EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT OF
BRADLEY B. BUECHLER
AGREEMENT effective November 1, 2002, by and between SPARTECH CORPORATION, a
Delaware corporation ("Employer"), and BRADLEY B. BUECHLER ("Employee").
WHEREAS, Employee currently holds the position of Chairman of the Board,
President and Chief Executive Officer of Employer pursuant to an employment
agreement with Employer originally entered into as of July 1, 1992 and
subsequently from time to time amended (as so amended, the "Agreement"); and
WHEREAS, Employer desires to provide for Employee's continued service to
Employer in his current positions, and Employee is willing to provide such
services on the terms set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual premises set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Agreement is hereby amended and restated to
read in its entirety as follows:
1. Employment and Duties of Employee.
(a) Employer employs Employee to act in a senior executive capacity, as
President and Chief Executive Officer of Employer, and in all aspects of its
business, as and when requested, and at such times and places as Employer shall
reasonably request, except that (i) Employee shall not be assigned duties or
responsibilities which are inconsistent with his position and status as
President and Chief Executive Officer, and (ii) Employee shall not be required
temporarily or permanently to relocate his residence. Employer will also use
its best efforts to cause Employee to be a duly elected member of Employer's
Board of Directors at all times during his employment hereunder, and so long as
Employee serves as a director, to also be the Chairman of the Board of Employer.
(b) Employee agrees faithfully to perform such duties as Employer assigns to
him; to devote the necessary time and best efforts to the manufacture and sale
of Employer's products and services; and to endeavor to improve Employer's
business, through plant and production organization, customer and supplier
relationships, capital development and additional financing resources,
acquisition of other businesses, and by other means, in all reasonable ways for
the term hereof, the services to be of a similar nature as those currently
provided Employer, subject always to the control and direction of Employer's
Board of Directors.
(c) Employee agrees to timely file all SEC Form 4's, Form 5's and any other
reports which he is required by law or regulation to file as a stockholder,
employee, officer or director. Employer will provide reasonable assistance to
Employee with respect to preparing and making such filings.
2. Compensation.
(a) Subject to annual review (without obligation to increase) for cost of
living and/or merit and other increases at the Board's discretion, Employer
agrees to compensate Employee at a fixed rate of $700,000 annually ("Base
Salary"), such Base Salary to be paid in equal weekly installments. Employer
shall further advance or reimburse to Employee such other funds as Employer
determines for credit cards, costs and other reasonable expenses incurred by
Employee in the discharge of Employer's instructions hereunder, and consistent
with the necessities of the operation of the business. Except to the extent
that his participation therein will disadvantage the other participants,
Employee will also participate, as appropriate, in all other stock option and
stock purchase plans, insurance, medical and other employee benefit programs
currently established or hereafter instituted by Employer. In addition, for the
term of this Agreement, Employer will continue to lease or otherwise make
available for Employee an automobile of comparable quality to the automobile
currently leased by Employer for Employee, and to pay the cost of insurance and
maintenance for such automobile.
(b) In addition to the stock options previously granted to Employee,
Employer further agrees to grant to Employee an option to purchase 100,000
shares of common stock of Employer pursuant to Employer's 2001 Stock Option
Plan. Such option shall (i) have an exercise price equal to the market price of
the underlying shares on the date of grant, (ii) be granted simultaneously with
Employer's customary annual option grants in late 2002 (but in no event later
than December 31, 2002), and (iii) otherwise be on such terms as are provided
for in the standard form of option agreement then in effect for nonqualified
options granted under the 2001 Stock Option Plan. The option shall be approved
by Employer's Compensation Committee in advance as required by the 2001 Stock
Option Plan and to the extent required in order to comply with Rule 16b-3(d)(1)
under the Securities Exchange Act of 1934. The failure to so approve such
option shall be deemed a material breach of the covenant set forth in this
paragraph 2(b)).
(c) The above option is intended to represent Employee's entire option grant
for 2002, but Employer's Compensation Committee shall annually consider issuing
additional options to Employee during subsequent years of this Employment
Agreement.
(d) The Company shall annually contribute to Equitable Life Assurance
Company Policy No. 150218609, maintained in accordance with the Split-Dollar
Life Insurance Agreement between the Company and Employee dated June 6, 2000, an
amount equal to:
(i) Fifteen percent of Employee's annual base compensation as in effect
as of the due date for the payment of the premium; plus
(ii) The annual premium for $1,250,000 of yearly renewable term
insurance on Employee's life, as determined by the Company's
insurance advisers.
Such annual contribution shall be made no later than the last day of the grace
period under said policy for the payment of the premium for the year to which
the contribution relates. Unless it is determined before the premium due date
in any year beginning with 2003 that the Company's payment of such contribution
for such year will not violate the personal loan prohibition in Section 402 of
the Sarbanes-Oxley Act of 2002, the Company shall not make such contribution;
but instead, in order to permit Employee to make such contribution on his own
behalf, the Company shall pay to Employee, no later than the premium due date
for such year, a bonus (irrespective of and in addition to any other bonus
payable under this Agreement), in an amount which, after deduction of all
applicable state and federal withholding taxes, will equal the amount of such
annual contribution for such year.
(e) Employer agrees to repurchase during each twelve-month period that this
Agreement is in effect, beginning November 1, 2002, a number of Employer's
shares of common stock beneficially owned by Employee, on the following terms
and conditions:
(i) Only mature shares, i.e. shares outstanding at least six months,
will be repurchased;
(ii) The maximum number of shares which Employee may require Employer
to purchase in each twelve-month period shall be 15% of the sum of
(1) the number of outstanding shares beneficially owned by Employee
at the time of the repurchase plus (2) the number of shares subject
to currently-exercisable options beneficially owned by Employee at
the time of the repurchase;
(iii) The price per share will be the average of the publicly-reported
high and low sale prices of the common stock on the New York Stock
Exchange (ignoring any after-hours trading) over the ten trading
days prior to the sale.
(iv) Employer shall not be obligated to repurchase shares if
Employer's Board of Directors determines in good faith that
Employer's cash needs do not permit the repurchase; and
(v) The repurchases will be effected as of such date as Employee
specifies by notice to Employer's Chief Financial Officer or Manager
of Taxes at least ten trading days in advance of the desired
repurchase date; and
(vi) Employer's Board of Directors or its Compensation Committee will
approve each repurchase in advance to the extent required in order
to comply with Rules 16b-3(e) and 16b-3(d)(1) under the Securities
Exchange Act of 1934. The failure to so approve a requested
repurchase which is otherwise in compliance with these conditions
shall be deemed a material breach of the repurchase covenant set
forth in this paragraph 2(e)).
3. Term of Employment.
(a) The term of this Agreement as amended shall commence on the effective
date first above written and shall continue until terminated:
(i) As provided in Section 6 or Section 11 below; or
(ii) By Employer upon at least three years' written notice to
Employee given on or after November 1, 2005; or
(iii) By Employee upon at least one year's written notice to Employer
given on or after:
(A) November 1, 2003, if a Change in Control has occurred before the
notice is given; or
(B) November 1, 2005, if a Change in Control has not occurred before
the notice is given.
If notice is given by Employer under clause 3(a)(ii), Employee shall not be
required to perform further services to Employer hereunder after receiving such
notice. If notice is given by Employee under clause 3(a)(iii)(A) or clause
3(a)(iii)(B), Employee shall not be required to perform further services to
Employer hereunder after receiving such notice except that for a period not to
exceed 45 days after the date of such notice Employee shall provide such
consulting services to Employer as Employer shall reasonably request.
(b) For purposes of this Agreement, "Change of Control" means the first to
occur of any of the following:
(i) The date Employer's Board of Directors votes to approve and
recommends a stockholder vote to approve:
(A) Any consolidation or merger of Employer in which Employer is not
the continuing or surviving corporation; or
(B) Any consolidation or merger of Employer in which shares of
Employer's capital stock would be converted into cash,
securities or other property, other than a consolidation or
merger of Employer:
(1) In which the direct or indirect holders of Employer
capital stock immediately prior to the consolidation or
merger have the right to receive the same direct or
indirect proportionate ownership of voting stock of the
surviving corporation immediately after the
consolidation or merger, or
(2) With another corporation which owns Employer capital
stock pursuant to which merger all of the Employer
capital stock owned by such corporation would be
canceled or redeemed and Employer capital stock would be
issued to the stockholders of such corporation; or
(C) Any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially
all, of the assets or Employer, other than any sale, lease,
exchange or other transfer to any corporation where Employer
owns, directly or indirectly, at least eighty percent (80%) of
the outstanding voting securities of such corporation after any
such transfer; or
(D) Any plan or proposal for the liquidation or dissolution of
Employer; or
(ii) The date any person (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934, hereinafter the "Exchange Act")
shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of a majority of Employer's outstanding
voting stock; or
(iii) The date the Board of Directors of Employer or any affiliate
(within the meaning of Rule 12b-2 under the Exchange Act) of
Employer authorizes and approves any transaction which has either a
reasonable likelihood or the purpose of causing, whether directly or
indirectly, Employer's common stock to be held of record by fewer
than 300 persons or not to be listed on any national securities
exchange; or
(iv) The date, during any period of 24 consecutive months, on which
those individuals who at the beginning of such period constitute
Employer's Board of Directors shall cease for any reason to
constitute a majority thereof unless the election, or the nomination
for election by Employer's stockholders, of each new director
comprising the majority was approved by a vote of at least a
majority of the Continuing Directors in office on the date of such
election or nomination for election of the new director. For
purposes of this Section, "Continuing Director" means any member of
Employer's Board of Directors who:
(A) Is serving as of the close of business on the date first above
written; or
(B) Was originally elected to succeed a Continuing Director
described in clause 3(b)(iv)(A), either by a majority of the
Continuing Directors described in clause 3(b)(iv)(A) then still
in office or by Employer's stockholders following nomination by
a majority of the Continuing Directors described in clause
3(b)(iv)(A); or
(C) Was originally elected to fill a vacancy or newly-created
directorship, either by a majority of the Continuing Directors
described in clause 3(b)(iv)(A) then still in office or by
Employer's stockholders following nomination by a majority of
the Continuing Directors described in clause 3(b)(iv)(A).
