Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (the “Employment Agreement”), dated as of September 15,
2008 (the “Employment Date”), between Reddy Ice Corporation, a Nevada
corporation (the “Company”), and PAUL D. SMITH, an individual residing at the
address set forth on Schedule A attached hereto (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company wishes to secure the services of the Executive as Executive
Vice President and Chief Operating Officer of the Company upon the terms and
conditions hereinafter set forth, and the Executive wishes to render such
services to the Company upon the terms and conditions hereinafter set forth; and

 

WHEREAS, the Company is a wholly-owned subsidiary of Reddy Ice Holdings, Inc., a
Delaware corporation (the “Parent”);

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:

 

1.             Employment by the Company.

 

1.1           Subject to the terms of this Employment Agreement, the Executive
shall be the Executive Vice President and Chief Operating Officer of the Company
and shall perform such duties as the Board of Directors of the Company (the
“Board”) may from time to time assign, consistent with Section 1.2 hereof.  The
Executive shall be based in the Company’s executive offices in Dallas, Texas,
subject to such travel as may be required or necessary in connection with the
performance of the Executive’s duties hereunder.

 

1.2           The Executive shall report directly to or at the direction of the
Board and shall comply with the direction of the Board and with the policies of
the Company.  The Executive agrees to devote the Executive’s full business time
and attention to the business of the Company and to faithfully, diligently and
competently perform the Executive’s duties hereunder.  The Executive shall, as
part of the Executive’s duties as an employee of the Company, actively seek such
opportunities and undertake such activities so as to promote high visibility and
a positive image of the Company, the Parent and the Subsidiaries of the Parent.

 

2.             Term of Employment.  The term of the Executive’s employment under
this Employment Agreement (the “Term”) shall be for the period commencing on the
Employment Date and ending when the employment is terminated as provided in
Section 4 hereof.

 

3.             Compensation.  As full compensation for all services to be
rendered by the Executive to the Company and its Affiliates in all capacities
during the Term, the Executive shall receive the following compensation and
benefits:

 

3.1           Salary.  The Executive shall be entitled to receive an annual base
salary (the “Base Salary”) payable not less frequently than monthly in
accordance with the then customary

 

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payroll practices of the Company.  The Base Salary shall initially be $290,000
per year and shall be subject to increase from time to time as determined by the
Board.

 

3.2           Participation in Executive Benefit Plans; Other Benefits.  The
Executive shall be permitted during the Term, if and to the extent eligible, to
participate in all compensation and employee benefit plans and arrangements
maintained from time to time by the Company or on behalf of the Company by an
Affiliate of the Company or otherwise, commensurate with the Executive’s
position with the Company, in form and substance substantially similar to those
that existed in the Company in September 2008, except to the extent of changes
in Company employee benefit plans generally.  Nothing in this Employment
Agreement shall preclude the Company (or any Person maintaining such plans on
the Company’s behalf) from terminating or amending any such plans or coverage so
as to eliminate, reduce or otherwise change any benefit payable thereunder.

 

3.3           Bonuses.    In addition to the Base Salary, to the extent provided
below, the Executive shall be eligible to receive an annual bonus (the “Bonus
Amount”) for each calendar year ending during the Term, including, without
limitation, for calendar year 2008.  The Compensation Committee of the Board has
established a bonus plan for certain employees, including the Executive.  The
Executive will have payment targets initially equal to 65% of his Base Salary
for the applicable calendar year (subject to proration for the portion of fiscal
year 2008 occurring after the date hereof), structured in a manner consistent
with the Company’s existing bonus plan.  The Executive’s actual Bonus Amount, if
any, shall be based on the Company achieving certain financial and operating
goals in each calendar year during the Term.

 

3.4           Equity Incentive Grant.   On the Employment Date, Executive will
receive a restricted stock award (the “Restricted Stock Award”) as set forth in
the Restricted Stock Agreement of even date herewith.  The Executive will
receive a customary income tax “gross-up” with respect to the Restricted Stock
Award at a rate of 35%.

 

3.5           Vacation.  The Executive shall be entitled to four (4) weeks of
paid vacation per year.  Unused vacation may not be taken in any subsequent
year.

 

4.             Termination.

 

4.1           Termination upon Death.  The Term shall terminate as of the date
of the Executive’s death.

 

4.2           Termination upon Disability.  If the Executive becomes Disabled,
the Company may terminate the Term by written notice to the Executive, in which
event the Term shall terminate ten (10) days after the date upon which the
Company has given notice to the Executive of its intention to terminate the
Executive’s employment under this Employment Agreement.

