SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit
10.1
SECOND
AMENDMENT TO EMPLOYMENT AGREEMENT
This
Second Amendment to Employment Agreement (“Second Amendment”) is entered into by
and between ICO, Inc. (the “Company”) and W. Xxxxxx Xxxxxx, Xx. (“Employee”), to
be effective February 11, 2005 (the “Effective Date”).
WHEREAS,
Employee and the Company entered into an Employment Agreement and First
Amendment to Employment Agreement (together the “Agreement”), both of which
being effective as of February 2, 2004; and
WHEREAS,
the parties desire to amend the Agreement, as set forth herein.
NOW,
THEREFORE, for and in consideration of the mutual promises, covenants, and
obligations contained herein, the Company and Employee agree as
follows:
1. The following provision is hereby added in Article 1:
“1.6. Upon
termination of Employee’s employment for any reason, Employee shall be deemed
without further action by the Company or Employee to have been terminated from
his position on the Board of Directors of the Company and from any and all
positions as an officer and director of any subsidiary of the Company that he
may hold. Such termination shall be effective on the date of termination of
Employee’s employment.”
2. The
following provision is hereby substituted for the language in
2.2(a)(i)-(iii):
“2.2(a) The bonus
for the first fiscal year during the Employment Period (which shall be a partial
year, ending on September 30, 2004) (the Year One Annual Incentive Bonus) shall
equal $150,000.00.”
3. Year
Two Annual Incentive Bonus
a) The Year
Two Annual Incentive Bonus, referenced in Section 2.2(b) of the Agreement, shall
be calculated as follows: The Company’s Target EBITDA (“Target”) for fiscal year
2005 is $20 million. The Company’s EBITDA must be greater than 80% of the Target
for fiscal year 2005, before Employee is eligible for a bonus equal to a
percentage of his Base Salary up to a maximum of 60% of his Base Salary. The
formula for this bonus percentage is:
Bonus
percentage = (1.5 x T) - 120
where
T = the
percentage of the Target reached
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 and includes as an operating expense
bonus amounts payable to Employee and other employees.
If the
Company does not achieve fiscal year 2005 Return on Invested Capital (“ROIC”) of
8% or more, Employee’s bonus, as calculated above, will be reduced by 20%. For
purposes of this calculation, ROIC will be (i) operating income from continuing
operations as defined by GAAP, excluding impairment, restructuring and other
costs and stock option expenses divided by (ii) total assets, excluding goodwill
and 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.
b) Notwithstanding
paragraph (a) above, if the Company receives a “Qualified Opinion for fiscal
2005” (as defined below), then Employee shall not be entitled to receive any
Year Two Annual Incentive Bonus. For the purpose of this paragraph, the Company
shall be deemed to have received a “Qualified Opinion for fiscal 2005” if, in
connection with the Company’s fiscal 2005 annual audit (relative to
Xxxxxxxx-Xxxxx 404 compliance), the Company (i) does not receive an unqualified
opinion from PricewaterhouseCoopers (“PwC”) regarding Management’s Assessment of
the Internal Control System of the Company, or (ii)
does not receive an unqualified opinion from PwC regarding their assessment of
the Company’s Internal Control System. This provision shall apply only to the
Year Two Annual Incentive Bonus (relating to fiscal year 2005), and shall not
apply to future Annual Incentive Bonuses unless expressly agreed to by Employee.
This provision shall not apply if the issuance of the independent auditor
opinions relating to (i) and (ii) above are not required due to a change in
applicable law or regulation.
4. In
addition to the amendments stated above, Employee acknowledges and agrees that
he has waived any claim to any additional bonus for fiscal year 2004 other than
the bonus he actually received.
IN
WITNESS WHEREOF, the Company and Employee have duly executed this Second
Amendment in multiple originals to be effective on the Effective Date.
ICO, Inc.
/s/ Xxxxxxxxxxx
X. X’Xxxxxxxx | |
|
Xxxxxxxxxxx
X. X’Xxxxxxxx |
Chairman
of the Board of Directors | |
Date: |
February
11, 2005 |
Employee
/s/ W.
Xxxxxx Xxxxxx, Xx. | |
|
Xxx
X. Xxxx |
Date: |
February
11, 2005 |