4. Bonuses.
(a) For each fiscal year of Employer, Employee shall receive an annual bonus
equal to 0.90% of Employer's earnings before income taxes as reported in
Employer's audited consolidated financial statements for each year that this
Agreement is in effect, adjusted, however, to exclude profit or loss on
extraordinary or nonrecurring items and unusual items (such as sale of a
significant amount of assets or securities other than in the ordinary course of
business operations, one-time employee separation costs, and significant
litigation costs or recoveries) ("Adjusted Pre-Tax Earnings"), such
determination to be made by Employer's auditors based on generally accepted
accounting principles; provided, however, no bonus will be paid with respect to
any fiscal year in which Employer's Adjusted Pre-Tax Earnings are less than 75%
of Employer's Adjusted Pre-Tax Earnings in its immediately preceding fiscal
year.
(b) Should this Agreement terminate prior to the close of a fiscal year of
Employer, then unless otherwise expressly provided in this Agreement Employee
shall be entitled to a bonus for such fiscal year in addition to any other
amounts to which he may be entitled on termination under other provisions of
this Agreement) equal to the bonus he would have earned had this Agreement been
in effect for the entire fiscal year multiplied by a fraction, the numerator of
which shall be the number of days in such fiscal year prior to termination of
this Agreement, and the denominator of which shall be 365.
(c) The bonus for each fiscal year shall be paid as soon as practicable upon
completion of Employer's audited financial statements for such fiscal year.
Once a bonus has been earned by Employee, the termination of this Agreement or
of Employee's employment prior to the time of payment shall not affect
Employee's right to receive the bonus.
5. Severance Benefits.
(a) If, at any time before a Change in Control occurs, Employee's employment
with Employer is terminated (or notice of termination is given subject to
expiration of the applicable notice period):
(i) By Employer for any reason other than Cause (as defined in Section
11(c) below); or
(ii) By Employee with Justification (as defined in Section 11(a)
below); or
(iii) By Employee pursuant to notice of termination given by Employee
to Employer under clause 3(a)(iii)(B) above;
then Employer shall pay to Employee, not later than 30 days after the first to
occur of (A) the date notice of such termination is given to Employee or (B) the
date of such termination, a lump sum severance benefit (the "Severance Benefit")
equal to (I) two times Employee's then current Base Salary plus (II) the
aggregate amount of bonus paid or earned by Employee in the two years prior to
the date of such notice of termination.
(b) If, at any time after a Change in Control occurs, Employee's employment
with Employer is terminated (or notice of termination is given subject to
expiration of the applicable notice period):
(i) By Employer for any reason other than Cause (as defined in Section
11(c) below); or
(ii) By Employee with Justification (as defined in Section 11(a)
below); or
(iii) By Employee pursuant to notice of termination given by Employee
to Employer under clause 3(a)(iii)(A) above;
then Employer shall pay to Employee, not later than 30 days after the first to
occur of (A) the date notice of such termination is given to Employee or (B) the
date of such termination, a lump sum severance benefit (the "Severance Benefit")
equal to 2.95 times the sum of (I) Employee's then current Base Salary plus (II)
one-third of the aggregate amount of bonus paid or earned by Employee in the
three years prior to the date of such notice of termination.
(c) The Severance Benefit shall be payable in lieu of any further claims to
Base Salary under Section 2 or bonuses under Section 4 hereof, for any remaining
term of this Agreement; however, the Severance Benefit shall be in addition to
and not in lieu of all other compensation and benefits to which Employee may be
entitled under any other provision of this Agreement or otherwise, including
accrued vacation or sick pay, accrued amounts payable for prior salary or
bonuses earned, or any amounts payable under any life insurance, health,
disability or similar employee benefit plan. Employee may elect to have any
life insurance, health plan, disability plan or similar plan which was in effect
immediately prior to Employee's termination extended for a period of two years
beyond when Employee's eligibility for such plan would otherwise have ended,
provided that (i) Employee so notifies Employer within five days of Employee's
termination and (ii) the cost of extending Employee's eligibility as described
above shall be negotiated on a good faith basis and, at Employee's request,
subtracted from the payment of Employee's severance benefit. Should the
Employee subsequently obtain similar coverage from another Employer or
otherwise, Employee will notify Employer and coverage will cease and a pro-rata
refund returned to the Employee. For this purpose "cost" shall be deemed to be
the most recent rate charged to employees of Employer or its subsidiaries for
such benefits. Promptly after Employee's request for such extension, Employer
shall place sufficient funds in escrow to pay all premiums on such insurance and
plans for the period of the extension.
(d) If all or any portion of the Severance Benefit, together with any other
amounts, including the value of any stock options, received or deemed to be
received by Employee from Employer or any of its subsidiaries and affiliates or
from any pension, employee welfare, incentive compensation or other plans
sponsored by Employer or any of its subsidiaries and affiliates (collectively,
the "Base Payment"), will be subject to any excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended, or any similar tax payable under any
federal, state, local or other law (collectively, "Excise Taxes"), Employer
shall pay Employee an additional amount (the "Gross-Up Payment") such that the
net amount retained by Employee, after deduction of any Excise Taxes payable by
Employee with respect to the Base Payment and the Gross-Up Payment and any
federal, state or local income or other taxes payable by Employee with respect
to the Base Payment and the Gross-Up Payment (collectively, "Other Taxes")
(including any additional tax resulting from any loss or disallowance of
deductions due to the Gross-Up Payment), will equal the Base Payment net of the
Other Taxes on the Base Payment determined without regard to any Excise Taxes.
For the purposes of this determination, Employee's income shall be assumed to be
subject to Other Taxes at the highest marginal rates. The Gross-Up Payment
shall be paid simultaneously with the payment of the Severance Benefit, on the
basis of Employer's good-faith estimate of the Excise Taxes if necessary, but if
the actual amount of Excise Taxes is later determined by Employer or Employee to
be different from the amount on which the Gross-Up Payment was originally
calculated, the difference shall be paid or refunded within 30 days after notice
of such difference is given to the party liable for such payment or refund.
(e) In order to provide security to Employee for Employer's payment of the
amounts payable pursuant to Sections 5(a), 5(b) and 5(d) in the event of a
Change in Control, Employer agrees that within 10 days after a Change in
Control, whether or not Employee's employment is terminated, Employer will
either:
(i) Pay Employee the Base Payment plus the Gross-Up Payment, in full, in
immediately available funds (which will discharge any further
obligations under this Section except for payment of any difference
upon final determination of the Gross-Up Amount pursuant to Section
5(d)); or
(ii) Deposit 110% of the then-estimated Base Payment and Gross-Up
Payment in an interest-bearing escrow account with a St. Louis,
Missouri bank with which Employer has no other banking relationship,
which escrow account shall be maintained pursuant to a written
escrow agreement reasonably satisfactory to counsel for all parties,
as security for Employer's timely payment of the amounts due
pursuant to Sections 5(a), 5(b) and 5(d), the terms of which shall
provide that the escrow account, including the interest thereon, may
be applied only to payment of any amounts due pursuant to Sections
5(a), 5(b) and 5(d) and may be disbursed only pursuant to written
instructions to the escrow agent from both Employer and Employee or
pursuant to a valid court order.
6. Disability and Death Benefits.
(a) If during the term of Employee's employment under this Agreement
Employee becomes physically or mentally disabled (as determined in accordance
with the Social Security Act) from performing his functions contemplated
hereunder, Employer shall continue Employee's Base Salary, pro rata bonus and
other benefits, payable to Employee or Employee's Representatives, as the case
may be, during the first six months of any period of disability.
(b) If such period of disability continues for at least six consecutive
months, then notwithstanding any other provision of this Agreement Employer may
terminate Employee's employment and will pay to Employee or his Representatives
(as defined in Section 16 below), as the case may be, in lieu of all other
severance benefits, Employee's Base Salary and annual bonus (if otherwise
payable, and pro rated to the extent applicable) for a period of one year
beginning on the date on which the six-month disability period is satisfied.
(c) If during the term of Employee's employment under this Agreement
Employee dies, then Employer will pay to Employee's Representatives, in lieu of
all other severance benefits, Employee's Base Salary and annual bonus (if
otherwise payable, and pro rated to the extent applicable), for a period of one
year beginning on the date of Employee's death.
7. Restrictive Covenants. Employee agrees that while employed by Employer
hereunder (including any renewal or extension of this Agreement), and for 24
consecutive months following termination of his employment, Employee will not,
in any manner, directly or indirectly:
(i) Disclose or divulge to any person, entity, firm or company
whatsoever, nor use for his own benefit or the benefit of any other
person, entity, firm and company, directly or indirectly in
competition with Employer, any proprietary knowledge, confidential
information, production or business methods, techniques or customer
lists of Employer or its affiliates ("Trade Secrets"), except
information generally known or used in the trade;
(ii) Solicit, call on, divert, or interfere with any of the customers
of Employer or its affiliates or any trade, business, patronage,
employees or agents of Employer or its affiliates, with whom
Employee has done business and in any city where Employee, Employer
or its affiliates is then engaged in the plastics business, for the
purpose of diverting their trade to any plastics business which
compete directly with Employer's businesses; or
(iii) Invest in, or take an active management or advisory role in, any
company in the plastics business whose operations compete directly
with any of Employer's businesses.
8. Intellectual Property.
(a) Employee acknowledges that all mechanical or scientific inventions,
production processes, techniques, programs, patents, discoveries, formulae and
improvements invented, discovered or learned by Employee during employment
hereunder and relating to Employer's business will be disclosed to Employer and
will be the sole property of Employer and/or will be assigned to Employer in
writing at the request of Employer.
