<PAGE> 1
[ICO LOGO]
11490 WESTHEIMER, SUITE 1000
HOUSTON, TEXAS 77077
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 7, 1996
The Annual Meeting of Shareholders of ICO, Inc. ("ICO" or the "Company") will
be held at the Westchase Hilton, located at 9999 Westheimer, Houston, Texas, on
Monday, October 7, 1996 at 10:00 a.m. Central Daylight Savings Time, for the
following purposes:
1) To elect three Class II Directors to serve until the 1999
Annual Meeting of Shareholders and one Class III Director to
serve until the 1997 Annual Meeting of Shareholders and until
their respective successors are elected and qualified;
2) To approve the ICO, Inc. 1996 Stock Option Plan;
3) To approve the amendment and restatement of the 1993
non-employee directors stock option plan;
4) To ratify and approve the selection of Price Waterhouse LLP as
the Company's independent accountants for the ensuing fiscal
year; and
5) 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 23, 1996 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
Asher O. Pacholder Sylvia A. Pacholder
Chairman of the Board and Chief Executive Officer,
Chief Financial Officer President & Secretary
Houston, Texas
August 29, 1996
<PAGE> 2
ICO, INC.
11490 WESTHEIMER, SUITE 1000
HOUSTON, TEXAS 77077
(281) 721-4200
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 7, 1996
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 7th day of October, 1996, 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 29, 1996.
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 three nominees for Class II Directors and one Class
III Director named below, (2) for the approval of the ICO, Inc. 1996 Stock
Option Plan, (3) for the approval of the amendment and restatement of the 1993
non- employee directors stock option plan, and (4) for confirmation of the
appointment of Price Waterhouse LLP to serve as independent accountants for the
Company for the fiscal year ending September 30, 1996. 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 23, 1996, of 19,624,845 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 ICO
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> 3
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, which own more
than five percent of the Company's Common Stock at the close of business on
August 23, 1996. Shareholders who are a party to the Shareholders Agreement
described below, who individually are not record holders of more than five
percent of the Company's Common Stock have not been set forth in the following
table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------ ---------------------- ----------------
<S> <C> <C> <C> <C>
Pacholder Associates
8044 Montgomery Road, Suite 382
Cincinnati, Ohio 45236 . . . . . . . . . . . . . . . . . 1,004,125 (1)(2) 5.0% (1)(2)
William E. Willoughby
607 U.S. Highway 202
Far Hills, New Jersey 07931 . . . . . . . . . . . . . . . 2,362,159 (1)(3) 12.0% (1)(3)
William C. Willoughby
6250 Covered Bridge
Pipersville, PA 18947-1508 . . . . . . . . . . . . . . . 1,175,072 (1)(4) 6.0% (1)(4)
</TABLE>
________________
(1) ICO, Inc., Dr. Asher O. Pacholder ("AOP"), Sylvia A. Pacholder ("SAP"),
Robin E. Pacholder ("REP"), William J. Morgan ("WMJ"), Pacholder
Associates, Inc. ("PAI"), PM Delaware, Inc. ("PMD") (AOP, SAP, REP, WMJ,
PAI and PMD are collectively the "ICO Shareholders"), William E. Willoughby
("WEW"), Peggy S. Willoughby ("PSW"), William C. Willoughby ("WCW"),
Regina S. Willoughby ("RSW"), Fred R. Feder ("FRF"), Theo J.M.L. Verhoeff
("TV") and Catherine Willoughby Stevens ("CWS"), (WEW, PSW, WCW, RSW, FRF,
TV and CWS are collectively the "Wedco Shareholders") (the ICO Shareholders
and the Wedco Shareholders are collectively the "Shareholders") are parties
to a Shareholders Agreement, pursuant to which the Shareholders agreed to
take all actions necessary or appropriate to cause the election of William
E. Willoughby ("Willoughby"), Walter Leib ("Leib") and George S. Sirusas
("Sirusas") to the Board of Directors of ICO for terms ending on the date
of ICO's annual shareholders meeting in 1996 in the case of Willoughby, the
date of its annual shareholders meeting in 1997 in the case of Leib and
Sirusas and to cause the reelection of Willoughby, Sirusas and Leib to the
Board of Directors of ICO until the earlier of the time the Wedco
Shareholders who are parties to the Shareholders Agreement, taken as a
whole, beneficially own less than 1,500,000 shares of Common Stock of ICO
or there is a "change in control" of ICO, when the ICO Shareholders who are
parties to the Shareholders Agreement shall no longer be obligated to cause
the reelection of such persons to the Company's Board of Directors
("Termination Date"). In addition, if Willoughby, Leib or Sirusas shall
cease to serve as a director of ICO at any time prior to the Termination
Date, the Shareholders will agree to take all actions necessary and
appropriate to ensure that the vacancy created shall be filled by a person
nominated by the other Wedco Shareholders who are parties to the
Shareholders Agreement, subject to the consent of a majority of the full
Board of Directors of ICO.
In addition to the foregoing, all the ICO Shareholders who are parties to
the Shareholders Agreement have granted irrevocable proxies coupled with an
interest to Walter Leib and Edward N. Barol to vote their shares of Common
Stock of ICO in favor to the slate of nominees for ICO's Board of Directors
selected by the then incumbent members of the Board of Directors of ICO
(the "Nominated Slate") and the Wedco Shareholders who are parties to the
Shareholders Agreement granted substantially identical proxies to SAP and
AOP to vote their shares of Common Stock of ICO also in favor of the
Nominated Slate.
2
<PAGE> 4
The Shareholders Agreement also provides that with respect to Wedco
Technology, Inc. ("Wedco"), a wholly owned subsidiary of ICO, SAP will be
its President, Chief Executive Officer and a Director, AOP will be its
Chairman of the Board, Chief Operating Officer and a Director, and
Willoughby will be a Director. Pursuant to the Shareholders Agreement,
Wedco's Articles of Incorporation were amended to provide that the Chairman
of the Board, President, CEO, COO or any person who shall hold any other
office, position or title having similar functions or authority to the
functions of the Chairman of the Board, President, CEO or COO or who shall
have equivalent operating authority of Wedco will be elected by a unanimous
vote of the Wedco Board of Directors.
