Document:

EX-10.2

 

 

Exhibit 10.2

REVOLVING TERM NOTE

September 28, 2006

	 	 	 
	$5,000,000.00

	 	Cleveland, Ohio

          For value received, the undersigned John D. Oil & Gas Company, a Maryland corporation, with an
address of 8500 Station Street, Suite 345, Mentor, Ohio 44060 and Richard M. Osborne, an
individual, with an address of 8500 Station Street, Suite 113, Mentor, Ohio 44060 (collectively,
the “Borrower”), jointly and severally, promise to pay to the order of Charter One Bank, N.A., a
national banking association with an address of 1215 Superior Avenue, Cleveland, Ohio 44114
(together with its successors and assigns, the “Bank”), the principal amount of Five Million
Dollars and Zero Cents ($5,000,000.00), or, if less, such amount as may be the aggregate unpaid
principal amount of all loans or advances made by the Bank to the Borrower pursuant hereto, on or
before September 28, 2007 (the “Maturity Date”), together with interest from the date hereof on
the unpaid principal balance from time to time outstanding until paid in full. The aggregate
principal balance outstanding shall bear interest thereon at a per annum rate equal to One and
Three-Quarters Percent (1.75%) above the LIBOR Rate (as hereinafter defined) for any Interest
Period (as hereinafter defined). All accrued and unpaid interest shall be payable monthly in
arrears on the ______ day of each month following the end of an Interest Period.

          Interest Period means initially, the period commencing on the date of this Note (the “Start Date”)
and ending on the numerically corresponding date one month later, and thereafter each one month
period ending on the day of such month that numerically corresponds to the Start Date. If an
Interest Period is to end in a month for which there is no day which numerically corresponds to
the Start Date, the Interest Period will end on the last day of such month.

          LIBOR Rate means relative to any Interest Period, the offered rate for delivery in two London
Banking Days (as hereinafter defined) of deposits of U.S. Dollars which the British Bankers’
Association fixes as its LIBOR rate as of 11:00 a.m. London time on the day on which the Interest
Period commences, and for a period approximately equal to such Interest Period. If the first day
of any Interest Period is not a day which is both a (i) Business Day (as hereinafter defined), and
(ii) a day on which US dollar deposits are transacted in the London interbank market (a “London
Banking Day”), the LIBOR Rate shall be determined in reference to the next preceding day which is
both a Business Day and a London Banking Day. If for any reason the LIBOR Rate is unavailable
and/or the Bank is unable to determine the LIBOR
Rate for any Interest Period, the LIBOR Rate shall be deemed to be equal to the Bank’s Prime rate.
“Business Day” means any day which is neither a Saturday of Sunday nor a legal holiday on which
commercial banks are authorized or required to be closed.

          Principal and interest shall be payable at the Bank’s main office or at such other place as
the Bank may designate in writing in immediately available funds in lawful money of the United
States of America without set-off, deduction or counterclaim. Interest shall be calculated on the
basis of actual number of days elapsed in a 360-day year.

          This Note is a revolving note and, subject to the foregoing and in accordance with the provisions
hereof and of any and all other agreements between the Borrower and the Bank related hereto, the
Borrower may, at its option, borrow, pay, prepay and reborrow hereunder at any time prior to the
Maturity Date or such earlier date as the obligations of the Borrower to the Bank under this Note,
and any other agreements between the Bank and the Borrower related hereto, shall become due and
payable, or the obligation of the Bank to extend financial accommodations to the Borrower shall
terminate; provided, however, that in any event the principal balance outstanding hereunder shall
at no time exceed the face amount of this Note. This Note shall continue in full force and effect
until all obligations and liabilities evidenced by this Note are paid in full and the Bank is no
longer obligated to extend financial accommodations to the Borrower, even if, from time to time,
there are no amounts outstanding respecting
this Note.

