ICO, INC. CHANGE IN CONTROL
SEVERANCE PLAN
This ICO, Inc. Change in Control Severance Plan
(the “Plan”) is intended to assure ICO, Inc. (the
“Company”) that it will have the continued dedication
of specified employees and eliminate the distractions of personal
uncertainties associated with potential transactions that the
Company may undertake in the future by providing for certain
severance benefit payments to those employees on employment
termination in connection with a Change in Control, as defined
below.
The terms set forth below have the following
meanings:
“Affiliate” means any company controlled by, controlling or
under common control with the Company within the meaning of
Section 414 of the Code.
“Board” means the Board of Directors of the
Company.
(a) action
or inaction of Participant constituting fraud (as determined by the
Board);
(b) Participant’s
conviction of a felony, or of a crime involving moral turpitude,
dishonesty, or fraud;
(c) a
knowing and material violation by Participant of any written policy
of the Company, including without limitation the Company’s
Code of Business Ethics;
(d) a
material violation by Participant of an applicable law, rule, or
regulation that results in, or that is reasonably possible to
result in, the Company incurring significant expenses (including
legal expenses), damages, or liability;
(e) Participant’s
material breach of any of Participant’s fiduciary duties to
the Company; or
(f) Participant’s
breach of any confidentiality, nonsolicitation or noncompetition
provision of any agreement with the Company.
A “Change in Control” shall
be deemed to have occurred upon the occurrence of any of the
following events:
(a) any
person or group within the meaning of Section 13(d) and 14(d) of
the Exchange Act), together with their affiliates and associates
(both as defined in Rule 12b-2
under the
Exchange Act) other than (i) the Company or any of its Affiliates,
(ii) any employee benefit plan of the Company or any of its
Affiliates, or the trustee or other fiduciary holding securities
under any such employee benefit plan, (iii) a company owned,
directly or indirectly, by shareholders of the Company in
substantially the same proportions as their ownership of the
Company or (iv) a person or group to the extent (and only to the
extent) he or it acquires beneficial ownership of voting securities
(1) directly from the Company or (2) pursuant to an Excluded
Business Combination (as defined in clause (c) below), becomes the
‘beneficial owner’ (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of more than 50% of combined
voting power of the voting securities of the Company then
outstanding; or
(b) individuals
who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that for
purposes of this definition of Change in Control, any individual
becoming a director subsequent to the Effective Date whose
appointment or election to the Board was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an election contest with respect to the election or removal of
directors or other solicitation of proxies or consents by or on
behalf of a person other than the Board; or
(c) the
consummation of any merger, reorganization, share exchange,
business combination or consolidation of the Company or one of its
subsidiaries (a “Business Combination”) with or into
any other entity, other than a Business Combination which would
result in the holders of the voting securities of the Company
outstanding immediately prior thereto holding securities which
represent immediately after such Business Combination more than a
majority of the combined voting power of the voting securities of
the Company or the surviving company or the ultimate parent of such
surviving company (an “Excluded Business Combination”);
or
(d) the
consummation of a sale or disposition by the Company of all or
substantially all of the Company’s assets, other than a sale
or disposition if the holders of the voting securities of the
Company outstanding immediately prior thereto hold securities
immediately thereafter which represent more than a majority of the
combined voting power of the voting securities of the acquirer, or
the ultimate parent of the acquirer, of such assets; or
(e) the
shareholders of the Company approve a plan of complete liquidation
or dissolution of the Company.
“Code” means the United States Internal Revenue Code of
1986, as amended from time to time.
“Committee” means the Compensation Committee of the Board or
any person or persons appointed by the Board to administer the
Plan.
“Company” means ICO, Inc., and any successor
thereto.