 

4.3           Termination by the Company for Cause.  If the Executive (i) is
convicted of, or pleads guilty to, a felony or a crime involving moral
turpitude, (ii) engages in independently verified, continuing and unremedied
substance abuse involving drugs or alcohol, (iii) performs an action or fails to
take an action that, in the reasonable judgment of a majority of the
disinterested members of the Board, constitutes willful dishonesty, larceny,
fraud or gross negligence by the Executive in the performance of the Executive’s
duties to the Company, or

 

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makes a knowing or reckless misrepresentation (including by omission of any
material adverse information) to shareholders, directors or officers of the
Parent, (iv) willfully and repeatedly fails, after ten (10) business days
notice, to materially follow the written policies of the Company or instructions
of the Board or (v) materially breaches any agreement to which the Executive and
the Company or any of its Subsidiaries are a party, or materially breaches any
written policy, rule or regulation adopted by the Company or any of its
Subsidiaries relating to compliance with securities laws or other laws, rules or
regulations and such breach is not cured by the Executive or waived in writing
by the Company within thirty (30) days after written notice of such breach to
the Executive, then the Company may, at any time by written notice to the
Executive, which notice shall be appended to a certified written resolution duly
adopted by the Board, terminate the Term immediately.

 

4.4           Termination by the Company without Cause.  The Company may
terminate the Term at any time, without cause, upon thirty (30) days’ written
notice from the Company to the Executive.

 

4.5           Termination by the Executive without Cause.  The Executive may
terminate the Term at any time, without cause (i.e., the Executive’s voluntary
termination), upon thirty (30) days’ written notice from the Executive to the
Company.

 

4.6           Termination by the Executive for Good Reason.  The Executive may
terminate the Term for Good Reason upon thirty (30) days’ written notice from
the Executive to the Company.

 

5.             Severance Payments.

 

5.1           Severance Payments Upon Termination for Disability, by the Company
without Cause or by the Executive for Good Reason.  If this Employment Agreement
is terminated pursuant to Sections 4.2, 4.4 or 4.6 hereof, the Executive shall
be entitled to a severance payment equal to 100% of the Executive’s annual Base
Salary then in effect, which payment shall be payable at the Company’s
discretion either on a payroll basis for a period of twelve (12) months (the
“Benefits Period”) or in a lump sum and, in either case, without offset for
other earnings.  If severance is paid over time to the Executive, the Executive
shall be entitled to the continuation of healthcare benefits for the Benefits
Period; provided the Executive shall pay the premiums for such benefits at rates
assessed for employees; provided further that the rights to continued
participation in healthcare benefits shall terminate if the Executive shall
become actively engaged (whether as an employee, an independent contractor or
otherwise) under circumstances where the Executive is eligible to participate in
another employer’s healthcare benefit program.  If, prior to the end of the
Benefits Period, the Executive violates Section 6 hereof, then the Company shall
have no obligation to make any of the payments and benefits required to be made
under this Section 5.1 on or after the date of such violation.

 

5.2           Severance Payments Upon Termination for Cause, Death or Voluntary
Termination by the Executive.  If the Term is terminated pursuant to Sections
4.1, 4.3 or 4.5 hereof, the Executive shall receive only all previously earned,
accrued and unpaid Base Salary and benefits from the Company and its employee
benefit plans, including any such benefits under pension, disability and life
insurance plans, policies and programs applicable to the

 

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Company; provided, however  that nothing in this Section 5.2 shall affect the
Executive’s right to receive the benefits the Executive is entitled to receive
pursuant to Section 5.2.1 hereof.

 

5.2.1        Bonus Upon Death.  If the Executive dies while employed by the
Company (i.e., if the Term is terminated pursuant to Section 4.1 hereof), the
Executive’s estate shall also be entitled to receive the pro rated amount (to
the date of death) of the Bonus Amount the Executive would have earned during
such year based on actual performance, and such bonus shall be paid when
management bonuses are paid generally.