(b) Employee acknowledges that information imparted to him by Employer or
its affiliates relating to the production methods, techniques, customer lists,
statistics, credit, customers and suppliers of Employer or its affiliates is the
property of Employer or its affiliates. Therefore, Employee shall, upon
termination of his employment hereunder, return to Employer all books, records
(including computer files and storage media) and notes containing customer lists
and addresses, all duplicate invoices, all statements and correspondence
pertaining to such customers, and all other information and documents (including
all copies thereof) relating to customers, their needs, products of Employer, or
its affiliates used by them, schedules of discussions with them, all formulae,
code books, price lists, products, manuals and equipment, production or
processing information or instructions, data applicable to methods of
manufacture, types, kinds, suppliers and costs of raw materials, and all such
other information applicable to Employer or its affiliates, its customers and
the manner of conducting its business. Employer agrees, however, to provide
Employee upon request with copies of whatever documents he may reasonably
require. The restraints on Employee, as set forth in this Section 8, however,
shall not apply to any invention (i) for which no equipment, supplies, facility
or Trade Secrets of Employer was used; (ii) which was developed entirely on
Employee's own time; (iii) which does not relate to the business of Employer
(including Employer's actual or demonstrably anticipated research or
development); and (iv) which does not result from any work performed by Employee
for Employer.
9. Limitation on Restrictive Covenants. The parties recognize that the
services to be rendered by Employee hereunder are special, unique and of an
extraordinary character. However, it is the intention of the parties to
restrict the activities of Employee only to the extent necessary for the
protection of Employer's legitimate business interests. The parties
specifically agree that should any provision set forth in Sections 7 or 8 under
any set of circumstances not now presently foreseen by the parties, be deemed
too broad for that purpose, said provisions will nevertheless be valid and
enforceable to the extent necessary for such protection.
10. Non-Waiver of Breach. Employer's failure to exercise any right
hereunder in the event of Employee's breach of any term hereof shall not be
construed as a waiver of such breach or prevent Employer from thereafter
enforcing strict compliance with any and all terms of this Agreement.
11. Termination.
(a) If any of the following events (each, a "Justification") occurs during
the term hereof, Employee may voluntarily terminate and resign his employment
immediately upon the occurrence of such event, and be entitled to the severance
benefits set forth in Section 5 of this Agreement:
(i) Any duties are assigned to Employee or restrictions are placed on
Employee which are inconsistent with his position, duties,
responsibilities and status pursuant to Section 1; or
(ii) Employee's Base Salary, options and bonuses hereunder are not
paid or delivered within seven days of Employee's notifying Employer
that such are due, or Employer takes action which otherwise
adversely affects or materially reduces any other benefits or rights
which Employee is entitled to hereunder.
If Employer and Employee are unable to agree that any of the above events have
occurred, the matter shall be referred to binding arbitration pursuant to the
rules of the American Arbitration Association.
(b) Employee is not required to seek employment after termination, and no
compensation earned after termination shall reduce the amounts otherwise payable
hereunder, including without limitation, any severance benefits payable pursuant
to Section 5 hereof.
(c) If Employee's employment is terminated for Cause, or if Employee resigns
without Justification (i.e., other than as permitted by subsection 11(a)) and
without giving notice of termination pursuant to clause 3(a)(iii), then Employee
shall be entitled to receive all accrued compensation and benefits payable
hereunder through the date of such termination but shall not be entitled to any
additional options, compensation, bonuses or severance benefits under this
Agreement. "Cause" as used in this Agreement means only:
(i) Conviction of a misdemeanor involving physical harm, moral turpitude,
fraud or misappropriation, or conviction of any felony; or
(ii) The failure of Employee, within ten days after receipt of written
notice thereof from Employer's Board of Directors, to correct, cease or
otherwise alter any failure to comply with this Agreement or the lawful
instructions of Employer's Board of Directors concerning Employee's
employment; or
(iii) Any violation of Employer's company policies or any other act or
circumstance constituting "cause" at common law;
if the conviction, act, omission or circumstance is determined by Employer's
Board of Directors to have a substantial likelihood of resulting, or to have
been intended by Employee to result, in (1) personal gain at the expense of
Employer or its subsidiaries, or (2) material injury in excess of $1,000,000 to
the property or business of Employer or its subsidiaries or (C) if it is or were
to become publicly known, significant harm to Employer's business reputation or
standing in the community. Cause shall not include:
(A) Bad judgment or any act or omission reasonably believed by Employee
in good faith to have been in or not opposed to the best interests
of Employer (including its subsidiaries); or
(B) Any acts or omissions by Employee in connection with any bid, tender
or merger offer, restructuring proposals, or any controversy or
litigation relating thereto (whether involving Vita or other
persons), in which Employer may become involved, wherein Employee's
acts or omissions are the subject of controversy with any persons or
firms involved in such matters.
12. Independent Obligations.
(a) Employer's obligations to pay compensation and benefits due hereunder
shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off (including no
reduction in compensation or bonuses for compensation which was or could have
been earned elsewhere during the term hereof), counter-claim, recoupment,
defense or other right which the Employer may have against Employee. Any such
set-offs or other such counter-claims shall be the subject of separate action,
claim and proof against Employee without being made subject to any set-off,
counter-claim or cross-claim in any action by the Employee to enforce his rights
under this Agreement.
(b) Employee's obligations under Sections 7, 8, and 9 hereof represent
independent covenants by which Employee shall remain bound irrespective of any
breach of any other provision of this Agreement by Employer.
13. Indemnification; Arbitration.
(a) In the event that Employee is required to institute or join in any legal
action or arbitration proceeding to obtain or enforce, or to defend the validity
or enforceability of, any contemplated or actual payment of compensation or
benefits under this Agreement, Employer will, if Employee substantially prevails
in such action or proceeding, as determined by the arbitrator or court, pay all
actual legal fees and expenses incurred by Employee.
(b) Employee shall have the right, in his sole discretion, to demand
arbitration of any substantive claim he may have against Employer for any
compensation or benefits due under this Agreement. Such arbitration shall be
conducted in St. Louis, Missouri, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. Judgment upon any arbitration
award may be entered in any court having jurisdiction. In the event of
concurrent arbitration and court proceedings relating to this Agreement, the
arbitration will not be stayed pending the conclusion of any court proceedings.
14. Registration Rights.
(a) In the case of a proposed registration under the Securities Act of 1933
(the "Securities Act") of an offering by Employer of shares of its common stock
while any common shares or preferred shares are owned by Employee, Employee
shall have the right to participate in such registration and public offering as
hereinafter provided. Employer will give Employee at least twenty (20) days'
prior written notice of any proposed registration of shares of common stock
under the Securities Act for any offering by it otherwise relating to an
employee stock option or benefit plan or in a merger, consolidation, acquisition
of assets or recapitalization plan. If requested by Employee in writing, within
twenty (20) days after receipt of any such notice or on two occasions even if no
such notice has been given, Employer will use its best efforts to register all
or part of the shares of common stock of Employer owned by Employee or which
Employee has a right to acquire (as specified in such request) under the
Securities Act and from time to time, if possible, amend or supplement the
registration statement and prospectus used in connection therewith if and to the
extent necessary in order to comply with the Securities Act for a period of up
to one hundred twenty (120) days after the initial effective date of such
registration, provided that Employee shall not have failed to exercise a right
following such a notice within six months of the proposed registration. Such
registration shall be at the expense of Employer. Employer will, at the request
of Employee, take any and all such actions, make such filings and enter into
such agreements as may be reasonably necessary or appropriate to facilitate
sales of Employee's securities in the manner contemplated by any such
registration. If Employer or the underwriter managing or proposing to manage
Employer's offering determines that registration of Employee's securities would
impair Employer's offering, then Employer may by notice in writing to Employee
reduce the number of shares to be registered for Employee (provided any others
in a similar position are similarly reduced) or elect to defer any registration
of shares requested by Employee for a period to be agreed upon between Employer
and Employee, such period to be not less than six (6) months nor more than two
(2) years from the date of Employer's offering. At the deferred date, such
registration shall proceed on the terms provided herein. Employer in any case
may defer registration in order to coordinate with its normal quarterly and
annual filings with the Securities and Exchange Commission.
(b) In the event of any such registration, to the extent permitted by law,
Employer will indemnify Employee against all losses, claims, damages,
liabilities and expenses (under the Securities Act, at common law or otherwise),
including those arising from any obligation of Employee to indemnify any
underwriter or other person, resulting from any untrue statement or alleged
untrue statement of a material fact contained in any registration statement or
prospectus or resulting from any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses result from any untrue statement or omission or alleged
untrue statement or alleged omission contained or omitted in information
furnished in writing to Employer by Employee expressly for use therein.
(c) Employee will furnish to Employer in writing such information as shall
be reasonably requested by Employer for use in any such registration statement
or prospectus and, to the extent permitted by law, will indemnify Employer, its
directors, each officer signing such registration statement, each person, if
any, who controls Employer within the meaning of the Securities Act, each
underwriter, and each person, if any, who controls any such underwriter, within
the meaning of the Securities Act, against all losses, claims, damages,
liabilities and expenses resulting from any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact required to be stated in the registration statement or prospectus or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission or alleged untrue statement or alleged
omission is contained or omitted in information so furnished in writing by
Employee expressly for use therein.
15. Amendment or Modification. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing signed by Employee and a person authorized to sign on
behalf of Employer.
16. Successors; Binding Agreement.
(a) This Agreement shall bind any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Employer, in the same manner and to the same extent
that Employer would be required to perform this Agreement if no such succession
had taken place.
(b) This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees, or if none, then
Employee's estate ("Representatives"). If Employee should die before receiving
all compensation and benefits that had previously been earned and would have
been paid if Employee had continued to live, all such compensation and benefits
shall be paid in accordance with the terms of this Agreement to Employee's
Representatives.
17. Notice. Notices and all other communication provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the
signature page of this Agreement, provided that all notices to Employer shall be
directed to the attention of the Secretary of Employer, or to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
18. Validity and Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect, and any prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
20. Board Approval; Entire Agreement. This Agreement, which has been
reviewed and approved by the Board of Directors of Employer, embodies the entire
agreement between the parties with respect to its subject matter.
21. Governing Law. This Agreement shall be construed and interpreted in
accordance with, and shall be governed by, the substantive laws, but not the
conflicts of law principles, of the State of Missouri.
22. Certain Terms Survive. The obligations of Employer under Sections 13,
14 and 16(a), and the obligations of Employee under Sections 7, 8, 9 and 14,
shall survive the termination of this Agreement in accordance with their terms
unless and until expressly terminated by a subsequent agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement effective as of
the date first above written.
