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SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-12
ICO, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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THE COMPANY STRONGLY ADVISES ALL ICO, INC. ("ICO") SHAREHOLDERS TO READ
ICO'S PROXY STATEMENT, WHICH WILL BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"). ICO'S PROXY STATEMENT WILL CONTAIN IMPORTANT INFORMATION
THAT YOU SHOULD CONSIDER BEFORE MAKING ANY DECISION ABOUT THE PROPOSALS TO BE
VOTED ON AT ICO'S ANNUAL MEETING. When completed, ICO's proxy statement will be
mailed to all ICO shareholders and will be available at no charge at the SEC's
Web site at http://www.sec.gov or from ICO by contacting Jon C. Biro at
281-721-4125.
INFORMATION REGARDING DIRECTORS, NOMINEES FOR DIRECTOR AND CERTAIN EXECUTIVE
OFFICERS WHO MAY BE DEEMED TO BE PARTICIPANTS BECAUSE THEY MAY SOLICIT PROXIES
ICO and certain other persons named below may be deemed to be
participants in the solicitation of proxies under the rules of the SEC.
Participants may include (1) the current directors and nominee for director of
ICO: Dr. Asher O. Pacholder, John F. Williamson, Walter L. Leib, James E.
Gibson, William E. Cornelius, Robin E. Pacholder (who is a director but will not
be standing for reelection), George S. Sirusas, William J. Morgan, Sylvia A.
Pacholder, William E. Willoughby and Dr. Howard P. Tuckman (who is a nominee but
not a current director) and (2) the executive officers of ICO who are not
directors: Isaac H. Joseph (President - ICO Worldwide, Inc.), Jon C. Biro
(Senior Vice President, Chief Accounting Officer and Treasurer), and David M.
Gerst (Senior Vice President and General Counsel).
INFORMATION REGARDING OWNERSHIP OF ICO'S COMMON STOCK BY PARTICIPANTS
The following table sets forth, as of December 29, 2000, the shares of
ICO Common Stock, without par value ("Common Stock") beneficially owned by each
director and nominee for director of ICO and each current executive officer of
ICO who is not a director. Except as otherwise set forth, such persons have sole
voting power and sole dispositive power with respect to the shares beneficially
owned by them. Beneficial ownership with respect to shares held in ICO's 401(k)
plans are attributed to that participant. The 401(k) plans have previously
provided for voting of such shares at the direction of ICO; however, these plans
are being amended to provide for voting of such shares at the direction of the
plan participants.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME BENEFICIALLY OWNED
<S> <C>
Directors and Nominee for Director
----------------------------------------
William E. Cornelius 34,000 (1)
Robin E. Pacholder 86,336 (2)(3)
George S. Sirusas 47,959 (4)
William J. Morgan 884,270 (2)(5)(6)
Sylvia A. Pacholder 4,295,497 (2)(6)(7)
William E. Willoughby 1,689,929 (2)(8)
Dr. Asher O. Pacholder 4,385,761 (2)(6)(9)
John F. Williamson 37,631 (10)
Walter L. Leib 898,212 (11)
James E. Gibson 28,000 (12)
Dr. Howard P. Tuckman 0
Executive Officers Who Are Not Directors
----------------------------------------
Isaac H. Joseph 53,332 (13)
Jon C. Biro 65,844 (14)
David M. Gerst 53,350 (15)
</TABLE>
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(1) Share amounts consist of 1,000 shares of Common Stock and 33,000 shares
of Common Stock that are issuable upon exercise of stock options
granted under the 1993 Stock Option Plan for Non-Employee Directors.
(2) This director or officer is a party to the Wedco Shareholders Agreement
described below in the section entitled "Shareholders Agreements."
Except as set forth in the notes below, share amounts do not include,
for purposes of clarity, the shares of Common Stock beneficially owned
by other parties to the Wedco Shareholders Agreement because multiple
parties listed in the table are party to the agreement and could be
deemed to have beneficial ownership of the same shares. To the extent
the parties to the Wedco Shareholders Agreement constitute a group,
such group and its members could be deemed to be the beneficial owner
of 4,666,805 shares of Common Stock or approximately 20.0% of the
shares of ICO Common Stock of deemed outstanding (of which 4,078,643
shares of these beneficially owned shares of Common Stock were
outstanding as of December 29, 2000).
