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Exhibit 10.16
AGREEMENT
This Agreement, made as of the 1st day of July, 2000 between Valley
National Gases, Inc., a Corporation, ("VALLEY") and William A. Indelicato
("INDELICATO").
WHEREAS, Indelicato, individually and by and through his consulting
corporation ADE Vantage, Inc. ("CORPORATION") have an arrangement with Valley
National Gases, Inc., which expires June 30, 2000, 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 Indelicato desire to enter into this Agreement
setting forth Indelicato's continuing relationship with Valley in the execution
of the Acquisition Program including compensation therefore.
WITNESSETH in consideration the mutual promises hereinafter contained
Valley and Indelicato agree as follows:
1. Duties. Indelicato will identify, investigate and develop industrial gas and
welding supply business distributors as prospective acquisition candidates.
Indelicato together with Valley will qualify all potential distributors for
acquisition and jointly target distributors for acquisition solicitation
("TARGET DISTRIBUTORS"). Indelicato 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. Indelicato 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 Indelicato 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 Indelicato 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 Indelicato. 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 Indelicato.
4. Tax Duties and Responsibilities. Indelicato 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. Indelicato 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 Indelicato, and he shall be deemed employer of such persons. As
such, Indelicato 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. Indelicato 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 Indelicato hereunder. At all times, Corporation shall solely be the
contractual agent of Indelicato and not Valley.
7. Indemnification. Indelicato 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. Indelicato 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 Indelicato's default
hereunder or any willful misconduct or grossly negligent act by Indelicato, 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,
Indelicato 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 Indelicato agree that approximately sixty seven
percent (67%) of Indelicato's time will be spent on the Acquisition Program.
9. Supervision. Indelicato shall not be subject to the provisions of any
personnel handbook or the rules and regulations of applicable employees to
Valley since Indelicato shall fulfill his responsibilities independent of any
without supervision or control by Valley.
10. Compensation. Indelicato's compensation hereunder shall be set forth as
follows:
a. Indelicato will be paid a management service fee of $4,352 per month by
cash payment to be paid, (1) for the first six months $2,500 per month and a
lump sum payment of $11,120 paid between January 1, 2000 and January 7, 2000
and (2) for the last six months $4,352 per month. If however, Indelicato's
time in any single calendar month exceeds 75%, then the $4,352 per month
management service fee will be prorated upward based upon the actual time
spent on behalf of Valley but in no case exceed $6,180 per month. Also, if
Indelicato's 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
$3,605 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 Indelicato 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 Indelicato 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 L.E. Bandi,
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 Indelicato 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. Indelicato shall be entitled for financial support services
for financial projections, evaluations as well as other necessary and
required analyses prepared for Indelicato by Corporation or by independent
professional agents obtained for this specific purpose, at the rate of
eighty three dollars and sixty nine cents ($83.69) per hour as such support
service costs are incurred during the term of is Agreement. Valley and
Indelicato 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. Indelicato 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 Indelicato 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 Indelicato's 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 Indelicato
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., 67-43rd Street, Wheeling, WV
26003; Attention: Lawrence E. Bandi
To Indelicato: William A. Indelicato, 72 Park Street, Suite 105, New
Canaan, Connecticut 06840
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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Indelicato, with the exception of the letter agreements pertaining to deferred
compensation on future acquisitions.
20. Captions. The captions are inserted for convenience only and shall not be
considered when interpreting any provision or terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this day of
June, 2000.
VALLEY NATIONAL GASES, INC.
By /s/ Lawrence E. Bandi
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Its President & CEO
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/s/ William A. Indelicato
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WILLIAM A. INDELICATO
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