EXHIBIT 10.42
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of June, 2004 ("Agreement") by and
between Valley National Gases, Inc. ("Company"), a West Virginia corporation and
Xxxxxx X. Xxxxxx ("Employee").
In consideration of the premises and of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Duties. The Employee shall serve as Vice President and Chief
Operating Officer ("COO") of the Company, and shall perform such duties,
services and responsibilities as are consistent with such position and with the
practices of the Company as prescribed by the President of the Company. With
respect thereto and not by way of limitation, the Employee's position will be
subject to the following Reporting Requirements, Responsibilities and Personnel
Policies:
(a) Reporting. The Employee shall report directly to the President
of the Company. The following positions are representative of those which will
report to the COO: Marketing Area Manager, Region Area Manager; and any other
positions the Employee deems appropriate.
(b) Responsibilities. The Employee will have operational and certain
financial responsibility for the Company and will coordinate and optimize the
current collection of businesses while continuing to support acquisition and
consolidation at a pace consistent with the strategy and with capital
availability. The Employee will improve the cost position and productivity of
the operations. The Employee will be responsible for developing a unified
culture within the Company that is aligned with the strategic direction of the
Company; leading an integrated effort to provide a common platform for the
Company's procurement, distribution, and supply chain services; and building
confidence in the Company internally. During his employment with the Company,
the Employee shall devote substantially all of his time, attention and skill as
necessary to the performance of his duties, services and responsibilities
hereunder and will use his best efforts to promote the interests of the Company.
(c) Personnel Policies. The Employee shall be subject to and abide
by all rules and regulations as set forth in VALLEY NATIONAL GASES, INC.
PERSONNEL POLICIES, GENERAL WORK RULES & BENEFITS PORTFOLIO [COMMONLY REFERRED
TO AS EMPLOYEE HANDBOOK OR MANUAL] EFFECTIVE JULY 1, 1996, as same may be
modified from time to time.
2. Term. The Employee's employment by the Company and the initial term
of this Agreement ("Initial Term") shall commence as of the date hereof and
shall continue in full force and effect, unless earlier terminated as provided
hereinafter in Section 6., until the first (1st) anniversary thereof. At the
conclusion of the Initial Term, Employee's employment with the Company may, at
the Company's election, continue thereafter, until terminated as provided
hereinafter in Section 6., on the terms and conditions as set forth in this
Agreement. The Initial Term and all time of employment thereafter shall
collectively be referred to as the "Employment Term."
3. Compensation.
(a) Salary. In consideration of the performance by the Employee of
the Employee's obligations during the Initial Term (including any services as an
officer, employee, member of any committee of the Company or any of its
affiliates, or otherwise), the Company will pay the Employee a base salary
("Salary") at an annual rate of One Hundred Fifty Thousand Dollars
($150,000.00), payable in equal bi-weekly monthly installments, commencing on
the 1st day of June, 2004. The Salary will be reviewed annually based upon the
Employee's performance as well as the performance of the Company and changes in
the relevant market for the Employee's skills; and in that respect, after the
Initial Term, the Salary may be adjusted, from time to time, as proposed by the
Compensation Committee of the VLG Board of Directors and approved by the Board.
(b) Incentive. The Employee is eligible for an annual cash incentive
bonus targeted at thirty percent (30%) of the Salary, with no maximum
stipulated, but rather dependent on net income after tax earnings above plan,
with the specific objectives set by the Board annually.
Additionally, the Employee will qualify for VLG and the
Company's annual stock option plan after completion of his first year of
employment, (participation in which is at the discretion of the Board and the
Board of Directors of VLG) for VLG stock.
(c) Benefits.
(i) In addition to the payment of the Salary, the Employee
shall be entitled to participate in all employee benefit plans in effect to the
extent the Employee meets the eligibility requirements for any such plan; in
accordance with the Benefits Summary attached hereto as Schedule 3.(e)(i).
(ii) The Employee shall be entitled to paid vacation and
holidays in accordance with Company policy; which at the commencement of this
Agreement is ten (10) business days of vacation per year and eight (8) national
holidays.
(iii) The Employee will be furnished a Company automobile or
an automobile allowance in accordance with Company policy in effect, from time
to time.
(e) Expenses. The Company will reimburse the Employee in accordance
with Company Policy, for all normal and reasonable business expenses upon
presentation of an approved expense report and related receipts to the President
or in his absence the Vice Chairman of the Board.
