SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
PORTAGE INDUSTRIES CORPORATION
(Name of Issuer)
COMMON STOCK, $0.01 par value
(Title of Class of Securities)
735755 10 0
(CUSIP Number)
David B. Mueller Albert F. Bender, III, Esq.
Spartech Corporation Armstrong, Teasdale, Schlafly & Davis
7733 Forsyth, Suite 1450 One Metropolitan Square, Suite 2600
Clayton, MO 63105 St. Louis, Missouri 63102
Ph. (314) 721-4242 Ph. (314) 621-5070
(Name, address and telephone number of person
authorized to receive notices and communications)
January 26, 1996
(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 [X].
(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.)
Note: Six copies of this Statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* 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 disclosure provided in a prior cover page.
The information required on 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 ("Act") 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).
CUSIP No. 735755 10 0 Page 2
1 NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: Spartech Corporation
IRS ID No. 43-0761773
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
a ( ) b ( ) Not applicable
3 SEC USE ONLY
4 SOURCE OF FUNDS: WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e): [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER: 784,160
8 SHARED VOTING POWER: -0-
9 SOLE DISPOSITIVE POWER: 784,160
10 SHARED DISPOSITIVE POWER: -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 784,160
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 35%
14 TYPE OF REPORTING PERSON: CO
CUSIP No. 735755 10 0 Page 3
This Schedule 13D relates to the proposed acquisition by Spartech
Corporation, a Delaware corporation ("Spartech"), of all of the outstanding
shares of common stock, $0.01 par value, ("Common Stock") of Portage Industries
Corporation, a Delaware corporation (the "Company"), pursuant to a cash merger
(the "Merger") between Spartech Plastics, Inc., a Delaware corporation and
wholly owned subsidiary of Spartech ("Mergeco"), and the Company, whereby each
outstanding share of the Common Stock not owned directly by Spartech, Mergeco,
the Company or any wholly owned subsidiary of Spartech, except for shares of
Common Stock held by holders who comply with the provisions of the Delaware law
regarding the right of stockholders to dissent from the Merger and require
appraisal of their shares of Common Stock, will be converted into the right to
receive $6.60 per share, in cash, without interest.
Item 1. Security and Issuer
This Statement relates to the common stock, $0.01 par value, of Portage
Industries Corporation, a Delaware corporation. The address of the Company's
principal executive offices is 1325 Adams Street, Portage, Wisconsin 53901.
Item 2. Identity and Background
(a), (b), (c) The person filing this Statement is Spartech. Spartech,
together with its subsidiaries, is engaged in the plastics processing business,
with its two lines of business being extruded sheet and rollstock and merchant
compounding. The address of the principal executive offices of Spartech is
7733 Forsyth, Suite 1450, Clayton, Missouri 63105. The names, business
addresses and present principal occupations or employments of the executive
officers and directors of Spartech are set forth on Schedule A which is
attached hereto and is incorporated herein by reference.
(d), (e) Neither Spartech, nor, to the best of its knowledge, any of the
persons listed in Schedule A, during the last five years has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which Spartech or any such person was or
is 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.
(f) Spartech, and, to the best knowledge of Spartech, every person listed
in Schedule A, excepting W. R. Clerihue, Francis J. Eaton and Rodney H.
Sellers, is a citizen of the United States. Mr. Clerihue is a citizen of
Canada. Mr. Eaton and Mr. Sellers are citizens of the United Kingdom.
Item 3. Source and Amount of Funds or Other Consideration
The aggregate amount of funds used by Spartech for the acquisition of a
beneficial interest in the Option Shares described in Item 4 will not exceed
$2.00. The source of funds is Spartech's working capital.
If Spartech exercises all of the options provided in the Shareholder
Option Agreements described in Item 4, it will pay an additional $5,175,456 in
cash from its working capital.
