Document:

exhibit10-1.htm

     
      
        

      

    

    2008
      EQUITY INCENTIVE PLAN

    FOR
      NON-EMPLOYEE DIRECTORS

    OF

    ICO,
      INC.

    

    [Amending
      and Restating the Fourth Amended and Restated

    1993
      Stock Option Plan for Non-employee Directors of ICO, Inc.]

    

     

    This
      2008
      Equity Incentive Plan for Non-employee Directors of ICO, Inc. has been adopted
      by the Board of Directors of the Company, effective on January 23, 2008, subject
      to approval by the stockholders of the Company no later than twelve months
      thereafter.

     

    ARTICLE
      I

     

    Purpose

     

    The
      purpose of this Plan is to advance the interests of 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.

     

    ARTICLE
      II

     

    Definitions

     

    2.1           
      Definitions. For
      purposes of this
      Plan the following capitalized terms shall have the definition that is
      attributed to them, unless another definition is clearly indicated by a
      particular usage and context:

     

    
      	
               

            	
              (a)

            	
              “Affiliate”
                shall mean, except to the extent otherwise not permitted under Code
                Section 424(f), any one or more corporations which are members of
                a
                “parent-subsidiary controlled group” as such term is defined in Code
                Section 1563(a)(1), except that “at least 50 percent” shall be substituted
                for “at least 80 percent” each place it appears in Code Section
                1563(a)(1). 

            

    

     

    
      	
               

            	
              (b)

            	
              “Award”
                shall mean any form of award authorized and granted under this Plan,
                whether singly or in combination, pursuant to the terms, conditions,
                restrictions and/or limitations (if any) the Committee may
                establish.  Awards granted under this Plan may include:
                

            

    

     

    
      	
               

            	
              (i)

            	
              Options;
                and 

            

    

     

    
      	
               

            	
              (ii)

            	
              Restricted
                Shares. 

            

    

     

    
      	
               

            	
              (c)

            	
              “Award
                Agreement” shall mean an agreement between an Eligible Person and the
                Company evidencing an Award including, without limitation, an Option
                Agreement and/or a Restricted Stock Agreement.

            

    

     

    
      	
               

            	
              (d)

            	
              “Board”
                shall mean the Board of Directors of the Company.
                

            

    

     

    
      	
               

            	
              (e)

            	
              ”Change
                of Control” shall have the meaning ascribed to it in Section 9.3.
                

            

    

     

    
      	
               

            	
              (f)

            	
              “Code”
                shall mean the Internal Revenue Code of 1986, as amended.
                

            

    

     

    
      	
               

            	
              (g)

            	
              “Committee”
                shall mean the Board. 

            

    

     

    
      	
               

            	
              (h)

            	
              “Company”
                shall mean ICO, Inc. 

            

    

     

    
      	
               

            	
              (i)

            	
              “Date
                of Grant” shall mean the date when a grant of an Award is effective,
                which, unless otherwise provided in this Plan, shall be designated
                by the
                Committee at the time it makes an Award, and shall be either the
                date when
                the Award is made or a date in the future specified by the Committee.
                

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              (j)

            	
              “Director”
                shall mean a member of the Board. 

            

    

     

    
      	
               

            	
              (k)

            	
              “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.
                

            

    

     

    
      	
               

            	
              (l)

            	
              “Fair
                Market Value” of a Share on a specified date shall mean the last sale
                price reported on the NASDAQ Global MarketTM (“NASDAQ”) on the specified
                date, or if Shares are no longer traded on the NASDAQ, the last sales
                price of the Shares reported on any other stock exchange or
                over-the-counter trading system on which the Shares are trading on
                the
                specified date.   If no sale has been made on a specified
                date, then the Fair Market Value of the Shares shall be the last
                sales
                price on the last preceding date on which any sales of Shares were
                made on
                the NASDAQ or other applicable stock exchange or over-the-counter
                trading
                system. 

            

    

     

    
      	
               

            	
              (m)

            	
              “Minimum
                Restricted Period” shall have the meaning ascribed to it in Section 7.3.
                

            

    

     

    
      	
               

            	
              (n)

            	
              “Nonqualified
                Stock Option” shall mean an Option granted under this Plan that is not an
                incentive stock option as defined in Section 422A of the Code.
                