(f) Taxes. The Salary, Incentive, Benefits and all other forms of
compensation paid to the Employee shall be subject to all applicable taxes
required to be
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withheld by the Company pursuant to federal, state or local law. The Employee
shall be solely responsible for all income or other taxes imposed on the
Employee by reason of any cash or non-cash compensation and benefits provided
hereunder.
(g) Relocation Expense Reimbursement. The Company will reimburse
Employee, grossed up to accommodate taxes net of deductions, "out of pocket"
expenses associated with living in the Washington, Pennsylvania area. The
Company will pay Employee's temporary living expenses for up to twelve months,
which includes, housing (not to exceed $1,660 per month), automobile allowance
($450 per month) and telephone, real estate taxes, condo fees, including closing
costs not to exceed $12,000, and utility expenses, as incurred.
4. Travel. The Employee shall, in the scope of his employment, travel
(domestically) on behalf of the Company on Company business. It is estimated
that this travel will range from thirty percent (30%) to thirty-five percent
(35%) of a typical work month, but will vary according to the needs of the
Company. Travel will be more intensive during the initial one hundred eighty
(180) days of employment due to the need to orient the Employee with customers,
remote employees, and key strategic relationships.
5. Termination.
(a) Instances of Termination. This Agreement and Employee's
employment with the Company may be terminated at any time after date of this
Agreement as follows:
(i) By death or Disability (as defined in Section 5.(d)
hereinafter) of Employee at the close of business on the date of the Employee's
death or Disability;
(ii) By the Company, at the close of business on the day
specified in the Date of Termination (as defined in Section 5.(f) hereinafter)
in the Notice of Termination (as defined in Section 6.(e) hereinafter) notifying
Employee of the Company's election to terminate his employment for "Cause" (as
defined in Section 6.(b) hereinafter);
(iii) By the Company, at the close of business on the day
specified as the Date of the Termination (as defined in Section 6.(f)
hereinafter) in the Notice of Termination (as defined in Section 5.(e)
hereinafter) notifying Employee of the Notice of Termination of the Company's
election to terminate his employment for any reason other than for "Cause" (as
defined in Section 5.(d) hereinafter);
(iv) By the Employee, at the close of business on the day
specified as the Date of the Termination (as defined in Section 5.(f)
hereinafter) which shall not be less than sixty (60) days after the Employee
shall have delivered the Notice of Termination (as defined in Section 5.(e)
hereinafter) to the Company notifying the company of the Employee's election to
terminate his employment. In the event, the Date of Termination set forth in
Employee's Notice of Termination is less than sixty (60) days from the delivery
of the Notice of Termination to the Company, then and in such event, termination
of this Agreement and Employee's employment with the company shall become
effective immediately upon delivery of the Notice of Termination; or
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(v) By the Company or the Employee, at the close of business
on any other date as mutually agreed to as Date of the Termination (as defined
in Section 5.(f) hereinafter) in writing by the Company and the Employee.
(b) Cause. For purposes of this Agreement, termination of employment
for "Cause" shall mean termination based on
(i) willful and continued failure to use reasonable best
efforts to substantially perform his duties (other than such failure resulting
from the Employee's physical or mental illness, in the reasonable opinion of a
qualified physician), and if such failure is not cured by the Employee within
ten (10) days after written notice from the Company (or if such breach is not
susceptible to cure within ten (10) days, reasonable steps have been taken to
cure such breach as soon as reasonably practicable);
(ii) willful misconduct that is materially and demonstrably
injurious to the financial condition or business reputation of the Company or
VLG;
(iii) breach of Section 5 of this Agreement that is materially
and demonstrably injurious to the financial condition or business reputation of
the Company or VLG; or
(iv) conviction or plea of guilty or nolo contendere to a
felony or to any other crime involving moral turpitude.
For purposes of this Section 6, no act or failure to act by
Employee shall be considered "willful" unless committed in bad faith and without
a reasonable basis to form a belief that the act or omission was in the best
interests of the Company. This Agreement shall not prevent Employee from
challenging the Company's determination that Cause exists or that Employee has
failed to cure any act (or failure to act) that purportedly formed the basis for
the Board's determination. The Company must provide notice to Employee that it
is intending to terminate his employment for Cause within one hundred and twenty
(120) days after the Company has knowledge of the occurrence of the event it
believes constitutes Cause.
