Document:

FY05 Exec. Leadership Team Incentive Compensation Plan

Exhibit
10.1

Fiscal
Year 2005 Executive Leadership Team Incentive Compensation Plan

This
Fiscal Year 2005 Executive Leadership Team Incentive Compensation Plan (the
“Plan”) has been adopted by the Compensation Committee of the Board of Directors
of ICO, Inc. (“ICO” or the “Company”) to provide a method to reward members of
the Executive Leadership Team (“ELT”) for their contribution to achieving the
Company’s performance goals, and to ensure that the ELT members have a financial
stake in the success of the Company’s overall performance. The Plan supersedes
any short-term annual bonus program sponsored by the Company or its Affiliates
with respect to any ELT member.

 

	
      1.
	
      Participants
      - ELT members, namely:

                

W. Robert
Parkey, Jr., ICO, Inc., President and Chief Executive Officer 

Jon C.
Biro, ICO, Inc. CFO and Treasurer 

Steve
Barkmann, President, Bayshore Industrial 

Derek
Bristow, President, ICO Europe

Dario
Masutti, President, ICO-Courtenay Australasia

David
Phillips, President, ICO Americas

 

	
      2.
	
      Compensation
      philosophy - The intent of this Plan is to motivate the ELT to meet or
      exceed internal budgets, and drive the appropriate team behavior while, at
      the same time, putting in place an annual cash bonus plan that is as
      simple as possible. 

3. High
level drivers: 

·  FY 2005
EBITDA1 and FY
2005 Return on Invested Capital2
(“ROIC”)

·  Business
Unit Performance and “Overall Company Performance”3

	
      4.
	
      FY
      2005 bonus payout amounts will be calculated as a percentage of the ELT
      member’s annual base salary, as follows:

 

	 	 	
      Threshold
      -

      80%
      Target
	 	
      Target
	 	
      Max
      - 120% Target

	
      CEO
      and Business Unit Presidents
	 	
      0%
	 	
      30%
      of base
	 	
      60%
      of base

	
      CFO
	 	
      0%
	 	
      24%
      of base
	 	
      48%
      of base

 

	
      5.
	
      FY
      2005 EBITDA shall be used to calculate “Initial Bonus Amounts.” The CEO
      and CFO’s FY 2005 bonus payout percentage in #3 above will be based upon
      Overall Company Performance. Each Business Unit President’s bonus payout
      percentage will be based upon the performance of the business unit he
      manages.

	 	 	
      EBITDA
      − Overall Company
	 	
      EBITDA
      − Business Units

	
      Threshold
	 	
      80%
      of EBITDA target - $XXX
	 	
      80%
      of EBITDA target

	 	 	 	 	 
	
      Target
	 	
      $XXX
	 	
      EBITDA
      Targets:

      XXXXXXXXXXXX

	 	 	 	 	 
	
      Max
	 	
      120%
      of EBITDA Target = $XXX
	 	
      120%
      of EBITDA Target

	
      
	
      Note:
      EBITDA Targets included above include bonus expenses payable under this
      Plan.

	
      6.
	
      The
      Initial Bonus Amount calculated as set out above shall be reduced by 20%
      if the applicable ROIC targets set forth below are not met. The ROIC
      targets below are per the ROIC targets included in the strategic plan
      rounded to the nearest 1⁄2% for XXX and XXX. XXX and XXX ROIC targets have
      been capped at 25%. Overall Company targets shall be calculated as the
      ICO, Inc. consolidated ROIC forecast included in the strategic plan
      (XXX%), adjusted down to XXX% to reflect the 25% cap for XXX and
      XXX.

	
      ROIC
      target:
	 	 
	 	
      XXX
	 	
      XXX%

	 	
      XXX
	 	
      XXX%

	 	
      XXX
	 	
      XXX%

	 	
      XXX
	 	
      XXX%

	 	
      XXX
	 	
      XXX%

For the
CEO and CFO only, the overall Company target shall apply for purposes of this
adjustment. For the Business Unit Presidents, only the ROIC for their regions
shall apply. 

	
      7.
	
      The
      CEO and CFO bonus amounts shall be determined based upon the overall
      Company results. Business Unit President Initial Bonus Amounts calculated
      pursuant to paragraphs 4 and 5 above shall be reduced by an additional 20%
      if the overall company EBITDA Target of $XXX is not
    achieved.

	
      8.
	