            

    

     

    
      	
               

            	
              (o)

            	
              “Option”
                shall mean the right to purchase a stated number of Shares at a specified
                price.  An Option may be granted to an Eligible Person subject
                to the terms of this Plan, and such other conditions and restrictions
                as
                the Committee deems appropriate. 

            

    

     

    
      	
               

            	
              (p)

            	
              “Option
                Expiration Date” shall mean the last day of the term of an Option, i.e.
                the last date when an Option may be exercised.

            

    

     

    
      	
               

            	
              (q)

            	
              “Option
                Price” shall mean the purchase price per Share subject to an Option and,
                unless otherwise provided in this Plan, 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. 

            

    

     

    
      	
               

            	
              (r)

            	
              “Optionee”
                shall mean a person to whom an 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. 

            

    

     

    
      	
               

            	
              (s)

            	
              “Performance
                Measures” shall have
                the
                meaning ascribed to it in Section 3.3.

            

    

     

    
      	
               

            	
              (t)

            	
              “Performance
                Period” shall have the meaning ascribed to it in Section 3.3.
                

            

    

     

    
      	
               

            	
              (u)

            	
              “Permanent
                Disability” shall mean any medically determinable physical or mental
                impairment rendering an individual unable to engage in any substantial
                gainful activity, which disability can be expected to result in death
                or
                which has lasted or can be expected to last for a continuous period
                of not
                less than twelve months. 

            

    

     

    
      	
               

            	
              (v)

            	
              “Plan”
                shall mean this 2008 Equity Incentive Plan for Non-employee Directors
                of
                ICO, Inc., which is a restatement of the previously adopted Fourth
                Amended
                and Restated 1993 Stock Option Plan for Non-employee Directors of
                ICO,
                Inc. 

            

    

     

    
      	
               

            	
              (w)

            	
              “Restricted
                Period” shall
                have the meaning ascribed to it in Section 7.1.

            

    

     

    
      	
               

            	
              (x)

            	
              “Restricted
                Shares” shall have the meaning ascribed to it in Section 7.1.
                

            

    

     

    
      	
               

            	
              (y)

            	
              “Rule
                16b-3” shall mean Rule 16b-3 promulgated under the Securities and Exchange
                Act of 1934, as amended. 

            

    

     

    
      	
               

            	
              (z)

            	
              “Share(s)”
                shall mean a share or shares of the common stock, no par value, of
                the
                Company. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	
               

            	
              (aa)

            	
              “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 Award, each of the corporations other than the last corporation
                in
                the unbroken chain owns stock possessing more than 50 percent of
                the total
                combined voting power of all classes of stock in one of the other
                corporations in such chain. 

            

    

     

    
      	
               

            	
              (bb)

            	
              “Termination
                of Service” shall mean the cessation of the Eligible Person’s relationship
                with the Company as a director. 

            

    

     

    
      	
               

            	
              (cc)

            	
              “Vesting
                Period” shall mean the continuous period of service on the Board required
                for an Award of Options or Restricted Shares to become fully earned.
                

            

    

     

    ARTICLE
      III

     

    Administration

     

    
      	
              3.1

            	
              Administration.  The
                Plan shall be administered by the Committee.  Actions shall be
                taken by a majority of the Committee members.

            

    

     

    
      	
              3.2

            	
              Interpretation.  Except
                as specifically limited by the provisions of this Plan, the Committee
                in
                its discretion shall have the authority to interpret the provisions
                of
                this Plan and decide all questions of fact arising in its application.
                

            

    

    

    
      	
              3.3

            	
              Awards
                Contingent on
                Performance.  The Committee may grant Awards contingent
                upon the achievement of performance or other objectives (“Performance
                Measures”) during a specified period (“Performance
                Period”).  Except as specifically limited by the provisions of
                this Plan, the Committee in its discretion shall have the authority
                to
                determine the Performance Period and Performance Measures, if any,
                applicable to an Award, and the Performance Period and Performance
                Measures shall be set forth in the Award Agreement.  If an Award
                is subject to Performance Measures, the number of Options that vest,
                or
                the number of Restricted Shares earned will be contingent on the
                degree to
                which the Performance Measures established at the time of the initial
                Award are satisfied or achieved, in the sole discretion of the
                Committee.  The Committee shall have the sole discretion to
                revise the Performance Measures or Performance Period to reflect
                significant events or changes that occurred during the Performance
                Period.
                

