EXHIBIT 2
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT is made and entered into by and between
Xxxxx X. Xxxxxxxxx (hereinafter referred to as "Employee") and ICO, Inc.
(hereinafter referred to as the "Company").
WITNESSETH:
WHEREAS, the Company and Employee are parties to an employment
agreement dated April 1, 1995 and amended by amendments dated June 14, 1996,
February 7, 1997 and September 4, 1998 (as amended, the "Employment Agreement");
and
WHEREAS, the Company desires to terminate Employee's employment by and
position as an officer of the Company and Employee has consented to such
termination; and
WHEREAS, the termination of Employee's employment is being effected by
mutual agreement of Employee and the Company and is not intended to constitute
termination for "Cause" as defined in the Employment Agreement; and
WHEREAS, Employee is willing to resign as a director of the Company and
as a member of any committees of the Board of Directors of the Company and from
all other positions with the Company's subsidiaries and affiliates and the
Company is willing to accept such resignation; and
WHEREAS, Employee and the Company desire to modify certain of their
obligations in connection with such termination of employment from those set
forth in the Employment Agreement; and
WHEREAS, Employee and the Company mutually desire to avoid and resolve
any and all actual and potential differences between them;
NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained, it is mutually agreed as follows:
FIRST: The Company hereby terminates Employee as an employee (including
as Chairman of the Board and Chief Financial Officer of the Company) effective
immediately, and Employee hereby consents to such termination. In addition,
Employee hereby tenders, and the Company hereby accepts, Employee's immediate
resignation as a director of the Company and from membership on all committees
thereof and from all offices, directorships and committee memberships of any and
all subsidiaries and affiliates of the Company and all committees thereof;
provided, however, that nothing herein will require resignation from any office,
directorship or other position, if any, held in Pacholder Associates, Inc. or
the Pacholder High Yield Fund.
SECOND: In any and all press releases and other public communications
made by either party, the stated reason for Employee's termination as an
employee and officer and resignation as a director shall be the desire of
Employee and the Company to avoid conflict among the members of the Company's
board of directors; provided, however, that neither the making of such
statements nor Employee's termination are to be construed as meaning or
suggesting that Employee has been terminated for reason of his age. Employee
shall be afforded the opportunity to review and comment on any press release
with respect to this Termination Agreement or his termination of employment at
least one day in advance of the actual release thereof. The Company and Employee
hereby agree not to make any disparaging or intentionally false or misleading
statements (or encourage others to make any such statements) regarding the
other. The preceding sentence shall not apply to any statements required to be
made by applicable law or to avoid perjury.
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THIRD: The Company acknowledges and agrees that Employee's termination
of employment is not as a result of Disability and is not intended to be as a
result of any action that would constitute Cause (as such terms are defined in
the Employment Agreement). Notwithstanding the terms of Section 6(d)(i) of the
Employment Agreement (which if applied would result in a substantially higher
payment), as consideration for Employee's termination the Company shall pay
Employee at the time of execution of this Termination Agreement by Employee the
Termination Amounts set forth on Annex A attached hereto (subject to applicable
withholding) by wire transfer of immediately available funds.
Employee also shall be entitled to the other rights and benefits under
the Employment Agreement arising or due as a result of the termination of his
employment other than for Cause or Disability (as defined in the Employment
Agreement) and shall be subject to his continuing obligations thereunder. For
purposes of the application of Section 9 of the Employment Agreement and
calculation of the Gross-Up Payment, Employee hereby represents and warrants
that his "base amount," within the meaning of Section 280G(b)(3) as calculated
in accordance with Section 280(G) of the Internal Revenue Code of 1986, as
amended, is the amount reflected as the "base amount" on Annex A attached
hereto. The Company and Employee have agreed that the value of any "parachute
payments," within the meaning of Section 280G(b)(2) paid or payable to Employee
pursuant to this Termination Agreement, the Employment Agreement (as modified
hereby) or otherwise, excluding the Principal Severance Payment (as reflected on
Annex A) and the Gross-Up Payment will be the "Parachute Payment Value" as set
forth on Annex A. Employee has agreed to such value for purposes of the
determination of the Gross-Up Payment under Section 9 of the Employment
Agreement. Employee agrees that, for purposes of such calculation, in addition
to the tax imposed under Section 280G, the parties shall assume that
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Employee pays and will pay a combined federal, state and local tax rate of 39%.