 

 

          At the option of the Bank, this Note shall become immediately due and payable without notice or
demand upon the occurrence at any time of any of the following events of default (each, an “Event
of Default”): (1) default of any liability, obligation, covenant or undertaking of the Borrower,
any endorser hereof to the Bank, hereunder or otherwise, including, without limitation, failure to
pay in full and when due any installment of principal or interest or default of the Borrower, any
endorser hereof under any other loan document delivered by the Borrower, any endorser, or in
connection with the loan evidenced by this Note or any other agreement by the Borrower, any
endorser with the Bank; (2) default of any material liability, obligation or undertaking of the
Borrower, any endorser hereof to any other party; (3) if any statement, representation or warranty
heretofore, now or hereafter made by the Borrower, any endorser or any guarantor hereof in
connection with the loan evidenced by this Note or in any supporting financial statement of the
Borrower, any endorser hereof shall be determined by the Bank to have been false or misleading in
any material respect when made; (4) if the Borrower, any endorser hereof is a corporation, trust,
partnership or limited liability company, the liquidation, termination or dissolution of any such
organization, or the merger or consolidation of such organization into another entity, or its
ceasing to carry on actively its present business or the appointment of a receiver for its
property; (5) the death of the Borrower, any endorser hereof and, if the Borrower, any endorser or
any guarantor hereof is a partnership or limited liability company, the death of any partner or
member; (6) the institution by or against the Borrower, any endorser hereof of any proceedings
under the Bankruptcy Code 11 USC §101 et seq. or any other law in which the Borrower, any endorser
hereof is alleged to be insolvent or unable to pay its debts as they mature, or the making by the
Borrower, any endorser hereof of an assignment for the benefit of creditors or the granting by the
Borrower, any endorser hereof of a trust mortgage for the benefit of creditors; (7) the service
upon the Bank of a writ in which the Bank is named as trustee of the Borrower, any endorser hereof;
(8) a judgment or judgments for the payment of money shall be rendered against the Borrower, any
endorser hereof, and any such judgment shall remain unsatisfied and in effect for any period of
thirty (30) consecutive days without a stay of execution; (09) any levy, lien (including mechanics
lien) except as permitted under any of the other loan documents between the Bank and the Borrower,
seizure, attachment, execution or similar process shall be issued or levied on any of the property
of the Borrower, any endorser or any guarantor hereof; (10) the termination or revocation of any
guaranty hereof; or (11) the occurrence of such a change in the condition or affairs (financial or
otherwise) of the Borrower, any endorser hereof, or the occurrence of any other event or
circumstance, such that the Bank, in its sole discretion, deems that it is insecure or that the
prospects for timely or full payment or performance of any obligation of the Borrower, any endorser
hereof to the Bank has been or may be impaired.

          Any payments received by the Bank on account of this Note shall, at the Bank’s option, be applied
first, to accrued and unpaid interest; second, to the unpaid principal balance hereof; third to any
costs, expenses or charges then owed to the Bank by the Borrower; and the balance to escrows, if
any. Notwithstanding the
foregoing, any payments received after the occurrence and during the continuance of an Event of
Default shall be applied in such manner as the Bank may determine. The Borrower hereby authorizes
the Bank to charge any deposit account which the Borrower may maintain with the Bank for any
payment required hereunder without prior notice to the Borrower.

          If
pursuant to the terms of this Note, the Borrower is at any time obligated to pay interest on the
principal balance at a rate in excess of the maximum interest rate permitted by applicable law for
the loan evidenced by this Note, the applicable interest rate shall be immediately reduced to such
maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due hereunder.

          The Borrower represents to the Bank that the proceeds of this Note will not be used for personal,
family or household purposes or for the purpose of purchasing or carrying margin stock or margin
securities within the meaning of Regulations U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224. This Note is a “contract of indebtedness” pursuant to
§1301.21 of the Ohio Revised Code.

          The Borrower and each endorser hereof grant to the Bank a continuing lien on and security interest
in any and all deposits or other sums at any time credited by or due from the Bank or any Bank
Affiliate (as

2

 

hereinafter defined) to the Borrower and/or each endorser hereof and any cash, securities,
instruments or other property of the Borrower and each endorser hereof in the possession of the
Bank or any Bank Affiliate, whether for safekeeping or otherwise, or in transit to or from the Bank
or any Bank Affiliate (regardless of the reason the Bank or Bank Affiliate had received the same or
whether the Bank or Bank Affiliate has conditionally released the same) as security for the full
and punctual payment and performance of all of the liabilities and obligations of the Borrower
and/or any endorser hereof to the Bank or any Bank Affiliate and such deposits and other sums may
be applied or set off against such liabilities and obligations of the Borrower or any endorser
hereof to the Bank or any Bank Affiliate at any time, whether or not such are then due, whether or
not demand has been made and whether or not other collateral is then available to the Bank or any
Bank Affiliate.

