<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)(1)
Specialty Chemical Resources, Inc.
- - -------------------------------------------------------------------------------
(NAME OF ISSUER)
Common Stock, $.10 par value
- - -------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
847 487 20 4
- - --------------------------------------------------------------------------------
(CUSIP NUMBER)
Edwin M. Roth
9100 Valley View Road
Macedonia, Ohio 44056
(216) 468-1380
- - --------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
October 6, 1995
- - -------------------------------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with this statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
____________________
1 The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing information
which would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
<TABLE>
SCHEDULE 13D
CUSIP NO. 847 487 20 4 PAGE 2 OF 5 PAGES
-------------- --- ---
<S> <C>
- - -----------------------------------------------------------------------------------------------------------
| 1 | NAME OF REPORTING PERSONS |
| | S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS |
| | |
| | Edwin M. Roth |
|-----|---------------------------------------------------------------------------------------------------|
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] |
| | (b) [ x ] |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 3 | SEC USE ONLY |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 4 | SOURCE OF FUNDS* |
| | |
| | PF |
|-----|---------------------------------------------------------------------------------------------------|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT |
| | TO ITEMS 2(d) OR 2(e) [ ] |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | |
| | U.S.A. |
|-------------------------------|-------|-----------------------------------------------------------------|
| NUMBER OF | 7 | SOLE VOTING POWER |
| | | |
| SHARES | | 831,189 |
| |-------|-----------------------------------------------------------------|
| BENEFICIALLY | 8 | SHARED VOTING POWER |
| | | |
| OWNED BY | | 6,250 |
| |-------|-----------------------------------------------------------------|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| | | |
| REPORTING | | 831,189 |
| |-------|-----------------------------------------------------------------|
| PERSON | 10 | SHARED DISPOSITIVE POWER |
| | | |
| WITH | | 6,250 |
|-------------------------------|-------|-----------------------------------------------------------------|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | |
| | 837,439 |
|-----|---------------------------------------------------------------------------------------------------|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN |
| | SHARES* [ ] |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | |
| | 20.5% |
|-----|---------------------------------------------------------------------------------------------------|
| 14 | TYPE OF REPORTING PERSON* |
| | |
| | IN |
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
Page 3 of 5 Pages
ITEM 1. SECURITY AND ISSUER.
No change from original filing.
ITEM 2. IDENTITY AND BACKGROUND.
No change from original filing.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Roth used personal funds to effect the purchase to which this
Amendment No. 3 relates. The aggregate amount of funds used to make the
purchase was $350,000.00.
ITEM 4. PURPOSE OF TRANSACTION.
Mr. Roth purchased 3,500 shares of 7-1/2% Cumulative Convertible
Preferred Stock, par value $.01 per share, of the Company (the "Preferred
Stock") pursuant to a Stock Purchase Agreement (the "Stock Purchase Agreement")
dated October 6, 1995 between Mr. Roth and the Company for $100.00 per share,
or an aggregate purchase price of $350,000.00 (the "Transaction"). The
purpose of the Transaction was to provide $350,000.00 of equity to the Company
to facilitate the financing of the Company's purchase of certain real estate
located in Macedonia, Ohio.
Prior to the Transaction, Mr. Roth beneficially owned approximately
18.9% of the Company's outstanding Common Stock. The Transaction increased his
beneficial ownership of the outstanding Common Stock to approximately 20.5%.
Mr. Roth may, from time to time, acquire additional shares of Common
Stock pursuant to various stock option plans of the Company.
Except as disclosed herein, Mr. Roth has no plans or proposals that
relate to or would result in any of the matters described in paragraphs (a)
through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Mr. Roth beneficially owns 837,439 shares of Common Stock,
representing approximately 20.5% of the Common Stock outstanding on April 28,
1995. This number includes (i) 86,667 shares of Common Stock which Mr. Roth
has or had within 60 days after the date of this Amendment No. 3 the right to
acquire upon the exercise of options and (ii) 70,000 shares of Common Stock
which Mr. Roth has or had within 60 days after the date of this Amendment No. 3
the right to acquire upon the conversion of Preferred Stock.
(b) Mr. Roth has sole voting power and sole dispositive power over
831,189 shares of Common Stock (including (i) 86,667 shares of Common Stock
subject to options currently
<PAGE> 4
Page 4 of 5 Pages
exercisable or exercisable within 60 days from the date of this Amendment No. 3
and (ii) 70,000 shares of Common Stock which Mr. Roth has or had within 60 days
after the date of this Amendment No. 3 the right to acquire upon the conversion
of Preferred Stock). Mr. Roth has shared voting power and shared dispositive
power over 6,250 shares of Common Stock, which are owned by the Edwin M. Roth
Family Foundation, Inc. (the "Foundation"), a not-for-profit Ohio corporation,
of which Mr. Roth and his son, Mr. Corey B. Roth, are both officers and
trustees.
Mr. Corey Roth, a United States citizen, is the Vice President,
Treasurer and Assistant Secretary of the Company and his principal business
address is 9100 Valley View Road, Macedonia, Ohio 44056. During the last five
years, Mr. Corey Roth has not been convicted in a criminal proceeding nor has
he been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in his being subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws. Mr. Corey Roth beneficially owns 161,611
shares of Common Stock, including the 6,250 shares owned by the Foundation.
(c) Since July 21, 1995, the date of the most recent filing on
Schedule 13D, Mr. Roth has had no transactions in the Common Stock, except as
described in Item 4 above.
(d) Except as described in Item 5(b) above, no other person is
known to have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Common Stock beneficially
owned by Mr. Roth.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Mr. Roth purchased the shares to which this Amendment No. 3 relates
pursuant to the Stock Purchase Agreement. See Item 4 above.
Except as described herein, Mr. Roth has no contracts, arrangements,
understandings or relationships with any other person with respect to any
securities of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The Stock Purchase Agreement is filed as Exhibit A to this Amendment
No. 3 and incorporated herein.
<PAGE> 5
Page 5 of 5 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 12, 1995
------------------------------------------
(DATE)
/s/ Edwin M. Roth
------------------------------------------
(SIGNATURE)
------------------------------------------
(NAME/TITLE)
<PAGE> 6
EXHIBIT A
SPECIALTY CHEMICAL RESOURCES, INC.
$350,000
7 1/2% CUMULATIVE CONVERTIBLE PREFERRED STOCK
_____________________________________
STOCK PURCHASE AGREEMENT
_____________________________________
DATED AS OF OCTOBER 6, 1995
<PAGE> 7
SPECIALTY CHEMICAL RESOURCES, INC.
9100 VALLEY VIEW ROAD
MACEDONIA, OHIO 44056-2013
Dated as of October 6, 1995
Mr. Edwin M. Roth
c/o Specialty Chemical Resources, Inc.
