INCENTIVE STOCK OPTION
PURSUANT TO THE SPARTECH CORPORATION
2004 EQUITY COMPENSATION PLAN
Option No.: 2004-___
Option Date: ________, 20__
Optionee: ____________________
Option Shares: ________
Exercise Price: $______ (US) per share [to be not less than FMV on Option
Date]
Expiration Date: 5:00 p.m. St. Louis, Missouri time on ________, 20__
[to be 1 day before the 10th anniversary of the Option D
ate]
This Incentive Stock Option ("Option") is granted by Spartech Corporation
("Spartech") to the "Optionee" named above, as of the "Option Date" specified
above, pursuant to the Spartech Corporation 2004 Equity Compensation Plan (as
amended and in effect from time to time, the "Plan"). Capitalized terms not
defined herein have the meanings given to them in the Plan.
Subject to the terms and conditions set forth herein and the Plan, and
subject to the Optionee's written acknowledgment and acceptance of the Option,
Spartech hereby grants to the Optionee the right and option to purchase, by
exercising the Option, all or any part of the number of shares of Spartech's
common stock, $.75 par value per share (the "Common Stock") specified above (the
"Option Shares"), at the price per share specified above (the "Exercise Price").
The Option is subject to the terms of the Plan and to all of the terms and
conditions contained above and in Exhibit A, which begins on the following page
and which is a part of the Option. Among other things, Exhibit A contains
important information on vesting and termination of the Option.
SPARTECH: SPARTECH CORPORATION
By:
Bradley B. Buechler
Chairman of the Board, President and
Chief Executive Officer
* * * * *
By signing below, the Optionee hereby acknowledges and accepts the grant of
the Option subject to the terms set forth above and in the Plan, and
acknowledges receipt of a copy of the Plan and the current Prospectus for the
Option and the Option Shares.
OPTIONEE:
EXHIBIT A
TO
INCENTIVE STOCK OPTION
1. Characterization as Incentive Stock Option. The Option is
intended to constitute an "incentive stock option" under Section
422 of the Internal Revenue Code; however, Spartech does not
guarantee that the Option will in fact be treated as an incentive
stock option, and to the extent the Option does not meet the
requirements of an "incentive stock option" it will be treated as a
nonstatutory stock option.
2. Term and Termination of the Option. The Option is effective
as of the Option Date. The Option will expire, terminating the
Optionee's right to exercise it, automatically and without any
requirement of notice to the Optionee, on the "Expiration Date"
specified above; except that:
(i) If the Optionee terminates his or her Employment prior
to the Expiration Date for any reason except Disability,
the Option will expire immediately upon the termination of
the Optionee's employment; or
(ii) If Spartech terminates the Optionee's Employment prior
to the Expiration Date for Cause, the Option will expire
immediately upon the termination of the Optionee's
employment; or
(iii) If Spartech terminates the Optionee's Employment by
reason of Disability, the Option will expire one (1) year
after the effective date of termination of the Optionee's
employment, but in no event later than the Expiration
Date; or
(iv) In the event of the Optionee's death, the Option will
expire one (1) year after the date of death, but in no
event later than the Expiration Date; or
(v) If the Optionee's Employment terminates for any reason
other than as set forth in Sections 2(i), 2(ii), 2(iii) or
2(iv), the Option will expire three (3) months after the
effective date of termination of the Optionee's
employment, but in no event later than the Expiration
Date.
3. When the Option Becomes Exercisable. The Option will become
exercisable ("vest") in installments at a rate of 25% of the total
number of Option Shares on each of the first four (4) anniversaries
of the grant date, on a cumulative basis; provided, however, that,
subject to the above termination provisions:
(i) The Option will immediately vest in full (A) upon the
death of the Optionee, or (B) if the Optionee's Employment
terminates because of Disability, or (C) if the
Optionee's Employment terminates because of Retirement, or
(D) in the event of a Change in Control; and
(ii) Except as set forth above, no part of the Option will
vest after the termination of the Optionee's Employment.