(c) Cooperation with Company After Termination. In the event of
termination of employment, for whatever reason, the Employee agrees to cooperate
with the Company and to be reasonably available to the Company with respect to
continuing and/or future matters arising out of the Employee's employment or any
other relationship with the Company, whether such matters are business-related,
legal or otherwise provided, however, that when requesting such cooperation,
Company shall accommodate the requirements of Employee's business or employment
and other obligations. The Company agrees to reimburse the Employee for the
Employee's reasonable time charges and travel expenses incurred in complying
with the terms of this paragraph upon delivery by the Employee to the Company of
valid receipts for such expenses. The provisions of this paragraph shall survive
termination of employment for a period of one year.
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(d) Disability. For purposes of this Agreement, "Disability" shall
mean the incapacity or inability of Employee to perform his required duties, in
the reasonable opinion of a qualified physician (mutually acceptable to Employee
and Company), for a period of ninety (90) consecutive days, due to a disability,
and such qualified physician reasonably determines that it is unlikely that
Employee will be able to return to full performance of Employee's duties within
thirty (30) days thereafter.
(e) Notice of Termination. Any purported termination of this
Agreement and Employee's employment by Employer or by Employee, shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice, which
shall set forth in reasonable detail the Date of Termination and the reason for
termination of Employee's employment. No purported termination which is not
effected pursuant to this Section 5(e) shall be effective.
(f) Date of Termination. "Date of Termination" shall mean the date
specified in the Notice of Termination as the effective date for the termination
of this Agreement and Employee's employment with the Company.
(g) Termination Pursuant to Section 5(a)(iii). In the event, the
Company terminates the Agreement and Employee's employment with the Company
pursuant to Section 5(a)(iii), the Company shall pay COBRA expenses for the
Employee's health insurance for the twelve (12) month period following the Date
of Termination; and
(h) Effect of Termination. Except as required by applicable law, all
Compensation, whether Salary, Incentive, Stock Options, Benefits or otherwise
and Employee's right to same shall terminate as of the Date of Termination;
provided, however, and notwithstanding, the foregoing, any grant of Stock
Options to Employee will continue in effect according to the terms of the Stock
Option Agreement (Exhibit 3.(c)(i) hereto) in the event and in the event, only
that the Company terminates the Agreement and Employee's employment with the
Company, pursuant to Section 5.(a)(iii). Further, as of the Date of Termination,
the Employee shall no longer be an Officer or Director of the Company, and the
Employee shall tender to the Board his resignation as Vice President and Chief
Operating Officer effective as of the Date of Termination.
6. Employee Covenants.
(a) Unauthorized Disclosure. The Employee agrees and understands
that, in the Employee's position with the Company, the Employee will be exposed
to and receive information relating to the confidential affairs of the Company,
including but not limited to technical information, business and marketing
plans, strategies, customer information, other information concerning the
Company's services and products, promotions, development, financing, expansion
plans, business policies and practices, and other forms of information
considered by the Company to be confidential and in the nature of trade secrets.
Except to the extent that the proper performance of the Employee's duties,
services and responsibilities hereunder may require disclosure, and except as
such information (i) was known to the Employee prior to his employment by the
Company, (ii) was or becomes generally available to
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the public other than as a result of the disclosure by the Employee in violation
of the provisions of this Section 6. (a), or (iii) is compelled to be disclosed
by a court (or similar tribunal) of competent jurisdiction, the Employee agrees
that during the Employment Term and thereafter the Employee will keep such
information confidential and not disclose such information, either directly or
indirectly, to any third person or entity without the prior written consent of
the Company, except as may be required by legal process from a court of
competent jurisdiction. This confidentiality covenant has no temporal,
geographical or territorial restriction. Upon termination of this Agreement, the
Employee will promptly supply to the Company all property, keys, notes,
memoranda, writings, lists, files, reports, customer lists, correspondence,
tapes, disks, cards, surveys, maps, logs, machines, technical data or any other
tangible product or document which has been produced by, received by or
otherwise submitted to the Employee in his capacity as an employee, officer,
director, agent or stockholder of the Company during or prior to the Employment
Term.