          No delay or omission on the part of the Bank in exercising any right hereunder shall operate as a
waiver of such right or of any other right of the Bank, nor shall any delay, omission or waiver on
any one occasion be deemed a bar to or waiver of the same or any other right on any future
occasion. The Borrower and every endorser or guarantor of this Note, regardless of the time, order
or place of signing, waives presentment, demand, protest, notice of intent to accelerate, notice of
acceleration and all other notices of every kind in connection with the delivery, acceptance,
performance or enforcement of this Note and assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, and to the addition or release of any other
party or person primarily or secondarily liable and waives all recourse to suretyship. To the
maximum extent permitted by law, the Borrower and each endorser of this Note waive and terminate
any homestead rights and/or exemptions respecting any premises under the provisions of any
applicable homestead laws, including without limitation Section 2329.66 of the Ohio Revised Code.

          The Borrower and each endorser of this Note shall indemnify, defend and hold the Bank and the Bank
Affiliates and their directors, officers, employees, agents and attorneys (each an “Indemnitee”)
harmless against any claim brought or threatened against any Indemnitee by the Borrower, by any
endorser, or by any other person (as well as from attorneys’ reasonable fees and expenses in
connection therewith) on account of the Bank’s relationship with the Borrower or any endorser
hereof (each of which may be defended, compromised, settled or pursued by the Bank with counsel of
the Bank’s selection, but at the expense of the Borrower and any endorser), except for any claim
arising out of the gross negligence or willful misconduct of the Bank.

          The Borrower and each endorser of this Note agree to pay, upon demand, costs of collection of all
amounts under this Note including, without limitation, principal and interest, or in connection
with the enforcement
of, or realization on, any security for this Note, including, without limitation, to the extent
permitted by applicable law, reasonable attorneys’ fees and expenses. Upon the occurrence and
during the continuance of an Event of Default, interest shall accrue at a rate per annum equal to
the aggregate of 5.0% plus the rate provided for herein. If any payment due under this Note is
unpaid for 10 days or more, the Borrower shall pay, in addition to any other sums due under this
Note (and without limiting the Bank’s other remedies on account thereof), a late charge equal to
the greater of $35.00 or 5.0% of such unpaid amount. In addition the Borrower shall pay the Bank’s
customary fee if any payment made on account of this Note is dishonored.

          This Note shall be binding upon the Borrower and each endorser hereof and upon their respective
heirs, successors, assigns and legal representatives, and shall inure to the benefit of the Bank
and its successors, endorsees and assigns.

          The liabilities of the Borrower and any endorser of this Note are joint and several; provided,
however, the release by the Bank of the Borrower or any one or more endorsers shall not release any
other person obligated on account of this Note. Any and all present and future debts of the
Borrower to any endorser of this Note are subordinated to the full payment and performance of all
present and future debts and obligations of the Borrower to the Bank. Each reference in this Note
to the Borrower, any endorser, and, is to such person individually and also to all such persons
jointly. No person obligated on account of this Note may seek contribution from any other person
also obligated, unless and until all

3

 

liabilities, obligations and indebtedness to the Bank of the person from whom contribution is
sought have been irrevocably satisfied in full. The release or compromise by the Bank of any
collateral shall not release any person obligated on account of this Note.

          The Borrower and each endorser hereof each authorizes the Bank to complete this Note if delivered
incomplete in any respect. A photographic or other reproduction of this Note may be made by the
Bank, and any such reproduction shall be admissible in evidence with the same effect as the
original itself in any judicial or administrative proceeding, whether or not the original is in
existence.

