SEVERANCE AND NONCOMPETITION AGREEMENT
THIS SEVERANCE AND NONCOMPETITION AGREEMENT (this “Agreement”) is made by and between SPARTECH CORPORATION , a Delaware corporation (together with its subsidiaries, the “Company”) and (“Employee”) effective as of the day of December, 2008.
In consideration of the terms and conditions hereof, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Employee agree as follows:
1. Severance .
(a) If Employee’s employment with the Company is terminated by the Company for any reason other than for Cause, or if Employee’s employment with the Company is terminated by the Company for any reason other than for Cause within 24 months following a Change in Control, or if Employee terminates his or her employment with the Company for Good Reason, Employee shall be entitled to receive as a severance payment to be paid in equal installments over the twelve months following Employee’s termination, and in accordance with the Company’s normal payroll practices, an aggregate amount equal to: (i) twelve months’ base salary at the highest rate paid to Employee during the three years prior to Employee’s termination, plus (ii) the average annual bonus awarded to Employee for the three fiscal years ended prior to Employee’s termination (or for the period of Employee’s employment by the Company if less than three years). In addition to the foregoing severance payment, Employee shall be entitled to receive during the twelve months following Employee’s termination continuing health insurance benefits at least equal to the benefits received by Employee at the time of termination.
(b) As used herein:
“Cause” means, in each case in the reasonable discretion of the Company’s board of directors (the “Board”): (i) Employee being charged with commission of a crime that constitutes a felony (provided that if following Employee’s termination the charges are dropped or Employee is acquitted then Employee shall be entitled to the severance payment); (ii) acts of Employee which constitute willful fraud or dishonesty on the part of Employee in connection with his or her duties; (iii) Employee willfully engaging in conduct materially injurious to the Company or gross misconduct, including but not limited to the willful or grossly negligent failure or refusal of Employee to comply with the lawful instruction of the Board or Employee’s supervisor, after a written demand for compliance is delivered to Employee by the Board or Employee’s supervisor which specifically identifies the manner in which the Board or Employee’s supervisor believes that Employee has violated this provision; (iv) Employee’s failure, whether or not intentional, to fully comply with: (a) the Company’s Code of Business Conduct and Ethics for Directors, Officers and Employees, (b) the Company’s Code of Ethics for Chief Executive Officer and Senior Financial Officers; or (c) the Company’s Statement of Policy Regarding Securities Trades by Company Personnel; or (v) Employee’s failure to fully cooperate in good faith with any internal, governmental or regulatory investigation involving or in any way related to the Company or its operations. Any act or failure to act based upon authority given pursuant to a resolution duly adopted by the Board or based on the advice of a senior officer or counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Employee in good faith and in the best interests of the Company.
“Change in Control” means the successful consummation of a transaction resulting in a change in the ownership or effective control of the Company or ownership of a substantial portion of the assets of the Company within the meaning of Section 409A(a)(2)(C)(v) of the Internal Revenue Code of 1986, as amended, or any successor statute (“Code”).
“Good Reason” means any of the following: (i) one or more reductions of Employee’s base salary amounting to 10% or more from Employee’s highest previous base salary, provided that any reduction which is generally consistent with across-the-board reductions in pay of the Company as a whole shall not be counted for this purpose unless a Change in Control has occurred; (ii) the Company’s requiring Employee to be based at any office or location greater than 50 miles from the office of the Company at which Employee is employed as of the date of this Agreement; (iii) after a Change in Control, a relocation of the office of the Company at which Employee is employed as of the date of this Agreement more than 50 miles from its present location; or (iv) one or more other actions by the Company which collectively amount to a constructive discharge of Employee.
(c) If Employee is a “specified employee” (within the meaning of Code Section 409A(a)(2)(B)(i)) of the Company at the time of his or her termination of employment with the Company and if the separation payments under Section (a) are on account of his or her “involuntary separation from service” (as defined in Treasury Regulation Section 1.409A-1(n), or a successor regulation), Employee shall receive payments during the six (6) month period immediately following the date of such termination as otherwise provided under Section (a) for such six month period except that the total amount of such payments shall not exceed the lesser of the amount specified under (i) Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) or (ii) Treasury Regulation Se