Exhibit 10.1

 
SEPARATION AGREEMENT AND RELEASE
 
This Separation Agreement and Release (“Agreement”) is made and entered into by
and between ICO, Inc. and ICO Polymers North America, Inc., both of which having
corporate offices at 5333 Westheimer, Suite 600, Houston, Texas 77056
(collectively, “Company”), and David J. Phillips, with a residence address of 34
Constellation Wharf, Boston, Massachusetts 02129 (“Employee”).
 
1.  Termination. Employee’s employment with Company has terminated effective at
midnight Central Standard Time on May 13, 2005 (the “Termination Date”), through
which date Employee will be paid his regular salary. Pursuant to the Company’s
policy set forth in its employee handbook, Employee shall be paid unused
vacation days.
 
2.  Definitions.
 
(a)  “Claims” means all theories of recovery of whatever nature, whether known
or unknown, and whether recognized by the law or equity of any jurisdiction.
This term includes causes of action, charges, indebtedness, losses, claims,
liabilities, and demands, whether arising in equity or under the common law or
under any contract or statute. This term includes any claims of discrimination,
harassment, retaliation, retaliatory discharge, or wrongful discharge, and any
other claim which is alleged or which could be alleged by Employee, or on
Employee’s behalf, in any lawsuit or other proceeding. This term includes any
claims and rights arising under the Age Discrimination in Employment Act of
1967, 29 U.S.C. §621, et seq.; Title VII of the Civil Rights Act of 1964, 42
U.S.C. §2000e, et seq.; the Employee Retirement Income Security Act of 1974, 29
U.S.C. §1001, et seq.; the Americans with Disabilities Act, 42 U.S.C. §12101, et
seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §2101, et
seq.; the Family and Medical Leave Act, 29 U.S.C. §2601, et seq.; and any other
federal, state or local law or regulation regarding employment or the
termination of employment. This term includes any and all rights, benefits or
claims Employee may have under any employment contract or under any severance,
bonus, stock option or incentive compensation plan, program or agreement.
 
(b)  “Damages” means all elements of relief or recovery of whatever nature,
whether known or unknown, which are recognized by the law or equity of any
jurisdiction which is sought or which could be sought by Employee, or on
Employee’s behalf, in any lawsuit or other proceeding. This term includes
actual, incidental, indirect, consequential, compensatory, exemplary, liquidated
and punitive damages; rescission; attorneys’ fees; interest; costs; equitable
relief; and expenses. This term also includes wages, benefits or other
compensation owed, or allegedly owed to Employee, by virtue of Employee’s
employment or termination of employment with Company, including severance,
bonuses, stock option or incentive compensation, payable pursuant to any plan,
program, or agreement.
 
(c)  “Employee” means and includes Employee acting individually; in any
corporate or other representative capacity; and on behalf of Employee’s heirs,
executors, administrators, legal representatives, successors, beneficiaries, and
assigns.
 

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(d)  “Released Parties” means and includes Company, and its past, present and
future owners, trustees, parents, subsidiaries, affiliates, and related
entities, and all of the foregoing entities’ and persons’ past, present and
future directors, officers, employees, associates, agents, benefit plans (and
each such plan’s fiduciaries, administrators, trustees, sponsors and
representatives), insurance carriers, predecessors, successors, assigns,
executors, administrators, and representatives, in both their representative and
individual capacities; provided that this term does not include Employee. Each
of the Released Parties is an intended beneficiary of this Agreement.
 
3.  Termination Payments.  In consideration for Employee executing (and not
revoking) this Agreement, within twenty-five (25) days after the Termination
Date, and after Employee’s execution and non-revocation of this Agreement,
Company shall: (a) pay Employee the sum of Twenty Thousand Dollars ($20,000);
and (b) pay the premiums for Employee and his wife’s continued coverage under
the Company’s medical and dental plans for nine months following the Termination
Date, provided Employee elects and is eligible for such continued coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). The
payments referenced in (a) and (b) of the preceding sentence are referred to as
the “Termination Payment” The portion of the Termination Payment referenced in
clause (a) above shall be paid to Employee in lump sum cash (subject to required
taxes and withholding) within thirty (30) days after Employee executes this
Agreement.
 
