1
EXHIBIT 10.4
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of
April 17, 1997, by and between Packaged Ice, Inc., a Texas corporation
("Parent"), Packaged Ice Mission, Inc., a wholly-owned subsidiary of Parent and
a Texas corporation ("Newco"), Packaged Ice STPI, a wholly-owned subsidiary of
Parent and a Texas corporation ("Subco"), and X.X. Xxxxx III an individual
residing in Bexar County, Texas ("Shareholder").
RECITALS
WHEREAS, Shareholder and the respective Boards of Directors of
Parent, Newco, and Mission Party Ice, Inc., a Texas corporation ("Mission")
each intends to effect a merger of Mission with and into Newco, pursuant to the
terms and conditions of the Agreement and Plan of Merger made as of April 17,
1997 (the "PIMI Agreement"); and
WHEREAS, Shareholder and the respective Boards of Directors of
Parent, Subco, and Southwest Texas Packaged Ice, Inc., a Texas corporation
("STPI") each intends to effect a merger of STPI with and into Subco, pursuant
to the terms and conditions of the Agreement and Plan of Merger made as of
April 17, 1997 (the "STPI Agreement"); and
WHEREAS, Section 2.8(a)(ii) of the PIMI Agreement and Section
2.8(a)(ii) of the STPI Agreement require that a noncompetition agreement be
executed and delivered by Shareholder as a condition to the consummation of the
Merger;
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall
have the meanings ascribed to them in the PIMI Agreement.
"COMPANIES" shall mean Mission, STPI and the Surviving Corporations,
collectively.
"SURVIVING CORPORATIONS" shall mean both the Surviving Corporation as defined
in the PIMI Agreement and the Surviving Corporation as defined in the STPI
Agreement.
2. ACKNOWLEDGMENTS BY SHAREHOLDER
Shareholder understands, acknowledges and agrees that (a)
Shareholder has occupied a position of trust and confidence with Mission and
STPI prior to the date hereof and has become
2
familiar with the following, any and all of which constitute confidential
information of the Surviving Corporations (collectively the "Confidential
Information"): (i) any and all trade secrets concerning the business and
affairs of the Companies, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned research and
development, current and planned manufacturing and distribution methods and
processes, acquisition opportunities, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer
software and database technologies, systems, structures and architectures (and
related processes, formulae, compositions, improvements, devices, know-how,
inventions, discoveries, concepts, ideas, designs, methods and information of
the Companies and any other information, however documented, of the Companies
that is a trade secret, (ii) any and all information concerning the business
and affairs of the Companies (which includes historical financial statements,
financial projections and budgets, historical and projected sales, capital
spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials), however documented, and (iii)
any and all notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Companies containing or based, in whole or in
part, on any information included in the foregoing; (b) the businesses of the
Companies and Parent are national or regional in scope; (c) their products and
services are marketed throughout the United States; (d) the Companies and
Parent compete with other businesses that are or could be located in any part
of the United States, and Parent is causing a merger with Mission and STPI in
connection with its consolidation strategy which Parent has explained in detail
to Shareholder; (e) Parent has required that Shareholder make the covenants set
forth in Sections 3 and 4 of this Agreement as a condition to Parent's
acquisition of Mission and STPI; (f) the provisions of Sections 3 and 4 of this
Agreement are reasonable and do not impose a greater restraint on Shareholder
than is necessary to protect the goodwill or other business interest of Parent
and the Surviving Corporations; (g) Parent has a legitimate interest in
protecting the confidentiality of its business secrets (including the
Confidential Information); (h) the provisions set forth in Sections 3 and 4 are
not oppressive to Shareholder nor injurious to the public; and (i) Parent would
be irreparably damaged if Shareholder were to breach the covenants set forth in
Sections 3 and 4 of this Agreement. None of the information relating solely
to the former division of Mission d/b/a Mission Ice Equipment Company, which
was sold to South Texas Equipment Distributors, Inc., shall be deemed
Confidential Information.
