<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ICO, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
ICO, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[ICO LOGO]
100 GLENBOROUGH DRIVE, SUITE 250
HOUSTON, TEXAS 77067
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 8, 1995
The Annual Meeting of Shareholders of ICO, Inc. ("ICO" or the "Company") will
be held at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston,
Texas, on Friday, September 8, 1995 at 10:00 a.m. Central Daylight Savings
Time, for the following purposes:
1) To elect two Class I Directors to serve until the 1998 Annual
Meeting of Shareholders and until their respective successors
are elected and qualified;
2) To approve the ICO, Inc. 1995 Stock Option Plan;
3) To ratify and approve the selection of Price Waterhouse LLP as
the Company's independent accountants for the ensuing fiscal
year; and
4) To consider and act upon any matters incidental to the
foregoing purposes and transact such other business as may
properly come before the meeting or any adjournment thereof.
Only holders of shares of common stock of record on the books of the
Company at the close of business on August 9, 1995 will be entitled to vote at
the meeting or any adjournment thereof.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY AT YOUR EARLIEST
CONVENIENCE. A REPLY ENVELOPE IS PROVIDED FOR THIS PURPOSE, WHICH NEEDS NO
POSTAGE IF MAILED IN THE UNITED STATES. YOUR IMMEDIATE ATTENTION IS REQUESTED
IN ORDER TO SAVE YOUR COMPANY ADDITIONAL SOLICITATION EXPENSE.
By Order of the Board of Directors
Sylvia A. Pacholder
Chief Executive Officer,
President & Secretary
Houston, Texas
August 10, 1995
<PAGE> 3
ICO, INC.
100 GLENBOROUGH DRIVE, SUITE 250
HOUSTON, TEXAS 77067
(713) 872-4994
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 8, 1995
The following information is submitted concerning the enclosed Proxy
and the matters to be acted upon under authority thereof at the Annual Meeting
of Shareholders of the Company to be held at 10:00 a.m., Central Daylight
Savings Time, on the 8th day of September, 1995, or any adjournment thereof,
pursuant to the enclosed Notice of said meeting. The approximate date this
Proxy Statement and the enclosed form of Proxy are first being sent to
Shareholders is August 11, 1995.
INFORMATION CONCERNING PROXY
The enclosed Proxy, even though executed and returned, may be revoked
at any time prior to voting of the Proxy (a) by the execution and submission of
a revised Proxy, (b) by written notice to the Secretary of the Company or (c)
by voting in person at the Annual Meeting. In the absence of such revocation,
shares represented by the Proxy will be voted at the Annual Meeting.
Unless contrary instructions are indicated on the enclosed Proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked or suspended before they are voted) will be voted
(1) for the selection of two nominees for Class I Directors named below, (2) to
approve the ICO, Inc. 1995 Stock Option Plan and (3) to confirm the appointment
of Price Waterhouse LLP to serve as independent accountants for the Company for
the fiscal year ending September 30, 1995. In the event a Shareholder
specifies a different choice by means of the enclosed Proxy, his shares will be
voted in accordance with the specification so made.
The cost of solicitation of Proxies will be borne by the Company. In
addition to the use of mail, employees of the Company may solicit Proxies by
telephone or other means. Upon request, the Company will reimburse brokers,
dealers, bankers, and trustees, or their nominees, for reasonable expenses
incurred by them in forwarding Proxy materials to beneficial owners of shares
of stock.
VOTING SECURITIES
The securities of the Company entitled to vote at the meeting consist,
as of August 9, 1995, of 8,838,954 shares of common stock, without par value.
Only Shareholders of record on the books of the Company on that date will be
entitled to vote at the meeting. All matters to be voted upon will be decided
by the affirmative vote of the holders of a majority of the shares of common
stock present or represented at the meeting. In voting on such matters, each
Shareholder is entitled to one vote for each of said shares. Under Texas law,
an abstention should have the same legal effect as a vote against, but broker
non-votes will not be counted for purposes of determining whether a majority
has been achieved. A broker non-vote occurs if a broker or other nominee
present in person or by proxy does not have discretionary authority and has not
received instructions with respect to a particular item or does not cast a vote
on that item for other reasons.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF MORE THAN 5% OF OUTSTANDING STOCK
The following table contains information concerning the security
ownership of certain beneficial owners known to the management of the Company,
based upon filings with the Securities and Exchange Commission, to own more
than five percent of the Company's common stock at the close of business on
July 31, 1995.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
- ------------------------------------ ------------------------ ----------------
<S> <C> <C>
Pacholder Associates
8044 Montgomery Road, Suite 382
Cincinnati, Ohio 45236 . . . . . . . . . . . . . . . . . . . . . 1,727,597 (2) 17.9%
Prudential Insurance Company of America
100 Mulberry Street
Newark, New Jersey 07102 . . . . . . . . . . . . . . . . . . . . 757,400 8.6%
State Street Research & Management Company
One Financial Center, 38th Floor
Boston, Massachusetts 02111 . . . . . . . . . . . . . . . . . . 773,040 (3) 8.5%
Wellington Management Company
75 State Street
Boston, Massachusetts 02109 . . . . . . . . . . . . . . . . . . 710,760 8.0%
FMR Corporation
82 Devonshire Street
Boston, Massachusetts 02109 . . . . . . . . . . . . . . . . . . 661,700 7.5%
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, Maryland 21202 . . . . . . . . . . . . . . . . . . . 515,040 5.8%
</TABLE>
____________________
(1) Voting and dispositive power is shared by the beneficial owner
indicated and certain of its subsidiaries, or investment funds managed
by it.
(2) Share amounts include 521,964 shares of common stock, 468,000 shares
of common stock which may be acquired through the exercise of warrants
and 203,560 shares of common stock which may be acquired upon
conversion of Convertible Exchangeable Preferred Stock, in each case
held by limited partnerships, of which Dr. Pacholder and Mr. Morgan
are general partners. Pursuant to certain Investment Advisory
Agreements, Pacholder Associates, Inc. has sole voting and investment
power over such securities. Share amounts also include 391,060 shares
of common stock, 100,000 shares of common stock which may be acquired
through the exercise of warrants and 43,013 shares of common stock
which may be acquired upon conversion of Convertible Exchangeable
Preferred Stock, in each case owned by a wholly-owned subsidiary of
Pacholder Associates, Inc.
2
<PAGE> 5
(3) This number represents 510,000 shares of common stock held and 263,040
shares of common stock which may be acquired upon conversion of
Convertible Exchangeable Preferred Stock.
3
<PAGE> 6
ELECTION OF DIRECTORS
Two Class I Directors are to be elected at the Annual Meeting, each
director to hold office until the Company's 1998 Annual Meeting of Shareholders
and until their respective successors shall have been elected and qualified.
Unless otherwise instructed or unless authority to vote is withheld,
the enclosed proxy will be voted FOR the election of the nominees listed below.
