Exhibit 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into effective May 1,
2004 by and between Spartech Corporation, a Delaware corporation ("Employer"),
and Xxxxxx X Xxxxxxx ("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. This Agreement supersedes in its entirety the Employment Agreement dated
January 1, 2003 between Employee and Spartech Plastics, Inc., and Employee's
employment under this Agreement shall be deemed to be a continuation of his
employment with Spartech.
2. Term. The term of this Agreement shall commence May 1, 2004 and, unless
earlier terminated as provided herein, shall expire April 30, 2007. 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 capacity, with
the initial title of Executive Vice President - Custom Sheet and Rollstock, on
behalf of Employer and Employer's subsidiaries (Employer and its subsidiaries
being herein referred to collectively as "Spartech"), on all aspects of
Spartech's 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 Chief Executive Officer. Employee also agrees to serve as an
officer and/or director of any Spartech-affiliated entity. 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 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 $275,000 annually.
(b) Employee shall be eligible for an annual discretionary bonus based upon
his performance, the overall results of the Employer's operations, and the
results of the operations of Employer's Custom Sheet & Rollstock business group,
to be determined and paid in accordance with the terms and conditions of
Employer's executive bonus program 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.
(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 the expenses reasonably
incurred by Employee in the discharge of Employee's duties hereunder, consistent
with the necessities of the operation of the business and Employer's expense
reimbursement policies.
(e) Employee shall be entitled to indemnification under Employer's
Certificate of Incorporation, Bylaws and insurance policies and other contracts
to the same extent as the other executive officers of Employer. The parties
acknowledge having entered into an Indemnification Agreement in the current
standard form for Employer's executive officers, effective May 1, 2004.
5. Transition and Non-Disclosure Covenants.
(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 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, customer lists,
pricing and margin information, production or processing information or
instructions, data applicable to methods of manufacture, types, suppliers and
costs of raw materials, and all other information of a confidential or secret
nature applicable to Spartech, its customers and the manner of conducting its
business. 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.
(b) 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, duplicate invoices,
correspondence, schedules and calendars, formulas, code books, price lists,
samples, manuals, equipment, files, software and storage media. 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(b).
(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 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 plus
a bonus equal to a pro rata portion of the average bonus paid to him over the
previous two years based on the number of days by which the extended period
exceeds the remaining term of this Agreement, paid at the same times as
Spartech's normal bonus payments for continuing employees.
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 a bonus for the current
year equal to a pro rata portion of the average bonus paid to him over the
previous two years, 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 pay Employee's
final base salary for the remaining term of this Agreement, paid when such
salary would have been payable if Employee had remained employed, plus any
accrued and unpaid bonus for the previous year, plus a bonus equal to the
average bonus paid to him over the previous two years, paid at the same times as
Spartech's normal bonus payments for continuing employees, plus 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 use best efforts to
comply with Employer's or Spartech's lawful policies or reasonable
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
Employee any further compensation except to pay 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 a bonus for the current year equal to a pro rata portion
of the average bonus paid to him over the previous two years, 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/XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx
Chairman of the Board, President
and Chief Executive Officer
Employee: s/XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
