EXHIBIT 1.01
THIS AGREEMENT CONTAINS A WAIVER OF CERTAIN OF YOUR LEGAL
RIGHTS. YOU ARE ADVISED TO CONSULT
WITH AN ATTORNEY PRIOR TO SIGNING.
SEPARATION AGREEMENT AND RELEASE
This
Separation Agreement and Release (“Agreement”) is made
and is effective as of July 16, 2007 (the “Effective
Date”), by and between George A. Abd (hereinafter
referred to as “Employee”) and Spartech
Corporation , a Delaware corporation, which includes, for
purposes of this Agreement, its subsidiaries and related
organizations and, collectively, all of its and their officers,
directors, employees, trustees, agents, representatives,
predecessors, successors and assigns, and compensation plans and
programs sponsored or established by any of the foregoing
(hereinafter collectively referred to as the
“Corporation”).
WHEREAS,
Employee was an employee of the Corporation; and
WHEREAS,
the parties to this Agreement intend hereby to implement the
Employee’s resignation as an officer, Director and employee
of the Corporation and to resolve any and all claims, to provide
for the amounts to be paid and benefit provided to the Employee in
connection with his termination from employment with the
Corporation and to secure a release of all claims from the Employee
for the benefit of Spartech.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements
contained herein and intending to be legally bound hereby, it is
understood and agreed as follows:
1 . Resignation as Officer and Director; Cessation of
Employment; Payments and Benefits
The Employee will and does hereby
resign as an officer of the Corporation and as a member of the
Board of Directors effective upon the parties entering into this
Agreement. Effective as of the close of business on the date which
is 90 days after the Effective Date (the “Termination
Date”), the Employee will and does hereby resign as an
employee of the Corporation.
During the period from the Effective
Date to the Termination Date, the Employee shall be a common law
employee of the Corporation but shall not serve as an officer or
director of the Corporation. The parties currently anticipate that
the Employee will perform a sufficient level of bona fide services
from the Effective Date to the Termination Date so as not to incur
a separation from service with the Corporation until the
Termination Date. He will not have access to the
Corporation’s communications technology (other than the use
of a cell phone for voice transmission through the Termination
Date) or data after the Effective Date. He will be offsite but
shall make himself available for consultation with the Corporation,
or any officer or director thereof, as the Corporation may
reasonably request. During such period, the Corporation shall
continue to make payments at the rate of one-third the
Employee’s current base salary in accordance with its regular
payroll practices, but the Employee shall not be entitled to any
bonuses or other compensation with respect to such period.
Provided that the Employee is not at
the time in breach of any of his obligations under this Agreement,
the Corporation shall pay or provide to the Employee:
(a) Severance and
Non-Competition Policy . In accordance with the terms of the
Corporation’s Severance and Non-Competition Policy and
Agreement, the Corporation shall continue payments of base salary
at a rate of $750,000 annually for a period of 24 months
following the Termination Date and shall make payments, in lieu of
any bonus due with respect to such period, equal in the aggregate
to $723,870, being 200% of the average annual bonus paid to the
Employee with respect to the last three fiscal years of the
Company, payable in equal monthly installments over such period on
the first regularly scheduled payroll date in each month; provided,
however, that the installments otherwise payable during the first
six months following the Termination Date shall be aggregated and
paid in a lump sum on the first day following the six month
anniversary of the Termination Date, together with interest at a 6%
per annum rate on such deferred amount from the Termination Date
through the day of payment..
(b) Stock Options . In
accordance with the terms of the applicable stock option plans and
agreements, the Employee holds 168,687 vested share options which
shall expire on the Termination Date and 32,250 vested share
options which shall expire on the third anniversary of the
Termination Date (or, if earlier in a particular case, the outside
expiration date of the applicable option grant).
(c) Performance Bonus
Plan. An award of a performance bonus, if any, with respect to
the current Plan year shall be determined by the Board following
the end of the Plan year using the standards and applying the
procedures the Board deems appropriate. The Employee acknowledges
that the Performance Bonus Plan does not entitle him to a bonus for
the measurement year ending in 2007.
(d) Deferred Compensation
Plan. In accordance with the terms of the Deferred Compensation
Plan, the Employee shall be entitled to payment of the amount of
deferred compensation vested as of the Termination Date, to be paid
in the form and at the times provided in the Deferred Compensation
Plan provided however that no amount paid by reason of separation
from service shall be paid until the first day following the six
month anniversary of the Termination Date. The Company shall inform
the Employee of its determination of such vested amount within
three days following the Effective Date. The Employee acknowledges
that the Deferred Compensation Plan does not provide for any
deferred compensation with respect to the current fiscal year of
the Company.
(e) Restricted
Stock/SARs/Performance Shares . The Employee acknowledges that
under the terms of the applicable restricted stock option plans,
stock appreciation rights plans and performance share plans, he
will have no vested rights to anything thereunder as of the
Termination Date.
(f) 401(k) Plan . The
employer contribution for the current Plan year and roll-overs of
account balances shall be made in accordance with the terms of the
Plan.
(g) Automobile Allowance
. The Corporation shall pay the automobile allowance through the
last business day of the month in which the Effective Date occurs.
Thereafter, no automobile allowance will be paid.
(h) Other Compensation and
Benefits.
(i)
Accrued Vacation and Other Accrued Compensation . Within
14 days after the Termination Date, the Corporation shall pay
the Employee in a single lump sum the aggregate amount of any
accrued but unused vacation pay, accrued and unpaid base salary
through the Termination Date and any reimbursement of business
travel taken and customer entertainment provided before the
Termination Date which has not then been reimbursed.
(ii)
Amounts Payable Under Other Compensation or Benefit Plans and
Programs. The Corporation will pay or cause to be paid in a
timely fashion any amount due to be paid as of the Termination
Date, or which would be paid as of the Termination Date upon proper
and timely application therefore to provide after the Termination
Date, under any other Corporation sponsored compensation or benefit
plan or program.
(iii)
Coverage Under Health & Life Insurance Benefit Plans.
Subject to the provisions of Section 13(c) hereof, for a period not
to exceed 42 months after the Termination Date, the
Corporation shall provide coverage (or cause comparable coverage to
be provided if the Corporation determines in good faith that its
then employee benefit plans cannot provide such coverage) to the
Employee and, if the Employee so elects, to Employee’s
dependents, under the Corporation’s health benefit program
and life insurance program generally available to other salaried
employees of the Corporation, as such programs are in effect from
time to time, on the same terms and conditions and subject to the
same COBRA contribution rates (in the case of health coverage) and
to the Employee reimbursing the Corporation for the life insurance
premiums at its actual cost, times and terms as the Corporation
provides such programs to other COBRA eligible former employees of
the Corporation, provided, however, if the Employee secures
health and/or life coverage through subsequent employment which
provides at least comparable coverage and on terms and conditions
at least reasonably comparable to the programs then offered by the
Corporation, the Corporation’s obligation to continue its
health and/or life coverage, as the case may be, shall cease and
not thereafter renew regardless of the circumstance. The Employee
will not receive credit for benefit, vesting or early retirement
eligibility purposes under any employee benefit plan or program of
the Corporation after the Termination Date. The first
18 months of such period shall be in satisfaction of the
Employee’s right to COBRA coverage and is provided at the
Employee’s cost and expense at the rate paid by similarly
situated COBRA participants. The remaining 24 months of
coverage (unless terminated sooner if the Employee secures other
coverage) shall be coverage in addition to COBRA at the
Employee’s cost and expense.
(i) Universal Life
Policy . The Corporation owns and will keep in effect until the
six month anniversary of the Termination Date a universal life
policy insuring the life of the Employee with a $500,000 death
benefit. In accordance with its practice with respect to its
Polycom Huntsman key employee universal life program, the
Corporation shall transfer ownership of such policy to the Employee
on the first day following the six month anniversary of the
Termination Date.
(j) ERISA Rights .
Nothing in this Agreement is intended to surrender or waive any
right the Employee may have under the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), including,
but not limited to, any vested and accrued benefits and balances
under Corporation’s employee benefit plans, which accrued
benefits and balances shall be payable when and in accordance with
the terms of the respective plans.
(k) Applicable Taxes .
Notwithstanding any provision of this Agreement, prior to the
delivery of any thing of value to the Employee, the Corporation
shall withhold from any cash payment under
this
Agreement the amount determined in good faith by the Corporation to
be required to be withheld for applicable federal, state and/or
local taxes or to be paid by the Employee as federal, state or
local payroll taxes for all things of value to be delivered under
this Agreement. If any thing of value to be delivered under this
Agreement is to be delivered in a form other than cash, withholding
for applicable taxes shall be withheld from cash payments before
delivery of non-cash things of values.
2. Release of Liability and Covenant Not
to
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