4. Exercise of the Option. Subject to the other terms and
conditions contained herein, the Option may be exercised only in
the following manner:
(a) Who May Exercise the Option. The Option may be exercised
during the lifetime of the Optionee only by the Optionee, and
thereafter only by the personal representative of the Optionee or a
person who acquired the right to exercise the Option by bequest or
inheritance or by reason of the death of the Optionee. Solely for
purposes of Sections 4(b) and 4(c), the term "Optionee" shall
include any person permitted to exercise the Option.
(b) Method of Exercise. The Optionee shall deliver to
Spartech's Chief Financial Officer or Director of Taxes or other
representative designated or authorized by Spartech for such
purpose, at Spartech's principal office, a written notice signed by
the Optionee (the form of which may be prescribed by Spartech)
specifying the number of Option Shares which the Optionee wishes to
purchase pursuant to the Option and the method of payment,
accompanied by:
(i) Payment of the Exercise Price as described in Section
4(c); plus
(ii) Payment of any required withholding taxes as described
in Section 4(d); plus
(iii) Certificates for any shares surrendered in payment of
the option price, or such other evidence of ownership and
transfer of such shares as Spartech may require.
(c) Payment of Exercise Price. The Optionee may pay the
Exercise Price by any one or a combination of the following
methods:
(i) By delivering a certified or cashier's check in the
amount of the Exercise Price; or
(ii) By delivering shares of Spartech common stock owned by
the Optionee for at least six months preceding the
exercise date and having a fair market value equal to the
Exercise Price; or
(iii) In lieu of such delivery, by attesting (in such form as
Spartech may require) to the Optionee's ownership of
deliverable shares of Spartech common stock owned by the
Optionee for at least six months preceding the exercise
date and having a fair market value equal to the Exercise
Price, in which event the number of such shares shall be
withheld from the Option Shares issued pursuant to the
exercise; provided that such shares may not have been
attested to for any similar purpose within the previous
six months; or
(iv) If Spartech consents in advance, by authorizing a third
party to sell a portion of the acquired Option Shares
promptly on the open market and remit the sale proceeds to
Spartech not later than the settlement date in payment of
the Exercise Price.
(d) Payment of Withholding Taxes. In the event that Spartech
is required to withhold any taxes, including but not limited to
Social Security and Medicare taxes, upon the exercise of the
Option, then as a condition of the exercise of the Option, at or
before the time of exercise the Optionee shall pay, or make
arrangements satisfactory to Spartech to assure the timely payment
of, all federal and state taxes required to be withheld by Spartech
as a result of the exercise. Such withholding taxes may be paid by
any one or a combination of the following methods:
(i) By delivering a certified or cashier's check in the
amount of such taxes; or
(ii) By delivering shares of Spartech common stock owned by
the Optionee for at least six months preceding the
exercise date and having a fair market value equal to the
amount of such taxes; or
(iii) In lieu of such delivery, by attesting (in such form as
Spartech may require) to the Optionee's ownership of
deliverable shares of Spartech common stock owned by the
Optionee for at least six months preceding the exercise
date and having a fair market value equal to the amount of
such taxes, in which event the number of such shares shall
be withheld from the Option Shares issued pursuant to the
exercise; provided that such shares may not have been
attested to for any similar purpose within the previous
six months; or
(iv) If Spartech consents in advance, by authorizing a third
party to sell a portion of the acquired Option Shares
promptly on the open market and remit the sale proceeds to
Spartech not later than the settlement date in payment of
such taxes; or
(v) By the partial surrender and cancellation of the Option
as to an aggregate number of shares of Spartech common
stock which, if issued, would have a fair market value
equal to the amount of such taxes; provided that no taxes
in excess of the minimum amount of taxes required to be
withheld by applicable laws or regulations may be paid by
this method.
If for any reason payment is not made as aforesaid, Spartech may
withhold the amount of any remaining withholding taxes from any
other compensation due to the Optionee.
