|
|
Filed
by ICO, Inc.
Pursuant
to Rule 425 under the Securities Act of 1933 and deemed filed pursuant
Rule 14a-12 under the Securities Exchange Act of 1934
|
|
|
|
|
|
Subject
Company: ICO, Inc.
|
|
|
Commission
File No.: 001-08327
|
[Letter
to Non-Employee Directors with Both Stock Options and Restricted
Shares]
April 12,
2010
<Name>
<Location>
Dear
<Name>:
The
purpose of this letter is to notify you of the treatment of: (i) stock options
(“
Stock
Options
”) you hold to acquire shares of the common stock of ICO, Inc.
(“
ICO
”), and
(ii) unvested restricted shares of ICO’s common stock that you hold (“
Restricted Shares
”)
in connection with the merger (the “
Merger
”) of ICO into
a subsidiary of A. Schulman, Inc. (“
A.
Schulman
”). The Merger will occur upon the terms and subject
to the conditions contained in the Agreement and Plan of Merger by and among A.
Schulman, its subsidiary, and ICO, dated December 2, 2009 (the “
Merger
Agreement
”). This letter outlines choices you have with
respect to your Stock Options and provides, or directs you to, information
relevant to your decisions concerning your Stock Options.
|
I.
|
Background
Information
|
The
closing of the Merger is contingent on a number of events, including ICO
stockholder approval. The Merger will be considered at a special
meeting of ICO stockholders, currently anticipated to occur on April 28,
2010. Assuming all conditions to the completion of the Merger are
satisfied, we expect that the effective date of the Merger will be April 30,
2010.
If the
Merger is consummated, each holder of ICO common stock will generally be
entitled to a combination of cash and A. Schulman stock (the “
Merger
Consideration
”), as described in the Merger Agreement. As
described in more detail below, holders of Stock Options will be able to receive
the Merger Consideration if they exercise their
Stock
Options before the completion of the Merger, or, if the Stock Options are “in
the money,” they may receive a cash payment if they do not exercise their Stock
Options. Furthermore, unvested Restricted Shares held by directors of
ICO at the time of the completion of the Merger will vest at that time, and as a
result such directors will have unrestricted ownership of the ICO common stock
and, like all other shareholders of ICO, will be able to receive the Merger
Consideration.
|
II.
|
Treatment
of Your Stock Options in the
Merger
|
You
currently have the following Stock Options:
|
Date
of
Grant
|
#
of
Stock
Options
|
Exercise
Price
|
The
Merger Agreement provides as follows with respect to your Stock
Options:
|
|
·
|
You
may elect to exercise your Stock Options contingent upon the completion of
the Merger. If you do so, and if the Merger is completed, you
will receive, with respect to the ICO shares that you would receive upon
exercise of your Stock Options, the same consideration received in the
Merger by other ICO shareholders. All Stock Options that are
not exercised as of the effective time of the Merger will terminate by
their terms (but see below concerning a cash payment you will receive if
your Stock Options are “in the money” when they
terminate).
|
|
|
·
|
You
may elect not to exercise your Stock Options. In that event, if
the Merger is completed, your Stock Options will terminate by their terms,
and provided that your Stock Options are “in the money” (have an exercise
price that is less than the Merger Consideration), you will receive a cash
payment equal to the number of shares underlying the Stock Options
multiplied by the Merger Consideration Value, as defined in the Merger
Agreement, over the exercise price per share previously subject to the
Stock Options, reduced by any applicable taxes and other withholding (the
“
Cashout
Amount
”), as described in the Merger Agreement
1
.
|
1
NOTE: If the exercise price under your Stock Option is greater than
the merger consideration value, you will not receive any Cashout Amount with
respect to such Stock Option, and the Stock Option will
terminate.
|
III.
|
Your
Decisions Regarding Your Stock
Options
|
As
indicated above, under the Merger Agreement you have two basic alternatives with
respect to your Stock Options:
|
|
·
|
Alternative #1
:
Exercise your Stock Options contingent on the completion of the Merger,
and receive the Merger Consideration (subject to withholdings) for the
shares you receive upon such
exercise;
|
-
OR -
|
|
·
|
Alternative #2
:
Do not exercise your Stock Options, in which case you will receive the
Cashout Amount (subject to withholdings) on the completion of the Merger
(provided that your Stock Options are “in the
money”).
|
YOU MUST make your decision
by April 26, 2010. YOU MUST indicate your choice on the form attached
as
Exhibit
A
, and return
the executed form by
April 26,
2010
to Kathy
Barnett / kbarnett@icopolymers.com or facsimile +1 (713)
335-2222.