(3) Share amounts include 14,700 shares of Common Stock, 1,644 shares of
Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock, 50,000 shares of Common Stock that are
issuable upon exercise of stock options granted under ICO's various
employee stock option plans, 11,000 shares of Common Stock issuable
upon exercise of stock options granted under the 1993 Stock Option Plan
for Non-Employee Directors, and 8,992 shares of Common Stock held in
ICO's 401(k) plans.
(4) Share amounts include 18,219 shares of Common Stock, 2,740 shares of
Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock and 27,000 shares of Common Stock that are
issuable upon exercise of stock options granted under the 1993 Stock
Option Plan for Non-Employee Directors. Common Stock holdings for Mr.
Sirusas include 2,379 shares held by his wife.
(5) Share amounts include 44,000 shares of Common Stock, 33,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under the 1993 Stock Option Plan for Non-Employee Directors.
(6) Share amounts include 180,000 shares of Common Stock and 63,051 shares
of Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock held by a limited partnership, of which
Dr. Asher O. Pacholder and William J. Morgan are beneficial owners of
the general partner. Pursuant to certain Investment Advisory
Agreements, Pacholder Associates, Inc. has sole voting and investment
power over such securities. Dr. Asher O. Pacholder, Sylvia A. Pacholder
and William J. Morgan are majority owners of Pacholder Associates, Inc.
Share amounts also include 415,461 shares of Common Stock, 102,879
shares of Common Stock that may be acquired through the exercise of
warrants and 45,879 shares of Common Stock that may be acquired upon
conversion of Convertible Exchangeable Preferred Stock owned by
Pacholder Associates, Inc.
(7) Share amounts include 31,400 shares of Common Stock, 125,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under ICO's various employee stock option plans, 2,000 shares of Common
Stock issuable upon exercise of stock options granted under the 1993
Stock Option Plan for Non-Employee Directors, 4,291 shares of Common
Stock held in ICO's 401(k) plan and (i) 374,873 shares of Common Stock
issued in connection with acquisitions by ICO over which Sylvia A.
Pacholder and Dr. Asher O. Pacholder share voting power and (ii)
2,950,663 shares of Common Stock of ICO subject to the Wedco
Shareholders Agreement over which Sylvia A. Pacholder and Dr. Asher O.
Pacholder have the power to vote on certain matters, each as described
below in the section entitled "Shareholders Agreements." Sylvia A.
Pacholder disclaims beneficial ownership of the 2,950,663 shares
related to the Wedco Shareholders Agreement and the 374,873 shares
related to the acquisitions.
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(8) Share amounts include 1,662,929 shares of Common Stock, 27,000 shares
of Common Stock that are issuable upon exercise of stock options
granted under the 1993 Stock Option Plan for Non-Employee Directors.
Common Stock owned by Mr. Willoughby includes 149,139 shares owned
jointly with his wife and 395,665 shares owned by his wife.
(9) Share amounts include 118,200 shares of Common Stock, 125,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under ICO's various employee stock option plans, 6,000 shares of Common
Stock issuable upon exercise of stock options granted under the 1993
Stock Option Plan for Non-Employee Directors, 3,755 shares of Common
Stock held in ICO's 401(k) plan and (i) 374,873 shares of Common Stock
issued in connection with acquisitions by ICO over which Sylvia A.
Pacholder and Dr. Asher O. Pacholder share voting power and (ii)
2,950,663 shares of Common Stock of ICO subject to the Wedco
Shareholders Agreement over which Sylvia A. Pacholder and Dr. Asher O.
Pacholder have the power to vote on certain matters, each as described
below in the section entitled "Shareholders Agreements." Dr. Asher O.
Pacholder disclaims beneficial ownership of the 2,950,663 shares
related to the Wedco Shareholders Agreement and the 374,873 shares
related to the acquisitions.