            

    

     

    
      	
              3.4

            	
              Final
                and Binding
                Decisions.  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 Awards.
                

            

    

     

    
      	
              3.5

            	
              Limitation
                of Liability;
                Indemnification.  No member of the Committee shall be
                liable for any action or determination taken or made in good faith
                with
                respect to this Plan or any Award granted hereunder, and to the extent
                permitted by law, all members shall be indemnified by the Company
                for any
                liability and expenses that may occur through any claim or cause
                of
                action. 

            

    

     

    ARTICLE
      IV

     

    Shares
      Subject to
      Plan

     

    The
      maximum number of Shares that may be made subject to Awards granted under this
      Plan shall not exceed FOUR HUNDRED TEN THOUSAND (410,000) 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.  To the
      extent permitted under Rule 16b-3, upon lapse or termination of any Award for
      any reason without being completely exercised, the Shares that were subject
      to
      such Award may again be subject to other Awards.  The maximum number
      of shares which may be subject to Awards granted under this Plan is subject
      to
      adjustment as provided in Article IX hereof with respect to the Shares subject
      to Awards then outstanding.  Exercise of an Award granted under this
      Plan in any manner shall result in a decrease in the number of Shares which
      may
      thereafter be available, both for purposes of this Plan and for sale to any
      one
      individual, by the number of Shares as to which the Award is
      exercised.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Separate
      stock certificates may be, but are not required to be, issued by the Company
      for
      those Shares acquired pursuant to the exercise of a Nonqualified Stock Option
      or
      upon the satisfaction of the applicable Vesting Period and/or Performance
      Measures under an Award of Restricted Shares. Any Option granted hereunder
      shall
      be a Nonqualified Stock Option.

     

    ARTICLE
      V

     

    Award
      Agreements

     

    
      	
              5.1

            	
              Award
                Agreements.  All Awards granted under this Plan shall be
                evidenced by a written Award Agreement in such form or forms as the
                Committee in its sole discretion may determine.

            

    

     

    
      	
              5.2

            	
              Consent
                of Eligible
                Person. Each Eligible Person, by acceptance of an Award under this
                Plan, shall be deemed to have consented to be bound, on the Eligible
                Person’s own behalf and on the behalf of the Eligible Person’s heirs,
                assigns and legal representatives, by all terms and conditions of
                this
                Plan, as amended from time to time.

            

    

     

    ARTICLE
      VI

     

    Stock
      Option
      Awards

     

    
      	
              6.1

            	
              Option
                Expiration
                Dates.  Subject to the provisions regarding Termination
                of Awards in Article VIII herein, each Option shall be for a term
                of from
                one to ten years from the Date of Grant.  In the event that the
                Option Expiration Date is not specified in the Option Award Agreement,
                it
                shall be ten years from the Date of Grant.

            

    

     

    
      	
              6.2

            	
              Revisions
                to Option
                Awards.  The Committee, subject to the Eligible Person’s
                approval, on or after the Date of Grant, may establish different
                exercise
                schedules and impose other conditions upon exercise and vesting for
                any
                particular Option or groups of Options.

            

    

     

    
      	
              6.3

            	
              Option
                Price.  The Option Price per Share of any grant of
                Options under this Plan shall be not less than 100% of the Fair Market
                Value per Share on the Date of Grant.

            

    

     

    
      	
              6.4

            	
              Exercise
                of
                Options.  Any person entitled to exercise an Option in
                whole or in part may do so by delivering 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 Date of Grant of the
                Option
                being exercised, and shall be accompanied by full payment of the
                Option
                Price for the Shares being purchased.

            

    

     

    6.5           
      Payment of Option
      Price

     

    
      	
               

            	
              (a)

            	
              Payment
                of Option Price may be made in cash, by wire transfer, by broker-assisted
                cashless exercise (in accordance with the Company’s current procedures for
                broker-assisted cashless exercise), by the tender of Shares, or any
                combination thereof, or in such other form as may be determined by
                the
                Committee.  Shares tendered for payment of the Option Price
                shall be valued at their Fair Market Value on the Date of Exercise.
                

            

    

     

    
      	
               

            	
              (b)

            	
              Payment
                through tender of Shares may be made by instruction from the Eligible
                Person 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 the portion thereof being exercised.
                