9100 Valley View Road
Macedonia, OH 44056-2013
Dear Mr. Roth:
The undersigned, Specialty Chemical Resources, Inc., a Delaware corporation
(herein called the "Company"), hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUANCE OF SECURITIES BY THE COMPANY. The Company
has authorized the issuance and sale of 3,500 shares of its Preferred Stock,
par value $.01 per share, to be designated as the "7 1/2% Cumulative
Convertible Preferred Stock" (the "Preferred Stock"). The preferences, voting
powers, qualifications, limitations, restrictions and the special or relative
rights granted to or imposed upon the Preferred Stock are as set forth in the
Certificate of Powers, Designation, Preferences and Rights of the 7 1/2%
Cumulative Convertible Preferred Stock (the "Certificate of Designation"), a
copy of which is attached hereto as Exhibit A.
2. PURCHASE AND SALE OF SECURITIES.
(a) SECURITIES AND PURCHASE PRICE. On the terms and subject to the
conditions set forth below, the Company agrees to issue and sell to you, and
you agree to purchase from the Company, 3,500 shares of Preferred Stock to be
evidenced by one or more certificates registered in your name and in such
denominations as you shall request, at a purchase price of $100 per share.
(b) CLOSING. The purchase and delivery of the Preferred Stock to
be purchased by you shall take place simultaneously with your and the Company's
execution of this Agreement or at such other time and place as the parties
shall agree (the "closing date" or "date of closing"). At the closing, the
Company will deliver certificates representing the Preferred Stock to be
purchased by you, against payment of the aggregate purchase price therefor.
3. CONDITIONS OF CLOSING. Your obligation to purchase and pay for the
Preferred Stock on the date of closing is subject to the satisfaction on or
before the date of closing of the following conditions:
2
<PAGE> 8
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 5 of this Agreement shall be true on and as of
the date of closing as if made on and as of such date.
(b) COMPLIANCE WITH THIS AGREEMENT. The Company shall have
performed and complied with all agreements and conditions contained herein
which are required to be performed or complied with by the Company before or at
the closing.
(c) PURCHASE OF REAL ESTATE. The Company shall have secured the
financing necessary, together with the proceeds from the issuance of the
Preferred Stock, for its purchase of the real estate located at 9055 Freeway
Drive, Macedonia, Ohio and shall have entered into agreements that are
satisfactory to you for the purchase of same.
4. COVENANTS.
(a) FINANCIAL STATEMENTS AND REPORTS. The Company will deliver to
you, so long as you shall hold any Preferred Stock:
(i) promptly upon the mailing thereof to the shareholders
of the Company generally, copies of all financial statements, reports
and proxy statements so mailed;
(ii) promptly upon the filing thereof, copies of all
registration statements and annual, quarterly or monthly reports that
the Company or any of its Subsidiaries shall have filed with the
Commission;
(iii) promptly upon transmission thereof (but in any event
within ten days after transmission), copies of all press releases and
other statements made available generally by the Company or its
Subsidiaries to the public concerning material developments in the
results of operations, financial condition, business or prospects of
the Company and its Subsidiaries; and
(iv) from time to time such additional information
regarding the financial positions, results of operations, business or
prospects of the Company or any of its Subsidiaries as you or any
holder of Preferred Stock may reasonably request.
(b) ACTIONS PENDING CLOSING. From the date hereof until the
closing date, the Company will not take any action the result of which would be
to cause any of the representations and warranties contained in Section 5
hereof to be untrue, or any of the conditions of closing contained in Section 3
hereof to be unsatisfied, on the closing date.
5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to you as set forth below:
(a) CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all material
governmental licenses, authorizations,
3
<PAGE> 9
consents and approvals required to carry on its business as now conducted, to
enter into this Agreement and is duly qualified as a foreign corporation,
licensed and in good standing in each jurisdiction where qualification or
licensing is required by the nature of its businesses, or the character and
location of its property or businesses, except where the failure to be so
qualified would not have a material adverse effect on the Company.
(b) CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.
The execution and delivery by the Company of this Agreement and
the Preferred Stock and the performance by the Company of its obligations
hereunder are within the corporate powers of the Company, have been duly
authorized by all necessary corporate action and, as of the date of closing,
will not contravene or constitute (with or without the giving of notice or
lapse of time or both) a default under any material provision of applicable law
or regulation or of the certificate of incorporation or bylaws or any material
agreement to which the Company is a party.
(c) VALID AND BINDING OBLIGATIONS. At the date hereof and at the
date of closing, this Agreement constitutes and will constitute a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
6. REPRESENTATIONS OF PURCHASER. You represent that you are an
"accredited investor" as such term is defined in 17 C.F.R. Section 230.501
(1986). You represent, and it is specifically understood and agreed, that you
are acquiring the Preferred Stock for your own account for the purpose of
investment and not with a view to distribution of any thereof. You further
represent that by virtue of your position with the Company you are able to
evaluate the risks of purchasing the Preferred Stock.
7. RESTRICTIONS ON TRANSFER; REGISTRATION.
(a) RESTRICTIVE LEGEND. Except as otherwise permitted by this
Section 7, each certificate representing shares of Preferred Stock, and each
certificate issued upon the registration of transfer of any shares of such
Preferred Stock or the conversion of any shares of Preferred Stock into
Restricted Common Stock, shall be stamped or otherwise imprinted with a legend
in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred
in the absence of such registration or an exemption therefrom under
such Act, except under circumstances where neither such registration
nor such an exemption is required by law. Such securities may be
transferred only upon the fulfillment of the conditions specified in a
certain Stock Purchase Agreement, dated as of October 6, 1995, between
Specialty Chemical Resources, Inc., and the purchaser named therein.
A complete and correct copy of the form of such Agreement is available
for inspection at the principal office of such Corporation or at the
office or agency maintained by such Corporation as provided in such
Agreement and will be furnished to the holder of such securities upon
written request and without charge."
4
<PAGE> 10
(b) NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Subject to
the exception set forth in the last sentence of this Section 7(b), prior to any
transfer of any Preferred Stock or Restricted Common Stock, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this Section 7(b). Each
such notice (1) shall describe the manner and circumstances of the proposed
transfer in sufficient detail to enable counsel to render the opinions referred
to below, and (2) shall designate counsel for the holder giving such notice.
The holder giving such notice will submit a copy thereof to the counsel
designated in such notice and the Company will promptly submit a copy thereof
to its counsel. The following provisions shall then apply:
(i) If in the opinion of each such counsel the proposed
transfer may be effected without registration of such Preferred Stock
or Restricted Common Stock under the Securities Act, the Company will
promptly notify the holder thereof and such holder shall thereupon be
entitled to transfer such Preferred Stock or Restricted Common Stock
in accordance with the terms of the notice delivered by such holder to
the Company. Each certificate issued upon or in connection with such
transfer shall bear the applicable restrictive legend set forth in
Section 7(a), unless in the opinion of each such counsel such legend
is no longer required to ensure compliance with the Securities Act.