If you
choose Alternative #1, you will have three options to fund the exercise price
and related tax withholding requirements, if any. For the first
funding option, you must provide, by April 27, 2010, to ICO, the funds needed to
cover the exercise price relating to the exercise of your Stock
Options.
The
second and third funding options available to you if you choose Alternative #1
involve applying the cash portion of the Merger Consideration against the
exercise price. For the second funding option, if there is a
shortfall, we will notify you of the remaining amounts due and you must furnish
the Company with a check within 5 days after the date of our notice to you
regarding the shortfall amount. If we do not receive your check by
the due date, your Stock Options for which we have not received the exercise
price will terminate and you will not receive any consideration for such Stock
Options.
For the
third funding option available to you if you choose Alternative #1, if there is
a shortfall after the cash portion of the Merger Consideration is applied
against the exercise price, you may elect to fund the remaining amounts due from
a sale of a portion of the A. Schulman shares received as a part of the Merger
Consideration. If you elect this approach, you must establish a
brokerage account to settle the shortfall amount within 5 days after the date of
our notice to you regarding the shortfall amount. If the shortfall
amount is not settled by the due date, your Stock Options for which we have not
received the exercise price will terminate and you will not receive any
consideration for such Stock Options.
If you
choose Alternative #2 (receive the Cashout Amount), you will not need to take
any further action (other than executing and returning
Exhibit A
as
instructed). You will receive a check shortly after the completion of
the Merger.
Please
note that Company will not withhold taxes on your earnings related to your Stock
Options (whether you select Alternative #1 or #2), as you are directly
responsible for payment of such taxes.
|
IV.
|
Treatment
of Your Unvested Restricted Shares in the
Merger
|
You
currently have the following unvested Restricted Shares:
|
Date
of Grant
|
#
of Unvested Restricted Shares
|
|
|
|
The
Merger Agreement provides that all unvested Restricted Shares outstanding
immediately before the effective time of the Merger will become vested and no
longer subject to restrictions at the effective time of the
Merger. As a result, such Restricted Shares shall be treated like ICO
common stock generally, entitled to receive the Merger
Consideration.
In the
U.S., the vesting of your unvested Restricted Shares will generally cause you to
recognize taxable income for purposes of federal and state income and employment
taxes. As with taxes on your earnings related to your Stock
Options, the Company will not withhold taxes, as you are directly responsible
for the payment of such taxes.
Following
the effective time of the merger, you will be receiving correspondence directly
from A. Schulman’s transfer agent, advising the manner in which you may transfer
your shares of A. Schulman common stock into a brokerage account of your
choice.
|
V.
|
Additional
Information
|
Please
contact Dana Bain (dbain@icopolymers.com) / +1 (713) 351-4180 and/or Kathy
Barnett (kbarnett@icopolymers.com) / +1 (713) 351-4149 for additional
information.
|
|
Sincerely,
|
|
|
|
|
|
|
|
|
Bradley
T. Leuschner
|
|
|
Chief
Financial Officer & Treasurer
|
|
|
ICO,
Inc.
|
“Safe Harbor” Statement
under the Private Securities Litigation Reform Act of 1995
A number
of the matters discussed in this document that are not historical or current
facts deal with potential future circumstances and developments, in particular,
information regarding expected synergies resulting from the merger of A.
Schulman and ICO, combined operating and financial data, the combined company’s
plans, objectives, expectations and intentions and whether and when the
transactions contemplated by the merger agreement will be
consummated. The discussion of such matters is qualified by the
inherent risks and uncertainties surrounding future expectations generally, and
also may materially differ from actual future experience involving any one or
more of such matters. Such risks and uncertainties
include: the risk that the businesses will not be integrated
successfully; the risk that the cost savings and any other synergies from the
transaction may not be fully realized or may take longer to realize than
expected; disruption from the transaction making it more difficult to maintain
relationships with customers, employees or suppliers; the failure to obtain
governmental approvals of the transaction on the proposed terms and schedule,
and any conditions imposed on the combined company in connection with
consummation of the merger; the failure to obtain approval of the merger by the
stockholders of ICO and the failure to satisfy various other conditions to the
closing of the merger contemplated by the merger agreement; and the risks that
are described from time to time in A. Schulman’s and ICO’s respective reports
filed with the SEC, including A. Schulman’s annual report on Form 10-K for the
year ended August 31, 2009, and quarterly report on Form 10-Q for the quarter
ended November 30, 2009 and ICO’s annual report on Form 10-K for the year ended
September 30, 2009, as amended on January 28, 2010, and quarterly report on Form
10-Q for the quarter ended December 31, 2009, in each case, as such reports may
have been amended. This document speaks only as of its date, and A.
