THIS AGREEMENT CONTAINS A WAIVER OF CERTAIN OF YOUR LEGAL RIGHTS. YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING. SEPARATION AGREEMENT AND RELEASE
Exhibit 10.2
THIS AGREEMENT CONTAINS A WAIVER OF CERTAIN OF YOUR
LEGAL RIGHTS. YOU ARE ADVISED TO CONSULT
WITH AN ATTORNEY PRIOR TO SIGNING.
LEGAL RIGHTS. YOU ARE ADVISED TO CONSULT
WITH AN ATTORNEY PRIOR TO SIGNING.
This Separation Agreement and Release (“Agreement”) is made and is effective as of the latest
date signed below, by and between Xxxxxxx X. Xxxxxx (hereinafter referred to as the “Employee” even
for periods after which he is no longer employed in an “employee” status) and Spartech Corporation,
a Delaware corporation, which includes, for purposes of this Agreement, its subsidiaries and
related organizations and, collectively, all of its and their officers, directors, employees,
trustees, agents, representatives, predecessors, successors and assigns, and compensation plans and
programs sponsored or established by any of the foregoing (hereinafter collectively referred to as
the “Corporation”).
WHEREAS, Employee is an employee and officer of the Corporation; and
WHEREAS, the parties to this Agreement intend hereby to implement the Employee’s resignation
as an employee and officer of the Corporation and to resolve any and all claims, to provide for the
amounts to be paid and benefit provided to the Employee in connection with the termination of his
employment with the Corporation, and to secure a release of all claims from the Employee for the
benefit of the Corporation.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and
intending to be legally bound hereby, it is understood and agreed as follows:
| 1. | Resignation as Officer and Director; Cessation of Employment; Payments and Benefits |
The Employee hereby resigns as an officer and employee of the Corporation effective July 25,
2008 (the “Termination Date”). Provided that the Employee is not at the time in breach of any of
his obligations under this Agreement, the Corporation hereby covenants with the Employee to provide
the Employee with the following payments and benefits:
(a) Severance and Non-Competition Payments. In accordance with the terms of the
Severance and Non-Competition Agreement, as amended, the Employee shall receive as a severance
payment, to be paid in equal installments over the twelve months following Employee’s termination,
and in accordance with the Company’s normal payroll practices, an aggregate amount equal to the sum
of (i) $284,000, being equal to 12 months base salary at the highest rate paid to the Employee in
the three years prior to the Termination Date, plus (b) $73,457, being the average annual bonus
awarded to the Employee for the last three fiscal years of the Company ended prior to the
Termination Date.
(b) Executive Bonus Plan. The Employee acknowledges that he is not entitled to a
bonus under the Executive Bonus Plan for the measurement year ending in 2008.
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(c) Automobile. The Corporation shall transfer to the Employee as additional
separation pay the 2004 Toyota Highlander currently being leased for the Employee and having a
buyout value of $14,000.
(d) Computer. The Corporation shall transfer to the Employee as additional separation
pay the laptop computer currently being provided to the Employee, having an agreed value of $250;
provided that prior to such transfer the Corporation may permanently delete all files and data as
required by any licenses or which contain Confidential Information of the Corporation.
(e) Other Compensation and Benefits.
(i) Accrued Vacation, Sick Days and Other Compensation. On the first payroll date after the
Termination Date, the Corporation shall pay the Employee in a single lump sum the aggregate amount
of any accrued and unpaid base salary through the Termination Date, any accrued but unused
vacation, any accrued but unused sick days (payable at the same rate as vacation pay), and (subject
to normal documentation requirements) any unreimbursed business expenses incurred before the
Termination Date.
(ii) Coverage Under Health Insurance Benefit Plans. Should Employee timely elect health
insurance continuation coverage under COBRA, the Corporation also agrees to continue to pay the
company’s portion of the COBRA payment for premiums for the first twelve months following
Employee’s termination, if Executive pays contributions in the same amount charged to active
employees. After this twelve month period Employee will be responsible for full payment of any
premiums consistent with COBRA.
(iv) Employment Search; Outplacement Services. Prior to the Termination Date, to the extent
his employment duties permit, the Employee will be afforded reasonable time off to search for other
employment. After the Termination Date, the Corporation will pay for third-party outplacement
services for up to 12 months or until the Employee secures a substantially full-time position,
whichever comes first.