          The Borrower will from time to time execute and deliver to the Bank such documents, and take or
cause to be taken, all such other further action, as the Bank may request in order to effect and
confirm or vest more securely in the Bank all rights contemplated by this Note or any other loan
documents related thereto (including, without limitation, to correct clerical errors) or to vest
more fully in or assure to the Bank the security interest in any collateral securing this Note or
to comply with applicable statute or law.

          This Note is delivered to the Bank at one of its offices in Ohio and shall be governed by the laws
of the State of Ohio.

          Any notices under or pursuant to this Note shall be deemed duly received and effective if delivered
in hand to any officer of agent of the Borrower or Bank, or if mailed by registered or certified
mail, return receipt requested, addressed to the Borrower or Bank at the address set forth in this
Note or as any party may from time to time designate by written notice to the other party.

          The term “Bank Affiliate” as used in this Note shall mean any “Affiliate” of the Bank or any lender
acting as a participant under any loan arrangement between the Bank
and the Borrower(s). The term
“Affiliate” shall mean with respect to any person, (a) any person which, directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under common control with,
such person, or (b) any person who is a director or officer (i) of such person, (ii) of any
subsidiary of such person, or (iii) any person described in clause (a) above. For purposes of this
definition, control of a person shall mean the power, direct or Indirect, (x) to vote 5% or more of
the Capital Stock having ordinary voting power for the election of directors (or comparable
equivalent) of such person, or (y) to direct or cause the direction of the management and policies
of such person whether by contract or otherwise. Control may be by ownership, contract, or
otherwise.

          The Borrower and each endorser of this Note each irrevocably submits to the nonexclusive
jurisdiction of any Federal or state court sitting in Ohio, over any suit, action or proceeding
arising out of or relating to this Note. Each of the Borrower and each endorser irrevocably waives,
to the fullest extent It may effectively do so under applicable law, any objection it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding brought in any
such court and any claim that the same has been brought in an inconvenient forum. Each of the
Borrower and each endorser hereby consents to any and all process which may be served in any such
suit, action or proceeding, (i) by mailing a copy thereof by registered and certified mail, postage
prepaid, return receipt requested, to the Borrower’s, endorser’s or guarantor’s address shown below
or as notified to the Bank and (ii) by serving the same upon the
Borrower(s), endorser(s) in any other manner otherwise permitted by law, and agrees that such
service shall in every respect be deemed effective service upon the Borrower or such endorser.

          THE BORROWER, EACH ENDORSER AND THE BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND
AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, (A) WAIVES ANY AND ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS NOTE, ANY OF THE OBLIGATIONS OF THE
BORROWER, EACH ENDORSER AND GUARANTOR TO THE BANK, AND ALL MATTERS CONTEMPLATED HEREBY AND
DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREES NOT TO SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT BE, OR HAS NOT BEEN, WAIVED. THE BORROWER, EACH
ENDORSER AND GUARANTOR AND THE BANK EACH CERTIFIES THAT NEITHER THE BANK

4

 

NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
BANK WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY
JURY.

Warrant of Attorney. Each of the undersigned authorizes any attorney at law to appear in
any Court of Record in the State of Ohio or in any other state or territory of the United States
after the above indebtedness becomes due, whether by acceleration or otherwise, to waive the
issuing and service of process, and to confess Judgment against any one or more of the undersigned
in favor of the Bank for the amount then appearing due together with costs of suit, and thereupon
to waive all error and all rights of appeal and stays of execution. No such judgment or judgments
against less than all of the undersigned shall be a bar to a subsequent judgment or Judgments
against any one or more of the undersigned against whom judgment has not been obtained hereon; this
being a joint and several warrant of attorney to confess judgment. The attorney at law authorized
hereby to appear for the undersigned may be an attorney at law representing the Bank, and the
undersigned hereby expressly waive any conflict of interest that may exist by virtue of such
representation. The undersigned also agree that the attorney acting for the undersigned as set
forth in this section may be compensated by the Bank for such services.

WARNING—BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY
ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A
COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR
ANY OTHER CAUSE.