 

6.             Certain Covenants of the Executive.

 

6.1           Covenants Against Competition.  The Executive acknowledges that: 
(i) the Company and its Affiliates anticipate conducting their business
throughout North America, (ii) from and after the Employment Date the
Executive’s work for the Company and its Affiliates will continue to bring him
into close contact with many confidential affairs not readily available to the
public, including confidential and proprietary information and trade secrets and
(iii) the covenants contained in this Section 6 will not involve a substantial
hardship upon the Executive’s future livelihood.  In order to induce the Company
to enter into this Employment Agreement and in consideration of Executive’s
receipt of Company’s confidential, proprietary, and/or trade secret information,
the Executive covenants and agrees that:

 

6.1.1        Non-Compete.  During the Term and for a period ending two (2) years
after the termination of the Term (the “Restricted Period” ), whether or not the
Executive becomes entitled to severance payments hereunder, the Executive shall
not, directly or indirectly, within 150 miles of (x) any ice manufacturing
facility or ice manufacturing equipment owned or operated by the Company or its
Subsidiaries or acquired by the Company after the date hereof or (y) any
facility, company or territory being actively evaluated by the Company during
the Term, which active evaluation the Executive had actual knowledge of, as a
likely acquisition or expansion opportunity within the twelve (12) months
following the last day of the Term, (i) be employed by, or render services to,
any person, firm or corporation engaged in any business which would directly
compete with the Company in the ice business (“Competitive Business”), (ii) own,
manage, operate, control, assist, consult, advise or participate in the
ownership, management, operation or control of any Competitive Business, or
otherwise engage in any Competitive Business for the Executive’s own account or
(iii) be associated with or interested in any Competitive Business as an
individual, partner, shareholder, creditor, director, officer, principal, agent,
employee, trustee, consultant, advisor or in any other relationship or
capacity.  Notwithstanding the foregoing, this Section 6.1.1 shall not preclude
the Executive from investing the Executive’s personal assets in the securities
of any corporation or other business entity which is engaged in a Competitive
Business if such securities are traded on a national stock exchange, through an
automated inter-dealer quotation system or in the over-the-counter-market and if
such investment does not result in the Executive beneficially owning, at any
time, more than 1% of the class of publicly-traded equity securities of such
Competitive Business.

 

6.1.2        Non-Solicitation and Non-Hire.  During the Term and for a period
ending three (3) years after the Executive’s termination from the Company,
without the Company’s prior consent, the Executive shall not, directly or
indirectly, (i) solicit, persuade, interfere with, induce, encourage, entice or
endeavor to entice away from the Company or any of its Subsidiaries, for

 

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the benefit of any Competitive Business, any of its customers, suppliers,
licensees or other persons with whom the Company has a contractual relationship
or (ii) employ or retain, or have or cause any other person or entity to employ
or retain, any person who was employed or retained by the Company or any of its
Subsidiaries as a corporate executive, operating manager at the plant manager
level or higher manager level or sales personnel while the Executive was
employed by the Company.

 

6.1.3        Non-Disparagement.  During the Term and after the termination of
the Executive’s employment with the Company, the Executive shall not make any
statements, in writing or otherwise, that disparage the reputation or character
of the Company or any of its Affiliates, Subsidiaries, divisions or any of their
respective directors, officers, employees or shareholders at any time for any
reason whatsoever, except that nothing in this Section 6.1.3 shall prohibit the
Executive from giving truthful testimony in any litigation, administrative or
arbitration proceeding either between the Executive and the Company or in
connection with which the Executive is required by law to give testimony.

 

6.1.4        Confidential Information.  During the Term and after the
termination of the Executive’s employment with the Company, the Executive shall
not, directly or indirectly, disclose to any person or entity who is not
authorized by the Company or any Affiliate of the Company to receive such
information, or use or appropriate for the Executive’s own benefit or for the
benefit of any person or entity other than the Company or any Affiliate of the
Company, any documents or other papers relating to the business or the customers
of the Company or any Affiliate of the Company, including, without limitation,
files, business relationships and accounts, pricing policies, customer lists,
computer software and hardware, information relating to the distribution of the
products of the Company or any Affiliate of the Company, or any other materials
relating to the business or the customers of the Company or any Affiliate of the
Company or any trade secrets or confidential information including, without
limitation, any business or operational methods, drawings, sketches, designs or
product concepts, know-how, marketing plans or strategies, product development
techniques or plans, business acquisition plans, financial or other performance
data, personnel and other policies of the Company or any Affiliate of the
Company, whether generated by the Executive or by any other person, except as
required in the course of performing the Executive’s duties hereunder or with
the express written consent of the Company; provided, however, that the
confidential information shall not include any information required to be
disclosed by law or readily ascertainable from public information; provided,
further, except as reasonably necessary to comply with the securities laws, the
Executive may disclose to any and all persons, without limitation of any kind,
the U.S. federal income tax treatment and tax structure of the Company and all
materials of any kind (including opinions and other tax analyses) that are
provided to the Executive relating to such tax treatment and tax structure.