      CEO
      shall have the discretion to adjust bonus amounts provided for under this
      Plan upward by up to 20%, subject to the review and approval of
      Compensation Committee of ICO, Inc.’s Board of Directors in regard to any
      such adjustment. The purpose of this provision is to allow other
      qualitative and quantitative objectives to be taken into account for
      purposes of determining FY 2005 bonuses. 

	
      9.
	
      A
      Business Unit President will not be entitled to a bonus under this Plan,
      or otherwise with respect to FY 2005, if, prior January 1, 2006, (a) he
      resigns from employment with the Company, or (b) he is terminated from
      employment for “Cause.”4 

	
      10.
	
      For
      the purpose of this paragraph, the Company shall be deemed to have
      received a “Qualified Opinion” if, in connection with its FY 2005 annual
      audit (relative to Sarbanes-Oxley 404 compliance), the Company (a) does
      not receive an unqualified opinion from PwC regarding Management’s
      Assessment of the Internal Control System of the Company, or
      (b) does not receive an unqualified opinion from PwC regarding their
      assessment of the Company’s Internal Control System. If the Company
      receives a Qualified Opinion, then the CEO and CFO shall not be entitled
      to receive any FY 2005 incentive bonus under this Plan. If the business
      unit that a Business Unit President oversees, upon audit by PwC, has a
      material weakness or significant deficiency that leads to PwC to provide
      the Qualified Opinion, then that Business Unit President shall not be
      entitled to receive any FY 2005 incentive bonus under this Plan.
      Additionally, note that all third party expenses incurred in connection
      with the implementation of Sarbanes-Oxley 404 and relating to a given
      Business Unit, shall be included in the expenses of such Business
      Unit.

1 Defined
as Operating Income from continuing operations as defined by U.S. GAAP plus
impairment, restructuring and other costs, stock option expenses, and
depreciation and amortization.

2 ROIC
calculated as Operating Income from continuing operations as defined by
U.S.GAAP, excluding impairment, restructuring and other costs and stock option
expenses, divided by total assets excluding goodwill, less current liabilities,
plus funded debt (i.e., interest bearing debt) included in current liabilities.
Intercompany loans will be considered long-term debt for purposes of calculating
ROIC.

3 “Overall
Company Performance” is defined as consolidated performance of ICO, Inc. and its
subsidiaries.

4
Termination for “Cause” shall mean termination for “Cause” as defined in the
employment agreement (if any) between the Company or its subsidiary and the
Business Unit President, and also shall mean termination of the Business Unit
President as a result of the Business Unit President’s violation of any
provision of the Company’s Code of Business
Ethics.Amend. No. 5 to Loan & Security Agreement dated May 10, 2005

 

Exhibit
10.2

 

 

AMENDMENT
NO. 5 TO LOAN AND SECURITY AGREEMENT

 

AMENDMENT
NO. 5 TO LOAN AND SECURITY AGREEMENT, dated as of May 10, 2005, by and among ICO
Polymers North America, Inc., a New Jersey corporation ("Polymers North
America"), and Bayshore Industrial, L.P. (formerly known as Bayshore Industrial,
Inc.), a Texas limited partnership ("Bayshore L.P.", and together with Polymers
North America, each individually a "Borrower" and collectively, "Borrowers"),
ICO, Inc., a Texas corporation ("Parent"), ICO Polymers, Inc., a Delaware
corporation ("Polymers"), Wedco Technology, Inc., a New Jersey corporation
("Wedco Tech"), Wedco Petrochemical, Inc., a Delaware corporation ("Wedco
Petro"), ICO Technology, Inc., a Delaware corporation ("ICO Tech"), Bayshore
Industrial GP, L.L.C., a Delaware limited liability company ("Bayshore GP LLC")
and Bayshore Industrial LP L.L.C. ("Bayshore LP LLC" and together with Parent,
Polymers, Wedco Tech, Wedco Petro, ICO Tech and Bayshore GP LLC each
individually a "Guarantor" and collectively, "Guarantors") and ICO P&O,
Inc., a Delaware corporation ("P&O"), and ICO Global Services, Inc., a
Delaware corporation ("Global"), and Wachovia Bank, National Association, a
national banking association, as successor by merger to Congress Financial
Corporation (Southwest) ("Lender").