4.  Release.
 
(a)  Employee releases and discharges the Released Parties from, and hereby
waives, all Claims and Damages, including those related to, arising from or
attributed to: (i) Employee’s employment with Company, including the Offer
Letter, and the Employment Agreement signed by Employee on July 16, 2004
(“Employment Agreement”), and any bonus that might have otherwise been payable
under the Fiscal Year 2005 Executive Leadership Team Incentive Compensation
Plan, (ii) the termination of Employee’s employment, and (iii) all other acts or
omissions related to any matter at any time prior to and including the date of
Employee’s execution of this Agreement; except that this release will not affect
Employee’s claims for benefits and payments to be payable after the Termination
Date under any of Company’s health or welfare plans.
 
(b)  Employee understands and expressly agrees that the release in Section 4(a)
extends to all Claims of every nature and kind, known or unknown, suspected or
unsuspected, past or present (but not future), which Claims are arising from,
attributable to, or related to Employee’s employment with Company, the
termination of Employee’s employment, or any alleged action or inaction of the
Released Parties, and that all such Claims are hereby expressly settled or
waived. Employee further understands and expressly agrees that the release in
Section 4(a) includes the waiver of any Claims and rights Employee may have
against any of the Released Parties under the Age Discrimination in Employment
Act, the Older Workers Benefit Protection Act, or under any other law
prohibiting age discrimination, arising prior to and including the date of
Employee’s execution of this Agreement.
 
(c)  Employee agrees not to bring or cause to be brought any Claims against any
of the Released Parties in any court or before any arbitral authority, or accept
any Damages for any Claims against any of the Released Parties, which Claims are
related to, arising from or
 
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attributed to Employee’s employment with Company, the Employment Agreement, the
termination of Employee’s employment, and any other matter covered by the
release in Section 4(a). Employee represents and warrants that Employee has not
brought or caused to be brought any such Claims, or accepted any such Damages
for any such Claims, against any of the Released Parties.
 
5.  Cooperation in Litigation. Employee agrees that Employee shall cooperate
with and assist Company in defense of any claim, litigation or administrative
proceeding brought against Company or any other Released Party, as reasonably
requested by Company. Such cooperation and assistance shall include
(a) interviews of Employee by legal counsel for Company or other Released Party
as reasonably requested by Company’s counsel, (b) Employee providing documents
(or copies thereof) and executing affidavits as reasonably requested by
Company’s counsel, and (c) Employee appearing for depositions, trials, and other
proceedings as reasonably requested by Company’s counsel. Furthermore, Employee
shall not communicate with any party adverse to Company, or with a
representative, agent or legal counsel for any such party, concerning any
pending or future claims or litigation or administrative proceedings, except
solely through legal counsel for Company. Nothing in this Section 5 is intended
to cause Employee to testify other than truthfully in any proceeding or
affidavit.
 
6.  Warranties. Employee agrees, represents and warrants that:
 
(a)  The Termination Payment set forth in Section 3(a) of this Agreement is not
something that Employee is otherwise indisputably entitled to except in exchange
for Employee's execution and non-revocation of this Agreement, and is good and
sufficient consideration for Employee's execution and non-revocation of this
Agreement, and is paid by or on behalf of Company and the other Released Parties
in full satisfaction and settlement of any Claims and Damages;
 
(b)  Employee is legally and mentally competent to sign this Agreement;
 
(c)  Employee is the sole owner of any Claims that have been or could have been
asserted, Employee has the requisite capacity and authority to make this
Agreement, and no portion of any existing or potential Claims has been sold,
assigned, pledged or hypothecated by Employee to any third party; and
 
(d)  Employee presently possesses the exclusive right to receive the Termination
Payment paid in consideration for this Agreement.
 
7.  Choice of Law.  This Agreement shall be interpreted and construed in
accordance with and shall be governed by the laws of the State of Texas, without
reference to principles of conflict of law of Texas or any other jurisdiction,
and, when applicable, the laws of the United States.
 
