Document:

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                                                                    Exhibit 10.7

                      INERGY EMPLOYEE UNIT PURCHASE PLAN

                                   SECTION 1
                                 INTRODUCTION

1.1  Establishment.  INERGY HOLDINGS, LLC, a Delaware limited liability company
     ("Holdings"), hereby establishes the Inergy Employee Unit Purchase Plan
     (the "Plan") for certain employees of Holdings, Inergy GP, LLC, a Delaware
     limited liability company (the "General Partner"), Inergy, L.P., a Delaware
     limited partnership (the "Partnership"), and their Affiliates.

1.2  Purpose.  The purpose of the Plan is to promote the interests of Holdings,
     the General Partner and the Partnership by encouraging all full-time
     employees of Holdings, the General Partner, the Partnership and their
     Affiliates to acquire or increase their ownership of Units and to provide a
     means whereby such individuals may develop a sense of proprietorship and
     personal involvement in the development and financial success of the
     Partnership, and to encourage them to devote their best efforts to the
     business of the Partnership, thereby advancing the interests of the
     Partnership, the General Partner and Holdings.

                                   SECTION 2
                                  DEFINITIONS

2.1  The following terms shall have the meanings set forth below.

     (a)  "Affiliates" means with respect to any Person, any other Person that
          directly or indirectly through one or more intermediaries controls, is
          controlled by or is under common control with, the Person in question.
          As used herein, the term "control" means the possession, direct or
          indirect, of the power to direct or cause the direction of the
          management and policies of a Person, whether through ownership of
          voting securities, by contract or otherwise.

     (b)  "Board" means the Board of Directors of the General Partner.

     (c)  "Committee" means the committee appointed to administer the Plan
          pursuant to Section 9.

     (d)  "Employee" means any individual who is a full-time employee of
          Holdings, the General Partner, the Partnership or one of their
          Affiliates, but excluding any employee covered by a collective
          bargaining agreement unless such bargaining agreement provides for his
          participation in the Plan.

     (e)  "Employer" means Holdings, the General Partner, the Partnership and/or
          one of their Affiliates, as the case may be.

     (f)  "Holdings" means Inergy Holdings, LLC, a Delaware limited liability
          company.

     (g)  "Partnership" means Inergy Partners, L.P., a Delaware limited
          partnership.
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     (h)  "Partnership Agreement" means the Amended and Restated Agreement of
          Limited Partnership of Inergy, L.P., as amended from time to time.

     (i)  "Person" means an individual or a corporation, limited liability
          company, partnership, joint venture, trust, unincorporated
          organization, association, governmental agency or political
          subdivision thereof or other entity.

     (j)  "Purchase Period" means the 10-day period following the end of each
          calendar quarter; provided, however, the Purchase Period shall include
          such other periods, if any, as may be designated by the Committee from
          time to time.

     (k)  "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
          Exchange Act of 1934 (the "1934 Act").

     (l)  "Unit" means a Common Unit of the Partnership.

2.2  Gender and Number. Except when otherwise indicated by the context, the
     masculine gender shall also include the feminine gender, and the definition
     of any term herein in the singular shall also include the plural.

                                   SECTION 3
                           UNITS AVAILABLE UNDER PLAN

3.1  The maximum number of Units that may be purchased for Employees under this
     Plan is 50,000.  Units to be delivered under the Plan may be Units acquired
     by Holdings in the open market, Units already owned by Holdings, Units
     acquired by Holdings directly from the Partnership or any other person, or
     any combination of the foregoing.  Upon an Employee's termination of
     employment with his or her Employer, all amounts then credited to his or
     her notional account under the Plan, if any, shall be paid to the
     terminated Employee as soon as practicable.  In the event that any change
     is made to the Units deliverable under the Plan, the Committee may make
     appropriate adjustments in the maximum number of Units deliverable under
     the Plan.  The adjustments determined by the Committee shall be final,
     binding and conclusive.

                                   SECTION 4
                               PURCHASE OF UNITS

4.1  Employee Withholding Elections.  The Committee shall provide an Employee
     the ability to purchase Units under this Plan upon the following terms and
     conditions:

     (a)  Effective as of the beginning of any month, an Employee may elect to
          have his Employer withhold from the Employee's cash base salary or
          cash base wages each future pay period, for the purchase of Units
          hereunder, a designated whole percentage of the Employee's cash base
          pay or wages (in whole percentages only, not to exceed 10%).  An
          Employee may change (within the above limitations) or stop his
          withholding election at any time; however, only one such change may be
          made during any calendar year.  All Employee elections and any changes
          to an election shall be in such written form as the Committee or its
          delegate may establish from time to time.