 

W I T N E S S E T H
:

 

WHEREAS,
Lender and Borrowers have entered into financing arrangements pursuant to which
Lender may make loans and advances and provide other financial accommodations to
Borrowers as set forth in the Loan and Security Agreement, dated as of April 9,
2002, among Lender, Borrowers, Guarantors, P&O and Global, Amendment No. 1
to Loan and Security Agreement, dated as of September 6, 2002, by and among
Lender, Borrowers, Guarantors, P&O and Global, Amendment No. 2 to Loan and
Security Agreement, dated as of August 26, 2004, by and among Lender, Borrowers,
Guarantors, P&O and Global, Amendment No. 3 to Loan and Security Agreement,
dated as of October 1, 2004, by and among Lender, Borrowers, Guarantors, P&O
and Global and Amendment No. 4 to Loan and Security Agreement, dated as of April
4, 2005, by and among Lender, Borrowers, Guarantors, P&O and Global (as
amended hereby and as the same may hereafter be further amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement", and
together with all agreements, documents and instruments at any time executed
and/or delivered in connection therewith or related thereto, as from time to
time amended and supplemented, collectively, the "Financing
Agreements");

 

WHEREAS,
Borrowers and Guarantors have requested that Lender agrees to certain amendments
to the Loan Agreement and Lender is willing to so agree, subject to the terms
and conditions contained herein; and

 

 

 

WHEREAS,
by this Amendment No. 5, Lender, Borrowers and Guarantors desire and intend to
evidence such amendments.

 

 

NOW
THEREFORE, in consideration of the foregoing, the mutual agreements and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

1.  Definitions.

 

(a)  Additional
Definition. As used
herein, the following term shall have the meaning given to it below, and the
Loan Agreement and the other Financing Agreements are hereby amended to include,
in addition to and not in limitation of, the following definition:

 

"Amendment
No. 5" shall mean this Amendment No. 5 to Loan and Security Agreement by and
among Lender, Borrowers, Guarantors, P&O and Global, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.

 

(b)  Amendments
to Definitions.

 

(i)  All
references to the term "Maximum Credit" in the Loan Agreement and any of the
other Financing Agreements and each such reference is hereby amended to mean
$25,000,000.

 

(ii)  All
references to the term "Revolving Loan Limit" in the Loan Agreement and any of
the other Financing Agreements and each such reference is hereby amended to mean
as to
each Borrower, at any time, the amount equal to $20,000,000 minus the then
outstanding principal amount of the Revolving Loans and the Letter of Credit
Accommodations provided to the other Borrowers.

 

(c)  Interpretation. For
purposes of this Amendment No. 5, unless otherwise defined herein, all terms
used herein, including, but not limited to, those terms used and/or defined in
the recitals above, shall have the respective meanings assigned to such terms in
the Loan Agreement.

 

2.  Representations,
Warranties and Covenants.
Borrowers and Guarantors, P&O and Global, jointly and severally, represent,
warrant and covenant with and to Lender as follows, which representations,
warranties and covenants are continuing and shall survive the execution and
delivery hereof, and the truth and accuracy of, or compliance with each,
together with the representations, warranties and covenants in the other
Financing Agreements, being a continuing condition of the making of Loans by
Lender to Borrowers:

 

(a)  This
Amendment No. 5 has been duly executed and delivered by each Borrower and
Guarantor and is in full force and effect as of the date hereof and the
agreements and obligations of each Borrower and Guarantor contained herein
constitute legal, valid and binding obligations of each Borrower and Guarantor
enforceable against each of them in accordance with their respective
terms.

 

 

2

 

(b)  No action
of, or filing with, or consent or any governmental or public body or authority
and no approval or consent of any other party, is or will be required to
authorize, or is or will be otherwise required in connection with, the
execution, delivery and performance of this Amendment No. 5.

 

(c)  No Event
of Default exists or has occurred as of the date of this Amendment No.
5.

 

(d)  None of
the transactions contemplated by this Amendment No. 5 violate or will violate
any applicable law or regulation, or do or will give rise to a default or breach
under any agreement to which any Borrower or Guarantor is a party or by which
any property of any Borrower or Guarantor is bound.

 

3.  Conditions
Precedent. The
effectiveness of the amendments contained herein shall be subject to the
satisfaction of each of the following, in a manner satisfactory to Lender and
its counsel:

 

(a)  Lender
shall have received as of the date hereof, this Amendment No. 5 duly authorized,
executed and delivered by the parties hereto; and

 

(b)  no Event
of Default, or event, act or condition which with notice or passage of time or
both would constitute an Event of Default, shall exist or have
occurred.