The Company and Employee have agreed in a separate Escrow Agreement entered into
in connection with this Agreement to escrow certain monies to be available to
Employee if the Gross-Up Payment is hereafter required to be paid.
In addition to the lump sum payment provided for above, the Company
shall transfer to Employee ownership of the Company car he is currently using,
his office computer, telecopy machine, printer and mobile phone and the
professional books acquired by the Company for Employee's use all as more
particularly described on Annex B attached hereto, in each case free and clear
of any liens or other encumbrances. Employee and his spouse shall also be
entitled, at no cost to them, to reasonable access and use of the Company's
leased apartment in London, England for a period of six months after the date
hereof in order to permit Employee to arrange for and move his personal
possessions therefrom and wind-up his personal affairs in that area.
The Company may withhold from any amounts payable under this
Termination Agreement such federal, state and local taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
FOURTH: The Company acknowledges and agrees that Employee is and will
continue to be entitled to indemnification as provided in the Company's bylaws
and that no amendment of such bylaws after the date hereof will be effective as
applied to Employee if it would adversely affect his rights to indemnification.
The Company also acknowledges and agrees that it is not aware of any fact or
circumstance that would disqualify Employee from satisfying the requirements
necessary to permit the Company's indemnification of Employee as set forth in
the Texas Business Corporation Act. The Company also agrees, for a period of
five years following the date hereof, to use commercially reasonable best
efforts to maintain directors and officers
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liability insurance providing coverage substantially the same as or better than
that currently maintained by the Company; provided that if the cost of
maintaining such insurance would exceed twice the cost currently being incurred
by the Company therefor, the Company shall only be required to maintain
directors and officers liability insurance providing the maximum coverage that
can be obtained for a cost that is twice the amount currently being incurred.
FIFTH: In consideration of the payments and agreements contained in
this Termination Agreement, and with the exception of rights created by or
pursuant to this Termination Agreement or the Employment Agreement (as modified
hereby), Employee, on his own behalf and on behalf of his affiliates, agents,
legal representatives, heirs, successors and assigns (the "Employee Parties"),
does hereby fully and forever release, acquit, forgive and forever discharge the
Company and its subsidiaries, affiliates, directors, officers, agents, legal
representatives, successors and assigns (the "Company Parties") from any and all
claims, demands and causes of action whatsoever, of every name, nature of
description, whether arising out of contract, tort or otherwise and whether
based on common law, statute or administrative regulation, and whether known or
unknown, which Employee now has or might have, in any way relating to Employee's
service or capacity as a director or officer of, or his employment by, the
Company or any subsidiary or affiliate of the Company. Without in any way
limiting the foregoing, Employee waives and releases the Company and its
subsidiaries and affiliates from any claims that Employee could assert, known or
unknown, in connection with Section 6(d)(i) of the Employment Agreement, and
acknowledges that this Termination Agreement extinguishes and replaces Section
6(d)(i) of the Employment Agreement with the provisions of this Termination
Agreement. In addition, the Employee hereby renounces, effective as of the date
hereof, all of the Employee's respective rights, in whatever capacity (whether
personal or as an officer or
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director of the Company or its subsidiaries or affiliates), granted under any
proxy or agreement (including, without limitation, under the proxies granted by
Messrs. Xxxx Xxxx, Xxxxxxx X. Xxxxx, Xx., Xxx X. Xxxxx, Xxxxx X. Xxxxxxx, Xxx X.
Xxxxxxx and Xxxxx X. Xxxx) to vote any shares of common stock of the Company
held by other persons, and shall take all such further actions as the Company
may reasonably request from time to time to evidence such renunciation of, or to
cause such voting rights to be revested in the persons of the grantors under,
such proxies or agreements.
SIXTH: In consideration of the mutual promises and agreements contained
in this Termination Agreement, and with the exception of rights created by or
pursuant to this Termination Agreement and the Employment Agreement (as modified
hereby), the Company, on its own behalf and on behalf of the other Company
Parties, does hereby fully and forever release, acquit, forgive and discharge
Employee and the other Employee Parties from any and all claims, demands and
causes of action whatsoever, of every name, nature of description, whether
arising out of contract, tort or otherwise and whether based on common law,
statute or administrative regulation, and, whether known or unknown, which the
Company or any Company Party now has or might have, in any way relating to
Employee's service or capacity as a director or officer of, or his employment
by, the Company or any of its subsidiaries or affiliates or the termination of
any such service or employment.