Although the Board of Directors does not contemplate that any of the nominees
will be unable to serve, if such a situation arises prior to the Annual
Meeting, the persons named in the enclosed proxy will vote FOR the election of
such other persons as may be nominated by the Board of Directors.
THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY
The following is information concerning the director nominees, as well
as Class II and Class III Directors, whose terms are not expiring at the 1995
Annual Meeting, and Executive Officers as of August 9, 1995:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
-----------------------
PRINCIPAL POSITION WITH DIRECTOR PERCENT
NAME THE COMPANY AGE SINCE SHARES OF CLASS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class I Director Nominees Whose Terms (if re-elected) Will Expire in 1998
William E. Cornelius (2)(3) Director 46 1992 6,000 (6) *
Robin E. Pacholder Director 28 1993 4,822 (6)(9) *
- ----------------------------------------------------------------------------------------------------------------------
Class II Directors Whose Terms Will Expire in 1996
William J. Morgan (2)(3)(4) Director 39 1992 1,733,597 (5)(6) 17.9%
Sylvia A. Pacholder (4) Chief Executive Officer, 53 1993 2,441,941 (5)(6)(7)(8) 25.2%
President, Secretary &
Director
- -----------------------------------------------------------------------------------------------------------------------
Class III Directors Whose Terms Will Expire in 1997
Asher O. Pacholder (4) Chairman of the Board & 58 1990 2,425,941 (5)(6)(7)(8) 25.0%
Chief Financial Officer
John F. Williamson (2)(3) Director 57 1995 2,000 (6) *
- -----------------------------------------------------------------------------------------------------------------------
Executive Officers Who Are Not Directors
Isaac Joseph Senior Vice President - n/a 4,000 (6) *
Sales
Curtis Mathews Senior Vice President - n/a 24,000 (6) *
Corporate Development
All Executive Officers and Directors as a Group 2,520,763 (10) 25.8%
(8 persons)
</TABLE>
____________________________
4
<PAGE> 7
(1) Except as otherwise indicated, the beneficial owner listed below has
sole voting and investment powers with respect thereto.
(2) Audit Committee Member
(3) Compensation Committee Member
(4) Executive Committee Member
(5) Share amounts include 521,964 shares of common stock and 468,000
shares of common stock which may be acquired through the exercise of
warrants and 203,560 shares of common stock which may be acquired upon
conversion of Convertible Exchangeable Preferred Stock, in each case
held by limited partnerships, of which Dr. Pacholder and Mr. Morgan
are general partners. Pursuant to certain Investment Advisory
Agreements, Pacholder Associates, Inc. has sole voting and investment
power over such securities. Share amounts also include 391,060 shares
of common stock, 100,000 shares of common stock which may be acquired
through the exercise of warrants and 43,013 shares of common stock
which may be acquired upon conversion of Convertible Exchangeable
Preferred Stock, in each case owned by a wholly-owned subsidiary of
Pacholder Associates, Inc.
(6) Share amounts for Ms. S. Pacholder, Mr. Joseph, and Mr. Mathews
include 20,000, 1,500 and 4,000 shares of common stock, respectively,
that are issuable upon exercise of stock options granted under the
1985 Stock Option Plan. Share amounts for Ms. S. Pacholder, Dr.
Pacholder, Mr. Joseph and Mr. Mathews include 30,000, 30,000, 2,500
and 20,000 shares of common stock, respectively, that are issuable
upon exercise of stock options granted under the 1994 Stock Option
Plan. Share amounts for Dr. Pacholder, Mr. Morgan, Mr. Cornelius, Ms.
S. Pacholder, Ms. R. Pacholder and Mr. Williamson include 6,000,
6,000, 6,000, 2,000, 4,000 and 2,000 shares of common stock,
respectively, that are issuable upon exercise of stock options granted
under the 1993 Stock Option Plan for Non-Employee Directors.
(7) Share amounts include 650,944 shares of common stock issued in
connection with six acquisitions over which Ms. S. Pacholder and Dr.
Pacholder share voting power. Ms. S. Pacholder and Dr. Pacholder
disclaim beneficial ownership of these shares.
(8) Includes 11,400 shares of common stock.
(9) Includes 822 shares of common stock which may be acquired upon
conversion of Convertible Exchangeable Preferred Stock.
(10) Share amounts include 134,000 shares of common stock issuable upon
exercise of stock options granted to certain officers and Directors
under the 1985 Stock Option Plan, the 1994 Stock Option Plan and the
1993 Stock Option Plan for Non-Employee Directors, 568,000 shares of
common stock issuable upon exercise of warrants and 247,395 shares of
Preferred Stock that are deemed to be beneficially owned by certain
Directors as indicated in (5) and (9) above. Share amounts also
include 650,944 shares of common stock over which certain Directors and
officers share voting power as indicated in (7) above.
* Less than 1% of outstanding shares.
William E. Cornelius has been an independent manufacturing consultant
since 1991. For more than five years prior to 1991, Mr. Cornelius was Vice
President/Partner of Young & Klein Technicraft, Inc, a printing company.
Robin E. Pacholder has been Senior Vice President and Associate
General Counsel with Pacholder Associates, Inc., an investment advisory firm,
since 1994. Ms. R. Pacholder was an Associate with the law firm of Pachulski,
Stang, Ziehl & Young from 1992 to 1994. Prior to that time, Ms. R. Pacholder
attended and graduated with honors from the UCLA School of Law and was admitted
to practice law in California in 1992. Ms. R. Pacholder is the daughter of
Asher O. Pacholder and Sylvia A. Pacholder.
William J. Morgan has been President and a Managing Director of
Pacholder Associates, Inc. for more than five years. He serves on the Board of
Directors of USF&G Pacholder Fund, Inc., a closed-end mutual fund,
Duckwall-Alco Stores, Inc., a Midwestern retailer, and Kaiser Ventures, Inc.,
an environmental resources company.
Sylvia A. Pacholder has been Chief Executive Officer of the Company
since February 1995 and President since November 1994. From July 1994 to
November 1994 Ms. Pacholder was Executive Vice President - Operations, and from
January 1994 to July 1994 she was Vice President - Corporate Development of the
Company. During 1993
5
<PAGE> 8
Ms. S. Pacholder was Senior Vice President of Pacholder Associates, Inc. Prior
to that time, Ms. S. Pacholder was a member of the faculty at the University of
Cincinnati from 1984 to 1993, most recently as the head of the Department of
Mathematics and Applied Sciences. Ms. S. Pacholder is the spouse of Asher O.
Pacholder and the parent of Robin E. Pacholder.