The Shareholders Agreement also provides that if one or more of the ICO
Shareholders or Wedco Shareholders who are parties to the agreement desire
to sell 500,000 or more shares of ICO Common Stock (other than in
connection with an underwritten public offering that would not result in a
transfer or transfers of 500,000 or more shares of ICO Common Stock to any
person or group of persons) such proposed sale shall not be effective
unless the proposed transferee agrees to be bound as the successor to the
transferor under the agreement.
The Shareholders beneficially own 5,464,023 shares of ICO Common Stock.
(2) Includes warrants to acquire 282,879 shares of Common Stock and Convertible
Exchangeable Preferred Stock convertible into 122,629 shares of Common
Stock. Also includes the following ownership of PMD, a wholly owned
subsidiary: 394,237 shares of Common Stock, warrants to acquire 102,879
shares of Common Stock and Convertible Exchangeable Preferred Stock
convertible into 44,257 shares of Common Stock. Excludes the shares of any
other Shareholder.
(3) Includes 149,139 shares held jointly with spouse, 704,865 shares owned by
spouse, and 2,000 common shares upon exercise of stock options issuable
under the 1993 non-employee directors stock option plan. Excludes the
shares of any other Shareholder.
(4) Includes 94,065 shares owned by spouse, 51,273 shares either owned by minor
son or held by self or spouse as a custodian for minor son. Excludes the
shares of any other Shareholder.
ELECTION OF DIRECTORS
Three Class II Directors and one Class III Director are to be elected at
the Annual Meeting. The Class II Directors will hold office until the Company's
1999 Annual Meeting of Shareholders and the Class III Director will hold office
until the 1997 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.
3
<PAGE> 5
THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY
The following is information concerning the director nominees, as well as
other Class I, Class II and Class III Directors, whose terms are not expiring
at the 1996 Annual Meeting, and Executive Officers as of August 29, 1996:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
-----------------------------------
PRINCIPAL POSITION WITH THE DIRECTOR PERCENT
NAME COMPANY AGE SINCE SHARES OF CLASS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class I Directors Whose Terms Will Expire in 1998
William E. Cornelius (2)(3) Director 47 1992 8,000 (6) *
Robin E. Pacholder Director 29 1993 6,822 (6)(9)(12) *
George S. Sirusas (2) Director 56 1996 17,285 (6) *
- ------------------------------------------------------------------------------------------------------------------------
Class II Directors Nominees Whose Terms (if re-elected) Will Expire in 1999
William J. Morgan (2)(3)(4) Director 41 1992 1,014,125 (5)(6)(12) 5.1%
Sylvia A. Pacholder (4) Chief Executive Officer, 54 1993 1,889,881 (5)(6)(7)(8) 9.4%
President, Secretary & (12)
Director
Chief Executive Officer,
President & Director -
Wedco Technology, Inc. (a
wholly owned subsidiary of
ICO)
William E. Willoughby Director 75 1996 2,362,159 (6)(12) 12.0%
- ------------------------------------------------------------------------------------------------------------------------
Class III Directors Whose Terms Will Expire in 1997
Asher O. Pacholder (4) Chairman of the Board and 58 1990 1,868,881 (5)(6)(7)(8) 9.3%
Chief Financial Officer & (12)
Director
Chairman of the Board,
Chief Operating Officer &
Director - Wedco
Technology, Inc.
John F. Williamson (2)(3) Director 58 1995 5,008 (6) *
Walter L. Leib(2) Director 66 1996 7,595 (6)(9) *
Class III Director Nominee Whose Term (if elected) Will Expire in 1997
James E. Gibson Director 31 1996 2,000 (6) *
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 6
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Executive Officers Who Are Not Directors
Jack Cave Senior Vice President - 61 n/a 96,000 (6)(11) *
Production Services
Isaac H. Joseph Senior Vice President - 40 n/a 22,000 (6) *
Corporate Administration
and Sales
Richard J. Girndt Senior Vice President - 39 n/a 29,900 (6) *
Exploration Services
Gary L. Lancaster Senior Vice President and 42 n/a 25,000 (6) *
General Counsel
Curtis Mathews Senior Vice President - 52 n/a 32 ,000 (6) *
Corporate Development
Kenneth L. Miller Senior Vice President - 52 n/a 20,000 (6) *
Corrosion Control Services
Jon C. Biro Treasurer/Controller 30 n/a 24,000 (6) *
All Executive Officers and Directors as a Group 4,623,650 (10) 22.6%
(17 persons)
</TABLE>
__________________
(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 204,380 shares of Common Stock and 180,000 shares
of Common Stock which may be acquired through the exercise of warrants
and 78,372 shares of common stock which may be acquired upon conversion
of Convertible Exchangeable Preferred Stock, in each case held by a
limited partnership, 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 394,237 shares of Common Stock,
102,879 shares of Common Stock which may be acquired through the exercise
of warrants and 44,257 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 Dr. Pacholder, Ms. S. Pacholder, Mr. Cave, Mr. Joseph,
Mr. Girndt, Mr. Lancaster, Mr. Mathews, Mr. Miller and Mr. Biro include
60,000, 85,000, 18,000, 22,000, 15,500, 25,000, 32,000, 20,000 and 22,500
shares of common stock, respectively, which are issuable upon exercise of
stock options under the Company's employee stock option plans. Share
amounts for Dr. Pacholder, Mr. Morgan, Mr. Cornelius, Ms. S. Pacholder,
Ms. R. Pacholder, Mr. Sirusas, Mr. Willoughby, Mr. Leib, Mr. Gibson and
Mr. Williamson include 6,000, 6,000, 8,000, 2,000, 6,000, 2,000, 2,000,
2,000, 2,000 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 787,356 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) Share amounts for Ms. R. Pacholder and Mr. Leib include 822 and 274
shares of Common Stock, respectively, which may be acquired upon
conversion of Convertible Exchangeable Preferred Stock.
5
<PAGE> 7
(10) Share amounts include 338,000 shares of Common Stock issuable upon
exercise of stock options granted to certain officers and Directors under
the Company's various stock option plans, 282,879 shares of Common Stock
issuable upon exercise of warrants and 123,725 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 787,356
shares of Common Stock over which certain Directors and officers share
voting power as indicated in (7) above.