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      VII

     

    Restricted
      Share
      Awards

     

    

    
      	
              7.1

            	
              Certain
                Definitions.  “Restricted Shares” are Awards consisting
                of grants of Shares to Eligible Persons, the vesting of which are
                subject
                to a Vesting Period and/or Performance Measures established by the
                Committee.  The period when any Restricted Shares have not yet
                been earned because the Vesting Period and/or Performance Measures
                have
                not been satisfied is referred to herein as the “Restricted Period.”
                

            

    

     

    
      	
              7.2

            	
              Awards
                of Restricted
                Shares.  The Committee shall designate the Eligible
                Persons to whom Restricted Shares are to be awarded and the number
                of
                Shares that are subject to the Award.  Restricted Shares may be
                granted to the same Eligible Person on more than one
                occasion.  Restricted Shares may be granted under this Section
                7.2 even if the Eligible Person receives a grant of Options under
                Article
                VI hereof. 

            

    

     

    
      	
              7.3

            	
              Terms
                and
                Conditions.  Grants of Restricted Shares awarded to
                Eligible Persons under this Plan shall be subject to the following
                terms
                and conditions and to such other terms and conditions, not inconsistent
                with this Plan, as shall be prescribed by the Committee in its sole
                discretion and as shall be contained in the Restricted Share Agreement:
                

            

    

     

    
      	
               

            	
              (a)

            	
              Restricted
                Shares awarded to Eligible Persons may not be sold, assigned, transferred,
                pledged or otherwise encumbered, except as provided otherwise herein,
                during the Restricted Period applicable to each Award.
                

            

    

     

    
      	
               

            	
              (b)

            	
              The
                Restricted Period of Restricted Shares granted under this Plan shall
                be
                ten years or such shorter period as the Committee may determine at
                the
                time of the Award of such Restricted Shares. Under no circumstances
                shall
                the Restricted Period be less than six months (“Minimum Restricted
                Period”); provided, however, that the vesting of any Restricted Shares may
                be accelerated to occur prior to the end of the Minimum Restricted
                Period
                pursuant to the provisions of Sections 8.2 or 9.3 below.
                

            

    

     

    
      	
               

            	
              (c)

            	
              (Except
                for the restrictions described in the preceding paragraph, and as
                otherwise provided in a Restricted Share Agreement, during the Restricted
                Period the Eligible Person as holder of such Restricted Shares shall
                have
                all the rights of a stockholder, including but not limited to:
                

            

    

     

    
      	
               

            	
              (i)

            	
              the
                right to vote such Restricted Shares, and

            

    

     

    
      	
               

            	
              (ii)

            	
              the
                right to receive all dividends paid on such Restricted Shares.
                

            

    

     

    
      	
               

            	
              (d)

            	
              The
                Committee may, subject to the Eligible Person’s approval, at any time
                after the date of an Award of Restricted Shares, adjust the length
                of any
                applicable Vesting Period or Performance Period to account for individual
                circumstances of an Eligible Person or group of Eligible Persons.
                

            

    

     

    
      	
               

            	
              (e)

            	
              Each
                certificate issued or book entry made in respect of Restricted Shares
                awarded under this Plan shall be registered in the name of the Eligible
                Person and, at the discretion of the Committee, until the conclusion
                of
                the Restricted Period each such certificate may be deposited in a
                bank or
                alternative location designated by the Committee. Each such certificate
                shall bear the following (or a similar) legend:

            

    

     

    “The
      transferability of this certificate and the shares of stock represented hereby
      are subject to the terms and conditions (including forfeiture) contained in
      the
      2008 Equity Incentive Plan for Non-employee Directors of ICO, Inc. [as amended
      from time to time] and an agreement entered into between the registered
      stockholder and ICO, Inc.  A copy of such plan and agreement is on
      file in the office of the Secretary of ICO, Inc., 1811 Bering Drive, Suite
      200,
      Houston, Texas 77057 [or current ICO, Inc. address].”