(b) Inventions. The Employee agrees that any and all inventions,
discoveries, improvements, processes, software, patents, copyrights and
trademarks made, developed, discovered or acquired by him during the Employment
Term, solely or jointly with others or otherwise and which relate to the
business of the Company and all knowledge possessed by the Employee relating
thereto (collectively, the "Inventions"), shall be fully and promptly disclosed
to the Board and to such person or persons as the Board shall direct and shall
be the sole and absolute property of the Company and the Company shall be the
sole and absolute owner thereof. The Employee agrees that he will at all times
keep all of the same secret from everyone except the Company and such persons as
the Board may from time to time direct. The Employee shall, as requested by the
Company at any time and from time to time, whether prior to or after the
expiration of the Employment Term, execute and deliver to the Company any
instruments deemed necessary by the Company to effect disclosure and assignment
of the Inventions to the Company or its designees and any patent applications
(United States or foreign) and renewals with respect thereto, including any
other instruments deemed necessary by the Company for the prosecution of patent
applications or the acquisition of letters patent.
(c) Non-competition.
(i) By and in consideration of the Company's entering into
this Agreement and the Salary and benefits to be provided by the Company, and
further in consideration of the Employee's exposure to the proprietary
information of the Company, the Employee agrees that the Employee will not,
during the period ("Non-compete Period") beginning on the date of this Agreement
and ending (A) one (1) year after Employee's termination of employment, engage
in any business which competes with Company (including acting as director,
officer, employee, partner or stockholder of, or consultant or agent to, any
entity engaged in such business), within any county, city, province, parish or
similar geographic region in which the Company or any of its subsidiaries is
carrying on its business, in the event of termination of Employee's employment
with the Company pursuant to Section 5(a)(iii).
(ii) In the event the Company terminates the Employee's
employment with the Company pursuant to Section 5.(a)(iii) and so long as
Employee is not in default under or in breach of Section 5., the Company shall
additionally pay Employee Twelve Thousand Five
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Hundred Dollars ($12,500.00), each month, during the one (1) year Non-compete
Period, commencing one (1) month after the Date of Termination and terminating
twelve (12) months after Date of Termination.
(iii) In the event, the Employee's employment with the Company
is terminated for any reason other than pursuant to Section 6.(a)(iii), Employee
shall not be entitled to any additional payment for the Non-competition
Covenants under this Section 7.(c), and all Employee Covenants under this
Section 7.(c), shall nevertheless remain in full force and effect, fully binding
upon Employee and fully enforceable by the Company in accordance with the terms
of this Agreement.
(d) Non-solicitation. During the period beginning on the date of
this Agreement and ending two (2) years after termination of Employee's
employment, the Employee shall not interfere with the Company's relationship
with, or endeavor to entice away from the Company, any person who at any time
during the Employment Term was a customer or employee of the Company or
otherwise has a material business relationship with the Company.
(e) Remedies. The Employee agrees that any breach of the terms of
this Section 6. will result in irreparable injury and damage to the Company for
which the Company would have no adequate remedy at law; the Employee, therefore,
also agrees that in the event of said breach or any threat of breach, the
Company shall be entitled to an immediate injunction and restraining order to
prevent such breach and/or threatened breach and/or continued breach by the
Employee, and/or any and all persons and/or entities acting for and/or with the
Employee without having to prove damages, in addition to any other remedies to
which the Company may be entitled at law or in equity. The terms of this
paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including but not limited
to the recovery of damages from the Employee.
(f) Survival. The provisions of this Section 7 shall survive any
termination of Employee's employment with the Company or this Agreement. The
existence of any claim or cause of action by the Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of the covenants and agreements of
this Section 6.
(g) Company. For the purposes of this Section 6., the term "Company"
shall mean, collectively, each of the Company, VLG and their successors, assigns
and nominees, and all individuals, corporations and other entities that directly
or indirectly through one or more intermediaries, control or are controlled by
or are under common control with any of the foregoing.
(h) Reasonableness of Covenants. Employee has carefully considered
the nature and extent of the restrictions upon him and the rights and remedies
conferred upon the Company under this Section 6., and Employee hereby
acknowledges and agrees that, in light of the material consideration furnished
the Employee pursuant to and under this Agreement, the same are reasonable in
time and territory, are designed to eliminate circumstances which would
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be unfair to the Company, are fully required to protect the legitimate interests
of the Company and do not confer a benefit upon the Company disproportionate to
any detriment to Employee.
(i) Severability of Provisions. If any covenant set forth in this
Section 6 is determined by any court to be unenforceable by reason of its
extending for too great a period of time or over too great a geographical area,
or by reason of its being too extensive in any other respect, such covenant
shall be interpreted to extend only for the longest period of time and over the
greatest geographical area, and to otherwise have the broadest application, as
shall be enforceable. The invalidity or unenforceability of any particular
provision of this Section 7 shall not affect the other provisions hereof, which
shall continue in full force and effect.