CUSIP No. 735755 10 0 Page 4
Item 4. Purpose of Transaction
On January 22, 1996, Spartech and the Company executed a non-binding
Letter of Intent ("Letter of Intent") providing for the purchase by Spartech of
all outstanding Common Stock of the Company at a price of $6.60 per share in a
cash merger transaction. The Letter of Intent is attached hereto as Exhibit 1
and incorporated herein by reference. Pursuant to the Letter of Intent, upon
execution of a definitive merger agreement and the receipt of all requisite
shareholder approvals, Mergeco is to be merged with and into the Company, the
Company being the surviving corporation, and each share of Common Stock issued
and outstanding (other than shares owned by Spartech, Mergeco, the Company, any
direct or indirect wholly owned subsidiary of Spartech or stockholders
asserting dissenters' rights) will be converted into the right to receive
$6.60, in cash, without interest. Upon completion of the Merger, the Company
will be a wholly owned subsidiary of Spartech.
On January 26, 1996, Spartech entered into a Shareholder Option Agreement
with Allstate Insurance Company, attached hereto as Exhibit 2 and incorporated
herein by this reference, and a Shareholder Option Agreement with Madison Allen
Self, attached hereto as Exhibit 3 and incorporated herein by this reference.
Pursuant to these Shareholder Option Agreements, Allstate Insurance Company has
granted Spartech an irrevocable option to purchase 459,660 shares of Common
Stock and Madison Allen Self has granted Spartech an irrevocable option to
purchase 324,500 shares of Common Stock (together, the "Option Shares") at a
price in cash of $6.60 per share, such options being exercisable for a period
of 120 days from the date of such Shareholder Option Agreements.
Upon exercise of Spartech's options therein, Spartech will receive, if it
so requests, an irrevocable proxy authorizing such persons as Spartech shall
designate to act for the grantor of such option as its 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 such Option Shares which the grantor
of such option is entitled to vote at any meeting (whether annual or special
and whether or not an adjourned meeting) of the Company's shareholders or
otherwise, and revoking any prior proxies granted by the grantor of such option
with respect to such Option Shares. For additional information concerning the
specific terms of the Shareholder Option Agreements, reference is hereby made
to such agreements.
The purpose of the Shareholder Option Agreements is to facilitate
Spartech's acquisition of the Company. Spartech intends to exercise its
options provided therein and to vote the Shares for which it is granted a proxy
in favor of the Merger.
If the Merger is completed as planned, the Certificate of Incorporation of
Mergeco will be the Certificate of Incorporation of the surviving corporation.
Upon completion of the Merger, the directors of Mergeco will be the initial
directors of the Company, and the officers of Mergeco and such other persons
designated by Spartech will be the officers of the Company. Upon completion of
the Merger, Spartech intends to cause the Company to have the Common Stock
deregistered under the Securities Exchange Act of 1934, as amended, and to
cease to be listed on the American Stock Exchange.
Spartech and any direct or indirect wholly owned subsidiary of Spartech
may purchase additional shares of Common Stock on the open market. The
CUSIP No. 735755 10 0 Page 5
consideration for such purchases will be paid from the working capital of
Spartech.
Other than as described above, Spartech has no other present plans or
proposals which relate to, or may result in, any of the matters listed in Items
4(a) - (j) of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) Spartech may be deemed the beneficial owner of 784,160 shares of
Common Stock pursuant to the terms of the Shareholder Option Agreements,
representing 35% of the 2,269,100 shares of Common Stock outstanding at October
1, 1995. Except for the Option Shares, neither Spartech nor, to the best of
its knowledge, any of the persons listed on Schedule A beneficially own or have
a right to acquire beneficial ownership of any shares of Common Stock.
(b) Pursuant to the terms of the Shareholder Option Agreements, Spartech
does not have the sole power to vote or to direct the vote, sole power to
dispose or to direct the disposition or shared power to dispose or to direct
the disposition of any shares of Common Stock until such time as Spartech shall
exercise its option under either or both of the Shareholder Option Agreements.