(10) Share amounts include 8,631 shares of Common Stock and 29,000 shares of
Common Stock that are issuable upon exercise of stock options granted
under the 1993 Stock Option Plan for Non-Employee Directors. Common
Stock holdings for Mr. Williamson includes 437 shares owned by his
wife.
(11) Share amounts include 55,021 shares of Common Stock, 4,384 shares of
Common Stock that may be acquired upon conversion of Convertible
Exchangeable Preferred Stock, 27,000 shares of Common Stock that are
issuable upon exercise of stock options granted under the 1993 Stock
Option Plan for Non-Employee Directors and 811,807 shares of Common
Stock of ICO subject to the Wedco Shareholders Agreement over which Mr.
Leib has the power to vote on certain matters as described below in the
section entitled "Shareholders Agreements."
(12) Share amounts include 1,000 shares of Common Stock owned jointly by Mr.
Gibson and his wife, and 27,000 shares of Common Stock that are
issuable upon exercise of stock options granted under the 1993 Stock
Option Plan for Non-Employee Directors.
(13) Share amounts include 50,000 shares of Common Stock that are issuable
upon exercise of stock options granted under ICO's various employee
stock option plans and 3,332 shares of Common Stock held in ICO's
401(k) plan.
(14) Share amounts include 12,000 shares of Common Stock owned jointly by
Mr. Biro and his wife, 50,000 shares of Common Stock that are issuable
upon exercise of stock options granted under ICO's various employee
stock option plans and 3,844 shares of Common Stock held in ICO's
401(k) plan.
(15) Share amounts include 50,000 shares of Common Stock that are issuable
upon exercise of stock options granted under ICO's various employee
stock option plans and 3,350 shares of Common Stock held in ICO's
401(k) plan.
DIRECTOR COMPENSATION
Each director who is not an employee of ICO receives an annual
retainer of $20,000 ($15,000 prior to July 1, 2000), and a director's fee in the
amount of $1,000 for each meeting of the Board or Committee of the Board
actually attended and reimbursement of actual expenses incurred. The Chairmen of
the Audit, Compensation and Nominating Committees also receive an annual stipend
of $5,000 ($2,000 prior to November 29, 2000). In addition, each director who is
not an employee is a participant in the Second Amended and Restated 1993
Non-Employee Director Stock Option Plan. Under the current terms of the plan,
each non-employee
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director is granted options to purchase 5,000 shares of Common Stock upon
appointment to the Board of Directors and options to purchase 5,000 shares of
Common Stock on the first business day after the date of each subsequent annual
meeting of shareholders. During fiscal 2000, options to purchase 5,000 shares at
an exercise price of $1-13/16 per share were granted to each of Messrs. Morgan,
Cornelius, Williamson, Leib, Willoughby, Sirusas and Gibson.
EMPLOYMENT AGREEMENTS
ICO has employment agreements with Sylvia A. Pacholder, Dr. Asher O.
Pacholder, Isaac H. Joseph, Robin E. Pacholder, Jon C. Biro and David M. Gerst.
The base salary of each executive is reviewed at least annually and is increased
from time to time to reflect, at a minimum, increases in the cost of living. The
current base salaries are as follows: Sylvia A. Pacholder, $380,000; Dr. Asher
O. Pacholder, $340,000; Isaac H. Joseph, $235,000; Robin E. Pacholder, $210,000;
Jon C. Biro, $210,000 and David M. Gerst, $210,000. Salary increases for each
executive are to be consistent with the increases given to other key executives.
Once increased, executive salaries cannot be reduced. Each executive may receive
an annual cash bonus in such amount as is determined by the Board. Each
executive is also eligible for other benefits offered by ICO.
The employment agreements, as amended, for Sylvia A. Pacholder and Dr.