 

4.  Effect
of this Amendment. Except
as expressly set forth herein, no other amendments, consents, changes or
modifications to the Financing Agreements are intended or implied, and in all
other respects the Financing Agreements are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date hereof and
Borrowers and Guarantors shall not be entitled to any other or further amendment
or consent by virtue of the provisions of this Amendment No. 5 or with respect
to the subject matter of this Amendment No. 5. To the extent of conflict between
the terms of this Amendment No. 5 and the other Financing Agreements, the terms
of this Amendment No. 5 shall control. The Loan Agreement and this Amendment No.
5 shall be read and construed as one agreement. 

 

5.  Further
Assurances. The parties hereto shall execute and deliver such additional
documents and take such additional action as may be necessary or desirable to
effectuate the provisions and purposes of this Amendment No. 5. 

 

6.  Governing
Law. The validity, interpretation and enforcement of this Amendment No. 5
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Texas but
excluding any principles of conflicts of law or other rule of law that would
cause the application of the law of any jurisdiction other than the laws of the
State of Texas.

 

3

 

7.  Binding
Effect. This Amendment No. 5 shall be binding upon and inure to the benefit
of each of the parties hereto and their respective successors and
assigns.

 

8.  Headings.
The headings listed herein are for convenience only and do not constitute
matters to be construed in interpreting this Amendment No. 5.

 

9.  Counterparts.
This Amendment No. 5 may be executed in any number of counterparts, but all of
such counterparts shall together constitute but one and the same agreement. In
making proof of this Amendment No. 5, it shall not be necessary to produce or
account for more than one counterpart thereof signed by each of the parties
hereto. Delivery of an executed counterpart of this Amendment No. 5 by
telefacsimile shall have the same force and effect as delivery of an original
executed counterpart of this Amendment No. 5. Any party delivering an executed
counterpart of this Amendment No. 5 by telefacsimile also shall deliver an
original executed counterpart of this Amendment No. 5, but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment No. 5 as to such party or
any other party.

 

 

 

 

 

 

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

4

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment No. 5 to be duly
executed and delivered by their authorized officers as of the day and year first
above written.

 

 

WACHOVIA
BANK, NATIONAL ASSOCIATION, 

successor
by merger to Congress Financial Corporation (Southwest)

 

	
                 
      By:
	
      /s/
      Mark Galovic

		
      Name:
      Mark Galovic

		
      Title:
      First Vice President

 

ICO
POLYMERS NORTH AMERICA, INC.

 

	
               
      By:
	
      /s/
      Jon C. Biro

		
      Name:
      Jon C. Biro

		
      Title:
      Chief Financial Officer 

 

BAYSHORE
INDUSTRIAL, L.P. 

 

                                By: Bayshore
Industrial GP, L.L.C., as General Partner

 

	
             By:
	
      /s/
      Jon C. Biro

		
      Name:
      Jon C. Biro

		
      Title:
      Chief Financial Officer 

 

 

 

WEDCO
TECHNOLOGY, INC.

WEDCO
PETROCHEMICAL, INC.

ICO
POLYMERS, INC.

ICO,
INC.

ICO
TECHNOLOGY, INC.

BAYSHORE
INDUSTRIAL GP L.L.C.

ICO
P&O, INC.

 

	
           
      By:
	
      /s/
      Jon C. Biro

		
      Name:
      Jon C. Biro

		
      Title:
      Chief Financial Officer 

 

 

[SIGNATURES
CONTINUE ON NEXT PAGE]

 

E-5

[SIGNATURES
CONTINUED FROM PREVIOUS PAGE]

 

 

BAYSHORE
INDUSTRIAL GP L.L.C.

 

 

	
            
      By:
	
      /s/
      Jon C. Biro

		
      Name:
      Jon C. Biro

		
      Title:
      Chief Financial Officer 

 

BAYSHORE
INDUSTRIAL LP L.L.C.

 

By: ICO
Global Services, Inc., Sole Manager

 

	
      By:
	
      /s/
      Eric Parsons

		
      Name:
      Eric Parsons

		
      Title: President 

 

 

AGREED:

 

ICO
P&O, INC. 

 

	
      By:
	
      /s/
      Jon C. Biro

		
      Name:
      Jon C. Biro

		
      Title:
      Chief Financial Officer 

 

ICO
GLOBAL SERVICES, INC.

 

	
      By:
	
      /s/
      Eric Parsons

		
      Name:
      Eric Parsons

		
      Title: President 

 

 

 

E-6

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