Asher O. Pacholder has been Chairman of the Board of Directors and
Chief Financial Officer of the Company since February 1995. Dr. Pacholder has
been Chairman of the Board and a Managing Director of Pacholder Associates,
Inc. since 1983. He serves on the Boards of Directors of USF&G Pacholder Fund,
Inc., Southland Corporation, which owns and operates convenience stores,
Trump's Castle Associates, which owns and operates the Trump's Castle Casino
Resort in Atlantic City, New Jersey, Forum Group, Inc., which owns and manages
retirement communities, and AM International, Inc., a manufacturer and
distributor of graphics equipment and supplies. Dr. Pacholder is the spouse of
Sylvia A. Pacholder and the parent of Robin E. Pacholder.
John F. Williamson has been Executive Vice President and Chief
Financial Officer of Asset Allocation Concepts, Inc., an investment management
company, since May 1995. From 1993 to 1994 Mr. Williamson was Vice
President/Manager of Investments for American Life and Casualty Insurance
Company. From 1990 to 1993 he was a Financial Consultant. Prior to that time
Mr. Williamson was Senior Vice President/Treasurer and member of the Operating
Committee for Community Federal Savings and Loan Association from 1985 to 1990.
Mr. Williamson serves on the Board of Directors of USF&G Pacholder Fund. Mr.
Williamson was appointed by the Board of Directors in June 1995 to fill the
vacancy on the Board resulting from the death of John R. Howard.
Mr. Joseph has been principally employed as Senior Vice President -
Sales of the Company since March 1995. From November 1994 to March 1995 he was
the Louisiana Division Manager. Mr. Joseph was the Company's Division Sales
Manager for Louisiana from June 1994 to November 1994. From March 1992 to June
1994 Mr. Joseph was the Louisiana Sales Manager for Tuboscope Vetco
International, an oilfield service company. From September 1991 to March 1992
he was a Sales Representative for Completion Accessories, Inc., an oilfield
service company, in Louisiana. Prior to that time, he was Senior Sales
Representative for Baker Hughes Vetco Services, an oilfield service company, in
Louisiana.
Mr. Mathews has been principally employed as Senior Vice President -
Corporate Development of the Company since July 1995. From September 1994 to
June 1995 Mr. Mathews was Vice President - Exploration Services of the Company.
From October 1992 to October 1994, Mr. Mathews was employed as Regional
Manager. For more than five years prior to that time, Mr. Mathews served as
Domestic Inspection Manager for Baker Hughes Tubular Services, Inc.
The Board of Directors held five meetings during the year ended
September 30, 1994. Each meeting was attended by all Directors. Each Director
who is not an employee of the Company receives an annual retainer of $10,000,
and a Director's fee in the amount of $2,000 for each meeting of the Board or
Committee of the Board actually attended and reimbursement of actual expenses
incurred. In addition, each Director who is not an employee is a participant
in the 1993 Non-Employee Director Stock Option Plan. Under the terms of the
plan, each non-employee Director is granted options to purchase 2,000 shares of
common stock upon appointment to the Board of Directors and options to purchase
2,000 shares of common stock on the first business day after the date of each
subsequent Annual Meeting of Shareholders.
Standing Audit and Compensation Committees met once during the past
fiscal year. All committee members were present. The functions of the Audit
Committee include reviewing the engagement of the independent accountants, the
scope and timing of the audit, certain non-audit services to be rendered by the
independent accountants, examining the report of the independent accountants
upon completion of their audit and reviewing with the independent accountants
and management the Company's policies and procedures with respect to accounting
and financial controls. The Compensation Committee reviews and recommends
compensation arrangements for Directors, officers and other employees and takes
whatever action may be required in connection with the Company's stock option
plans.
6
<PAGE> 9
In fiscal 1993, the Board of Directors established an Executive
Committee. The functions of the Executive Committee include reviewing capital
expenditure projects, assisting management in implementing consolidation plans
relating to the acquisitions and assisting management in developing and
implementing strategic plans. The Executive Committee held seven meetings
during the year ended September 30, 1994.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash compensation paid by the
Company to each of the five most highly compensated executive officers and
Directors to whom the total cash compensation during the fiscal year ended
September 30, 1994, exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)
- --------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM
------------------- COMPENSATION
------------
NAME AND OPTION AWARDS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (SHARES) COMPENSATION(1)
------------------ ---- ------ ----- ------------- ---------------
<S> <C> <C> <C> <C> <C>
James P. Shanahan, Jr. (2)(5) 1994 $158,958 $75,000 6,000 $16,336
Chairman of the Board & 1993 131,833 75,000 30,000 1,583
Chief Executive Officer 1992 85,652 -- -- 919
Bobby L. Payne (5) 1994 135,000 50,000 -- 8,800
Senior Vice President & 1993 135,000 25,000 -- 8,800
General Manager 1992 135,753 -- -- 8,800
Timothy T. Janszen (3)(5) 1994 130,000 50,000 6,000 1,515
President 1993 127,027 50,000 30,000 1,354
1992 90,160 -- -- --
George J. Allen (5) 1994 90,000 15,000 -- 5,899
Senior Vice President - 1993 89,607 20,000 10,000 5,899
Marketing 1992 88,880 -- -- 6,282
John E. Kahil (5) 1994 97,000 15,000 3,000 1,243
Vice President - 1993 97,000 -- 10,000 1,212
Research & Engineering 1992 (4) -- -- -- --
</TABLE>
(1) Includes the Company's matching contributions for fiscal 1994 to the
Employee Stock Ownership Plan [the 401(k) Plan] as follows: Mr.
Shanahan, $1,753; Mr. Janszen, $1,151; and Mr. Allen, $1,219. Also
includes premiums paid by the Company in 1994 under the Company's
Split Dollar Life Insurance policies maintained for certain employees
who were initially employed by the Company prior to 1986 as follows:
Mr. Payne, $8,800 and Mr. Allen, $4,680. Also includes $14,583 paid
to Mr. Shanahan in connection with the Company's relocation plan.
(2) Mr. Shanahan currently has an acquisition and financing consulting
agreement in effect with the Company for which he is paid $15,000 per
month and reimbursement of certain relocation expenses. The
agreement, which was effective in February 1995, is for not less than
twelve months in duration and may be terminated in certain
circumstances, including six months' notice by either party.
(3) Mr. Janszen is currently being paid under a Separation and Release
Agreement which became effective in November 1994. Under the terms of
the agreement, Mr. Janszen will receive fifty-two weeks of base salary
and a lump sum of $25,000 which includes earned vacation.
(4) In fiscal 1992, Mr. Kahil was employed by Baker Hughes Tubular
Services, Inc.
(5) No longer employed with the Company as of the date of this Proxy
Statement.