Employer: Employee:
SPARTECH CORPORATION
By: s/RANDY C. MARTIN s/BRADLEY B. BUECHLER
Title: EVP & CFO Bradley B. Buechler
120 South Central Ave., Suite 1700 #3 Lochinvar
St. Louis, Missouri 63105 Town and Country, Missouri 63131
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT entered into this 1st day of January 2003 by and between Randy
C. Martin (the "Employee") and Spartech Corporation, a Delaware corporation (the
"Employer").
WITNESSETH:
WHEREAS, Employer desires to employ Employee, and Employee is willing to
accept such employment on the terms hereinafter set forth,
NOW, THEREFORE, the parties agree as follows:
1. Employment. Employer hereby employs Employee and Employee agrees to
accept such employment on the terms and conditions hereinafter set forth.
2. Term. The term of this Agreement shall commence January 1, 2003 for
a term of three (3) years ending January 1, 2006 (Original Term), unless
extended by mutual consent of the parties hereto.
It is the intent of the parties to negotiate a new contract to replace
this contract by December 31, 2004. If the parties have not entered into a new
three (3) year contract by December 31, 2004, then it is understood this
contract is effectively terminated and an amount equivalent to the Base Salary
plus the last year's bonus shall become due and payable on demand of the
Employee or throughout the remaining year of the Original Term, at the sole
discretion of the Employee. This amount should be in addition to any other
benefits earned as of that date.
3. Duties. Employer employs Employee to act in an executive capacity,
as Executive Vice President and Chief Financial Officer for Employer, on all
aspects of its business, as and when requested, and at such times and places as
Employer shall reasonably request, subject always to the control and direction
of Employer's Board of Directors. During the term of this Agreement, Employee
(a) will serve Employer faithfully, diligently and to the best of his ability,
and (b) will devote his best
efforts and his entire working time, attention and skill to the performance
of his duties hereunder and to promoting and furthering the interests of
Employer. While he is so employed, Employee will not, without the prior written
consent of Employer, render any services to any other business concern;
provided, however, that nothing herein shall prevent Employee from (i) engaging
in additional activities in connection with personal investments which do not
interfere or conflict with his duties hereunder, or (ii) making any investment
in any publicly traded company so long as such investment does not exceed one
percent of the outstanding securities of any class.
4. Compensation. Subject to periodic review for cost of living and/or
merit and other increases, Employer agrees to compensate Employee at the rate of
$275,000 annually (Base Salary). Employer shall further advance or reimburse to
Employee such other monies as Employer determines for credit cards, costs and
other reasonable expenses incurred by Employee in the discharge of Employer's
instructions hereunder, and consistent with the necessities of the operation of
the business. Employee may also participate in all stock option and stock
purchase plans, insurance, medical and other employee benefit programs currently
established and hereafter instituted by Employer which are generally available
to other employees of comparable position. For the term of this Agreement,
Employer shall maintain term life insurance for Employee's designated
beneficiaries equivalent to $300,000.
5. Bonuses. Employee shall be eligible for an annual discretionary
bonus based upon his performance, and based upon the overall results of the
Employer's operations at the end of each year, paid in accordance with the terms
and conditions of Employer's Bonus Program. Any such Bonus shall be subject to
approval by the CEO, and the Compensation Committee of the Board of Directors,
of Employer.
-2-
6. Non-Disclosure. (a) Employee acknowledges that as a result of his
employment by Employer he has acquired, and in the future, will use and acquire
knowledge and information utilized by Employer in its business which may not be
generally available to the public or to other persons in the plastics business
("Confidential Information"), including, without limitation, Employer's systems,
procedures, formulas, processes, confidential reports, lists of customers,
pricing structure, margins with respect to its products and similar information.
As a material inducement to Employer to enter into this Agreement and to pay
Employee the compensation set forth herein, Employee agrees that he will not, at
any time, directly or indirectly, divulge or disclose to any person, for any
purpose, any Confidential Information, except to those persons authorized by
Employer to receive Confidential Information and except for information which
becomes publicly available through no fault of Employee.
(b) Employee further acknowledges that information imparted to him
by Employer, relating to Employer's production and business methods, techniques,
customer lists, statistics, credit, customers and suppliers is secret and
confidential. Therefore, Employee shall, upon termination of his employment
hereunder and as a prior condition to receiving final wages, return to Employer
all books, records and notes containing customer lists and addresses, all
duplicate invoices, all statements and
correspondence pertaining to such customers, and all information and
documents (including all copies thereof) relating to customers, their needs,
products of Employer used by them, schedules of discussions with them, all
formulas, code books, price lists, products, manuals and equipment, production
or processing information or instructions, data applicable to methods of
manufacture, types, kinds, suppliers and costs of raw materials, and all other
information of confidential or secret nature applicable to Employer, its
customers and the manner of conducting its business. As a prior condition to
his receiving final wages, Employee, if requested, shall also execute an
affidavit to the effect that he has complied with the provisions in this
Paragraph 6.
-3-
7. Covenant Not To Compete; No Solicitation of Employees. Employee
agrees as follows:
(a) For as long as he is employed by Employer and for one year after
any termination of employment, Employee agrees that he will not, directly or
indirectly, except as a passive investor in publicly held companies
in which he has less than a one percent interest, engage in, own or control any
interest in or act as director, officer or employee of, or consultant to, any
firm or corporation, directly or indirectly engaged, as these terms may be
reasonably construed, in a business substantially similar to that operated by
Employer on the date of termination, in the territories where Employer
manufactures or distributes its products. If the Employee is terminated without
cause pursuant to Paragraph 12(a) hereof, the non-competition provisions of this
Paragraph 7(a) shall apply only so long as Employer continues to pay Employee
his base salary.
(b) Employee agrees that for one year after any termination
of his employment with Employer he will not, directly or indirectly, induce or
attempt to induce any of the employees of Employer to leave the employment of
Employer, or employ any such employees within 90 days after any termination of
their employment with Employer.
8. Inventions. Employee acknowledges that all inventions, production
processes, techniques, programs, patents, discoveries, formulas and improvements
invented, discovered or learned by Employee during employment hereunder, and
relating to Employer's business, will be disclosed to Employer and will be the
sole property of Employer. The restraints on Employee, as set forth in this
Paragraph 8, however, shall not apply to those inventions for which no
equipment, supplies, facility or trade secret information of Employer was used
and which was developed entirely on Employee's own time and which does not
relate to the business of the Employer, to Employer's actual or demonstrably
anticipated research or development, or which did not result from any work
performed by Employee for Employer.
-4-
9. Remedies. By reason of the fact that irreparable harm would be
sustained by Employer if there is any breach by Employee of the provisions of
Paragraphs 6, 7 and 8 hereof, it is agreed that, in addition to any other rights
which Employer may have under this Agreement or at law or in equity, Employer
shall be entitled to apply to any court of competent jurisdiction for, and
obtain, injunctive relief against Employee or against any third party, in order
to prevent any breach or threatened breach of the provisions of such paragraph.
10. Death During Employment. If Employee should die during the term of
this Agreement, Employer's only obligation shall be to pay Employee's spouse, or
his estate if he has no spouse, his base monthly salary to the month in which
death occurs, plus administrate the payment of any other benefits under which
the Employee was a participant (e.g., life insurance, disability, deferred
compensation plan,.).
11. Disability. Employer, at its option, may terminate this Agreement
upon written notice to Employee if the Employee, because of physical or mental
incapacity or disability, fails in any material respect to perform the services
required of him hereunder for a continuous period of 120 days, or for shorter
periods aggregating 180 days or more in any consecutive period of 240 days.
Upon such termination, all obligations hereunder of the Employer shall cease
except for any long-term disability payments under plans that the Employee
participated.
12. Termination. Anything herein to the contrary notwithstanding,
Employer shall have the right to terminate this Agreement as follows:
(a) Employer may terminate this Agreement without cause upon
written notice to Employee. In the event of such termination, Employee will be
entitled to receive the unpaid portion of base salary for the remaining term of
this Agreement, paid out over the remaining term of this Agreement.
-5-
(b) Employer may terminate this Agreement at any time for
cause. "Cause" as used herein shall mean dishonesty, theft, conviction of a
felony, drunkenness or a material breach of this Agreement. "Cause" shall also
include the failure of Employee, within ten days after receipt of written
notice thereof from Employer, for any reason, to correct, cease or otherwise
alter any failure to comply with the lawful instructions of the corporation's
Board of Directors or other act or omission, which, in the sole opinion of the
Board of Directors, will materially adversely affect Employer's business. In
the event of termination for cause, Employer shall have no obligation to pay any
compensation except to the extent the Employee's base salary has been accrued
but is unpaid at the time of termination.
13. Severability. If any part of this Agreement is found to be void or
unenforceable for any reason, the remainder of this Agreement shall be severable
and may be enforced accordingly.
14. Benefit. This Agreement shall inure to the benefit of and be
binding upon Employee, his heirs, executors and administrators, and upon the
Employer and its successors, but this Agreement may not be assigned by either
party except by operation of law by a merger of the Employer into another
corporation or by Employer in connection with any sale of its business or parts
thereof.
15. Headings. These headings have been inserted in this Agreement for
convenience only and shall not affect the interpretation hereof.
16. Entire Agreement. This Agreement contains the entire understanding
of the parties and may not be amended or changed except by an agreement in
writing signed by the parties.
17. Notices. Any notices required or permitted hereunder shall be
addressed to Employer at its principal office and to Employee at his address as
it appears in the records of the Employer, or at such other address as either
party may have furnished to the other for such purpose in writing.
-6-
18. Applicable Law. This Agreement has been entered into in, and shall
be construed under the laws of, the State of Missouri.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
EMPLOYER:
SPARTECH CORPORATION
By: /s/Bradley B. Buechler
Bradley B. Buechler
Chairman, President and CEO
EMPLOYEE:
/s/Randy C. Martin
Randy C. Martin
Exhibit 10.4
EMPLOYMENT AGREEMENT
AGREEMENT entered into this 1st day of January 2003 by and between David
G. Pocost (the "Employee") and Spartech Corporation, a Delaware corporation (the
"Employer").