SEVENTH:
(a) Each party hereto agrees that, following execution of this
Termination Agreement, such party will not disclose the terms hereof, to any
other person, except in the case where, and only to the extent that, there is a
bona fide need for such disclosure to a third party, such as in connection with
obtaining advice or furnishing personal financial information, and, in
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each such case, only on the condition that such other person keeps such
information strictly confidential. The foregoing obligations of confidentiality
shall not apply to information that is required to be disclosed as a result of
any applicable law, rule or regulation of any governmental authority or any
court.
(b) Employee agrees that he will keep confidential and will not,
directly or indirectly, use for himself or use for, or disclose to, any person,
any confidential or proprietary information, data or technology regarding the
business or operations of the Company, or any subsidiary or affiliate of the
Company including, without limitation, any strategy, information, data or
technology regarding costs, uses, methods, applications, customers, accounts,
suppliers, apparatus, process, system, or other method at any time used,
developed or investigated by or for the Company, or any subsidiary or affiliate
of the Company, whether or not invented, developed, acquired, discovered or
investigated by Employee. The foregoing disclosure restrictions shall not apply
when disclosure is required of Employee pursuant to a subpoena or order issued
by a court or governmental agency of competent jurisdiction, provided that
detailed notice of such subpoena or order is first given to the Company so to
provide the Company a reasonable opportunity to challenge or object to such
subpoena or order and in no event will Employee be permitted to provide copies
of written documentation pertaining to the Company to any third party.
Furthermore, Employee agrees to utilize and assert any and all applicable
privileges regarding any requested disclosure respecting the Company. The
provisions of this subsection (b) supercede the confidentiality covenant
contained in Article 10 of the Employment Agreement.
(c) Employee shall immediately deliver and return to the Company
all books, records, memoranda, plans, computer discs (and transcripts or copies
thereof), correspondence,
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studies and reports, operating projections, trade secrets, customer lists and
other documents of any kind and character relating to the Company, its
subsidiaries or its affiliates or their respective business operations made or
compiled by, delivered to, or otherwise acquired by Employee.
(d) Except with the express prior written consent of the Company which
may be withheld in the Company's sole discretion, Employee will not retain any
copies of all or any portion of the information or data referenced in
subsections (b) and (c) above.
(e) Except as otherwise provided in the third paragraph of Section
THIRD above, Employee agrees to immediately return all other Company property
under his possession or control, including, without limitation, all Company
identification, parking cards, access cards, travel authority cards, keys and
credit cards to the Company.
EIGHTH: Employee will not, directly or indirectly, whether for his own
account or for the account of any other person:
(a) for a period of two years following the date hereof, do anything
which would interfere with or divert from the Company any trade, business or
business opportunity with (i) any individual or entity with whom Employee has
had any contact or association during his tenure with the Company or its
subsidiaries or affiliates or (ii) any individual or entity whose identity was
confidential and learned by Employee while an employee or officer or director of
the Company or its subsidiaries or affiliates providing nothing herein shall
limit the application of Section SEVENTH above;
(b) for a period of two years following the date hereof, either for
himself or as an investor, director, officer, principal, agent, employee,
advisor, partner, or in any corporate, individual or representative capacity,
solicit, induce or attempt to induce any individual
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employed by the Company or one of its subsidiaries or affiliates to leave the
employment of the Company or such subsidiary or affiliate;
(c) for a period of two years following the date hereof, engage in or
carry on, directly or indirectly, either for himself or as a member of a
partnership or as a stockholder or a equity holder (except as a stockholder of
less than one percent (1%) of the issued and outstanding stock of a
publicly-held corporation), investor, officer, or director of a corporation or
other entity or as an employee, agent, associate or consultant of any person,
partnership, corporation or other entity, any business which is in competition
with the business of the Company or its subsidiaries or affiliates as conducted
on or contemplated as of the date hereof; or
(d) do anything that could reasonably be expected to harm the
relationship enjoyed by the Company or its affiliates with any individual
(including any employee or officer of the Company or its affiliates) or entity
who or which has provided financing, equipment, materials, supplies and/or
services to the Company or its subsidiaries or affiliates prior to the date
hereof.