(11) Includes 78,000 shares of Common Stock owned by Mr. Cave over which Ms.
S. Pacholder and Dr. Pacholder share voting power pursuant to an
irrevocable proxy.
(12) Director or Executive Officer is a Party to the Shareholders Agreement
decribed in note (1) of "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF MORE THAN 5% OF OUTSTANDING STOCK". Except as set forth above and in
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF MORE THAN 5% OF
OUTSTANDING COMMON STOCK", share amounts do not include the shares of
common stock beneficially owned by other parties to the Shareholders
Agreement.
* 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.
George S. Sirusas has been continuously employed by New Jersey Savings
Bank, Somerville, New Jersey from 1983 and until the bank's merger with United
Jersey Bank on September 22, 1995. He served as senior lending officer of the
merged bank since 1986 and presently holds the position of Vice President and
Commercial Lending Officer with the United Jersey Bank, now known as Summit
Bank. Mr. Sirusas was a Wedco Technology, Inc. Director from 1984 until the
April 1996 acquisition by ICO.
William J. Morgan has been President and a Managing Director of Pacholder
Associates, Inc., an investment advisory firm, 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, Munsingwear,
Inc., an apparel manufacturing company, and Kaiser Ventures, Inc., an
environmental resources company.
Sylvia A. Pacholder has been Chief Executive Officer of the Company since
February 1995, President since November 1994, and Chief Executive Officer,
President, and a Director of Wedco Technology, Inc. since May of 1996. From
July 1994 to November 1994, Ms. Pacholder served as Executive Vice President -
Operations, and from January 1994 to July 1994 she served as Vice President -
Corporate Development of the Company. During 1993 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.
William E. Willoughby founded Wedco and was employed by Wedco as its
Chairman of the Board and President from 1960 through April 1996. He has been
a Director of ICO and Wedco Technology, Inc. since May 1996. He is also a
Director TDT, Inc., which in 1988 acquired from Wedco the assets of Tri-Delta
Technology, Inc. (formerly the Bottle Division of Wedco, Inc.).
Asher O. Pacholder has been Chairman of the Board of Directors and Chief
Financial Officer of the Company since February 1995 and Chief Operating
Officer and a Director of Wedco Technology, Inc. since May of 1996. Dr.
Pacholder has been Chairman of the Board and a Managing Director of Pacholder
Associates, Inc. since 1983. He is Chairman of the Board of Directors of
USF&G Pacholder Fund, Inc. and he serves on the boards of: 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, and AM International, Inc., a manufacturer and
distributor
6
<PAGE> 8
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.
Walter L. Leib has been Senior Partner in the law firm of Leib, Kraus,
Grispen & Roth, in Scotch Plains, New Jersey since its inception in 1971. Mr.
Leib served as a Director from 1970 and General Counsel to Wedco from its
inception in 1960, until the acquisition of Wedco by ICO in April 1996. Mr.
Leib has served as a Director of ICO since May 1996.
James E. Gibson has been employed as Senior Vice President of Pacholder
Associates, Inc. since 1988. He was appointed to the Board of Directors of ICO
in July 1996.
Jack C. Cave has been principally employed as Senior Vice President -
Production Services of ICO since January 1996. From August 1995 to January
1996, Mr. Cave was Director of Asset Utilization for ICO. From April 1994 to
August 1995 he was Division Manager of Frontier Inspection Services for ICO.
Prior to April 1994 Mr. Cave was President and General Manager of Frontier
Inspection Services.
Kenneth Miller has been principally employed as Senior Vice President -
Corrosion Control Services of ICO since October 1995. From November 1994 to
October 1995, Mr. Miller served ICO as Assistant Vice President - Corrosion
Control Products. From October 1993 to October 1994, he was ICO's Louisiana
Division Manger, and for the three years prior to October 1993, Mr. Miller
served as the Gulf Coast Area Manager for Baker Hughes Tubular Services, Inc.
Isaac H. Joseph has been principally employed as Senior Vice President -
Corporate Administration and Sales of ICO since July 1996. From March 1995 to
June 1996, Mr. Joseph was employed as Senior Vice President - Sales. From
November 1994 to March 1995, he was ICO's Louisiana Division Manager. Mr.
Joseph was ICO'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. From September 1991 to March 1994, 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.
Richard J. Girndt has been principally employed as Senior Vice President
- - Exploration Services since April 1996. From December 1994 to June 1995, he
was Vice President - Research and Engineering. From October 1994 to December
1994, he was Assistant Vice President - Research and Engineering. From
November 1993 to October 1994, he was Director of Engineering. Mr. Girndt
started with ICO in November 1993 as Assistant Manager of UT Development.
Prior to that time, he was part owner of Tubular Ultrasound Corporation.
Gary L. Lancaster has been principally employed as Senior Vice President
and General Counsel of ICO since December 1995. For more than five years prior
to that time, Mr. Lancaster was employed with Scurlock Permian Corporation, a
subsidiary of Ashland Inc., including employment as Senior Attorney from July
1991 to December 1995.
Curtis Mathews has been principally employed as Senior Vice President -
Corporate Development of the Company since July 1995. From October 1994 to
June 1995, Mr. Mathews was Vice President - Exploration Services of the
Company. From October 1992 to September 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.
7
<PAGE> 9
Jon C. Biro, a certified public accountant, has been principally employed
as Controller of ICO since October 1994 and as Treasurer and Controller of ICO
since April 1995. Prior to that time, Mr. Biro was a certified public
accountant with Price Waterhouse LLP.
The Board of Directors held five meetings during the year ended September
30, 1995. Each meeting was attended by all Directors. Each Director who is not
an employee of the Company received 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 May of 1996, the compensation to be paid to Directors was
modified. Under the new terms, each non-employee Director of ICO will be paid
a fee of $15,000 per year. Additionally, each of these Directors will receive
$1,000 per meeting attended. The Chairmen of the Audit and Compensation
Committees will also receive an annual stipend of $2,000. In addition, each
Director who is not an employee is a participant in the 1993 Non-Employee
Director Stock Option Plan. Under the current 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 Executive Committees met one and five times,
respectively, during the past fiscal year. The Compensation Committee took
action in writing on one occasion. 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 and 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 establishes compensation arrangements for
Directors, officers and other employees and takes whatever action that may be
required in connection with the Company's stock option plans. 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 Company does not have a Nominating Committee.