WITNESSETH:
WHEREAS, Employer desires to employ Employee, and Employee is willing to
accept such employment on the terms hereinafter set forth,
NOW, THEREFORE, the parties agree as follows:
1. Employment. Employer hereby employs Employee and Employee agrees to
accept such employment on the terms and conditions hereinafter set forth.
2. Term. The term of this Agreement shall commence January 1, 2003 for a
term of three (3) years ending January 1, 2006 (Original Term), unless extended
by mutual consent of the parties hereto.
It is the intent of the parties to negotiate a new contract to replace
this contract by December 31, 2004. If the parties have not entered into a new
three (3) year contract by December 31, 2004, then it is understood this
contract is effectively terminated and an amount equivalent to the Base Salary
plus the last year's bonus shall become due and payable on demand of the
Employee or throughout the remaining year of the Original Term, at the sole
discretion of the Employee. This amount should be in addition to any other
benefits earned as of that date.
3. Duties. Employer employs Employee to act in an executive capacity,
as Executive Vice President-Custom Sheet & Rollstock for Employer, on all
aspects of its business, as and when requested, and at such times and places as
Employer shall reasonably request, subject always to the control and direction
of Employer's Board of Directors. During the term of this Agreement, Employee
(a) will serve Employer faithfully, diligently and to the best of his ability,
and (b) will devote his best
efforts and his entire working time, attention and skill to the performance
of his duties hereunder and to promoting and furthering the interests of
Employer. While he is so employed, Employee will not, without the prior written
consent of Employer, render any services to any other business concern;
provided, however, that nothing herein shall prevent Employee from (i) engaging
in additional activities in connection with personal investments which do not
interfere or conflict with his duties hereunder, or (ii) making any investment
in any publicly traded company so long as such investment does not exceed one
percent of the outstanding securities of any class.
4. Compensation. Subject to periodic review for cost of living and/or
merit and other increases, Employer agrees to compensate Employee at the rate of
$225,000 annually (Base Salary). Employer shall further advance or reimburse to
Employee such other monies as Employer determines for credit cards, costs and
other reasonable expenses incurred by Employee in the discharge of Employer's
instructions hereunder, and consistent with the necessities of the operation of
the business. Employee may also participate in all stock option and stock
purchase plans, insurance, medical and other employee benefit programs currently
established and hereafter instituted by Employer which are generally available
to other employees of comparable position. For the term of this Agreement,
Employer shall maintain term life insurance for Employee's designated
beneficiaries equivalent to $300,000.
5. Bonuses. Employee shall be eligible for an annual discretionary bonus
based upon his performance, and based upon the overall results of the Employer's
operations at the end of each year, paid in accordance with the terms and
conditions of Employer's Bonus Program. Any such Bonus shall be subject to
approval by the CEO, and the Compensation Committee of the Board of Directors,
of Employer.
-2-
6. Non-Disclosure. (a) Employee acknowledges that as a result of his
employment by Employer he has acquired, and in the future, will use and acquire
knowledge and information utilized by Employer in its business which may not be
generally available to the public or to other persons in the plastics business
("Confidential Information"), including, without limitation, Employer's systems,
procedures, formulas, processes, confidential reports, lists of customers,
pricing structure, margins with respect to its products and similar information.
As a material inducement to Employer to enter into this Agreement and to pay
Employee the compensation set forth herein, Employee agrees that he will not, at
any time, directly or indirectly, divulge or disclose to any person, for any
purpose, any Confidential Information, except to those persons authorized by
Employer to receive Confidential Information and except for information which
becomes publicly available through no fault of Employee.
(b) Employee further acknowledges that information imparted to him
by Employer, relating to Employer's production and business methods, techniques,
customer lists, statistics, credit, customers and suppliers is secret and
confidential. Therefore, Employee shall, upon termination of his employment
hereunder and as a prior condition to receiving final wages, return to Employer
all books, records and notes containing customer lists and addresses, all
duplicate invoices, all statements and
correspondence pertaining to such customers, and all information and
documents (including all copies thereof) relating to customers, their needs,
products of Employer used by them, schedules of discussions with them, all
formulas, code books, price lists, products, manuals and equipment, production
or processing information or instructions, data applicable to methods of
manufacture, types, kinds, suppliers and costs of raw materials, and all other
information of confidential or secret nature applicable to Employer, its
customers and the manner of conducting its business. As a prior condition to
his receiving final wages, Employee, if requested, shall also execute an
affidavit to the effect that he has complied with the provisions in this
Paragraph 6.
-3-
7. Covenant Not To Compete; No Solicitation of Employees. Employee agrees
as follows:
(a) For as long as he is employed by Employer and for one year after
any termination of employment, Employee agrees that he will not, directly or
indirectly, except as a passive investor in publicly held companies
in which he has less than a one percent interest, engage in, own or control any
interest in or act as director, officer or employee of, or consultant to, any
firm or corporation, directly or indirectly engaged, as these terms may be
reasonably construed, in a business substantially similar to that operated by
Employer on the date of termination, in the territories where Employer
manufactures or distributes its products. If the Employee is terminated without
cause pursuant to Paragraph 12(a) hereof, the non-competition provisions of this
Paragraph 7(a) shall apply only so long as Employer continues to pay Employee
his base salary.
(b) Employee agrees that for one year after any termination
of his employment with Employer he will not, directly or indirectly, induce or
attempt to induce any of the employees of Employer to leave the employment of
Employer, or employ any such employees within 90 days after any termination of
their employment with Employer.
8. Inventions. Employee acknowledges that all inventions, production
processes, techniques, programs, patents, discoveries, formulas and improvements
invented, discovered or learned by Employee during employment hereunder, and
relating to Employer's business, will be disclosed to Employer and will be the
sole property of Employer. The restraints on Employee, as set forth in this
Paragraph 8, however, shall not apply to those inventions for which no
equipment, supplies, facility or trade secret information of Employer was used
and which was developed entirely on Employee's own time and which does not
relate to the business of the Employer, to Employer's actual or demonstrably
anticipated research or development, or which did not result from any work
performed by Employee for Employer.
-4-
9. Remedies. By reason of the fact that irreparable harm would be
sustained by Employer if there is any breach by Employee of the provisions of
Paragraphs 6, 7 and 8 hereof, it is agreed that, in addition to any other rights
which Employer may have under this Agreement or at law or in equity, Employer
shall be entitled to apply to any court of competent jurisdiction for, and
obtain, injunctive relief against Employee or against any third party, in order
to prevent any breach or threatened breach of the provisions of such paragraph.
10. Death During Employment. If Employee should die during the term of
this Agreement, Employer's only obligation shall be to pay Employee's spouse, or
his estate if he has no spouse, his base monthly salary to the month in which
death occurs, plus administrate the payment of any other benefits under which
the Employee was a participant (e.g., life insurance, disability, deferred
compensation plan,.).
11. Disability. Employer, at its option, may terminate this Agreement
upon written notice to Employee if the Employee, because of physical or mental
incapacity or disability, fails in any material respect to perform the services
required of him hereunder for a continuous period of 120 days, or for shorter
periods aggregating 180 days or more in any consecutive period of 240 days.
Upon such termination, all obligations hereunder of the Employer shall cease
except for any long-term disability payments under plans that the Employee
participated.
12. Termination. Anything herein to the contrary notwithstanding,
Employer shall have the right to terminate this Agreement as follows:
1581: (a) Employer may terminate this Agreement without cause upon
written notice to Employee. In the event of such termination, Employee will be
entitled to receive the unpaid portion of base salary for the remaining term of
this Agreement, paid out over the remaining term of this Agreement.
-5-
(b) Employer may terminate this Agreement at any time for
cause. "Cause" as used herein shall mean dishonesty, theft, conviction of a
felony, drunkenness or a material breach of this Agreement. "Cause" shall also
include the failure of Employee, within ten days after receipt of written
notice thereof from Employer, for any reason, to correct, cease or otherwise
alter any failure to comply with the lawful instructions of the corporation's
Board of Directors or other act or omission, which, in the sole opinion of the
Board of Directors, will materially adversely affect Employer's business. In
the event of termination for cause, Employer shall have no obligation to pay any
compensation except to the extent the Employee's base salary has been accrued
but is unpaid at the time of termination.
13. Severability. If any part of this Agreement is found to be void or
unenforceable for any reason, the remainder of this Agreement shall be severable
and may be enforced accordingly.
14. Benefit. This Agreement shall inure to the benefit of and be
binding upon Employee, his heirs, executors and administrators, and upon the
Employer and its successors, but this Agreement may not be assigned by either
party except by operation of law by a merger of the Employer into another
corporation or by Employer in connection with any sale of its business or parts
thereof.
15. Headings. These headings have been inserted in this Agreement for
convenience only and shall not affect the interpretation hereof.
16. Entire Agreement. This Agreement contains the entire understanding
of the parties and may not be amended or changed except by an agreement in
writing signed by the parties.
17. Notices. Any notices required or permitted hereunder shall be
addressed to Employer at its principal office and to Employee at his address as
it appears in the records of the Employer, or at such other address as either
party may have furnished to the other for such purpose in writing.
-6-
18. Applicable Law. This Agreement has been entered into in, and shall
be construed under the laws of, the State of Missouri.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
EMPLOYER:
SPARTECH CORPORATION
By: /s/Bradley B. Buechler
Bradley B. Buechler
A. Chairman, President and CEO
EMPLOYEE:
/s/ David G. Pocost
David G. Pocost
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into effective July 1,
2002 by and between Spartech Corporation, a Delaware corporation ("Employer"),
and William F. Phillips ("Employee").
WHEREAS, Employer desires to employ Employee, and Employee is willing to
accept such employment on the terms hereinafter set forth,
NOW, THEREFORE, the parties agree as follows:
1. Employment. Employer hereby agrees to employ Employee and Employee
agrees to accept such employment on the terms and conditions hereinafter set
forth.
2. Term. The term of this Agreement shall commence July 1, 2002 and,
unless earlier terminated as provided herein, shall expire on June 30, 2004.
However, should Employer and Employee continue Employee's employment thereafter,
Employee will thereupon become an at-will employee with no fixed term of
employment upon the terms stated in the following Sections of this Agreement, to
the extent their terms permit, unless and until Employer and Employee either
enter into a new written employment agreement or agree otherwise in writing.