(e) Fair Market Value. For the purposes of Sections 4(c) and
4(d), the "fair market value" of Spartech common stock means the
closing price (i.e. excluding after-hours trading) on the New York
Stock Exchange (or such other exchange as may then be the principal
exchange for Spartech common stock) on the last day on which
Spartech common stock was traded prior to the date the notice of
exercise is received by Spartech.
(f) Option Shares Not Issued Until Full Payment Received. The
Option Shares shall not be deemed issued for any purpose except to
permit a sale pursuant to Section 4(c)(iv) or 4(d)(iv), and
certificates for the Option Shares shall not be delivered to the
Optionee, until full payment has been received by Spartech; and the
Optionee shall not have any right or status as a stockholder with
respect to any Option Shares prior to their issuance.
(g) Reporting of Certain Dispositions. The Optionee hereby
agrees to report to the Chief Financial Officer or Director of
Taxes of Spartech or other representative designated or authorized
by Spartech for such purpose, at Spartech's principal office, any
sale, gift or other transfer of the Option Shares, including a
surrender of the Option Shares to Spartech to exercise further
stock options, during the two years after the Option Date or the
year after the exercise date, whichever is later.
5. Restrictions on the Option and the Option Shares. The Option
and Option Shares shall be subject to the following restrictions:
(a) Prohibition Against Transfers. Neither the Option nor any
interest or expectancy in the Option Shares prior to their issuance
may be transferred in whole or in part except by the Optionee's
last will and testament; or pursuant to the laws of descent and
distribution.
(b) No Pledges. Neither the Option nor any interest or
expectancy in the Option Shares prior to exercise may be pledged,
hypothecated, or otherwise used as collateral to secure the payment
of any debt.
(c) Spartech's Repurchase Rights. If, either during the
Optionee's Employment or within one year after the termination of
the Optionee's Employment (regardless of the reason for termination
or which part initiates it), the Optionee directly or indirectly
engages in any Detrimental Activity, Spartech shall have the right
to repurchase from the Optionee any Option Shares acquired pursuant
to exercise of the Option, subject to the limitations below, at a
price equal to the Exercise Price of such Option Shares without
regard to any tax effects of the exercise or the repurchase. This
repurchase right shall only apply to Option Shares acquired
pursuant to the Option within one year preceding Spartech's notice
to the Optionee of its exercise of the right, and only to Option
Shares still owned by the Optionee, and to exercise the right,
Spartech must give the Optionee written notice of its election to
exercise the right, specifying the nature of the Detrimental
Activity, not later than one year after termination of the
Optionee's Employment.
6. Additional Definitions. For purposes of the Option:
(a) "Cause" means any of the following:
(i) Conviction of a misdemeanor involving physical harm,
moral turpitude, fraud or misappropriation, or conviction
of any felony; or
(ii) Dishonesty or theft materially adversely affecting
Spartech's assets, business reputation or standing in the
community; or
(iii) Drunkenness or drug abuse in violation of Spartech
policies or affecting the Optionee's performance of his or
her usual and customary employment duties or materially
adversely affecting Spartech's assets, business reputation
or standing in the community; or
(iv) The failure of the Optionee, within ten days after
receipt of written notice thereof from his or her
supervisor, to correct, cease or otherwise alter any
failure to comply with Spartech's lawful policies or
instructions concerning the Optionee's employment; or
(v) Any other act or circumstance constituting "cause"
under any applicable employment contract or collective
bargaining agreement, or constituting "cause" under common
law if the act or circumstance is determined by Spartech's
Board of Directors ("Board") or Chief Executive Officer to
have a substantial likelihood of materially adversely
affecting Spartech's assets or business, or, if it is or
were to become publicly known, Spartech's business
reputation or standing in the community.
For purposes of this definition, "Spartech" includes any of
Spartech's subsidiaries.