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     (b)  Each withholding election made by an Employee hereunder shall be an
          ongoing election until the earlier of the date changed by the Employee
          or the date the Employee ceases to be eligible to participate in the
          Plan.

     (c)  Holdings shall maintain for each electing Employee a separate notional
          or ledger account reflecting the aggregate amount of his cash base pay
          or wages that has been withheld and not yet applied to the purchase of
          Units for such Employee.  Amounts of base pay or wages withheld by the
          Employer and remitted to Holdings shall not be segregated from the
          general assets of Holdings and shall not bear interest.

     (d)  During each Purchase Period, Holdings shall use, to the fullest extent
          practicable, all amounts then credited to the notional accounts of the
          electing Employees to purchase Units for such Employees.  Purchases of
          Units may be made at any time or times during the Purchase Period on
          any securities exchange on which the Units are traded, in the over-
          the-counter market and/or in negotiated transactions as the Committee
          shall determine.  Any amounts credited to a notional account and not
          so applied during a Purchase Period shall be carried over to the next
          Purchase Period.

     (e)  Upon an Employee's termination of Employment with his or her Employer,
          all amounts then credited to his or her notional account under the
          Plan, if any, shall be paid to the terminated Employee as soon as
          reasonably practicable.

4.2  Purchase of Units and Plan Expenses.  During each Purchase Period Holdings,
     using funds withheld from Employees' wages pursuant to this Section 4,
     shall purchase for the electing Employees the maximum number of whole Units
     that can be acquired based on the sum of (i) amounts then credited to the
     electing Employees' notional accounts, and (ii) an amount, as determined
     from time to time by the Committee, not to exceed 10% of the aggregate
     price of the Units to be purchased (the "Reimbursement Amount").  Holdings
     shall pay, other than from the notional accounts, all brokerage fees and
     other costs and expenses of the Plan.

4.3  Reimbursements of Employee Purchases.  At any time during a year an
     Employee may furnish evidence satisfactory to Holdings that during that
     year (i) the Employee has purchased, while an Employee, Units on the open
     market, and (ii) the Employee continues to own such Units.  To the extent
     the purchase price paid by the Employee for such Units, when aggregated
     with any amounts withheld for such Employee pursuant to Section 4.2, does
     not exceed 10% of his or her cash base pay or wages for the year (through
     the date of reimbursement), Holdings shall reimburse (pay to) the Employee
     an amount equal to the sum of (x) the product of the Reimbursement Amount
     percentage and the Employee's purchase price of such Units and (y) any
     reasonable brokerage fees and expenses incurred by the Employee on such
     purchase.

4.4  No Fractional Units.  Holdings will not be required to deliver any
     fractional Units to an Employee pursuant to this Plan.

4.5  Withholding of Taxes.  To the extent that the Employer is required to
     withhold any taxes in connection with either the purchase of Units for an
     Employee or the reimbursement for

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     a purchase of Units, it will be a condition to the receipt of such Units or
     reimbursement that the Employee make arrangements satisfactory to the
     Employer for the payment of such taxes, which may include a reduction in
     the Employee's notional account or reimbursement as the case may be.

                                   SECTION 5
                                 SALE OF UNITS

5.1  If an Employee sells or otherwise disposes of any Units that the Employee
     has either acquired pursuant to or been reimbursed for under this Plan, the
     Employee shall not be eligible to again participate in the Plan at any time
     and any amounts then credited to his notional account shall be paid to the
     Employee as soon as practicable.

                                   SECTION 6
                              GENERAL RESTRICTIONS

6.1  Investment Representation.  Unless the Units subject to purchase under the
     Plan have been registered under the Securities Act of 1933, as amended (the
     "1933 Act"), and, in the case of any Employee who may be deemed an
     affiliate (for securities law purposes) of Holdings, the General Partner or
     the Partnership, such Units have been registered under the 1933 Act for
     resale by such Participant, or the Partnership has determined that an
     exemption from registration is available, Holdings may require prior to and
     as a condition of the delivery of any Units that the person purchasing such
     Units hereunder furnish Holdings with a written representation in a form
     prescribed by the Committee to the effect that such person is acquiring
     such Units solely with a view to investment for his or her own account and
     not with a view to the resale or distribution of all or any part thereof,
     and that such person will not dispose of any of such Units otherwise than
     in accordance with the provisions of Rule 144 under the 1933 Act unless and
     until either the Units are registered under the 1933 Act or Holdings is
     satisfied that an exemption from such registration is available.