3. CONFIDENTIAL INFORMATION
Shareholder acknowledges and agrees that all Confidential
Information known or obtained by Shareholder, whether before or after the date
hereof, is now the property of the Surviving Corporations. Therefore,
Shareholder agrees that he will not, at any time, disclose to any unauthorized
Persons or use for his own account or for the benefit of any third party any
Confidential Information, whether Shareholder has such information in his
memory or embodied in writing or other physical form, without the written
consent of the Surviving Corporations, unless and to the extent that the
Confidential Information (i) is or becomes generally known to and available for
use by the public, other than as a result of the fault of Shareholder or any
other Person bound by a duty of confidentiality to Parent or the Companies,
(ii) becomes available to Shareholder on a non-
2
3
confidential basis from a source other than Parent or the Surviving
Corporations, provided that such source is not bound by a confidentiality
agreement or other contractual, legal or fiduciary obligation of
confidentiality to Parent or the Surviving Corporations, or (iii) Shareholder
or any of his representatives is compelled to disclose by judicial or
administrative process or, in the opinion of Shareholder's counsel, by other
mandatory requirements of law. Shareholder agrees to deliver to Parent at any
time Parent may request, all documents, memoranda, notes, plans, records,
reports, and other documentation, models, components, devices, or computer
software, whether embodied in a disk or in other form (and all copies of all of
the foregoing), relating to the businesses, operations, or affairs of the
Companies and any other Confidential Information that Shareholder may then
possess or have under Shareholder's control. Shareholder's obligations with
respect to this paragraph 3 shall terminate two years after the date of
termination of his employment with the both of the Surviving Corporations.
4. NONCOMPETITION
As an inducement for Parent to enter into the PIMI Agreement and
the STPI Agreement and as additional consideration to Parent in exchange for
the consideration paid to Shareholder under the PIMI Agreement and the STPI
Agreement, Shareholder agrees that:
(a) For a period of five (5) years after the Closing
within the states in which the Parent or any of its Subsidiaries transacts, or
reasonably expects to transact, business, without the express consent of the
Parent or the Surviving Corporations:
(i) Except with respect to his employment by Parent
and ownership of Parent Stock, Shareholder will not, directly or
indirectly, engage or invest in, own, manage, operate, finance,
control, or participate in the ownership, management, operation,
financing, or control of, be employed by, associated with, or in
any manner connected with, lend Shareholder's name or any similar
name to, lend Shareholder's credit to, or render services or advice
to, any business whose products or activities compete in whole or
in part with the products or activities of the Parent as of the
date of the termination of his employment with the Parent;
provided, however, that Shareholder may purchase or otherwise
acquire up to (but not more than) one percent of any class of
securities of any enterprise (but without otherwise participating
in the activities of such enterprise) if such securities are listed
on any national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of
1934. Notwithstanding the foregoing, Shareholder shall not be
restricted with respect to the retail and wholesale business of
selling, renting and leasing commercial refrigeration equipment,
including ice machines and ice merchandisers (but specifically
excluding systems which make, bag and merchandise packaged ice).
Shareholder agrees that this covenant is reasonable with respect to
its duration, geographical area, and scope.
(ii) Shareholder will not, directly or indirectly,
either for himself or any other Person, except in his capacity as
officer of the Parent or either of the Surviving Corporations, (A)
solicit or attempt to solicit any employee of Parent in attempt to
encourage the employee to leave the employ of Parent, (B) in any
way interfere with the
3
4
relationship between Parent and any employee of Parent or either of
the Surviving Corporations, (C) knowingly employ, or otherwise
engage as an employee, independent contractor, or otherwise, any
employee of Parent or either of the Surviving Corporations, or (D)
induce or attempt to induce any customer, supplier, licensee, or
business relation of Parent to cease doing business with Parent, or
in any way interfere with the relationship between any customer,
supplier, licensee, or business relation of Parent; provided,
however, this prohibition shall not apply to general advertisements
in newspapers or other widely distributed publications, media, or
mail, whether electronic or otherwise.