8.   Confidentiality and Non-Poach Agreements.
 
(a) Employee agrees that Employee will not disclose Company’s trade secrets, or
other proprietary, confidential, or non-public information (“Confidential
Information”) acquired during employment with Company. Confidential Information
includes, but is not limited to, the following information pertaining to
Company: non-public financial information;
 
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information relating to strategic marketing plans, business plans, business
assessments, product development plans, and planned or contemplated business
activities or ventures; corporate plans, decisions, investigations, and
strategies; cost or pricing information; vendor or supplier information,
including the identity of suppliers and supply pricing; confidential customer
information such as prices, volumes, and products sold to or processed for
particular customers, as well as customer product formulations, specifications
and requirements; and, information regarding proposed joint ventures, mergers,
acquisitions, and other such anticipated or contemplated transactions.
Confidential Information shall not, however, include information if Employee can
establish by written records that such information is or has become publicly
disseminated other than through Employee.
 
(b) Employee further promises and agrees not to damage or attempt to damage the
business reputation or goodwill of the Company, and in this regard promises not
to disparage or make malicious statements regarding the Company’s employees,
officers, and directors.

(c) Employee shall not disclose the terms or contents of this Agreement to any
person who is not a party hereto (with the exception of confidential disclosures
to Employee’s immediate family members, personal attorney, or personal tax
advisor) unless ordered by a court of competent jurisdiction, compelled pursuant
to a subpoena, or required for the purpose of a governmental tax audit.

(d) During the nine (9) months after Employee’s execution of this Agreement,
Employee, acting either directly or indirectly, or through any other person,
firm, corporation, or new employer, will not: (i) induce or attempt to induce or
influence any employee of Company to terminate employment with Company and/or to
consider or accept employment with a different employer; (ii) assist, directly
or indirectly, any person, firm or corporation in any attempt to acquire the
stock or assets of ICO, Inc. or any of its subsidiaries; (iii) hire any person
who is or was a Company employee as of the date of this Agreement.

9.  Return of Company Property.  Employee shall, on the Termination Date
specified in Section 1 above, or if not logistically possible then as soon as
reasonably possible, promptly return to Company all Company property in
Employee's possession, including, but not limited to, the following Company
property that may have been entrusted to Employee: keys to any of Company's
offices and facilities, credit cards, vehicle fuel cards, pager, vehicle,
cellular telephone, office equipment, customer lists, and documentation and
other information constituting or relating to Company’s Confidential
Information. Notwithstanding the foregoing, as Employee is executing a
consulting agreement with Company, Company shall permit Employee to retain the
laptop computer, blackberry, and ancillary IT equipment assigned to him, and
Company business plans, sales call records, trade secret information, and other
Company-related documents in order that Employee may perform services for the
Company pursuant to the consulting agreement, with the understanding that
Employee shall return all such items to Company immediately upon termination of
the consulting agreement for any reason. Unless an authorized representative of
the Company agrees otherwise in writing, Employee has no rights to use or
possess any Company property after separation from Company.

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10.  Entire Agreement. This Agreement constitutes the entire agreement of the
parties relating to the subject matter hereof, and supersedes any obligations of
Company and the other Released Parties under any previous agreements, except as
otherwise provided in this Agreement. Notwithstanding the foregoing, (a)
Employee’s obligations under Article 4 of the Employment Agreement (entitled
“Employee Covenants”) and the Confidentiality and Non-Disclosure Agreement dated
July 6, 2004 shall remain in full force and effect, and (b) should the parties
enter into that certain Consulting Services Agreement as currently contemplated
by the parties, such Consulting Services Agreement will not be superseded by
(nor will it supersede) this Agreement. No term, provision or condition of this
Agreement may be modified in any respect except by a writing executed by both
Employee and Company. No person has any authority to make any representation or
promise on behalf of any of the parties not set forth in this Agreement. This
Agreement has not been executed in reliance upon any representation or promise
except those contained herein.
 
11.  Acknowledgment of Terms.  Employee acknowledges that Employee has carefully
read this Agreement; that Employee has had the opportunity for review of it by
Employee’s attorney; that Employee fully understands its final and binding
effect; that Company admits to no wrongdoing in connection with Employee’s
employment, the Employment Agreement, the termination of Employee’s employment,
or any other matter covered by the release in Section 4(a); that this Agreement
is intended as a compromise of all Claims which Employee has alleged or may
allege against any of the Released Parties; that the only promises or
representations made to Employee to sign this Agreement are those stated herein;
and that Employee is signing this Agreement voluntarily.
 