6.2  Compliance with Securities Laws.  Notwithstanding anything herein or in any
     other agreement to the contrary, the Partnership shall not be obligated to
     sell or issue any Units to an Employee under the Plan unless and until the
     Partnership is satisfied that such sale or issuance complies with (i) all
     applicable requirements of the securities exchange on which the Units are
     traded (or the governing body of the principal market in which such Units
     are traded, if such Units are not then listed on an exchange), (ii) all
     applicable provisions of the 1933 Act, and (iii) all other laws or
     regulations by which the Partnership is bound or to which the Partnership
     is subject.  Holdings acknowledges that it is an affiliate of the
     Partnership under securities laws and it shall comply with such laws and
     obligations of the Partnership relating thereto as if they were directly
     applicable to Holdings.

                                   SECTION 7
                       RIGHTS OF EMPLOYEES; PARTICIPANTS

7.1  Employment. This Plan will not confer upon any Employee any right with
     respect to continuance of employment or other service with Holdings, the
     General Partner, the Partnership or one of their Affiliates, nor will it
     interfere in any way with any right

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     Holdings, the General Partner, the Partnership or one of their Affiliates
     would otherwise have to terminate such Employee's employment or other
     service at any time.

7.2  Nontransferability. No right to purchase Units or be reimbursed for the
     purchase of Units granted under this Plan shall be assignable or
     transferable during the lifetime of any Employee either voluntarily or
     involuntarily, or be subjected to any lien, directly or indirectly, by
     operation of law, or otherwise, including execution, levy, garnishment,
     attachment, pledge or bankruptcy.

                                   SECTION 8
                              PLAN ADMINISTRATION

8.1  Authority of Committee.  The Plan shall be administered by the Committee.
     Subject to the terms of the Plan and applicable law, and in addition to
     other express powers and authorizations conferred on the Committee by the
     Plan, the Committee shall have full power and authority to: (i) determine
     which persons are Employees who may participate; (ii) determine the number
     of Units to be purchased by an Employee; (iii) determine the time and
     manner for purchasing Units; (iv) interpret, construe and administer the
     Plan; (v) establish, amend, suspend, or waive such rules and regulations
     and appoint such agents as it shall deem appropriate for the proper
     administration of the Plan; (vi) make a determination as to the right of
     any person to receive Units under the Plan; (vii) correct any defect,
     supply any omission, or reconcile an inconsistency in the Plan; and (viii)
     make any other determinations and take any other actions that the Committee
     deems necessary or desirable for the administration of the Plan.

8.2  Determination Under the Plan.  Unless otherwise expressly provided in the
     Plan, all designations, determinations, interpretations, and other
     decisions under or with respect to the Plan or any Award shall be within
     the sole discretion of the Committee, may be made at any time and shall be
     final, conclusive, and binding upon all persons, including the Partnership
     or any Employee. No member of the Committee shall be liable for any action,
     determination or interpretation made in good faith, and all members of the
     Committee shall, in addition to their rights as directors, be fully
     protected by Holdings with respect to any such action, determination or
     interpretation.

                                   SECTION 9
                  PLAN AMENDMENT, MODIFICATION AND TERMINATION

9.1  This Plan may be amended from time to time by the Committee. This Plan may
     be terminated at any time by the Committee and shall automatically
     terminate when all Units authorized for purchase pursuant to the Plan have
     been purchased.  On termination of the Plan, all amounts then remaining
     credited to the notional accounts for Employees shall be returned to the
     affected Employees.

                                   SECTION 10
                           NONEXCLUSIVITY OF THE PLAN

10.1 The adoption of the Plan by Holdings shall not be construed as creating any
     limitations on the power or authority of Holdings to adopt such other or
     additional incentive or other compensation arrangements of whatever nature
     as Holdings may deem necessary or

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     desirable or preclude or limit the continuation of any other plan, practice
     or arrangement for the payment of compensation or fringe benefits to
     employees, non-employee directors, or consultants generally, or to any
     class or group of employees, directors, or consultants, which Holdings now
     has lawfully put into effect, including, without limitation, any
     retirement, pension, savings and stock purchase plan, insurance, death and
     disability benefits and executive short-term incentive plans.

