EXHIBIT 10.4
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Employment and Non-Competition Agreement (the "Agreement"), dated
as of __________________, 1997, is by and among PalEx, Inc., a Delaware
corporation (the "Company"), Fraser Industries, Inc., a Texas corporation
("Fraser"), and ______________ ("Employee").
R E C I T A L S
WHEREAS, Fraser is engaged in the business of manufacturing, marketing,
repairing and recycling pallets and other shipping containers and providing
logistics services with respect thereto;
WHEREAS, the Company, Fraser, Fraser Acquisition Corporation ("Newco"),
Employee and certain other persons entered into an Agreement and Plan of
Reorganization and Merger, dated as of December ___, 1996 (the "Merger
Agreement") pursuant to which Newco will merge (the "Merger") with and into
Fraser, making Fraser a wholly owned subsidiary of the Company;
WHEREAS, in connection with the Merger, the Company desires to engage
Employee and Employee desires to accept such engagement;
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
A G R E E M E N T S
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as
________________________________. As such, Employee shall have responsibilities,
duties and authority commensurate with such position and as may be assigned to
him by the Company from time to time during the term of this Agreement. Employee
will report to _____________________. Employee hereby accepts this employment
upon the terms and conditions herein contained and agrees to devote his time,
attention and best efforts to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the Company.
(c) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. However, the foregoing limitations shall not be
construed as prohibiting Employee from making personal investments in such form
or manner
-1-
as will neither require his services in the operation or affairs of the
enterprises in which such investments are made nor violate the terms of
paragraph 3 hereof.
2. COMPENSATION. For all services rendered by Employee, the Company
shall compensate Employee as follows:
(a) BASE SALARY. Beginning on the date of this Agreement, the base
salary payable to Employee shall be $__________ per year, payable on a regular
basis in accordance with the Company's standard payroll procedures. On at least
an annual basis, the Compensation Committee of the Board of Directors of the
Company (the "Committee") will review Employee's performance and may recommend
increases to such base salary if, in the Committee's discretion, any such
increase is warranted.
(b) INCENTIVE BONUS PLAN. For 1997 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan setting forth the
criteria under which Employee and other officers and key employees will be
eligible to receive year-end bonus awards.
(c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(1) Reimbursement for all business travel and other out-of-pocket
expenses (including those costs to maintain any professional
certifications held or obtained by Employee) reasonably incurred
by Employee in the performance of his services pursuant to this
Agreement. All reimbursable expenses shall be appropriately
documented in reasonable detail by Employee upon submission of
any request for reimbursement and in a format and manner
consistent with the Company's expense reporting policy.
(2) ________ (__) weeks of paid vacation or such greater amount as
may be afforded officers and key employees at similar levels
under the Company's policies in effect from time to time.
(3) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for
Employee by the Board or the Committee and participation in all
other the Company-wide employee benefits as may be adopted from
time to time by the Company.
3. NON-COMPETITION AGREEMENT.
(a) Employee recognizes that the Company's willingness to enter into the
Merger Agreement and to consummate the Merger is based in material part on
Employee's agreement to the provisions of this paragraph 3, and that Employee's
breach of the provisions of this paragraph could materially damage the Company.
Therefore, in consideration of the benefits to be received by
-2-
Employee as a result of the Merger, Employee agrees that the Employee shall not,
for a period of five (5) years immediately following the consummation of the
Merger, for any reason whatsoever, directly or indirectly, for himself or on
behalf of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:
(1) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any business selling any products or services in
direct competition with the Company or any of the Company's subsidiaries
within 100 miles of where the Company or any of the Company's
subsidiaries conducts business (the "Territory");
(2) call upon any person who is a managerial employee of the
Company (including its subsidiaries) for the purpose or with the intent
of enticing such employee away from or out of the employ of the Company
(including its subsidiaries); or
(3) call upon any person or entity which is a customer of the
Company (including its subsidiaries) within the Territory for the
purpose of soliciting or selling products or services in direct
competition with the Company within the Territory.
(b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company for which
it would have no other adequate remedy, Employee agrees that the foregoing
covenant may be enforced by the Company in the event of breach by him, by
injunctions and restraining orders.