(c) The Shareholder Option Agreements were each executed on January 26,
1996. The Letter of Intent was executed on January 22, 1996.
(d) Until such time as Spartech shall exercise its options pursuant to
the Shareholder Option Agreements, Allstate Insurance Company and Madison Allen
Self have the right to receive and the power to direct the receipt of dividends
from, or the proceeds of, the Option Shares.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Reference is made to the descriptions of the Letter of Intent described in
Item 4 and attached hereto as Exhibit 1 and the Shareholder Option Agreements
described in Item 4 and attached hereto as Exhibit 2 and Exhibit 3.
Item 7. Material to be Filed as Exhibits
Exhibit 1 - Letter of Intent dated as of January 22, 1996, by and
between Spartech and the Company.
Exhibit 2 - Shareholder Option Agreement dated as of January 26, 1996,
by and between Allstate Insurance Company and Spartech
Corporation.
Exhibit 3 - Shareholder Option Agreement dated as of January 26, 1996,
by and between Madison Allen Self and Spartech Corporation.
Exhibit 4 - Text of Spartech Press Release dated January 23, 1996.
CUSIP No. 735755 10 0 Page 6
SIGNATURES
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this Statement is true,
complete and correct.
SPARTECH CORPORATION
February 5, 1996 By: /s/ David B. Mueller
------------------------------------
David B. Mueller, Vice President
of Finance
CUSIP No. 735755 10 0 Page 7
SCHEDULE A
The names of the executive officers and directors of Spartech Corporation
("Spartech") and their principal occupations, if other than with Spartech, are
set forth below. The business address of each person, if not specified below,
is that of Spartech.
Executive Officers of Spartech
- ------------------------------
W.R. Clerihue Chairman of the Board
Bradley B. Buechler President, Chief Executive Officer
and Chief Operating Officer
David B. Mueller Vice President of Finance, Chief
Financial Officer and Secretary
Daniel J. Yoder Vice President - Engineering and
Technology
Randy C. Martin Corporate Controller
Directors of Spartech
- ---------------------
Bradley B. Buechler President, Chief Executive Officer
and Chief Operating Officer of Spartech
Corporation
David B. Mueller Vice President of Finance, Chief
Financial Officer and Secretary of
Spartech Corporation
John F. Arning Retired Partner of the law firm of
Sullivan & Cromwell
Thomas L. Cassidy Managing Director, Trust Company of the West
Senior Partner, TCW Capital
W.R. Clerihue Chairman of the Board of Spartech
Corporation
Francis J. Eaton Deputy Chief Executive Officer, British
Vita PLC
Jackson W. Robinson President, Winslow Management Company
Rodney H. Sellers Chief Executive Officer, British Vita PLC
Exhibit 1
[SPARTECH CORPORATION LETTERHEAD]
January 22, 1996
Confidential
- ------------
Mr. Anthony J. Lisauskas
President
Portage Industries Corporation
1325 Adams Street
Portage, Wisconsin 53901
Dear Mr. Lisauskas:
The purpose of this letter is to summarize the preliminary understandings
we have reached regarding the proposed offer by Spartech Corporation
("Spartech") to acquire all of the outstanding capital stock of Portage
Industries Corporation ("Portage"). Except as set forth in paragraphs 3, 4, 5,
6, and 7 below, this letter is not to be considered as a legally binding or
enforceable agreement or commitment of either Spartech or Portage, and failure
for any reason to consummate these transactions shall not, except as provided
herein, give rise to any legal liability on the part of Spartech or Portage.
Rather, this letter will serve to assist the parties in negotiating a
definitive agreement. Subject to the above, our understanding is as follows:
1. Structure. A wholly-owned subsidiary of Spartech will be merged
with and into Portage, and all outstanding shares of Portage Common Stock
shall be cancelled in exchange for $6.60 per share in cash. Prior to the
effective time of the merger, Portage will take such action as may be
necessary to cause each outstanding stock option or warrant, whether or
not then exercisable, to be cancelled with the result that each holder
will be entitled to receive only an amount in cash equal to the difference
between $6.60 (the merger consideration) and the exercise price per share
of such option or warrant multiplied by the number of shares previously
subject to such option or warrant. Except for the issuance of shares of
Common Stock upon the exercise of currently outstanding options and
warrants, Portage will not issue any additional shares of its capital
stock, or options, warrants or other securities exercisable for or
convertible into its capital stock, prior to the closing of the proposed
transaction.
