EXHIBIT 5
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT is made and entered into by and between
Xxxxx X. Xxxxx (hereinafter referred to as "Employee") and ICO, Inc.
(hereinafter referred to as the "Company").
WITNESSETH:
WHEREAS, the Company and Employee are parties to an Amended and
Restated Employment Agreement dated August 5, 1999 (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 from all other positions with
the Company and its subsidiaries (other than those from which he is being
terminated) 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 Senior Vice President and General Counsel) 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 from all other 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 officer, directorships or positions, 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 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.
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
-2-
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 (including but not limited to those set forth in
Section 9) 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" set forth on
Annex A. Employee has agreed to such value for purposes of the initial
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 Employee
pays and will pay a combined federal, state and local tax rate of 39%. The
Company and Employee have agreed in
-3-
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. The Company shall also provide Employee, at
the Company's expense, with the services of an out-placement consulting firm for
a period of one year provided the costs to the Company in this regard will not
exceed $9,000.
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 liability insurance providing
coverage substantially the same or better as 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
-4-
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 director of the Company or any subsidiary or
affiliate), granted under any proxy or agreement 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
-5-
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.
-6-
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 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 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
-7-
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, studies and reports, operating projections, trade
secrets, customer lists and other documents of any kind and character relating
to the Company or its subsidiaries or 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 six months 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 of the Company
-8-
or its subsidiaries or affiliates, provided 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 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 six months 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 within 150 miles
of any office of the Company or its subsidiaries or affiliates and 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 subsidiaries or affiliates with any
individual (including any employee or officer of the Company or its subsidiaries
or 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
-9-
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:
(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
-10-
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.Section 621-634, including the Older Workers'
Benefit Protection Act, 29 U.S.C.Section 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 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
-11-
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 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
-12-
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.
-13-
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. XXXXX
------------------------------------------
XXXXX X. XXXXX
-14-
ANNEX A
TO
TERMINATION AGREEMENT
(X. Xxxxx)
I. TERMINATION PAYMENTS:
Principal Severance Payment: $ 702,205
Legal Fees and Related Expenses: $ 23,213
Accrued Unpaid Vacation $ 16,154
II. GROSS-UP PAYMENT COMPONENTS:
Base Amount: $ 99,124
Parachute Payment Value: $ 82,337
III. POTENTIAL GROSS-UP PAYMENT: $ 351,948
ANNEX B
TO
TERMINATION AGREEMENT
(X. Xxxxx)
Car: 2000 Mercedes-Benz 320 CLK
Office computer: Dell desktop and Dell laptop
Printer: Hewlett Packard laser printer
Mobile Phone: Nokia digital
Professional Books: Various legal publications as agreed between the Company and
X. Xxxxx