8
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Company to
each of the five most highly compensated executive officers and directors and
the Company's former Chairman and Chief Executive Officer during the fiscal
year ended September 30, 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM
------------------- COMPENSATION
------------
NAME AND SECURITIES
PRINCIPAL POSITION UNDERLYING ALL OTHER
------------------ YEAR SALARY BONUS OPTIONS COMPENSATION(1)
---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C> <C>
Sylvia A. Pacholder (3) 1995 $156,193 $125,000 50,000 2,300
President and 1994 78,564 75,000 0 0
Chief Executive Officer 1993 -- -- -- --
Asher O. Pacholder (3) 1995 94,327 100,000 30,000 0
Chairman of the Board 1994 -- -- -- --
& Chief Financial Officer 1993 -- -- -- --
James P. Shanahan, Jr. (2) 1995 83,011 0 30,000 0
Chairman of the Board & 1994 158,958 75,000 6,000 16,336
Chief Executive Officer 1993 131,833 75,000 30,000 1,583
Isaac H. Joseph 1995 78,126 37,500 10,000 781
Senior Vice President 1994 18,423 17,000 0 100
Sales 1993 -- -- -- --
Curtis Mathews 1995 91,875 30,000 20,000 1,148
Senior Vice President 1994 78,528 10,000 0 1,020
Corporate Development 1993 77,940 8,100 4,000 0
Kenneth Miller 1995 74,145 20,000 6,000 1,834
Senior Vice President 1994 58,872 2,000 2,000 816
Corrosion Control Services 1993 58,872 3,954 0 809
</TABLE>
(1) Includes the Company's matching contributions for fiscal 1995 to the
Employee Stock Ownership Plan [the 401(k) Plan]. Also includes $14,583
paid to Mr. Shanahan in connection with the Company's relocation plan in
1994.
(2) Mr. Shanahan is no longer an employee or director of the Company; however,
he 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) Effective June 14, 1996, the Company's Employment Agreements with Ms.
Pacholder and Dr. Pacholder were amended. The termination date of both
agreements was changed to December 31, 2001 from December 31, 1998. The
term of the Employment Agreements is extended automatically from day to
day until such time as either party gives written notice to the other
that no further such automatic extensions shall occur, in which event
employment terminates on a date five years after such notice has been
given.
9
<PAGE> 11
OPTIONS GRANTED DURING FISCAL 1995
The following table sets forth stock options granted to the individuals
named in the Summary Compensation Table during the fiscal year ending September
30, 1995 under the Company's 1985 and 1994 Stock Option Plans. Under the
Securities and Exchange Commission ("SEC") regulations, companies are required
to project an estimate of appreciation of the underlying shares of Common 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 Common Stock at a future date, which may or may not correspond to the
projections below.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF STOCK
------------------------------------------------------------------------------ PRICE APPRECIATION FOR
OPTION TERM
-----------------------
% OF TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE PRICE EXPIRATION
NAME GRANTED EMPLOYEES IN 1995 PER SHARE (1) DATE 5% 10%
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sylvia A. Pacholder 50,000 11% 30,000 @ $5.00 10/14/2004 $93,334 $239,061
20,000 @ $4.75 12/02/2004 59,745 151,406
Asher O. Pacholder 30,000 7% $5.00 4/01/2005 94,334 239,061
James P. Shanahan, Jr. 30,000 7% $5.00 5/16/1995 0 0
Isaac Joseph 10,000 2% 1,500 @ $4.75 12/02/2004 4,481 11,355
2,500 @ $5.00 10/14/2004 7,861 19,922
6,000 @ $5.75 6/30/2005 21,697 54,984
Curtis Mathews 20,000 4% $5.00 10/14/2004 62,889 159,374
Kenneth Miller 6,000 1% 1,000 @ $4.75 12/02/2004 2,987 7,570
5,000 @ $5.00 10/14/2004 15,722 39,844
</TABLE>
(1) Exercise price is the fair market value on the date of grant.
FISCAL YEAR 1995 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 fiscal year 1995, 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 Common Stock on September 30, 1995.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT SEPTEMBER 30, IN-THE-MONEY OPTIONS AT
NAME ACQUIRED ON VALUE 1995 SEPTEMBER 30, 1995 (1)
EXERCISE REALIZED (2) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sylvia A. Pacholder -0- n/a 52,000/0 $2,500/0
Asher O. Pacholder -0- n/a 36,000/0 0/0
James P. Shanahan, Jr. 30,000 $21,250 0/0 33,750/0
Isaac Joseph -0- n/a 10,000/0 188/0
Curtis Mathews -0- n/a 20,000/0 0/0
Kenneth Miller -0- n/a 8,000/0 125/0
</TABLE>
10
<PAGE> 12
(1) Represents market value of the Company's Common Stock at September 30,
1995 less the exercise price.
(2) Based on market value of the Company's Common Stock on the date of the
exercise of the options.
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, bonuses are not awarded based upon any
quantifiable goals or standards, but rather reflect the Committee's
general, subjective view of the contribution of the particular
individuals to the Company's operations.
Long-Term Compensation
Stock Options - 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 Officers
in 1995, the Compensation Committee took into account the overall individual
skill, business experience and judgment of each Chief Executive Officer as well
as an assessment by the Compensation Committee of each 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 of 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
14 oil service companies which are utilized in the performance graph.
COMPENSATION COMMITTEE
William E. Cornelius
William J. Morgan
John F. Williamson
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, 1995 with: (1) the cumulative total return of
the NASDAQ Composite Stock Index (U.S.); (2) an index of 14 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).
STOCK PERFORMANCE CHART
[CHART]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEAR ICO NASDAQ OILFIELD SVCS TUBO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1990 100 100 100 100
- --------------------------------------------------------------------------------
1991 177 157 93 94
- --------------------------------------------------------------------------------
1992 45 176 96 78
- --------------------------------------------------------------------------------
1993 45 231 104 92
- --------------------------------------------------------------------------------
1994 134 233 90 69
- --------------------------------------------------------------------------------
1995 73 320 109 65
- --------------------------------------------------------------------------------
</TABLE>
(1) Assumes $100 invested on September 30, 1990 and all dividends reinvested.