7
<PAGE> 10
EMPLOYMENT AGREEMENTS
Effective April 1, 1995, the Company entered into Employment
Agreements with Ms. Sylvia Pacholder and Dr. Asher O. Pacholder. Under the
terms of the Employment Agreements, Ms. S. Pacholder is entitled to receive a
base salary of $175,000 and an annual bonus in an amount as shall be determined
by the Board of Directors. Dr. Pacholder is entitled to receive a base salary
of $150,000 and an annual bonus in an amount as shall be determined by the
Board of Directors. In addition, Dr. Pacholder received, on the effective date
of the Employment Agreements, fully vested options exercisable for 30,000
shares of common stock at the price of the stock on the date of grant pursuant
to the ICO, Inc. 1994 Stock Option Plan. The Employment Agreements extend
until December 31, 1998, and renew automatically from day to day until notice
is given that no further automatic extension shall occur, in which event the
Employment Agreements shall terminate on a date three years after such notice
has been received. The Employment Agreements are subject to early termination
by the Company for cause or upon the death or incapacity of Ms. S. Pacholder or
Dr. Pacholder. If employment is terminated due to death, the obligations
under the Employment Agreements shall terminate as of the date of death. In
the event of disability, Ms. S. Pacholder or Dr. Pacholder shall be entitled to
receive base salary for a three-year period commencing with the effective date
of disability. The Employment Agreements are also subject to early termination
by Ms. S. Pacholder or Dr. Pacholder for good reason. If the Employment
Agreements are terminated without cause by the Company or for good reason
(including certain changes in control of the Company) by Ms. S. Pacholder or
Dr. Pacholder, the Company is obligated to pay in a lump sum in cash the
aggregate of (i) base salary through the date of termination, (ii) the product
of (x) the greater of the highest annual bonus paid during the employment term
and 50% of the base salary in the year of termination and (y) the fraction
obtained dividing (a) the number of days of employment during a particular year
by (b) 365 and (iii) three times the sum of (A) the annual base salary and (B)
the greater of the highest annual bonus paid during the employment period and
50% of the base salary in the year of termination. Such payment shall also
include gross-up amounts for any applicable excise taxes attributable to such
payments. In addition, any previously granted unvested options received shall
become immediately vested and fully exercisable.
OPTIONS GRANTED DURING FISCAL 1994
The following table sets forth stock options granted to the
individuals named in the Summary Compensation Table during 1994 under the
Company's 1985 Stock Option Plan. Under the Securities and Exchange Commission
("SEC") regulations, companies are required to project an estimate of
appreciation of the underlying shares of stock during the option term. The
Company has chosen the 5%, 10% formula approved by the SEC; however, the
ultimate value will depend on the market value of the Company's stock at a
future date, which may or may not correspond to the projections below.
<TABLE>
<CAPTION>
Potential realizable value
at assumed annual rates of
stock price appreciation
INDIVIDUAL GRANTS for option term
- ---------------------------------------------------------------------------- --------------------------
% of total
Options granted
Options To employees Exercise price Expiration
Name Granted In 1994 Per Share (1) Date 5% 10%
- ---- ------- ---------------- ------------- ----------- -- ---
<S> <C> <C> <C> <C> <C> <C>
James P. Shanahan, Jr. 6,000 40% $7.13 12/28/2004 $26,900 $68,100
Timothy T. Janszen 6,000 40% $7.13 11/15/1996 26,900 68,100
John E. Kahil 3,000 20% $7.13 6/20/1995 13,400 34,100
</TABLE>
(1) Exercise price is the fair market value on the date of grant.
9
<PAGE> 11
FISCAL 1994 OPTION EXERCISES AND FISCAL YEAR-END VALUE
The following table sets forth stock options exercised by the individuals
named in the Summary Compensation Table during 1994, and the number and value
of all unexercised options at fiscal year end. The value of "in-the-money"
options refers to options having an exercise price which is less than the
market price of the Company's stock on September 30, 1994.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired on Value September 30, 1994 September 30, 1994 (1)
Name Exercise Realized (2) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
James P. Shanahan, Jr. -0- n/a 36,000/0 $ 38,000/0
Bobby L. Payne -0- n/a 30,000/0 0/0
Timothy T. Janszen -0- n/a 36,000/0 38,000/0
George J. Allen -0- n/a 14,000/0 13,000/0
John E. Kahil 10,000 $20,000 3,000/0 0/0
</TABLE>
(1) Represents market value of the Company's common stock at September 30,
1994 less the exercise price.
(2) Based on market value of the Company's common stock on the date of
issuance of shares.
10
<PAGE> 12
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
To: The Board of Directors:
The Company's policies with respect to compensation of executive officers
are outlined as follows:
Cash Compensation
Base Salary - It is believed to be requisite that the Company pay
base salaries to executive officers that are reflective of: (1) the
individual's skills, business experience and judgment; (2) the
responsibilities and duties of the position; and (3) the interests
of the Shareholders by assuring that well-qualified persons are
attracted, motivated, and retained to manage the Company. In this
respect, the salary levels established reflect the subjective
judgment of the Committee on these matters.
Bonus - Depending upon the operating results of the Company as a
whole and taking into account the responsibilities and performance
of the individual executive in the achievement of specific
performance goals, discretionary bonuses may be paid to executive
officers. However, the bonuses were not awarded based upon any
quantifiable goals or standards, but rather reflect the Committee's
general view of the contribution of the particular individuals to
the Company's operations.
Long-Term Compensation
Stock Options - Non-qualified stock options to purchase Company
stock, at the market price in effect at date of grant, may be
granted by the Compensation Committee to executive officers to link
their interests directly with those of other Shareholders while
increasing their personal investment in the Company. Specific stock
option targets have not been established for participants, but
rather the Committee views the awards of stock options as an
incentive for future performance and grants participants ownership
positions through options which it believes are consistent with each
participant's current and expected future responsibilities.
With respect to the base salary granted to the Chief Executive Officer in
1994, the Compensation Committee took into account the overall individual
skill, business experience and judgment of the Chief Executive Officer as well
as an assessment by the Compensation Committee of the Chief Executive Officer's
individual performance including the areas of corporate acquisitions, increased
sales volume of the Company, and overall increases in market share in the
Company's various lines of business. The Compensation Committee also compared
the compensation levels of chief executive officers in companies of similar
size that operate in the oilfield service industry. The companies with which
these comparisons were made, are not necessarily the same as the index of 18
oil service companies which are utilized in the performance graph.
COMPENSATION COMMITTEE
April 12, 1994 William E. Cornelius
John R. Howard
William J. Morgan
Asher O. Pacholder
Robin E. Pacholder
11
<PAGE> 13
STOCK PERFORMANCE CHART (1)
The following chart compares the yearly percentage change in the
cumulative total Shareholder return of the Company's common stock during the
five years ended September 30, 1994 with: (1) the cumulative total return of
the NASDAQ Composite Stock Index (U.S.); (2) an index of 18 oil service
companies (Oilfield Services and Equipment Industry Index); and (3) the
cumulative total Shareholder return on the Company's only publicly-held,
domestic competitor, Tuboscope Vetco International Corporation (Tuboscope),
since September 30, 1990 (the first September that Tuboscope common stock
traded on the NASDAQ National Market System).