7. Non-Exclusivity Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by Employer and for which Employee
may qualify, nor shall anything herein limit or otherwise adversely affect such
rights as Employee may have under any stock option or other agreements with
Employer.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given (i) if
delivered personally or by recognized courier, when so delivered, or (ii) if
mailed, three (3) business days after having been placed in the United States
mail, registered or certified, postage prepaid, addressed to the party to whom
it is directed at the address set forth below or such other address as a party
may specify in writing:
IF TO THE COMPANY:
Valley National Gases, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, CEO
IF TO THE EMPLOYEE:
Xxxxxx X. Xxxxxx
________________
________________
9. Arbitration.
(a) Any controversy or dispute arising under this Agreement or with
respect to the performance or non-performance of any activities by the parties
hereto, whether based upon contract or tort, which the parties are unable to
resolve through negotiation in good faith, shall be resolved by final and
binding arbitration in Wheeling, West Virginia in accordance with the procedure
and requirements set forth in this subsection, and (except as modified herein)
the Commercial Arbitration Rules of the American Arbitration Association (the
"Rules"). Such
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resolution shall be final and conclusive as to matters submitted to arbitration,
and may be enforced in any court of competent jurisdiction.
(b) Each party shall give written notice in sufficient detail to the
other of the existence and nature of any dispute proposed to be arbitrated. If,
within fifteen (15) calendar days, the dispute is not resolved through
negotiations pursued diligently in good faith, then either party may initiate
arbitration by notice to the other party in writing. Within ten (10) calendar
days thereafter, the parties shall agree upon a single arbitrator. If the
parties fail to agree upon the selection of such arbitrator, then either of the
parties upon written notice to the other may require such appointment from the
American Arbitration Association pursuant to the Rules.
(c) The parties shall have thirty (30) calendar days to perform
discovery and present evidence and argument to the arbitrator. During that
period, the arbitrator shall be available to receive and consider all such
evidence as is relevant and, within reasonable limits due to the restricted time
period, to hear as much of such argument as possible, giving a fair allocation
of time to each party to the arbitration. The arbitrator shall not consider any
evidence or argument not presented during such period and shall not extend such
period except by the written consent of both parties. At the conclusion of such
period, the arbitrator shall have twenty (20) calendar days to reach a
determination.
(d) The arbitrator shall have the right only to interpret and apply
the terms of the Agreement and may not change any such terms, deprive any party
thereto of any right or remedy expressly provided thereunder, or provide any
right or remedy that has been excluded thereunder. The determination of the
arbitrator shall be binding upon the parties. The arbitrator shall given written
notice to the parties stating the determination and the findings of fact and
conclusions of law, and shall furnish to each party a signed copy thereof within
ten (10) calendar days from the date of such determination. This determination
shall be final and conclusive as to matters submitted to arbitration, and may be
enforced in any court of competent jurisdiction.
(e) Costs. The costs, excluding attorneys' fees, of any dispute
resolution under this paragraph shall be paid by the non-prevailing party,
unless the arbitrator, as appropriate, shall determine for good cause on a
case-by-case basis that costs should be allocated differently. If the arbitrator
or a court enforcing the arbitrator's decision determines that a party has acted
unreasonably, the arbitrator may award reasonable attorneys' fees to the
prevailing party.
10. Binding Effect/Assignment. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors,
personal representatives, estates, successors (including, without limitation, by
way of merger) and assigns. Notwithstanding the provisions of the immediately
preceding sentence, the Employee acknowledges that his services are unique and
personal, and accordingly, the Employee may not assign his rights or delegate
his duties or obligations under the Agreement.
11. Entire Employment Agreement. This Employment Agreement together with
the Schedules and Exhibits hereto sets forth the entire understanding of the
parties hereto with
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respect to the subject matter hereof and supersedes all prior agreements,
understandings or representations, written or oral, between them as to such
subject matter. This Employment Agreement may not be amended, nor may any
provision hereof be modified or waived, except by an instrument in writing duly
signed by the party to be charged.
12. Severability. If any provision of this Agreement, or any application
thereof to any circumstances, is invalid, in whole or in part, such provision or
application shall to that extent be severable and shall not affect other
provisions or applications of this Agreement.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Pennsylvania, without
reference to the principles of conflict of laws.
