EXHIBIT 7(3)
SHAREHOLDER OPTION AGREEMENT
This Shareholder Option Agreement (the "Agreement") is entered into this
26th day of January, 1996 by and between XXXXXXX XXXXX SELF ("Shareholder") and
SPARTECH CORPORATION, a Delaware corporation ("Optionee").
WITNESSETH:
WHEREAS, Optionee has entered into a letter of intent dated January 22,
1996 (the "Letter of Intent") with Portage Industries Corporation, a Delaware
corporation ("Portage"), providing for the purchase by Optionee of all
outstanding Portage Common Stock at a price of $6.60 per share; and
WHEREAS, the transaction is expected to be structured as a cash merger (the
"Merger"); and
WHEREAS, Shareholder owns 324,500 shares of Portage Common Stock (the
"Optioned Shares"); and
WHEREAS, Shareholder desires to induce Optionee to proceed with the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and in consideration of $1.00 and such other valuable consideration
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Grant and Exercise of Option. Shareholder hereby grants Optionee an
irrevocable option (the "Option") to purchase all of his Optioned Shares during
the Exercise Period (as defined below) at a price in cash of $6.60 per share, or
such higher price as may be offered by Optionee pursuant to the Merger. On the
terms and subject to the conditions of this Agreement, Optionee may exercise the
Option in whole, but not in part, at any time during the Exercise Period. To
exercise the Option, Optionee shall give written notice to Shareholder
specifying a place and date for the closing which date shall not be later than
ten business days from the date of such notice and may be one day after the
delivery of such notice or earlier if reasonably practicable. The giving of
such notice shall create a binding obligation of Optionee to buy and of
Shareholder to sell the Optioned Shares on the closing date. For the purposes
of this Agreement, the "Exercise Period" shall mean the period commencing on the
date hereof and extending for a period of 120 days thereafter.
2. Closing. At the closing (the "Closing") of the purchase of Optioned
Shares:
(a) against delivery of Shareholder's Optioned Shares, Optionee shall pay
to Shareholder the aggregate purchase price for such Optioned Shares by bank
cashier's check or by wire transfer to a bank designated by Shareholder; and
(b) Shareholder shall cause to be delivered to Optionee a duly executed
certificate or certificates representing all of the Optioned Shares, together
with stock powers endorsed in blank, relating to such certificates (or at
Optionee's request the shares which are currently held in street name, may be
delivered as instructed by Optionee through the facilities of the Depository
Trust Company) and, if requested by Optionee, an irrevocable proxy, duly
executed by Shareholder, authorizing such persons as Optionee shall designate to
act for Shareholder as his lawful agent, attorney and proxy, with full power of
substitution, to vote in such manner as such agent, attorney and proxy or its
substitute shall in its sole discretion deem proper, and otherwise act with
respect to the Optioned Shares which Shareholder is entitled to vote at any
meeting (whether annual or special and whether or not an adjourned meeting) of
Portage's Shareholder or otherwise, and revoking any prior proxies granted by
Shareholder with respect to the Optioned Shares.
3. Covenants of Shareholder. During the period from the date of this
Agreement until the termination of the Option, except in accordance with the
provisions of this Agreement, Shareholder agrees that he will not:
(a) sell, transfer, pledge, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
the sale, transfer, pledge, assignment or other disposition of any Optioned
Shares;
(b) grant any proxies, deposit any Optioned Shares into a voting trust
or enter into a voting agreement with respect to any Optioned Shares; or
(c) solicit or encourage any party, other than Optionee, to acquire or
offer to acquire Portage, any of his stock or a material portion of the
Portage's assets or business;
4. Representations and Warranties of Shareholder. Shareholder
represents and warrants to Optionee as follows:
(a) Shareholder owns the number of Optioned Shares specified in the
recitals of this Agreement and has the right, power and authority to execute and
deliver this Agreement and to sell the Optioned Shares; such execution, delivery
and sale will not violate or breach any outstanding agreement or instrument to
which Shareholder is a party; and this Agreement constitutes a valid and binding
agreement on the part of Shareholder, enforceable in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or limiting
creditor's rights generally;
(b) the Optioned Shares will at the Closing be held by Shareholder, or
by a custodian for the account of the Shareholder, free and clear of all liens,
claims, encumbrances and security interests with respect to the ownership or
voting of the Optioned Shares or otherwise, other than pursuant to this
Agreement;
(c) upon purchase of the Optioned Shares, Optionee shall receive good
and marketable title to the Optioned Shares, free and clear of all liens,
claims, encumbrances and security interests.