STOCK PERFORMANCE CHART
<TABLE>
<CAPTION>
Year ICO NASDAQ Oilfield Svcs Tubo
---- --- ------ ------------- ----
<S> <C> <C> <C> <C>
1989 100 100 100
1990 177 74 135 100
1991 45 117 125 94
1992 45 131 128 82
1993 134 172 140 118
1994 73 172 121 76
</TABLE>
(1) Assumes $100 invested on September 30, 1989 and all dividends reinvested
(assumes $100 invested on September 30, 1990 for Tuboscope). Data
supplied by NASDAQ and Value Line Institutional Services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors of the Company
currently consists of Messrs. William J. Morgan, William E. Cornelius, and John
F. Williamson.
Dr. Pacholder and Mr. Morgan are each Directors of the Company and are
executive officers of Pacholder Associates, Inc.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and NASDAQ. Officers, Directors and greater than 10% Shareholders are required
by Securities and Exchange Commission regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on the review of the
copies of such forms furnished to the Company, or written representations that
no Forms 5 were required, the Company believes that during fiscal 1994, all
Section 16(a) filing requirements applicable to its Directors, officers and
greater than 10% beneficial owners were met with the exception of Mr. Janszen
who filed one Form 4 after the date it was due.
12
<PAGE> 14
APPROVAL OF THE ICO, INC. 1995 STOCK OPTION PLAN
ICO first adopted a stock option plan for employees in 1985 which
eventually covered 310,000 shares of ICO Common Stock. The 1985 plan has
expired by its terms. In 1994 the Company adopted a stock option plan which
covered 400,000 shares of ICO Common Stock. The Board of Directors of the
Company has determined that it would be in the best interests of the Company to
continue the program through the adoption of the ICO, Inc. 1995 Stock Option
Plan (the "1995 Stock Option Plan"). Therefore, the Board of Directors adopted
the 1995 Stock Option Plan on August 10, 1995 subject to approval of ICO
shareholders at the Annual Meeting. The 1995 Stock Option Plan provides for
the issuance of both incentive stock options and nonqualified stock options to
all individuals who perform services for the Company and are treated as
employees for federal income tax purposes ("Eligible Employees").
The following description is qualified in its entirety by reference to
the text of the 1995 Stock Option Plan which is set forth in Exhibit "A" to
this Proxy Statement.
PURPOSE OF THE PLAN
The purpose of the 1995 Stock Option Plan is to promote the interests of
ICO and its shareholders by providing a means for Eligible Employees of ICO and
its subsidiaries to acquire a proprietary interest in ICO, thereby
strengthening ICO's ability to attract capable management personnel and provide
an inducement for Eligible Employees to remain employed by ICO or its
subsidiaries and to perform at their maximum levels.
ELIGIBILITY
Options under the 1995 Stock Option Plan may be granted to Eligible
Employees of ICO and its subsidiaries.
SECURITIES TO BE UTILIZED
The maximum number of shares of ICO Common Stock for which options may be
granted under the 1995 Stock Option Plan is 400,000 (subject to antidilution
provisions). Shares delivered by ICO pursuant to the exercise of options may
be authorized but unissued shares of common stock, previously acquired treasury
shares or a combination thereof. Shares subject to options which expire or are
terminated shall again be available for the granting of other options under the
1995 Stock Option Plan.
PLAN ADMINISTRATION AND TERMINATION
The 1995 Stock Option Plan will be administered by a committee (the
"Committee") designated by the Board of Directors. The Committee shall be
comprised of not less than two "outside directors," as such term is defined in
P. Reg. Section 1.162-27(e)(3) of the Income Tax Regulations (or such
comparable definition in the final Income Tax Regulations). Each member shall
also be a "disinterested person" as defined in Section 16b-3(c)(2)(i) of the
Securities Exchange Act of 1934 (the "Exchange Act"). The Board of Directors
will have the ability to amend the 1995 Stock Option Plan at any time without
further shareholder approval unless such amendment would cause the 1995 Stock
Option Plan to cease to satisfy any applicable conditions of Rule 16b-3.
Unless earlier terminated, the 1995 Stock Option Plan will continue in effect
until August 15, 2005.
PRICE, EXERCISE PERIOD AND VESTING OF OPTIONS
The Committee will determine the exercise price and exercise schedule for
options granted under the 1995 Stock Option Plan. If the Company grants an
incentive stock option to an Eligible Employee who owns, directly or
indirectly, common stock of ICO representing more than 10% of the total
combined voting power of all classes of stock of the Company, the option price
must equal at least 110% of the fair market value on the date of grant and the
term of such option shall not be greater than five years from the date of
grant. The fair market value of the common stock will be the closing price of
ICO Common Stock on the NASDAQ/National Market System for the most recent day
of trading. On August 9, 1995, the closing price of ICO Common Stock was $5 5/8
per share.
The maximum number of shares of common stock with respect to which
options may be granted to any employee during each fiscal year is 40,000.
13
<PAGE> 15
Payment for shares purchased upon exercise of an option shall be made in
cash or securities or in such other form as may be determined by the Committee.
FEDERAL INCOME TAX CONSEQUENCES
Deductibility. Recently enacted provisions of the Internal Revenue Code
limit the Company's income tax deduction for non- performance based
compensation paid to the five highest paid executive officers to $1 million per
year. The taxable portion of a non-qualified option ordinarily constitutes
compensation which may be deducted by the Company. The Plan has been designed
to allow this compensation element to be classified as performance based so as
to ensure the Company the full income tax deduction otherwise available.
Incentive Stock Options. The Company intends that certain of the options
granted under the Plan will qualify as incentive stock options under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Assuming
that the options are so qualified, the tax consequences of the Plan will vary
depending on whether certain holding period requirements are met.
If an optionee acquiring stock pursuant to an incentive stock option does
not dispose of the stock until at least one year after the transfer of the
stock to the optionee and at least two years from the date of grant of the
option, then, subject to the alternative minimum tax rules discussed below,
there will be no tax consequences to the optionee or the Company when the
incentive stock option is granted or when it is exercised.
If stock acquired upon exercise of an option is sold by the optionee and
the holding period requirements described in the preceding paragraph have not
been met, the federal income tax consequences to the optionee and the Company
will be as follows: first, the optionee will be required to report, on his or
her federal income tax return for the year in which the sale occurs, additional
compensation income equal to the difference between the fair market value of
the stock at the time of exercise of the option and the purchase price at which
the stock was acquired (the Company will generally be entitled to a
compensation deduction in an equivalent amount). Next, for purposes of
determining gain or loss upon sale of the stock an amount equal to this
compensation income will be added to the exercise price of the stock and the
total will be the optionee's adjusted basis of the stock. Gain or loss will be
determined, based upon the difference between the optionee's adjusted basis of
the stock and the net proceeds of the sale, and the optionee will be required
to report such gain or loss as long-term or short-term (depending on how long
the optionee held the stock) capital gain or loss on his or her federal income
tax return for the year in which the sale occurs.