	 	 	 	 	 
	 	John D. Oil & Gas Company

 	 
	 	By:  	
 	 
	 	 	Richard M. Osborne, CEO 	 
	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Greg Osborne, President 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	C. Jean Mihitsch, CFO
 	 

	 	 	 	 	 
	 	8500 Station Street, Suite 345

Mentor, Ohio

44060 	 

5

 

	 	 	 	 	 

WARNING—BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY
ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A
COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR
ANY OTHER CAUSE.

	 	 	 	 	 
	 	 	 
	 	  
 	 
	 	Richard M Osborne, individually
 	 
	 	8500 Station Street, Suite 113

Mentor, Ohio

44060 	 
	 

6

 

DISBURSEMENT AUTHORIZATION

	 	 	 	 	 	 	 
	DATE:

	 	September 28, 2006	 	 	 	 
	 
	 	 	 	 	 	 
	BORROWER:

	 	John D. Oil & Gas
Company

8500 Station Street, Suite 345

Mentor, Ohio
44060
	 	Bank:
	 	Charter One Bank, N.A. 

1215 Superior Avenue 

Cleveland, Ohio 

44114 
	 
	 	 	 	 	 	 
	BORROWER:

	 	Richard M. Osborne 

8500 Station Street, Suite 113

Mentor, Ohio 

44060	 	 	 	 
	 
	 	 	 	 	 	 
	LOAN:	 	$5,000,000.00
Revolving Line of Credit (the “Loan”)

The
undersigned hereby authorizes and directs the Bank, in its discretion pursuant to the terms of
the loan documents (the “Loan Documents”) between the Bank and the undersigned respecting the Loan,
to disburse $10,000.00 of the loan proceeds available respecting the Loan as set forth below.

	 	 	 	 	 	 	 	 	 
	Disbursement	 	 	 	 	 	Amount
	1. Origination Fee
	 	 	 	 	 	$	10,000.00	 
	2.
	 	 	 	 	 	$	 	 
	3.
	 	 	 	 	 	$	 	 
	4.
	 	 	 	 	 	$	 	 
	Total
	 	 	 	 	 	$	10,000.00	 

The undersigned represents and warrants to the Bank that there has been no material adverse change
in the undersigned’s financial condition since the date of the latest financial statements
delivered by the undersigned to the Bank. In addition, the undersigned affirms that the
representations and warranties contained in the Loan Documents are true and correct as of the date
hereof.

The Bank is not responsible for changes in payoff amounts caused by the actual date of funding. The
balance of the loan proceeds of $4,990,000.00 shall be held by the Bank pending further instruction
from the undersigned pursuant to the terms of the Loan Documents.

By your signature below, you agree to the terms and acknowledge receipt of a copy of this
Disbursement Authorization.

 

 

	 	 	 	 	 
	 	John D. Oil & Gas Company

 	 
	 	By:  	
 	 
	 	 	Richard M. Osborne, CEO 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Greg Osborne, President 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	C. Jean Mihitsch, CFO  	 
	 	 	 	 
	 
	 	 	 
	 	
 	 
	 	Richard M. Osborne, individually 	 
	 	 	 	 

 

 

	 	 	 	 	 

ERROR AND OMISSIONS/COMPLIANCE AGREEMENT

     The undersigned borrower(s) for and in consideration of the above-referenced Lender funding the
closing of this loan agrees, if requested by Lender or Closing Agent for Lender, to fully cooperate
and adjust for clerical errors in any or all loan closing documentation if deemed necessary or
desirable in the reasonable discretion of Lender to enable Lender to sell, convey, seek, guaranty
or market said loan to any entity.

     The undersigned Borrower(s) agree(s) to comply with all above noted requests by the
above-referenced Lender within 30 days from date of mailing of said requests. Borrower(s) agree(s)
to assume all costs including, by way of illustration and not limitation, actual expenses, legal
fees and marketing losses for failing to comply with correction requests in the above noted time
period.

     The undersigned Borrower(s) do hereby so agree and covenant in order to assure that this loan
documentation executed this date will conform and be acceptable in the marketplace in the instance
of transfer, sale or conveyance by Lender of its interest in and to said loan documentation, and to
assure marketable title in the said Borrower(s).

