Document:

Exhibit 10.2 - Biro Employment Agmt

Exhibit 10.2 

SECOND AMENDED AND RESTATED 

EMPLOYMENT AGREEMENT 

This Employment Agreement ("Agreement") is entered into by and between ICO, Inc. (the "Company") and Jon C. Biro ("Employee"), to be effective as of January 28, 2004 (the "Effective Date"). 

WITNESSETH: 

WHEREAS, Employee is currently employed by the Company, and shall continue to be employed by Company on the Effective Date; and 

 

WHEREAS, the Company desires to employ Employee from and after the Effective Date pursuant to the terms and conditions and for the consideration set forth in this Agreement, and Employee desires to be employed by Company pursuant to such terms and conditions and for such consideration. 

 

NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, the Company and Employee agree as follows: 

ARTICLE 1: EMPLOYMENT AND DUTIES: 

1.1  The Company agrees to employ Employee, and Employee agrees to be employed by the Company, beginning as of the Effective Date and continuing until the date of termination of Employee’s employment ("Termination Date"), subject to the terms and conditions of this Agreement. It is expressly understood and agreed that, as of the Effective Date, this Agreement shall amend, supercede, and replace the Amended and Restated Employment Agreement dated September 4, 1998, by and between Employee and the Company, and all amendments and supplements to that agreement. The "Employment Period," as used herein, shall mean the period commencing on the Effective Date, and ending on the Termination Date. The "Term," as used herein, shall mean the period commencing on the Effective Date, and expiring at midnight of the day before the second anniversary of the Effective Date. 

 

(a)  At least six (6) weeks prior to the expiration of the Term (and each mutually agreed to extension thereof), the board of directors ("Board") of the Company shall notify the Employee, in writing pursuant to Section 5.1, of the Board’s desire to continue Employee’s employment beyond the end of the Term (or any mutually agreed to extension thereof). If the Board desires to retain the Employee, then the parties shall amend this agreement to extend the Employment Period for an additional two-year period ("Extension Period"), and the Term (or any mutually agreed to extension thereof) shall be extended for an additional two 

	
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years, or a new employment agreement (on substantially the same terms as this Agreement) shall be negotiated, prepared, and put into effect prior to the end of the Term (or any mutually agreed to extension thereof); however if the parties cannot agree to the terms of a new agreement by the expiration of the Term (or any mutually agreed to extension thereof), then Employee’s employment shall terminate at the end of the Term (or any mutually agreed to extension thereof), and shall be subject to 3.1(d). 

 

(b)  For the avoidance of doubt it is the parties’ understanding that if this Agreement is extended for an Extension Period or any subsequent Extension Period, at the end of any such Extension Period, the provisions of Section 1.1(a) shall apply, and any reference in this Agreement to the Term shall include any mutually agreed extension thereof, whether or not expressly noted. 

 

(c)  The Company shall be responsible for payment of up to $4,000 of Employee’s legal and accounting advisory expenses incurred in connection with the initial negotiation and execution of this Second Amended and Restated Employment, and up to $4,000 of Employee’s legal and accounting advisory expenses incurred in connection with any new employment agreement between Employee and the Company that is proposed or prepared by Company and presented to Employee prior to the expiration of the initial two-year Term of this Agreement and each subsequent extension thereof. 

 

1.2  Beginning as of the Effective Date and throughout the Term (and mutually agreed to extension thereof), Employee shall continue to be employed as Chief Financial Officer and Treasurer of the Company, and shall be a member of the Board. Employee shall also continue to serve as an officer and/or director of the Company’s domestic and foreign affiliated subsidiaries, and in such other key contributor capacities as may be requested by the Employer. Employee agrees to serve in such positions, and to perform diligently and to the best of Employee’s abilities the duties and services pertaining to such positions as reasonably determined by Company, as well as such additional or different duties and services appropriate to such positions which the Employee from time to time may be directed to perform by the Company. Employee shall report to the Chief Executive Officer. 

 

1.3  Employee shall at all times comply with and be subject to such policies and procedures as the Company may establish from time to time, including, without limitation, the Company’s Employee Handbook and Code of Business Ethics. 

 

1.4  Employee shall, during the Employment Period, devote Employee’s full business time, energy, and best efforts to the business and affairs of the Company. Employee may not engage, directly or indirectly, in any other business, investment, or activity that interferes with Employee’s performance of Employee’s duties hereunder, is contrary to the interest of the Company or any of its affiliated subsidiaries and divisions (collectively, the "ICO Entities" or, 

	
 

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individually, an "ICO Entity"), or requires any significant portion of Employee’s business time. The ICO Entities as of the Effective Date are listed on Exhibit A attached hereto and incorporated herein. In the event that, during the Employment Period, any of the ICO Entities establish or purchase a 10% or more direct or indirect equity interest in any entity not listed on Exhibit A, such entity shall be deemed to be an ICO Entity for the purposes of this Agreement. The foregoing notwithstanding, the parties recognize and agree that Employee may engage in passive personal investments and other business activities which do not conflict with the business and affairs of the Company or the ICO Entities or interfere with Employee’s performance of his duties hereunder. Employee shall be eligible to serve on the board of directors or committees thereof of entities that are not ICO Entities during Employee’s employment by the Company, subject to the Board’s advance consideration and approval thereof. Employee shall be permitted to retain any compensation received for approved service on any unaffiliated corporation’s board of directors or committees thereof. 

 

1.5  Employee acknowledges and agrees that Employee owes a fiduciary duty of loyalty, fidelity, and allegiance to act at all times in the best interests of the Company and other ICO Entities and to do no act which would, directly or indirectly, injure any such entity’s business, interests, or reputation. It is agreed that any direct or indirect interest in, connection with, or benefit from any outside activities, particularly commercial activities, which interest might in any way adversely affect the Company, or any ICO Entity, involves a possible conflict of interest. In keeping with Employee’s fiduciary duties to the Company, Employee agrees that during the Employment Period Employee shall not knowingly become involved in a conflict of interest with the Company or the ICO Entities, or upon discovery thereof, allow such a conflict to continue. Moreover, during the Employment Period Employee shall not engage in any activity which might involve a possible conflict of interest without first obtaining approval in accordance with this Agreement and the Company’s policies and procedures. 

ARTICLE 2: COMPENSATION AND BENEFITS: 

2.1  During the Employment Period, the Employee shall receive a base salary ("Base Salary") of Two Hundred and Thirty Thousand Dollars ($230,000) per annum, less all required deductions, including but not limited federal withholding, social security and other taxes, and payable bi-weekly on the Company’s regular payroll schedule. During the Employment Period, the Base Salary shall be reviewed at least annually by the Compensation Committee of the Board (the "Compensation Committee"). The Compensation Committee may make recommendations to the Board to increase the Employee’s Base Salary, which may only be effective upon approval by the Board. Any increase in the Base Salary shall not serve to limit or reduce any other obligation to the Employee under this Agreement. During the Term (and each mutual extension thereof), the Base Salary shall not be reduced. 

 

2.2  In addition to the Base Salary, the Employee shall be eligible, upon the conclusion of each fiscal year during the Employment Period, to receive an annual bonus (an 

	
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"Annual Incentive Bonus"), pursuant to an Annual Incentive Bonus structure and formula that has been established and pre-approved by the Board. The Annual Incentive Bonus earned for a given fiscal year, if any, shall be paid in lump sum cash (subject to all legally required withholdings) on or before the last day of the first quarter of the following fiscal year (during or after the Term). Any Annual Incentive Bonus will be considered earned only if the Employee is employed on the October 1 st immediately following the fiscal year on which the bonus is calculated, unless a pro-rata bonus is due as specifically provided for in this Agreement. 