Schulman and ICO each disclaims any duty to update the information
herein.
Additional Information and
Where to Find It
In
connection with the proposed transaction, A. Schulman has filed a Registration
Statement on Form S-4 with the SEC (Reg. No. 333-164085) containing a
preliminary proxy statement/prospectus regarding the proposed merger.
SHAREHOLDERS OF ICO ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/
PROSPECTUS THAT IS PART OF THE REGISTRATION STATEMENT, BECAUSE THEY CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final proxy
statement/prospectus will be mailed to stockholders of
ICO. Investors and security holders will be able to obtain the
documents free of charge at the SEC’s web site, www.sec.gov, from A. Schulman,
Inc. at its web site, www.aschulman.com, or from ICO, Inc. at its web site,
www.icopolymers.com, or 1811 Bering Drive, Suite 200, Houston, Texas, 77057,
attention: Corporate Secretary.
This
communication shall not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction.
Participants in
Solicitation
A.
Schulman and ICO and their respective directors and executive officers, other
members of management and employees and the proposed directors and executive
officers of the combined company, may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction. Information
concerning the proposed directors and executive officers of the combined
company, A. Schulman’s and ICO’s respective directors and executive officers and
other participants in the proxy solicitation, including a description of their
interests, is included in the proxy statement/prospectus contained in the
above-referenced Registration Statement on Form S-4.
Exhibit
A
STOCK
OPTION ELECTION
Date:
_______________, 2010
ICO,
Inc.
1811
Bering Drive, Suite 200
Houston,
Texas 77057
Attention: Kathy
Barnett / kbarnett@icopolymers.com
I have
read and understand the letter to me dated April 12, 2010, to which this
Election form is attached, regarding my Stock Options (as defined in the letter;
other terms in this Election form are defined in the letter). I
hereby elect as follows:
p
Alternative
#1
: By
checking Alternative #1, I hereby exercise my Stock Options contingent on the
completion of the Merger, and will receive the Merger Consideration for the
shares I receive upon such exercise. In addition, I elect the
following funding option to cover the costs relating to my exercise of my Stock
Options:
p
Funding Option 1
: I
elect to provide, by April 27, 2010, to ICO, the funds needed to cover (the
exercise price relating to the exercise of my Stock Options.
p
Funding Option 2
: I
elect to apply the cash portion of the Merger Consideration against the exercise
price. If there is a shortfall, I will provide a check for such
shortfall within 5 days after the date of ICO’s notice to me regarding the
shortfall amount.
p
Funding Option 3
: I
elect to apply the cash portion of the Merger Consideration against the exercise
price. If there is a shortfall, I elect to fund the remaining amounts
due from a sale of a portion of the A. Schulman shares received as a part of the
Merger Consideration, and will have established a brokerage account to settle
the shortfall amount within 5 days after the date of ICO’s notice to me
regarding the shortfall amount.
p
Alternative
#2
: By
checking Alternative #2, I elect not to exercise my Stock Options, and will
receive the Cashout Amount upon completion of the Merger (if the merger
consideration value exceeds the exercise price under my Stock
Options).
|
|
|
|
|
Printed
Name of Optionee
|
|
|
|
|
|
|
|
|
Signature
- Optionee
|
|
|
|
|
|
Address:
___________________________
|
|
|
|
|
|
|
|
|
|
|
|
Social
Security No. :
|
|
|
|
|
|
|
You must return an executed
electronic (PDF) copy of this letter, on or before April 26, 2010, to
kbarnett@icopolymers.com. Alternatively you may fax it to Kathy
Barnett, facsimile number +1 (713) 335-2222.
7