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              (f)

            	
              At
                the end of the Vesting Period applicable to a Restricted Share Award
                (that
                is not subject to Performance Measures), certificates issued in respect
                to
                such Restricted Shares will be transferred free of all restrictions
                to the
                Eligible Person (or the Eligible Person’s successors) and all restrictions
                will be removed from an Eligible Person’s (or the Eligible Person’s
                successors) book entry(ies) representing such Restricted Shares,
                as
                applicable. At the end of the Performance Period applicable to a
                Restricted Share Award, the Committee shall determine the number
                of
                Restricted Shares that have been earned in accordance with the provisions
                of Section 3.3 above; provided that the Vesting Period, if any, has
                been
                satisfied, certificates issued in respect to such Restricted Shares
                will
                be transferred free of all restrictions to the Eligible Person (or
                the
                Eligible Person’s successors) and all restrictions will be removed from an
                Eligible Person’s (or the Eligible Person’s successors) book entry(ies)
                representing such Restricted Shares, as applicable; and any Restricted
                Shares that are not earned because of failure to satisfy applicable
                Performance Measures shall be forfeited.

            

    

     

    ARTICLE
      VIII

     

    Termination
      of
      Awards

     

    
      	
              8.1

            	
              Termination
                During Service as
                a Director.  During an Eligible Person’s period of
                continuous service as a director of the Company, an Award of Options
                or
                Restricted Shares will be terminated only if it (a) has been fully
                exercised or earned, (b) has not vested due to a failure to satisfy
                any
                Performance Measures or other terms of grant or (c) has expired or
                been
                forfeited by its terms. 

            

    

     

    
      	
              8.2

            	
              Termination
                of Service.
                

            

    

     

    
      	
               

            	
              (a)

            	
              Options.
                

            

    

     

    (1)           
      Unless an Option Award Agreement provides otherwise, upon Termination of Service
      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 of Service or (ii) the Option
      Expiration Date set forth in the Award Agreement pursuant to which the award
      was
      granted. The portion of any Option Award not exercisable will terminate on
      the
      date of Termination of Service.

     

    (2)           
      Notwithstanding the preceding paragraph, if an Eligible Person holding an Option
      dies or becomes subject to Permanent Disability while serving as a director
      of
      the Company or within three months after Termination of Service, 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 decent and distribution until the earlier
      of (i) the date which is one year after the date of such death or occurrence
      of
      Permanent Disability or (ii) the Option Expiration Date set forth in the Award
      Agreement.

     

    (3)           
      The Committee may at any time prior to the three months after the date of
      Termination of Service 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 Service until the Option Expiration Date set forth in the Award
      Agreement or any date prior thereto.

     

    (4)           
      Except as provided in Article IX hereof, in no event will the continuation
      of
      the term of an Option beyond the date of Termination of Service allow the
      Eligible Person, or the Eligible Person’s beneficiaries or heirs, to accrue
      additional rights under this Plan, or to purchase more Shares through the
      exercise of an Option that could have been purchased on the date of Termination
      of Service.  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.

     

    
      	
               

            	
              (b)

            	
              Restricted
                Shares.  Except as otherwise determined by the Committee
                in its sole discretion, or as otherwise permitted herein, an Eligible
                Person who ceases to be a Director of the Company prior to the end
                of the
                Vesting Period applicable to a Restricted Share Award for any reason
                shall
                forfeit all Restricted Shares remaining subject to such outstanding
                Restricted Share Award. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (c)

            	
              Termination
                due to
                Death or Permanent Disability – Awards Subject to Performance
                Measures.  In the event that an Eligible Person who holds
                Options or Restricted Shares conditioned upon Performance Measures
                ceases
                to be a Director because of death or because the Eligible Person
                becomes
                subject to a Permanent Disability, and the Performance Period has
                not
                ended at the time of such termination due to death or Permanent
                Disability, the Committee shall have sole discretion to determine
                whether
                all or any portion of the Award that is subject to Performance Measures
                will be deemed earned. 

            

    

     

    ARTICLE
      IX

     

    Adjustments
      to Awards due to
      Changed Circumstances

     

    
      	
              9.1

            	
              Recapitalizations.  In
                the event of changes in the issued and outstanding Shares of the
                Company
                as a result of stock dividends, split-ups, recapitalizations, combinations
                of Shares, exchanges of Shares or related transactions, (a) the maximum
                number of Shares subject to Award under this Plan as provided in
                Article
                IV hereof shall be adjusted accordingly so that the same proportion
                of the
                Company’s issued and outstanding Shares shall continue to be subject to
                being so awarded and (b) the number and class of Shares and price
                per
                Share for each outstanding Award of Options or Restricted Shares
                shall be
                correspondingly adjusted by the Committee.