 

(a)  The bonus for the first fiscal year during the Employment Period (ending on September 30, 2004) ("the "Year One Annual Incentive Bonus"), shall be calculated as follows: 

 

(i)  If EBITDA is less than $9.8 million, no Year One Annual Incentive Bonus shall be earned. 

 

(ii)  If EBITDA is greater than or equal to $9.8 million, but less than $12 million, the Year One Annual Incentive Bonus will be X% of Base Salary, where

 

X = [(EBITDA – 7,600,000)/ 88,000] x 65%

 

(iii)  If EBITDA is greater than or equal to $12 million, the Year One Annual Incentive Bonus will be Y % of Base Salary, where 

 

Y = [(EBITDA – 6,000,000) /120,000] x 65% 

 

For the purposes of the above formula, "EBITDA" is defined as the consolidated operating income or loss from continuing operations plus: (i) depreciation and amortization; (ii) impairment, restructuring, and other costs, and (iii) stock option compensation expense. EBITDA is calculated and determined based on the Company’s audited financial statements.

 

(b)  The Board, subject to the mutual agreement between the Employee and the Board, shall approve the structure and formula for calculating the Year Two Annual Incentive Bonus (for the fiscal year commencing on October 1, 2004), and for calculating the Annual Incentive Bonus for each fiscal year thereafter (provided that the Term of this Agreement has been so extended). The structure for calculating the Year Two Annual Incentive Bonus shall be similar to the structure for calculating the Year One Annual Incentive Bonus, but the formula shall be based on the Year Two business plan, as presented to and accepted by the Board. It is the parties’ intention that Employee’s Annual Incentive Bonuses be calculated consistent with the Company’s Chief Executive Officer’s Annual Incentive Bonuses. 

	
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            2.3.  In addition to the Base Salary and other benefits afforded to Employee under this Agreement, on the Effective Date Employee shall be granted options ("Options") to purchase 126,000 shares of the Common Stock of the Company ("Shares").

 

The Options shall vest as follows: 

 

(a)  Options to purchase 42,000 Shares shall be 100% fully vested on the Effective Date. 

(b)  Options to purchase 42,000 Shares shall be 100% fully vested two days before the first anniversary of the Effective Date. 

(c)  Options to purchase 42,000 Shares shall be 100% fully vested two days before the second anniversary of the Effective Date. 

All of the 126,000 Options shall be granted at an exercise price equal to the Fair Market Value (as defined in the applicable stock option plan under which the options are granted) of the Common Stock on the Effective Date, and to the extent permitted under the Internal Revenue Code, shall be Incentive Stock Options ("ISOs"). The Options shall expire on the seventh anniversary of the Effective Date. Notwithstanding the foregoing, upon termination of Employee’s employment for any reason then the options shall expire upon the first business day following the expiration of the three (3) month period after Employee’s Termination Date. The Options shall be granted under the terms of the Company’s 1994, 1995, 1996, and/or 1998 Employee Stock Option Plans, at the Company’s discretion, or on terms substantially identical to the terms in such plans, and subject to the Employee’s execution of option agreements in compliance with all terms and conditions of the applicable plans. 

2.4  During the Employment Period, the Employee shall be entitled to participate in incentive, savings, and retirement plans, and other standard benefit plans afforded to executive-level employees of the Company, including, without limitation, all medical, dental, disability, group life, accidental death, D&O indemnity, and travel accident insurance plans and programs of the Company, to the extent Employee is otherwise eligible under the terms and conditions of the applicable plan or policy, and as such plans or policies may be from time to time be amended, modified or terminated by the Company without prior notice. Dependents of Employee may participate in such plans to the extent allowed for other dependants of executive level Employees of the Company as allowed by the applicable plan. This Agreement shall not be construed to limit in any respect the Company’s right to establish, amend, modify, or terminate any benefit plan or policy. Furthermore, the Company shall not by reason of this Article 2 be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any incentive compensation, employee benefit, or stock or stock option program or plan, so long as such actions are similarly applicable to covered employees generally. 

	
 

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2.5  During the Employment Period, the Company shall pay or reimburse Employee for all actual, reasonable, and customary expenses incurred by Employee in the course of his employment in accordance with the Company’s policies and procedures in effect at the time. Such expenses paid or reimbursed by the Company shall include, but not be limited to, the following:

 

(a)  In lieu of use of a Company vehicle, and maintenance, repair, and insurance expenses associated therewith, the Employee shall receive a monthly vehicle allowance in the sum of $1,290.00 ("Vehicle Allowance"), paid on the first payday of each month.

 

(b)  The Company shall pay or reimburse Employee for all business-related air travel. It is understood that all international travel shall be business class, and that the Employee’s spouse may accompany Employee on such international travel on an occasional basis through use of Platinum American Express "partner flies free" plan, or similar plans providing for the spouse to fly free when accompanying Employee. All domestic travel shall be coach class. 

 

(c)  The Company shall pay all costs associated with the Employee’s cellular telephone and cellular telephone service. 

 

(d)  The Company shall pay for or reimburse Employee for all business-related expenses to attend, from time to time, seminars or conferences approved by the Chief Executive Officer that will serve to benefit the Company; and for the maintaining and/or increasing the level of professional and contemporary executive management skills, that will serve to benefit the Company. 

 

2.6  During the Employment Period, the Employee shall be entitled to four weeks of vacation, fully paid, per calendar year.

 

2.7  The Company may withhold from any compensation, benefits, or amounts payable under this Agreement all federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling. 

 

2.8  Following the end the of the Company’s 2004 fiscal year, the Board shall review the Employee’s performance to allow, within ninety days after the end of the 2004 fiscal year and subject to the Board’s conclusions in its performance review, for negotiations regarding increases in the Employee’s Base Salary, bonus structure, equity compensation, severance payment terms, and/or benefits. 

 

2.9  No amendment, modification, or repeal of Article Eleven of the Articles of Incorporation of the Company (as amended on or before the date hereof) or Article 7 of the Amended and Restated Bylaws of ICO, Inc., as amended October 5, 2001, shall have the effect 

	
 

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of limiting or denying any indemnification rights with respect to actions of Employee occurring, or proceedings arising, prior to such amendment, modification, or repeal, which indemnification rights Employee would otherwise have been entitled to if such amendment, modification, or repeal had not been effectuated, and the provisions of Article 7 of the Amended and Restated Bylaws of ICO, Inc., as amended October 5, 2001, shall continue to apply to Employee with respect to actions taken or proceedings arising prior to such amendment, modification, or repeal, as if such amendment, modification or repeal had not been effectuated. Notwithstanding the foregoing, nothing in this Section 2.9 shall entitle Employee to indemnification (i) to any extent not permitted by the Texas Business Corporation Act, as amended from time to time, and (ii) with respect to actions occurring at or after (but not as to actions of Employee occurring prior to) the time of such amendment, modification, or repeal that are the basis for Employee’s claim for indemnity to any extent that indemnity for such later actions of Employee is not permitted by such Articles of Incorporation or Bylaws as so amended, modified, or repealed. Employee’s rights to indemnification shall continue in effect after the termination of this Agreement, regardless of the cause of termination, for a period of five (5) years thereafter, and as to any claim for indemnification raised or in existence during that five-year period, Employee’s rights and the Company’s obligations under this Section 2.9 shall continue until such claim is resolved without further right of appeal . 

ARTICLE 3: TERMINATION OF EMPLOYMENT AND EFFECTS OF SUCH TERMINATION: 

3.1  (a) Employee’s employment shall be terminated during the Employment Period by reason of the following circumstances: 

 

(i)  Death of Employee.