 

6.1.5        Property of the Company.  At no time shall the Executive remove or
cause to be removed from the premises of the Company or any Affiliate of the
Company, any memorandum, note, list, record, file, disk, document or other
paper, equipment or any like item relating to the business (including copies,
extracts and summaries thereof) except in furtherance of the performance of the
Executive’s duties on behalf of the Company or any Affiliate of the Company. 
All memoranda, notes lists, records, files, disks, documents and other papers
and other like items (and all copies, extracts and summaries thereof) made or
compiled by the

 

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Executive or made available to the Executive concerning the business of the
Company or any Affiliate of the Company shall be the property of the Company or
any Affiliate of the Company, as the case may be, and shall be delivered to the
Company promptly upon the termination of the Executive’s employment with the
Company or any Affiliate of the Company or at any other time upon request.

 

6.2           Rights and Remedies Upon Breach.  If the Executive breaches any of
the provisions of Section 6.1 hereof (collectively, the “Restrictive
Covenants”), the Company and its Affiliates shall, in addition to the rights set
forth in the last sentence of Section 5.1 hereof, have the following rights and
remedies, each of which rights and remedies shall be independent of the others
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company and its Affiliates under law or in equity.

 

6.2.1        Specific Performance.  The right and remedy to seek specific
performance of the Restrictive Covenants or injunctive relief, without the
request to post bond, against any act which would violate any of the Restrictive
Covenants; it being acknowledged and agreed that any such breach or threatened
breach will cause irreparable injury to the Company and its Affiliates and that
money damages will not provide an adequate remedy to the Company and its
Affiliates.

 

6.2.2        Threatened Breach.  In addition, if the Executive threatens to
breach any provisions of Section 6.1 hereof, the Company and its Affiliates
shall have the rights set forth in Section 6.2.1 hereof.

 

6.2.3        Severability of Covenants.  If any of the Restrictive Covenants, or
any part thereof, is held by an arbitration body or court of competent
jurisdiction or any foreign, federal, state, county or local government or other
governmental, regulatory or administrative agency or authority to be invalid,
void, unenforceable or against public policy for any reason, the remainder of
the Restrictive Covenants shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and such arbitration body, court,
government, agency or authority shall be empowered to substitute, to the extent
enforceable, provisions similar thereto or other provisions so as to provide to
the Company and its Affiliates, to the fullest extent permitted by applicable
law, the benefits intended by such provisions.

 

6.3           Enforceability in Jurisdictions.  The parties intend to and hereby
confer jurisdiction to enforce the decisions of the arbitrators pursuant to
Section 7.5 hereof with respect to the Restrictive Covenants upon the courts of
any jurisdiction within the geographical scope of such Restrictive Covenants. 
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants wholly invalid or unenforceable by reason of the breadth of such scope
or otherwise, it is the intention of the parties that such determination not bar
or in any way affect the Company’s right to the relief provided above before the
arbitrators or in the courts of any other jurisdiction within the geographical
scope of such Restrictive Covenants, as to breaches of such Restrictive
Covenants in such other respective jurisdictions, such Restrictive Covenants as
they relate to each jurisdiction being, for this purpose, severable into diverse
and independent covenants.

 

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7.             Other Provisions.

 

7.1           Notices.  Notice under this Employment Agreement shall be in
writing and shall be deemed given when received by the party to be notified
(a) when given in person, (b) on the first day after delivery to Federal Express
or other overnight courier, postage prepaid and (c) upon transmission by
telecopier with confirmation by United States mail, in each case at the address
for the intended recipient as set forth below:

 

(i)                                   if to the Company, to:

 

                                                Reddy Ice Corporation
8750 North Central Expressway, Suite 1800
Dallas, Texas 75231
Telecopier:  (214) 528-1532
Attention:  Chairman of the Board

 

with a copy (which shall not constitute notice) to:

 

                                                DLA Piper LLP (US)
1251 Avenue of the Americas
New York, New York 10020
Attention:       Roger Meltzer, Esq.

 

(ii)                                if to the Executive, to him at the address
set forth on Schedule A attached hereto or to the telecopier number set forth
below:

 

Telecopier:  (214) 528-1532

 

7.2           Entire Agreement.  This Employment Agreement contains the entire
agreement between the parties with respect to the specific subject matter hereof
and replaces and supersedes any and all prior employment contracts and other
related agreements, written or oral, with respect thereto, as well as any and
all entitlements which have accrued as of the date of this Employment Agreement
that the Executive may otherwise have with or derive from the Company.  This
Employment Agreement should be read in conjunction with the Indemnification
Agreement.

