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EXHIBIT 10.5
SEVERANCE AGREEMENT
AGREEMENT between Packaged Ice, Inc., a Texas corporation ("Company")
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") dated as of April 19, 2001.
WHEREAS, Stuart and the Company are parties to an Employment Agreement
dated August 1, 1998 (the "Employment Agreement"), pursuant to which Stuart
would be paid severance compensation in the event of an involuntary termination;
and
WHEREAS, subject to the terms and conditions of this Agreement, Stuart
and the Company have agreed that Stuart's employment with the Company would
terminate and the Company would pay severance compensation to Stuart; and
WHEREAS, as a material part of this Agreement, Stuart has agreed to
voluntarily resign his employment with the Company and its subsidiaries, and his
positions as Chairman, Chief Executive Officer and Director of the Company and
its subsidiaries, effective April 19, 2001; for the purposes of this Agreement,
the defined term "Company" shall include Packaged Ice, Inc. and all of its
subsidiaries and
WHEREAS, the parties wish to eliminate any questions concerning their
mutual obligations with respect to, and arising out of Stuart's resignation from
his positions with the Company;
NOW, THEREFORE, in consideration of the mutual covenants
expressed herein, the parties agree as follows:
1. Stuart hereby resigns, and the Company hereby accepts,
Stuart's resignation from his position as Chairman and Chief
Executive Officer and as a member of the Board of Directors of
the Company effective as of the date hereof (the "Termination
Date"). Such resignation shall be deemed to also constitute
Stuart's resignation as an officer and a director of any
related companies. Stuart shall also be deemed to have
resigned from all other positions, titles and duties held by
him by reason of his association with the Company.
2. For a period commencing April 20, 2001 and ending February 29,
2004, the Company will pay Stuart the sum of $250,000 per
annum, less any applicable withholding taxes. This sum will be
paid in equal installments in accordance with the Company's
now existing regular payroll schedule for its executives. In
the event of ▇▇. ▇▇▇▇▇▇'▇ death or disability prior to
February 29, 2004, this compensation will continue without
interruption. Payment would be made to ▇▇. ▇▇▇▇▇▇'▇ personal
representative in the event of his death.
3. For a period of eighteen (18) months following the effective
date of Stuart's resignation, the Company will continue to pay
the full-premium cost of continuing the enrollment of Stuart
and his current dependents in the Company's group health plan
provided that Stuart will still be required to pay his portion
of the dependent care coverage as required of employees under
the current group health plan. If required by applicable law,
this coverage shall be pursuant to the Consolidated Omnibus
Budget Reconciliation Act ("COBRA"), in the manner and on the
schedule specified in the COBRA instructions the Company will
be furnishing to him. If upon expiration of this 18-month
period Stuart or any of his dependents are no longer eligible
to be covered under the Company's group health plan, the
Company will reimburse Stuart for the reasonable cost of
continuing the enrollment of Stuart and any affected
dependents in a comparable replacement medical benefits plan
through February 29, 2004 provided that Stuart will still be
required to pay his portion of the dependent care coverage as
required of employees under the current group health plan. If
Stuart or any of his dependents is eligible to be covered
under the Company's group health plan after the 18 month COBRA
period, the Company shall continue to pay the full premium
cost of continuing the enrollment of Stuart and his dependents
in the Company's group health plan provided that Stuart will
still be required to pay his portion of the dependent care
coverage as required of employees under the current group
health plan.
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4. Within 30 days following the date hereof, the Company will pay
Stuart for any vacation he earned but has not used as of the
effective date of his resignation, to the extent the same has
not already been paid. In addition, within 30 days following
the date hereof, the Company will reimburse Stuart for all
ordinary and necessary expenses incurred by him during his
employment, including, without limitation, $18,000
representing unreimbursed automobile expenses incurred since
November 1999.
5. Except as provided in Sections 2, 3 and 4 of this Agreement,
the Company shall have no obligation to make any other
payments or provide any other benefits to Stuart on or after
the Termination Date. The parties agree that this Section 5
shall supersede any provisions to the contrary set forth in
the Employment Agreement.
6. Notwithstanding Stuart's resignation, the Company will honor
and shall otherwise cause to be honored its grants of
non-qualified options to Stuart, which shall remain in full
force and effect, but
(a) Stuart's right to such option shares shall
be deemed fully (100%) vested on the
effective date of his resignation and shall
thereafter remain exercisable;
(b) Stuart (or his heirs and assigns) shall be
permitted to exercise the options through
April 19, 2004 at which time all unexercised
options will expire;
(c) except as stated herein, the grants of
options shall remain subject to all terms
and conditions set forth in the applicable
stock option plans and stock option
agreements. Such plan and agreements shall
be considered amended for all purposes to
the extent inconsistent with the terms
hereof.