(f) ERISA Rights. Nothing in this Agreement is intended to surrender or waive any
right the Employee may have to any vested and accrued benefits under the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), including, but not limited and balances under
Corporation’s employee benefit plans, which accrued benefits and balances shall be payable when and
in accordance with the terms of the respective plans.
(g) Applicable Taxes. Notwithstanding any provision of this Agreement, prior to the
delivery of any thing of value to the Employee, the Corporation shall withhold from any cash
payment under this Agreement the amount determined in good faith by the Corporation to be required
to be withheld for applicable federal, state and/or local taxes or to be paid by the Employee as
federal, state or local payroll taxes for all things of value to be delivered under this Agreement.
If any thing of value to be delivered under this Agreement is to be delivered in a form other than
cash, withholding for applicable taxes shall be withheld from cash payments before delivery of
non-cash things of value.
(h) Deferral. The parties agree that (i) Employee is a “specified employee” (within
the meaning of Internal Revenue Code Section 409A(a)(2)(B)(i)) of the Corporation and that (ii)
notwithstanding the Employee’s resignation the separation payments under Section 1(a), (c) and (d)
are on account of the Employee’s “involuntary separation from service” (as defined in Treasury
Regulation Section 1.409A-1(n)). The Employee shall receive such payments during the six month
period immediately following the Termination Date as otherwise provided under
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Section 1(a) for such six month period except that the total amount of such payments shall not
exceed the lesser of the amounts specified under Treasury Regulation Section
1.409A-1(b)(9)(iii)(A)(1) or (2). To the extent the amounts otherwise payable during such six
month period under Section 1(a) exceed the amounts payable under the immediately preceding
sentence, such excess amounts shall be paid in a single sum on the first regular payroll date of
the Corporation immediately following the six month anniversary of the Termination Date.
| 2. | Agreement to Assist and Consult |
(a) As of July 25, 2008, when no employment relationship exists, as and for consulting
services, the Corporation agrees to pay to Employee Twenty Three Thousand Five Hundred Dollars
($23,500.00) per month, commencing in July 25, 2008 and continuing through October 31, 2008 for a
total of Seventy Five Thousand Nine Hundred Dollars ($75,900.00). The Corporation will issue the
Employee an IRS Form 1099 for the sums attributable to the consulting relationship, and Employee
will be responsible for all taxes due on the payments made.
(b) As an independent consultant, Employee will make himself available, on an as-needed basis,
for the purpose of responding in good faith to questions that the management may have concerning
the Corporation within the specific knowledge of the Employee and/or to help transition a new
General Counsel. If the Employee fails to cooperate in good faith on questions or matters referred
to him, the Corporation may, at its discretion, withhold any or all of the monthly payments to be
made pursuant to this paragraph 2.
| 3. | Release of Liability and Covenant Not to Xxx |
(a) This Agreement constitutes full and final settlement of all claims asserted or which could
have been asserted by Employee prior to the date of the Agreement. By the execution of the terms
hereof, Corporation, its officers, directors, agents, employees, attorneys, representatives,
affiliates, subsidiaries, successors and assigns are released from all claims for liability
asserted or which could have been asserted. The Release under this paragraph includes any and all
claims, demands and causes of action of any kind whatever, including attorneys’ fees and costs
actually incurred (collectively referred to as “Claims”), whether known or unknown, which Employee
now has or ever has had against Corporation up to the date of this Agreement, including but not
limited to claims under the Age Discrimination in Employment Act, 29 U.S.C. §§621 et
seq., the Equal Pay Act, 29 U.S.C. §206 et seq., the Employment Retirement
Security Act, 29 U.S.C. §§1001 et seq., Xxxxx XXX, 00 X.X.X. §§0000 et
seq., the Missouri Human Rights Act, X.X.Xx. Xxxxxxx 000, xx xxx., 00
X.X.X. §0000, the Americans With Disabilities Act, 42 U.S.C. §§12,101 et seq., the
Missouri Service Letter Statute, X.X.Xx. §290.140; and any and all other federal, state or local
statues and/or ordinances, and any and all other Claims arising under or pursuant to statute,
contract or common law. In the event that any person or entity should bring a charge, claim or
complaint or action on Employee’s behalf relating to any Claim, he hereby waives, releases and
forfeits any right to recovery under said Claim and will exercise a good faith effort, including
(but not limited to) the execution of such additional releases or other documents, to have any such
Claim dismissed. The foregoing shall not prevent the Employee from filing charges with the Equal
Employment Opportunity Commission but the Employee agrees he shall not financially benefit from
such charges.