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 1995, all Section 16(a) filing requirements applicable to its
Directors, officers and greater than 10% beneficial owners were met.
12
<PAGE> 14
APPROVAL OF THE ICO, INC. 1996 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. In 1995 the Company adopted a
stock option plan which covered 400,000 shares of ICO Common Stock. A
cumulative total of only 21,200 shares remain available for grant under the
1994 and 1995 plans. The Board of Directors of the Company has determined that
it would be in the best interests of the Company to continue the stock option
program through the adoption of the ICO, Inc. 1996 Stock Option Plan (the
"1996 Stock Option Plan"). Therefore, the Board of Directors adopted the 1996
Stock Option Plan on August 29, 1996 subject to approval of ICO shareholders at
the Annual Meeting. The 1996 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 who 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 1996 Stock Option Plan, which is set forth in Exhibit "A" to
this Proxy Statement.
PURPOSE OF THE PLAN
The purpose of the 1996 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. Also, the plan will allow
options to be granted to employees of Wedco Technology, Inc., acquired by the
Company in April 1996. These employees' stock options, held prior to the
acquisition, were redeemed in connection with the transaction.
ELIGIBILITY
Options under the 1996 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 1996 Stock Option Plan is 800,000 (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 1996 Stock Option Plan.
PLAN ADMINISTRATION AND TERMINATION
The 1996 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
the Income Tax Regulations. The Board of Directors will have the ability to
amend the 1996 Stock Option Plan at any time without further shareholder
approval unless such amendment would cause the 1996 Stock Option Plan to cease
to satisfy any applicable conditions of Rule 16b-3. Unless earlier terminated,
the 1996 Stock Option Plan will continue in effect until August 29, 2006.
PRICE, EXERCISE PERIOD AND VESTING OF OPTIONS
The Committee will determine the exercise price and exercise schedule for
options granted under the 1996 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 27, 1996, the closing price of ICO Common Stock was
$5-7/16 per share.
13
<PAGE> 15
The maximum number of shares of Common Stock with respect to which
options may be granted to any employee during each fiscal year is 80,000.
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 to 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. 1996 Stock Option Plan.
14
<PAGE> 16
PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE
1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
On April 13, 1993, the Board of Directors adopted, subject to Shareholder
approval, the Company's 1993 Stock Option Plan for Non-employee Directors
("1993 Director Plan"). The Company's Shareholders approved the 1993 Director
Plan at the 1993 Shareholders' Meeting. The Board of Directors approved the
amendment and restatement of the 1993 Director Plan on August 29, 1996. A copy
of the Amended and Restated 1993 Director Plan is attached hereto as Exhibit
"B". The material features of the 1993 Stock Option Plan for Non-employee
Directors are discussed below.
GENERAL
The purpose of the 1993 Director Plan is to retain the services of
qualified and competent non-employee Directors upon whose efforts and judgment
the continuing development and financial success of the Company will be largely
dependent. In furtherance of this purpose, the 1993 Director Plan authorizes
the granting of stock options ("Director Options") to purchase Common Stock to
such non-employee Directors. Director Options granted to non-employee
Directors will be in addition to, and not in lieu of, other benefits received
by Directors.
Each non-employee Director eligible to participate in the 1993 Director Plan
currently receives, on the first business day after the date of each annual
Meeting of Shareholders of the Company, an option to purchase 2,000 shares of
Common Stock at the exercise price per share equal to the fair market value of
the Common Stock on the date of grant. Each option expires ten (10) years
after the date of grant.
In addition, the 1993 Director Plan provides that any non-employee
Director of the Company who is elected to the Board of Directors at other than
an Annual Meeting of Shareholders, will be granted an option for 2,000 shares
of Common Stock on the date such non-employee Director is so elected as a
Director, at the exercise price of 100% of the fair market value of the Common
Stock on the date such non-employee Director is elected.
A total of 80,000 shares of Common Stock are reserved for issuance upon
exercise of options granted pursuant to the 1993 Director Plan.
The 1993 Director Plan is administered by the Compensation Committee, which is
presently comprised of Messrs. Cornelius, Morgan, and Williamson.
TERMS AND CONDITIONS OF OPTIONS
An option may be exercised six months and one day after the date of
grant.
The exercise price of an option may be paid in cash, certified or
cashier's check, money order or by delivery of already-owned shares of Common
Stock having a fair market value equal to the exercise price, or by delivery of
a combination of the above.
No option is assignable or transferable, other than by will or by the
laws of descent and distribution.
An option shall terminate on the earliest to occur of (i) thirty (30)
days after the date that an Optionee ceases to be a Director regardless of the
reason therefor other than as a result of such termination by death of the
Optionee; (ii) one year after the date that an Optionee ceases to be a Director
by reason of death of the Optionee, or six months after the Optionee shall die
if that shall occur during such thirty-day period described in (i); or (iii)
the tenth (10th) anniversary of the date of grant of the option.
To prevent dilution of the rights of a holder of an option, the 1993
Director Plan provides for the adjustment of (i) the number of shares upon
which options may be granted; (ii) the number of shares subject to outstanding
options; and (iii) the exercise price of an option, in the event of any
subdivision or consolidation of shares of Common Stock, any stock dividend,
recapitalization or other capital adjustment.
15
<PAGE> 17
FEDERAL INCOME TAX CONSEQUENCES
The grant of an option will not be taxable to an optionee. Generally,
upon the exercise of an option, an optionee will recognize ordinary income at
the time of exercise equal to the excess of the then fair market value of the
shares of Common Stock received over the exercise price. The Company will not
be entitled to a deduction for federal income tax purposes for the granting of
an option. The taxable income recognized by an optionee upon the exercise of
an option will be treated as compensation income, subject to withholding, and
the Company will be entitled to a corresponding tax deduction for compensation
expense in the year of exercise. When the shares of Common Stock received upon
the exercise of an option subsequently are disposed of in a taxable
transaction, the optionee generally will recognize capital gain (or loss) in
the amount by which the amount realized exceeds (or is less than) the fair
market value of the Common Stock on the date the option was exercised; such
capital gain or loss will be long-term or short-term, depending upon the
optionee's holding period following the exercise of the options.