                                   SECTION 11
                              REQUIREMENTS OF LAW

11.1  Requirements of Law.  The issuance of Units pursuant to the Plan shall be
      subject to all applicable laws, rules and regulations.

11.2  Rule 16b-3. It is intended that any purchases by a person subject to
      Section 16 of the 1934 Act meet all of the requirements of Rule 16b-3. If
      any action or procedure would otherwise not comply with Rule 16b-3, such
      action or procedure shall be modified, to the extent the Committee deems
      practicable, to conform to Rule 16b-3.

11.3  Governing Law. The validity, construction and effect of the Plan and any
      rules and regulations relating to the Plan shall be determined in
      accordance with applicable Federal law, and to the extent not preempted
      thereby, with the laws of the State of Delaware, without regard to
      conflicts of laws principles.

                                   SECTION 12
                         REIMBURSEMENT FROM PARTNERSHIP

12.1  The Partnership shall reimburse Holdings for all direct and indirect
      expenses incurred by Holdings in administering this Plan. Such costs
      incurred by Holdings may include, but are not limited to, costs incurred
      by Holdings attributable to (i) Holdings supplementing the purchase of
      Units by Employees pursuant to Section 4.2 of this Plan, (ii) Holdings
      reimbursing Employee's pursuant to Section 4.3 of this Plan and (iii)
      Holdings' payment of brokerage fees and other expenses incurred in
      purchasing Units under this Plan. The Partnership shall reimburse Holdings
      on a monthly basis, or such other reasonable basis as the General Partner
      may determine in its sole discretion.

                                       6<PAGE>

                                                                    Exhibit 10.8

                             EMPLOYMENT AGREEMENT
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          THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into this 30th
day of May, 2001, by and between Inergy Partners, LLC, a Delaware limited
liability company (the "Company"), and John J. Sherman, an individual (the
"Employee").

          1.   Employment.  The Company agrees to employ the Employee and the
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Employee agrees to be employed by the Company as the President and Chief
Executive Officer of the Company upon the terms and conditions of this
Agreement, commencing on the date hereof and continuing until terminated as
provided in Section 11 below.
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          2.   Compensation; Bonus.  For all services rendered by the Employee
               -------------------
to the Company, the Company shall pay the Employee a salary at the annual rate
of Two Hundred Fifty Thousand Dollars ($250,000) (the "Salary") payable bi-
monthly in arrears. The Employee shall be eligible for annual bonuses at the
discretion of the Board of Directors of the Company. Such Salary shall be
reviewed from time to time by the Company but no less often than annually.

          3.   Expenses.  The Company shall reimburse the Employee for all
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ordinary and necessary expenses incurred and paid by the Employee in the course
of the performance of the Employee's duties pursuant to this Agreement and
consistent with the Company's policies in effect from time to time with respect
to travel, entertainment and other business expenses, and subject to the
Company's requirements with respect to the manner of approval and reporting of
such expenses.

          4.   Additional Benefits.
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          (a)  The Employee shall be eligible for such fringe benefits, if any,
     by way of insurance, hospitalization and vacations normally provided to
     other members of the executive management of the Company generally and such
     additional benefits as may be from time to time agreed upon in writing
     between the Employee and the Company.

          (b)  It is anti cipated by the parties hereto that in the event that
     the Company effects the IPO:

               (i)    The Company will receive Subordinated Units in the MLP
          that will have a yield equal to (but subordinated to) the yield on the
          publicly-traded common units;

               (ii)   At the expiration of the subordination period, the
          Subordinated Units will convert to common units of the MLP on a one-
          for-one basis and will receive distributions pro rata with all other
          common units;

