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Exhibit 10.16
AGREEMENT
This Agreement, made as of the 1st day of July, 1997 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, 1997, 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.
2. Term. The term of this Agreement shall be one (1) year from the execution
and delivery of this Agreement.
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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
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any damage or injury caused by its negligent mistakes, errors and omissions
in and about providing financial services under this Agreement.
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 $4,000 per month by
cash payment, paid monthly. The management service fee shall be reviewed
after six months to evaluate whether adjustment should be made to the fee
for actual management services provided.
b. For each acquisition which closes during the term of this Agreement, *
with the exception of Doansco and Redball, Valley will provide Xxxxxxxxxx
with a bonus payment based upon the following calculation:
Payment = 75(2950(S) + 5000)/V
Where P = Payment in Dollars for each closed transaction
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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 75. If V is at a value above or below the range of 75 to 85,
then the actual value of V will be used.
Strategic Value will be determined by the method consistent with past
practices used by Xxxxxxxxxx and the Company as presented to Valley. The
methodology involves ten year financial projections and a terminal value
using agreed upon assumptions and cost savings recognized by Valley
management as being achievable over a reasonable period of time.
Calculations will be on a debt free basis and will be adjusted for assets
held outside by related parties and will be further adjusted for all non
recurring costs or income items which would not exist under Valley
ownership.
Strategic Value will be based upon information available immediately
after completion of due diligence as documented by letter to X.X. Xxxxx,
President, which is also used to communicate transaction specific
information to Bank One (the "Letter").
Percent of Strategic Value is determined as follows:
(Actual Payment/Strategic Value) 100
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.
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Doansco will be treated as having closed prior to June 30, 1997 and as
such will be considered based upon the Agreement between Valley and
Xxxxxxxxxx dated March 16, 1994, which was cancelled effective June 30,
1997. Valley and Xxxxxxxxxx will negotiate in good faith to arrive at a
mutually acceptable bonus compensation for Redball, based upon previous
payments to Xxxxxxxxxx and the value of the acquisition to Valley
shareholders if an acquisition of, or joint venture with, Redball finally
materializes.
* If a letter of intent has been executed prior to the expiration of this
Agreement, and the transaction ultimately closes, the transaction will be
treated as if it had closed prior to the expiration of this agreement and
a bonus payment will be paid to Xxxxxxxxxx after closing and after the
appropriate documentation has been provided by Xxxxxxxxxx to Valley.
c. Valley shall reimburse Xxxxxxxxxx by cash payment for all out of
pocket expenses reasonably incurred by him, while rendering services in
support of the Acquisition Program, excluding office rent but including
cellular phone monthly charges and charges for phone service which is
exclusively for Valley's benefit.
11. Reimbursable Support Service.
a. Financial. Xxxxxxxxxx shall be entitled for financial support services
for financial projections, evaluations as well as other necessary and
required analyses prepared for Xxxxxxxxxx by Corporation or by
independent professional agents obtained for this specific purpose, at
the rate of seventy seven ($77.00) per hour as such support service costs
are incurred during the term of this Agreement. Valley
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for Xxxxxxxxxx agree that they intend to use ADE Vantage, Inc. for financial
services.
b. Approval of Valley.All such financial support services shall be incurred
on a case by case basis, only upon the notice to and agreement of Valley as
to the proposed nature and extent thereof.
12. Assignment. Xxxxxxxxxx shall not sell, assign or transfer this Agreement,
however, he shall have the limited right to assign the Agreement to the
Corporation.
13. Governing Law. This Agreement shall be subject to and governed by the laws
of the State of West Virginia.
14. Renewal. This Agreement may be renewed for one year periods upon written
acknowledgment by both parties 30 days prior to expiration.
15. Termination of Agreement. This Agreement may be terminated at will by
either party, at any time, by at least ninety (90) 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.
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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.
20. Entire Agreement. This Agreement constitutes the entire Agreement between
the parties and supersedes all prior Agreements or understandings between
Valley and Xxxxxxxxxx, with the exception of the letter agreement dated May 16,
1997, which provides for Xxxxxxxxxx'x payment covering the period July 1, 1996
through June 30, 1997.
19. 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 first day of July, 1997.
VALLEY NATIONAL GASES, INC.
By /s/ Xxxxxxxx X.Xxxxx
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Its
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President
/s/ XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxxxxxx
