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:
(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.
“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
