As filed with the Securities and Exchange Commission on March 19, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PALEX, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0520673
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1360 POST OAK BLVD.
SUITE 800
HOUSTON, TEXAS 77056
(713) 350-6030
(Address of registrant's principal executive offices, including zip code)
1996 STOCK OPTION PLAN
(Full Title of Plan)
Edward E. Rhyne
Vice President and General Counsel
PalEx, Inc.
1360 Post Oak Blvd., Suite 800
Houston, Texas 77056
(713) 350-6030
(Name and address, including zip code, and telephone number,
including area code, of registrant's agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
TITLE OF EACH CLASS Amount to be offering price aggregate offering Amount of
OF SECURITIES TO BE REGISTERED registered (1) per share (2) price (1)(2) registration fee (2)
- ---------------------------- ---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 2,800,000 shares $12.625 $35,350,000 $10,429
============================ ================ ================= ================= =================
</TABLE>
(1) There are also registered hereby such indeterminate number of shares
of Common Stock as may become issuable by reason of operation of the
anti-dilution provisions of the Plan described herein.
(2) Calculated pursuant to Rule 457(h), based on the average of the high
and low prices for Common Stock on March 16, 1998, as reported on The
Nasdaq Stock Market.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10 PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
*Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with Rule
428 under the Securities Act of 1933, as amended, and the Note to Part I of
Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by PalEx, Inc. (referred to herein as the
"CORPORATION" or the "REGISTRANT") with the Securities and Exchange Commission
are incorporated by reference in this Registration Statement.
(1) The Corporation's Quarterly Report on Form 10-Q for the quarter ended
March 2, 1997 (Commission File No. 000-22237).
(2) The description of the Corporation's Common Stock contained in its
Registration Statement on Form 8-A, as filed with the Securities and
Exchange Commission on March 13, 1997 (Commission File No. 000-22237).
(3) The Corporation's Quarterly Report on Form 10-Q for the quarter ended
June 1, 1997 (Commission File No. 000-22237).
(4) The Corporation's Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on August 7, 1997 (Commission File
No. 000-22237).
(5) The Corporation's Quarterly Report on Form 10-Q for the quarter ended
August 31, 1997 (Commission File No. 000-22237).
(6) The Corporation's Post-Effective Amendment No. 1 to Form S-1, as filed
with the Securities and Exchange Commission on September 3, 1997
(Registration No. 333-28027).
(7) The Corporation's Current Report on Form 8-K/A, as filed with the
Securities and Exchange Commission on October 15, 1997 (Commission
File No. 000-22237).
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<PAGE>
(8) The Corporation's Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on November 24, 1997 (Commission
File No. 000-22237).
(9) The Corporation's Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on February 27, 1998 (Commission
File No. 000-22237).
In addition, all documents subsequently filed by the Corporation pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents. The audited financial statements incorporated by reference in this
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports. Future financial statements of the Corporation and the reports
thereon of Arthur Andersen LLP also will be incorporated by reference in this
Registration Statement in reliance upon the authority of that firm as experts in
giving those reports to the extent said firm has audited those financial
statements and consented to the use of their reports thereon.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Certain legal matters with respect to the shares of Common Stock offered
hereby will be passed upon for the Corporation by Edward E. Rhyne, Vice
President and General Counsel for the Corporation, who is eligible to
participate in the plan covered hereby. As of March 18, 1998, Mr. Rhyne held
options to purchase 100,000 shares of Common Stock, none of which are
immediately exercisable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware (the "DGCL") empowers a corporation to indemnify any person who was
or is a party to or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than by an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such person shall have been
made to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
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<PAGE>
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section 145
in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith; that indemnification provided for by Section 145
shall not be deemed exclusive of any other rights to which the indemnified party
may be entitled; that indemnification provided for by Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of such person's heirs, executors and administrators; and empowers the
corporation to purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided such provision shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or knowing violation of
law, (iii) under Section 174 of DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit.
Article Eight of the Corporation's Amended and Restated Certificate of
Incorporation states that:
"No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty by such director as a director; provided, however, that
this Article Eight shall not eliminate or limit the liability of a
director to the extent provided by applicable law (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
DGCL or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Eight
shall apply to, or have any effect on, the liability or alleged liability
of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal. If
the DGCL is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the DGCL, as so amended."
In addition, Article VI of the Corporation's Bylaws further provides that
the Corporation shall indemnify its officers, directors and employees to the
full extent permitted by law.