If for any reason counsel for the Company (after having been furnished
with the information required to be furnished by clause (1) of this
Section 7(b)) shall fail to deliver a favorable or unfavorable opinion
to the Company, or the Company shall fail to notify such holder
thereof as aforesaid, within fifteen days after such holder shall have
delivered to the Company a copy of the opinion of counsel for such
holder, then for all purposes of this Agreement the opinion of counsel
for such holder shall be sufficient to authorize the proposed transfer
and the opinion of counsel for the Company shall not be required in
connection with such proposed transfer; and
(ii) If in the opinion of either or both of such counsel
the proposed transfer may not be effected without registration of such
Preferred Stock or Restricted Common Stock under the Securities Act,
the Company will promptly so notify the holder thereof and such holder
shall not be entitled to transfer such Preferred Stock or Restricted
Common Stock until receipt of a favorable opinion or opinions pursuant
to the provisions of this Section 7(b) or until registration of such
Preferred Stock or Restricted Common Stock under the Securities Act
has become effective.
(c) INCIDENTAL REGISTRATION. In case the Company, at any time or
from time to time, proposes to register any of its securities under the
Securities Act (other than (1) a registration of securities solely in
connection with any plan for the acquisition of securities by employees of the
Company or its subsidiaries or any dividend reinvestment plan, (2) a
registration of securities when the registration statement therefor does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of Common Stock or (3) a
registration on Form S-4 or S-8), it will at each such time give written notice
to all holders of Restricted Common Stock of its intention to do so and, upon
the written request of any such holder made within thirty days after the
receipt of any
5
<PAGE> 11
such notice (which request shall specify the number of shares of Restricted
Common Stock intended to be disposed of by such holder and the intended method
of disposition thereof), the Company will, as provided in Section 7(d), use its
best efforts to effect, as expeditiously as possible, the registration under
the Securities Act of all Restricted Common Stock which the Company has been so
requested to register by the holders of the Restricted Common Stock, to the
extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Restricted Common Stock so to be
registered, PROVIDED that:
(i) if, at any time after giving written notice of its
intention to register any securities and prior to or after the
effective date of the registration statement filed in connection with
such registration, the Company shall determine for any reason not to
register or to withdraw or suspend the registration of such securities,
the Company may, at its election, give written notice of such
determination to each holder of Restricted Common Stock and, thereupon
shall be relieved from its obligation with respect to such registration
(but not from its obligation to pay the Registration Expenses in
connection therewith);
(ii) if the Company's securities so registered for sale are
to be distributed in an underwritten offering and the managing
underwriter shall advise the Company in writing that, in its opinion,
the amount of securities to be offered should be limited in order to
assure a successful offering, the amount of securities to be included in
such registration shall be so limited and shall be allocated among the
persons selling such securities, in the following order of priority
(with the effect that all securities of a category below must be
included in the registration before any securities of a subsequent
category below are included in the registration): (1) the securities,
if any, the Company proposes to sell and (2) the Restricted Common
Stock and the other securities requested to be included and having
similar rights, pro rata among the holders of such securities in
proportion, as nearly as practicable, to the amount of securities
requested to be registered by each of the holders of the Restricted
Common Stock and such other securities; and
(iii) if the securities or blue sky laws of any jurisdiction
in which the securities so registered are proposed to be offered would
prohibit the Company's payment of Registration Expenses attributable to
the Restricted Common Stock requested to be included in such
registration, and if the Company shall determine, in good faith, that
the offering of such securities in such jurisdiction is necessary for
the successful consummation of the registered offering, then the
holders of Restricted Common Stock requested to be included in such
registration shall either agree to pay the portion of the Registration
Expenses attributable thereto, or withdraw their request for inclusion
of Restricted Common Stock in such registration.
Except as provided above, the Company will pay all Registration Expenses in
connection with each registration of Restricted Common Stock under this Section
7(c).
6
<PAGE> 12
(d) REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any Restricted
Common Stock under the Securities Act as provided in Section 8(c), the Company
will promptly:
(i) prepare and (in any event within ninety days after the
end of the period within which requests for registration may be given
to the Company) file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such
registration statement to become effective;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration
statement, but in no event for a period of more than six months after
such registration statement becomes effective;
(iii) furnish to each seller of such securities such number
of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits,
except that the Company shall not be obligated to furnish any seller of
securities with more than two copies of such exhibits), such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, all documents
filed and all correspondence dispatched to or from the Commission in
connection with such offering, and such other documents, as such seller
may reasonably request in order to facilitate the disposition of the
securities owned by such seller;
(iv) use its best efforts to register or qualify such
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, and do any and all other acts and things which may
be necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it is not so qualified, or to subject itself to
taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(v) notify each seller of any such securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make statements therein
not misleading in the light of the
7
<PAGE> 13
circumstances then existing, and prepare and furnish to such seller a
reasonable number of copies of a supplement to, or an amendment of, such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(vi) advise each seller as to the time when such
registration statement becomes effective and as to the issuance by the
Commission of any stop order suspending the effectiveness of such
registration statement or the institution of any proceedings for that
purpose, and use its best efforts to prevent the issuance of any such
stop order and to obtain as soon as possible the lifting thereof, if
issued;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
(viii) furnish to each seller a signed counterpart of:
(1) an opinion of counsel for the Company addressed
to the sellers or, in the case of an underwritten public
offering, to the underwriter, dated the effective date of such
registration statement, and
(2) a "comfort letter" addressed to the underwriter
signed by the independent public accountants who have certified
the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the
case of such accountants' letter, with respect to events subsequent to
the date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten public offerings of securities,
PROVIDED that the Company shall not be obligated to furnish such
accountants' letter except in connection with an underwritten offering.
The Company may require each seller of any securities as to which any
registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the
Company may from time to time request in writing and as shall be
required by law in connection therewith.
(e) TERMINATION OF RESTRICTIONS. The restrictions imposed by this
Section 7 upon the transferability of Preferred Stock and Restricted Common
Stock shall cease and terminate as to any particular shares of Preferred Stock
or Restricted Common Stock (1) when such securities shall have been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering such securities, or (2) when, in the
8
<PAGE> 14
opinion of both counsel for the holder thereof and counsel for the Company, or
when, in the opinion of either counsel for the Company or counsel for the
holder reasonably satisfactory to counsel for the Company on the basis of a
pertinent Commission rule or regulation promulgated under the Securities Act,
or a "no-action" letter addressed to either the holder thereof or the Company
from the staff of the Commission, such restrictions are no longer required in
order to ensure compliance with the Securities Act. Whenever such restrictions
shall terminate as to any shares of Preferred Stock or Restricted Common Stock
the holder thereof shall be entitled to receive from the Company, without
expense (other than transfer taxes, if any), new certificates representing such
shares of like tenor not bearing the applicable legend set forth in Section
7(a).
(f) INDEMNIFICATION.