7. Within 30 days following the date hereof, the Company will
transfer to Stuart all key man life insurance policies on his
life, and Stuart will be responsible for all premium payments
or liability therefor.
8. Stuart agrees to provide consulting services to the Company
for the period ending March 2, 2004 at the request of the
Company's Chief Executive Officer or at the request of the
Board of Directors, provided, however, Stuart will not, and
will not be obligated to, undertake any services without the
express written request of the Chief Executive Officer of
Board of Directors received in advance. Stuart agrees not to
contact any Company investment banker, analyst, portfolio
manager, investor, customer, vendor or employee on behalf of
the Company or in any manner which interferes with the
Company's established relationship with any of the foregoing,
without the written approval of the Company's Chief Executive
Officer or the Board of Directors.
9. Stuart confirms that he has delivered and returned to the
Company any and all property of the Company (including but not
limited to files, records, computer disks and related
materials, office access keys and office equipment) in good
condition, ordinary wear and tear excepted; provided, however,
that Stuart shall be entitled to retain the cellular telephone
currently in his possession, and the Company hereby assigns,
sells and conveys to Stuart all the Company's rights, title
and interest in and to said telephone. Stuart shall be
responsible for payment of all charges associated with said
cellular telephone after the Termination Date.
10. The Company and Stuart agree that the terms and conditions of
the Indemnification Agreement dated October 18, 1994 between
Company and Stuart shall remain in full force and effect and
shall survive the termination of Stuart's employment and
directorship relationship with the Company in accordance with
their terms. The Indemnification Agreement shall be amended to
the extent necessary to cause such survival through the
expiration of any applicable statute of limitations.
11. Stuart will refrain from disparaging the Company or its
services, products, directors, agents, or employees in any
manner, and from any other action that may lead to the
impairment of the Company's reputation and good standing in
the community and industry, or that may interfere with its
relationships with others with whom it does business, or with
its customers or employees,
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except as may be necessary to comply with a valid order,
subpoena or law and after reasonable notice has been given to
the Company that Stuart is or may become under a legal duty to
make disparaging remarks, opinions or disclosures. The
Company's officers and directors will refrain from
disparaging, in any manner, Stuart's personal or business
reputation or standing in the community and industry, and,
subject to Section 15 below, from interfering with Stuart's
pursuit of other gainful employment, except as may be
necessary to comply with a valid order, subpoena or law and
after reasonable notice has been given to Stuart that the
Company is or may become under a legal duty to make
disparaging remarks, opinions or disclosures.
12. Stuart will cooperate fully with the Company and its attorneys
concerning any current or future litigation or other legal
matter affecting the Company, to the extent that Stuart has or
may have knowledge of facts pertaining thereto. The Company
will strive to minimize the amount of time required of Stuart,
if any, for this purpose. Stuart will be reimbursed for
reasonable out-of-pocket expenses incurred in connection
therewith.
13. Stuart does, for himself and his heirs, agents, executors,
administrators, and assigns hereby RELEASE and FOREVER
DISCHARGE the Company and its directors, officers, employees,
agents, successors, assigns, and affiliated entities from any
and all claims, actions, and causes of action of whatever kind
or nature, which he may now have or ever may have had against
the said releasees, whether known or unknown to him, such as
may have arisen in whole or in part at any time prior to the
execution of this Severance Agreement. The claims being waived
by virtue of this Severance Agreement include, but are not
limited to those arising under
o The Age Discrimination in Employment Act, 29 U.S.C.
Section 621, et seq.;
o The Americans with Disabilities Act, 42 U.S.C.
Section 12101, et seq.;
o The Family & Medical Leave Act, 29 U.S.C. Section
2601, et seq.;
o Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. Section 2000e, et seq.;
o The Texas Commission on Human Rights Act, Labor Code
Section 21.001, et seq.;
o Chapter 451, Texas Labor Code; and
o The common or statutory laws of the United States or
the State of Texas, whether in tort or in contract,
and SPECIFICALLY INCLUDING ANY CLAIM STUART MIGHT
MAKE FOR NEGLIGENCE.
Stuart also promises that he will not file any sort of lawsuit
or claim against the releasees in any court of law or with any
federal, state or local governmental agency. The claims
released hereby do not include any obligations of the Company
under this Agreement.
14. The Company does, for itself and its directors, officers,
employees, agents, successors, assigns, and affiliated
entities hereby RELEASE and FOREVER DISCHARGE Stuart and his
heirs, agents, executors, administrators, and assigns from any
and all claims, actions, and causes of action of whatever kind
or nature, which it may now have or ever may have had against
the said releasees, whether known or unknown to the Company,
such as may have arisen in whole or in part at any time prior
to the execution of this Severance Agreement. The claims being
waived by virtue of this Severance Agreement include, but are
not limited to ANY CLAIMS THE COMPANY MIGHT MAKE FOR
NEGLIGENCE. The Company also promises that it will not file
any sort of lawsuit or claim against the releasees in any
court of law or with any federal, state or local governmental
agency. The claims released hereby do not include any
obligations of Stuart under this Agreement.
