EMPLOYMENT AGREEMENT (Corrected and Restated)
Exhibit 10.2
EMPLOYMENT AGREEMENT
(Corrected and Restated)
(Corrected and Restated)
AGREEMENT made as of this 1st day of February, 2006 (“Agreement”) by and between
Valley National Gases, Inc. (“Company”), a West Virginia corporation and Xxxxxx X. Xxxxxx
(“Employee”).
WHEREAS, Company and Employee entered into an Employment Agreement (otherwise defined therein
as “Agreement”) as of the 1st day of February, 2006; and
WHEREAS, due to the clerical error the affect of termination set forth in Sections 6 (g) and 6
(h) were misstated; and
WHEREAS, Company and Employee enter into this corrective Agreement designated as “Employment
Agreement (Corrected and Restated)”, as of the original date of the 1st day of February,
2006 to correct the errors and misstatements contained therein.
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], 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 February,
2006. 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.
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(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 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 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);
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(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
(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 5, 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,
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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.
(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 Employee the compensation provided for in Section 3. (a) when due and owing for the
duration of the Term, and as well 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 Section 5. (g) hereinabove or 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.
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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 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
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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.
(ii) In the event (A) the Company terminates the Employee’s employment with the Company
pursuant to Section 5.(a)(iii), (B), Employee’s employment with the Company is terminated pursuant
to Section 5.(a)(i) or (C) Employee’s employment with the Company is terminated by agreement
providing for payment for this Non-competition covenant of Employer and Employee pursuant to
Section 5.(a)(v) and so long as Employee is not in continuing default under or in breach of Section
5., the Company shall additionally pay Employee the sum of One Hundred Fifty Thousand Dollars
($150,000.00) payable in twelve (12) consecutive monthly installments of Twelve Thousand Five
Hundred Dollars ($12,500.00), commencing one (1) month after the Date of Termination and
terminating twelve (12) months after Date of Termination. In the event Employee’s employment is
terminated because of his death pursuant to Section 5.(a)(i) or if he dies after termination of
employment pursuant to Section 5.(a)(i), 5.(a)(iii) or 5.(a)(v), if applicable, Employer shall
nevertheless make payment of the balance of unpaid compensation hereunder when otherwise due as
provided for hereunder to his widow, and if he has no widow, then to his estate, heirs or assigns
or as otherwise directed by his fiduciary representative.
(iii) In the event, the Employee’s employment with the Company is terminated for any reason
other than pursuant to Section 5.(a)(i), Section 5.(a)(iii), Section 5.(a)(v), if applicable,
Employee shall not be entitled to any additional payment for the Non-competition Covenants under
this Section 5.(c), and all Employee Covenants under this Section 5.(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
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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 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 unenfroceability 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:
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| 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 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
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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
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.
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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: |
||||||||
| By: | /s/ W.A. Xxxxxxxxxx | |||||||
| Its: | Chief Executive Officer | |||||||
WITNESS: |
||||||||
/s/ Xxxxx X. Xxxx
|
||||||||
| /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
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.
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
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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
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.
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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.
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.
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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: | ||||
| Name: | Xxxxxxx X. Xxxxxxxxxx | |||
| Its: | Chief Executive Officer | |||
| OPTIONEE | ||||
| Name: | Xxxxxx X. Xxxxxx | |||
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Schedule 3.(e)(i)
Benefits Summary
(TO BE PROVIDED)
17