(i) In the event of any registration of any Restricted
Common Stock under the Securities Act pursuant to Section 7(c), the
Company will indemnify and hold harmless the seller of such securities,
its directors and officers, each other Person who participates as an
underwriter within the meaning of the Securities Act, in the offering
or sale of such securities and each other Person, if any, who controls
such seller or any such participating Person against any losses,
claims, damages or liabilities, joint or several, to which such seller
or any such director or officer or participating Person or controlling
Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (1) any
untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities
were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or (2) any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and the
Company will reimburse such seller and each such director, officer,
participating Person and controlling Person for any legal or any other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability or action, PROVIDED that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement made in such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument
duly executed by such seller specifically stating that it is for use in
the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
seller or any such director, officer, participating Person or
controlling Person and shall survive the transfer of such securities by
such seller.
(ii) As a condition to including any Restricted Common Stock
in any registration statement filed pursuant to Section 7(c), the
Company shall have received an undertaking from the prospective seller
of such securities to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company
9
<PAGE> 15
who shall sign such registration statement, each other Person, if any,
who controls the Company within the meaning of the Securities Act and
each other Person who participates as an underwriter within the meaning
of the Securities Act, with respect to any statement in such
registration statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, if such
statement was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such
securities by such seller.
(iii) Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding paragraphs of this Section 7(f), such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give prompt written notice to the latter
of the commencement of such action, PROVIDED that the failure of any
indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under the preceding paragraphs
of this Section 7(f), except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, the indemnifying party
may (and, upon request by the indemnified party, will), at its expense,
participate in and assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and, in the event of any failure
by the indemnifying party diligently to assume and conduct such defense,
the indemnifying party will pay all costs and expenses (including legal
fees and expenses) incurred by such indemnified party in connection with
such claim or litigation. No indemnifying party, in the defense of any
such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
(iv) Indemnification similar to that specified in the
preceding paragraphs of this Section 7(f) (with appropriate
modifications) shall be given by the Company and each seller of
Restricted Common Stock with respect to any required registration or
other qualification of such Restricted Common Stock under any Federal or
state law or regulation of governmental authority other than the
Securities Act.
(g) AVAILABILITY OF INFORMATION. If and so long as the Company is
a Public Company, the Company will comply with the reporting requirements of
Sections 13 and 15(d) of the Exchange Act and will comply with all other public
information reporting requirements of the Commission (including the
requirements of Rule 144 promulgated by the Commission under the Securities
Act) from time to time in effect and relating to the availability of an
exemption from the Securities Act for the sale of any restricted securities or
the sale of
10
<PAGE> 16
securities by affiliates and will furnish on request a written statement as to
such compliance. The Company will also cooperate with each holder to complete
and file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any restricted securities or the sale of
securities by affiliates. The Company will deliver to each holder of
Restricted Common Stock, promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its stockholders, and copies of all
regular and periodic reports and all registration statements and prospectuses
filed by the Company with any securities exchange or with the Commission.
8. LISTING ON SECURITIES EXCHANGES. The Company will, at its expense, use
its best efforts to list on each national securities exchange (including
NASDAQ) on which any Common Stock shall at any time be listed, and will use its
best efforts to maintain such listing of, all shares of Restricted Common Stock
registered pursuant to the terms of this Agreement.
9. DAMAGES. The Company recognizes and agrees that the holder of
Restricted Common Stock will not have an adequate remedy at law if the Company
fails to comply with Sections 7(c), 7(d), 7(e), 7(g) and 8 and that a holder of
Restricted Common Stock will be entitled to an appropriate decree of specific
performance or other equitable remedies and that the Company waives the defense
in action or proceeding that there exists an adequate remedy at law.
10. DEFINITIONS.
(a) DEFINITIONS OF TERMS. For the purpose of this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Certificate of Designation" has the meaning set forth in Section 1
hereof.
The terms "closing date" and "date of closing" have the respective
meanings set forth in Section 2(c) of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commission" mean the Securities and Exchange Commission and any other
similar or successor agency of the Federal Government administering the
Securities Act or the Exchange Act.
"Common Stock" means the common stock of the Company, par value $.10.
"Company" has the meaning set forth in the first paragraph hereof.
11
<PAGE> 17
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any similar or successor Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Preferred Stock" has the meaning set forth in Section 1 hereof.
"Public Company" means the Company, if and so long as any class of the
Company's securities is registered pursuant to Sections 12(b) or 12(g) of the
Exchange Act.
"Registration Expenses" means all expenses related to the Company's
registration of Restricted Common Stock, including all expenses with respect to
the procedures set forth in Section 7(d) (other than underwriting discounts and
commissions and transfer taxes, if any, applicable to the Restricted Common
Stock and the fees and disbursements of counsel engaged by the holders to
register the Restricted Common Stock in any jurisdiction in which the Company
is not required to register such Common Stock pursuant to Section 7(d) hereof).
"Restricted Common Stock" means Common Stock received upon conversion of
Preferred Stock.
"Securities Act" means the Securities Act of 1933, as amended, and any
similar or successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same may be in effect at the time.
"Subsidiaries" means any corporation or other entity, a majority of the
then outstanding voting securities of which is owned, directly or indirectly,
by the Company or one or more of its Subsidiaries.
(b) ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP.
11. MISCELLANEOUS.
(a) HOME OFFICE PAYMENT. The Company agrees that, so long as you
shall hold any shares of Preferred Stock or Common Stock, it will make payments
of dividends on such shares not later than 11:00 a.m., your local time, to a
place within the United States, on the date such payment is due, in immediately
available funds, at your option, by credit to your
12
<PAGE> 18
account, as specified by you in writing, or by check mailed or delivered to you
at your address for payments specified by you in writing, or such other account
or address within the United States as you may from time to time designate in
writing. You agree that, before disposing of any Preferred Stock or any Common
Stock, you will notify the Company of the name and address of the transferee of
such Preferred Stock or Common Stock.
(b) AMENDMENT AND WAIVER.
(i) Any term, covenant, agreement or condition of this
Agreement may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by and only by, one or more substantially concurrent
written instrument(s) signed by the holders of not less than 62/3% of
the number of shares of Preferred Stock outstanding or represented by
shares of Preferred Stock outstanding or represented by shares of
Restricted Common Stock outstanding, PROVIDED, HOWEVER, that no such
amendment or waiver shall, without the consent in writing of the
holders of all such shares change the percentage of holders required to
approve any such amendment or effectuate any such waiver, and PROVIDED
FURTHER, that any amendment or waiver pursuant to this Section 11(b)
shall apply equally to all holders of shares of Preferred Stock or
Restricted Common Stock and shall be binding upon them and upon the
Company.
(ii) The Company will give prompt notice to all holders of
shares of Preferred Stock or Restricted Common Stock of the proposal of
any amendment or waiver of any provision of this Agreement and of the
effectiveness of any amendment or waiver entered into in accordance
with the provisions of this Section 11(b). Such notices shall state
the terms of any such amendment or waiver and in the case of effective
amendments or waivers, shall be accompanied by at least two conformed
copies (which may be composite conformed copies) of each written
instrument which embodies such amendment or waiver.