 

(ii)  Permanent Disability. "Permanent Disability" shall mean Employee’s physical or mental incapacity to perform his usual duties, with such condition likely to remain continuously and permanently as determined by the Board of Directors. The decisions as to whether and as of what date Employee has become permanently disabled are delegated to the Board of Directors for determination, and any dispute of Employee with any such decision shall be limited to whether the Board of Directors reached such decision in good faith.

 

(iii)  Voluntary Termination. "Voluntary Termination" shall mean a termination of employment at the election of Employee (other than for Good Reason, as defined in Section 3.2(b) below), including termination upon the expiration of the Term because Employee does not desire to continue his employment beyond the end of the Term (as described in Section 3.1(d)(i) below). Employee will provide the Company with six (6) weeks advance notice of 

	
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           his intent to terminate his employment voluntarily. Employee shall continue to remain an employee of the Company through the six week notice period and will perform such duties, if any, assigned to him by the Company during the notice period. Notwithstanding the foregoing, the Company may, at its option, waive the Employee’s obligation to remain an employee during all or any portion of the six week notice period, in which case Employee’s employment shall cease immediately.

 

(iv)  Termination by Company for Cause. "Termination for Cause" shall mean a termination of employment immediately upon notice to the Employee from the Company that an event constituting "Cause" has occurred. For purposes of this Agreement, the term "Cause" shall be defined as: (a) an act of dishonesty or fraud; (b) a knowing and material violation of any written policy of the Company or applicable to the Company’s operations; (c) a knowing and material violation of an applicable law, rule, or regulation that exposes the Company to damages or liability; (d) a material breach of fiduciary duty; or (e) conviction of a felony. In the event that Employee is terminated for Cause, Employee shall be provided with notice of such termination in accordance with Section 5.1 below.

 

    (b)  In the event Employee’s employment terminates as a result of any of the circumstances described in 3.1(a)(i) through (iv) above, all future compensation to which Employee would otherwise be entitled and all future benefits for which Employee is eligible shall cease and terminate as of the Termination Date, except as specifically provided in this Section 3.1 or the terms of any of the Company’s health or welfare plans, and Employee shall receive payment, if any, for accrued and unused vacation days according to the Company’s current policy applicable to payment for unused vacation. In the event of termination for any of the reasons set forth in 3.1(a)(i) through (iv) above, Employee shall not be entitled to receive an Annual Incentive Bonus for the fiscal year in which the termination occurs, but shall be entitled to receive an Annual Incentive Bonus, if any, that has been earned but not yet paid to Employee for the fiscal year prior to the fiscal year in which the termination occurs.

 

    (c)  Notwithstanding anything contained in 3.1(b), in the event that Employee’s employment terminates as a result of death or permanent disability resulting from any accident or incident beyond Employee’s control that occurs while Employee is traveling on Company business or is in the course and scope of employment (excluding any accident or incident occurring when Employee is traveling within Houston and to or from his normal place of business or his residence), the preceding paragraph shall not apply, and instead Employee (or his Estate, as the case may be) shall be entitled to receive payment subject to and calculated in accordance with the provisions of Sections 3.2(a) and 3.2(a)(i) through (iv) below.

 

    (d)  In the event that Employee’s employment terminates upon the expiration of the Term because the parties are unable to agree to the terms of a new agreement by the expiration of 

	
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      the Term (or any mutual extension thereof), then the Termination Date shall be the last day of the Term (or any mutual extension thereof), and:

 

(i)  if the Company has offered to extend the Term of this Agreement (or any mutual extension thereof) (without amending the terms of this Agreement, other than by increasing Employee’s salary, bonus, and/or other remuneration or benefits hereunder), or to enter into a new agreement on terms that are substantially the same as the terms of this Agreement (other than by increasing Employee’s salary, bonus, and/or other remuneration or benefits hereunder), then if Employee declines to accept the Company’s offer, Employee’s termination shall be treated as a Voluntary Termination, and the provisions of Section 3.1(b) shall apply; or

 

(ii)  if the Company has not offered (x) to extend the Term of this Agreement (or any mutual extension thereof) (without amending the terms of this Agreement, other than by increasing Employee’s salary, bonus, and/or other remuneration or benefits hereunder), or (y) to enter into a new agreement on terms that are substantially the same as the terms of this Agreement (other than by increasing Employee’s salary, bonus, and/or other remuneration or benefits hereunder), then Employee shall be entitled to an Early Termination Payment subject to and calculated in accordance with the provisions of Sections 3.2(a) and 3.2(a)(i) through (iv) below. 

 

3.2  The Company reserves the right to terminate Employee’s employment for any reason other than the circumstances described in Sections 3.1(a)(i) through 3.1(a)(iv) above, or to terminate Employee’s employment upon the expiration of the Term, in which case it shall provide him with written notice of termination ("Notice of Termination"). The Notice of Termination shall specify the Termination Date.

 

(a)  If the Termination Date occurs during the Term (or any mutual extension thereof), or on the last day of the Term (or any mutual extension thereof) because the Board does not desire to continue Employee’s employment beyond the Term (or any mutual extension thereof), Company shall pay Employee, within thirty (30) days after the Termination Date, and after Employee’s execution of a full release of all claims against the Company (excluding only claims for benefits and payments to be payable after Termination Date under any of the Company’s health or welfare plans, and claims for indemnification against third parties pursuant to Article 7 of the Amended and Restated Bylaws of ICO, Inc., as amended October 5, 2001), an "Early Termination Payment," in lump sum cash (subject to required taxes and withholdings) consisting of the following: 

	
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(i)  pro rata Base Salary through the Termination Date, and in the event that the prior fiscal year’s Annual Incentive Bonus, if any, has been earned but not yet paid, such Annual Incentive Bonus for the prior fiscal year; and 

 

(ii)  payment, if any, for accrued and unused vacation days according to the Company’s current policy applicable to payment for unused vacation; and 

 

(iii)  a sum equal to 200% of the Employee’s current annual Base Salary; and

 

(iv)  a pro-rated portion of the Annual Incentive Bonus for the fiscal year during which the Termination Date occurs. Such pro-rated portion of the Annual Incentive Bonus will be calculated according to the following example: If the Termination Date occurs on the last day of the second quarter of the 2004 fiscal year, and EBITDA is on track to reach $12,000,000 by the end of the 2004 fiscal year (e.g. EBITDA has reached $6,000,000 as of the last day of the second quarter), Employee would be entitled to receive 1⁄2 (representing 182/364 days in the fiscal year) of the percentage of Base Salary that he would otherwise be entitled to receive if EBITDA reached $12,000,000 at the end of that fiscal year, so in this case he would be entitled to 16.25% (representing 1⁄2 of 32.5%) of his Base Salary.

 

(b)  "Good Reason" shall mean a termination of employment by Employee under any one of the following circumstances: 

 

(i)  In the event of a material breach by Company of any material provision of this Agreement which remains uncorrected for thirty (30) days following written notice ("Material Breach Notice Period") of such breach by Employee to the Board, Employee may terminate this Agreement provided that Employee provides the Board with written notice of such termination, specifying a Termination Date that is on or after the date of such written notice but within sixty (60) days after the expiration of the Material Breach Notice Period.

 

(ii)  In the event that there is any material diminution of Employee’s job description, job role, responsibilities, and/or scope of position during the Term, Employee may terminate this Agreement upon written notice to the Board of Directors specifying a Termination Date that is on or after the date of such written notice. 