Mr. Anthony J. Lisauskas
January 22, 1996
Page Two
2. Conditions. Consummation of the above described transactions
shall be subject to, among other things, completion, to the satisfaction
of Spartech and its legal counsel, of the following matters:
(a) An investigation of Portage's financial condition, results
of operations, business, pending litigation, accounting and tax
matters, and such other matters as Spartech deems necessary.
(b) Execution and delivery of a definitive agreement between
Spartech and each of Allstate Insurance Company and Madison Allen
Self whereby each agrees to sell each entity's Portage Common Stock
to Spartech at the price specified above and to vote any shares owned
in favor of the proposed transaction.
(c) Execution and delivery of a definitive agreement between
Spartech and Portage with respect to the merger, containing mutually
satisfactory representations, warranties and covenants, and providing
for no continuation or survival of the representations, warranties
and covenants or indemnification beyond the closing.
(d) Receipt of all necessary consents and approvals from
directors, shareholders, lenders, lessors, governmental entities and
other third parties. If a filing is required under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, Spartech will pay all of
the filing fees in connection therewith, provided, however, that if
the transaction is not consummated for any reason, Portage will
reimburse Spartech for 50% of such fees.
(e) Delivery of a satisfactory comfort letter from the
independent accountants of Portage.
(f) Mailing by Portage of definitive proxy materials to all
shareholders regarding the merger, and the Board's recommendation
that Portage shareholders vote for the merger, all in form
satisfactory to Spartech.
(g) Execution of employment contracts and/or noncompete
agreements with key employees of Portage, all in form satisfactory to
Spartech.
3. Public Announcements. Each party agrees that there shall be no
public statements or releases, except those as may be required by law in
the judgment of counsel, without the advance approval of the other party
as to substance and timing. The parties will cooperate with each other to
coordinate all such public statements and releases either party may make
with respect to the transactions contemplated thereby.
Mr. Anthony J. Lisauskas
January 22, 1996
Page Three
4. Due Diligence Review. Portage will provide to Spartech's
officers, employees, counsel, agents, accountants and other
representatives working on the transaction, free and full access to its
facilities, properties, books and records, will permit them to make
extracts from and copies of such books and records, and will from time to
time furnish them with additional financial and operating data and other
information as to its financial condition, results of operation, business,
properties, assets, liabilities or future prospects as they from time to
time may request. Portage will cause its independent certified
accountants to make available to Spartech and its independent certified
accountants the work papers relating to any audit of its financial
statements in the last five (5) years. Spartech agrees to keep all
Proprietary Information (as defined) confidential in accordance with the
terms and conditions of that certain letter agreement dated December 14,
1995 between Spartech and Mesirow Financial.
5. Broker's or Finder's Fees. Each party represents that there are
not and will not be any broker's, finder's or similar fees payable in
connection with the transactions contemplated hereby, except that Spartech
has engaged, and will be solely responsible for, certain fees to First
Analysis Securities Corporation, and except that Portage has engaged, and
will be solely responsible for, certain fees to Mesirow Financial.
6. Expenses. Each party will bear its own expenses, including
attorney's fees and expenses, in connection with the actions and
transactions contemplated by this letter except if (a) at any time prior
to the termination of this Agreement (as described in Section 8 below)
Portage reaches an agreement with, or receives a bona fide proposal from,
a third party to acquire substantially all of the assets or Common Stock
of Portage or Portage shareholders receive a tender offer from a third
party for more than 20% of the outstanding Common Stock of Portage and
(b) the acquisition contemplated by such agreement or proposal is
consummated within one hundred and eighty (180) days from the date hereof
or such tender offer results in the purchase by the offeror of at least
20% of the outstanding shares of Portage Common Stock within one hundred
and eighty (180) days from the date hereof, then Portage or its successor
in interest shall be obligated to pay, upon consummation of such
acquisition, merger or stock purchase, a one-time fee of $250,000 to
Spartech to reimburse Spartech for its costs and expenses incurred in
connection with the transactions contemplated by this letter and to
otherwise compensate Spartech for its efforts. It is also understood that
the process of due diligence review will take 30 days to complete.