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15. Notwithstanding Sections 13 and 14 hereof, the following
sections of the Employment Agreement shall remain in full
force and effect:
o Section 6, Disclosure of Confidential Information,
Covenant Not to Compete;
o Subsection 7.2, Injunctive Relief;
o Subsection 7.7, Governing Law; and
o Subsection 7.8, Arbitration, it being understood that
the parties intend to invoke the Federal Arbitration
Act, 9 U.S.C. Section 1, et seq., or if such law is
inapplicable for any reason, then the Texas General
Arbitration Act, CIV. PRAC. & REM. CODE Section
171.001, et seq.
It is further agreed that Subsections 7.7 and 7.8 of the
Employment Agreement shall apply with equal force to this
Severance Agreement and are incorporated herein by reference,
as if fully set forth.
16. In the event Stuart materially breaches this Severance
Agreement or the continuing provisions of the Employment
Agreement as described in Section 15 above, which breach has
an adverse effect on the Company, Stuart agrees that he shall
no longer be entitled to any of the payments described in
Sections 2 and 3 hereof, and that all unexercised stock
options in the Company held by him shall terminate, it being
understood that such payments are in consideration of Stuart's
covenants and agreements hereunder. Notwithstanding the
foregoing, the Company shall have all other rights and
remedies to which it is entitled under law in the event Stuart
breaches this Severance Agreement or the continuing provisions
of the Employment Agreement as described in Section 15 above.
17. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, any waiver of any other
provision, whether or not similar. No waiver shall constitute
a continuing waiver. No waiver shall be binding unless
executed in writing by the party charged with the waiver. In
the event any provision of this Agreement shall finally be
determined to be unlawful, such provision shall be deemed to
be severed from this Agreement and every other provision of
this Agreement shall remain in full force and effect. If,
moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively
broad, it shall be construed, by limiting and reducing it, so
as to be enforceable to the extent compatible with the
applicable law as it shall then appear.
18. This Severance Agreement contains the complete and exclusive
expression of all promises and representations made between
the parties. Except as stated above, this Severance Agreement
supersedes and replaces all prior agreements and
understandings between the parties, both written and oral. No
additional or contrary promise or representation, or any
amendments to this Severance Agreement, shall be binding upon
either party unless reduced to writing and signed by Stuart
and a duly authorized officer of the Company on a date
subsequent to the date of execution of the present Agreement.
19. Stuart acknowledges that, with reference to the execution of
this Severance Agreement,
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o The consideration to be received by Stuart pursuant
to this Agreement exceeds that which is owed to him
by law;
o Stuart has been advised in writing to consult with an
attorney prior to executing this Severance Agreement;
o Stuart has waived any right to consider this
Severance Agreement for 21 days; and
o Stuart understands that, for a period of seven (7)
days following his execution of this Severance
Agreement, he may revoke it, and that the agreement
created by this document shall not become effective
or enforceable until after seven (7) days.
20. This Severance Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
21. Nothing contained in this Agreement shall be construed in any
way as an admission by the Company or Stuart that either of
them has acted wrongfully with respect to the other or with
respect to any other person, and each party specifically
disclaims any liability to, or wrongful acts against, the
other, on the part of themselves or their representatives,
affiliates, associates, employees or agents.
22. Neither party may assign this Agreement to anyone without the
express prior written consent of the other party hereto, which
consent shall not be unreasonably withheld, except that the
Company may assign this Agreement to a successor by merger or
sale of substantially all of the Company's business. Upon any
such assignment by the Company, the Company shall remain
liable for its obligations hereunder and the successor or
assignee shall expressly assume such obligations. This
Agreement shall inure to the benefit of Stuart's heirs or
legatees upon his death and to the benefit of any permitted
assigns.
23. This Agreement shall survive the death or disability of Stuart
and all the rights and entitlements of Stuart under this
Agreement and any relevant option plans and agreements shall
inure to the benefit of Stuart's personal representatives,
heirs, administrators and executors and shall be binding on
the Company and its successors and assigns.
IN WITNESS WHEREOF, the parties have affixed their signatures in the
spaces provided on this 19th day of April, 2001.
PACKAGED ICE, INC. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AN INDIVIDUAL:
By: /s/ ▇.▇. ▇▇▇▇▇ III /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇.▇. ▇▇▇▇▇ III
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Title: Chairman of the Board
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Attest:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President & COO
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