CHANGE IN CONTROL
AGREEMENT
This Change in
Control Agreement (this “Agreement”) between GARY A.
MILLER (the “Employee”) and A. Schulman, Inc., a
Delaware corporation (the “Corporation”), is effective
as of April 21, 2008 (“Effective
Date”).
WHEREAS,
the Employee currently is employed by the Corporation;
and
WHEREAS,
in order to induce the Employee to remain in the employ of the
Corporation, the Corporation desires to provide the Employee with
certain severance benefits in the event his employment with the
Corporation terminates in connection with a Change in Control under
the circumstances described herein;
NOW,
THEREFORE, in consideration of the mutual promises and
agreements hereinafter set forth, the Corporation and the Employee
agree as follows:
When used in this
Agreement, the following terms will have the meanings given to them
in this section unless another meaning is expressly provided
elsewhere in this Agreement. When applying these definitions, the
form of any term or word will include any of its other
forms.
1.1
“Affiliate” shall mean any entity with whom the Corporation
would be considered a single employer under Sections 414(b) and
414(c) of the Code.
1.2
“Board” shall
mean the Corporation’s Board of Directors.
(a) Any act of
fraud, embezzlement, misappropriation or conversion by the Employee
of the assets or business opportunities of the Corporation and its
Affiliates;
(b) The
Employee’s conviction of (or plea of guilty to) a felony or a
misdemeanor that originally was charged as a felony but was reduced
to a misdemeanor as part of a plea bargain;
(c) Intentional
and repeated material violations by the Employee of the written
policies or procedures of the Corporation or, to the extent
applicable to the Employee, any of its Affiliates or intentional
and material breach of any contract with or violation of any legal
obligation owed to the Corporation or any of its Affiliates
provided that a breach or violation shall be considered intentional
and material only if the Employee fails to cure to the best of the
Employee’s ability such breach within thirty (30) days
after delivery to the Employee of a notice from the Board
specifying such breach; or
(d) The
Employee’s willful engagement in gross misconduct or
intentional misrepresentation that is materially and demonstrably
injurious to the Corporation or any
of its
Affiliates, provided that such breach is not cured within thirty
(30) days after delivery to the Employee of a notice from the
Board requesting cure.
For purposes of
this definition, no act or failure to act, on the Employee’s
part shall be deemed “willful” unless done, or omitted
to be done, by the Employee not in good faith and without
reasonable belief that the Employee’s act or failure to act,
was in the best interest of the Corporation or any Affiliate. In
the event of a dispute concerning the application of the definition
of Cause, no claim by the Corporation or any Affiliate that Cause
exists shall be given effect unless the Corporation establishes by
clear and convincing evidence that Cause exists.
1.4
“Change in Control” shall mean the occurrence of any of the
following:
(a) The
acquisition by any person (as defined under Section 409A of
the Code), or more than one person acting as a group (as defined
under Section 409A of the Code), of stock of the Corporation
that, together with the stock of the Corporation held by such
person or group, constitutes more than fifty percent (50%) of the
total fair market value or total voting power of the stock of the
Corporation;
(b) The
acquisition by any person, or more than one person acting as a
group, within any twelve (12) month period of stock of the
Corporation possessing thirty percent (30%) or more of the total
voting power of the stock of the Corporation;
(c) A majority of
the members of the Board is replaced during any twelve
(12) month period by directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election; or
(d) The
acquisition by any person, or more than one person acting as a
group, within any twelve (12) month period, of assets from the
Corporation that have a total gross fair market value equal to or
more than forty percent (40%) of the total gross fair market value
of all of the assets of the Corporation immediately prior to such
acquisition or acquisitions.
This definition
of Change in Control shall be interpreted in a manner that is
consistent with the definition of “change in control
event” under Section 409A of the Code and the Treasury
Regulations promulgated thereunder.
Notwithstanding
the foregoing, a “Change in Control” shall be deemed to
have not occurred if there is consummated any transaction or series
of integrated transactions immediately following which the record
holders of the common stock of the Corporation immediately prior to
such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which
owns all or substantially all of the assets of the Corporation
immediately following such transaction or series of
transactions.
Further,
notwithstanding the foregoing, any event or transaction which would
otherwise constitute a Change in Control (a
“Transaction”) shall not constitute a Change in
Control
2
for purposes of
this Agreement if, in connection with the Transaction, the Employee
participates as an equity investor in the acquiring entity or any
of its affiliates (the “Acquiror”). For purposes of the
preceding sentence, the Employee shall not be deemed to have
participated as an equity investor in the Acquiror by virtue of
(i) obtaining beneficial ownership of any equity interest in
the Acquiror as a result of the grant to the Employee of an
incentive compensation award under one or more incentive plans of
the Acquiror (including, but not limited to, the conversion in
connection with the Transaction of incentive compensation awards of
the Corporation into incentive compensation awards of the
Acquiror), on terms and conditions substantially equivalent to
those applicable to other Employees of the Corporation and its
Affiliates immediately prior to the Transaction, after taking into
account normal differences attributable to job responsibilities,
title and similar matters, (ii) obtaining beneficial ownership
of any equity interest in the Acquiror on terms and conditions
substantially equivalent to those obtained in the Transaction by
all other stockholders of the Corporation, or (iii) passive
ownership of less than three percent (3%) of the stock of the
Acquiror.
1.5
“Change in Control Protection Period”
shall mean the period beginning on
the date of a Change in Control and ending on the first anniversary
thereof, even if such period extends beyond the Expiration Date (as
defined in Section 2).
1.6
“Code” shall
mean the Internal Revenue Code of 1986, as amended.
1.7
“Good Reason” shall mean the occurrence of any of the
following without the Employee’s express prior written
consent: (a) a material diminution in the Employee’s
base compensation; (b) a material diminution in the
Employee’s authority, duties, or responsibilities; (c) a
material diminution in the authority, duties, or responsibilities
of the supervisor to whom the Employee is required to report;
(d) a material diminution in the budget over which the
Employee retains authority; (e) a material change in the
geographic location at which the Employee must perform services for
the Corporation and its Affiliates; or (f) any other action or
inaction that constitutes a material breach of the terms of this
Agreement.
1.8
“Notice of Termination” shall mean a written notice that describes in
reasonable detail the facts and circumstances claimed to provide a
basis for Termination.
1.9
“Termination” shall mean a “separation from
service” with the Corporation and its Affiliates within the
meaning of Treasury Regulation §1.409A-l(h).
Section 2. Term of Agreement
Subject to
Sections 5.2 and 6.2, the term of this Agreement shall
commence on the Effective Date and end on April 1, 2011 (the
“Expiration Date”).
Section 3. Effect of
Termination
3.1
Termination for Any Reason Prior to a Change in Control or After
Expiration of a Change in Control Protection Period.
The Employee’s employment may
be Terminated by the
3
Corporation or
by the Employee, in each case by delivering a Notice of
Termination, for any reason prior to a Change in Control or
following the expiration of the Change in Control Protection
Period, and the Employee will not be entitled to any payments or
benefits under this Agreement.
3.2
Termination During a Change in Control Protection
Period.
(a) Termination Without Cause or for Good
Reason. The Employee will
be entitled to receive the payments and benefits described in
Section 4.1 if, during the Change in Control Protection
Period:
(i) The
Corporation Terminates the Employee without Cause by delivering to
the Employee a Notice of Termination; or
(ii) The Employee
Terminates for Good Reason by delivering to the Corporation a
Notice of Termination for Good Reason; provided that such Notice of
Termination is delivered within ninety (90) days of the
initial existence of the condition constituting Good Reason and the
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