               (iii)  The subordination period will terminate based on the
          performance of the MLP in achieving certain earnings and distribution
          levels.
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     In the event that the subordination period terminates with respect to all
     of the Subordinated Units, the Employee shall receive a cash bonus of Six
     Hundred Twenty-Five Thousand Dollars ($625,000), with such bonus to be paid
     within sixty (60) days after the date of such termination; provided,
     however, that the Company may in its discretion pay all or part of such
     bonus prior to the termination of the subordination period with respect to
     all of the Subordinated Units; provided, further, that in the event the
     Company makes such early payments to the Employee and the subordination
     period is not subsequently terminated, the Employee shall not be required
     to repay such amounts to the Company.  Immediately upon a Change of Control
     (as defined below), within thirty (30) days of such Change of Control, the
     Company shall pay (A) the amount of the subordination bonus payable under
     this Section 4(b) to the extent unpaid, if such Change of Control results
     in the expiration of the subordination period, or (B) fifty percent (50%)
     of the amount of the subordination bonus to the extent unpaid, if such
     Change of Control does not result in the termination of the subordination
     bonus, with the balance of the subordination bonus to be paid pursuant to
     the previous sentence, or earlier in the event of a subsequent Change of
     Control that results in the termination of the subordination period.  For
     purposes of this Section 4(b), a "Change of Control" shall have the same
     meaning as that term is used in the Inergy Long Term Incentive Plan.

     Notwithstanding the foregoing, in order to receive a bonus with respect to
     the termination of the subordination period for all Subordinated Units, the
     Employee must have been continuously employed by the Company from the date
     hereof until the date of such termination.  In the event the Employee's
     employment is terminated without Cause, as defined herein, prior to the
     full payment of the subordination bonus and a portion of the subordinated
     units have previously been converted, the Company shall pay to Employee an
     amount equal to Employee's total subordination bonus times a fraction equal
     to the number of all subordinated units of the MLP which have converted to
     common units divided by the total number of subordinated units issued by
     the MLP.

          5.   Duties.  The Employee agrees that so long as he is employed
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under this Agreement he will (i) to the satisfaction of the Company devote his
best efforts and his entire business time to further properly the interests of
the Company, (ii) at all times be subject to the Company's direction and control
with respect to his activities on behalf of the Company, (iii) comply with all
rules, orders and regulations of the Company, (iv) truthfully and accurately
maintain and preserve such records and make all reports as the Company may
require, and (v) fully account for all monies and other property of the Company
of which he may from time to time have custody and deliver the same to the
Company whenever and however directed to do so.

          6.   Disclosure and Assignment of Inventions.
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          (a)  The Employee agrees that any Inventions (as hereinafter defined)
     that he, alone or with others, may conceive, develop, make or perfect, in
     whole or in part, during his employment by the Company which relate or
     pertain in any way to the existing or reasonably anticipated scope of the
     Company's or any subsidiary, parent or affiliate of the Company's business,
     or that he, alone or with others, may conceive, make or perfect in whole or
     in part, in the performance of the duties of his employment by the Company,

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     shall be promptly and fully disclosed in writing immediately by the
     Employee to the Company (but to no other person or persons prior to
     procuring patents therefor). All of the right, title and interest in and to
     any Invention shall be and hereby is assigned exclusively to the Company or
     its nominee regardless of whether or not the conception, development,
     making or perfection of such Inventions involved the use of the Company's
     time, facilities or materials and regardless of where such Inventions may
     be conceived, made or perfected and shall become the sole property of the
     Company or its nominee. For purposes hereof, the term "Inventions" shall
     mean inventions, discoveries, ideas, concepts, systems, works, trade
     secrets, know-how, intellectual property, products, processes or
     improvements or modifications of current products, processes or designs, or
     methods of manufacture, distribution, management or otherwise (whether or
     not covered by or able to be covered by a patent or copyright).

          (b)  The Employee agrees to execute and deliver all documents and do
     all acts which the Company shall deem necessary or desirable to secure to
     the Company or its nominee the entire right, title and interest in and to
     said Inventions, including, without limitation, applications for any United
     States and/or Foreign Letters Patent or Certificates of Copyright
     Registration in the name of or for the benefit of the Company or, in the
     discretion of the Company, in the Employee's name, which patents and
     copyrights shall then be assigned by the Employee to the Company. Any
     document described above prepared and filed pursuant to this subsection
     shall be so prepared and filed at the Company's expense. The Employee
     hereby irrevocably appoints the President of the Company as his
     attorney-in-fact with authority to execute for him and on his behalf any
     and all assignments, patent or copyright applications, or other instruments
     and documents required to be executed by the Employee pursuant to this
     subsection, if the Employee is unwilling or unable to execute same.