12.  Waiver.  The failure of Company to enforce or to require timely compliance
with any term or provision of this Agreement shall not be deemed to be a waiver
or relinquishment of rights or obligations arising hereunder, nor shall this
failure preclude the enforcement of any term or provision or avoid the liability
for any breach of this Agreement.
 
13.  Severability.  Each part, term or provision of this Agreement is severable
from the others. Notwithstanding any possible future finding by a duly
constituted authority that a particular part, term or provision is invalid, void
or unenforceable, this Agreement has been made with the clear intention that the
validity and enforceability of the remaining parts, terms and provisions shall
not be affected thereby; provided that if the release is invalidated, Employee
shall execute a valid release or this entire Agreement shall be voidable, at the
option of Company, thereby requiring Employee to return that portion of the
Termination Payment described in Section 3 of this Agreement and terminating the
obligation of Company to provide the Termination Services, to the extent
permitted under applicable law.
 
14.  Costs and Attorneys’ Fees.  If any action is initiated to enforce this
Agreement, the prevailing party shall be entitled to recover from the other
party its reasonable costs and attorneys’ fees.
 
15.  Construction.  This Agreement shall be deemed drafted equally by all the
parties. Its language shall be construed as a whole and according to its fair
meaning. Any presumption or principle that the language is to be construed
against any party shall not apply. The headings in this Agreement are only for
convenience and are not intended to affect construction or interpretation. This
Agreement represents a compromise of disputed Claims and is not to be
 
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construed as an admission, direct or indirect, against any interest of the
parties. Any references to paragraphs, subparagraphs, or sections are to those
parts of this Agreement, unless the context clearly indicates to the contrary.
Also unless the context clearly indicates to the contrary, (a) the plural
includes the singular and the singular includes the plural; (b) “and” and “or”
are each used both conjunctively and disjunctively; (c) “any,”“all,”“each,” or
“every” means “any and all, and each and every”; (d) “includes” and “including”
are each “without limitation;” and (e) “herein,”“hereof,”“hereunder” and other
similar compounds of the word “here” refer to the entire Agreement and not to
any particular paragraph, subparagraph, section or subsection.
 
16.  Timing.  Employee acknowledges: (a) Employee has at least 21 days to
consider this Agreement before executing it, although Employee may execute this
Agreement before the 21 days expires, but not before the Termination Date,
(b) Employee may revoke this Agreement within 7 days after Employee executes it,
(c) such revocation must be in writing (and may be transmitted by facsimile
pursuant to Section 17 below) and received by Company’s President and Chief
Executive Officer within this 7-day period, (d) this Agreement will not become
effective or enforceable, and the Termination Payment set forth in Section 3 of
this Agreement will not be paid until the expiration of this 7-day period
without Employee’s revocation, and Employee returns this Agreement to Company’s
President and Chief Executive Officer, and (e) Employee’s acceptance of any
portion of the Termination Payment set forth in Section 3 of this Agreement
after the expiration of the 7-day period shall constitute Employee’s
acknowledgement that he did not revoke the Agreement during the 7-day period.
 
17. Delivery and Signatures by Facsimile.  All signatures of the parties to this
agreement may be transmitted by facsimile, and such facsimile will, for all
purposes, be deemed to be the original signature of such party whose signature
it reproduces, and will be binding upon such party.
 
18. Advice to Consult Counsel. Company hereby advises Employee to consult with
an attorney prior to executing this Agreement.
 
 
 

 AGREED AND ACCEPTED:    ICO, INC.        EMPLOYEE     By:  /s/ W. Robert
Parkey, Jr.
 /s/ David J. Phillips   
 David J. Phillips
 
 Printed Name: W. Robert Parkey, Jr. 
 Title: President & CEO
       Date:          5/14/05            ICO Polymers North America, Inc.    
 By:     /s/ Jon C. Biro    
 Printed Name:   Jon C. Biro   
 Title: Senior V.P., Treasurer & CFO