(c) EXCHANGE OF STOCK CERTIFICATES. Upon surrender of any
certificate representing shares of Preferred Stock or Restricted Common Stock
for exchange at the principal office of the Company, or at such other location
as the Company may designate to you in writing, the Company, at its expense
(exclusive of applicable transfer taxes), will issue in exchange therefor one
or more new certificates, in such denomination or denominations as may be
requested, for the same aggregate number of shares represented by the
certificate so surrendered, less that number of shares represented by such
surrendered certificate that have theretofore been redeemed, and registered as
such holder may request, each such new certificate to bear the legend set forth
in Section 7(a), unless pursuant to the terms of this Agreement, such legend is
no longer required. The Company will also pay the cost of all deliveries of
certificates representing such shares from your office to the office of the
Company (including the cost of insurance against loss or theft in any amount
satisfactory to you) upon any exchange provided for in this Section 11(c).
(d) LOST, ETC, STOCK CERTIFICATES. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
any certificate representing any
13
<PAGE> 19
of the shares of Preferred Stock or Restricted Common Stock held by you, and
(in case of loss, theft or destruction) of indemnity satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of such certificate, if mutilated,
the Company will make and deliver to you in lieu of such certificate a new
certificate of like tenor and for an equal number of shares, less that number
of shares represented by such lost, stolen, destroyed or mutilated certificate
that have theretofore been redeemed. Your agreement of indemnity in such a
form and of such a scope as are customary for such indemnities shall constitute
indemnity satisfactory to the Company for the purposes of this Section 11(d).
(e) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by or on
behalf of any party to this Agreement in connection herewith shall survive the
execution and delivery of this Agreement and the issuance and delivery of the
Preferred Stock regardless of any investigation made by you or on your behalf.
(f) SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, all covenants and agreements in this Agreement contained by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed
or not, except that the Company may not assign or transfer any of its rights or
obligations under this Agreement. When any reference is made to "you" in
Sections 2, 3, 4, 5, 6, 7 and 11 this Agreement, such reference shall be deemed
to include and inure to the benefit of, any Person who shall become the
registered holder of any shares of Preferred Stock or Restricted Common Stock
upon transfer thereof; provided that (1) such shares were acquired from you by
such Person directly or indirectly in a transaction or chain of transactions
not involving a public offering, and (2) notice in writing of such transfer is
received by the Company.
(g) NOTICES. All communications provided for hereunder shall be
sent by registered mail and, if to you, addressed to you at the address set
forth by you for such communications under your name on the signature page of
this Agreement, or to such other address as you may have designated to the
Company in writing, if to any other holder of Preferred Stock or Restricted
Common Stock, at the registered address of such holder as set forth in the
stock record books of Company, and if to the Company, addressed to it at the
address set forth on the first page hereof or to such other address or
addresses as the Company may have designated in writing to you and each other
holder of any of the Preferred Stock or Restricted Common Stock at the time
outstanding. All communications provided for shall be effective five days
after such communication is deposited in the mail with registered postage
prepaid, addressed as aforesaid.
(h) DESCRIPTIVE HEADINGS. The descriptive headings contained in
this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
(i) GOVERNING LAW; NO ORAL MODIFICATION. This Agreement is being
delivered and is intended to be performed in the State of Ohio, and shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of such State.
14
<PAGE> 20
This Agreement may not be changed orally, but (subject to the provisions of
Section 11(b) hereof) only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification or discharge is
sought.
(j) COUNTERPARTS. This Agreement may be executed simultaneously in
two counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance where provided below and return the same to the undersigned,
whereupon this letter shall become a binding agreement between you and the
undersigned.
Very truly yours,
SPECIALTY CHEMICAL RESOURCES, INC.
By: /s/ Corey B. Roth
-------------------------------
Its: Vice President, Treasurer and
------------------------------
Assistant Secretary
The foregoing Agreement is hereby
accepted as of the date first above
written.
/s/ Edwin M. Roth
- - ----------------------------------
Edwin M. Roth
- - ----------------------------------
- - ----------------------------------
, Ohio
- - -------------------- ----------
15
<PAGE> 21
EXHIBIT A
SPECIALTY CHEMICAL RESOURCES, INC.
----------------------------------
CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS, PROVIDING
FOR AN ISSUE OF 3,500 SHARES OF CUMULATIVE CONVERTIBLE PREFERRED STOCK,
$.01 PAR VALUE, DESIGNATED "CUMULATIVE CONVERTIBLE PREFERRED STOCK"
We, Edwin M. Roth, President, and George Aronoff, Secretary, of
Specialty Chemical Resources, Inc., (hereinafter referred as the
"Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 151 thereof, do hereby certify:
That pursuant to authority conferred upon the Board of Directors by its
Certificate of Incorporation, as amended, said Board of Directors, by unanimous
vote at a meeting of the Board of Directors on October 2, 1995, duly authorized
and adopted the following resolution providing for the issuance of a series of
Preferred Stock, $.01 par value, to be designated "Cumulative Convertible
Preferred Stock":
"RESOLVED, that an issue of a series of Preferred Stock, to consist of
3,500 shares, designated Cumulative Convertible Preferred Stock, $.01 par
value, is hereby provided for and the powers, designations, preferences, and
rights, and the qualifications, limitations and restrictions thereof are hereby
fixed as follows:
1. DIVIDEND RATE.
(a) Dividends on each share of the Cumulative Convertible
Preferred Stock shall accrue from the date of its
original issue at a rate of $7.50 per annum per share (the
"Rate"). Such dividends shall be cumulative from the date of
such original issue and shall be payable, when and as
declared by the Board of Directors, out of funds legally
available for such purpose, on January 1, April 1,
July 1, and October 1, of
<PAGE> 22
each year, commencing January 1, 1996, (each such date being hereinafter
called individually a "Dividend Payment Date" and collectively the "Dividend
Payment Dates"), except that if any such date is a Saturday, Sunday or legal
holiday then such dividend shall be payable on the first immediately
succeeding calendar day which is not a Saturday, Sunday or legal holiday. Each
such dividend shall be paid to the holders of record of shares of the
Cumulative Convertible Preferred Stock as they appear on the books of the
Corporation on such record dates, not exceeding 60 days nor fewer than ten days
preceding the payment dates thereof, as shall be fixed by the Board of
Directors of the Corporation. Dividends in arrears may be declared and paid at
any time, without reference to any regular Dividend Payment Date, to holders of
record on such date, not exceeding 60 days preceding the payment date thereof,
as may be fixed by the Board of Directors of the Corporation.