Date is
effective this 28th day of September, 2006.

	 	 	 	 	 
	 	Borrower: John D. Oil & Gas Company

 	 
	 	By:  	 
 	 
	 	 	Richard M. Osborne, CEO 	 
	 	 	 
	 	By:  	
 	 
	 	 	Greg Osborne, President 	 
	 	 	 
	 	By:  	
 	 
	 	 	C. Jean Mihitsch, CFO 	 
	 	 	 	 
	 	Borrower: Richard M. Osborne 

 	 
	 	By:  	
 	 
	 	 	Richard M. OsborneEX-10.1

 

Exhibit 10.1

MODIFICATION TO EMPLOYMENT AGREEMENT

     This Modification to Employment Agreement is made as of the 2nd day of October, 2006, by and
between Valley National Gases, Inc. and its subsidiaries (“Company”) and William A. Indelicato
(“Employee”).

     WITNESSETH:

     WHEREAS, the Parties are now bound by that certain Employment Agreement made as of the
1st day of February, 2006, (hereinafter referred to as the “Employment Agreement”). A
copy of said Employment Agreement is attached hereto as Exhibit “A”;

     WHEREAS, the Parties now wish to modify the Employment Agreement in certain regards; and

     WHEREAS, the Company is desirous of modifying Sections 6(d) and 7 of the Employment Agreement.

     NOW, THEREFORE, In consideration of the premises and of the mutual covenants contained herein,
the Parties hereto agree as follows:

     1.) The Parties agree that Section 6(d) of the Employment Agreement will now read as follows:

          “6. Termination.

     (d) 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 two (2) years.”

 

 

     2.) The Parties agree that Section 7 of the Employment Agreement will now read as follows:

          “7. 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 7(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, and until
June 30, 2009, 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,

2

 

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 extensive knowledge and experience within the industry and
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 four (4) years after Employee’s termination of employment,
engage in any business which competes with Company (including acting as director,
officer, employee, partner, or material stockholder of [more than five percent (5%)
of the outstanding stock of a corporation], 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 6(a)(iii), or (B) Employee’s employment with the Company
is terminated pursuant to Section 6(a)(i) or 6(a)(v), or (C) Employee’s employment
with the Company is terminated by agreement providing for payment for the
Non-competition covenant of Employee and Company pursuant to Section 6(a)(vi) and so
long as Employee is not in continuing default under or in breach of this Section 7,
the Company shall additionally pay Employee as compensation for this Non-compete
covenant the sum of Nine Hundred Sixty Thousand Dollars ($960,000.00) payable in
Twenty-four (24) consecutive monthly installments of Twenty-five Thousand Dollars
($25,000.00) commencing one (1) month after the Date of Termination to be
immediately followed by an additional Twenty-four (24) consecutive monthly
installments of Fifteen Thousand Dollars ($15,000.00) with the final payment due
Forty-eight (48) months after Date of Termination. In the event Employee’s
employment is terminated because of his death pursuant to Section 6(a)(i) or if he
dies after termination of employment pursuant to Section 6(a)(i), 6(a)(iii),
6(a)(v), or 6(a)(vi), if applicable, Company 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 6(a)(i),

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6(a)(iii), 6(a)(v), or 6(a)(vi), if applicable, 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 four (4) 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 7 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 7.

     (g) Company. For the purposes of this Section 7, 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 7, 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

4

 

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 7 is determinated 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 unenforceability of any particular provision of this
Section 7 shall not affect the other provisions hereof, which shall continue in full
force and effect.”

     3.) With the exception of the modification of Sections 6(d) and 7 of the Employment Agreement,
all other Sections of the Employment Agreement will continue to be in full force and effect.

     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., and its
	 	 	 	Subsidiaries (“Company”)
	WITNESS:
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	 	By:
	/s/ Gary E. West
	 

	 	 	 	 
	 

	 	 	 	Gary E. West
	 	 	 	Its: Chairman of the Board
	 
	 	 	 	 
	WITNESS:
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 	/s/ W.A. Indelicato
	 

	 	 	 	 
	 	 	 	William A. Indelicato (“Employee”)

5

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