(iii) Shareholder will not, directly or indirectly,
either for himself or any other Person, solicit the business of any
Person known to Shareholder to be a customer or prospective
customer (identified as such by Parent while Shareholder is in the
employ of the Parent or either of the Surviving Corporations) of
Parent or any subsidiary of the Parent, whether or not Shareholder
had personal contact with such Person, with respect to products or
activities which compete in whole or in part with the products or
activities of Parent or any subsidiary thereof;
(b) In the event of a breach by Shareholder of any covenant set
forth in Subsection 4(a) of this Agreement, the term of such covenant will be
extended by the period of the duration of such breach;
5. REMEDIES
If Shareholder breaches the covenants set forth in Sections 3 or 4
of this Agreement, Parent will be entitled to the following remedies:
(a) Damages from Shareholder; and
(b) In addition to its right to damages and any other rights it may
have, to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 3 and 4 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate the Parent and the Surviving Corporations and
would be an inadequate remedy for such breach
The rights and remedies of the parties to this Agreement are cumulative and not
alternative.
6. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon Parent, Newco, Subco, the
Surviving Corporations and Shareholder and will inure to the benefit of Parent
and the Surviving Corporations and their affiliates, successors and assigns and
Shareholder and Shareholder's assigns, heirs and legal representatives.
Neither this Agreement nor any rights or obligations hereunder shall be
assignable by any of the parties hereto, including without limitation,
assignments by operation of law.
4
5
7. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any
other right, power, or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement can be discharged by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which
it is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement.
8. GOVERNING LAW
This Agreement will be governed by the laws of the State of Texas
without regard to conflicts of laws principles.
9. JURISDICTION; SERVICE OF PROCESS
The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in this Agreement upon the courts of any state
or other jurisdiction in which any alleged breach of such covenant occurs. If
the courts of any one or more of such states or other jurisdictions hold that
such covenants are not wholly enforceable by reason of the breadth of such
scope or otherwise, it is the intention of the parties hereto that such
determination not bar or in any way affect Parent or the Surviving
Corporations' right to the relief provided above in the courts of any other
states or jurisdictions within the geographical scope of such covenants, as to
breaches of such covenants in such other respective states or jurisdictions.
The above covenants as they relate to each state or jurisdiction are severable
into diverse and independent covenants.
10. SEVERABILITY
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by law or invalid, then such
provision or term will be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement. If any of the covenants set forth in this Agreement are held
by a court of competent jurisdiction to contain limitations as to time,
geographical area or scope of activity to be restrained that are not reasonable
and impose a greater restraint than is necessary to protect the goodwill or
other business interest of Parent, the court shall reform the covenants to the
extent necessary to cause the limitations contained in the covenants as to
time, geographical area and scope of activity to be restrained to be reasonable
5
6
and to impose a restraint that is not greater than necessary to protect the
goodwill or other business interest of Parent and enforce the covenants as
reformed.
11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
12. SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement unless otherwise specified. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
13. NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
Shareholder: X.X. Xxxxx III
000 Xxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
With a copy to: Xxxxx X. Xxxxx, Esq.
Xxx & Xxxxx Incorporated
000 X. Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000)000-0000
Parent and Newco: Xxxxx X. Xxxxxx, President
Packaged Ice, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
6
7
With a copy to: Xxxx Xxxxxxxxxx, P.C.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
0000 XxxxxxxXxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Facsimile No.: (000)000-0000
14. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter of this Agreement. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
[SIGNATURE PAGE FOLLOWS]
7
8
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
SHAREHOLDER:
---------------------------------------
X. X. XXXXX III
PARENT:
PACKAGED ICE, INC.
By:
-----------------------------------
XXXXX X. XXXXXX, CEO
NEWCO/SURVIVING CORPORATION:
PACKAGED ICE MISSION, INC.
By:
-----------------------------------
XXXXX X. XXXXXX, CEO
SUBCO/SURVIVING CORPORATION
PACKAGED ICE STPI, INC.
By:
-----------------------------------
XXXXX X. XXXXXX, CEO
8