The Corporation has entered into an indemnification agreement with each of
its executive officers and directors which indemnifies such person to the
fullest extent permitted by its Amended and Restated Certificate of
Incorporation, its Bylaws and the DGCL. The Corporation also maintains
directors' and officers' liability insurance coverage.
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<PAGE>
ITEM 8. EXHIBITS.
5.1 Opinion of Edward E. Rhyne, Vice President and General Counsel of
the Registrant.
10.1 1996 Stock Option Plan, as amended.
10.2 Form of Stock Option Agreement.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Edward E. Rhyne (included as part of Exhibit 5.1).
24.0 Power of Attorney (set forth on the signature pages of this
Registration Statement).
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
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<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby further undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 18th day of March,
1998.
PALEX, INC.
(Registrant)
By: /s/ VANCE K. MAULTSBY
Vance K. Maultsby
President and Chief Executive Officer
Each person whose signature appears below constitutes and appoints Vance
K. Maultsby and Edward E. Rhyne true and lawful attorneys-in-fact and agents,
each acting alone, with full powers of substitution and re-substitution, for him
and in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, each acting alone, full powers and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below in the City of Houston, State of Texas on the 18th
day of March, 1998.
NAME TITLE
/s/ VANCE K. MAULTSBY President and Chief Executive Officer
Vance K. Maultsby (principal executive officer)
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<PAGE>
NAME TITLE
/s/ CASEY A. FLETCHER Chief Accounting Officer
Casey A. Fletcher (principal financial and accounting officer)
/s/ TUCKER S. BRIDWELL Director
Tucker S. Bridwell
/s/ A. JOSEPH CRUZ Director
A. Joseph Cruz
/s/ JOHN E. DRURY Director
John E. Drury
/s/ TROY L. FRASER Director
Troy L. Fraser
/s/ A. E. HOLLAND Director
A. E. Holland
/s/ SAM W. HUMPHREYS Director
Sam W. Humphreys
/s/ ELLIOT S. PEARLMAN Director
Elliot S. Pearlman
/s/ STEPHEN C. SYKES Director
Stephen C. Sykes
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<PAGE>
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
5.1 Opinion of Edward E. Rhyne, Vice President and 10
General Counsel of the Registrant
10.1 1996 Stock Option Plan, as amended 11
10.2 Form of Stock Option Agreement 21
23.1 Consent of Arthur Andersen LLP 26
23.2 Consent of Edward E. Rhyne (included as part of
Exhibit 5.1)
24.0 Power of Attorney (set forth on the signature pages
of this Registration Statement)
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EXHIBIT 5.1
[LETTERHEAD OF PALEX, INC.]
March 18, 1998
PalEx, Inc.
1360 Post Oak Boulevard
Suite 800
Houston, Texas 77056
Gentlemen:
You have requested the undersigned's opinion in his capacity as General
Counsel of PalEx, Inc., a Delaware corporation (the "COMPANY"), in connection
with the Registration Statement on Form S-8 (the "REGISTRATION STATEMENT"),
filed with the Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended, of 2,800,000 shares
of the Company's Common Stock, par value $.01 per share (the "COMMON STOCK"), to
be issued upon exercise of options granted by the Company under its 1996 Stock
Option Plan, as amended (the "OPTION PLAN").
With respect to the foregoing, the undersigned has examined such
documents and questions of law as he deemed necessary to render the opinions
expressed below. Based upon the foregoing, the undersigned is of the opinion
that the Common Stock, when issued, sold and delivered in the manner and for the
consideration stated in the Option Plan and the form of Stock Option Agreement
included as Exhibits 10.1 and 10.2 to the Registration Statement, respectively,
will be duly and validly issued, fully paid and nonassessable.
The undersigned consents to the use of this opinion as Exhibit 5.1 to
the Registration Statement.
This opinion letter is as of the date hereof, and the undersigned
undertakes no obligation, and expressly disclaims any obligation, to advise you
of any change in the matters set forth herein. Please note that the opinions
expressed herein relate only to the matters specifically set forth, and no
opinion is implied or should be inferred as to any other matters.
Sincerely,
/s/ EDWARD RHYNE
Edward Rhyne, Vice President and General Counsel
EXHIBIT 10.1
PALLET LOGISTICS, INC.