(b) "Change in Control" means:
(i) The occurrence of the "Distribution Date" as such term
is defined in the Rights Agreement dated as of April 2,
2001 between Spartech and Mellon Investor Services LLC
(the "Rights Agreement"); or
(ii) If the "Redemption Date" or the "Final Expiration
Date," as such terms are defined in the Rights Agreement,
has occurred, either (A) the acquisition by any person,
entity or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Securities Exchange Act of 1934)
other than an institutional investor holding its interest
purely for passive investment purposes, or a Spartech
employee benefit plan, of beneficial ownership (within the
meaning of Rule 13d-3 under the Securities Exchange Act of
1934) of 15% or more of the combined voting power of all
Spartech's then outstanding voting securities, or (B) the
acquisition by any person, entity or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934) of beneficial ownership
(within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934) of 50% or more of the combined
voting power of all Spartech's then outstanding voting
securities; unless prior to any such acquisition the Board
has approved such acquisition and determined that it in
the best interests of Spartech and its shareholders; or
(iii) The approval by the Board of any merger, consolidation
or other transaction involving Spartech, or of any one of
a series of related transactions, as a result of which
(A) Spartech would not be the surviving corporation, or
(B) the holders of the Common Stock immediately prior to
such transaction would not own at least a majority of the
voting power of Spartech immediately after the transaction
in substantially the same relative proportions as they
owned Common Stock immediately prior to the transaction,
or (C) the common stock would be converted into cash or
other securities of Spartech other than voting securities
having substantially the same relative and proportionate
voting power in the entity or entities surviving the
transaction as the common stock has immediately prior to
the transaction; or
(iv) The commencement of any tender offer subject to Section
14(d) of the Securities Exchange Act of 1934 and the rules
thereunder for 20% or more of the Common Stock; if the
person making such offer could own 50% or more of the
Common Stock when the tender offer terminates; or
(v) Any change or changes in the composition of the Board
within any two-year period such that the individuals
constituting the Board at the beginning of such period,
together with any individuals who became directors after
the beginning of such period whose election by the Board
or nomination for election by Spartech's shareholders was
approved by at least a majority of the directors who were
on the Board at the beginning of such period or whose
election was previously approved in the same manner, cease
to constitute a majority of the Board.
(c) "Detrimental Activity" means any of the following, unless
done with the express written consent of Spartech:
(i) Engaging in, owning or controlling any interest in
(except as a passive investor in publicly held companies
in which the Optionee has less than a one percent
interest), or acting as a director, officer or employee of
or a consultant to, any company directly or indirectly
engaged as a material part of its business in a business
substantially similar to that operated by Spartech or any
of its subsidiaries in the territories where Spartech or
any of its subsidiaries manufactures or distributes its
products; or
(ii) In competition with Spartech or any of its
subsidiaries, soliciting the business of any customer of
Spartech or any of its subsidiaries; or
(iii) Inducing or attempting to induce any employee of
Spartech or any of its subsidiaries to leave his or her
Employment, or employing or offering to employ any former
employee of Spartech or any of its subsidiaries within
three (3) months after any termination of his or her
Employment; or
(iv) Disclosing to anyone outside Spartech, or using in
other than Spartech's business, any confidential
information of Spartech or its subsidiaries relating to
their business, acquired by the Optionee either during or
after his or her Employment; or
(v) Refusing to disclose promptly and to assign to Spartech
at its request all right, title and interest in any
invention or idea, patentable or not, made or conceived by
the Optionee during his or her Employment, relating in any
manner to the actual or anticipated business, research or
development work of Spartech, or refusing to do anything
reasonably requested by Spartech to enable it to secure a
patent where appropriate in the United States and in other
countries; or
(vi) Engaging in activity that results in termination of the
Optionee's Employment for Cause.
(d) "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Internal Revenue Code and as
determined consistent with the Code and the regulations thereunder.
(e) "Employment" means substantially full-time employment by
Spartech or a subsidiary. In this regard, the transfer of the
Optionee's employment between Spartech and a subsidiary or between
subsidiaries shall not be deemed to be a termination of Employment.