3. Duties. Employer employs Employee to act in an executive sales
capacity, with the initial title of Vice President of National Accounts, on
behalf of Employer and Employer's subsidiaries (Employer and its subsidiaries
being herein referred to collectively as "Spartech"), on all aspects of its
business (including the businesses of its subsidiaries), as and when requested,
and at such times and places as Employer shall reasonably request, subject
always to the control and direction of Employer's Chief Executive Officer.
During the term of this Agreement, Employee (a) will serve Employer faithfully,
diligently and to the best of his ability, and (b) will devote his best efforts
and his entire working time, attention and skill to the performance of his
duties hereunder and to promoting and furthering the interests of Employer and
Spartech. While he is so employed, Employee will not, without the prior written
consent of Employer, render any services to any business concern other than
Spartech; provided, however, that nothing herein shall prevent Employee from (i)
engaging in additional activities in connection with personal investments which
do not interfere or conflict with his duties hereunder, or (ii) making any
investment in any publicly traded company so long as such investment does not
exceed one percent of the outstanding securities of any class.
4. Compensation.
(a) Subject to periodic review for cost of living and/or merit and other
increases, Employer agrees to pay Employee a base salary of $175,000 annually.
(b) Employee shall be eligible for an annual discretionary bonus based upon
his performance and the overall results of Employer's operations, to be
determined and paid in accordance with the terms and conditions of Employer's
executive Bonus Plan as in effect from time to time. Any such Bonus shall be
subject to approval by Employer's Chief Executive Officer and/or the
Compensation Committee of Employer's Board of Directors. Provided that
Employee's bonus shall not be less than $25,000 per year.
(c) Employee may also participate in all stock option and stock purchase
plans, insurance, medical and other employee benefit programs currently
established and hereafter instituted by Employer which are generally available
to other employees of comparable position and responsibility. For the term of
this Agreement, Employer shall maintain term life insurance for Employee's
designated beneficiaries in the amount of at least $250,000.
(d) Employer shall advance or reimburse to Employee such other monies as
Employer determines for credit cards, costs and other reasonable expenses
incurred by Employee in the discharge of Employer's instructions hereunder, and
consistent with the necessities of the operation of the business.
5. Transition and Non-Disclosure Covenants.
(a) Employee shall, upon termination of his employment hereunder and as a
prior condition to receiving final wages, return to Employer all property of
Spartech and all other tangible embodiments of Confidential Information,
including, without limitation, books, records and notes containing customer
lists and addresses, all duplicate invoices, all statements and correspondence
pertaining to such customers, and all information and documents (including all
copies thereof) relating to customers, their needs, products of Employer used by
them, schedules of discussions with them, all formulas, code books, price lists,
products, manuals, equipment, software, files, storage media, production or
processing information or instructions, data applicable to methods of
manufacture, types, kinds, suppliers and costs of raw materials, and all other
information of confidential or secret nature applicable to Spartech, its
customers and the manner of conducting its business. As a prior condition to
his receiving final wages, Employee, if requested, shall also execute an
affidavit to the effect that he has complied with the provisions of this
paragraph 5(a).
(b) Employee acknowledges that as a result of his employment by Employer he
has acquired, and in the future will use and acquire, knowledge and information
utilized by Spartech in its business which may not be generally available to the
public or to other persons in the plastics business ("Confidential
Information"), including, without limitation, Spartech's systems, procedures,
formulas, processes, confidential reports, business plans, lists of customers,
pricing structure, margins with respect to its products and the other
information described in paragraph 5(a). As a material inducement to Employer
to enter into this Agreement and to pay Employee the compensation set forth
herein, Employee agrees that he will not, at any time, directly or indirectly,
divulge or disclose to any person, for any purpose, any Confidential
Information, except to those persons authorized by Spartech to receive
Confidential Information and except for information which becomes publicly
available through no fault of Employee.
(c) Employee acknowledges that he is being employed in a position of
authority and responsibility; that as part of the normal and necessary scope of
such authority and responsibility Spartech will impart to Employee, or Employee
will otherwise acquire, knowledge specifically applicable to Spartech's business
which may be known uniquely to Employee or which may be difficult to compile
from other employees in a timely manner; and that Spartech's willingness to
employ Employee is expressly conditioned on Employee's agreement to assist
Spartech with any necessary post-termination transition of such specialized
knowledge. By way of example and without limitation, such knowledge may include
passwords or access codes, work procedures, hardware and software operating
information, customer or supplier contact information, the status of pending
matters, and actions required to be taken by Spartech within a short time after
termination. Employee therefore agrees that upon termination of Employee's
employment, whether by Employee or Employer and for whatever reason, Employee
will, without additional consideration, and if, as and when reasonably and
specifically requested by Spartech, impart such knowledge to such person or
persons as may be designated by Spartech; provided that to the extent
practicable, Employee may impart such knowledge orally rather than in writing
and at times and in a manner that will not interfere with any subsequent
employment; and Spartech will reimburse Employee for any actual and reasonable
expenses incurred by Employee in imparting such knowledge.
(d) If and as reasonably requested by Spartech, Employee will make himself
available after both during and after the termination of his employment for
interviews, depositions and/or testimony relating to, and will otherwise
cooperate with and assist Spartech in the resolution and/or defense of, any
claims arising out of the business of Spartech or out of Employee's acts or
omissions while employed by Spartech, provided that Spartech will reimburse
Employee for his actual and reasonable expenses, and any lost wages, incurred as
a result of such cooperation and assistance.
(e) In consideration of the salary and other benefits to be paid to Employee
under this Agreement, Employee expressly agrees that the covenants in Sections
5, 6, 7 and 8 shall remain in effect not only during Employee's entire term of
employment under this Agreement but also thereafter according to their terms,
notwithstanding the expiration of the term stated in Section 2, unless and until
Employer and Employee either (i) enter into a new written employment agreement
without such covenants, or (ii) agree in writing to terminate such covenants, or
(iii) otherwise expressly agree in writing.
6. Non-Competition and Non-Solicitation Covenants.
(a) During his employment by Employer, and thereafter for the period
described in paragraph 6(c), Employee will not, directly or indirectly, except
as a passive investor in publicly held companies in which he has less than a one
percent interest, engage in, own or control any interest in or act as director,
officer or employee of, or consultant to, any firm or corporation, directly or
indirectly engaged, as these terms may be reasonably construed, in a business
substantially similar to that operated by Employer or Spartech on the date of
termination, in the territories where Employer or Spartech manufacture or
distribute their products.
(b) During his employment by Employer, and thereafter for the period
described in paragraph 6(c), Employee will not, directly or indirectly, induce
or attempt to induce any employee of Employer or Spartech to leave the
employment of Employer or Spartech, or employ or attempt to employ any of such
employees within 90 days after any termination of their employment with Employer
or Spartech.
(c) If Employee's employment is terminated for Cause or because of
Employee's resignation or disability, then the restrictions described in
paragraphs 6(a) and 6(b) will continue for a period of one year after the
effective termination date. If Employee's employment is terminated for any
reason other than Cause or Employee's resignation or disability, then the
restrictions described in paragraphs 6(a) and 6(b) will continue for the lesser
of one year or the period, if any, during which Employer continues to pay
Employee his final base salary pursuant to paragraph 10(a), whether more or less
than one year, provided that if at the time of such termination the remaining
term of this Agreement is less than one year, Employer may, at its sole option,
extend such restrictions for a total period of up to one year after the
termination of Employee's employment by continuing to pay Employee his final
base salary during the extended period.
7. Inventions. Employee acknowledges that all inventions, production
processes, techniques, programs, patents, discoveries, formulas and improvements
invented, discovered or learned by Employee during employment hereunder, and
relating to Spartech's business, will be disclosed to Employer and will be the
sole property of Employer, and Employee will assign all rights to such
inventions and other intellectual property to Spartech upon Employer's request
without further consideration. The restraints on Employee, as set forth in this
Section 7, however, shall not apply to those inventions for which no equipment,
supplies, facility or trade secret information of Spartech was used and which
was developed entirely on Employee's own time and which does not relate to
Spartech's business or to Spartech's actual or demonstrably anticipated research
or development, or which did not result from any work performed by Employee for
Spartech.
8. Remedies. By reason of the fact that irreparable harm would be
sustained by Employer if there is any breach by Employee of the provisions of
Sections 5, 6 and 7 hereof, it is agreed that, in addition to any other rights
which Employer may have under this Agreement or at law or in equity, Employer
shall be entitled to apply to any court of competent jurisdiction for, and
obtain, injunctive relief against Employee or against any third party, in order
to prevent any breach or threatened breach of such provisions.
9. Death During Employment. If Employee should die during the term of this
Agreement, Employer's only obligation shall be to pay Employee's spouse, or his
estate if he has no spouse, his base salary to the date of his death, plus any
accrued and unpaid bonus for the previous year, plus any unpaid portion of any
guaranteed minimum bonus, based on the number of days in the current year to and
including the Employee's death, plus any vacation and fringe benefits accrued to
the date of death in accordance with Employer's vacation and fringe benefit
policies.
10. Termination. Notwithstanding anything herein to the contrary, Employer
shall have the right to terminate Employee's employment as follows:
(a) Employer may terminate Employee's employment without Cause upon written
notice to Employee. In the event of such termination, Employer shall have no
obligation to pay Employee any further compensation except to continue the
payment of Employee's base salary for the remaining term of this Agreement, paid
when such salary would have been payable if Employee had remained employed, and
to pay any accrued and unpaid bonus for the previous year, any unpaid portion of
any guaranteed minimum bonus, based on the number of days in the current year to
and including the Employee's death, and any vacation and fringe benefits accrued
to the effective date of termination in accordance with Employer's vacation and
fringe benefit policies.
(b) Employer may terminate Employee's employment at any time for Cause.
"Cause" as used herein 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 Employer's or
Spartech's assets, business reputation or standing in the community; or
(iii) Drunkenness or drug abuse in violation of Employer's or Spartech's
policies or affecting Employee's performance of Employee's usual and
customary employment or materially adversely affecting Employer's or
Spartech's assets, business reputation or standing in the community; or
(iv) The failure of Employee, within ten days after receipt of written
notice thereof from Employer's or Spartech's Chief Executive Officer, to
correct, cease or otherwise alter any failure to comply with Employer's
or Spartech's lawful policies or instructions concerning Employee's
employment; or
(v) Any violation of Company policy or any other act or circumstance
constituting "cause" at common law if the violation, act or circumstance
is determined by Employer's or Spartech's Chief Executive Officer or
Board of Directors to have a substantial likelihood of materially
adversely affecting Employer's or Spartech's assets or business, or, if
it is or were to become publicly known, Employer's or Spartech's
business reputation or standing in the community.
In the event of termination for Cause, Employer shall have no obligation to pay
Employee any further compensation except to pay Employee's base salary accrued
to the effective date of termination, plus any accrued and unpaid bonus for the
previous year, and to pay any vacation and fringe benefits accrued to the
effective date of termination in accordance with Employer's vacation and fringe
benefit policies.
(c) Employer may terminate Employee's employment by reason of disability
upon written notice to Employee if the Employee, because of physical or mental
incapacity, illness or disability, fails in any material respect to perform the
services required of him hereunder for a continuous period of 120 days, or for
shorter periods aggregating 180 days or more in any consecutive period of 240
days, or for such lesser period as constitutes the waiting period for benefits
under any disability insurance policy maintained for Employee. In the event of
termination by reason of disability, Employer shall have no obligation to pay
any Employee any further compensation except to continue the Employee's base
salary for the waiting period under any long-term disability insurance policy
under which Employee is insured, or if there is no such policy, then for a
period of 90 days after the effective date of termination, to pay any accrued
and unpaid bonus for the previous year, plus any unpaid portion of any
guaranteed minimum bonus, based on the number of days in the current year to and
including the effective date of termination, and to pay any vacation and fringe
benefits accrued to the effective date of termination in accordance with
Employer's vacation and fringe benefit policies.
11. Severability. If any part of this Agreement is found to be void or
unenforceable for any reason, the remainder of this Agreement shall be severable
and may be enforced according to its terms.
12. Benefit; Assignment. This Agreement shall inure to the benefit of and
be binding upon Employee, his heirs, executors and administrators, and upon
Employer and its successors; but this Agreement may not be assigned by either
party except (i) by operation of law upon a merger or consolidation of Employer
into or with another corporation, or (ii) by Employer in connection with a sale
of its business or any part thereof. Employee hereby expressly consents to any
such assignment and agrees to render his services hereunder to any such
assignee.
13. Headings. The headings have been inserted in this Agreement for
convenience only and shall not affect the interpretation hereof.
14. Entire Agreement. This Agreement contains the entire understanding of
the parties and may not be amended or changed except by an agreement in writing
signed by the parties.
15. Notices. Any notices required or permitted hereunder shall be addressed
to Employer at its principal office and to Employee at his address as it appears
in the records of the Employer, or at such other address as either party may
have furnished to the other for such purpose in writing.
16. Applicable Law. This Agreement has been entered into in, and shall be
construed under the laws of, the State of Missouri.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Employer: SPARTECH CORPORATION
By: s/BRADLEY B. BUECHLER
Bradley B. Buechler
Chairman of the Board, President
and Chief Executive Officer
Employee: s/WILLIAM F. PHILLIPS
William F. Phillips
EXHIBIT 10.10
Form of Indemnification Agreement
This Indemnification Agreement ("Agreement") is entered into as of the _____
day of ____________, 20__, by and between Spartech Corporation, a Delaware
corporation (the "Corporation") and _____________________ ("Indemnitee"), a
member of the board of directors ("Board") [{and} an officer] of the
Corporation.
WHEREAS, it is essential to the Corporation to retain and attract as
directors [and officers] the most capable persons available; and
WHEREAS, the substantial risks of litigation against corporations and their
directors [and officers] subjects directors [and officers] of the Corporation to
the possible necessity of incurring extraordinary expenses out of their personal
funds either while directors' [and officers'] liability insurance may be
unavailable to them or because the expenditure is not covered by insurance
policies then in effect; and
WHEREAS, it is the policy of the Corporation to indemnify its directors [and
officers] so as to provide them with the maximum possible protection permitted
by law; and
WHEREAS, Indemnitee does not regard the protection available under the
Corporation's Certificate of Incorporation, Bylaws and insurance policies as
adequate in the present circumstances, and may not be willing to continue to
serve as a director [{or} an officer] without adequate protection, and the
Corporation desires Indemnitee to continue to serve as a director [{and} an
officer];
THEREFORE, in consideration of Indemnitee's continued service as a director
[{and} an officer] of the Corporation, the Corporation and Indemnitee hereby
agree as follows:
1. Agreement to Serve. Indemnitee agrees to continue to serve as a
director [{and} an officer] of the Corporation for so long as Indemnitee is duly
elected or appointed or until such time as Indemnitee tenders Indemnitee's
resignation in writing. However, this Agreement does not constitute either an
employment contract or any commitment, express or implied, to cause Indemnitee
to be elected as a director {or} [continue the employment of Indemnitee].
2. Definitions. As used in this Agreement:
(a) "Proceeding" includes, without limitation, any threatened, pending, or
completed action, suit, or proceeding, including any appeals related thereto,
whether brought by or in the right of the Corporation or otherwise, and whether
of a civil, criminal, administrative, or investigative nature, in which
Indemnitee is or was a party or is threatened to be made a party by reason of
the fact that Indemnitee is or was a director or officer of the Corporation (or
of any predecessor or subsidiary of the Corporation or any successor to the
Corporation by merger), or is or was serving at the request of the Corporation
as a director, officer, employee, member, manager, agent, or fiduciary of any
other corporation, partnership, joint venture, trust, or other enterprise
(including but not limited to a subsidiary). Such request by the Corporation
shall be presumed to exist in the case of a subsidiary or other entity in which
the Corporation has an investment or contractual interest. "Proceeding" also
includes an action by Indemnitee, including without limitation any mediation or
arbitration, to establish or enforce a right of Indemnitee under this Agreement.
(b) "Expenses" include, without limitation, expenses of investigation, costs
of judicial or administrative proceedings or appeals, amounts paid in settlement
by or on behalf of Indemnitee, attorneys' fees and disbursements, costs of
meals, lodging and travel reasonably and necessarily incurred by Indemnitee to
attend any Proceeding or event related to the Proceeding including but not
limited to depositions and mediation sessions, and any other defense costs
incurred by Indemnitee in connection with any Proceeding, but shall not include
judgments, fines, or penalties finally assessed against Indemnitee.
(c) "Other enterprises" include employee benefit plans; "fines" include any
excise taxes assessed on Indemnitee with respect to any employee benefit plan;
"serving at the request of the Corporation" includes any service as a director,
officer, employee, member, manager or agent of the Corporation which imposes
duties on, or involves services by, such director, officer, employee, member,
manager, agent, or fiduciary with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner Indemnitee reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interest of the Corporation" as referred to in
this Agreement.
3. Indemnity in Third-Party Proceedings. The Corporation shall indemnify
Indemnitee against all Expenses, judgments, fines, and penalties actually and
reasonably incurred by Indemnitee in connection with the defense or settlement
of any Proceeding (other than a Proceeding by or in the right of the Corporation
to procure a judgment in its favor, and other than or a Proceeding brought or
initiated voluntarily by Indemnitee), but only if Indemnitee acted in good faith
and in a manner which Indemnitee reasonably believed to be in or not opposed to
the best interests of the Corporation, and, in the case of a criminal
proceeding, had no reasonable cause to believe that Indemnitee's conduct was
unlawful. The termination of any such Proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not act in good
faith in a manner which Indemnitee reasonably believed to be in or not opposed
to the best interests of the Corporation or, with respect to any criminal
proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's
conduct was unlawful.
4. Indemnity in Proceedings By or In the Right of the Corporation. The
Corporation shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by Indemnitee in connection with the defense or settlement
of any Proceeding by or in the right of the Corporation to procure a judgment in
its favor, but only if Indemnitee acted in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation; except that no indemnification for Expenses shall be made under
this section in respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Corporation for negligence or
misconduct in the performance of Indemnitee's duty to the Corporation, unless
(and then only to the extent that) the court in which such Proceeding was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, Indemnitee is fairly
and reasonably entitled to indemnity for such Expenses which such court shall
deem proper.
5. Indemnification of Expenses of Successful Party. Notwithstanding any
other provision of this Agreement:
(i) To the extent that Indemnitee has been successful on the merits or
otherwise, including by a settlement, in defense of any Proceeding,
or in defense of any one or more claims, issues or matters included
therein, Indemnitee shall be indemnified against all Expenses
actually and reasonably incurred by Indemnitee in connection
therewith; and
(ii) Indemnitee's Expenses actually and reasonably incurred in
connection with successfully establishing or enforcing, in whole or
in part, Indemnitee's right to indemnification or advancement of
Expenses under this Agreement or otherwise, shall also be
indemnified by the Corporation.
6. Advances of Expenses. At the written request of Indemnitee, the
Expenses reasonably incurred by Indemnitee in any Proceeding, including Expenses
billed but not yet paid, shall be paid directly (or if already paid by
Indemnitee, shall be reimbursed to Indemnitee) by the Corporation from time to
time in a timely manner in advance of the final disposition of such Proceeding,
provided that Indemnitee shall undertake in writing to repay the amounts
advanced if and to the extent that it is ultimately determined that Indemnitee
is not entitled to indemnification. Indemnitee shall not be required to provide
security for such undertaking. If the Corporation makes an advance of Expenses
pursuant to this section, the Corporation shall be subrogated to every right of
recovery Indemnitee may have against any insurance carrier from whom the
Corporation has purchased insurance for such purpose.
7. Right of Indemnitee to Indemnification Upon Application; Procedure Upon
Application.
(a) Any indemnification or advancement of Expenses under this Agreement
shall be paid by the Corporation no later than 30 days after receipt of the
written request of Indemnitee, unless a determination is made within said 30-day
period by either
(i) The Board by a majority vote of a quorum consisting of directors who
were not and are not parties to the Proceeding in respect of which
indemnification is being sought, or
(ii) Independent legal counsel in a written opinion, or
(iii) The stockholders of the Corporation by vote of a majority of a
quorum at a meeting duly called and held,
that Indemnitee has not met the standards for indemnification set forth in the
relevant section or sections of this Agreement.