1996 STOCK OPTION PLAN
Section 1. PURPOSE
The Pallet Logistics, Inc. 1996 Stock Option Plan (the "Plan") (i)
authorizes the Committee to grant to Employees and Consultants of the
Corporation and its Subsidiaries options to acquire Common Stock of the
Corporation; and (ii) provides for the automatic grant of options to Outside
Directors of the Corporation in accordance with the terms specified herein.
Section 2. DEFINITIONS
Unless the content clearly indicates otherwise, the following terms,
when used in this Plan, shall have the meanings set forth in this Section:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Cause" shall mean (i) Grantee's willful, material and irreparable
breach of any agreement which governs the terms and conditions of his
employment; (ii) Grantee's gross negligence or gross incompetence in the
performance or intentional nonperformance (continuing for ten (10) days
after receipt of written notice of such negligence) of any of Grantee's
material duties and responsibilities; (iii) Grantee's dishonesty, fraud
or misconduct with respect to the business or affairs of Corporation or
any Subsidiary; (iv) Grantee's conviction of a felony crime; or (v)
chronic alcohol abuse or illegal drug abuse by Grantee.
(c) A "Change in Control" of the Corporation shall occur when: (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Corporation representing 30% or more of the combined voting power of
the Corporation's then outstanding securities; (ii) as a result of, or
in connection with, any tender offer or exchange offer, merger or other
business combination (a "Transaction"), the persons who were directors
of the Corporation immediately before the Transaction shall cease to
constitute a majority of the Board of Directors of the Corporation or
any successor to the Corporation; (iii) the Corporation is merged or
consolidated with another corporation and as a result of the merger or
consolidation less than 75% of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in aggregate by
former stockholders of the Corporation; (iv) a tender offer or exchange
offer is made and consummated for the ownership of securities of the
Corporation representing 50% or more of the combined voting power of the
corporation's then outstanding voting securities; or (v)
<PAGE>
the Corporation transfers substantially all of its assets to another
corporation which is not controlled by the Corporation.
(d) "Code" shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time.
(e) "Committee" shall mean the Board , or any Committee of two or more
Directors that may be designated by the Board to administer the Plan. If
a Committee is designated by the Board, all of the Committee's members
shall be Non-Employee Directors.
(f) "Consultant" shall mean any person who is engaged to perform
services for the Corporation or its Subsidiaries, other than as an
Employee or Director.
(g) "Control Person" shall mean any person who, as of the date of grant
of an Option, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than ten percent (10%) of the total combined
voting power or value of all classes of stock of the Corporation or of
any parent or Subsidiary.
(h) "Corporation" shall mean Pallet Logistics, Inc., a Delaware
corporation.
(i) "Director" shall mean any member of the Board.
(j) "Employee" shall mean any full-time employee of the Corporation or
its Subsidiaries (including Directors who are otherwise employed on a
full-time basis by the Corporation or its Subsidiaries).
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934 as it
may be amended from time to time.
(l) "Fair Market Value" of the Stock on a given date shall be based
upon: (i) if the Stock is listed on a national securities exchange or
quoted in an interdealer quotation system, the last sales price or, if
unavailable, the average of the closing bid and asked prices per share
of the Stock on such date (or, if there was no trading or quotation in
the Stock on such date, on the next preceding date on which there was
trading or quotation) securities exchange or quoted in an interdealer
quotation system, as determined by the Board in good faith in its sole
discretion; provided, however, that the "fair market value" of the Stock
on the date on which shares of Stock are first issued and sold pursuant
to a registration statement filed with and declared effective by the
Securities and Exchange Commission (the "Registration Statement") shall
be the Initial Public Offering price of the shares so issued and sold,
as set forth in the first final prospectus used in such offering.
(m) "Grantee" shall mean a person granted an Option under the Plan.
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<PAGE>
(n) "Initial Public Offering" shall mean the initial public offering of
shares of Stock in a firm commitment underwriting registered with the
Securities and Exchange Commission in compliance with the provisions of
the 1933 Act.
(o) "ISO" shall mean an Option granted pursuant to the Plan to purchase
shares of the Stock and intended to qualify as an inventive stock option
under Section 422 of the Code, as now or hereafter constituted.
(p) "1933 Act" shall mean the Securities Act of 1933, as amended.
(q) A "Non-Employee Director" shall mean a director who:
(i) Is not currently an officer (as defined in Rule 16a-1(f)
under the Exchange Act) of the Corporation or a Subsidiary, or
otherwise currently employed by the Corporation or Subsidiary;
(ii) Does not receive compensation, either directly or
indirectly, from the Corporation or Subsidiary, for services
rendered as a consultant or in any capacity other than as
director, except for an amount that does not exceed the dollar
amount for which disclosure would be required pursuant to Item
404(a) of SEC Regulation S-K.
(iii) Does not possess an interest in any other transaction for
which disclosure by the Corporation would be required pursuant to
Item 404(a) of SEC Regulation S-K; and
(iv) Is not engaged in a business relationship for which
disclosure by the Corporation would be required pursuant to Item
404(b) of SEC Regulation S-K.
(r) "NQSO" shall mean an Option granted pursuant to the Plan to purchase
shares of that Stock is not an ISO.
(s) "Option" or "Options" shall refer to one or more NQSOs and ISOs
issued under and subject to the Plan.
(t) "Parent" shall mean any parent corporation as defined in Section 424
of the Code.
(u) "SEC" means the United States Securities and Exchange Commission.
(v) "Plan" shall mean this 1996 Stock Option Plan as set forth herein
and as amended from time to time.
(w) "Stock" shall mean shares of the Common Stock of the Corporation.
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<PAGE>
(x) "Subsidiary" shall mean any corporation with respect to which the
Corporation owns, directly or indirectly, 50% or more of the total
combined voting power of all classes of stock of such corporation.
Section 3. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 10, the total amount of Stock with
respect to which Options may be granted under the plan shall not exceed the
greater of (i) 1,470 (subject to adjustment pursuant to Section 10 to reflect
Stock splits) and (ii) Fifteen percent (15%) of the total numbers of shares of
stock outstanding from time to time. Stock issuable under the Plan may be
authorized but unissued shares or reacquired shares of Stock. If, prior to
exercise, any Options are forfeited, lapse or terminate for any reason, the
Stock covered thereby may again be available for Option grants under the Plan.
Section 4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have the authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of stock option agreements
thereunder and to make all other determinations necessary or advisable for the
administration of the Plan. Any controversy or claim arising out of or related
to this Plan or the Options granted thereunder shall be determined unilaterally
by, and at the sole discretion of, the Committee. To the extent necessary to
comply with Rule 16b-3 under the Exchange Act, determinations concerning Options
granted to any person who is a Director or officer shall be made by the
Committee.
Section 5. TYPES OF OPTIONS
Options granted under the Plan may be of two types: ISOs or NQSOs. The
Committee shall have the authority and discretion to grant to an eligible
Employee either ISOs, NQSOs or both, but shall clearly designate the nature of
each Option at the time of grant. Grantees who are not Employees of the
Corporation or a Subsidiary on the date an Option is granted shall only receive
NQSOs.
Section 6. GRANT OF OPTIONS TO EMPLOYEES AND CONSULTANTS
(a) Employees and Consultants of the Corporation and its Subsidiaries
shall be eligible to receive Options under the Plan.
(b) The exercise price per share of Stock subject to an Option granted
to an Employee or Consultant shall be determined by the Committee,
provided, however, that the exercise price of each share subject to an
Option shall be not less than 100% of the Fair Market
4
<PAGE>
Value of a share of the Stock on the date such Option is granted, or, in
the case of an ISO granted to a Control Person, not less than 110% of
such Fair Market Value.
(c) The term of each Option granted to an Employee or Consultant shall
be determined by the Committee, provided further than no ISO granted to
a Control Person shall be exercisable more than five years from the date
of Option grant.
(d) The Committee shall determine and designate from time to time
Employees or Consultants who are to be granted Options, the nature of
each Option granted and the number of shares of Stock subject to each
Option, provided, however, that in any calendar year, no Employee or
Consultant may be granted an Option to purchase more than 50 shares of
Stock (determined without regard to when such Option is exercisable),
subject to adjustment pursuant to Section 10.
(e) Notwithstanding any other provisions hereof, the aggregate Fair
Market Value (determined at the time the ISO is granted) of the Stock
with respect to which ISOs are exercisable for the first time by any
Employee during any calendar year under all plans of the Corporation and
any Parent or Subsidiary corporation shall not exceed $100,000. To the
extent the limitation set forth in the preceding sentence is exceeded,
the Options with respect to such excess shall be treated as NQSOs.