Asher O. Pacholder provide for a term of employment through December 31, 2001,
that is extended automatically from day to day until such time as the executive
or ICO gives written notice that automatic extensions shall cease, in which
event employment terminates on a date five years after such notice has been
given. The employment agreements for Isaac H. Joseph, Robin E. Pacholder and Jon
C. Biro provide for a term of employment through September 3, 2000, that is
extended automatically from day to day until such times as the executive or ICO
gives written notice that automatic extensions shall cease, in which event
employment terminates on a date two years after such notice has been given. The
employment agreement for David M. Gerst provides for a term of employment
through August 4, 2001, that is extended automatically from day to day until
such times as the executive or ICO gives written notice that automatic
extensions shall cease, in which event employment terminates on a date two years
after such notice has been given.
If an executive is terminated by ICO for cause, ICO shall pay the
executive the full salary through the termination date. If the employment of the
executive is terminated by ICO other than for cause or disability or by the
executive for Good Reason (as defined below), the executive will be entitled to
receive a lump sum equal to the sum of the following items: (1) the executive's
annual base salary through the termination date; (2) the product of (x) the
number of days worked in the year of termination divided by 365, and (y) the
greater of half of the executive's annual base salary in the year of termination
or the executive's highest annual bonus paid during the employment period; and
(3) five times (two times for Isaac H. Joseph, Robin E. Pacholder, Jon C. Biro
and David M. Gerst) the sum of (x) the executive's annual base salary as of the
termination date and (y) the greater of half of the executive's annual base
salary in the year of termination or the executive's highest annual bonus paid
during the employment period.
Good Reason means:
o the executive ceasing for any reason to be a named
executive officer, other than by death, disability or
termination by the executive of employment with ICO other
than for Good Reason;
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o the assignment to the executive of any duties inconsistent
in any respect with the executive's position (including
status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
the employment agreement, or any other action by ICO which
results in a diminishment in such position, authority,
duties or responsibilities, other than an insubstantial
and inadvertent action which is remedied by ICO promptly
after receipt of notice thereof given by the executive;
o any failure by ICO to comply with any of the provisions of
the compensation section of the agreement, other than an
insubstantial and inadvertent failure which is remedied by
ICO promptly after receipt of notice thereof given by the
executive;
o ICO's requiring the executive to be based at any office or
location outside the greater Houston metropolitan area,
except for travel reasonably required in the performance
of the executive's responsibilities;
o any purported termination by ICO of the executive's
employment otherwise than as permitted by the employment
agreement, it being understood that any such purported
termination shall not be effective for any purpose of the
agreement;
o any failure by ICO to comply with and satisfy the section
of the employment agreement requiring any parent company
or successor, in the event of a change of control (as
defined in the next paragraph), by an agreement acceptable
in form and substance satisfactory to the executive,
guarantee and cause the performance of the employment
agreement; or
o if executive shall no longer be employed by ICO for any
reason within two years after the occurrence of a change
of control.
A change of control is defined in the employment agreements to mean a
change of control of ICO during the period of an executive's employment of a
nature that would be required to be reported in response to Item 1(a) of the
Current Report on Form 8-K, as in effect on the date of the employment
agreement, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"). A change of control shall be deemed to have occurred
if, without limitation:
o ICO shall not be the surviving entity in any merger,
consolidation or other transaction (or survives only as a
subsidiary of an entity other than a previously
wholly-owned subsidiary of ICO) or the shareholders of ICO
prior to any such merger, consolidation or other
transaction do not continue to own at least 60% of the
surviving entity;
o ICO sells, leases or exchanges all or substantially all of
its assets to any other person or entity (other than a
wholly-owned subsidiary of ICO);
o ICO is materially or completely liquidated;
o a third person, including a "group" as such term is used
in Section 13(d)(3) of the Exchange Act, becomes the
beneficial owner, directly or indirectly, of
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(a) 50% or more of the combined voting power of ICO's
outstanding voting securities ordinarily having the right
to vote for the election of directors of ICO or (b) 20% or
more of the combined voting power of ICO's outstanding
voting securities ordinarily having the right to vote for
the election of directors of ICO if such acquisition of
20% of securities is not approved by the Board of
Directors then in office immediately prior to the
acquisition;
o any person (other than ICO) purchases any voting
securities of ICO in a tender or exchange offer with the
intent, express or implied, of purchasing or otherwise
acquiring voting control of ICO; or
o during any consecutive two-year period, individuals who
constituted the Board of Directors of ICO (together with
any new directors whose election by the Board of Directors
or whose nomination for election by the shareholders of
ICO was approved by a vote of at least three-quarters of
the directors still in office who were either directors at
the beginning of such period or whose election or
nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of
Directors then in office.