“Covered Termination”
means any termination of
Participant’s employment with the Company or any Affiliate
that is a “Separation from Service” (within the meaning
of Code Section 409A and Treasury Regulation § 1.409A-1(h)(3)
(or any successor regulations or guidance thereto))
thereof:
(a) that
does not result from any of the following:
(ii) “Permanent
Disability,” defined as any medically determinable physical
or mental impairment rendering the Participant unable to engage in
any substantial gainful activity, which disability can be expected
to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months;
(iii) involuntary
termination for Cause; or
(iv) resignation
by Participant, unless such resignation is for Good Reason;
and
(i) between
the date when a letter of intent, and/or transaction agreement
relating to a Business Combination is executed by the Company and
the date when such Business Combination is consummated and/or the
closing date of the transaction relating to such Business
Combination (a “Pre-Change in Control Covered
Termination”); or
(ii) on
or within two years after the date upon which a Change in Control
occurs.
For the avoidance of doubt it is hereby noted
Participant’s termination shall not be a Covered Termination
and no Severance Benefit shall be owed to Participant pursuant to
this Plan in any of the following circumstances:
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Participant is
terminated with or without Cause prior to the date of the
Company’s execution of a letter of intent and/or transaction
agreement relating to a Business Combination;
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Participant is
terminated without Cause after the date of the Company’s
execution of a letter of intent and/or transaction agreement
relating to a Business Combination, but such Business Combination
is abandoned (not consummated or closed); or
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prior to the
date upon which a Change in Control occurs, Participant becomes
aware that effective as of the date of the Change in Control one or
more events will occur constituting Good Reason (but an event
constituting Good Reason does not in fact occur prior to the
effective date of the Change in Control), and Participant
voluntarily terminates employment prior to the date of the Change
in Control. [For example only: if the Company enters
into a transaction agreement and Participant learns, prior to the
closing of the transaction, that his position will be eliminated
following the closing of the transaction, but Company desires for
Participant to continue in his current position, working in his
current location, earning current compensation through the closing,
if Participant resigns prior to the Closing (e.g. to accept new
employment), no Severance Benefit shall be owed to
Participant.]
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“Date of Termination”
means the date on which Participant
incurs a separation from service from the Company and all
Affiliates within the meaning of Section 409A(c)(2)(A)(i) of the
Code.
“Effective Date”
means August 6, 2009.
“Employee” means an individual employed by the Company or
an Affiliate of the Company.
“Employer” means the Company or any Affiliate that employs
a Participant.
“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended.
“Good Reason”
means any one or more of the
following events arising without the express written consent of the
Participant:
(a) a
material diminution in the Participant’s base compensation
and benefits;
(b) a
material diminution in the Participant’s authority, duties,
or responsibilities following a Change in Control; or
(c) a
material change in the geographic location at which the Participant
must perform the services.
provided, however , that no later than 30 days after learning of
the action (or inaction) described herein as the basis for a
termination of employment for Good Reason, Participant shall advise
the Company in writing that the action (or inaction) constitutes
grounds for a termination of his employment for Good Reason, in
which event the Company shall have 30 days to correct such action
(or inaction) and if such action (or inaction) is timely corrected,
then Participant shall not be entitled to terminate his employment
for Good Reason as a result of such action (or
inaction).
“Participant”
means an Employee who is designated
as eligible for a Plan benefit under Section 3(b), provided that
the Employee executes the Participation Agreement furnished to the
Employee by Company, and returns the executed Participation
Agreement to Company’s General Counsel with in ten (10)
business days after the Employee’s receipt of such
Participation Agreement.
“Participant Agreement”
means the written agreement by which
a benefit under this Plan shall be evidenced.
“Person” means an individual or a corporation, limited
liability company, partnership, joint venture, trust,
unincorporated organization, association, government agency or
political subdivision thereof or other entity.
“Plan” means the ICO, Inc. Change in Control Severance
Plan, as amended from time to time.
“Section 409A”
means Code Section 409A, and all
regulations and guidelines applicable thereto issued or promulgated
by the appropriate government agency or regulatory body.
“Severance Benefit”
has the meaning set forth in a
Participant’s Participation Agreement.