(f) The Committee, in its sole discretion, shall determine whether any
Option granted to an Employee or Consultant shall become exercisable in
one or more installments and specify the installment dates. The
Committee may also make such other provisions, not inconsistent with the
terms of this Plan, as it may deem desirable, including such provisions
as it may deem necessary to qualify any ISO under the provisions of
Section 422 of the Code. Notwithstanding any determination by the
Committee regarding the exercise period of any Option granted to an
Employer or Consultant, all such Options shall immediately become
exercisable upon (i) the death of an Employee or Consultant while in the
employ of the Corporation or any Subsidiary or, (ii) a Change in
Control.
(g) The Committee may, at any time, grant new or additional options to
any eligible Employee or Consultant who has previously received Options
under this Plan, or options under other plans, whether such prior
Options or other options are still outstanding, have been exercised
previously in whole or in part, or have been canceled. The exercise
price of such new or additional Options may be established by the
Committee, subject to Section 5(b) hereof, without regard to such
previously granted Options or other options.
Section 7. GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS
(a) Non-Employee Directors of the Corporation shall be eligible to
receive Options under the Plan only pursuant to the provisions of this
Section 7. Each individual who agrees to become a Non-Employee Director
prior to the filing of the Registration Statement
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covering the Initial Public Offering shall receive, without the exercise
of the discretion of any person, an NQSO under the Plan relating to the
purchase of 20,000 shares of stock. Each individual who agrees to become
a Non-Employee Director between the filing and effective date of the
Registration Statemernt covering the Initial Public Offering shall
receive, without the exercise of the discretion of any person, an NQSO
under the Plan relating to purchase of 20,000 shares of stock at an
exercise price equal to the Initial Public Offering price per share.
Thereafter, each individual who agrees to become a Non-Employee Director
within six months following (i) the effective date of the Registration
Statement covering the Initial Public Offering or (ii) an annual meeting
of the Corporation's stockholders shall receive, without the exercise of
the discretion of any person, an NQSO under the Plan relating to the
purchase of 20,000 shares of Stock. In addition, on the day after the
first annual meeting of stockholders next following the date of the
Initial Public Offering, and the date after each subsequent annual
meeting, each person who is a continuing Non-Employee Director on any
such date shall receive, without the exercise of the discretion of any
person, an NQSO under the Plan relating to the purchase of 5,000 shares
of Stock, and each person who is a new, first-time Non-Employee Director
on any such date and who became a Non-Employee Director more than six
months following (i) the effective date of the Registration Statement
covering the Initial Public Offering or (ii) the immediately preceding
annual meeting of the Corporation's stockholders, shall receive, without
the exercise of the discretion of any person, an NQSO under the Plan
relating to the purchase of 20,000 shares of stock. In the event that
there are not sufficient shares available under this Plan to allow for
the grant to each Non-Employee Director of an NQSO for the number of
shares provided herein, each Non-Employee Director shall receive an NQSO
for his pro rata share of the total number of shares of Stock available
under the Plan.
(b) The exercise price of each share of Stock subject to an Option
granted to a Non-Employee Director shall equal the Fair Market Value of
a share of Stock on the date such Option is granted. Payment of the
exercise price for the shares being purchased shall be made in cash.
(c) Each Option granted to a Non-Employee Director shall become
exercisable six months from, and shall have a term of ten (10) years
from, the date of Option grant, or, if later, the date the Grantee
becomes a Non-Employee Director. Notwithstanding the exercise period of
any Option granted to a Non-Employee Director, all such Options shall
immediately become exercisable upon (i) the death of a Non-Employee
Director while serving as such or, (ii) a Change in Control.
Section 8. EXERCISE OF OPTIONS
(a) A Grantee shall exercise an Option by delivery of written notice to
the Corporation setting forth the number of shares with respect to which
the Option is to be exercised, together with cash, certified check, bank
draft of postal of express money order payable to the order of the
Corporation for an amount equal to the Option price of such shares and
any
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income tax required to be withheld. The Committee may, in its sole
discretion, permit a Grantee to pay all or a portion of the exercise
price by a simultaneous sale of the shares of stock to be listed
pursuant to such exercise pursuant to a brokerage or similar
arrangement.
(b) Except as provided pursuant to Section 9(a), no Option granted to an
Employee or Consultant shall be exercised unless at the time of such
exercise the Grantee is then an Employee or Consultant of the
Corporation or a Subsidiary.