(b) So long as any shares of the Cumulative Convertible Preferred
Stock are outstanding, no dividend or distribution (other than a dividend or
distribution paid in Common Stock or in any other stock of the Corporation
ranking junior to the Cumulative Convertible Preferred Stock) shall be declared
or paid or set aside for payment upon the Common Stock or upon any other stock
of the Corporation ranking junior to the Cumulative Convertible Preferred
Stock, nor shall any Common Stock or any other stock of the Corporation ranking
junior to the Cumulative Convertible Preferred Stock be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any shares of any such
stock) by the Corporation unless, in each case,
-2-
<PAGE> 23
the full cumulative dividends required to have been paid to date on all
outstanding shares of the Cumulative Convertible Preferred Stock shall have
been paid.
(c) Dividends payable on the Cumulative Convertible Preferred
Stock for any full quarterly period shall be computed by dividing the Rate by
four. Dividends payable on the Cumulative Convertible Preferred Stock for the
initial dividend period or any period less than a full quarterly period shall
be computed on the basis of a 365 day year.
2. REDEMPTION.
(a) The shares of Cumulative Convertible Preferred Stock will not
be redeemable, either in whole or in part, prior to October 6, 1998. Such
shares may be redeemed thereafter at the redemption price of $100 per share,
plus an amount equal to accrued and unpaid dividends thereon (the total sum so
payable on any such redemption being herein referred to as the "Redemption
Price").
(b) Upon November 6, 2000, (the "Mandatory Redemption Date") the
Corporation shall redeem all outstanding Cumulative Convertible Preferred Stock
by paying in cash therefor an amount per share equal to the Redemption Price.
The Optional Redemption Date and the Mandatory Redemption Date will
collectively be referred to herein as a "redemption date."
(c) The term "Accrued and Unpaid Dividends" shall mean a sum equal
to $7.50 per share per annum from the date from which dividends on the shares
of the Cumulative Convertible Preferred Stock accrued to and including the
redemption date, less the aggregate amount of all dividends theretofore paid
thereon.
-3-
<PAGE> 24
(d) In the event the Corporation shall redeem shares of the
Cumulative Convertible Preferred Stock, notice of such redemption shall be given
by registered mail, not less than ten nor more than sixty days prior to the
redemption date, to each holder of record of the shares to be redeemed, at such
holder's address as the same appears on the books of the Corporation. Each such
notice shall state: (i) the redemption date; (ii) the number of shares of the
Cumulative Convertible Preferred Stock to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (iii) the place or places where certificates for such
shares are to be surrendered for payment of the Redemption Price; (iv) that
shares of Cumulative Convertible Preferred Stock called for redemption may be
converted at any time before the close of business on the third day before the
redemption date; (v) the conversion price: and (vi) that dividends on the shares
to be redeemed will cease to accrue on such redemption date. In case of the
redemption of only a part of the Cumulative Convertible Preferred Stock at the
time outstanding, such redemption shall be made pro rata as nearly as
practicable, according to the number of shares then held by the respective
holders, with adjustment to the extent practicable to equalize for any prior
redemptions, provided that only full shares shall be selected for redemption.
(e) Upon notice having been mailed as aforesaid, from and after the
close of business on the redemption date (unless default shall be made by the
Corporation in making payment of the Redemption Price of the shares called for
redemption), dividends on the shares of the Cumulative Convertible Preferred
Stock so called for redemption shall cease to accrue, and said shares shall no
longer be deemed to be
-4-
<PAGE> 25
outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the Redemption
Price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by the Corporation at the
Redemption Price aforesaid.
(f) So long as any shares of Cumulative Convertible Preferred
Stock remain outstanding, any shares of the Cumulative Convertible Preferred
Stock which shall at any time have been redeemed by the Corporation shall, upon
such redemption, be retired and thereafter may not be reissued except as part
of a particular series of preferred stock ranking junior to the Cumulative
Convertible Preferred Stock.
(g) Notwithstanding the foregoing provisions of this paragraph 2,
unless the full cumulative dividends required to have been paid to date on all
outstanding shares of the Cumulative Convertible Preferred Stock shall have
been paid no shares of the Cumulative Convertible Preferred Stock shall be
redeemed unless all outstanding shares of the Cumulative Convertible Preferred
Stock are simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of the Cumulative Convertible Preferred Stock.
3. CONVERSION.
(a) The holder of any share of the Cumulative Convertible
Preferred Stock at his option may at any time (except that if any such share
shall have been called for redemption, then, as to such share, such right shall
terminate at the close of
-5-
<PAGE> 26
business on the third day before the date fixed for such redemption, unless
default shall be made by the Corporation in the payment of the redemption price
of the shares called for redemption) convert such share into a number of fully
paid and non-assessable shares of Common Stock determined pursuant to paragraph
3(d). Such right shall be exercised by the surrender of the share so to be
converted to the Corporation at any time during normal business hours at the
office or agency then maintained by it for payment of dividends on the shares
of the Cumulative Convertible Preferred Stock (which may be the Corporation's
principal place of business) (the "Payment Office"), accompanied by written
notice to the Corporation of such holder's election to convert and (if so
required by the Corporation or any conversion agent) by an instrument of
transfer, in form satisfactory to the Corporation and to any conversion agent,
duly executed by the registered holder or by his duly authorized attorney, and
transfer tax stamps or funds therefor, if required pursuant to paragraph 3(i).
(b) As promptly as practicable after the surrender for conversion
of any share of the Cumulative Convertible Preferred Stock in the manner
provided in paragraph 3(a) and the payment in cash of any amount required by
the provisions of paragraph 3(i), the Corporation will deliver or cause to be
delivered at the Payment Office to or upon the written order of the holder of
such share, certificates representing the number of full shares of Common Stock
issuable upon such conversion, issued in such name or names as such holder may
direct in accordance with and subject to the terms and conditions of the Stock
Purchase Agreement dated as of October 6, 1995, between the Corporation and the
original holders of the
-6-
<PAGE> 27
Cumulative Convertible Preferred Stock. Such conversion shall be deemed
to have been made immediately prior to the close of business on the date
of such surrender of the share in proper order for conversion, and all
rights of the holder of such share as a holder of such share shall cease
at such time and the person or persons in whose name or names the
certificates for such shares of Common Stock are to be issued shall be
treated for all purposes as having become the record holder or holders
thereof at such time and such conversion shall be at the Conversion
Price (as defined in paragraph 3(d)) in effect at such time; provided,
however, that any such surrender and payment on any date when the stock
transfer books of the Corporation shall be closed shall constitute the
person or persons in whose name or names the certificates for such
shares of Common Stock are to be issued as the record holder or holders
thereof for all purposes immediately prior to the close of business on
the next succeeding day on which such stock transfer books are opened
and such conversion shall be at the Conversion Price in effect at such
time on such succeeding day.
If the last day for the exercise of the conversion right shall be other
than a day on which the stock transfer books of the Corporation are open, then
such conversion right may be exercised on the next succeeding day on which such
stock transfer books are opened.