14. Modifications and Waivers. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing and executed by
the parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions at the time
or at any prior or subsequent time.
15. Headings. The headings contained herein are solely for the purposes of
reference, and are not part of this Agreement and shall not in any way affect
the meaning or interpretation of this Agreement.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by authority of its Board of Directors, and the Employee has hereunto set his
hand, as of the day and year first written above.
Valley National Gases, Inc.
WITNESS:
/s/ Xxxx X. Xxxxxxxx
---------------------
By: /s/ W. A. Xxxxxxxxxx
----------------------------
Its: Chief Executive Officer
WITNESS:
/s/ Xxxxx X. Xxxx
--------------------
/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxx
-------------------- ---------------------
Xxxxxx X. Xxxxxx
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Schedule 3.(b)
Incentive
(TO BE PROVIDED)
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Exhibit 3.(c)(i)
VALLEY NATIONAL GASES INCORPORATED
STOCK OPTION AGREEMENT
UNDER
1997 STOCK OPTION PLAN, AS AMENDED
This Stock Option Agreement, effective as of the 1st day of June, 2003,
(the "Agreement"), under the Valley National Gases Incorporated (the "Company")
1997 Stock Option Plan, as amended (the "Plan") is entered into by and between
the Company and Xxxxxx X. Xxxxxx (hereinafter referred to as "Optionee").
WHEREAS, the Board of Directors of the Company has adopted and approved
the Plan pursuant to which options for shares of the Common Stock, $.001 par
value per share, of the Company (the "Common Stock") may be granted to key
employees, officers and directors of the Company and its subsidiaries; and
WHEREAS, Optionee is now an officer or other key employee of the Company
or a subsidiary of the Company; and
WHEREAS, the Company desires to grant to Optionee the option to purchase
certain shares of its Common Stock under the terms of the Plan.
NOW, THEREFORE, in consideration of the mutual agreements set forth below
and referenced herein, the parties agree as follows:
1. Grant Subject to Plan. This option is granted under and is expressly
subject to, all the terms and provisions of the Plan, which terms are
incorporated herein by reference. The Committee referred to in Paragraph 4 of
the Plan ("Committee") has been appointed by the Board of Directors of the
Company, and designated by it, as the Committee to make grants of options.
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2. Grant and Terms of Option. The Company grants to Optionee, effective as
of the date hereof ("Date of Grant"), the option to purchase all or any part of
30,000 SHARES of Common Stock, for a period of ten years from the Date of Grant,
at the purchase price of EIGHT DOLLARS ($8.00) PER SHARE; provided, however, the
right to exercise such option shall be, and is hereby, restricted so that no
shares may be purchased until after the third anniversary of the Date of Grant,
so that upon the expiration of the third year from the Date of Grant (the 15th
day of October, 2005) and thereafter during the term hereof, Optionee will have
become entitled to purchase the entire number of shares to which this option
relates, subject however to the express limitations the Plan including but not
limited to Paragraphs 7, 8, 9 and 10. Notwithstanding the foregoing, in the
event of a Change of Control (as hereinafter defined) Optionee may purchase 100%
of the total number of shares to which this option relates so long as such
Change of Control occurs at least six months after the Date of Grant. In no
event may this option or any part thereof be exercised after the expiration of
ten years from the Date of Grant. The purchase price of the shares subject to
the option may be paid for (i) in cash, (ii) in the discretion of the Committee,
by tender of shares of Common Stock already owned by Optionee, or (iii) in the
discretion of the Committee, by a combination of methods of payment specified in
clauses (i) and (ii), all in accordance with Paragraphs 6 and 8 of the Plan. No
shares of Common Stock may be tendered in exercise of this option if such shares
were acquired by Optionee through the exercise of an Incentive Stock Option,
unless (i) such shares have been held by Optionee for at least one year, and
(ii) at least two years have elapsed since such Incentive Stock Option was
granted.