(c) Except as provided in Section 9(a), no Option granted to a
Non-Employee Director shall be exercised unless at the time of such
exercise the Grantee is then a Non-Employee Director.
(d) Before the Corporation issues Stock to a Grantee pursuant to the
exercise of an NQSO, the Corporation shall have the right to require
that the Grantee make such provision, or furnish the Corporation such
authorization, necessary or desirable so that the Corporation may
satisfy its obligation under applicable income tax laws, to withhold for
income or other taxes due upon or incident to such exercise.
Section 9. EXERCISE OF OPTIONS UPON TERMINATION
(a) Subject to Section 9 (c) hereof, upon the termination of a Grantee's
relationship with the Corporation and its Subsidiaries, the period
during which such Grantee may exercise any outstanding and then
exercisable installments of his Options shall not exceed: (i) if such
termination is due to death or permanent and total disability (within
the meaning of Section 22(e)(3) of the Code), one year from the date of
such termination, and (ii) in all other cases, three months (six months
for Outside Directors) from the date of such termination, provided
however, that in no event shall the period extend beyond the expiration
of the Option term. Notwithstanding the foregoing, all Options shall
immediately terminate upon a termination of a Grantee's Employment if
the Committee determines, in its sole discretion, that such termination
is for Cause.
(b) In no event shall any Option be exercisable for more than the
maximum number of share that the Grantee was entitled to purchase at the
date of termination of the relationship with the Corporation and its
Subsidiaries; provided, however, that in the case of Options granted
prior to the Initial Public offering to a Grantee who at no time prior
to the date of termination of his relationship with the Corporation and
its Subsidiaries was subject to the provisions of Section 16(b) of the
Exchange Act, any member of the Board who had been the Grantee's
immediate or ultimate supervisor prior to the Initial Public Offering
may, in the sole discretion of such Board member, accelerate the
exercisability of all or a portion of such Option which is not then
otherwise exercisable if (i) such Grantee is terminated by the Company
or a Subsidiary without Cause or (ii) the Subsidiary employing such
Grantee is sold.
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(c) The Committee may, in its discretion, extend the period of
exercisability set forth in clause (i) and (ii) in paragraph (a) above,
provided, however, that such period may not be extended for Options
granted to Outside Directors.
(d) Subject to Section 9(b) hereof, the sale of any Subsidiary shall be
treated as a termination of employment with respect to any Grantee
employed by such Subsidiary.
(e) Subject to the foregoing, in the event of death, Options may be
exercised by a Grantee's legal representative.
Section 10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
If the Corporation shall effect a subdivision or consolidation of shares
or other increase or reduction of shares of Stock outstanding without receiving
compensation therefor in money, services or property, or any other change in
corporate capital structure shall occur, then (a) the number of shares subject
to outstanding Options shall be proportionately adjusted (without a change in
the total price applicable to any such Option, but with a corresponding
adjustment in the price per share), and (b) the number of shares available for
issuance under Sections 3, 6(d) and 7(a) shall be proportionately adjusted.
Section 11. RESTRICTIONS ON ISSUING SHARES
No shares shall be issued or transferred under the Plan unless and until
all applicable legal requirements have been compiled with to the satisfaction of
the Committee. The Committee shall have the right to condition any Option on the
Grantee's undertaking in writing to comply with such restrictions on any
subsequent disposition of the shares of Stock issued or transferred thereunder
as the Committee shall deem necessary or advisable as a result of any applicable
law, regulation, official interpretation thereof, or any underwriting agreement,
and certificates representing such shares may be legended to reflect any such
restrictions.
Section 12 EXERCISE OF OPTIONS UPON TERMINATION
(a) Each Option shall be evidenced by a written agreement containing
such terms and conditions, not inconsistent with this Plan, as the
Committee shall approve. The terms and provisions of such agreements may
vary among Grantees and among different Options granted to the same
Grantee.
(b) The grant of an Option in any year shall not give the Grantee any
right to similar grants in future years, any right to continue such
Grantee's employment relationship with the Corporation or its
Subsidiaries, or, until such Option is exercised and share certificates
are issued, any rights as a Stockholder of the Corporation. All Grantees
shall remain subject to discharge to the same extent as if the Plan were
not in effect.