            

    

     

    
      	
              9.2

            	
              Distributions
                to Shareholders
                and Other Adjustments.  The Committee shall make
                appropriate adjustments in the Option Price of any outstanding Award
                of
                Options to reflect any spin-off of assets, extraordinary dividends
                or
                other distributions to shareholders.

            

    

     

    
      	
              9.3

            	
              Change
                of
                Control.  In event that the Company shall, pursuant to
                action by its Board, at any time propose to merge into, consolidate
                with,
                or sell or transfer substantially all of its assets, or otherwise
                enter in
                to a transaction pursuant to which the Company is not the surviving
                corporation (other than a corporate restructuring among Company
                Affiliates), or in which the outstanding Shares of the Company are
                converted to cash, other securities or other property (any such
                circumstances referred to herein as a “Change of Control”) and provision
                is not made pursuant to the terms of the transaction(s) relating
                to such
                Change of Control (the “Transaction”) for the assumption by the surviving,
                resulting or acquiring corporation of any outstanding category of
                Awards
                under this Plan, or for the substitution of new Awards therefor,
                with
                regard for Awards for which no provision is made the following shall
                apply: 

            

    

     

    
      	
               

            	
              (a)

            	
              Options.
                The
                Committee shall cause written notice of the proposed Transaction
                to be
                given to each Option holder not more than twenty days prior to the
                anticipated effective date of the proposed Transaction, and the holder’s
                Option, unless otherwise provided for under the terms of the applicable
                Award Agreement, 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
                Option
                holder shall have the right to exercise his or her Option to purchase
                any
                or all Shares then subject to such Option (unless otherwise provided
                under
                the terms of the applicable Award Agreement), including those, if
                any,
                which by reason of other provisions of this Plan have not then become
                available for purchase. Each Option holder, by so notifying the Company
                in
                writing, may, in exercising his or her Option, condition such exercise
                upon, and provide that such exercise shall become effective at the
                time
                of, but immediately prior to, the consummation of the proposed
                Transaction, in which event such Option holder 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 Option holder that the
                proposed Transaction has been consummated. If the proposed 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 the proposed Transaction. If the proposed 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 this 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. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (b)

            	
              Restricted
                Shares. The Committee shall cause written notice of the proposed
                Transaction to be given to each holder of Restricted Shares not more
                than
                twenty days prior to the anticipated effective date of the proposed
                Transaction, and unless provided for under the terms of the applicable
                Award Agreement, all restrictions imposed on Restricted Shares shall
                lapse
                and such Restricted Shares shall become fully (100%) vested as of
                a date
                specified in the notice, which shall not be more than ten days prior
                to
                the anticipated effective date of the proposed Transaction.
                

            

    

     

    
      	
              9.4

            	
              No
                Adjustment in Certain
                Circumstances.  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 Shares and/or the Option Price
                of
                Shares then subject to outstanding Awards granted under this Plan.
                

            

    

     

    
      	
              9.5

            	
              No
                Limitation on Corporate
                Actions.  Without limiting the generality of anything
                contained in this Article IX, the existence of outstanding Awards
                granted
                under this Plan shall not affect in any manner the right or power
                of the
                Company to make, authorize or consummate (a) any or all adjustments,
                recapitalizations,  reorganizations or other changes in the
                Company’s capital structure or its business; (b) any merger or
                consolidation of the Company; (c) any issue by the Company of debt
                securities, or preferred or preference stock which would rank above
                the
                Shares subject to outstanding Awards; (d) the dissolution or liquidation
                of the Company; (e) any sale, transfer or assignment of all or any
                part of
                the assets or business of the Company; or (f) any other corporate
                act or
                proceeding, whether of a similar character or otherwise.
                

            

    

     

    ARTICLE
      X

     

    Transferability
      of
      Awards

     

    
      	
              10.1

            	
              Transferability
                of
                Awards.  During the lifetime of an Eligible Person to
                whom an Award of Options or Restricted Shares has been granted, such
                Options or Restricted Shares are not transferable voluntarily or
                by
                operation of law, and may be exercised only by the designated Eligible
                Person.  Upon the death of an Eligible Person to whom an Award
                of Options or Restricted Shares has been granted and is outstanding,
                the
                Options or Restricted Shares may be transferred to the beneficiaries
                or
                heirs of the deceased Eligible Person by will or by the laws of descent
                and distribution.  Notwithstanding the foregoing limitations,
                the Committee, in its sole discretion, may allow for the transferability
                of any Option or Restricted Share Award granted pursuant to this
                Plan.
                