If it is determined that any payment made under the employment
agreement, or another plan or agreement of ICO, in the event of a change of
control, would be considered a payment as defined in Section 280G of the
Internal Revenue Code and is subject to excise tax under Section 4999 of the
Internal Revenue Code, then the executive would be entitled to an additional
"gross-up payment" that will place the executive in the same after-tax economic
position as if such payment had not been considered an excess parachute payment.
SHAREHOLDER AGREEMENTS
Dr. Asher O. Pacholder, Sylvia A. Pacholder, Robin E. Pacholder,
William J. Morgan and Pacholder Associates, Inc. (these shareholders are
collectively the "ICO Shareholders"), and William E. Willoughby, Peggy S.
Willoughby, William C. Willoughby (individually and as custodian for William B.
Willoughby), Regina S. Willoughby (individually and as custodian for William B.
Willoughby), Fred R. Feder, Theo J.M.L. Verhoeff and Catherine Willoughby
Stevens (these shareholders are collectively the "Wedco Shareholders") (the ICO
Shareholders and the Wedco Shareholders are collectively the "Shareholders") and
ICO are parties to a shareholders agreement (the "Wedco Shareholders Agreement")
covering, in the aggregate, 4,078,643 outstanding shares of ICO's Common Stock
(as of December 29, 2000). Pursuant to the agreement, the Shareholders agree to
take all actions necessary or appropriate to cause the election of William E.
Willoughby, Walter L. Leib and George S. Sirusas (the "Initial Wedco Directors")
to the Board of Directors of ICO and to cause their re-election to the Board of
Directors of ICO until the earlier of: (1) the time the Wedco Shareholders,
taken as a whole, beneficially own less than 1,500,000 shares of Common Stock or
(2) there is a change in control (as defined below) of ICO (the "Termination
Date").
Also under the Wedco Shareholders Agreement, all the ICO Shareholders
have granted irrevocable proxies coupled with an interest to Mr. Leib to vote
their shares of Common Stock in favor of 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") effective until the Termination Date. The Wedco
Shareholders have granted irrevocable proxies coupled with an interest to Sylvia
A. Pacholder and Dr. Asher O. Pacholder to vote their shares of Common Stock
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of ICO also in favor of the Nominated Slate. The Wedco Shareholders' proxies are
effective while any Wedco Shareholder owns any Common Stock of ICO or until a
change of control (as defined in the next paragraph).
A change of control occurs under the Wedco Shareholders Agreement when
(1) any person or group becomes the beneficial owner of shares of stock or other
securities of ICO either (a) constituting in excess of 50% of the shares of
voting stock of ICO or (b) entitling such person or group, either immediately or
with the passage of time or the occurrence of a stated event, to exercise a
majority of the voting power in the election of the directors, (2) a majority of
the Board of Directors of ICO ceases to be composed of the nominees of the
Shareholders (the "Continuing Directors") or of persons nominated by and elected
to the Board of Directors with the consent or approval of a majority of the
Continuing Directors or (3) a sale, transfer, conveyance, assignment or other
disposition of all or substantially all of ICO's assets, whether in liquidation,
dissolution or otherwise.
In addition, if any one of Messrs. Willoughby, Leib or Sirusas shall
cease to serve as a director of ICO at any time prior to the Termination Date,
the Shareholders are required to take all actions necessary and appropriate to
ensure that the vacancy created shall be filled by a person nominated by the
remaining Initial Wedco Directors or, if there are no remaining Initial Wedco
Directors, by the Wedco Shareholders acting by a majority in interest, subject
to the consent of a majority of the full Board of Directors of ICO.
The Wedco Shareholders Agreement also provides that if one or more of
the Shareholders desire to sell 500,000 or more shares of Common Stock in a
single or series of related transactions (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 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 Wedco
Shareholders Agreement is filed as Exhibit 10.9 to ICO's Form S-4 dated March
15, 1996.