“Waiver and Release”
means a legal document,
substantially in the form attached hereto as Attachment A ,
in which Participant, in exchange for severance benefits described
in Section 4, among other things, releases the Company, the
Affiliates, their directors, officers, employees and agents, their
employee benefit plans and the fiduciaries and agents of said plans
from liability and damages in any way related to
Participant’s employment with or separation from the Company
or any of its Affiliates.
3. Administration and
Eligibility.
(a)
Administration . The Plan shall be administered by the
Committee, which shall have full and exclusive power to interpret
this Plan and to adopt rules, regulations and guidelines to carry
out this Plan as it deems necessary or appropriate. The Committee,
in its discretion, may retain the services of an outside
administrator to perform any of its Plan functions. Any Committee
decision in interpreting and administering this Plan shall lie
within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned.
(b)
Eligibility to Participate . From time to time the
Committee, in its sole discretion, shall designate in writing the
Employees who shall be eligible to receive Plan benefits, and may
designate additional Participants at any time prior to a Change in
Control.
(c)
Eligibility for the Severance Benefit . If the employment of
a Participant who is employed by the Company or an Affiliate
thereof is terminated as a result of a Covered Termination, then
the Company will provide or cause to be provided to the Participant
the Severance Benefit as provided in Section 4 below, subject to
the Participant’s execution, without revocation within the
relevant statutory revocation period, of a Waiver and
Release.
If a Participant is eligible for a Severance
Benefit under Section 3(c), then the Company shall provide or cause
to be provided to the Participant benefits as follows:
(a)
Timing of Payment of Severance Benefit . The cash portion of
the Severance Benefit shall be paid in a lump sum, subject to
applicable withholding for income and employment
taxes. Such payment shall be paid on or before the 10th
day following the date of the Participant’s Covered
Termination, or, in the event of a Pre-Change in Control Covered
Termination, the 10th day following the date of the Change in
Control.
(b)
Parachute Tax Limitation . If the Severance Benefit is
subject to the excise tax imposed by Code Section 4999 or any
interest or penalties are incurred by the Participant with respect
to such excise tax (such excise tax, together with any such
interest and penalties, hereinafter collectively referred to as the
“Excise Tax”), then the provisions of either of clause
(i) or (ii) of this paragraph shall apply, whichever provision
results in the Participant retaining the greater amount of the
Severance Benefits after payment of the Excise Tax:
(i) the
lump sum payment pursuant to Section 4(a) shall be reduced such
that all potential “parachute payments” to the
Participant will not exceed 2.99 times the Participant’s
“base amount”, as such terms are used in Code Section
280G; or
(ii) the
lump sum shall not be reduced, and the Participant shall be
responsible for the payment of the Excise Tax from the Severance
Benefit.
(c)
No Duty to Mitigate; Offsets . A Participant’s
entitlement to a Severance Benefit shall not be governed by any
duty to mitigate the Participant’s damages by seeking further
employment nor offset by any compensation which the Participant may
receive from future employment.
5.
C onflicts With Other
Agreements .
In the event that a Participant becomes entitled
to benefits under a prior or subsequent agreement, or severance or
separation policy, pertaining to the Participant’s employment
by the Company or any Affiliate thereof (other than this Plan) or
the benefits to which the Participant is entitled as a result of
such employment and such benefits conflict with the terms of this
Plan, the Participant will receive the greater and more favorable
of each of the benefits provided under either this Plan or such
other agreement, severance or separation policy, or benefits, on an
individual benefit basis, provided, however, that the payments
available upon the Covered Termination under this Plan will not
change the timing of payment of any nonqualified deferred
compensation subject to (and not exempt from) Section 409A of the
Code pursuant to the terms of any plan or agreement in effect prior
to the date hereof, except to the extent the Covered Termination
follows a Change in Control which qualifies as a “change in
control event” under the Treasury Regulations issued pursuant
to Section 409A of the Code.
Notwithstanding the foregoing,
Participant’s rights to stock options or restricted shares
awarded pursuant to a