            

    

     

    
      	
              10.2

            	
              Issuanceof
                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 Award Agreement or
                any law
                or regulation including, but not limited to, the
                following:

            

    

     

    
      	
               

            	
              (a)

            	
              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
                

            

    

     

    
      	
               

            	
              (b)

            	
              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 Eligible Person who is a party to any shareholders
      agreement or a similar agreement shall bear the legends contained in such
      agreements.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      XI

     

    Amendment
      or Discontinuance
      of Plan

     

    The
      Board
      of Directors may amend, modify, suspend or terminate this 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, this 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 the aggregate number of Shares of stock that may be issued under this
      Plan (except for adjustments pursuant to Article VIII of this Plan), (ii)
      increase materially the benefit accruing to holders of Awards under this Plan,
      or (iii) modify materially the requirements as to eligibility for participation
      in this Plan.

     

    ARTICLE
      XII

     

    Miscellaneous

     

    
      	
              12.1

            	
              Retention
                as
                Director.  Neither this Plan nor any Award granted under
                this Plan shall confer upon any person any right to continue to serve
                as a
                Director. 

            

    

     

    
      	
              12.2

            	
              Interpretation;
                Governing
                Law

            

    

     

    
      	
               

            	
              (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. 

            

    

     

    
      	
              12.3

            	
              Section
                83(b)
                Election.  If an Eligible Person receives Shares under
                this Plan 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 Eligible Person 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 Eligible Person makes the
                Section 83(b) election described above, the Eligible Person 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. 

            

    

     

    
      	
              12.4

            	
              Effective
                Date and Termination
                Date; Adoption of Plan.  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
                this Plan on June 15, 1993.  This Plan was subsequently amended
                and restated by the Board on August 29, 1996, which amendment and
                restatement was approved by the Shareholders on October 7,
                1996.  In connection with the corporate restructuring effected
                on April 1, 1998, pursuant to a Plan of Merger of ICO Merger Sub,
                Inc.
                with and into ICO, Inc., the Company (which prior to such merger
                was named
                “ICO Holdings, Inc.”) adopted this Plan and assumed the obligations under
                this Plan from the entity previously named “ICO, Inc.” (which after such
                merger was renamed “ICO P&O, Inc.”).  This Plan was again
                amended and restated by the Board on January 8, 1999.  This Plan
                was again amended and restated by the Board on December 18, 2001,
                which
                amendment and restatement was approved by the Shareholders on March
                15,
                2002.  This Plan was again amended and restated by the Board on
                November 18, 2005, which amendment and restatement was approved by
                the
                Shareholders on March 14, 2006.  This Plan was again amended and
                restated by the Board on January 23, 2008, which amendment and restatement
                was approved 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    by
      the
      shareholders on [March 11, 2008].  No further Awards may be granted
      under this Plan after [January 23, 2018], subject to early termination by the
      Board pursuant to Article XI of this Plan.  This Plan shall remain in
      effect until all Awards granted under this Plan have been fully earned,
      exercised or have expired.

     

    
      	
              12.5

            	
              Government
                Regulations.  This Plan, and the granting and exercise of
                Awards thereunder, and the obligation of the Company to sell and
                deliver
                Shares under such Awards, 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.NORFOLK SOUTHERN CORPORATION

OUTSIDE DIRECTORS'
DEFERRED STOCK UNIT PROGRAM

I.             Effective Date:  May 9, 1996, amended to and including January 22,
2008.  

II.           
Purpose:  To align further each outside director's ownership interest in
Norfolk Southern Corporation ("Corporation") with that of stockholders
generally.

III.           Eligibility:  Each outside director of the Corporation serving on the
Effective Date and any such outside director whose term as director begins
after the Effective Date ("Eligible Director").  For purposes of this
Program, an "outside director" is a director who is not an officer of
the Corporation or any of its subsidiaries.

IV.           Benefits:        

    (1)  Each Eligible Director
shall be granted from time to time such deferred stock units (each such stock
unit representing at the time of grant the value of one share of Norfolk
Southern Corporation Common Stock) ("Stock Units"), as the Board of
Directors may authorize.  Each Eligible Director's Stock Units will be recorded
in an individual memorandum account ("Account") maintained by the
Corporate Secretary or designated agent.  On each dividend payment date, an
amount equivalent to the dividend paid on the Common Stock ("Dividend
Equivalent") will be credited for each Stock Unit and each fraction
thereof in the Account and converted into additional Stock Units and fractions
thereof (rounded to four decimal places) based on the Fair Market Value of the
Common Stock on the dividend payment date.