 

7.3           Waivers and Amendments.  This Employment Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance.  No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right, power or privilege hereunder, nor any single or partial exercise
of any right, power or privilege hereunder, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.

 

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7.4           Governing Law.  This Employment Agreement shall be governed by,
and construed in accordance with and subject to, the laws of the State of Texas,
without giving effect to the principles of conflicts of law.

 

7.5           Arbitration.  Any dispute or controversy arising out of or in
connection with this Employment Agreement or the Executive’s employment or the
termination thereof, including, but not limited to, any claim of discrimination
under federal or state law, shall be subject to and settled exclusively by
binding arbitration in Dallas, Texas, in accordance with the rules of the
American Arbitration Association then in effect.  Judgment may be entered on the
arbitrators’ award in any court having jurisdiction and reasonable attorneys’
fees and shall be awarded to the prevailing party.  The arbitrators shall
determine the allocation of the costs and expenses arising in connection with
any arbitration proceeding pursuant to this Section 7.5 based on the
arbitrators’ assessment of the merits of the positions of the parties.

 

7.6           Binding Effect; Benefit.  This Employment Agreement shall inure to
the benefit of and be binding upon the parties hereto and any heirs, successors
and assigns.  Nothing in this Employment Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or such heirs,
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Employment Agreement.

 

7.7           Assignment.  This Employment Agreement, and the Executive’s rights
and obligations hereunder, may not be assigned by the Executive; provided,
however, that such rights and obligations shall be enforceable by the
Executive’s legal representatives, heirs and other successors in interest.  The
Company shall assign this Employment Agreement and its rights, together with its
obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its assets or business, whether
direct or indirect, by purchase, merger, consolidation or otherwise.

 

7.8           Number and Gender.  As used herein, the singular shall include the
plural and vice versa and words used in one gender shall include all others as
appropriate.

 

7.9           Withholding of Taxes.  The Company may withhold from any
compensation or benefits payable under this Employment Agreement all federal,
state, city and other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

 

7.10         Definitions.  For purposes of this Employment Agreement:

 

(i)            “Affiliate” shall have the same meaning as set forth in
Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended.

 

(ii)           “Disabled” or “Disability” shall mean, with respect to the
Executive, (a) the occurrence of a period of 90 consecutive days or 180 out of
360 consecutive days during which the Executive is unable to perform the
Executive’s duties due to a mental or physical impairment or (b) a determination
of disability due to mental or physical impairment by an agreed upon medical
practitioner selected by the Company and the Executive, that it is reasonably
likely that an impairment exists with respect to the Executive which will, with
the passage of time, satisfy clause (a). If the Company and the Executive are
unable to agree upon a medical practitioner, each shall select a medical
practitioner and such practitioners shall jointly select another medical

 

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practitioner who shall determine whether or not there is a disability.  If the
two practitioners chosen by the Company and the Executive are unable to agree
upon the third practitioner, the American Arbitration Association in Dallas,
Texas shall select a medical practitioner.

 

(iii)          “Good Reason” shall mean a separation from service (with the
meaning of Treasury Regulation Section 1.409A-1(h)) within 1 year following the
initial existence of one or more of the following conditions arising without
Executive’s consent:  (1) a material diminution in Executive’s Base Salary;
(2) a material diminution in Executive’s title, authority, or responsibility; (4
) relocation of Executive to an office more than 50 miles from Executive’s
office on the Employment Date;  or (5) a material breach by the Company of this
Agreement.  Before terminating employment for Good Reason, Executive must
provide notice of the existence of the condition within 90 days following the
initial existence of such condition.  Company shall have a period of thirty 30
days after receipt of such notice to correct the situation (and thus prevent
Executive’s termination for Good Reason).  Upon the expiration of the thirty
(30) day period without cure by the Company, Executive shall be entitled to
terminate for Good Reason.

 

(iv)          “Indemnification Agreement” shall mean that certain
indemnification agreement, dated as of the date hereof, between the Executive
and the Parent.

 

7.11         Counterparts.  This Employment Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

7.12         Headings.  The headings in this Employment Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Employment Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first above written.

 

 

The Company:

 

 

REDDY ICE CORPORATION

 

 

 

 

 

By:

/s/ Gilbert M. Cassagne

 

 

Name: Gilbert M. Cassagne

 

 

Title:   President and Chief Executive Officer

 

 

 

 

Executive:

 

 

 

 

 

 

/s/ Paul D. Smith

 

Paul D. Smith

 

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