Although an optionee who receives an incentive stock option under the
Plan realizes no taxable income when the optionee receives or exercises the
incentive stock option, the difference between the fair market value of the
stock on the date of exercise and the exercise price results in an adjustment
in computing alternative minimum taxable income for purposes of Sections 55 et.
seq. of the Code, which may trigger alternative minimum tax consequences for
optionees. Any alternative minimum tax that is payable may ultimately be
credited against taxed owed upon disposition of the stock.
Nonqualified Stock Options. The Company may also grant nonqualified
stock options under the Plan. In general, there will be no tax consequences to
the optionee or the Company when the option is granted. Upon exercise of the
option, the optionee will be required to report, on his or her federal income
tax return for the year in which the exercise occurs, additional compensation
income equal to the difference between the fair market value of the stock at
the time of exercise of the option and the exercise price (the Company will
generally be entitled to a compensation deduction in an equivalent amount.)
The foregoing is only a summary of the federal income tax rules
applicable to options granted under the Plan and is not intended to be
complete. In addition, this summary does not discuss the effect of the income
or other tax laws of any state or foreign country in which a participant may
reside.
The Board of Directors recommends that shareholders vote FOR the proposal
to approve the ICO, Inc. 1995 Stock Option Plan.
14
<PAGE> 16
SELECTION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, independent accountants, examined the Company's
consolidated financial statements for the fiscal year ended September 30, 1994,
and, in connection with their audit function, reviewed the Company's Annual
Report to Shareholders and certain of its filings with the Securities and
Exchange Commission. The Board of Directors has re-employed the firm of Price
Waterhouse LLP as independent accountants for the Company for fiscal 1995,
subject to Shareholders' ratification at the Annual Meeting. If ratification
is not obtained, the Board intends to continue the employment of Price
Waterhouse LLP at least through fiscal 1995. Representatives of Price
Waterhouse LLP will be present at the Shareholders' meeting, with the
opportunity to make a statement if they desire to do so, and such
representatives are expected to be available to respond to appropriate
questions at the Shareholders' meeting.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
A Shareholder intending to submit a proposal to be presented at the 1996
Annual Meeting of Shareholders must deliver such proposal in writing to the
Company's executive officers no later than November 30, 1995.
OTHER MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING
The Company knows of no matters other than those above stated which are
to be brought before the meeting. It is intended that the persons named in the
Proxy will vote your stock according to their best judgment if any other
matters do properly come before the meeting.
Whether or not you intend to be present at this meeting, you are urged to
return this Proxy promptly. If you are present at the meeting and wish to vote
your stock in person, this Proxy shall, at your request, be returned to you at
the meeting.
By Order of the Board of Directors
Sylvia A. Pacholder
Chief Executive Officer,
President & Secretary
Dated: August 10, 1995
<PAGE> 17
EXHIBIT "A"
ICO, INC.
1995 STOCK OPTION PLAN
ARTICLE 1
Objectives
----------
ICO, Inc. ("ICO" or the "Company") has established this Stock Option
Plan effective August 15, 1995 as an incentive to the attraction and retention
of dedicated and loyal employees of outstanding ability, to stimulate the
efforts of such persons in meeting the Company's objectives and to encourage
ownership of the Company's common stock by employees.
ARTICLE 2
Definitions
-----------
2.1 For purposes of the Plan the following terms shall have the definition
which is attributed to them, unless another definition is clearly
indicated by a particular usage and context.
A. "Code" means the Internal Revenue Code of 1986, as amended.
B. The "Company" means ICO and any subsidiary of ICO as the term
"subsidiary" is defined in Section 424(f) of the Code.
C. "Date of Exercise" means the date on which the Company has received
a written notice of exercise of an Option, in such form as is
acceptable to the Committee, and full payment of the purchase
price.
D. "Date of Grant" means the date on which the Committee makes an award
of an Option.
E. "Eligible Employee" means any individual who performs services for
the Company and is treated as an employee for federal income tax
purposes.
F. "Fair Market Value" means the last sale price reported on any stock
exchange or over-the-counter trading system on which Shares are
trading on the last trading day prior to a specified date or, if no
last sale price is reported, the average of the closing bid and
asked prices for a Share on the last trading day prior to any
specified date. If no sale has been made on such prior trading
day, then prices on the last preceding day on which any such sale
shall have been made shall be used in determining Fair Market Value
under either method prescribed in the previous sentence.
G. "Incentive Stock Option" shall have the same meaning as given to
that term by Section 422 of the Code.
H. "Nonqualified Stock Option" means any Option granted under the Plan
which is not considered an Incentive Stock Option.
I. "Option" means the right to purchase a stated number of Shares at a
specified price. The option may be granted to an Eligible Employee
subject to the terms of this Plan, and such other conditions and
restrictions as the Committee deems appropriate. Each Option shall
be designated by the Committee to be either an Incentive Stock
Option or a Nonqualified Stock Option.
J. "Option Price" means the purchase price per Share subject to an
Option and shall be fixed by the Committee, but shall not be less
than 100% of the Fair Market Value of a Share on the Date of Grant
in the case of an Incentive Stock Option.
A-1
<PAGE> 18
K. "Permanent and Total Disability" shall mean any medically
determinable physical or mental impairment rendering an individual
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.
L. "Plan" means this 1995 Stock Option Plan as it may be amended from
time to time.
M. "Share" means one share of the common stock, no par value, of the
Company.
ARTICLE 3
Administration
--------------
3.1 The Plan shall be administered by a committee (the "Committee")
designated by the Board of Directors. The Committee shall be
comprised solely of three or more directors each of whom shall be (i)
a "disinterested person" as defined under Rule 16b-3 of the Securities
and Exchange Act of 1934 (the "Act") and (ii) an "outside director" to
the extent required by Section 162(m) of the Internal Revenue Code
("Section 162(m)"). Each director serving on the Committee shall be
ineligible to receive options under this Plan and none shall have,
within the twelve months prior to their appointment to the Committee
and while serving on such Committee, received options or an interest
in other shares pursuant to any plans of the Company or any of its
affiliates. Notwithstanding the foregoing, to the extent relevant
state law now or hereafter permits, the Committee may be comprised
solely of two or more such directors.
Actions shall be taken by a majority of the Committee.
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
A. Determine which Eligible Employees shall be granted Options;
B. Determine the number of Shares which may be subject to each Option;
C. Determine the Option Price;
D. Determine the term of each Option;
E. Determine whether each Option is an Incentive Stock Option or
Nonqualified Stock Option;
F. Interpret the provisions of the plan and decide all questions of
fact arising in its application; and
G. Prescribe such rules and procedures for Plan administration as from
time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination by the Committee
with respect to the application or administration of this Plan shall
be final and binding upon all persons, and need not be uniform with
respect to its determination of recipients, amount, timing, form,
terms or provisions of Options.