PROPOSED AMENDMENTS
The 1993 Director Plan has been amended and restated to, among other
things, (i) increase the number of shares subject to options which can be
granted under the 1993 Director Plan from 80,000 to 160,000 shares; (ii)
increase the number of shares issuable upon each annual grant of options to
non-employee Directors from 2,000 shares to 5,000 shares; and (iii) to allow
the committee administering the 1993 Plan to allow for the transferability of
any option previously granted or to be granted under the 1993 Director Plan.
The following table describes the benefits that would be received by the
eligible Directors under the 1993 Director Plan, assuming certain values set
forth in the footnotes to the table. The Executive Officers as a group and all
non-executive employees as a group would not receive any benefits under the
1993 Director Plan. Messrs. Morgan, Cornelius, Williamson, Leib, Willoughby,
Sirusas, Gibson and Ms. R. Pacholder are the only individuals presently
entitled to receive benefits under the 1993 Non-Employee Director Plan.
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE (*/SHARE) AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION FOR
OPTION TERM
----------------------------------------------------
OPTIONS TO
PLAN NAME BE GRANTED 0% 5% 10%
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 Stock Option Plan for Non-Employee 40,000 0 136,785 346,639
Directors
</TABLE>
*The market value of the Common Stock on August 27, 1996 was $5-7/16 per share
and was the assumed exercise price for the options. Neither the dollar value
of the option nor the benefits or amounts which would have been received by or
allocated to the last fiscal year are determinable.
The Board of Directors believes that the 1993 Director Plan benefits the
Company and its Shareholders by further aligning long-term interests of the
non-employee Directors with those of the Shareholders and by reducing the
possibility that one or more Directors will engage in an activity competitive
with and harmful to the Company's business and future performance. The Board
of Directors also believes that grants under the plan are a favorable method to
the Company for compensating the recipients for past contributions to the
Company's success, as well as for anticipated contributions in the future.
APPROVAL
The proposals to adopt ICO's 1996 Stock Option Plan and to amend and
restate the 1993 Director Plan adopted by the Board of Directors each require
approval by the holders of a majority of the outstanding shares of Common
Stock represented at the 1993 Annual Meeting in person or by Proxy. Proxies
will be voted for or against such proposal in accordance with the specification
marked thereon, and, if no specification is made, will be voted in favor of such
proposal.
16
<PAGE> 18
SELECTION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, independent accountants, examined the Company's
consolidated financial statements for the fiscal year ended September 30, 1995,
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 1996,
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 1996. Representatives of Price
Waterhouse LLP will be present at the Annual 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 Annual Shareholders' Meeting.
CERTAIN TRANSACTIONS
In connection with the April 30, 1996 merger of Wedco Technology, Inc.
into a wholly owned subsidiary of the Company, Wedco and William E. Willoughby
entered into a ten-year non-compete agreement and a five-year consulting
agreement. As consideration, Mr. Willoughby will receive $300,000 payable in
60 equal monthly installments for the non-compete agreement and $240,000 per
year, payable monthly, for consulting services. Mr. Willoughby and Wedco are
also parties to a salary continuation agreement which provides that Mr.
Willoughby's spouse will be paid a survivorship benefit of $150,000 for five
years if Mr. Willoughby predeceases his spouse at a time when he is serving as a
consultant to Wedco or ICO, provided however, such payment shall terminate upon
the earlier to occur of the death of his spouse or April 30, 2001. As of August
27, 1996, Wedco had outstanding a non-interest bearing receivable due from Mr.
Willoughby of approximately $66,000.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
A Shareholder intending to submit a proposal to be presented at the 1997
Annual Meeting of Shareholders must deliver such proposal in writing to the
Company's executive officers no later than June 2, 1997.
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 Annual 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
Asher O. Pacholder Sylvia A. Pacholder
Chairman of the Board and Chief Executive Officer,
Chief Financial Officer President & Secretary
Dated: August 29, 1996
17
<PAGE> 19
EXHIBIT "A"
ICO, INC.
1996 STOCK OPTION PLAN
ARTICLE 1
Objectives
ICO, Inc. ("ICO" or the "Company") has established this Stock Option
Plan, effective August 29, 1996, as an incentive to attract and retain
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 below, 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 to 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.
A-1
<PAGE> 20
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.
K. "Permanent and Total Disability" means 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 1996 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 ("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.
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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 be incurred 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 800,000 Shares in the aggregate. Except as provided
in Section 4.2, upon lapse or termination of any Option for any reason
without having been completely exercised, the Shares which were
subject to such Option may again be subject to other Options.
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
80,000. If an Option is canceled, 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 29, 2006, 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
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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.
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% 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
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<PAGE> 23
(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. In addition, the Committee may allow for the
transferability of any option granted pursuant to this Plan.
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 a 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 in 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
separation 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 separation
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 than could have been
purchased on the day of
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<PAGE> 24
separation of employment. 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 that 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.
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 except as otherwise permitted by
Rule 16b-3 and Section 162(m), 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; or
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<PAGE> 25
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 on August 29, 1996, having been
adopted by the Board of Directors on that date.
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 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 shall 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.
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<PAGE> 26
EXHIBIT "B"
AMENDED AND RESTATED
1993 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
OF
ICO, INC.
1. Purpose. The purpose of this Plan is to advance the interests of
ICO, Inc., a Texas corporation (the "Company"), by providing an
additional incentive to attract and retain qualified and competent
Directors, upon whose efforts and judgment the success of the Company
is largely dependent, through the encouragement of stock ownership in
the Company by such persons.
2. Definitions. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean those members of the Board who are not
Eligible Persons.
(c) "Date of Grant" shall mean the date on which an Option is granted
to an Eligible Person pursuant to Section 4(c) hereof.
(d) "Director" shall mean a member of the Board.
(e) "Eligible Person(s)" shall mean those persons who are Directors of
the Company and who are not employees or officers of the Company
or a Subsidiary.