(c) No adjustments in respect of dividends shall be made
upon the conversion of any share of the Cumulative Convertible
Preferred Stock; provided, however, that if a share shall be converted
subsequent to the record date for any Dividend Payment Date but on or
prior to such Dividend Payment Date, the registered holder of such
share at the close of business on such record date shall be entitled to
receive the dividend payable on such share on such Dividend Payment
-7-
<PAGE> 28
Date notwithstanding the conversion thereof or the Corporation's
default in payment of the dividend due on such Dividend Payment Date.
(d) The initial conversion price ("Conversion Price")
shall be $5.00 per share of the Common Stock (equivalent to a
conversion rate of 20 shares of Common Stock for each share of the
Cumulative Convertible Preferred Stock). The Conversion Price shall
be subject to adjustment as follows:
(i) In case the Corporation shall (A) pay a
dividend or make a distribution on its Common Stock in shares of
its capital stock (whether in shares of Common Stock or of
capital stock of any other class), (B) subdivide its
outstanding shares of Common Stock into a greater number of
shares, (C) combine its outstanding shares of Common Stock into
a smaller number of shares, or (D) issue by reclassification
(including any reclassification in connection' with a merger or
consolidation in which the Corporation is the continuing
corporation) of its shares of Common Stock any shares of
capital stock of the Corporation, then the Conversion Price in
effect immediately prior to such action shall be adjusted so
that the holder of any share of the Cumulative Convertible
Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number and kind of shares of capital
stock which such holder would have owned immediately following
such action had such share been converted immediately prior
thereto. An adjustment made pursuant to this subparagraph (i)
shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a
-8-
<PAGE> 29
subdivision, combination or reclassification. If, as a result an adjustment
made pursuant to this subparagraph (i), the holder of any share thereafter
surrendered for conversion shall become entitled to receive shares of two or
more classes of capital stock of the Corporation, the Board of Directors or a
duly authorized committee thereof (whose determination shall be conclusive)
shall determine the allocation of the adjusted Conversion Price between or
among shares of such classes of capital stock. After such allocation, the
Conversion Price of each class of capital stock shall thereafter be subject to
adjustment in a manner and on terms as nearly equivalent as practicable to
those applicable to Common Stock under this paragraph 3.
(ii) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock (or securities convertible into Common Stock) at a price
per share less than the current market price per share (as determined pursuant,
to subparagraph (v) below) of the Common Stock on the record date mentioned
below, the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the date of issuance of such rights or warrants by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such rights or warrants plus the number of shares of
Common Stock which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate Conversion Price of the convertible
securities so offered) would
-9-
<PAGE> 30
purchase at such current market price per share of Common Stock, and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase (or into
which the convertible securities so offered are convertible). Such adjustment
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights or warrants. In case any rights
or warrants on account of which any adjustment is required to be made pursuant
to this subparagraph (ii) are issued for consideration, the offering price of
the shares to be issued upon exercise of any such right or warrant shall be
deemed to include such consideration as well as the additional consideration to
be received by the Corporation upon the exercise of such right or warrant
(determined as provided in subparagraph (iv) below). In case any rights or
warrants on account of which any adjustment has been made pursuant to this
paragraph (ii) expire without having been exercised, the Conversion Price shall
be further adjusted effective immediately after such expiration, so that such
Conversion Price shall equal the same Conversion Price as would have obtained
had the adjustment which was made upon the issuance of such rights or warrants
been made on the basis that the offering of additional shares of Common Stock
(or securities convertible into Common Stock) for subscription or purchase
related solely to those shares of additional Common Stock (or securities
convertible into Common Stock) actually subscribed for or purchased.
-10-
<PAGE> 31
(iii) In case the Corporation shall distribute to holders of its
Common Stock on account of its Common Stock any evidences of its indebtedness or
assets (excluding any cash dividends or other cash distributions out of funds
legally available therefor, or distributions referred to in subparagraph (i)
above) or rights, options or warrants to subscribe for securities of the
Corporation (excluding those referred to in subparagraph (ii) above), or any
other securities of the Corporation other than Common Stock, then in each such
case the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall be
the current market price per share (determined as provided in subparagraph (v)
below) of the Common Stock on the record date mentioned below less the then fair
market value (as determined by the Board of Directors of the Corporation or a
duly authorized committee thereof, whose determination shall be conclusive) on
such record date of the assets, evidences of indebtedness, options, rights or
warrants or other securities applicable to one share of Common Stock, and of
which the denominator shall be such current market price per share of Common
Stock on such record date. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such distribution.
(iv) For purposes of any computation respecting consideration
received pursuant to subparagraph (ii) above, the following shall apply:
-11-
<PAGE> 32
(a) In the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deductions be made for any commissions,
discounts or other expenses incurred by the Corporation for any
underwriting of the issue or otherwise in connection therewith;
(b) In the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined by the Board of Directors (irrespective of
the accounting treatment thereof), whose determination shall be
conclusive; and
(c) In the case of the issuance of securities convertible
into or exchangeable for shares of Common Stock, the aggregate
consideration received therefor shall be deemed to be the consideration
received by the Corporation for the issuance of such securities plus the
additional consideration, if any, to be received by the Corporation upon
the conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in subparagraphs (a) and (b)
of this subsection (iv)).
(v) For the purpose of any computation under subparagraph (ii) and
(iii) above, the current market price per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices of the Common
Stock for the 30 most recent consecutive trading days commencing no more than 45
trading days before the day in question. The closing price for each day shall be
the closing price on the American Stock Exchange, or, in case no such reported
sales take place on such day, the average of the reported closing bid and asked
quotations on the American Stock Exchange, or, if the Common Stock is not listed
on such Exchange or no such quotations are available, the last sales price in
the over-the-counter market reported by the National Association of Securities
Dealers Automated Quotations System, or if not reported by such System, the
average of the high bid and low asked
-12-
<PAGE> 33
quotations in the over-the-counter market as reported by National Quotation
Bureau, incorporated, or any similar organization, or if no such quotations are
available, the fair market price as determined by the Board of Directors of the
Corporation (whose determination shall be conclusive).
(vi) In any case in which this paragraph 3(d) shall require that an
adjustment be made immediately, retroactive to a record date, the Corporation
may elect to defer (but only until five business days following the mailing by
the Corporation of the notice described in paragraph 3(d)(viii) below) issuing
to the holder of any share converted after such record date the excess number
of (a) the shares of Common Stock and other capital stock of the Corporation
issuable upon such conversion (after adjustment) over (b) the shares of Common
Stock and other capital stock of the Corporation issuable upon such conversion
only on the basis of the conversion price prior to adjustment. In any case in
which this paragraph 3(d) shall require that an adjustment be made immediately
following an expiration date for any warrants or rights issued to all holders
of the Corporation's Common Stock, the Corporation may elect to defer (but only
until five business days following the mailing by the Corporation of the notice
described in paragraph 3(d)(viii) below) issuing to the holder of any share
converted after such expiration date all shares of Common Stock and other
capital stock of the Corporation issuable upon such conversion.
(vii) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
-13-
<PAGE> 34
price; provided, however, that any adjustments which by reason of this
subparagraph (vii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
paragraph 3 shall be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be.