3.4 No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan or
any Option granted hereunder, and to the extent permitted by law, all
members shall be indemnified by the Company for any liability and
expenses which may occur through any claim or cause of action.
ARTICLE 4
Shares Subject to Plan
----------------------
4.1 The Shares that may be made subject to Options granted under the Plan
shall not exceed 400,000 Shares in the aggregate. Except as provided
in Section 4.2, upon lapse or termination of any Option for any reason
without being completely exercised, the Shares which were subject to
such Option may again be subject to other Options.
A-2
<PAGE> 19
4.2 The maximum number of Shares with respect to which options may be
granted to any employee during each fiscal year of the Company is
40,000. If an Option is cancelled, it continues to be counted against
the maximum number of Shares for which Options may be granted to an
employee. If an Option is repriced, the transaction is treated as a
cancellation of the Option and a grant of a new Option.
ARTICLE 5
Granting of Options
-------------------
Subject to the terms and conditions of the Plan, the Committee may,
from time to time prior to August 15, 2005, grant Options to Eligible Employees
on such terms and conditions as the Committee may determine. More than one
Option may be granted to the same Eligible Employee.
ARTICLE 6
Terms of Options
----------------
6.1 Subject to specific provisions relating to Incentive Stock Options set
forth in Article 9, each Option shall be for a term of from one to ten
years from the Date of Grant. The Committee in its sole discretion
may establish different exercise schedules and impose other conditions
upon exercise and vesting for any particular Option or groups of
Options on the Date of Grant.
6.2 Nothing contained in this Plan or in any Option granted pursuant to it
shall confer upon any employee any right to continue in the employ of
the Company or to interfere in any way with the right of the Company
to terminate employment at any time. So long as a holder of an Option
shall continue to be an employee of the Company, the Option shall not
be affected by any change of the employee's duties or position.
6.3 In the event that the Company shall, pursuant to action by its Board
of Directors, at any time propose to merge into, consolidate with, or
sell or otherwise transfer all or substantially all of its assets to
another corporation and provision is not made pursuant to the terms of
such transaction for the assumption by the surviving, resulting or
acquiring corporation of outstanding Options under the Plan, or for
the substitution of new options therefor, the Committee shall cause
written notice of the proposed transaction to be given to each
Optionee not less than 40 days prior to the anticipated effective date
of the proposed transaction, and his or her Option shall become fully
(100%) vested and, prior to a date specified in such notice, which
shall not be more than ten days prior to the anticipated effective
date of the proposed transaction, each Optionee shall have the right
to exercise his or her Option to purchase any or all Shares then
subject to such Option, including those, if any, which by reason of
other provisions of the Plan have not then become available for
purchase. Each Optionee, by so notifying the Company in writing, may,
in exercising his or her Option, condition such exercise upon, and
provide that such exercise shall become effective at the time of, but
immediately prior to, the consummation of the transaction, in which
event such Optionee need not make payment for the Shares to be
purchased upon exercise of such Option until five days after written
notice by the Company to such Optionee that the transaction has been
consummated. If the transaction is consummated, each Option, to the
extent not previously exercised prior to the date specified in the
foregoing notice, shall terminate on the effective date of such
consummation. If the transaction is abandoned, (i) any Shares not
purchased upon exercise of such Option shall continue to be available
for purchase in accordance with the other provisions of the Plan and
(ii) to the extent that any Option not exercised prior to such
abandonment shall have vested solely by operation of this paragraph,
such vesting shall be deemed annulled, and the original vesting
schedule set forth shall be reinstituted, as of the date of such
abandonment.
ARTICLE 7
Exercise of Options
-------------------
Any person entitled to exercise an Option in whole or in part, may do
so by delivering a written notice of exercise to the Company, attention
Corporate Secretary, at its principal office. The written notice shall specify
the number of Shares for which an Option is being exercised and the grant date
of the option being exercised and shall be accompanied by full payment of the
Option Price for the Shares being purchased.
A-3
<PAGE> 20
ARTICLE 8
Payment of Option Price
-----------------------
8.1 Payment of the Option price may be made in cash, by the tender of
Shares, or both, or in such other form as may be determined by the
Committee. Shares tendered shall be valued at their Fair Market Value
on the Date of Exercise.
8.2 Payment through tender of Shares may be made by instruction from the
Optionee to the Company to withhold from the Shares issuable upon
exercise that number which have a Fair Market Value equal to the
exercise price for the Option or portion thereof being exercised.
ARTICLE 9
Incentive Stock Options and Nonqualified Stock Options
------------------------------------------------------
9.1 The Committee in its discretion may designate whether an Option is to
be considered an Incentive Stock Option or a Nonqualified Stock
Option. The Committee may grant both an Incentive Stock Option and a
Nonqualified Stock Option to the same individual. However, where both
an Incentive Stock Option and a Nonqualified Stock Option are awarded
at one time, such Options shall be deemed to have been awarded in
separate grants, shall be clearly identified, and in no event will the
exercise of one such Option affect the right to exercise the other
such Option.
9.2 Any option designated by the Committee as an Incentive Stock Option
will be subject to the general provisions applicable to all Options
granted under the Plan. In addition, the Incentive Stock Option shall
be subject to the following specific provisions:
A. At the time the Incentive Stock Option is granted, if the Eligible
Employee owns, directly or indirectly, stock representing more than
10% of (i) the total combined voting power of all classes of stock
of the Company, or (ii) a corporation that owns 50 percent or more
of the total combined voting power of all classes of stock of the
Company, then:
(i) The Option Price must equal at least 110% of the Fair Market
Value on the Date of Grant, and
(ii) The term of the Option shall not be greater than five years
from Date of Grant.
B. The aggregate Fair Market Value of Shares (determined at the
Effective Date of Grant) with respect to which Incentive Stock
Options are exercisable by an Eligible Employee for the first time
during any calendar year under this Plan or any other plan
maintained by the Company shall not exceed $100,000.
9.3 If any Option is not granted, exercised, or held pursuant to the
provisions noted immediately above, it will be considered to be a
Nonqualified Stock Option to the extent that the grant is in conflict
with these restrictions.
ARTICLE 10
Transferability of Option
-------------------------
During the lifetime of an Eligible Employee to whom an Option has been
granted, such Option is not transferable voluntarily or by operation of law and
may be exercised only by such individual. Upon the death of an Eligible
Employee to whom an Option has been granted, the Option may be transferred to
the beneficiaries or heirs of the holder of the Option by will or by the laws
of descent and distribution.
A-4
<PAGE> 21
ARTICLE 11
Termination of Options
----------------------
11.1 An Option may be terminated as follows:
A. During the period of continuous employment with the Company, an
Option will be terminated only if it has been fully exercised or it
has expired by its terms.
B. Upon termination of employment for any reason, the then exercisable
portion of any Option will terminate upon the earlier of (i) the
first business day following expiration of the three month period
after the date of termination, or (ii) the option expiration date
set forth in the Option Agreement. The portion not exercisable
will terminate on the date of termination of employment. For
purposes of the Plan, a leave of absence approved by the Company
shall not be deemed to be termination of employment.