 

(iii)  If there is any amendment, modification, or repeal of Article Eleven of the Articles of Incorporation of the Company (as amended on or before the date hereof) and/or Article 7 of the Amended and Restated Bylaws of 

	
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ICO, Inc. (as amended October 5, 2001) by the shareholders or the Board, which amendment, modification, or repeal shall have the effect of limiting or denying, except in any immaterial respect, any indemnification rights that Employee would otherwise be entitled to if such amendment, modification, or repeal had not been effectuated, then Employee may terminate this Agreement within thirty (30) days of the taking effect of such amendment, modification, or repeal, upon written notice to the Board. 

 

(iv)  If the Company requires the Employee to be based at any office or location outside the greater Houston metropolitan area, except for travel reasonably required in the performance of the Employee’s responsibilities, then the Employee may terminate this Agreement upon written notice to the Board of Directors specifying a Termination Date that is on or after the date of such written notice. 

 

In the event of such termination by Employee for Good Reason, Employee shall be entitled to an Early Termination Payment subject to and calculated in accordance with the provisions of Sections 3.2(a) and 3.2(a)(i) through (iv) above.

 

3.3.  Termination following a Change of Control 

 

(a)  For the purposes of this Agreement, "Change of Control" means any of the following events: (i) a merger, share exchange or consolidation in which the Company will not be the surviving entity (or survives only as a subsidiary of an entity), (ii) the sale or exchange by the Company all or substantially all of its assets to any other person or entity, (iii) the acquisition of ownership or control (including, without limitation, power to vote) by any person or entity, including a "group" as contemplated by Section 13(d)(3) of the 1934 Act, of more than 50% of the outstanding shares of the Company's voting stock (based upon voting power); provided , however , that a Change of Control will not include (A) any reorganization, merger, consolidation, sale, exchange, or similar transaction, which involves solely the Company and one or more entities wholly-owned, directly or indirectly, by the Company immediately prior to such event; or (B) the consummation of any transaction or series of integrated transactions immediately following which the record holders of the voting stock of the Company immediately prior to such transaction or series of transactions continue to hold 50% or more of the voting stock (based upon voting power) of (1) any entity that owns, directly or indirectly, the stock of the Company, (2) any entity with which the Company has merged, or (3) any entity that owns an entity with which the Company has merged.

 

(b)  A "COC Termination" shall be deemed to have occurred if (i) there is a Change of Control during the Term (or any mutual extension thereof), and (ii) within the twelve (12) month period immediately following the Change of Control (but still within the Term (or any mutual extension thereof) (A) the Employee’s employment terminates for any reason other than 

	
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the circumstances described in Sections 3.1(a)(i) through 3.1(a)(iv) above, (B) Employee is required to relocate outside the Houston, Texas metropolitan area; (C) Employee is required to commute to a location outside the Houston, Texas metropolitan area; (D) Employee’s Base Salary is materially reduced or any other material benefit of the Employee’s employment is materially reduced; or (E) there is any material diminution of Employee’s job description, job role, responsibilities, and/or scope of position. In the event of a COC Termination, the Company or successor in interest shall be obligated to pay employee, within thirty (30) days after the Termination Date, and after Employee’s execution of a full release of all claims against the Company (excluding only claims for benefits and payments to be payable after Termination Date under any of the Company’s health or welfare plans, and claims for indemnification against third parties pursuant to Article 7 of the Amended and Restated Bylaws of ICO, Inc., as amended October 5, 2001), an Early Termination Payment subject to and calculated in accordance with the provisions of Sections 3.2(a) and 3.2(a)(i) through (iv) above.

 

In addition to an Early Termination Payment, in the event of a COC Termination: (x) the Company shall pay any premiums due under COBRA (or any legal successor thereto) in order to maintain Employee’s current medical and dental insurance coverages for the 12-month period immediately following the Termination Date, and (y) with regard to any of the Company’s welfare plans (e.g. life insurance) that Employee participates in immediately prior to the Termination Date, if such plans allow for continued coverage after termination of employment, the Company shall pay the premiums that would otherwise be due from the Employee in order to maintain Employee’s coverages during the 12-month period immediately following the Termination Date.

 

3.4  Any Early Termination Payment paid to Employee pursuant to Section 3.2 or 3.3 shall be in consideration of Employee’s continuing obligations under Article 4. Nothing contained in this Article 3 shall be construed to be a waiver by Employee of any benefits accrued for or due Employee under any employee benefit plan (as such term is defined in the Employee Retirement Income Security Act of 1974, as amended), maintained by the Company except that Employee shall not be entitled to any severance benefits pursuant to any severance plan or program of the Company.

 

3.5  Termination of the employment relationship does not terminate those obligations imposed by this Agreement which are continuing obligations, including Employee’s obligations under Article 4.

 

3.6  Notwithstanding anything in this Agreement to the contrary, if any amounts due to the Employee under this Agreement and any other agreement, plan or program constitute a "parachute payment," as such term is defined in Code Section 280G(b)(2), and the amount of the parachute payment, reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Code Section 4999, is less than the amount the Employee would receive if he were paid three times his "base amount," as defined in Code Section 280G(b)(3), less one dollar, reduced by all federal, state and local taxes applicable thereto, then the aggregate 

	
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of the amounts constituting the parachute payment shall be reduced to an amount that will equal three times his base amount less one dollar. The determinations to be made with respect to this Section shall be made by an accounting firm selected by the Employee and paid by the Company, and which may be the Company’s independent auditors. 

ARTICLE 4: 

OWNERSHIP AND PROTECTION OF INTELLECTUAL PROPERTY 

AND CONFIDENTIAL INFORMATION; 

NON-COMPETITION AGREEMENT: 

4.1  All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed or acquired by Employee, individually or in conjunction with others, during Employee’s employment by the Company (whether during business hours or otherwise and whether on the Company’s premises or otherwise) which relate to the business, products or services of the Company or any of the ICO Entities (including, without limitation, all such information relating to corporate opportunities, confidential financial information, research and development activities, sales data, pricing and trading terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or potential customers and their requirements, the identity of key contacts within the customers’ organizations or within the organizations of acquisition prospects, marketing and merchandising techniques, prospective names, and marks), and all writings or material of any type embodying any of such items, shall be the sole and exclusive property of ICO or the ICO Entities, as the case may be. 

 

4.2  Employee acknowledges that the businesses of the Company and the ICO Entities are highly competitive and that their strategies, methods, books, records, and documents, their technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning their customers and business affiliates (including but not limited to the products and/or services marketed, advertised, and/or sold to customers and prospective customers, and the prices charged or quoted to them for such products and/or services, and the business activities, needs, and requirements for products and/or services of such customers or prospective customers) all comprise confidential business information and trade secrets which are valuable, special, and unique assets which the Company or the ICO Entities use in their business to obtain a competitive advantage over their competitors. Employee further acknowledges that protection of such confidential business information and trade secrets against unauthorized disclosure and use is of critical importance to the Company and the ICO Entities in maintaining their competitive position. Employee hereby agrees that Employee will not, at any time during or after the Employment Period, make any unauthorized disclosure of any confidential business information or trade secrets of the Company or any other ICO Entity, or make any use thereof, except in the carrying out of his employment responsibilities hereunder. Confidential business information shall not include information in the public domain (but only if 

	
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the same becomes part of the public domain through a means other than a disclosure prohibited hereunder). The above notwithstanding a disclosure shall not be unauthorized if (i) it is required by law or by a court of competent jurisdiction or (ii) it is in connection with any judicial arbitration, dispute resolution or other legal proceeding in which Employee’s legal rights and obligations as an Employee or under this Agreement are at issue; provided, however, that Employee shall, to the extent practicable and lawful in any such events, give prior notice to the Company of his intent to disclose any such confidential business information in such context so as to allow the Company or the applicable ICO Entity an opportunity (which Employee will cooperate with and will not oppose) to obtain such protective orders or similar relief with respect thereto as may be deemed appropriate. Not withstanding the foregoing, the parties agree that nothing in this Agreement shall apply to or restrict in any way Employee from communicating to any state or federal law enforcement agency information that Employee is required by law to so communicate.

