EXHIBIT 10.36
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of June, 2003 ("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, 2003. 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 Valley National Gases Incorporated, a Pennsylvania
corporation ("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.
(c) Stock Options.
(i) The Employee qualifies for Thirty Thousand
(30,000) shares of stock options of VLG which will vest in three (3) years and
carry a strike price equal to Eight Dollars ($8.00) per share, in accordance
with the Stock Option Agreement attached hereto as Exhibit 3.(c)(i).
(ii) 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.
(d) 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 twenty (20) 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.
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(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 Vice
Chairman or in his absence the 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 Twenty Thousand Seven Hundred Thirty-three Dollars
($20,733.00), grossed up to accommodate taxes, to cover "out of pocket" expenses
associated with relocation to the Washington, Pennsylvania area. The Company
will also pay Employee's temporary living expenses for up to twelve months,
which includes, housing One Thousand Five Hundred Dollars ($1,500.00) per month,
automobile allowance Four Hundred Fifty Dollars ($450.00) per month and
telephone and utility expenses, as incurred. The Employee will also be eligible
for permanent transfer assistance in accordance with the Company's relocation
policy in effect at the time, if elected by the Employee at any time within the
duration of this agreement.
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
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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
(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.
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(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.
(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 of the Company.
6. Employee Covenants.
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(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 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")
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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 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
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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:
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
00000 Xxxx Xxxxxx Xxxxx Xx.
Xxxxxxxxxx, XX 00000-0000
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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 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.
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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.
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
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year first written above.
Valley National Gases, Inc.
WITNESS:
/s/ Xxxxxxx Xxxxxx-Xxxxxxx
-------------------------------
/s/ Xxxxxxxx X. Xxxxxxxx By: /s/ W. A. Xxxxxxxxxx
------------------------------- --------------------------
Its: Chief Executive Officer
WITNESS:
/s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------
/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
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
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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
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
14
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.
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
15
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/ W. A. 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)
17