In connection with several acquisitions by ICO in which the sellers
received shares of the Common Stock of ICO, such sellers granted certain rights
to vote those shares to members of ICO's management.
Pursuant to ICO's acquisition of Frontier Inspection Services, Inc. in
April 1994, each recipient of shares of the Common Stock of ICO granted an
irrevocable proxy appointing the Chairman of the Board and the President of ICO,
or either of them, to vote all shares of ICO the recipient received in
connection with the acquisition. The proxy expires upon the earliest of:
termination of employment of the recipient, transfer of the shares to a person
not affiliated with or an immediate family member or ten years. One of the
recipients, Jack C. Cave, currently owns 78,000 shares of the Common Stock of
ICO and is an employee of ICO.
Pursuant to ICO's acquisition of R. J. Dixon, Inc. in June 1995,
Raymond J. Dixon, Jr. granted an irrevocable proxy appointing the Chairman of
the Board and the President of ICO, or either of them, to vote all shares of ICO
he received in connection with the acquisition. The proxy expires upon the
earliest of: termination of employment of Mr. Dixon, transfer of the shares to a
person not affiliated with or an immediate family member or ten years. Mr. Dixon
is an employee of ICO and currently holds 94,884 shares of the Common Stock of
ICO that he received in the acquisition.
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Pursuant to ICO's acquisition of Polymer Service of Indiana, Inc. in
July 1996, each recipient of shares of the Common Stock of ICO granted an
irrevocable proxy appointing the Chairman of the Board and the President of ICO,
or either of them, to vote all shares of ICO that the recipient is entitled to
vote. The proxy expires upon the earliest of: transfer of the shares to a
non-affiliated person or entity or ten years. One of the recipients, Joe Moore,
currently owns 23,942 shares of the Common Stock of ICO.
Pursuant to ICO's acquisition of Bayshore Industrial, Inc. in December
1996, each recipient of shares of the Common Stock of ICO granted an irrevocable
proxy appointing the Chairman of the Board and the President of ICO, or either
of them, to vote all shares of ICO the recipient is entitled to vote. The proxy
expires upon the earliest of (1) transfer of the shares to a non-affiliated
person or entity, (2) termination of employment of the recipient, (3) if either
one or both of Dr. Asher O. Pacholder and Sylvia A. Pacholder cease to serve as
Chairman of the Board and President and Chief Executive Officer, respectively of
ICO, or (4) ten years. Three of the recipients, Eddie Johnson, Max Kloesel and
Carol C. Munn, currently own shares of the Common Stock of ICO and are employees
of ICO. They hold 60,283, 116,361 and 1,403 shares of the Common Stock of ICO,
respectively.
CERTAIN CHANGE OF CONTROL MATTERS
10-3/8% Senior Notes Due 2007
Pacholder Associates, Inc., ("PAI") which is majority-owned by Dr.
Asher O. Pacholder, Sylvia A. Pacholder and William J. Morgan, may be deemed to
beneficially own the following 10-3/8% Senior Notes due 2007 of ICO (the "Senior
Notes"):
o $1,725,000 in face value owned by Pacholder High Yield
Fund, Inc. for which PAI may be deemed to possess
dispositive authority; and
o $2,275,000 in face value owned by three PAI clients for
which PAI may be deemed to possess dispositive
authority.
The indenture pursuant to which ICO's Senior Notes were issued contains
a number of covenants, including a change of control provision that requires ICO
to repurchase all of the Senior Notes at a repurchase price in cash equal to
101% of the principal amount of the Senior Notes upon the occurrence of a change
of control. A change of control is defined under the indenture as:
o the sale, lease or other disposition of all or
substantially all of the assets of ICO and its restricted
subsidiaries;
o the adoption of a plan relating to the liquidation or
dissolution of ICO;
o any person or group becoming the beneficial owner of more
than 50% of the total voting power of the voting stock of
ICO; or
o a majority of the members of the Board of Directors no
longer being continuing directors.