(b) If Employee violates this Agreement by filing a claim against or suing the Corporation,
Employee agrees to pay all costs and expenses of defending against such claims incurred by the
Corporation or in prosecuting any counterclaim or cross claim based on this
Agreement, including reasonable attorney’s fees and all other costs and expenses associated
therewith.
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| 4. | Waiver of Relief |
This Agreement encompasses all relief, no matter how called, whether now apparent or yet to be
discovered, including but not limited to: wages, front pay, back pay, compensatory damages, pension
or retirement benefits, punitive damages, liquidated damages, damages for pain, suffering, mental
anguish and loss of enjoyment of life, and costs and attorney’s fees.
| 5. | No Admission of Liability |
Execution of this Agreement and compliance with its terms, as provided above, do not
constitute an admission by the Corporation that (i) it has treated the Employee or any other person
unfairly or unlawfully or (ii) that it engaged in any breach of contract or violation of any Civil
Rights Provision or other employment discrimination statute, or any other legal provision,
regulation, ordinance order or rule of common law.
| 6. | Return of Property |
(a) The Employee shall, by the close of business on the Termination Date, return to the
Corporation all cell phones and other items of tangible personal property owned by the Corporation,
However the Employee may keep his current cell phone and service until the end of the consulting
period in section 2.
(b) The Employee shall, by the close of business on the Termination Date, return to the
Corporation all records relating to the Corporation and its business in whatever medium; provided
that the Employee (i) may retain copies of documents and records which are publicly available and
(ii) may retain as forms for use in his future employment as an attorney, copies of legal forms and
documents personally prepared by him during his employment, provided that they are first redacted
to remove any Confidential Information of the Company.
| 7. | Litigation Cooperation |
The Employee agrees to cooperate with the Corporation in the prosecution or defense of claims
asserted by or against the Corporation. Such cooperation shall include meeting with
representatives of the Corporation or the Corporation’s attorneys, or both, divulging to the
Corporation any information that the Corporation may request for possible use in litigation,
arbitration, or other legal proceeding, and testifying on behalf of the Corporation at the
Corporation’s request. If called upon by the Corporation for cooperation under this Section 7, the
Corporation shall reimburse the Employee for his reasonable out-of-pocket expenses in connection
with such cooperation. If the Employee is named a defendant in any lawsuit arising or alleged to
have arisen from his employment with the Corporation prior to the Termination Date, he shall be
provided a defense and indemnity or insurance coverage to the extent provided by the By-laws of the
Corporation and/or under any indemnification agreement and/or under any policy of insurance in
effect on the Termination Date.
| 8. | Non-Competition Agreement; Non-Solicitation; Non-Disparagement; Confidentiality |
The Employee agrees that:
(a) Until after the first anniversary of the Termination Date, he shall refrain, as a
principal, partner, co-venturer, employee, agent, servant or independent contractor, from any
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business activity which is engaged in a business which competes with a business in which the
Corporation is engaged as of the Termination Date, including, but not limited to, the production of
engineered thermoplastic sheet and rollstock, thermoformed plastic packaging, polymeric compounds
and custom engineered wheels.
(b) Until after the first anniversary of the Effective Date, he shall refrain from soliciting
for employment with any business of any type whatsoever individuals who are employees of the
Corporation on the Termination Date.
(c) The Employee will not divulge to others or use for his or her own benefit or for the
benefit of others any confidential information, including correspondence and other records, whether
or not reduced to writing, which the Employee may have acquired from Spartech or others by reason
of the Employee’s employment with Spartech; it being expressly understood that all such
information, lists, correspondence and other writings are confidential and (except to the limited
extent provided in Section 6(b)) shall remain the sole property of Spartech and shall not be
removed or transcribed for removal by the Employee before or after the Termination Date.
(d) The Employee and the Corporation agree that he and it will not, in any way, disparage one
another to any person(s) or organization(s), including, without limitation, any employee of the
Corporation. The Corporation will not make any public statement or provide information to any
person concerning the reasons for the termination of the Employee’s employment other than as made
in this Agreement or as mutually agreed.
(e) Any breach or threatened breach of any one or more of the provisions of this Section 8
would cause immediate, material and irreparable harm to the Corporation and that money damages
would not provide an adequate remedy to the Corporation. The Corporation shall have all of the
rights and remedies available under law or equity, including, but not limited to, injunctive
relief, available to any party enforcing this covenant not to compete. Each of the rights and
remedies shall be independent of the other and shall be severally enforceable including, but not
limited to, the right to have the covenants specifically enforced by any court of competent
jurisdiction and the right to require Employee to account for and pay over to the Corporation all
benefits derived or received by him as a result of any such breach of covenant and Employee shall
not raise a defense to the granting of any such relief that the Corporation has an adequate remedy
at law.