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(c) No Grantee, and no beneficiary or other persons claiming under or
through the Grantee shall have any right, title or interest by reason of
any Option to any particular assets of the Corporation or its
Subsidiaries, or any shares of Stock allocated or reserved for the
purposes of the Plan or subject to any Option except as set forth
herein. The Corporation shall not be required to establish any fund or
make any other segregation of assets to assure the payment of any
Option.
(d) No Option shall be subject to anticipation, sale, assignment,
pledge, encumbrance, or charge except by will or the laws of descent and
distribution, and an Option shall be exercisable during the Grantee's
lifetime only by the Grantee.
(e) The issuance of shares of Stock to Grantees or to their legal
representatives shall be subject to any applicable taxes and other laws
or regulations of the United States or of any state having jurisdiction
thereof.
Section 13. AMENDMENT OR TERMINATION
The Board may, at any time, alter, amend, suspend, discontinue or
terminate this Plan; provided, however, that no such action shall adversely
affect the rights of Grantees to Options previously granted hereunder and,
provided further, however, that any stockholder approval necessary or desirable
in order to comply with Rule 16b-3 under the Exchange Act or with Section 422 of
the Code (or other applicable law or regulation) shall be obtained in the manner
required therein. In addition, no plan provision, within the meaning of Rule
16b-3(c)(2)(i)(D), shall be amended more than once every six months, other than
to comport with changes in the Code or rules thereunder.
Section 14. EFFECTIVE DATE OF PLAN
This Plan is effective upon its adoption by the Board and the
Stockholders. No ISO may be granted more than ten years after such date.
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AMENDMENT OF THE PALEX, INC.
1996 STOCK OPTION PLAN
On September 3, 1997, the Board of Directors of PalEx, Inc. (the
"COMPANY") amended the Company's 1996 Stock Option Plan (the "PLAN"), effective
as of the adoption of the Plan, so that Section 6(d) of the Plan reads in its
entirety as follows:
"(d) The Committee shall determine and designate from time
to time Employees or Consultants who are to be granted Options,
the nature of each Option granted and the number of shares of
Stock subject to each such Option, provided, however, that in any
calendar year, no Consultant may be granted an Option to purchase
more than 51,000 shares of Stock (determined without regard to
when such Option is exercisable, but after adjustment for the
1,021-for-1 stock split of the Common Stock effected in December
1996), subject to adjustment pursuant to Section 10."
EXHIBIT 10.2
PALEX, INC.
STOCK OPTION AGREEMENT
This certifies that, pursuant to the PalEx 1996 Stock Option Plan, as
amended (the "PLAN"), the Compensation Committee of the Board of Directors of
PalEx, Inc. (the "COMPANY") has granted an option (an "OPTION") to purchase
shares of the Company's Common Stock ("COMMON STOCK") as follows:
NAME, ADDRESS AND SOCIAL SECURITY NUMBER OF OPTIONEE:
Name
Address
SS#
TYPE OF OPTION:
NUMBER OF SHARES SUBJECT TO OPTION:
OPTION PRICE:
DATE OF GRANT:
OPTION TERM:
EXPIRATION DATE:
VESTING SCHEDULE:
CASHLESS EXERCISE: Cashless exercises will be permitted. Payment in full
or in part may be made in the form of Common Stock owned beneficially and of
record by the Optionee (and for which the Optionee has good title, free and
clear of any liens and encumbrances) or by reduction in
<PAGE>
the number of shares issuable upon such exercise, based on the Fair Market Value
of the Common Stock on the exercise date.
STOCK OPTION AND CONFIDENTIALITY AND NONCOMPETITION AGREEMENTS: Optionee
must sign and return this Stock Option Agreement and a Confidentiality and
Noncompetition Agreement in the form attached. The Option will be forfeited and
may not be exercised if this Stock Option Agreement and the Confidentiality and
Noncompetition Agreement are not signed and returned within 21 days after the
date of this Agreement.
ADDITIONAL TERMS AND CONDITIONS: Terms used herein with their initial
letters capitalized and not otherwise defined shall have the meanings ascribed
thereto in the Plan.
The Option is subject to all the terms and conditions of the Plan, a
copy of which has been furnished with this Agreement.
PALEX, INC.
By:_______________________________
Edward Rhyne
Vice President and General Counsel
OPTIONEE
__________________________________
Name
2
<PAGE>
CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
FOR STOCK OPTIONS
NAME: HIRE DATE:
POSITION: REGION:
PalEx, Inc. has adopted a stock option plan designed to reward key
employees, such as you, for their contribution to its success. In order to
receive stock options, you must agree to be bound by the terms of this
Confidentiality and Noncompetition Agreement (this "AGREEMENT").
