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AGREEMENT
This Agreement, made as of the 1st day of July, 1999 between Valley
National Gases, Inc., a Corporation, ("VALLEY") and Xxxxxxx X. Xxxxxxxxxx
("XXXXXXXXXX").
WHEREAS, Xxxxxxxxxx, individually and by and through his consulting
corporation ADE Vantage, Inc. ("CORPORATION") have an arrangement with Valley
National Gases, Inc., which expires June 30, 1999, for the expansion of Valley's
industrial gas and welding supply business, through acquisition and expansion of
industrial gas and welding supply distributors ("ACQUISITION PROGRAM"); and,
WHEREAS, Valley and Xxxxxxxxxx desire to enter into this Agreement
setting forth Xxxxxxxxxx'x continuing relationship with Valley in the execution
of the Acquisition Program including compensation therefore.
WITNESSETH in consideration the mutual promises hereinafter contained
Valley and Xxxxxxxxxx agree as follows:
1. Duties. Xxxxxxxxxx will identify, investigate and develop industrial
gas and welding supply business distributors as prospective acquisition
candidates. Xxxxxxxxxx together with Valley will qualify all potential
distributors for acquisition and jointly target distributors for acquisition
solicitation ("TARGET DISTRIBUTORS"). Xxxxxxxxxx will assist Valley in the
solicitation, preparation of offering memoranda, contract negotiation, due
diligence and/or any other matters necessary to assist Valley to consummate
Target Distributor acquisitions in accordance with the Acquisition Program.
Xxxxxxxxxx will also provide general management consulting services as may be
requested by Valley Management from time to time. Compensation for such services
will be provided as part of the management service fee covered in Paragraph 10.
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2. Term. The term of this Agreement shall be one (1) year from the
execution and delivery of this Agreement.
3. Independent Contractor Status. It is understood that Xxxxxxxxxx is an
independent contractor, representing Valley pursuant to this Agreement, and he
shall not otherwise hold himself out to the public as employee, or partner of
Valley. As such Xxxxxxxxxx is responsible, where necessary, to secure at his
sole cost, worker's compensation, insurance, disability, benefits and any other
insurance as may be requires by law. Valley will not provide, nor will it be
responsible to pay for benefits for Xxxxxxxxxx. Any benefits, if provided by
Indelicato for himself and/or his staff, including by not limited to, health
insurance, paid vacation, paid holidays, sick leave or disability insurance
coverage of whatever nature, shall be secured and paid for by Xxxxxxxxxx.
4. Tax Duties and Responsibilities. Xxxxxxxxxx is responsible for the
payment of all required payroll taxes, whether federal, state or local in
nature, including, but not limited to, income taxes, social security taxes,
federal unemployment compensation taxes, and any other fees, charges, licenses
or other payments required by law.
5. Employee's of Independent Contractor. Xxxxxxxxxx may employ as many
employees as he requires, such matter resting entirely with his own discretion.
Valley need not be advised to the employment of such individuals. Such persons
are employed of Xxxxxxxxxx, and he shall be deemed employer of such persons. As
such, Xxxxxxxxxx shall be responsible for compensation as well as all necessary
insurance and payroll deductions for such persons, including but not limited to,
federal, state and local income taxes, social security taxes, unemployment
compensation taxes, workers compensation coverage, etc.
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6. ADE Vantage, Inc. Xxxxxxxxxx may at his sole cost and expense (except
for reimbursement support service costs as provided in Paragraph 11
hereinafter), in his execution of the Acquisition Program engage Corporation,
ADE Vantage, Inc., his consulting firm, as his agent and contractor to provide
support services and any other services executed pursuant to the Acquisition
Program or otherwise required of Xxxxxxxxxx hereunder. At all times, Corporation
shall solely be the contractual agent of Xxxxxxxxxx and not Valley.
7. Indemnification. Xxxxxxxxxx shall not be liable for the acts,
negligence or defaults of any employee, agent or representative of Valley, nor
shall he be liable for anything done or not done in good faith, including errors
of judgment, acts done or committed on the advise of counsel, or mistakes of
fact or law. Xxxxxxxxxx shall, without prejudice to any other rights which he
may have, be indemnified by Valley against all liability and expense reasonably
incurred by him in connection with any claim, action, suit or proceeding of
whatever nature in which he may be involved as a party or otherwise by reason of
having entered into this Agreement and the execution of the duties assumed
hereunder relative to his execution of the Acquisition Program. Indemnification
hereunder, shall not, however, extend to any liability, loss, damage claim or
expense to the extent occasioned by or arising out of Xxxxxxxxxx'x default
hereunder or any willful misconduct or grossly negligent act by Xxxxxxxxxx, his
agents and employees in his capacity as an Independent Contractor in the
execution of his duties hereunder. Further, Valley agrees that ADE Vantage, Inc.
shall not be liable and shall be held harmless for any damage or injury caused
by its negligent mistakes, errors and omissions in and about providing financial
services under this Agreement.
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8. Business of Independent Contractor. During the term of this Agreement,
Xxxxxxxxxx may engage in any other business which does not conflict with his
duties hereunder, conflict with Valley's business, or otherwise impair the
successful execution and implementation of the Acquisition Program.
Notwithstanding, Valley and Xxxxxxxxxx agree that approximately sixty seven
percent (67%) of Xxxxxxxxxx'x time will be spent on the Acquisition Program.