          (c)  The Company shall have no obligation to use, attempt to protect
     by application for Letters Patent or Certificates of Copyright Registration
     or promote any of said Inventions; provided, however, that the Company, in
     its sole discretion, may reward the Employee for any especially meritorious
     contributions in any manner it deems appropriate or may provide the
     Employee with full or partial releases as to any subject matter contributed
     by the Employee in which the Company is not interested.

          7.   Covenant Not to Disclose Confidential Information.  The Employee
               -------------------------------------------------
acknowledges that during the course of his employment with the Company he has or
will have access to and knowledge of certain information and data which the
Company or any subsidiary, parent or affiliate of the Company considers
confidential and that the release of such information or data to unauthorized
persons would be extremely detrimental to the Company.  As a consequence, the
Employee hereby agrees and acknowledges that he owes a duty to the Company not
to disclose, and agrees that, during or after the term of his employment,
without the prior written consent of the Company, he will not communicate,
publish or disclose, to any person anywhere or use any Confidential Information
(as hereinafter defined) for any purpose other than carrying out his duties as
contemplated by this Agreement.  The Employee will use his best efforts at all
times to hold in confidence and to safeguard any Confidential Information from
falling into the hands of any unauthorized person and, in particular, will not
permit any Confidential Information to be read, duplicated or copied.  The
Employee will return to the

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Company all Confidential Information in the Employee's possession or under the
Employee's control when the duties of the Employee no longer require the
Employee's possession thereof, or whenever the Company shall so request, and in
any event will promptly return all such Confidential Information if the
Employee's relationship with the Company is terminated for any or no reason and
will not retain any copies thereof. For purposes hereof the term "Confidential
Information" shall mean any information or data used by or belonging or relating
to the Company or any subsidiary, parent or affiliate of the Company that is not
known generally to the industry in which the Company or any subsidiary, parent
or affiliate of the Company is or may be engaged, including without limitation,
any and all trade secrets, proprietary data and information relating to the
Company's or any subsidiary, parent or affiliate of the Company's past, present
or future business and products, price lists, customer lists, processes,
procedures or standards, know-how, manuals, business strategies, records,
drawings, specifications, designs, financial information, whether or not reduced
to writing, or information or data which the Company or any subsidiary, parent
or affiliate of the Company advises the Employee should be treated as
confidential information.

          8.   Covenant Not to Compete.  The Employee acknowledges that during
               -----------------------
his employment with the Company he, at the expense of the Company, has been and
will be specially trained in the business of the Company, has established and
will continue to establish favorable relations with the customers, clients,
accounts and lenders of the Company or any subsidiary, parent or affiliate of
the Company and will have access to Inventions, trade secrets and Confidential
Information of the Company or any subsidiary, parent or affiliate of the
Company. Therefore, in consideration of such training and relations, his
employment with the Company, and to further protect the Inventions, trade
secrets and Confidential Information of the Company or any subsidiary, parent or
affiliate of the Company, the Employee agrees that for a period commencing on
the date hereof and ending on the fifth anniversary of the date hereof, he will
not, directly or indirectly, without the express written consent of the Company,
except when and as requested to do in and about the performing of his duties
under this Agreement:

          (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, member, principal,
     employee, agent, representative, consultant or independent contractor of,
     or in any way assist any individual or entity in the conduct of any
     business that is engaged or may become engaged in any business competitive
     to any business now or at any time during the period hereof engaged in by
     the Company or any subsidiary, parent or affiliate of the Company,
     including, but not limited to, any business that trades, markets or
     distributes propane gas (at retail, wholesale or otherwise) or sells,
     services and installs parts, appliances or supplies related thereto;

          (b)  divert or attempt to divert clients or customers (whether or not
     such persons have done business with the Company or any subsidiary, parent
     or affiliate of the Company once or more than once) or accounts of the
     Company or any subsidiary, parent or affiliate of the Company; or

          (c)  entice or induce or in any manner influence any person who is or
     shall be in the employ or service of the Company or any subsidiary, parent
     or affiliate of the

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     Company to leave such employ or service for the purpose of engaging in a
     business which may be in competition with any business now or at any time
     during the period hereof engaged in by the Company or any subsidiary,
     parent or affiliate of the Company.