Spartech may, at any time within the first 30
Mr. Anthony J. Lisauskas
January 22, 1996
Page Four
days from the signing of this letter, upon written notice to Portage,
decide it is not going to proceed with the merger without further
obligation or liability. If after the end of the 30-day period, Spartech
or one of its subsidiaries does not proceed in good faith to negotiate a
definitive merger agreement under the terms contemplated hereunder, and
provided (i) Spartech is lawfully authorized to do so, (ii) there has not
been a material adverse change in the financial condition of Portage, and
(iii) all of the conditions b-g of Section 2 of this letter have either
been fully satisfied or are contained as conditions to closing in the
merger agreement, Spartech will pay a one-time fee of $250,000 to Portage
to reimburse Portage for its costs and expenses incurred in connection
with the transactions contemplated by this letter and to otherwise
compensate Portage for its effort with such payment to be considered full
and complete "liquidated damages."
7. Exclusive Dealings. During the term of this agreement (as
described in Section 8 below), Portage will not, directly or indirectly,
through any officer, director, agent or otherwise, (i) solicit or
initiate, directly or indirectly, or encourage submission of inquiries,
proposals or offers from any potential buyer (other than Spartech)
relating to the disposition of the assets or securities of Portage, or any
part thereof (other than sales of inventory in the ordinary course) or
(ii) participate in any discussions or negotiations regarding, or furnish
any person with information with respect to, the disposition of the assets
or any securities of Portage or any part thereof provided, however, that
nothing in this Section 7 should preclude Portage's Board from considering
an unsolicited offer or proposal in accordance with the proper exercise of
its fiduciary duties.
8. Termination. In the event that a binding merger agreement has
not been entered into between Portage and Spartech or one of its wholly-
owned subsidiaries within sixty days of the date hereof, either party may
terminate this agreement upon written notice to the other party without
further obligation or liability, except Section 5 and 6, which shall
survive termination of this agreement.
Mr. Anthony J. Lisauskas
January 22, 1996
Page Five
If the foregoing is in accordance with your understanding, please sign as
indicated below and return one of the originally-executed copies of this letter
to me. If we do not receive a signed copy of this letter on January 22, 1996,
we will assume you have no interest in pursuing this matter.
Very truly yours,
SPARTECH CORPORATION
By: /s/ Bradley B. Buechler
-----------------------------------
Bradley B. Buechler
President and CEO
ACCEPTED:
PORTAGE INDUSTRIES CORPORATION
By: /s/ Anthony J. Lisaukas
--------------------------------
Anthony J. Lisauskas
President
Date: January 22, 1996
Exhibit 2
SHAREHOLDER OPTION AGREEMENT
----------------------------
This Shareholder Option Agreement (the "Agreement") is entered into this
26th day of January, 1996 by and between ALLSTATE INSURANCE COMPANY
("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 459,660 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 its 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 deliver 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 and, if requested by
Optionee, an irrevocable proxy, duly executed by Shareholder, authorizing such
persons as Optionee shall designate to act for Shareholder as its lawful agent,
-1-
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 it 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 its 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
-2-
its 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
7733 Forsyth, Suite 1450
Clayton, Missouri 63105-1817
Attention: David B. Mueller
With copies to: Armstrong, Teasdale, Schlafly & Davis
One Metropolitan Square, Suite 2700
St. Louis, Missouri 63102-2740
Attention: Albert F. Bender, III, Esq.