(f) Nothing in this Agreement shall diminish the professional responsibilities or obligations
due to Corporation pursuant to the Employee’s role as an attorney for Corporation, including but
not limited to any fiduciary duties or any duties to maintain the confidences of the Corporation,
or any obligations Employee may have under other agreements.
| 9. | Entire Agreement; Counterparts; Amendments |
This Agreement constitutes the entire agreement and understanding of the parties and supersedes all
prior negotiations, understandings and agreements, proposed or otherwise, written or oral.
Notwithstanding this paragraph, all written stock option or equity award agreements, as well as the
provisions of paragraphs 2, 3, and 4 of the Severance and Noncompetiton Agreement between the
parties dated March 7, 2006 and paragraphs 5, 6, and 7 of the Employment Agreement dated December
11, 2003 shall remain in full force and effect.. This Agreement may be executed in several
counterparts each of which shall be deemed to be an original, and all such counterparts when taken
together shall constitute one and the same instrument. Furthermore, no
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modification of this Agreement shall be binding unless in writing signed by each of the parties
hereto.
| 10. | Severability |
Should any provision of this Agreement be declared illegal or unenforceable by any court of
competent jurisdiction and if such provision cannot be modified to be enforceable (including the
general release language in Section 3), such provision shall immediately become null and void,
leaving the remainder of this Agreement in full force and effect. However, if any portion of the
general release language in Section 3 is ruled unenforceable for any reason, the Corporation and
the Employee agree to use their best efforts to negotiate in good faith an enforceable general
release.
11. Governing Law
This Agreement shall be governed by, and construed and enforced in accordance with, the laws
of the State of Missouri, the state in which the Corporation operates its principal place of
business, without regard to its principles or provisions of conflicts of laws. Any action brought
under this Agreement shall be brought in a court of competent jurisdiction with venue in St. Louis
County, Missouri.
| 12. | Judicial Enforcement |
This Agreement may be specifically enforced in judicial proceedings brought in equity in a
court of competent jurisdiction.
| 13. | Voluntary and Understanding Execution |
The Employee agrees and acknowledges that he has read this Agreement and fully understands the
terms and conditions of this Agreement, including the release of claims and waiver of rights, and
that he enters into this Agreement knowingly, voluntarily, free from duress and as a result of his
own free will.
| 14. | Consideration and Revocation Periods |
(a) The Employee acknowledges that he has been advised by this writing and previously by the
Corporation to consult with an attorney of his choosing concerning his rights in connection with
his termination from employment and the terms and conditions of this Agreement, including the
release of all claims contained herein. It is expressly agreed that the benefits specified in this
Agreement include benefits to which Employee is presently not entitled.
(b) The Employee acknowledges that he has been advised that, with regard to the release of
claims under the Age Discrimination in Employment Act, as amended, he has a legal right to use all
or any part of twenty-one (21) days to consider, in consultation with his attorney, whether to sign
this Agreement.
(c) The Employee acknowledges that he has been advised that, if he signs this Agreement, he
can thereafter revoke his execution of this Agreement to the extent of the release of claims under
the Age Discrimination in Employment Act (but only to the extent of his release of claims under the
Age Discrimination in Employment Act) on or before the close of business on the seventh day after
his execution hereof by delivering a written revocation to Spartech Corporation, Attention: Chief
Executive Officer, 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000. For the avoidance
of doubt, the Employee’s release of all claims other than those under the Age Discrimination in
Employment Act shall be effective on the date the Employee executes and delivers this Agreement to
the Corporation. In the event that the Employee revokes his execution with respect to his release
of claims under the Age
Discrimination in Employment Act, he will forfeit any and all rights and benefits under this
Agreement other than Sections 1(a) and (d).
IN WITNESS WHEREOF, the aforesaid parties have hereunto set their hands and seals as of the date
written below.
| XXXXXXX X. XXXXXX | ||||||
| /s/ Xxxxxxx X. Xxxxxx | ||||||
| Date: July 15, 2008 | ||||||
| SPARTECH CORPORATION | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxx
|
|||||
| President and Chief Executive Officer | ||||||
| Date: | July 14, 2008 | |||||