Notwithstanding the foregoing provisions, the Employee may own not more than
five percent (5%) of the outstanding equity securities in any corporation or
entity (including, but not limited to, units in a master limited partnership)
that is listed upon a national stock exchange or actively traded in the over-
the-counter market.  Notwithstanding the foregoing provisions, the Employee
shall not, directly or indirectly, without the express written consent of the
Company, except when and as requested to do in and about the performing of his
duties under this Agreement, engage in any actions under subsections (a), (b) or
(c) above, at any time the Company is making payments to the Employee pursuant
to this Agreement.

          9.  Specific Performance.  Recognizing that irreparable damage will
              --------------------
result to the Company in the event of the breach or threatened breach of any of
the foregoing covenants and assurances by the Employee contained in Sections 6,
                                                                    -----------
7 or 8 hereof, and that the Company's remedies at law for any such breach or
------
threatened breach will be inadequate, the Company and its successors and
assigns, in addition to such other remedies which may be available to them,
shall 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 the Employee, and each and every person,
firm or company acting in concert or participation with him, from the
continuation of such breach and, in addition thereto, he shall 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
said covenants and assurances.  The obligations of the Employee and the rights
of the Company, its successors and assigns under Sections 6, 7, 8, 9, 10, 12, 16
                                                 -------------------------------
and 18 of this Agreement shall survive the termination of this Agreement.  The
------
covenants and obligations of the Employee set forth in Sections 6, 7 and 8
                                                       -------------------
hereof are in addition to and not in lieu of or exclusive of any other
obligations and duties of the Employee to the Company, whether express or
implied in fact or in law.

          10.  Potential Unenforceability of Any Provision.  If a final judicial
               -------------------------------------------
determination is made that any provision of this Agreement is an unenforceable
restriction against the Employee, the provisions hereof shall be rendered void
only to the extent that such judicial determination finds such provisions
unenforceable, and such unenforceable provisions shall automatically be
reconstituted and become a part of this Agreement, effective as of the date
first written above, to the maximum extent in favor of the Company that is
lawfully enforceable.  A judicial determination that any provision of this
Agreement is unenforceable shall in no instance render the entire Agreement
unenforceable, but rather the Agreement will continue in full force and effect
absent any unenforceable provision to the maximum extent permitted by law.

          11.  Term and Termination.
               --------------------

          (a)  Subject to Sections 11(b) and 11(c) below, the term of the
                          --------------     -----
     Employee's employment under this Agreement shall be five (5) years from the
     date hereof.

                                       5
<PAGE>

          (b)  Notwithstanding Section 11(a) above, this Agreement shall
                               -------------
     terminate immediately upon the death, disability or adjudication of legal
     incompetence of the Employee, or upon the Company's ceasing to carry on its
     business or becoming bankrupt.  For purposes of this Agreement, the
     Employee shall be deemed to be disabled when the Employee has become
     unable, by reason of physical or mental disability, to satisfactorily
     perform his essential job duties and there is no reasonable accommodation
     that can be provided to enable him to be a qualified individual with a
     disability under applicable law.  Such matters shall be determined by, or
     to the reasonable satisfaction of, the Company.

          (c)  Notwithstanding Section 11(a) above, the Company may terminate
                               -------------
     the Employee's employment at any time for Cause or without Cause.  "Cause"
     means (i) the Employee has failed to perform the duties assigned to him and
     such failure has continued for thirty (30) days following delivery by the
     Company of written notice to the Employee of such failure, (ii) the
     Employee has been convicted of a felony or misdemeanor involving moral
     turpitude, (iii) the Employee has engaged in acts or omissions against the
     Company constituting dishonesty, breach of fiduciary obligation, or
     intentional wrongdoing or misfeasance, (iv) the Employee has acted
     intentionally or in bad faith in a manner that results in a material
     detriment to the assets, business or prospects of the Company, or (v) the
     Employee has breached any obligation under this Agreement.

          (d)  In the event (x) the Company elects to terminate the Employee's
     employment with the Company for Cause or as a result of the death,
     disability, adjudication of legal incompetence of the Employee or the
     Company's ceasing to carry on its business or becoming bankrupt, or (y) the
     Employee terminates his employment with the Company for any reason or no
     reason, the Company shall pay or provide to the Employee:

               (i)    such Salary as the Employee shall have earned up to the
          date of his termination;

               (ii)   such earned but unpaid subordination bonus, if any,
          pursuant to Section 4(b) hereof; and
                      -----------

               (iii)  such other fringe benefits normally provided to employees
          of the Company as the Employee shall have earned up to the date of his
          termination.