(c) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth in
this paragraph 3 are unreasonable, then it is the intention of the parties that
such restrictions be enforced to the fullest extent which the court deems
reasonable, and this Agreement shall thereby be reformed.
(d) Each of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. The term of this Agreement
shall begin on the date hereof and continue for _______ (__) years (the "Initial
Term"), and, unless terminated sooner as herein provided, shall continue
thereafter on a year-to-year basis on the same terms and conditions contained
herein. This Agreement and Employee's employment may be terminated in any one of
the followings ways:
-3-
(a) DEATH. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
(b) DISABILITY. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from his full-time duties
hereunder for four (4) consecutive months, then thirty (30) days after receiving
written notice (which notice may occur before or after the end of such four (4)
month period, but which shall not be effective earlier than the last day of such
four (4) month period), the Company may terminate Employee's employment
hereunder provided Employee is unable to resume his full-time duties at the
conclusion of such notice period. Also, Employee may terminate his employment
hereunder if his health should become impaired to an extent that makes the
continued performance of his duties hereunder hazardous to his physical or
mental health or his life, provided that Employee shall have furnished the
Company with a written statement from a qualified doctor to such effect and
provided, further, that, at the Company's request made within thirty (30) days
of the date of such written statement, Employee shall submit to an examination
by a doctor selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the conclusion of
Employee's doctor. In the event this Agreement is terminated as a result of
Employee's disability, Employee shall receive from the Company, in a lump-sum
payment due within ten (10) days of the effective date of termination, the base
salary at the rate then in effect for whatever time period is remaining under
the Initial Term of this Agreement or for six (6) months, whichever amount is
greater.
(c) GOOD CAUSE. The Company may terminate this Agreement ten (10) days
after written notice to Employee for good cause, which shall be: (1) Employee's
material and irreparable breach of this Agreement; (2) Employee's gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Employee's
material duties and responsibilities hereunder; (3) Employee's dishonesty, fraud
or misconduct with respect to the business or affairs of the Company which
materially and adversely affects the operations or reputation of the Company;
(4) Employee's conviction of a felony crime; or (5) chronic alcohol abuse or
illegal drug abuse by Employee. In the event of a termination for good cause, as
enumerated above, Employee shall have no right to any severance compensation.
(d) WITHOUT CAUSE. At any time after the commencement of employment, the
Company or Employee may, without cause, terminate this Agreement and Employee's
employment, effective thirty (30) days after written notice is provided to the
other party. Should Employee be terminated by the Company without cause,
Employee shall receive from the Company, in a lump-sum payment due on the
effective date of termination, the base salary at the rate then in effect for
whatever time period is remaining under the Initial Term of this Agreement or
for twelve (12) months, whichever amount is greater. Further, any termination
without cause by the Company shall operate to shorten the period set forth in
paragraph 3(a) and during which the terms of paragraph 3 apply to one (1) year
from the date of termination of employment. If Employee resigns or otherwise
terminates his employment without cause pursuant to this paragraph 5(d),
Employee shall receive no severance compensation.
-4-
(e) CHANGE IN CONTROL OF THE COMPANY. This Agreement may be considered
terminated upon a "change in control", as defined in paragraph 11 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 11. All other rights and obligations of the Company and Employee under
this Agreement shall cease as of the effective date of termination, except that
the Company's obligations under paragraph 9 herein and Employee's obligations
under paragraphs 3, 5, 6, 7 and 9 herein shall survive such termination in
accordance with their terms.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 15 below, the Company shall pay all amounts and damages
to which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce his rights hereunder. Further, none of the provisions of
paragraph 3 shall apply in the event this Agreement is terminated as a result of
a breach by the Company.
5. RETURN OF COMPANY PROPERTY. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of the Company or the
representatives, vendors or customers thereof which pertain to the business of
the Company shall be and remain the property of the Company and be subject at
all times to the discretion and control thereof. Likewise, all correspondence,
reports, records, charts, advertising materials and other similar data
pertaining to the business, activities or future plans of the Company which are
collected by Employee shall be delivered promptly to the Company without request
by it upon termination of Employee's employment.