(f) "Fair Market Value" of a Share on any date of reference shall be
the Closing Price on the business day immediately preceding such
date. For this purpose, the Closing Price of the Shares on any
business day shall be (i) if the Shares are listed or admitted for
trading on any United States national securities exchange, the
last reported sale price of Shares on such exchange, as reported
in any newspaper of general circulation, (ii) if Shares are quoted
on NASDAQ, or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between
the closing high bid and low asked quotations for such day of
Shares on such system, (iii) if neither clause (i) or (ii) is
applicable, the mean between the high bid and low asked quotations
for Shares as reported by the National Daily Quotation Service if
at least two securities dealers have inserted both bid and asked
quotations for Shares on at least five of the ten preceding
business days, or (iv) in lieu of the above, if actual
transactions in the Shares are reported on a consolidated
transaction reporting system, the last sales price of the Shares
on such system. If there is no Closing Price as determined above,
the Fair Market Value shall be determined by any fair and
reasonable means prescribed by the Committee.
(g) "Internal Revenue Code" or "Code" shall mean the Internal Revenue
Code of 1986, as it now exists or as it may be amended from time
to time.
(h) "Non-incentive Stock Option" shall mean an option that is not an
incentive stock option as defined in Section 422A of the Internal
Revenue Code.
(i) "Option" (when capitalized) shall mean any option granted under
this Plan.
(j) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any successor to the rights of such person
under this Plan by reason of the death of such person.
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<PAGE> 27
(k) "Plan" shall mean this 1993 Stock Option Plan for Non-employee
Directors of ICO, INC., as amended and restated August 29, 1996.
(l) "Share(s)" shall mean a share or shares of the Common Stock, no
par value, of the Company.
(m) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company
if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain
owns stock possessing more than 50% of the total combined voting
power of all classes of stock in one of the other corporations in
such chain.
3. Shares and Options. The maximum number of Shares to be issued
pursuant to Options under this Plan shall be ONE HUNDRED SIXTY
THOUSAND (160,000) Shares, such number having been adjusted for all
previous stock splits, from Shares held in the Company's treasury or
from authorized and unissued Shares. If any Option granted under this
Plan shall terminate, expire, or be canceled or surrendered as to any
Shares, new Options may not thereafter be granted covering such
Shares. Any Option granted hereunder shall be a Non-incentive Stock
Option.
4. Automatic Grant of Options.
(a) Options shall automatically be granted to Eligible Persons as
provided in this Section 4. Each Option shall be evidenced by an
option agreement (an "Option Agreement") and shall contain such
terms as are not inconsistent with this Plan or any applicable
law. Any person who files with the Board, in a form satisfactory
to the Board, a written waiver of eligibility to receive any
Option under this Plan shall not be eligible to receive any Option
under this Plan for the duration of such waiver.
(b) The Options automatically granted to Directors under this Plan
shall be in addition to regular Director's fees or other benefits
with respect to the Director's position with the Company or its
subsidiaries. Neither the Plan nor any Option granted under the
Plan shall confer upon any person any right to continue to serve
as a Director.
(c) Options shall be automatically granted as follows:
(i) each Director who is an Eligible Person on the first
business day after the date of the 1996 Annual Meeting of
Shareholders of the Company, on that date shall
automatically receive an Option for FIVE THOUSAND (5,000)
Shares, such date being the Date of Grant of such Option;
(ii) each Director who is an Eligible Person on the first
business day after the date of each subsequent Annual
Meeting of Shareholders of the Company, commencing with the
Annual Meeting of Shareholders held in 1997, on that date
shall automatically receive an Option for FIVE THOUSAND
(5,000) Shares, such date being the Date of Grant of such
Option; and
(iii) each Eligible Person who is elected a Director by the
Company's Shareholders or the Board of Directors (not
previously being a Director) on a date other than the date
of the Annual Meeting of Shareholders of the Company shall
be granted an Option for FIVE THOUSAND (5,000) Shares on
the date of such Eligible Person's election as a Director,
such date being the Date of Grant for such Option.
(d) Any Option that may be granted pursuant to subparagraph (c) may be
exercised six months and one day after the Date of Grant.
Notwithstanding the foregoing sentence, no Option shall be
exercisable until six months after the Company's Shareholders
approve the Plan.
(e) Except for the automatic grants of Options under subparagraph (c)
of this Section 4, no Options shall otherwise be granted
hereunder, and the Board shall not have any discretion with
respect to the grant of Options within the meaning of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended,
or any successor rule.
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<PAGE> 28
5. Option Price. The option price per Share of any Option shall be one
hundred percent (100%) of the Fair Market Value per Share on the Date
of Grant.
6. Exercise of Options. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance
with the terms of the Option Agreement, (ii) full payment of the
aggregate Option Price of the Shares as to which the Option is
exercised has been made, and (iii) arrangements that are satisfactory
to the Committee in its sole discretion have been made for the
Optionee's payment to the Company of the amount, if any, that the
Committee determines to be necessary for the Company to withhold in
accordance with applicable federal or state income tax withholding
requirements. Pursuant to procedures approved by the Committee, tax
withholding requirements, at the option of an Optionee, may be met by
withholding Shares otherwise deliverable to the Optionee upon the
exercise of an Option. Unless further limited by the Committee in any
Option Agreement, the Option Price of any Shares purchased shall be
paid solely in cash, by certified or cashier's check, by money order,
with Shares (but with Shares only if permitted by the Option Agreement
or otherwise permitted by the Committee in its sole discretion at the
time of exercise) or by a combination of the above; provided, however,
that the Committee in its sole discretion may accept a personal check
in full or partial payment of any Shares. If the exercise price is
paid in whole or in part with Shares, the value of the Shares
surrendered shall be their Fair Market Value on the date received by
the Company. Any permitted payment through the 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.
7. Termination of Option Period. The unexercised portion of an Option
shall automatically and without notice terminate and become null and
void at the time of the earliest to occur of the following:
(i) thirty (30) days after the date that an Optionee ceases to
be a Director regardless of the reason therefor other than
as a result of such termination by death of the Optionee;
(ii) one year after the date that an Optionee ceases to be a
Director by reason of death of the Optionee, or six months
after the Optionee shall die if that shall occur during the
thirty-day period described in Subsection 7(i); or
(iii) the tenth (10th) anniversary of the Date of Grant of the
Option.