NINTH: Employee shall on or prior to the effective date of this
Agreement, submit all actual, reasonable and customary expenses theretofore
incurred by Employee in the course of Employee's employment with proper
documentation, which, upon verification, the Company shall reimburse promptly in
accordance with the Company's reimbursement policy. Employee acknowledges and
agrees that Employee has not and has no authority to incur any expenses after
the date Employee executes this Agreement, and further agrees that,
notwithstanding the provisions of the Employment Agreement, the Company shall
have no obligation to reimburse expenses not submitted within the time set forth
above or incurred after the date hereof.
TENTH: Employee understands and acknowledges that he:
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(i) has received and has read this Termination Agreement;
(ii) is fully informed of and fully understands the terms
and meaning of the terms, conditions and effect of
signing this Termination Agreement;
(iii) has had ample opportunity to ask questions of Company
personnel and that the Company advised him and hereby
advises him in writing to consult with an attorney of
his choice prior to executing this Termination
Agreement;
(iv) has relied solely on his own judgment and on the
advice of such counselors and advisors with whom he
has considered it appropriate, desirable, or
necessary to consult in making the decision to sign
this Termination Agreement, and Employee represents
and acknowledges that in executing this Termination
Agreement he does not rely and has not relied upon
any representation or statement made by the Company,
or by any of the Company's agents, shareholders,
directors, attorneys, or representatives with regard
to the subject matter, basis, or effect of this
Termination Agreement or otherwise, other than those
specifically stated in this written Termination
Agreement;
(v) has made his decision voluntarily without any
pressure from the Company or its employees either to
accept or reject this Termination Agreement;
(vi) had twenty-one days to consider this Termination
Agreement if he chose to do so, and that no one
hurried him into executing this Termination Agreement
during that 21-day period, or otherwise coerced him
into executing this Termination Agreement;
(vii) has seven days following his execution of this
Termination Agreement to revoke such acceptance;
(viii) must make any such revocation of his prior acceptance
of this Termination Agreement in writing and cause
such revocation, together with a cashier's check in
the amount of the lump sum payment received by him
pursuant to Section THIRD, to be delivered to the
Company at 00000 Xxxxxxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000;
(ix) he fully understands that he is, through this
Termination Agreement, releasing the Company from any
and all claims he may have against the Company and
the other parties specified in Section FIFTH, and
that this Termination Agreement constitutes a release
and discharge of claims arising under the 29 U.S.C.
Sections 621-634, including the Older Workers'
Benefit Protection Act, 29 U.S.C. Sections 626(f);
and
(x) he acknowledges that, because he has waived his
rights under Sections 6(d)(i) of the Employment
Agreement, the payments and other benefits that he
will receive in accordance with Section THIRD of this
Termination
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Agreement constitutes something of value to which
Employee would not be entitled to receive if he did
not agree to give the Company a release of claims.
ELEVENTH: If within seven days following Employee's acceptance of this
Termination Agreement, Employee revokes such acceptance in accordance with
clauses (vii) and (viii) of Section TENTH, then all of the rights and
obligations of the parties hereunder shall be deemed rescinded and the parties
shall be restored to their respective positions, offices, rights and obligations
as they existed immediately prior to execution of this Termination Agreement.
TWELFTH: This Termination Agreement is made and entered into in the
State of Texas, and, except to the extent that federal law controls the
interpretation or enforceability of any provision in this Termination Agreement
in which case any such provision shall be construed and enforced in accordance
with federal law, shall in all respects be interpreted, enforced and governed
under the laws of the State of Texas. The language of all parts of this
Termination Agreement shall in all cases be construed as a whole, according to
its fair meaning, and not strictly for or against any of the parties. Any claim
or controversy of whatever nature arising from or relating in any way to this
Termination Agreement, the Employment Agreement, the employment relationship
between the Company and Employee or the cessation of such relationship,
including disputes arising under the common law or federal or state statutes,
laws or regulations and disputes with respect to the arbitrability of any claim
or controversy, shall be resolved exclusively by final and binding arbitration
before a single experienced employment arbitrator selected in accordance with
the Employment Dispute Resolution ("EDR") Rules of the American Arbitration
Association ("AAA") unless the parties hereto shall agree otherwise in writing.