          (e)  In the event the Company elects to terminate the Employee's
     employment with the Company during the five (5)-year period referred to in
     Section 11(a) above and such termination is without Cause, the Company
     -------------
     shall pay to the Employee:

               (i)    the unpaid amount of the Employee's Salary for the
          remainder of the term of this Agreement, with such amount to be paid
          bi-monthly in arrears;

               (ii)   such earned but unpaid subordination bonus, if any,
          pursuant to Section 4(b) hereof; and
                      -----------

               (iii)  such other fringe benefits (other than any bonus,
          severance pay benefit or participation in the Company's 401(k)
          employee benefit plan) normally

                                       6
<PAGE>

          provided to employees of the Company as the Employee shall have earned
          up to the date of his termination.

          12.  Waiver of Breach.  Failure of the Company to demand strict
               ----------------
compliance with any of the terms, covenants or conditions hereof shall not be
deemed a waiver of the term, covenant or condition, nor shall any waiver or
relinquishment by the Company of any right or power hereunder at any one time or
more times be deemed a waiver or relinquishment of the right or power at any
other time or times.

          13.  No Breach.  The Employee represents and warrants to the Company
               ---------
that neither the execution nor delivery of this Agreement, nor the performance
of the Employee's obligations hereunder will conflict with, or result in a
breach of, any term, condition, or provision of, or constitute a default under,
any obligation, contract, agreement, covenant or instrument to which the
Employee is a party or under which the Employee is bound, including without
limitation, the breach by the Employee of a fiduciary duty to any former
employers.

          14.  Entire Agreement; Amendment.  This Agreement cancels and
               ---------------------------
supersedes all previous agreements relating to the subject matter of this
Agreement, written or oral, between the parties hereto and contains the entire
understanding of the parties hereto and shall not be amended, modified or
supplemented in any manner whatsoever except as otherwise provided herein or in
writing signed by each of the parties hereto.

          15.  Headings.  The headings of the sections of this Agreement have
               --------
been inserted for convenience of reference only and shall in no way restrict or
otherwise modify any of the terms or provisions hereof.

          16.  Governing Law.  This Agreement and all rights and obligations of
               -------------
the parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Missouri applicable to agreements made
and to be performed entirely within the State, including all matters of
enforcement, validity and performance; provided, however, that to the extent any
provision herein is deemed unenforceable in the State of Missouri, then this
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Delaware.

          17.  Notice.  Any notice, request, consent or communication under
               ------
this Agreement shall be effective only if it is in writing and personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
or by a nationally recognized overnight delivery service, with delivery
confirmed, addressed as follows:

          If to the Company:

               Name:                              With Copy To:
               ----                               ------------
               Inergy Partners, LLC               Stinson, Mag & Fizzell, P.C.
               1101 Walnut, Suite 1500            1201 Walnut, Suite 2800
               Kansas City, Missouri 64106        Kansas City, Missouri 64106
               Attn: Board of Directors           Attn: Paul E. McLaughlin

                                       7
<PAGE>

          If to the Employee:

               John J. Sherman
               1101 Walnut, Suite 1500
               Kansas City, Missouri 64106

or such other persons and/or addresses as shall be furnished in writing by any
party to the other party, and shall be deemed to have been given only upon its
delivery in accordance with this Section 17.
                                 ----------

          18.  Assignment.  This Agreement is personal and not assignable by
               ----------
the Employee but it may be assigned by the Company without notice to or consent
of the Employee to, and shall thereafter be binding upon and enforceable by, any
affiliate of the Company, the MLP, and any person which shall acquire or succeed
to substantially all of the business or assets of the Company (and such person
shall be deemed included in the definition of the "Company" for all purposes of
this Agreement) but is not otherwise assignable by the Company.

          19.  Expenses.  If any action at law or in equity is necessary to
               --------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

          IN WITNESS WHEREOF, the Company has caused this Employment Agreement
to be duly executed, and the Employee has hereunto set his hand, as of the day
and year first above written.

                                       INERGY PARTNERS, LLC

                                       By: /s/ John J. Sherman
                                           --------------------
                                           John J. Sherman, President

                                       /s/ John J. Sherman
                                       -------------------
                                       John J. Sherman

                                       8

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