 

4.3  All written materials, records, and other documents made by, or coming into the possession of, Employee during the Employment Period which contain or disclose confidential business information or trade secrets of the Company or the ICO Entities shall be and remain the property of the Company or the ICO Entities, as the case may be. Upon termination of Employee’s employment with the Company, for any reason, Employee promptly shall deliver the same and all copies thereof to the Company.

 

4.4  To enable Employee to perform the duties contemplated by this Agreement, the Company promises that it will disclose confidential information, including confidential business information and trade secrets of the nature described or referenced in Sections 4.1 – 4.3 above, during the Employment Period and before termination of the employment relationship established by this Agreement. In return for and ancillary to the promise made by the Company to make such disclosure, Employee hereby makes a reciprocal promise designed to enforce the Company’s interest in protecting its confidential information and its goodwill. Accordingly, Employee promises to comply with the obligations set forth in Sections 4.1 through 4.3 above, and furthermore, Employee agrees that, during Employee’s employment with the Company and/or any other ICO Entity, and for fifteen (15) months following the end of employment with the Company or any other ICO Entity for any reason, Employee will not, directly or through any other person, firm, or corporation, in any country in which the Company or any ICO Entity does business:

 

(a)  perform services as an employee, officer, director or independent contractor for any Competing Enterprise (as defined below); 

 

(b)  be an owner, shareholder (except for the ownership by Employee of less than Five Percent (5%) of the equity securities of any publicly-traded company), agent, or partner of, or serve in an executive position with, any Competing Enterprise; 

	
	 	Page 14 of 19	 
	

	 

 

   (c)  call on or otherwise communicate with any customer or prior customer of the Company and/or any ICO Entity, including any respective successors and assigns, for the purpose of soliciting business for a Competing Enterprise or for someone other than the Company and/or other ICO Entities; or 

 

     (d)  do anything to interfere with the normal operation of the businesses of the Company or any other ICO Entity, including, without limitation, make any effort personally or through others to recruit, hire, or solicit any employee or independent contractor of the Company or another ICO Entity to leave the Company or such ICO Entity, or to interfere in any way with any ICO Entity’s relationships with its customers or suppliers. 

For purposes of this Section, the term "Competing Enterprise" shall mean: any person or any business organization of whatever form, excluding the Company and/or any other ICO Entity, engaged directly or indirectly in any business or enterprise whose business activities specifically relate to or involve: (i) grinding, processing, blending, and/or compounding of polymer products for (a) the rotational molding industry, or (b) any other industry that ICO Polymers North America, Inc. or any other ICO Entity specifically services or sells to; or (ii) the production of concentrates or compounds or other processing services related to polymer products as conducted by Bayshore Industrial, Inc. or any other ICO Entities. 

ARTICLE 5: MISCELLANEOUS: 

5.1  For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when received by or tendered to Employee or the Company, as applicable, by pre-paid courier or by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 

 

If to the Company, to 

 

ICO, Inc., To the attention of the Chairman of the Board of Directors 

5333 Westheimer Road, Suite 600 

Houston, Texas 77056 

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. 

 

If to Employee, to his last known personal residence.

 

Notwithstanding the foregoing, any Notice of Termination pursuant to Article 3 may be delivered to the Employee in accordance with the above sentences in this Section 5.1, or by email to the Employee’s Company email address, and in the event of such delivery by email, the 

	
	 	Page 15 of 19	 
	

	 

Delivery Date shall be conclusively determined to be the date when such email was received on the Company’s server regardless of the date when such email was opened by the Employee. 

 

5.2  This Agreement shall be governed by and construed and enforced, in all respects in accordance with the law of the State of Texas, without regard to principles of conflicts of law, unless preempted by federal law, in which case federal law shall govern; provided, however, that the dispute resolution process in Section 5.5 shall govern in all respects with regard to the resolution of disputes hereunder.

 

5.3  No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

5.4  It is a desire and intent of the parties that the terms, provisions, covenants, and remedies contained in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, provision, covenant, or remedy of this Agreement or the application thereof to any person, association, or entity or circumstances shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such term, provision, covenant, or remedy shall be construed in a manner so as to permit its enforceability under the applicable law to the fullest extent permitted by law. In any case, the remaining provisions of this Agreement or the application thereof to any person, association, or entity or circumstances other than those to which they have been held invalid or unenforceable, shall remain in full force and effect.

 

5.5  It is the mutual intention of the parties to have any dispute concerning this Agreement resolved out of court. Accordingly, the parties agree that any claim or controversy of whatever nature arising from or relating in any way to this Agreement or the employment of the Employee by the Company, and any continuing obligations under this Agreement, including disputes arising under the common law or federal or state statutes, laws or 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 by the parties and conducted in accordance with the agreement of the parties or as determined by the arbitrator. If the parties are unable to agree to an arbitrator, an arbitrator will be selected in accordance with the Employment Dispute Resolution ("EDR") Rules of the American Arbitration Association ("AAA"). The arbitration will be conducted in Houston, Texas, 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. The Company shall pay for the fees of the arbitrator or the administrative and filing fees charged by the AAA. However, either party, on its own behalf and on behalf of any other ICO Entities, shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any breach or the continuation of any breach of the provisions of herein. 

	
 

	 	Page 16 of 19	 
	

	 

5.6  This Agreement shall be binding upon and inure to the benefit of the Company, and any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s rights and obligations under this Agreement are personal and such rights, benefits, and obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred, whether by operation of law or otherwise, without the prior written consent of the Company.

 

5.7  This Agreement replaces and extinguishes any previous agreements and discussions pertaining to the subject matter covered herein. This Agreement constitutes the entire agreement of the parties with regard to the terms of Employee’s employment, termination of employment and severance benefits, and contains all of the covenants, promises, representations, warranties, and agreements between the parties with respect to such matters. Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party with respect to the foregoing matters which is not embodied herein, and that no agreement, statement, or promise relating to the employment of Employee by the Company that is not contained in this Agreement shall be valid or binding, except as set forth in any applicable Employee benefit plan. It is understood that, by signing below, Employee acknowledges that this Agreement supercedes any agreements or understandings regarding the subject matter covered herein made prior to the Employee signing this document. Any modification of this Agreement will be effective only if it is in writing and signed by each party whose rights hereunder are affected thereby, provided that any such modification must be authorized or approved by the Board of Directors or its delegate, as appropriate. 

	
	 	Page 17 of 19	 
	

	 

IN WITNESS WHEREOF , the Company and Employee have duly executed this Agreement in multiple originals to be effective on the Effective Date. 

	
ICO, Inc. 
	
 

	
 
	
 

		
	
/s/ Christopher N. O’Sullivan 
	
 

	

Christopher N. O’Sullivan	
	
Chairman of the Board of Directors 
	
 

	 	 
		
	
Date: January 28, 2004 
	
 

	 	 
		
		
	
Employee 
	
 

	
 
	
 

		
	
/s/ Jon C. Biro 
	
 

	

 Jon C. Biro 	
	 	 
		
	
Date: January 28, 2004 
	
 

		

	
	 	Page 18 of 19	 
	

	 

EXHIBIT A 

The ICO Entities (as defined in Section 1.4) are listed below, with country of incorporation and state (if U.S.) indicated. 