You have had access to and worked with, and during your employment you
will continue to have access to and work with, certain confidential information
and trade secrets of PalEx, Inc. and its present and future subsidiaries
(collectively, "PALEX"), which may include, without limitation, all non-public
lists of customers, operational policies, pricing and cost policies and
information, commission plans, supply information, internal business practices
or procedures, market studies, expansion plans, terms or negotiations concerning
any acquisitions or potential acquisitions, budgets, projections, results of
operations or other financial information or other operational systems or
procedures or any other non-public information relating to PalEx's financial
conditions, operations, or business policies or practices. At no time during
your employment with PalEx or at any time thereafter will you, without the prior
written consent of PalEx, signed by its Chief Executive Officer ("CEO") or
General Counsel ("GC"), (i) disclose any of PalEx's trade secrets or
confidential information to any third party, or (ii) use or permit the use of
any of PalEx's trade secrets or confidential information in any way to compete
(directly or indirectly) with PalEx or in any manner adverse to PalEx.
In addition, you agree that, without the prior written consent of PalEx,
signed by its CEO or GC, you will not, directly or indirectly, for yourself or
on behalf of or in conjunction with any other person, company, partnership,
corporation or business of whatever nature, during the term of your employment
by PalEx and for a period of one year thereafter:
(a) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial or advisory capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any Competitive Business (as hereinafter defined)
within the Territory (as hereinafter defined);
(b) directly or indirectly hire any person who is, at that time,
an employee of PalEx or call upon any such person for the purpose or
with the intent of enticing such employee away from or out of the employ
of PalEx; or
(c) call upon any person or entity which is a customer of PalEx
within the Territory for the purpose of soliciting or selling services
or products in a Competitive Business within the Territory.
<PAGE>
If your employment is involuntarily terminated by PalEx due to a reduction in
workforce, the noncompetition provisions of this paragraph shall apply only
during the term of your employment by PalEx and for any period thereafter with
respect to which you are receiving any severance or other compensation from
PalEx, or such longer period as is provided in any other similar agreement with
PalEx.
For purposes of this Agreement, the term:
(a) "COMPETITIVE BUSINESS" means any business that competes with
PalEx, including, without limitation, any business that (a)
manufactures, recycles, repairs, markets, distributes, brokers, manages
or transports new or used pallets or pallet parts and other logistics
services with respect thereto; or (b) competes with PalEx for raw
materials (E.G., wood, pallet carcasses and fasteners).
(b) "TERRITORY" means the geographic area within a 175 mile
radius from where (i) PalEx has a facility or conducts or, to your
knowledge, proposes to conduct business or (ii) PalEx has a facility
that is, within six months prior to the date of termination of your
employment, under your supervision or managerial authority.
You and PalEx intend for this Agreement to be binding and enforceable.
If a court with jurisdiction over the issue should determine that any provision
of this Agreement is unenforceable, that provision shall be enforced to the
fullest extent permitted by law, by limitation and the remainder of this
Agreement shall remain in effect. You agree that, in addition to any other
remedies at law or in equity, PalEx shall be entitled to injunctive relief for
any breach by you of this Agreement, and reimbursement of its reasonable
attorneys' fees and expenses in connection with PalEx's enforcement of its
rights and remedies under this Agreement.
Your employment with PalEx is at will, and may be terminated by you or
PalEx at any time with or without cause. This Agreement does not constitute an
employment contract or an agreement to provide any severance or other
compensation upon termination of your employment.
By working together we can make PalEx the dominant company in its
industries. Please join me in this commitment by signing this letter below.
Sincerely,
PALEX, INC.
By:_______________________________
Edward Rhyne
Vice President and General Counsel
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I accept and agree to be bound by the terms of this Agreement as of the date
written below.
Date:
_____________________________
Name
3
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated December 8, 1996,
March 31, 1997, July 11, 1997, and August 1, 1997 in PalEx, Inc.'s Post
Effective Amendment No. 1 to Form S-1 (Registration No. 333-28027) and our
reports dated July 11, 1997 and August 1, 1997 in PalEx, Inc.'s Current Report
on Form 8-K/A, as filed with the Securities and Exchange Commission on October
15, 1997, and to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Houston, Texas
March 18, 1998