C. If an Eligible Employee holding an Option dies or becomes subject
to a Permanent and Total Disability while employed or within three
months after termination of employment, such Option may be
exercised, to the extent exercisable on the date of the occurrence
of the event which triggers the operation of this paragraph, at any
time by the estate or guardian of such person or by those persons
to whom the Option may have been transferred by will or by the laws
of descent and distribution until the earlier of (i) the date which
is one year after the date of such death or occurrence of Permanent
and Total Disability, or (ii) the option expiration date set forth
in the Option Agreement.
11.2 The Committee may at any time prior to three months after the date of
termination of employment provide that particular options not be
affected by such termination and continue in force whether or not
exercisable at the date of such termination of employment until the
option expiration date set forth in the Option Agreement or any date
prior thereto.
11.3 Except as provided in Article 12 hereof, in no event will the
continuation of the term of an Option beyond the date of termination
of employment allow the Eligible Employee, or his beneficiaries or
heirs, to accrue additional rights under the Plan, or to purchase more
Shares through the exercise of an Option that could have been
purchased on the day that employment was terminated. In addition,
notwithstanding anything contained herein, no option may be exercised
in any event after the expiration of ten years from the date of grant
of such option.
ARTICLE 12
Adjustments to Shares and Option Price
--------------------------------------
12.1 In the event of changes in the outstanding common stock of the Company
as a result of stock dividends, splitups, recapitalizations,
combinations of Shares, exchanges of Shares or such other transaction,
the number and class of Shares and price per share for each Option
covered under the Plan and each outstanding Option shall be
correspondingly adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the Option price
to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
12.3 In the event of the dissolution or liquidation of the Company or any
merger, consolidation, exchange or other transaction in which the
Company is not the surviving corporation or in which the outstanding
Shares of the Company are converted into cash, other securities or
other property, each outstanding Option shall terminate as of a date
fixed by the Committee provided that not less than 20 days' written
notice of the date of expiration shall be given to each holder of an
Option and each such holder shall have the right during such period
following notice to exercise the Option as to all or any part of the
Shares for which it is exercisable at the time of such notice. The
Committee, in its sole discretion, may provide that Options in such
circumstances may be exercised to an extent greater than the number of
shares for which they were exercisable at the time of such a notice.
A-5
<PAGE> 22
ARTICLE 13
Option Agreements
-----------------
13.1 All Options granted under the Plan shall be evidenced by a written
agreement in such form or forms as the Committee in its sole
discretion may determine.
13.2 Each optionee, by acceptance of an Option under this Plan, shall be
deemed to have consented to be bound, on the optionee's own behalf and
on behalf of the optionee's heirs, assigns and legal representatives,
by all terms and conditions of this Plan.
ARTICLE 14
Amendment or Discontinuance of Plan
-----------------------------------
14.1 The Board of Directors may at any time amend, suspend, or discontinue
the Plan; provided, however, that no amendments by the Board of
Directors shall, without further approval of the shareholders of the
Company:
A. Change the class of Eligible Employees;
B. Except as provided in Articles 4 and 12 hereof, increase the number
of Shares which may be subject to Options granted under the Plan.
C. Cause the Plan or any Option granted under the Plan to fail to (i)
qualify for exemption from Section 16(b) of the Act, (ii) be
excluded from the $1 million deduction limitation imposed by
Section 162(m), or (iii) qualify as an "Incentive Stock Option" as
defined by Section 422 of the Internal Revenue Code.
14.2 No amendment or discontinuance of the Plan shall alter or impair any
Option granted under the Plan without the consent of the holder
thereof.
ARTICLE 15
Effective Date
--------------
The Plan shall become effective as of August 15, 1995, having been
adopted by the Board of Directors on August 10, 1995 subject to approval by the
affirmative vote of the holders of a majority of the shares of common stock of
the Company voting on the issue, and all Options granted prior to such approval
are expressly conditioned upon such approval being received. If shareholder
approval is not received within 12 months of the effective date, Options
granted pursuant to this Plan shall be null and void.
ARTICLE 16
Miscellaneous
-------------
16.1 Nothing contained in this Plan or in any action taken by the Board of
Directors or shareholders of the Company shall constitute the granting
of an Option. An Option shall be granted only at such time as a
written Option shall have been executed and delivered to the
respective employee and the employee shall have executed an agreement
respecting the Option in conformance with the provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options will be
issued in regular course after exercise of the Option and payment
therefor as called for by the terms of the Option but in no event
shall the Company be obligated to issue certificates more often than
once each quarter in each fiscal year. No persons holding an Option
or entitled to exercise an Option granted under this Plan shall have
any rights or privileges of a shareholder of the Company with respect
to any Shares issuable upon exercise of such Option until certificates
representing such Shares shall have been issued and delivered. No
Shares shall be issued and delivered upon exercise of an Option unless
and until the
A-6
<PAGE> 23
Company, in the opinion of its counsel, has complied with all
applicable registration requirements of the Securities Act of 1933 and
any applicable state securities laws and with any applicable listing
requirements of any national securities exchange on which the Company
securities may then be listed as well as any other requirements of
law.
16.3 This Plan shall continue in effect until the expiration of all Options
granted under the Plan unless terminated earlier in accordance with
Article 14; provided, however, that it shall otherwise terminate ten
years after the Effective Date.
A-7
<PAGE> 24
P R O X Y
ICO, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING SEPTEMBER 8, 1995
The undersigned hereby appoints Asher O. Pacholder and Sylvia A. Pacholder, or
any one of them, proxies of the undersigned, each with the power of
substitution, to vote all shares of common stock which the undersigned would be
entitled to vote at the Annual Meeting of Shareholders of ICO, Inc. to be held
in Houston, Texas on Friday, September 8, 1995, and any adjournment of such
meeting on the matters specified and in their discretion with respect to such
other business as may properly come before the meeting or any adjournment
thereof.
Election of two Class I directors to (change of address)
serve until the 1998 Annual Meeting of
Shareholders: William E. Cornelius ________________________________________
and Robin E. Pacholder
________________________________________
________________________________________
________________________________________
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The proxies cannot
vote your shares unless you sign and return this Card.
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 25
/X/ PLEASE MARK YOUR
VOTES AS IN THIS -------------------
EXAMPLE. SHARES IN YOUR NAME
<TABLE>
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. The approval of the ICO, Inc. / / / / / /
Directors 1995 Stock Option Plan.
(See reverse)
3. The ratification of the appoint- / / / / / /
ment of Price Waterhouse LLP
as independent accountants.
</TABLE>
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
Change of / /
Address
Attend / /
Meeting
SIGNATURE(S) _____________________________________________ DATE _______________
SIGNATURE(S) _____________________________________________ DATE _______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give your full title as such.