The indenture defines continuing directors as the members of the Board
of Directors on the date of the indenture and members that were nominated for
election or elected to
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the Board of Directors with the affirmative vote of a majority of the continuing
directors who were members of the Board at the time of such nomination or
election. The indenture also restricts certain mergers, consolidations or
dispositions of all or substantially all of ICO's assets.
$6.75 Convertible Exchangeable Preferred Stock
Pursuant to the Statement of Designation ("Statement of Designation")
Establishing $6.75 Convertible Preferred Exchangeable Stock (the "Preferred
Stock"), holders of Preferred Stock are entitled to special conversion rights
upon a change of control or a Fundamental Change (both of which are defined
below).
Upon a change of control, a holder of Preferred Stock is entitled to
convert all, but not less than all, of the holder's Preferred Stock into Common
Stock of ICO at the special conversion price, which is defined as the greater of
$5.17 and market value (as defined in the Statement of Definition). ICO may, at
its option, provide cash equal to the market value of the Common Stock
multiplied by the number of shares of Common Stock into which such shares of
Preferred Stock would have been convertible prior to the change of control in
lieu of providing Common Stock.
A change of control is deemed to have occurred under the Statement of
Designation in the event that any person or group of persons (within the meaning
of Section 13(d) of the Exchange Act) acquires beneficial ownership (as defined
in the Exchange Act) of 50% of the Common Stock of ICO. A change of control will
not be deemed to have occurred with respect to any transaction that constitutes
a Fundamental Change.
Upon the occurrence of a Fundamental Change, each holder of Preferred
Stock is entitled to convert all, but not less than all, of the holder's
Preferred Stock into the kind and amount of cash, securities, property or other
assets receivable upon such Fundamental Change by a holder of the number of
shares of Common Stock into which such shares of Preferred Stock would have been
convertible immediately prior to such Fundamental Change at the special
conversion price. ICO or a successor corporation, as the case may be, may, at
its option, provide cash equal to the market value of the Common Stock
multiplied by the number of shares of Common Stock into which such shares of
Preferred Stock would have been convertible prior to the change of control in
lieu of providing the consideration required above. Unless converted, Preferred
Stock which becomes convertible pursuant to a Fundamental Change will remain
convertible into the kind and amount of cash, securities, property or other
assets that a holder of the Preferred Stock would have owned immediately after
the Fundamental Change if the holders had converted the Preferred Stock
immediately before the effective date of the Fundamental Change.
A Fundamental Change means:
o the occurrence of any transaction or event in connection
with which all or substantially all of the Common Stock of
ICO is exchanged for, converted into or acquired for cash,
securities, or other property (whether by means of an
exchange offer, liquidation, tender offer, merger or
otherwise); or
o the conveyance, sale, lease, assignment, transfer or other
disposal of all or substantially all of ICO's property,
business or assets.
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A Fundamental Change will not be deemed to have occurred with respect to either
of the following transactions or events:
o any transaction or event in which more than 50% of the
consideration received by holders of Common Stock consists
of Marketable Stock (as defined below), or
o any consolidation or merger of ICO in which the holders of
Common Stock of ICO immediately prior to such
transaction own, directly or indirectly,
- 50% or more of the common stock of the sole
surviving corporation (or of the ultimate parent of
such sole surviving corporation) outstanding at the
time immediately after such consolidation or merger,
or
- securities representing 50% or more of the combined
voting power of the surviving corporation's voting
stock (or of voting stock of the ultimate parent of
such surviving corporation) outstanding at such
time.
All or substantially all means 66-2/3% or more of the aggregate outstanding
amount.
Marketable Stock means common stock of any corporation that is the
successor to all or substantially all of the business or assets of ICO as a
result of a Fundamental Change (or of the ultimate parent of such successor),
which is listed or quoted on a national securities exchange, the NASDAQ NMS or
any similar system of automated dissemination of quotations or securities prices
in the United States.
CERTAIN TRANSACTIONS
In connection with the April 30, 1996 merger of Wedco Technology, Inc.
("Wedco") into a wholly-owned subsidiary of ICO, 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.
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