9. Supervision. Xxxxxxxxxx shall not be subject to the provisions of any
personnel handbook or the rules and regulations of applicable employees to
Valley since Xxxxxxxxxx shall fulfill his responsibilities independent of any
without supervision or control by Valley.
10. Compensation. Xxxxxxxxxx'x compensation hereunder shall be set forth as
follows:
x. Xxxxxxxxxx will be paid a management service fee of $4,225 per month
by cash payment to be paid, (1) for the first six months $1,500 per
month and a lump sum payment of $16,350 paid between January 1, 2000
and January 7, 2000 and (2) for the last six months $4,225 per month.
If however, Xxxxxxxxxx'x time in any single calendar month exceeds 75%,
then the $4,225 per month management service fee will be prorated
upward based upon the actual time spent on behalf of Valley but in no
case exceed $6,000 per month. Also, if Xxxxxxxxxx'x time in any single
calendar month is less than 60%, then the $4,100 per month management
service fee will be prorated downward based upon the actual time spent
on behalf of Valley, but in no case will be less than $3,500 per month.
Adjustments to the monthly management service fee will be made
quarterly in arrears and invoiced or credit to Valley.
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b. For each acquisition which closes during the term of this Agreement
Valley will provide Xxxxxxxxxx with a bonus payment based upon the following
calculation:
Payment = 80(3090(S) + 5250)/V
Where P = Payment in Dollars for each closed transaction
S = Size of transaction (annual sales) in $ millions
V = Percent of Strategic Value, where if V is between values of
75 and 85 then for the purpose of this calculation V will be
set at 80. If V is at a value above or below the range of 75
to 85, then the actual value of V will be used.
Strategic Value will be determined by the method consistent with past
practices used by Xxxxxxxxxx and the Company as presented to Valley.
The methodology involves ten year financial projections and a terminal
value using agreed upon assumptions and cost savings recognized by
Valley management as being achievable over a reasonable period of time.
Calculations will be on a debt free basis and will be adjusted for
assets held outside by related parties and will be further adjusted for
all non recurring costs or income items which would not exist under
Valley ownership.
Strategic Value will be based upon information available immediately
after completion of due diligence as documented by letter to X.X.
Xxxxx, President, which is also used to communicate transaction
specific information to Bank One (the "Letter").
Percent of Strategic Value is determined as follows:
(Actual Payment/Strategic Value) 100
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The Actual Payment made for the business is on a net present value
basis including all interest bearing debt, as historically documented
in the Letter.
c. Valley shall reimburse Xxxxxxxxxx by cash payment for all out of
pocket expenses reasonably incurred by him, while rendering services in
support of the Acquisition Program, excluding office rent but including
cellular phone monthly charges and charges for phone service which is
exclusively for Valley's benefit.
11. Reimbursable Support Service.
a. Financial. Xxxxxxxxxx shall be entitled for financial support
services for financial projections, evaluations as well as other
necessary and required analyses prepared for Xxxxxxxxxx by Corporation
or by independent professional agents obtained for this specific
purpose, at the rate of seventy seven ($81.25) per hour as such support
service costs are incurred during the term of this Agreement. Valley
and Xxxxxxxxxx agree that they intend to use ADE Vantage, Inc. for
financial services.
b. Approval of Valley. All such financial support services shall be
incurred on a case by case basis, only upon the notice to and agreement
of Valley as to the proposed nature and extent thereof.
12. Assignment. Xxxxxxxxxx shall not sell, assign or transfer this
Agreement, however, he shall have the limited right to assign the Agreement to
the Corporation.
13. Governing Law. This Agreement shall be subject to and governed by the
laws of the State of West Virginia.
14. Renewal. This Agreement may be renewed for one year periods upon
written acknowledgment by both parties 30 days prior to expiration.
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15. Termination of Agreement. This Agreement may be terminated at will by
either party, at any time, by at least one hundred and eighty (180) days prior
notice to the other party as provided hereinunder in Paragraph "15. Notices." In
the event Xxxxxxxxxx dies, then in such event his estate would be entitled to
all payments due under this Agreement for acquisitions not yet closed, and the
same if Valley terminated the Agreement other than for just cause. Termination
of this Agreement will in no event cause forfeiture of Xxxxxxxxxx'x right to
payment hereunder, which shall survive any and all such termination.
16. Notices. All notices required to be given hereunder shall be in writing
and shall be sent by certified mail, postage prepaid, to Valley and/or to
Xxxxxxxxxx at the addresses indicated below, unless written notice of change of
address is provided to other party as the address indicated.
To Valley: Valley National Gases, Inc., 00-00xx Xxxxxx,
Xxxxxxxx, XX 00000; Attention: Xxxxxxxx X. Xxxxx
To Xxxxxxxxxx: Xxxxxxx X. Xxxxxxxxxx, 00 Xxxx Xxxxxx, Xxxxx
000, Xxx Xxxxxx, Xxxxxxxxxxx 00000
17. Waiver. The waiver by either party of a breach of any provision in the
Agreement shall not operate or be construed to operate as a waiver of any
subsequent breach.
18. Modification. No change, modification or waiver of any term of this
Agreement shall be valid unless it is in writing and signed by both parties.
19. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior Agreements or understandings
between Valley and
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Xxxxxxxxxx, with the exception of the letter agreements pertaining to deferred
compensation on future acquisitions.
20. Captions. The captions are inserted for convenience only and shall not
be considered when interpreting any provision or terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this day of
June, 1999.
VALLEY NATIONAL GASES, INC.
By /s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx, President
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Its
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XXXXXXX X. XXXXXXXXXX
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