For the purposes of this Agreement, a Change of Control means:
a. The purchase or other acquisition (other than from the
Company) by any person, entity or group of persons, within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (excluding, for this purpose, the Company or its
subsidiaries, or any employee benefit plan of the Company or its
subsidiaries, or Xxxx X. Xxxx or any entities controlled by him), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either the then-outstanding shares of
common stock of the Company or the combined voting power of the Company's
then-outstanding voting securities entitled to vote generally in the
election of directors; or
b. Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Board" and, as of the date hereof,
the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any person who becomes a director
subsequent to the date hereof whose election, or nomination for election
by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than
an individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of
directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be, for purposes
of this section, considered as though such person were a member of the
Incumbent Board; or
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c. Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case with respect to
which persons who were the stockholders of the Company immediately prior
to such reorganization, merger or consolidation do not, immediately
thereafter, own more than 50% of, respectively, the common stock and the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated corporation's then
outstanding voting securities, or of a liquidation or dissolution of the
Company or of the sale of all or substantially all of the assets of the
Company.
3. Anti-Dilution Provisions. In the event that, during the term of this
Agreement, there is any change in the number of shares of outstanding Common
Stock of the Company by reason of stock dividends, recapitalizations, mergers,
consolidations, split-ups, combinations or exchanges of shares and the like, the
number of shares covered by this option agreement and the price thereof shall be
adjusted, to the same proportionate number of shares and price as in this
original agreement.
4. Investment Purpose. Optionee represents that, in the event of the
exercise by him of the option hereby granted, or any part thereof, he intends to
purchase the shares acquired on such exercise for investment and not with a view
to resale or other distribution; except that the Company, at its election, may
waive or release this condition in the event the shares acquired on exercise of
the option are registered under the Securities Act of 1933, or upon the
happening of any other contingency which the Company shall determine warrants
the waiver or release of this condition. Optionee agrees that the certificates
evidencing the shares acquired by him on exercise of all or any part of this
option, may bear a restrictive legend, if appropriate, indicating that the
shares have not been registered under said Act and are subject to restrictions
on the transfer thereof, which legend may be in the following form (or such
other form as the Company shall determine to be proper), to-wit:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, but have been issued or
transferred to the registered owner pursuant to the exemption
afforded by Section 4(2) of said Act. No transfer or assignment of
these shares by the registered owner shall be valid or effective,
and the issuer of these shares shall not be required to give any
effect to any transfer or attempted transfer of these shares,
including without limitation, a transfer by operation of law, unless
(a) the issuer shall have received an opinion of its counsel that
the shares may be transferred without requirement of registration
under said Act, or (b) there shall have been delivered to the issuer
a 'no-action' letter from the staff of the Securities and Exchange
Commission, or (c) the shares are registered under said Act."
5. Non-Transferability. Neither the option hereby granted nor any rights
thereunder or under this Agreement may be assigned, transferred or in any manner
encumbered except by will or the laws of descent and distribution, and any
attempted assignment, transfer, mortgage, pledge or encumbrance except as herein
authorized, shall be void and of no effect. The option may be exercised during
Optionee's lifetime only by him.
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6. Termination of Employment. In the event of the termination of
employment of Optionee other than by death, disability or retirement, the option
granted may be exercised at the times and to the extent provided in Section 9 of
the Plan; provided, however, that if Optionee voluntarily terminates his
affiliation with the Company or his Employment with the Company's affiliate
Valley National Gases, Inc., a West Virginia corporation, or any successor or
assign of either of them, the grant of option right pursuant to and under this
Agreement shall lapse, become void and be of no further legal effect.
7. Death, Disability or Retirement of Optionee. In the event of the death,
disability or retirement of Optionee during the term of this Agreement and while
Optionee is employed by the Company (or a subsidiary), the option granted may be
exercised at the times and to the extent provided in Section 9 of the Plan
8. Shares Issued on Exercise of Option. It is the intention of the Company
that on any exercise of this option it will transfer to Optionee shares of its
authorized but unissued stock or transfer Treasury shares, or utilize any
combination of Treasury shares and authorized but unissued shares, to satisfy
its obligations to deliver shares on any exercise hereof.
9. Committee Administration. This option has been granted pursuant to a
determination made by the Committee, and such Committee or any successor or
substitute committee authorized by the Board or the Board, subject to the
express terms of this option, shall have plenary authority to interpret any
provision of this option and to make any determinations necessary or advisable
for the administration of this option and the exercise of the rights herein
granted, and may waive or amend any provisions hereof in any manner not
adversely affecting the rights granted to Optionee by the express terms hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
VALLEY NATIONAL GASES INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Its: Chief Executive Officer
OPTIONEE
/s/ Xxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxx
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Schedule 3.(e)(i)
Benefits Summary
(TO BE PROVIDED)
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