Bayshore Industrial, Inc. – USA, TX 

Courtenay Polymers Pty Ltd. - Australia 

Fabri-Moulds Ltd. - UK 

ICO Europe BV – The Netherlands 

ICO Global Services, Inc. – USA, DE 

ICO Holdings Australia Pty Ltd. - Australia 

ICO Holdings New Zealand Ltd. – New Zealand 

ICO Holland BV – The Netherlands 

ICO Italia Srl - Italy 

ICO Minerals, Inc. – USA, DE 

ICO Offshore – Cayman Islands 

ICO P&O, Inc. – USA, DE 

ICO Petrochemical Cayman Islands – Cayman Islands 

ICO Polymers do Brasil Ltda. - Brazil 

ICO Polymers France SAS - France 

ICO Polymers Hellas Ltd. - Greece 

ICO Polymers North America, Inc. – USA, NJ 

ICO Polymers UK Ltd. - UK 

ICO Polymers, Inc. – USA, DE 

ICO Scandinavia AB - Sweden 

ICO Technology, Inc. – USA, DE 

ICO UK Ltd. - UK 

ICO Worldwide, LP – USA, TX 

ICO Worldwide (UK), Ltd. - UK 

ICO Worldwide Tubular Services PTE Ltd. - Singapore 

Innovation Company, S.A. de C.V. - Mexico 

J.R. Courtenay (N.Z.) Ltd. – New Zealand 

J.R. Courtenay Sdn Bhd - Malaysia 

Rotec Chemicals, Ltd. - UK 

Lomic SCI - France 

Soreco SAS - France 

Swavasey Colours Ltd. - UK 

Tecron Industries Ltd. - UK 

Verplast Srl - Italy 

Wedco Minerais Ltda. - Brazil 

Wedco Petrochemical, Inc. – USA, DE 

Wedco Technology U.K. Ltd. - UK 

Wedco Technology, Inc. – USA, NJ 

Worldwide GP, LLC – USA, DE 

Worldwide LP, LLC – USA, DE 

	
	 	Page 19 of 19EXHIBIT 4.1

                     CERTIFICATE OF DESIGNATIONS, POWERS,
                            PREFERENCES AND RIGHTS
                                    OF THE
              FLOATING RATE CUMULATIVE PREFERRED STOCK, SERIES G
             ($2,500.00 initial liquidation preference per share)

                                      OF

                         LEHMAN BROTHERS HOLDINGS INC.

                       ---------------------------------

                        Pursuant to Section 151 of the
               General Corporation Law of the State of Delaware

                       ---------------------------------

         LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation (the
         "Corporation"), HEREBY CERTIFIES that the following resolution was
         duly adopted by the Executive Committee of the Board of Directors of
         the Corporation in accordance with Section 151(g) of the General
         Corporation Law of the State of Delaware pursuant to the authority
         conferred upon the Board of Directors of the Corporation by the
         provisions of the Restated Certificate of Incorporation of the
         Corporation and pursuant to the authority conferred upon the
         Executive Committee by the By-Laws of the Corporation and pursuant to
         the authority duly delegated thereto by the Board of Directors of the
         Corporation:

         RESOLVED, that the Corporation be, and hereby is, authorized to issue
a new series of its preferred stock, par value $1.00 per share, with a
liquidation preference, in the aggregate, of up to $130,000,000, on the
following terms, with the following designations, powers, preferences and
rights:

         1. Designation and Amount; Fractional Shares. The series of preferred
stock shall be designated as the "Floating Rate Cumulative Preferred Stock,
Series G" (the "Series G Preferred Stock"). The Series G Preferred Stock shall
be perpetual and the authorized number of shares of Series G Preferred Stock
shall be fifty-two thousand (52,000) shares. The Series G Preferred Stock is
issuable in whole shares only.

         2. Dividends. Holders of shares of Series G Preferred Stock shall be
entitled to receive, when, as and if declared by the Board or a duly
authorized committee thereof out of funds of the Corporation legally available
for payment, cumulative cash dividends at the Applicable Rate (as defined in
Section 3). Dividends on the Series G Preferred Stock shall accrue from the
date of initial issuance and shall be payable monthly, in arrears, on the 15th
day of each month, commencing March 15, 2004 (each a "Dividend Payment Date"),
provided that if any date on which dividends would otherwise be payable shall
not be a New York and London business day, then the Dividend Payment Date will
be the next succeeding New York and London business day, unless such day falls
in the next calendar month, in which case the

<PAGE>

Dividend Payment Date will be the immediately preceding New York and London
business day. "New York business day" means any day that is not a Saturday or
Sunday and that, in New York City, is not a day on which banking institutions
generally are authorized or obligated by law or executive order to be closed.
("London business day" means any day other than a Saturday or a Sunday on
which dealings in deposits in dollars are transacted, or with respect to any
future date are expected to be transacted, in the London interbank market.)
Dividends on shares of the Series G Preferred Stock shall be fully cumulative
and shall accumulate (whether or not earned or declared), on a daily basis,
without interest, from and including the previous Dividend Payment Date to but
excluding the current Dividend Payment Date (for avoidance of doubt, in each
case as such Dividend Payment Date may have been postponed or accelerated as
aforesaid), except that the first dividend shall accrue, without interest,
from the date of initial issuance of the Series G Preferred Stock. Accumulated
and unpaid dividends shall not bear interest. Dividends shall be payable, in
arrears, to holders of record as they appear on the stock books of the
Corporation on each record date, which shall be the 1st day of the month in
which such Dividend Payment Date occurs (or, if the Dividend Payment Date is
postponed for any of the reasons discussed above in this paragraph, the 1st
day of the month prior to such Dividend Payment Date) (each of which dates
being a "Dividend Payment Record Date"). Dividends payable on the Series G
Preferred Stock shall be computed on the basis of a 360-day year and the
actual number of days elapsed. Dividends shall cease to accrue on the Series G
Preferred Stock on the date of their earlier redemption pursuant to Section 6,
unless the Corporation shall default in providing funds for the payment of the
redemption price on the shares called for redemption pursuant thereto.

         No dividends may be declared or paid or set apart for payment on any
Parity Preferred Stock (as defined in Section 8 below) unless there shall also
be or have been declared and paid or set apart for payment on the Series G
Preferred Stock, dividends for all dividend payment periods of the Series G
Preferred Stock ending on or before the Dividend Payment Date of such Parity
Preferred Stock, ratably in proportion to the respective amounts of dividends
(x) accumulated and unpaid or payable on such Parity Preferred Stock, on the
one hand, and (y) accumulated and unpaid through the dividend payment period
or periods of the Series G Preferred Stock coinciding with or next preceding
such Dividend Payment Date, on the other hand.

         Except as set forth in the preceding sentence, unless full cumulative
dividends on the Series G Preferred Stock have been paid through the most
recently completed monthly dividend period for the Series G Preferred Stock,
no dividends (other than in common stock of the Corporation) may be paid or
declared and set aside for payment or other distribution made upon the common
stock or on any other stock of the Corporation ranking junior to or on a
parity with the Series G Preferred Stock as to dividends, nor may any common
stock or any other stock of the Corporation ranking junior to or on a parity
with the Series G Preferred Stock as to dividends be redeemed, purchased or
otherwise acquired for any consideration (or any payment be made to or
available for a sinking fund for the redemption of any shares of such stock;
provided, however, that any moneys theretofore deposited in any sinking fund
with respect to any preferred stock of the Corporation in compliance with the
provisions of such sinking fund may thereafter be applied to the purchase or
redemption of such preferred stock in accordance with the terms of such
sinking fund, regardless of whether at the time of such application full
cumulative dividends upon shares of the Series G Preferred Stock outstanding
to the last Dividend Payment

                                      2
<PAGE>

Date shall have been paid or declared and set apart for payment) by the
Corporation; provided that any such junior or parity stock or common stock may
be converted into or exchanged for stock of the Corporation ranking junior to
the Series G Preferred Stock as to dividends.