Moreover, the Optionee's Employment shall not be deemed to have
been terminated because of absence from active employment on
account of temporary illness or authorized vacation or temporary
leaves of absence from active employment granted by Spartech or a
subsidiary for reasons of professional advancement, education,
health, or government service, or during military leave for any
period if the Optionee returns to active employment within 90 days
after the termination of military leave, or during any period
required to be treated as a leave of absence by virtue of any valid
law or agreement. The Committee's determination in good faith
regarding whether a termination of Employment has occurred shall be
conclusive.
(f) "Retirement" means the permanent withdrawal of the
Optionee from the conduct of regular, active business activities,
on or after the Optionee reaches the age of 60. Retirement does
not preclude part-time employment, consulting, service as a non-
employee director, passive activities such as the management of the
Optionee's investments, or other activities expressly approved by
Spartech's Chief Executive Officer.
7. Securities Law Restrictions. The Optionee agrees that if at
the time of acquisition or delivery of any Option Shares issued
hereunder the sale of such shares is not covered by an effective
registration statement filed under the Securities Act of 1933 (the
"Act"), the Optionee will acquire the Option Shares for the
Optionee's own account and without a view to resale or distribution
in violation of the Act or any other securities law, and that the
Optionee will enter into such written representations, warranties
and agreements as Spartech may reasonably request in order to
comply with the Act or any other securities law or with the Option.
8. Reorganization of Spartech; Adjustment of Option Shares. The
existence of the Option shall not affect in any way the right or
power of Spartech or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other
changes in Spartech's capital structure or its business, or any
merger or consolidation of Spartech, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or
affecting the Option Shares or the rights thereof, or the
dissolution or liquidation of Spartech, or any sale or transfer of
all or any part of Spartech's assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise. However, if the Common Stock is subdivided,
consolidated, increased, decreased, changed into or exchanged for a
different number or kind of shares or other securities, whether
through reorganization, merger, recapitalization, reclassification,
capital adjustment or otherwise, or if Spartech shall issue common
stock or other securities as a dividend or upon a stock split, then
for all purposes, references herein to Common Stock or to Option
Shares shall mean and include all securities or other property
(other than cash) that holders of the Common Stock are entitled to
receive in respect of the Common Stock by reason of each such
event, which securities or other property (other than cash) shall
be treated in the same manner and shall be subject to the same
restrictions as the underlying Option Shares. Any such adjustment
shall be made without change in the total Exercise Price applicable
to the unexercised portion of the Option, but in computing any
adjustment hereunder, any fractional share or other security which
might otherwise become subject to issuance may be eliminated. Any
adjustments pursuant to this section may be determined by the
Committee, whose determination as to what, if any, adjustment shall
be made shall be final, binding and conclusive.
9. No Guarantee of Employment or Other Contract Right. The
Option is not a contract of employment, and neither the Option nor
the Plan shall confer upon the Optionee any right with respect to
continuance of Employment or other service with Spartech or any
subsidiary, or interfere in any way with any right Spartech or any
subsidiary would otherwise have to terminate the Optionee's
Employment or other service. Receipt of the Option shall not be
deemed to create a right to receive any future incentive award, and
shall not constitute an acquired labor right for purposes of any
foreign law. The Option is not a part of the Optionee's salary or
wages and shall not afford the Optionee any additional right to
severance payments or other termination awards or compensation
under any Spartech policy or any domestic or foreign law as a
result of the termination of the Optionee's employment for any
reason whatsoever.
10. Amendment and Termination. No amendment or termination of
the Option which would impair the rights of the Optionee may be
made without the written consent of the Optionee. No amendment or
termination of the Plan may impair the rights of the Optionee under
the Option without the written consent of the Optionee.
11. Severability. If any provision of the Option shall be
held illegal, invalid, or unenforceable for any reason, such
provision shall be fully severable and shall not affect the
remaining provisions of the Option, and the Option shall be
construed and enforced as if the illegal, invalid, or unenforceable
provision had never been included herein.
12. Governing Law. The Option shall be construed in
accordance with the laws of the State of Missouri.
End of Exhibit A