6. INVENTIONS. Employee shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company and which Employee conceives as a result of his
employment by the Company. Employee hereby assigns and agrees to assign all his
interests therein to the Company or its nominee. Whenever requested to do so by
the Company, Employee shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein.
-5-
7. CONFIDENTIALITY.
(a) Employee acknowledges and agrees that all Confidential Information
(as defined below) of the Company is confidential and a valuable, special, and
unique asset of the Company that gives the Company an advantage over its actual
and potential, current, and future competitors. Employee further acknowledges
and agrees that Employee owes the Company a fiduciary duty to preserve and
protect all Confidential Information from unauthorized disclosure or
unauthorized use; certain Confidential Information constitutes "trade secrets"
under the laws of the state of _______________________; and unauthorized
disclosure or unauthorized use of the Company's Confidential Information would
irreparably injure the Company.
(b) Both during the term of Employee's employment and after the
termination of Employee's employment for any reason (including wrongful
termination), Employee shall hold all Confidential Information in strict
confidence, and shall not use any Confidential Information except for the
benefit of the Company, in accordance with the duties assigned to Employer.
Employee shall not, at any time (either during or after the term of Employee's
employment), disclose any Confidential Information to any person or entity
(except other employees of the Company who have a need to know the information
in connection with the performance of their employment duties), or copy,
reproduce, modify, decompile, or reverse engineer any Confidential Information,
or remove any Confidential Information from the Company's premises, without the
prior written consent of the President of the Company, or permit any other
person to do so. Employee shall take reasonable precautions to protect the
physical security of all documents and other material containing Confidential
Information (regardless of the medium on which the Confidential Information is
stored). This Agreement applies to all Confidential Information, whether now
known or later to become known to Employee.
(c) Upon the termination of Employee's employment with the Company for
any reason, and upon request of the Company at any other time, Employee shall
promptly surrender and deliver to the Company all documents and other written
material of any nature containing or pertaining to any Confidential Information
and shall not retain any such document or other material. Within five days of
any such request, Employee shall certify to the Company in writing that all such
materials have been returned.
(d) As used in this Agreement, the term "CONFIDENTIAL INFORMATION" shall
mean any information or material known to or used by or for the Company (whether
or not owned or developed by the Company and whether or not developed by
Employee) that is not generally known to the public. Confidential information
included, but is not limited to, the following: all trade secrets of the
Company; all information that the Company has marked as confidential or has
otherwise described to Employee (either in writing or orally) as confidential;
all nonpublic information concerning the Company's products, services,
prospective products or services, research, product designs, prices, discounts,
costs, marketing plans, marketing techniques, market studies, test data,
customers, customer lists and records, suppliers, and contracts; all Company
business records and plans; all Company personnel files; all financial
information of or concerning the Company; all
-6-
information relating to operating system software, application software,
software and system methodology, hardware platforms, technical information,
inventions, computer programs and listings, source codes, object codes,
copyrights, and other intellectual property; all technical specifications; any
proprietary information belonging to the Company; all computer hardware or
software manual; all training or instruction manuals; all data and all computer
system passwords and user codes.
8. INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Company
against Employee), by reason of the fact that he is or was performing services
under this Agreement, then the Company shall indemnify Employee against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and the Company are made a party to
the same third-party action, complaint, suit or proceeding, the Company agrees
to engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by the Company shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and the Company shall pay all attorneys'
fees of such separate counsel. Further, while Employee is expected at all times
to use his best efforts to faithfully discharge his duties under this Agreement,
Employee cannot be held liable to the Company for errors or omissions made in
good faith where Employee has not exhibited gross, willful and wanton negligence
and misconduct or performed criminal and fraudulent acts which materially damage
the business of the Company.
9. NO PRIOR AGREEMENTS. Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee and his employment by
the Company and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client or any other person or
entity. Further, Employee agrees to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any noncompetition
agreement, invention or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
10. ASSIGNMENT; BINDING EFFECT. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, he cannot
assign all or any portion of his performance under this Agreement. Subject to
the preceding two (2) sentences and the express provisions of paragraph 12
below, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
-7-
11. CHANGE IN CONTROL.
(a) Unless he elects to terminate this Agreement pursuant to (c) below,
Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agrees to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause and the applicable portions of paragraph
5(d) will apply; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be triple the amount calculated under
the terms of paragraph 5(d) and the non-competition provisions of paragraph 3
shall not apply whatsoever.