         3. Definition of Applicable Rate, etc. The "Applicable Rate" for any
dividend period shall be a floating rate per annum of 0.75% above one-month
LIBOR, but in no event will the Applicable Rate be less than 3.0% per annum.
For the first dividend period, the Applicable Rate will be 3.0%. LIBOR, with
respect to a dividend period, means the rate (expressed as a percentage per
annum) for deposits in U.S. dollars for a one-month period that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the second London
business day immediately preceding the first day of such dividend period. The
term "Telerate Page 3750" means the display on Bridge Telerate, Inc. on page
3750, or any successor service or page for the purpose of displaying the
London interbank offered rates of major banks.

          If LIBOR cannot be determined as described above, the Corporation
will select four major banks in the London interbank market. The Corporation
will request that the principal London offices of those four selected banks
provide their offered quotations to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on the second London business day
immediately preceding the first day of such dividend period. These quotations
will be for deposits in U.S. dollars for a one-month period. Offered
quotations must be based on a principal amount equal to an amount that is
representative of a single transaction in U.S. dollars in the market at the
time.

         If two or more quotations are provided, LIBOR for the dividend period
will be the arithmetic mean of the quotations. If fewer than two quotations
are provided, the Corporation will select three major banks in New York City
and will then determine LIBOR for the dividend period as the arithmetic mean
of rates quoted by those three major banks in New York City to leading
European banks at approximately 3:00 p.m., New York City time, on the second
London business day immediately preceding the first day of such dividend
period. The rates quoted will be for loans in U.S. dollars, for a one-month
period. Rates quoted must be based on a principal amount equal to an amount
that is representative of a single transaction in U.S. dollars in the market
at the time. If fewer than three New York City banks selected by the
Corporation are quoting rates, LIBOR for the applicable period will be the
same as for the immediately preceding dividend period.

         The term "dividend period" means the period from and including each
Dividend Payment Date to but excluding the next succeeding Dividend Payment
Date (for avoidance of doubt, in each case as such Dividend Payment Date may
have been postponed or accelerated as aforesaid).

         4. Liquidation Preference. The shares of Series G Preferred Stock
shall rank, as to liquidation, dissolution or winding up of the Corporation,
prior to the shares of common stock and any other stock of the Corporation
ranking junior to the Series G Preferred Stock as to rights upon liquidation,
dissolution or winding up of the Corporation, so that in the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, the holders of the Series G Preferred Stock shall be entitled
to receive out of the assets of the Corporation available for distribution to
its stockholders, whether from capital, surplus or earnings, before any
distribution is made to holders of shares of common stock or any other such

                                      3
<PAGE>

junior stock, an amount equal to the liquidation preference of $2,500.00 per
share plus an amount equal to all dividends (whether or not earned or
declared) accrued and accumulated and unpaid on the shares of Series G
Preferred Stock to the date of final distribution. The holders of the Series G
Preferred Stock shall not be entitled to receive the preferential amounts as
aforesaid until the liquidation preference of any other stock of the
Corporation ranking senior to the Series G Preferred Stock as to rights upon
liquidation, dissolution or winding up shall have been paid (or a sum set
aside therefor sufficient to provide for payment) in full. After payment of
the full amount of the preferential amounts as aforesaid, the holders of
shares of Series G Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of shares of
Parity Preferred Stock and Series G Preferred Stock shall be insufficient to
pay in full the preferential amounts payable thereon, then such assets, or the
proceeds thereof, shall be distributable among such holders ratably in
accordance with the respective amounts which would be payable on such shares
if all amounts payable thereon were paid in full. For the purposes hereof,
neither a consolidation or merger of the Corporation with or into any other
corporation, nor a merger of any other corporation with or into the
Corporation, nor a sale, lease, exchange or transfer of all or any part of the
Corporation's assets shall be considered a liquidation, dissolution or winding
up of the Corporation.

         5. Conversion. The Series G Preferred Stock is not convertible into,
or exchangeable for, other securities or property.

         6. Voting Rights. The Series G Preferred Stock, except as provided
herein or as otherwise from time to time required by law, shall have no voting
rights. Whenever, at any time or times, dividends payable on the shares of
Series G Preferred Stock or on any Parity Preferred Stock shall be in arrears
for an aggregate number of days equal to six calendar quarters or more,
whether or not consecutive, the authorized number of directors of the
Corporation shall automatically be increased by two and the holders of the
Series G Preferred Stock shall have the right, with holders of shares of any
one or more other classes or series of Parity Preferred Stock outstanding at
the time upon which like voting rights have been conferred and are exercisable
("Voting Parity Stock"), voting together as a class, to elect two directors
(hereinafter the "Preferred Directors" and each a "Preferred Director") to
fill such newly created directorships at the Corporation's next annual meeting
of stockholders and at each subsequent annual meeting of stockholders until
such arrearages have been paid or set aside for payment, at which time such
right shall terminate, except as herein or by law expressly provided, subject
to revesting in the event of each and every subsequent default of the
character above mentioned. Upon any termination of the right of the holders of
shares of Series G Preferred Stock and Voting Parity Stock as a class to vote
for directors as provided above, the term of office of all Preferred Directors
then in office shall terminate immediately and the authorized number of
directors shall be reduced by the number of Preferred Directors elected
pursuant hereto. Any Preferred Director may be removed at any time, with or
without cause. Any vacancy created thereby may be filled only by the
affirmative vote of the holders of shares of Series G Preferred Stock voting
separately as a class (together with the holders of shares of Voting Parity
Stock). If the office of any Preferred Director becomes vacant for any reason
other than removal from office as aforesaid, the remaining Preferred Director
may choose a successor who shall hold office for the unexpired term in respect
of which such vacancy occurred. At elections for such directors, each

                                      4
<PAGE>

holder of shares of Series G Preferred Stock shall be entitled to ten votes
for each share held (the holders of shares of any other class or series of
Voting Parity Stock being entitled to such number of votes, if any, for each
share of such stock held as may be granted to them).

         So long as any shares of any Series G Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote of the
holders of at least 66-2/3% of the shares of such Series G Preferred Stock (i)
authorize, create or issue any capital stock of the Corporation ranking, as to
dividends or upon liquidation, dissolution or winding up, prior to such Series
G Preferred Stock, or reclassify any authorized capital stock of the
Corporation into any such shares of such capital stock or issue any obligation
or security convertible into or evidencing the right to purchase any such
shares of capital stock, or (ii) amend, alter or repeal the certificate of
designations for such Series G Preferred Stock, or the Restated Certificate of
Incorporation of the Corporation, whether by merger, consolidation or
otherwise, so as to adversely affect the powers, preferences or special rights
of such Series G Preferred Stock. Any increase in the amount of authorized
common stock or other authorized preferred stock, or any increase or decrease
in the number of shares of any series of preferred stock or the authorization,
creation and issuance of other classes or series of common stock or other
stock, in each case ranking on a parity with or junior to the shares of Series
G Preferred Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up, shall not
be deemed to adversely affect such powers, preferences or special rights.

         In exercising the voting rights set forth in this Section 5 or when
otherwise granted voting rights by operation of law or by the Corporation,
each share of Series G Preferred Stock shall be entitled to ten votes.