(b) Indemnitee's right to indemnification or advancement of Expenses as
provided by this Agreement shall be enforceable by Indemnitee in any court of
competent jurisdiction. The burden of proving that such indemnification or
advancement is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including the Board or independent legal counsel or the
stockholders) to have made a determination prior to the commencement of such
action that Indemnitee has met the applicable standard of conduct nor an actual
determination by the Corporation (including the Board or independent legal
counsel or the stockholders) that Indemnitee has not met such standard shall be
a defense to the action or create a presumption that Indemnitee has not met the
applicable standard of conduct.
(c) With respect to any Proceeding for which indemnification or advancement
of Expenses is requested, the Corporation will be entitled to participate
therein at its own expense and, except as otherwise provided below, the
Corporation may assume the defense thereof, with counsel reasonably satisfactory
to Indemnitee. After notice from the Corporation to Indemnitee of its election
to assume the defense of a Proceeding, the Corporation will not be liable to
Indemnitee under this Agreement for any Expenses subsequently incurred by
Indemnitee in connection with the defense thereof, other than as provided below.
The Corporation shall not settle any Proceeding in any manner which would impose
any penalty or limitation on Indemnitee without Indemnitee's written consent.
Indemnitee shall have the right to employ counsel in any Proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense of the Proceeding shall be at the expense of
Indemnitee and shall not be advanced or indemnified by the Corporation, unless:
(i) The employment of counsel by Indemnitee has been authorized by the
Corporation, or
(ii) Indemnitee shall have reasonably concluded, in writing sent to
the Corporation, that there may be a conflict of interest between
the Corporation and Indemnitee in the conduct of the defense of a
Proceeding, or
(iii) The Corporation shall not in fact have employed counsel to
assume the defense of a Proceeding, or
(iv) Such Expenses of counsel are actually and reasonably incurred in
connection with successfully establishing, in whole or in part,
Indemnitee's right to indemnification or advancement of Expenses
under this Agreement or otherwise,
in each of which cases the fees and expenses of Indemnitee's counsel shall be
advanced by the Corporation.
Notwithstanding the foregoing, the Corporation shall not be entitled to
assume the defense of any Proceeding brought by or in the right of the
Corporation.
8. Limitation on Indemnification. No payment pursuant to this Agreement
shall be made by the Corporation:
(i) To indemnify or advance funds to Indemnitee for Expenses with
respect to Proceedings initiated or brought voluntarily by
Indemnitee and not by way of defense, except with respect to
Proceedings brought to establish or enforce a right to
indemnification or advancement of expenses under this Agreement, but
such indemnification or advancement of Expenses may be provided by
the Corporation in specific cases if the Board finds it to be
appropriate;
(ii) To indemnify Indemnitee for any Expenses, judgments, fines, or
penalties sustained in any Proceeding for which payment is actually
made to Indemnitee under a valid and collectible insurance policy,
except in respect of any deductible or retention amount, or any
excess beyond the amount of payment under such insurance;
(iii) To indemnify Indemnitee for any Expenses, judgments, fines or
penalties sustained in any Proceeding for an accounting of profits
made from the purchase or sale by Indemnitee of securities of the
Corporation pursuant to the provisions of 16(b) of the Securities
Exchange Act of 1934, the rules and regulations promulgated
thereunder and amendments thereto or similar provisions of any
federal, state, or local statutory law;
(iv) To indemnify Indemnitee for any Expenses, judgments, fines or
penalties resulting from Indemnitee's conduct which is finally
adjudged to have been willful misconduct, knowingly fraudulent, or
deliberately dishonest; or
(v) If a court of competent jurisdiction finally determines that such
payment is unlawful.
9. Indemnification Hereunder Not Exclusive. The indemnification and
advancement of Expenses provided by this Agreement shall not be deemed exclusive
of any other rights to which Indemnitee may be entitled under the Certificate of
Incorporation or the Bylaws of the Corporation, any other agreement, any vote of
stockholders or disinterested directors, the General Corporation Law of the
State of Delaware, or otherwise, both as to action in Indemnitee's official
capacity and as to action in another capacity while holding such directorship or
office. The indemnification provided by this Agreement shall continue as to
Indemnitee even though Indemnitee may have ceased to be a director [{and/or} an
officer] and shall inure to the benefit of Indemnitee's personal
representatives, heirs, legatees and assigns.
10. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Corporation for a portion of the
Expenses, judgments, fines, or penalties actually and reasonably incurred by him
or her in any Proceeding but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify Indemnitee for the portion of such
Expenses, judgments, fines, or penalties to which Indemnitee is entitled.
11. Presumption and Burden of Proof. In any adjudication, opinion by
counsel, or decision by the Board or shareholders referred to in this Agreement
or otherwise that involves the determination, directly or indirectly, as to
whether Indemnitee is entitled to indemnification, including the advancement of
Expenses, there shall be a presumption that Indemnitee is entitled to
indemnification. The Corporation or any other person opposing indemnification
shall have the burden of proof to overcome the presumption in favor of
indemnification by clear and convincing evidence.
12. Selection of Independent Legal Counsel. If an opinion of independent
legal counsel shall be required for any purpose under this Agreement, such
counsel shall be selected and appointed by or in a manner determined by the
Board. Such selection and appointment shall also be subject to the consent of
Indemnitee, which consent shall not be unreasonably withheld. Nothing herein
shall prohibit the Board from selecting Indemnitee's defense counsel for this
purpose if the Board determines this to be in the best interest of the
Corporation as an appropriate way to determine the potential liability of
Indemnitee.
13. Settlement of Proceedings. In the case of a Proceeding by Indemnitee to
establish or enforce a right of Indemnitee under this Agreement, the Corporation
shall have the right at any time during such Proceeding to make the
determination that it is in the best interests of the Corporation to settle the
Proceeding, and to pay all or part of the indemnity sought as a part of such
settlement.
14. Arbitration. If the Corporation makes a determination that Indemnitee
is not entitled to indemnity in connection with a Proceeding, Indemnitee shall
have the right to a de novo review of such determination before a panel of
arbitrators chosen in accordance with the commercial arbitration rules of the
American Arbitration Association.
15. Maintenance of Liability Insurance.
(a) The Corporation hereby covenants and agrees that, as long as Indemnitee
continues to serve as a director [{or} an officer] of the Corporation and
thereafter as long as Indemnitee may be subject to any Proceeding, the
Corporation, subject to subsection (c) of this section, shall maintain in full
force and effect directors' and officers' liability insurance ("D&O Insurance")
in reasonable amounts from established and reputable insurers.
(b) In all D&O Insurance policies, Indemnitee shall be named as an insured
in such a manner as to provide the Indemnitee the same rights and benefits as
are accorded to the most favorably insured of the Corporation's directors and
officers. Further, in all policies of D&O Insurance, coverage for Indemnitee
shall include but not be limited to the following:
(i) Claims asserted by the Corporation's present or past shareholders,
directors, employees, lenders, customers, suppliers, competitors and
regulators, as well as claims in connection with class actions, claims
arising out of mergers and acquisitions and antitrust claims asserted by
governmental or private parties; but the policy may exclude claims by
one insured against another insured, except for employment claims;
(ii) No exclusion for Indemnitee's negligence;
(iii) No exclusion for fraud or deliberate dishonesty, except if there has
been a final adjudication of fraud or dishonesty by a court of competent
jurisdiction;
(iv) Punitive and exemplary damages as well as the multiplied portion of
any damage award; and
(v) Any and all Expenses, judgments, fines and penalties not indemnifiable
pursuant to this Agreement, the Corporation's Certificate of
Incorporation or Bylaws, the General Corporation Law of the State of
Delaware, or the laws, rules or regulations of any other jurisdiction or
state or federal agency whose laws, rules or regulations may be
applicable.
(c) Notwithstanding the foregoing, the Corporation shall have no obligation
to obtain or maintain D&O Insurance if and to the extent that the Corporation
determines in good faith that such insurance is not reasonably available, the
premium costs for such insurance are disproportionate to the amount of coverage
provided, the coverage provided by such insurance is so limited by exclusions
that it provides an insufficient benefit, or Indemnitee is covered by similar
insurance maintained by a subsidiary of the Corporation.
16. Miscellaneous.
(a) Savings Clause. If this Agreement or any portion hereof is invalidated
on any ground by any court of competent jurisdiction, the Corporation shall
nevertheless indemnify Indemnitee to the extent permitted by any applicable
portion of this Agreement that has not been invalidated or by any other
applicable law.
(b) Notice. Indemnitee shall, as a condition precedent to his right to be
indemnified under this Agreement, give to the Corporation notice in writing as
soon as practicable of any Proceeding for which indemnity will or could be
sought under this Agreement. Notice to the Corporation shall be directed to
Spartech Corporation, Attention: General Counsel, at 120 South Central, Suite
1700, Clayton, Missouri 63105, or such other address as is then its corporate
headquarters, or such other address as the Corporation shall have designated in
writing to Indemnitee at his last known residence or office address. Notice
shall be deemed received three days after the date postmarked if sent by prepaid
mail, properly addressed. In addition, Indemnitee shall give the Corporation
such information and cooperation as it may reasonably require and as shall be
reasonably within Indemnitee's power.
(c) Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be deemed to constitute one and the same
instrument.
(d) Applicable Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of Delaware.
(e) Successors and Assigns. This Agreement shall be binding upon the
Corporation and its successors and assigns and upon Indemnitee and his personal
representatives, heirs, legatees and assigns.
(f) Amendments. No amendment, waiver, modification, termination, or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto. The indemnification rights afforded to Indemnitee hereby
are contract rights and may not be diminished, eliminated, or otherwise affected
by amendments to the Certificate of Incorporation or Bylaws of the Corporation
or by other agreements without the express written agreement of the parties
expressly referring to and consenting to the provision by which such rights will
be diminished, eliminated or otherwise affected.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and signed as of the day and year first above written.
The Corporation: SPARTECH CORPORATION
By:
Title:
Attest:
Secretary
Indemnitee: