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Exhibit 10.11
AGREEMENT
This Agreement, made as of the 1st day of July, 2001 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, 2001, 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 $4,500 per
month by cash payment [to be paid, (1) for the first six months $3,000 per
month and a lump sum payment of $9,000 paid between January 1, 2002 and
January 7, 2002 and (2) for the last six months $4,500 per month.] If
however, Xxxxxxxxxx'x time in any single calendar month exceeds 75%, then
the $4,500 per month management service fee will be prorated upward based
upon the actual time spent on behalf of Valley but in no case exceed $6,390
per month. Also, if Xxxxxxxxxx'x time in any single calendar month is less
than 60%, then the $4,352 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 $3,730 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 National Gases, Inc. will provide Xxxxxxxxxx with a bonus
payment based upon the following calculation:
Payment = 80(3183(S) + 5408)/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").
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Percent of Strategic Value is determined as follows:
(Actual Payment/Strategic Value) 100
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 eighty six dollars and fifty cents ($86.50) per hour as
such support service costs are incurred during the term of is
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.
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14. Renewal. This Agreement may be renewed for one year periods upon written
acknowledgment by both parties 30 days prior to expiration.
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
May, 2001.
VALLEY NATIONAL GASES, INC.
By /s/ Xxxxxxxx X. Xxxxx
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Its President & CEO
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/s/ Xxxxxxx X. Xxxxxxxxxx
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XXXXXXX X. XXXXXXXXXX
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