EXHIBIT 1.01(a)
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SPARTECH CORPORATION
2006 EXECUTIVE BONUS PLAN
ARTICLE 1. ESTABLISHMENT OF PLAN
1.1 This Spartech Corporation 2006 Executive Bonus Plan has been
adopted by the Company for the purpose of attracting, motivating and
rewarding certain employees of the Company with performance-based
compensation.
ARTICLE 2. DEFINITIONS
2.1 As used in this Plan:
(a) "Board" means the Board of Directors of the Company.
(b) "Bonus" means the amount of compensation payable to any
Participant with respect to a Performance Period established under
the Plan.
(c) "Change in Control" has the meaning given in Section 5.1.
(d) "Code" means the Internal Revenue Code of 1986, as
amended, and the regulations and interpretations promulgated
thereunder.
(e) "Committee" means the Committee described in Section 6.1.
(f) "Company" means Spartech Corporation.
(g) "Covered Employee" means a covered employee as defined in
Section 162(m)(3)(A) and (3)(B) of the Code.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the regulations and interpretations promulgated
thereunder.
(i) "Participant" means an executive officer of the Company.
(j) "Performance Goals" has the meaning given in Section 3.2.
(k) "Performance Period" means a fiscal year of the Company or
such shorter period as the Committee may designate, over which
performance will be measured to determine whether and in what
amounts to pay Bonuses to Participants.
(l) "Plan" means this Spartech Corporation 2006 Executive
Bonus Plan, as amended from time to time.
ARTICLE 3. ESTABLISHMENT AND TERMS OF PERFORMANCE PERIODS
3.1 The Committee shall establish one or more Performance Periods
under the Plan. Each Performance Period must be established in writing prior
to the expiration of any prescribed time period for the pre-establishment of
performance goals under Section 162(m) of the Code.
3.2 For each Performance Period, the Committee shall (i) designate
the Participants, specifying those Participants whom the Committee believes
may be or become Covered Employees for the applicable Performance Period,
(ii) establish one or more objective Performance Goals for each Participant
or class of Participants, and (iii) adopt objective formulas or standards
for computing the amounts of Bonuses payable under the Plan based on actual
results compared to the Performance Goals. All Performance Goals shall be
based upon one or more objective performance criteria, such as (but not
necessarily limited to) sales, operating earnings, pretax income, earnings
per share, return on equity, working capital or specific elements thereof,
return on capital employed, cash flow, market share, stock price, total
shareholder return, costs, productivity and economic value added.
Performance Goals may be Company-wide or may be specific to a business unit.
The Performance Goals and target Bonuses may be different, or may be
weighted differently, for different Participants or classes of Participants.
ARTICLE 4. AMOUNT AND PAYMENT OF BONUSES
4.1 After the close of each Performance Period, the Committee shall
certify in writing the achievement of the applicable Performance Goals and
the amount of any Bonuses payable to the Participants for such Performance
Period under the applicable formulas or standards.
4.2 Bonuses payable for a Performance Period shall be paid not later
than January 15 of the calendar year following the fiscal year in which the
Performance Period ends. The Company shall withhold from any amount payable
under the Plan all taxes required to be withheld by any federal, state or
local government.
4.3 Except to the extent that a written contract between the Company
and the Participant may provide otherwise, a Participant whose employment
terminates for any reason prior to the end of a Performance Period, or who
voluntarily resigns after the end of the Performance Period and prior to the
time of payment, shall have no right to any portion of a Bonus for that
Performance Period.
4.4 Notwithstanding the degree to which the applicable Performance
Goals are satisfied the Committee shall have the discretion to reduce the
amount of any Participant's Bonus below the standard or formula amount to
reflect individual performance and/or unanticipated factors.
4.5 No Bonuses shall be paid under this Plan until the Plan has
received stockholder approval as required by Section 162(m) of the Code.
ARTICLE 5. CHANGE IN CONTROL
5.1 For purposes of this Plan, "Change in Control" means:
(a) The occurrence of the "Distribution Date" as such term is
defined in the Rights Agreement dated as of April 2, 2001 between
the Company and Mellon Investor Services LLC; or
(b) If the "Redemption Date" or the "Final Expiration Date,"
as such terms are defined in the aforesaid Rights Agreement, has
occurred, the acquisition by any Person of 50% or more of the
combined voting power of all the Company's then outstanding voting
securities, unless prior to such acquisition the Board has approved
such acquisition and determined that it is in the best interests of
the Company and its shareholders; or
(c) The approval by the Board of any merger, consolidation or
other transaction involving the Company, or of any one of a series
of related transactions, as a result of which (i)
the Company would not be the surviving corporation, or (ii) the
holders of the Company's common stock immediately prior to such
transaction would not own at least a majority of the voting power of
the Company immediately after the transaction in substantially the
same relative proportions as they owned the Company's common stock
immediately prior to the transaction, or (iii) the Company's common
stock would be converted into cash or other securities of the
Company other than voting securities having substantially the same
relative and proportionate voting power in the entity or entities
surviving the transaction as the common stock has immediately prior
to the transaction; or
(d) The commencement of any tender offer subject to Section
14(d) of the Exchange Act for 20% or more of the Company's common
stock; if the person making such offer could own 50% or more of such
common stock when the tender offer terminates; or
(e) Any change or changes in the composition of the Board
within any twenty-four month period such that the individuals
constituting the Board at the beginning of such period, together
with any individuals who became directors after the beginning of
such period whose election by the Board or nomination for election
by the Company's shareholders was approved by at least a majority of
the directors who were on the Board at the beginning of such period
or whose election was previously approved in the same manner, cease
to constitute a majority of the Board; or
(f) The approval by the stockholders of the Company of a plan
of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all the
Company's assets.
For purposes of this Article, "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof; however, a Person shall not include (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of Company stock.
5.2 On the date a Change in Control occurs, notwithstanding anything
else to the contrary herein:
(a) All Bonuses with respect to a completed Performance Period
shall be immediately payable in cash;
(b) With respect to the current Performance Period, such
Performance Period shall be deemed to have ended and the applicable
Performance Goals and formulas or standards shall be appropriately
adjusted to reflect the length of such Performance Period in
comparison to the originally established Performance Period, and all
Bonuses for such Performance Period shall be immediately payable in
cash on a pro-rated basis;
(c) The Committee shall not have the discretion provided in
Section 4.5 to reduce the amount of any Participant's Bonus below
the amount which would otherwise have been payable to the
Participant under the applicable formula or standard and under this
Section 6.2; and
(d) The provisions of this Section 5.2 may not thereafter be
amended adversely to any Participant without the written consent of
the Participant. If by reason of this Section 5.2 an excise or other
special tax ("Excise Tax") is imposed on any payment under the Plan
(a
"Required Payment"), the amount of each Required Payment shall be
increased by an amount which, after payment of income taxes, payroll
taxes and Excise Tax thereon, will equal such Excise Tax on the
Required Payment.
ARTICLE 6. ADMINISTRATION OF PLAN
6.1 The Plan shall be administered by a Committee established by the
Board. The Committee shall be comprised solely of two or more independent
directors of the Company as determined under the Company's Corporate
Governance Guidelines and Director Independence Policy, and each of whom
shall also qualify as an "outside director" as defined for purposes of
Section 162(m) of the Code. Until changed by the Board, the members of the
Compensation Committee shall serve as the members of the Committee. The
Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable.
ARTICLE 7. TERM, TERMINATION AND AMENDMENT
7.1. The Plan shall be in effect beginning October 30, 2005, and it
shall continue in effect until it is terminated. The Committee may terminate
the Plan at any time.
7.2 The Committee may amend the Plan at any time. However, no
amendment to the Plan may be made without stockholder approval unless the
Committee determines that stockholder approval of the amendment is not
required in order for Bonuses paid to Covered Employees to constitute
qualified performance-based compensation under Section 162(m) of the Code.
ARTICLE 8. MISCELLANEOUS
8.1. The Plan shall not give any Participant the right to continued
employment, or limit the right of the Company or any subsidiary to discharge
a Participant from employment, or restrict any Participant from resigning
from such employment, or restrict the Company or any subsidiary from
increasing or decreasing the compensation or changing the job classification
of any Participant.
8.2. Except as required by law, no amount payable under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution, or levy of
any kind, either voluntary or involuntary, and any attempt to do any such
thing shall be void.
8.3. Nothing contained in the Plan shall prohibit the Company from
adopting any other bonus or incentive plan or from granting other
performance awards or other forms of cash or non-cash remuneration to
employees (including Participants) under such conditions, and in such form
and manner, as the Company sees fit.
8.4. Subject to the provisions of applicable federal law, the Plan
shall be administered, construed and enforced according to the laws of
Missouri and in the state or federal courts situated in the City or County
of St. Louis, Missouri.
8.5. The invalidity of any particular clause, provision or covenant
herein shall not invalidate all or any part of the remainder of the Plan,
but such remainder shall be and remain valid in all respects as fully as the
law and the accomplishment of the general purposes of the Plan will permit.