8. Adjustment of Shares.
(a) If at any time while this Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the
number of issued and outstanding Shares through the declaration of
a stock dividend or through any recapitalization resulting in a
stock split-up, combination or exchange of Shares, then and in
such event:
(i) appropriate adjustment shall be made in the maximum number
of Shares then subject to being optioned under the Plan, so
that the same proportion of the Company's issued and
outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then
subject to any outstanding Option, so that the same
proportion of the Company's issued and outstanding Shares
shall remain subject to purchase at the same aggregate
exercise price.
(b) Except as otherwise expressly provided herein, the issuance by the
Company of Shares of its capital stock of any class, or securities
convertible into Shares of capital stock of any class, either in
connection with a direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of Shares or
obligations of the Company convertible into such Shares or other
securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of or exercise price of
Shares then subject to outstanding Options granted under this
Plan.
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<PAGE> 29
(c) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under this Plan shall not affect in
any manner the right or power of the Company to make, authorize or
consummate (1) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital
structure or its business; (2) any merger or consolidation of the
Company; (3) any issue by the Company of debt securities, or
preferred or preference stock which would rank above the Shares
subject to outstanding Options; (4) the dissolution or liquidation
of the Company; (5) any sale, transfer or assignment of all or any
part of the assets or business of the Company; or (6) any other
corporate act or proceeding, whether of a similar character or
otherwise.
9. Transferability of Options. Each Option Agreement shall provide that
such Option shall not be transferable by the Optionee other than by
will or by the laws of descent and distribution provided, however,
that the Committee, in its sole discretion may allow for the
transferability of any option previously granted or to be granted
pursuant to this Plan.
10. Issuance of Shares. No person shall be, or have any of the rights or
privileges of, a Shareholder of the Company with respect to any of the
Shares subject to an Option, unless and until certificates
representing such Shares shall have been issued and delivered to such
person. As a condition of any transfer of the certificate for Shares,
the Committee may obtain such agreements or undertakings, if any, as
it may deem necessary or advisable to assure compliance with any
provision of this Plan, any Option Agreement or any law or regulation
including, but not limited to, the following:
(i) a representation, warranty or agreement by the Optionee to the
Company, at the time any Option is exercised, that he or she
is acquiring the Shares to be issued to him or her for
investment and not with a view to, or for sale in connection
with, the distribution of any such Shares; and
(ii) a representation, warranty or agreement to be bound by any
legends that are, in the opinion of the Committee, necessary
or appropriate to comply with the provisions of any securities
law deemed by the Committee to be applicable to the issuance
of the Shares and are endorsed upon the Share certificates.
Share certificates issued to an Optionee who is a party to any
Shareholders agreement or a similar agreement shall bear the legends
contained in such agreements.
11. Amendment, Modification, Suspension or Discontinuance of this Plan.
The Board of Directors may amend, modify, suspend or terminate the
Plan for the purpose of meeting or addressing any changes in legal
requirements or for any other purpose permitted by law. Subject to
changes in law or other legal requirements, including any change in
the provisions of Rule 16b-3 and Section 162(m) of the Code that
would permit otherwise, the Plan may not be amended without the
consent of the holders of a majority of the Shares of stock
represented at a meeting of Shareholders for which a quorum is
present, to (i) increase materially the aggregate number of Shares of
stock that may be issued under the Plan (except for adjustments
pursuant to paragraph 8 of the Plan), (ii) increase materially the
benefit accruing to Optionees under the Plan, or (iii) modify
materially the requirements as to eligibility for participation in the
Plan.
12. Interpretation.
(a) If any provision of this Plan is held to be invalid for any
reason, such holding shall not affect the remaining provisions
hereof, but instead this Plan shall be construed and enforced
as if such provision had never been included in this Plan.
(b) THIS PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
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<PAGE> 30
13. Section 83(b) Election. If as a result of exercising an Option, an
Optionee receives Shares that are subject to a "substantial risk of
forfeiture" and are not "transferable" as those terms are defined for
purposes of Section 83(a) of the Code, then such Optionee may elect
under Section 83(b) of the Code to include in his gross income, for
his taxable year in which the Shares are transferred to him, the
excess of the Fair Market Value of such Shares at the time of transfer
(determined without regard to any restriction other than one which by
its terms will never lapse), over the amount paid for the Shares. If
the Optionee makes the Section 83(b) election described above, the
Optionee shall (i) make such election in a manner that is satisfactory
to the Committee, (ii) provide the Company with a copy of such
election, (iii) agree to promptly notify the Company if any Internal
Revenue Service or state tax agent, on audit or otherwise, questions
the validity or correctness of such election or of the amount of
income reportable on account of such election, and (iv) agree to such
withholding as the Committee may reasonably require in its sole and
absolute discretion.
14. Effective Date and Termination Date. The effective date of this Plan
is the 13th day of April, 1993, the date on which the Board originally
adopted this Plan. The Shareholders of the Company approved the Plan
on June 15, 1993. The Plan was subsequently amended and restated by
the Board on August 29, 1996. This Plan shall terminate on the tenth
(10th) anniversary of the effective date, subject to early termination
by the Board pursuant to Paragraph 11 of the Plan.
15. Government Regulations. The Plan, and the granting and exercise of
Options thereunder, and the obligation of the Company to sell and
deliver shares under such Options, shall be subject to all applicable
laws, rules and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
B-5
<PAGE> 31
PROXY
ICO, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING OCTOBER 7, 1996
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 Monday, October 7, 1996, 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 three Class II directors to serve until the 1999 Annual Meeting of
Shareholders: Sylvia A. Pacholder, William J. Morgan and William E. Willoughby.
Election of James E. Gibson, a Class III director, to serve until the 1997
Meeting of Shareholders.
(change of address)
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
- --------------------------------------------------------
(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
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<PAGE> 32
[X] PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
1. Election of Directors (SEE REVERSE)
FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2. The approval of the ICO, Inc. 1996 Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. The approval of the amendment and restatement of the 1993 non-employee
directors stock option plan which includes increasing the number of shares of
Common Stock issuable under the plan from 80,000 to 160,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. The ratification of the appointment of Price Waterhouse LLP as independent
accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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.