(c) In any Change in Control situation, Employee may, at his sole
discretion, elect to terminate this Agreement by providing written notice to the
Company at least five (5) business days prior to the anticipated closing of the
transaction giving rise to the Change in Control. In such case, the applicable
provisions of paragraph 5(d) will apply as though the Company had terminated the
Agreement without cause; however, under such circumstances, the amount of the
lump-sum severance payment due to Employee shall be double the amount calculated
under the terms of paragraph 5(d) and the non-competition provisions of
paragraph 3 shall all apply for a period of two (2) years from the effective
date of termination.
(d) For purposes of applying paragraph 5 under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Employee must be paid in
full by the Company at or prior to such closing.
(e) A "Change in Control" shall be deemed to have occurred if:
(1) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Company;
-8-
(2) the individuals (A) who, as of the effective date of the
Company's registration statement with respect to its initial public
offering, constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected to the Board of
Directors of the Company and whose election, or nomination for election,
to the Board of Directors of the Company was approved by a vote of at
least two-thirds (2/3) of the Original Directors then still in office
(such directors becoming "Additional Original Directors" immediately
following their election) or (C) who are elected to the Board of
Directors of the Company and whose election, or nomination for election,
to the Board of Directors of the Company was approved by a vote of at
least two-thirds (2/3) of the Original Directors and Additional Original
Directors then still in office (such directors also becoming "Additional
Original Directors" immediately following their election) (such
individuals being the "Continuing Directors"), cease for any reason to
constitute a majority of the members of the Board of Directors of the
Company;
(3) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not sought or obtained,
other than any such transaction which would result in at least 75% of
the total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction being
Beneficially Owned by at least 75 % of the holders of outstanding voting
securities of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
(4) the stockholders of the Company shall approve a plan of
complete liquidation of The Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the Company).
(f) Employee must be notified in writing by the Company at any time that
the Company anticipates that a Change in Control may take place.
(g) Employee shall be reimbursed by the Company or its successor for any
excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of his tax
return(s) showing the excise tax actually incurred by Employee.
12. COMPLETE AGREEMENT. Except as expressly provided herein, this
Agreement is not a promise of future employment. Employee has no oral
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and expression
of the agreement between the Company and Employee and of all the terms of this
Agreement, and
-9-
it cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly authorized officer
of the Company and Employee, and no term of this Agreement may be waived except
by writing signed by the party waiving the benefit of such term.
13. NOTICE. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: PalEx, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
To Employee: __________________________
__________________________
__________________________
Notice shall be deemed given and effective three (3) days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this paragraph 14.
14. SEVERABILITY HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
15. ARBITRATION. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in Houston, Texas, in
accordance with the rules of the American Arbitration Association then in
effect. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrators determine that
Employee was terminated without disability or good cause, as defined in
paragraphs 4(b) and 4(c), respectively, or that the Company has otherwise
materially breached this Agreement. A decision by a majority of the arbitration
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction.
16. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Texas.
-10-
PALEX, INC.
By:
Name:
Title:
EMPLOYEE:
The State of Texas ss.
ss.
County of Xxxxxx xx.
BEFORE ME, the undersigned, a Notary Public, on this day personally
appeared , Chairman of the Board of Directors of PalEx, Inc.,
known to me to be the person whose
name is subscribed to the foregoing instrument and acknowledged to me that he
executed the same for the purposes and consideration therein expressed.
-11-
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the ______ day of
__________________, 1996.
------------------------------------
Notary Public, State of Texas
My Commission Expires:
----------------------
The State of Texas ss.
ss.
County of Xxxxxx xx.
BEFORE ME, the undersigned, a Notary Public, on this day personally
appeared ___________________________, known to me to be the person whose name is
subscribed to the foregoing instrument and acknowledged to me that he executed
the same for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the ______ day of
__________________, 1996.
------------------------------------
Notary Public, State of Texas
My Commission Expires:
----------------------
-12-