(viii) Whenever the Conversion Price is adjusted as herein provided,
the Corporation shall promptly (a) file at the Payment Office a certificate
duly signed by an officer of the Corporation setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment, which certificate shall be conclusive evidence of
the correctness of such adjustment, and (b) mail or cause to be mailed a notice
of such adjustment in the Conversion Price to the holders of shares of the
Cumulative Convertible Preferred Stock at their last addresses as they shall
appear upon the books of the Corporation.
(ix) The term "Common Stock" shall mean the Corporation's Common
Stock, par value $.10, as the same exists at the date of filing of the
Certificate of Powers, Designations, Preferences and Rights with respect to the
Cumulative Convertible Preferred Stock or any other class of stock resulting
from successive changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time as a result of an
adjustment made pursuant to this paragraph 3(d), the holder of any share
thereafter surrendered for conversion shall become entitled to receive
-14-
<PAGE> 35
any shares of the Corporation other than shares of its Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any share shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in subparagraphs (i)
through (viii) above, and the provisions of paragraphs 3(a) through (c)
and paragraphs 3(e) through (k) with respect to the Common Stock shall
apply on like or similar terms to any such other shares.
(e) No fractional shares of stock shall be issued upon the
conversion of any share or shares of the Cumulative Convertible Preferred
Stock. In lieu of any fractional share which would otherwise be issuable, the
Corporation shall adjust such fractional interest by payment to the holder of
such surrendered share or shares of an amount in cash equal (computed to the
nearest cent) to the current market value of such fractional interest, computed
on the basis of the closing price of the Common Stock on the American Stock
Exchange on the trading day prior to the date of conversion, or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked quotations on the American Stock Exchange, or, if the Common Stock is
not listed on such Exchange or no such quotations are available, the last sales
price in the over-the-counter market reported by the National Association of
Securities Dealers Automated Quotations System, or if not reported by such
System, the average of the high bid and low asked quotations in the
over-the-counter market as reported by National Quotation Bureau, incorporated,
or any similar organization, or if no such quotations are available, the fair
market price
-15-
<PAGE> 36
as determined by the Board of Directors of the Corporation (whose determination
shall be conclusive).
(f) If any of the following shall occur, namely:
(i) any consolidation or merger to which the Corporation is
a party, other than a consolidation or a merger in which the
Corporation is a continuing or surviving Corporation and which does not
result in any reclassification of, or change (other than a change in
par value or from par value to no par value or from no par value to par
value, or as a result of a subdivision or combination) in, outstanding
shares of the Common Stock; or
(ii) any sale or transfer to another corporation of all or
substantially all of the assets of the Corporation;
then the holder of each share then outstanding shall have the right to convert
such share into the kind and amount of shares of stock and/or other securities
and property receivable upon such consolidation, merger, sale or conveyance by
a holder of the number of shares of Common Stock issuable upon conversion of
such share immediately prior to such consolidation, merger, sale or conveyance,
subject to adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this paragraph. The provisions
of this paragraph 3(f) shall similarly apply to successive consolidations,
mergers, sales or conveyances.
(g) The Corporation covenants that it will at all times reserve and
keep available, solely for the purpose of issue upon conversion of the shares
of the Preferred Stock, the full number of shares of Common Stock as shall be
issuable upon the conversion of all such outstanding shares, provided that
nothing contained
-16-
<PAGE> 37
herein shall be construed to preclude the Corporation from satisfying its
obligations in respect of the conversion of any shares of the Cumulative
Convertible Preferred Stock by delivery of repurchased shares of Common Stock
which are held in the treasury of the Corporation.
The Corporation covenants that all shares of Common Stock which shall
be issued upon conversion of the shares will upon issue be fully paid and
nonassessable and not subject to preemptive rights.
(h) Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of the Common Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at the Conversion
Price as so adjusted.
(i) The issuance of certificates for shares of Common Stock upon
conversion shall be made without charge for any stamp or other similar tax in
respect of such issuance. However, if any such certificate is to be issued in
a name other than that of the holder of record of the share or shares
converted, the person or persons requesting the issuance thereof shall pay to
the Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of
the Corporation that such tax has been paid or is not payable.
(j) Notwithstanding anything elsewhere contained herein, any funds
which at any time shall have been deposited by the Corporation or on its behalf
with any paying agent for the purpose of paying dividends on or the redemption
price of any
-17-
<PAGE> 38
of the shares of the Cumulative Convertible Preferred Stock and which shall not
be required for such purposes because of the conversion of such shares, as
provided in this paragraph 3, shall, upon delivery to the paying agent of
evidence satisfactory to it of such conversion, be repaid to the corporation by
the paying agent.
(k) In case there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, then the Corporation shall cause
to be filed with any conversion agent, and shall cause to be given to the
holders of the shares of the Cumulative Convertible Preferred Stock at least
ten days prior to the applicable record date hereinafter specified, a notice of
the date on which such dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such dissolution,
liquidation or winding up. Failure to give such notice or any defect therein
shall not affect the legality or validity of any proceedings described in this
paragraph 3(k).
4. VOTING.
Holders of the Cumulative Convertible Preferred Stock shall not be
entitled to vote in respect of their Cumulative Convertible Preferred Stock on
any matter submitted to the shareholders of the Corporation.
-18-
<PAGE> 39
5. LIQUIDATION RIGHTS.
(a) Upon the dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of the
Cumulative Convertible Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to stockholders, before
any payment or distribution shall be made on the Common Stock or on any other
class of stock ranking junior to the Cumulative Convertible Preferred Stock in
respect of distributions upon liquidation or winding up, the amount of $100 per
share, plus a sum equal to all dividends (whether or not earned or declared) on
such shares accrued and unpaid thereon to the date payment is made available.
(b) Neither the sale, lease or exchange (for cash, shares of
stock, securities or other consideration) of all or substantially all the
property and assets of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or consolidation
of any other corporation into or with the Corporation, shall be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary, for the
purposes of this paragraph 5.
(c) After the payment to the holders of the shares of the
Cumulative Convertible Preferred Stock of the full preferential amounts
provided for in this
-19-
<PAGE> 40
paragraph 5, the holders of the Cumulative Convertible Preferred Stock as such
shall have no right or claim to any of the remaining assets of the Corporation.
6. RANKING
With regard to rights to receive distributions upon the dissolution,
liquidation or winding-up of the Corporation, the Cumulative Convertible
Preferred Stock shall rank prior to the Common Stock or any other class of
capital stock of the Corporation. IN WITNESS WHEREOF, Specialty Chemical
Resources, inc. has caused this certificate to be made by its President and
Secretary, respectively, this 6th day of October, 1995.
--- -------
/s/ Edwin M. Roth
-----------------------------
Edwin M. Roth, President
/s/ Ira C. Kaplan
-----------------------------
Ira C. Kaplan, Assistant Secretary
[Seal]
-20-