    For purposes of this Program,
"Fair Market Value" on a particular date is the mean of the high and
low prices at which the Common Stock is traded on such date as reported in the
Composite Transactions for such date by Bloomberg L.P., or its successor, on
its internet-based service, or, if Common Stock was not traded on such date, on
the next preceding day on which Common Stock was traded.                                     

    (2)  Each outside director of
the Corporation serving on June 1, 1996, also shall have credited to the
Account the number of Stock Units, including fractions thereof to which such
director is entitled under the Norfolk Southern Corporation Directors' Pension
Plan.  Such Stock Units will be accounted for separately from any Stock Units
credited under paragraph (1) above but will be treated the same in all other
respects.

    (3)  Each Eligible
Director may make an election at any time up to one year prior to leaving the
Board of Directors to receive in cash any Stock Units in the Account either in
a lump sum or in 10 annual installments upon leaving the Board of Directors for
any reason.  The most current election on file with the Corporate Secretary
shall become irrevocable one year prior to the eligible Director leaving the
Board of Directors.  Failure to make a valid election will result in the
Account being distributed in a lump sum.  Separate elections will be made for
Stock Units credited under paragraphs (1) and (2) above.  A lump-sum payment
will be valued based on the Fair Market Value of Common Stock on the last
market day of the month following a director's termination of service and will
be paid to an Eligible Director or beneficiary as soon as practicable
thereafter.  The first distribution under an election to receive installment
payments will be made in January following the year in which the Eligible
Director terminates service; Stock Units at any time remaining in the Account
will be credited with Dividend Equivalents until the final installment has been
paid.  Each annual distribution will be valued based on the Fair Market Value
of the Common Stock on the third business day after the date in January that
the Corporation first makes publicly available its most recent regular annual financial
statements.  The first such installment will be an amount equal to one tenth of
the total value of the Stock Units in the Account at that time; the second
installment, one ninth of the remaining total value; the third installment, one
eighth; and so forth, until the Account is depleted with payment of the tenth
installment.

    (4)  The Board of Directors
may make such adjustments in the number of Stock Units as may be required by
any change in the corporate structure or shares of the Corporation, including
but not limited to, recapitalization, stock splits, stock dividends,
combination or exchange of shares, mergers, consolidations, rights offerings,
separations, reorganizations and liquidations.

V.            Miscellaneous:          

    (1)  Each Eligible Director may
designate in writing the person or persons ("Beneficiary") who shall
acquire the rights of the Eligible Director to the Account in the event of the
Eligible Director's death before final distribution.

    In order to be effective, an
Eligible Director's designation of a Beneficiary must be on file with the
Corporate Secretary before the Eligible Director's death.  Any such designation
may be revoked and a new designation substituted therefore by the Eligible
Director at any time before death.

    If the named Beneficiary does
not survive the Eligible Director, or if there is no named Beneficiary, then
the rights with respect to an Eligible Director's Account shall be acquired by
the person or persons who shall acquire the Eligible Director's rights to the
Account by bequest or inheritance in accordance with the applicable laws of
descent and distribution.

    (2)  This Program may be amended
or terminated by the Board of Directors of the Corporation at any time;
however, no such amendment or termination shall deprive an Eligible Director of
any Stock Units previously credited to his or her Account.

VI.           Settlement of Awards Under the Long-Term Incentive Plan of Norfolk
Southern Corporation:  Notwithstanding any provision of the Program described
herein to the contrary, effective as of January 22, 2008, for any Eligible
Director who is an outside director of the Corporation on January 22, 2008, any
Stock Units credited to such Eligible Director's Account that would be payable
in cash under this Program following such Eligible Director's termination of
service or death shall instead be settled in common stock of Norfolk Southern
Corporation, with such stock distributed under the Long-Term Incentive Plan of
Norfolk Southern Corporation ("LTIP"), as specified under the terms
of an award agreement under LTIP.  No Stock Units shall be granted under the
Program after January 22, 2008, as any such award shall instead be made under
LTIP.

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