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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
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Subject
Company: ICO, Inc.
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Commission
File No.: 001-08327
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[Letter
to Employees with Restricted Shares]
[Date]
[Restricted
Shareholder Name]
[Restricted
Shareholder Address]
[City,
State Zip]
Dear
[Restricted Shareholder]:
The
purpose of this letter is to notify you of the treatment of the unvested
restricted shares of the common stock of ICO, Inc. (“
ICO
”) 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 the treatment of your
Restricted Shares and provides, or directs you to, information relevant to the
treatment of your Restricted Shares.
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I.
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Background
Information
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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, unvested Restricted Shares held by employees of
ICO at the time of the completion of the Merger will vest at that
time. As a result, those employees will have unrestricted ownership
of the ICO common stock and, like all other shareholders of ICO, will be able to
receive the Merger Consideration. However, the lapse of the
restrictions on the unvested Restricted Shares will produce taxable compensation
income for the employees, so their receipt of the Merger Consideration will be
subject to the satisfaction of any required withholding of federal, state, local
or foreign taxes.
In
connection with the Merger, on March 29, 2010, a Rule 424(b)(3) Prospectus,
containing the proxy statement for ICO’s April 28, 2010 stockholder meeting
and other materials (the “
Proxy Statement
”) was
filed by A. Schulman with the Securities and Exchange Commission (“
SEC
”). The
Proxy Statement is currently available free of charge on the SEC’s website,
www.sec.gov
. You
are urged to read the Proxy Statement in its entirety because this document
contains important information about the Merger and the Merger Consideration
payable pursuant to the Merger Agreement. If you have trouble
accessing this document on the SEC’s website, please contact Charlotte Ewart
(cewart@icopolymers.com) or Ian Chin (ichin@icopolymers.com) in ICO’s legal
department, and they will send you a link to the document.
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II.
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Treatment
of Your Unvested Restricted Shares in the
Merger
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You
currently have the following unvested Restricted Shares:
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Date
of Grant
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#
of Unvested Restricted Shares
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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, subject to tax withholding. The tax withholding requirements
need to be satisfied before you will receive the Merger Consideration
attributable to your Restricted Shares.
You have
three options to fund the tax withholding requirements with respect to the
vesting of your unvested Restricted Shares. For the first funding
option, you must provide,
by
April 27, 2010,
to ICO, the
funds needed to cover the estimated income tax and employment tax that must be
withheld in connection with the vesting of your unvested Restricted
Shares. After the effective date of the Merger, we will determine the
exact amount of income tax and employment tax withholdings, and may apply the
cash portion of the Merger Consideration against any remaining tax withholding
requirements. Any shortfall will require you to provide a check for
any remaining amount by no later than 5 days after the completion of the
Merger.
The
second funding option available to you is to apply the cash portion of the
Merger Consideration against the amount of income tax and employment tax that
must be withheld at the time of the vesting of your unvested Restricted
Shares. If there is a shortfall, we will notify you of the remaining
amounts due, and your check will then be required within 5 days after the date
of our notice to you regarding the shortfall amount.
The third
funding option available to you is to apply the cash portion of the Merger
Consideration against the amount of income tax and employment tax that must be
withheld at the time of the vesting of your unvested Restricted
Shares. If there is a shortfall, we will notify you of the remaining
amounts due, and 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.
YOU MUST make your decision
by
April 23,
2010
. YOU MUST
indicate your choice on the form attached as
Exhibit
A
, and return
the executed form by
April 23,
2010
to Kathy
Barnett / kbarnett@icopolymers.com or facsimile +1 (713)
335-2222.
In addition, if you are not a
U.S. employee (i.e. if you are employed by one of ICO’s business units outside
of the United States), you must execute the enclosed W-8BEN form and return it
to Kathy Barnett by April 23, 2010, along with
Exhibit
A
. If
you fail to do so then ICO will be required to withhold U.S. federal taxes at
the highest tax rate.
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IV.
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Brief
Summary of U.S. Tax
Consequences
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The following is a very brief
summary of certain U.S. tax rules that will apply to the vesting of your
unvested Restricted Shares. The discussion is general in nature and
does not take into account a number of considerations that may apply to your
particular circumstances. This summary is not intended to be, nor
should it be construed as being, legal or tax advice.
As a
result, you should consult your own legal, financial and tax advisors regarding
your individual circumstances with respect to tax
consequences
.
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·
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The
vesting of the unvested Restricted Shares will be treated as ordinary
income, subject to applicable federal income taxes and payroll tax
(including, among other things, Social Security (6.2%) for amounts up to
the Social Security limit, and Medicare
(1.45%)).
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·
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We
will be required to withhold the amounts with respect to both federal
income tax withholding and payroll
taxes.
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V.
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Foreign
Restricted Share Holders
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Restricted Share
holders who are not U.S. citizens or U.S. taxpayers should consult their own
local tax advisors regarding such holder’s individual circumstances with respect
to foreign tax consequences
.
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VI.
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Additional
Information
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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.
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Sincerely,
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Bradley
T. Leuschner
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Chief
Financial Officer & Treasurer
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ICO,
Inc.
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“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
RESTRICTED
SHARE 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 unvested Restricted Shares (as defined
in the letter; other terms in this Election form are defined in the
letter). I hereby elect as follows:
p
Funding Option 1
: I
elect to provide, by April 27, 2020, to ICO, the funds needed to cover the
estimated income tax and employment tax that must be withheld in connection with
the vesting of those unvested Restricted Shares.
p
Funding Option 2
: I
elect to apply the cash portion of the Merger Consideration against the amount
of income tax and employment tax that must be withheld at the time of the
vesting of those unvested Restricted Shares. 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 amount
of income tax and employment tax that must be withheld at the time of the
vesting of those unvested Restricted Shares. 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.
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Printed
Name of Restricted Shareholder
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Signature
- Restricted Shareholder
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Address:
___________________________
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U.S.
Social Security No. (if applicable):
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You must return an executed
electronic (PDF) copy of this letter, on or before April 23, 2010, to
kbarnett@icopolymers.com. Alternatively you may fax it to Kathy
Barnett, facsimile number +1 (713) 335-2222.
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