The arbitration will be conducted in Houston, Texas (or in such other place as
may be mutually agreed by the parties) pursuant to the EDR Rules of the AAA, and
the arbitrator shall
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have full authority to award or grant all remedies provided by law. The judgment
upon the award may be enforced by any court having jurisdiction thereof. Each
party shall pay the fees of their respective attorneys, the expenses of their
witnesses, and any other expenses incurred by such party in connection with the
arbitration; provided, however, that the Company shall pay for the fees of the
arbitrator and the administrative and filing fees charged by the AAA.
THIRTEENTH: Should any provision of this Termination Agreement be
declared or be determined by any court to be unenforceable or invalid as
drafted, it may and shall be reformed or modified by a court of competent
jurisdiction to the form of an enforceable and valid provision that achieves, to
the greatest extent possible, the result intended by the parties in drafting and
agreeing to the unenforceable and invalid provision. Should a court of competent
jurisdiction decline to so reform or modify such a provision or determine that
no enforceable and valid provision can be created to achieve the intended
result, the unenforceability and invalidity of the remaining parts, terms or
provisions of this Termination Agreement shall not be affected thereby and said
unenforceable or invalid part, term, or provision shall be deemed not to be a
part of this Termination Agreement.
FOURTEENTH: This Termination Agreement, together with the Employment
Agreement (as modified hereby) and the Escrow Agreement, set forth the entire
agreement between the parties hereto, and supersede any and all other prior
agreements or understanding between the parties hereto pertaining to the subject
matter hereof. This Termination Agreement shall be binding on and inure to the
benefit of the Company and its successors and assigns, and, in the event of
Employee's death or incapacity, shall inure to the benefit of Employee's estate
or other legal representatives.
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FIFTEENTH: Employee and the Company acknowledge and agree that it was
not the intention of the Company or Employee that the terms of that certain
Xxxxxxxxxx Incentive Stockholders Agreement, dated effective as of April 30,
1996, as amended (the "ICO/Xxxxxxxxxx Agreement") would trigger the provisions
of the Rights Agreement between ICO, Inc. and Xxxxxx Trust & Savings Bank dated
April 1, 1998 or any prior rights agreements of the Company (collectively the
"Rights Plans"). Accordingly, the Company and Employee agree, from and after the
date hereof, not to maintain or assert any position that the Rights Plan was
triggered as a result of the execution of the ICO/Xxxxxxxxxx Agreement.
Furthermore, Employee agrees if requested by the Company to enter into such
reasonable documentation as may be required, if any, to reflect the prior intent
of the parties that the Rights Plan was not to be triggered as a result of the
ICO/Xxxxxxxxxx Agreement.
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EXECUTED on the 6th day of June, 2001, but effective as of 12:01 a.m.
(central time) on the 7th day of June, 2001.
ICO, INC.
By: /s/ XXX X. XXXX
-----------------------------------------
Name: Xxx X. Xxxx
---------------------------------------
Title: Senior Vice President,
--------------------------------------
Chief Accounting and Treasurer
--------------------------------------
/s/ XXXXX X. XXXXXXXXX
---------------------------------------
XXXXX X. XXXXXXXXX
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ANNEX A
TO
TERMINATION AGREEMENT
(A. Pacholder)
I. TERMINATION PAYMENTS:
Principal Severance Payment: $ 2,402,877
Legal Fees and Related Expenses: $ 45,077
Accrued Unpaid Vacation $ 26,154
II. GROSS-UP PAYMENT COMPONENTS:
Base Amount: $386,344
Parachute Payment Value: $ 86,378
III. POTENTIAL GROSS-UP PAYMENT: $ 1,079,800
ANNEX B
TO
TERMINATION AGREEMENT
(A. Pacholder)
Car: 1996 Jaguar XJ-S
Office computer: Dell laptop
Telecopy machine: Hewlett Packard
Printer: Hewlett Packard inkjet
Mobile Phone: Nokia digital
Professional Books: Various financial publications as agreed between the Company
and A. Pacholder