         The foregoing voting provisions shall not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required or upon which the holders of Series G Preferred Stock shall be
entitled to vote shall be effected, all outstanding shares of Series G
Preferred Stock shall have been redeemed or called for redemption and
sufficient funds shall have been deposited in trust to effect such redemption.

         7. Redemption. The shares of Series G Preferred Stock shall not be
redeemable prior to February 15, 2009. On any Dividend Payment Date on and
after such date, the Corporation, at its option, may redeem shares of the
Series G Preferred Stock, as a whole or in part, at a redemption price equal
to $2,500.00 per share, plus, in each case, an amount equal to all dividends
(whether or not earned or declared) accrued and accumulated and unpaid to, but
excluding, the date fixed for redemption.

         The holders of shares of Series G Preferred Stock at the close of
business on a Dividend Payment Record Date shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the call for redemption thereof (except that holders of shares
called for redemption on a date occurring between such Record Date and the
Dividend Payment Date shall not be entitled to receive such dividend on such
Dividend Payment Date) or the Corporation's default in payment of the dividend
due on such Dividend Payment Date.

                                      5
<PAGE>

         If fewer than all the outstanding shares of Series G Preferred Stock
are to be redeemed, the number of shares to be redeemed shall be determined by
the Board of Directors and the shares to be redeemed shall be selected by lot
or pro rata or by any other means determined by the Board of Directors in its
sole discretion to be equitable.

         If full cumulative dividends on the Series G Preferred Stock have not
been paid or set apart for payment with respect of all prior dividend periods,
the Series G Preferred Stock may not be redeemed in part and the Corporation
may not purchase or acquire any shares of the Series G Preferred Stock
otherwise than pursuant to a purchase or exchange offer made on the same terms
to all holders of the Series G Preferred Stock.

         In the event the Corporation shall redeem shares of Series G
Preferred Stock, written notice of such redemption shall be given by first
class mail, postage prepaid, mailed not less than 20 days nor more than 60
days prior to the redemption date, to each holder of record of the shares to
be redeemed at such holder's address as the same appears on the stock books of
the Corporation; provided, however, that no failure to give such notice nor
any defect therein shall affect the validity of the proceeding for the
redemption of any shares of Series G Preferred Stock to be redeemed except as
to the holder to whom the Corporation has failed to mail said notice or except
as to the holder whose notice was defective. Each such notice shall state: (a)
the redemption date; (b) the number of shares of Series G Preferred Stock to
be redeemed and, if less than all the shares held by such holder are to be
redeemed from such holder, the number of shares to be redeemed from such
holder; (c) the redemption price and any accumulated and unpaid dividends to
the redemption date; (d) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (e) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date (unless the Corporation shall default in providing funds for the payment
of the redemption price of the shares called for redemption at the time and
place specified in such notice).

         If a notice of redemption has been given pursuant to this Section 6
and if, on or before the date fixed for redemption, the funds necessary for
such redemption shall have been set aside by the Corporation, separate and
apart from its other funds, in trust for the pro rata benefit of the holders
of the shares of Series G Preferred Stock so called for redemption, then,
notwithstanding that any certificates for such shares have not been
surrendered for cancellation, on the redemption date dividends shall cease to
accrue on the shares to be redeemed, and at the close of business on the
redemption date the holders of such shares shall cease to be stockholders with
respect to such shares and shall have no interest in or claims against the
Corporation by virtue thereof and shall have no voting or other rights with
respect to such shares, except the right to receive the moneys payable upon
surrender (and endorsement, if required by the Corporation) of their
certificates, and the shares evidenced thereby shall no longer be outstanding.
The Corporation's obligation to provide funds for the payment of the
redemption price (and any accumulated and unpaid dividends to the redemption
date) of the shares called for redemption shall be deemed fulfilled if, on or
before a redemption date, the Corporation shall deposit, with a bank or trust
company, or an affiliate of a bank or trust company, having an office or
agency in New York City and having a capital and surplus of at least
$50,000,000, such funds sufficient to pay the redemption price (and any
accumulated and unpaid dividends to the redemption date) of the shares called
for redemption, in trust for the account of the holders of the shares to be
redeemed (and so as to be and continue to be available therefor), with
irrevocable instructions

                                      6
<PAGE>

and authority to such bank or trust company that such funds be delivered upon
redemption of the shares of Series G Preferred Stock so called for redemption.

         Subject to applicable escheat laws, any moneys so set aside by the
Corporation and unclaimed at the end of two years from the redemption date
shall revert to the general funds of the Corporation, after which reversion
the holders of such shares so called for redemption shall look only to the
general funds of the Corporation for the payment of the amounts payable upon
such redemption. Any interest accrued on funds so deposited shall be paid to
the Corporation from time to time.

         Shares of Series G Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed, shall (upon
compliance with any applicable provisions of the laws of the State of
Delaware) have the status of authorized and unissued shares of the class of
Preferred Stock undesignated as to series and may be redesignated and reissued
as part of any series of the preferred stock.

         8. Amendment of Resolution. The Board reserves the right from time to
time to increase or decrease the number of shares that constitute the Series G
Preferred Stock (but not below the number of shares thereof then outstanding)
and in other respects to amend this Certificate of Designations within the
limitations provided by law, this resolution and the Restated Certificate of
Incorporation.

         9. Rank. Any stock of any class or classes or series of the
Corporation shall be deemed to rank:

         (a) prior to shares of the Series G Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up, or both, if the
holders of stock of such class or classes or series shall be entitled by the
terms thereof to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of the Series G Preferred Stock;

         (b) on a parity with shares of the Series G Preferred Stock, either
as to dividends or upon liquidation, dissolution or winding up, or both,
whether or not the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof be different from those of the Series G
Preferred Stock, if the holders of stock of such class or classes or series
shall be entitled by the terms thereof to the receipt of dividends or of
amounts distributed upon liquidation, dissolution or winding up, as the case
may be, in proportion to their respective dividend rates or liquidation
prices, without preference or priority of one over the other as between the
holders of such stock and the holders of shares of Series G Preferred Stock
(the term "Parity Preferred Stock" being used to refer to any stock on a
parity with the shares of Series G Preferred Stock, either as to dividend or
upon liquidation, dissolution or winding up, or both, as the content may
require); and

         (c) junior to shares of the Series G Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up, or both, if such
class or classes or series shall be common stock or if the holders of the
Series G Preferred Stock shall be entitled to the receipt of dividends

                                      7
<PAGE>

or of amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of stock of such
class or classes or series.

         The Series G Preferred Stock shall rank, as to dividends and upon
liquidation, dissolution or winding up, on a parity with the Corporation's
5.94% Cumulative Preferred Stock, Series C, the Corporation's 5.67% Cumulative
Preferred Stock, Series D, the Corporation's Fixed/Adjustable Rate Cumulative
Preferred Stock, Series E, the Corporation's 6.50% Cumulative Preferred Stock,
Series F and any Parity Preferred Stock issued hereafter.

               [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      8
<PAGE>

         IN WITNESS WHEREOF, the undersigned, being duly authorized thereto,
does hereby affirm, under penalties of perjury, that this certificate is the
act and deed of the Corporation and that the facts herein stated are true, and
accordingly has hereunto set his hand this 30th day of January, 2004.

                                        LEHMAN BROTHERS HOLDINGS INC.

                                        By:  /s/ Barrett S. DiPaolo
                                           -----------------------------------
                                           Name:   Barrett S. DiPaolo
                                           Title:  Vice President and
                                                   Assistant Secretary

                                      9

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