To Shareholder: Allstate Insurance Company
Allstate Plaza South, Ste. G5B
Northbrook, Illinois 60062
Attn: Venture Capital Division,
D. O'Connell
14. Effect of Invalidity. Any term or provision of this Agreement which
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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.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
day and year first above written.
Optionee:
SPARTECH CORPORATION
By: /s/ David B. Mueller
-------------------------------------
Title: Vice President of Finance
Shareholder:
ALLSTATE INSURANCE COMPANY
By: /s/ John M. Gowse
--------------------------------
Title: Authorized Signatory
By: /s/ David A. Chatspark
--------------------------------
Title: Authorized Signatory
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Exhibit 3
SHAREHOLDER OPTION AGREEMENT
----------------------------
This Shareholder Option Agreement (the "Agreement") is entered into this 26th
day of January, 1996 by and between MADISON ALLEN 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
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(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
-2-
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
7733 Forsyth, Suite 1450
Clayton, Missouri 63105-1817
Attention: David B. Mueller
With copies to: Armstrong, Teasdale, Schlafly & Davis
One Metropolitan Square, Suite 2700
St. Louis, Missouri 63102-2740
Attention: Albert F. Bender, III, Esq.
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To Shareholder: Madison Allen Self
Tioga International, Inc.
1440 Huntington Drive
Calumet City, Illinois 60409
With copies to: Stephen A. Tsoris, Esq.
McDermott, Will & Emery
227 West Monroe
Chicago, Illinois 60606
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.
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
day and year first above written.
Optionee:
SPARTECH CORPORATION
By: /s/ David B. Mueller
-------------------------------------
Title: Vice President of Finance
Shareholder:
/s/ Madison Allen Self
--------------------------------------------
Madison Allen Self
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Exhibit 4
[SPARTECH CORPORATION LETTERHEAD]
SPARTECH ANNOUNCES INTENT TO PURCHASE
-------------------------------------
THE STOCK OF PORTAGE INDUSTRIES CORPORATION
-------------------------------------------
ST. LOUIS, MISSOURI, January 23, 1996 -- Spartech Corporation (NYSE-SEH)
announced today that it signed a letter of intent to acquire the stock of
Portage Industries Corporation -- a thermoplastic processor specializing in
custom heavy and light gauge extrusion, and thermoforming products, based in
Portage, Wisconsin -- for $6.60 per share.
Spartech's President and Chief Executive Officer, Bradley B. Buechler,
stated, "We are enthusiastic about the prospect of adding Portage to the
Spartech family of plastics processing companies. The addition of Portage will
be of strategic importance in further strengthening the Company's current ten
plant extruded sheet & rollstock segment -- Spartech Plastics. Portage's
excellent reputation for producing specialized packaging products should
complement well Spartech Plastics' history of servicing the heavier gauge
transportation, consumer and industrial products markets. When completed, the
combination of Spartech Corporation's current annual sales volume of just over
$370 million and Portage's recent running rate of approximately $35 million
will increase our annualized production capacity and total Company sales to
more than 450 million pounds and $400 million, respectively."
David B. Mueller, Spartech's Vice President of Finance and Chief Financial
Officer, stated that "Current plans call for a definitive cash merger agreement
to be executed in the next 30 days, followed by the closing of the transaction
expected on or before May 1, 1996, subject to the receipt of certain consents,
as well as Portage shareholder and regulatory approvals. The acquisition will
be financed through additional borrowings under the Company's unsecured credit
facility. Despite this increase in our outstanding debt, the transaction is
expected to be accretive on the Company's earnings per share, and our debt-to-
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equity ratio will continue to remain less than one-to-one following the close
of the transaction."
Finally, Mr. Buechler added, "Spartech plans to put additional
manufacturing equipment and capital into Portage's facilities during the next
12 to 18 months. We also hope to be able to retain all key Portage personnel
following completion of the transaction."
Spartech is a leading manufacturer of engineered thermoplastic
materials and polymeric compounds which today annually produces more than
375 million pounds of extruded sheet & rollstock and specialty plastic
alloys, compounds & color concentrates.