5. Representations and Warranties of Optionee. Optionee represents and
warrants to Shareholder that it has the right, power and authority to execute
and deliver this Agreement and to purchase the Optioned Shares; such execution
and delivery, and such purchase, if any, will not violate or breach any
outstanding agreement or instrument to which Optionee is a party; and this
Agreement constitutes the valid and binding agreement on the part of Optionee,
enforceable in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditor's rights generally.
6. Permitted Sale. If Optionee or any of its affiliates commences a
tender or exchange offer for shares of Portage, Shareholder may tender or sell
his Optioned Shares pursuant thereto, notwithstanding any provision of this
Agreement to the contrary. Upon the purchase of such Optioned Shares, pursuant
to such tender or exchange offer, Shareholder's obligations under this Agreement
with respect to such purchased shares shall terminate.
7. Termination. In the event that Optionee determines not to proceed
with the Merger or to otherwise acquire all of the outstanding shares of Portage
Common Stock, and communicates the same to Portage pursuant to the terms of the
Letter of Intent or the definitive merger agreement, this Agreement shall
immediately terminate without liability to either party, except that the
obligations contained in Article 14 shall survive.
8. Adjustments. In the event of any increase or decrease or other
change in the stock of Portage by reason of stock dividends, split-up,
recapitalizations, combinations, exchanges of shares or the like, the number of
Portage shares subject to the Option and the exercise price per Optioned Share
shall be adjusted appropriately.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Missouri.
10. Further Assurances. Each party hereto shall perform such further
acts and execute such further documents as may reasonably be required to carry
out the provisions of this Agreement, including instruments necessary or
desirable to complete the transfer, sale and assignment of the Optioned Shares.
11. Assignment. This Agreement may not be assigned by any party hereto,
except that Optionee may assign to one or more of its affiliates any and all of
the rights and obligations of Optionee under this Agreement, including, without
limitation, the right to substitute in its place such affiliates as the Optionee
may designate.
12. Remedies. The parties agree that the Optioned Shares are unique and
that legal remedies for breach of this Agreement will be inadequate and that
this Agreement may be enforced by injunctive or other equitable relief.
13. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed duly given if delivered in
person, by cable, telex, telecopy or telegram or by registered or certified
mail, postage prepaid addressed as follows:
To Optionee:
Spartech Corporation
0000 Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
With copies to:
Armstrong, Teasdale, Schlafly & Xxxxx
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, III, Esq.
To Shareholder:
Xxxxxxx Xxxxx Self
Tioga International, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
With copies to:
Xxxxxxx X. Xxxxxx, Esq.
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
14. Effect of Invalidity. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
15. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same agreement.
16. Entire Agreement; Binding Effect; Benefits. This Agreement contains
the entire agreement between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by both
parties. This Agreement shall inure to the benefit of and shall be binding upon
the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns. Nothing in this Agreement, expressed or implied, is
intended to or shall confer on any person other than the parties hereto and
their respective heirs, legal representatives and successors and permitted
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
17. Expenses. Each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, except that Optionee shall reimburse Shareholder for up
to $2,000 of the legal fees incurred by Shareholder in connection with the
negotiation of this Agreement.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the day and year first above written.
Optionee:
SPARTECH CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
Title: Vice President-Finance
and CFO
Shareholder:
XXXXXXX XXXXX SELF
/s/ Xxxxxxx Xxxxx Self
Xxxxxxx Xxxxx Self
