Exhibit 10(ee)
EMPLOYMENT AGREEMENT
          THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into
as of the 28th day of May, 2003, by and between A. SCHULMAN, INC., a Delaware
corporation (the “Company”), A. Schulman Inc. Limited, a corporation organized
under the laws of the United Kingdom and a wholly-owned subsidiary of the
Company (the “Employer”), and JACK B. TAYLOR (the “Employee”).
          WHEREAS, the Employer and the Board of Directors of the Company desire
to provide for the continued employment of the Employee as a member of the
Employer’s management, and believe that such continued employment is in the best
interest of the Employer, the Company and the Company’s stockholders. The
Employee is willing to commit himself continue to serve the Employer, on the
terms and conditions herein provided;
          NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree as follows:
          1. DEFINED TERMS
          The definitions of capitalized terms used in this Agreement (unless
stated where first used) are provided in the last Section hereof.
          2. EMPLOYMENT; EMPLOYER’S OBLIGATIONS
          2.1 Employment. The Employer hereby continues to employ the Employee
as General Manager-Europe for the Employer, and the Employee hereby accepts such
continued employment upon the terms and conditions herein contained.
          2.2 Employer’s Obligations. If the Employer ceases to be an Employer
hereunder on a certain date, the Employer’s obligations under this Agreement
shall cease to accrue on such date.
          3. DUTIES AND CONDITIONS OF EMPLOYMENT
          3.1 Duties. The Employee shall devote his entire business time,
attention and energies to the Employer and shall not engage in any conduct which
shall reflect adversely upon the Employer. The Employee shall perform such
duties for the Employer as may be assigned to one in his employment status and
capacity by the Chief Executive Officer of the Company or the Board. The
Employee shall serve diligently and to the best of his ability.
          During his employment by the Employer, the Employee shall not, without
the Company’s prior written consent, be engaged in any other business activity,
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage, except that notwithstanding the foregoing, he may invest
his personal funds for his own account; provided that such investment shall be
passive and not controlling in any such investment and subject to the provisions
of Section 13.2 hereof and provided further that he will not be required to
provide any substantial services on behalf of such enterprise. Notwithstanding
the foregoing, the

 

--------------------------------------------------------------------------------

 

Employee may serve on the Boards of Directors of other corporations during the
Term as long as such service does not interfere with the performance of his
duties hereunder.
          3.2 Conditions. The Employee shall be provided with suitable office
space, furnishings, secretarial and administrative assistance. Without the
Employee’s consent, the Employee shall not be required to report principally to
an office located more than five hundred (500) miles from his principal office
at the date of this Agreement, except to the extent the Employee may be required
to report to the Company’s principal office.
          4. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT; ESCROW DURING DISPUTE
          4.1 Term of Agreement. The Employer hereby employs the Employee for a
Term commencing as of the date hereof and ending May 28, 2006. At the end of
June 2003 and at the end of each calendar month thereafter up to and including
the end of the calendar month in which Employee’s 62nd birthday occurs, this
Agreement shall automatically be extended for one (1) month unless either party
shall give notice to the other of non-extension prior to the end of such
calendar month; provided, however, if a Change in Control shall have occurred
during the Term of this Agreement, Sections 7 and 8 and 10 through 21 of this
Agreement shall continue in effect until at least the end of the
Change-in-Control Protective Period (whether or not the Term of the Agreement
shall have expired for other purposes).
          4.2 Termination of Employment Prior to a Change in Control. Prior to
any Change in Control, the Company may terminate the employment of the Employee
for Cause pursuant to this Agreement. Prior to any Change in Control, the
Employee may terminate his employment pursuant to this Agreement if the Employer
fails to make full and timely payments of all sums provided for in Sections 5
and 6 hereof (subject to Section 7.2 hereof), or otherwise shall breach its
covenants hereunder in any material respect.
          4.3 Escrow during a Termination Dispute. Prior to any Change in
Control, if the Employee shall be terminated for Cause, and, within 30 days of
such termination, shall notify the Employer and the Company of his intention to
adjudicate such termination as improper, the Company agrees that it will deposit
(or will cause the Employer to deposit) with KeyBank National Association,
Cleveland, Ohio, as Escrow Agent the installments of the Employee’s Base Salary
(as provided in Section 5 below) as the same would have become payable but for
such termination. In the event of a final adjudication by a tribunal of
competent jurisdiction that such termination was not for Cause, then the amounts
so deposited in escrow, plus any interest earned by the Escrow Agent thereon,
shall be delivered promptly to the Employee. If such adjudication shall be in
favor of the Employer, the Escrow Agent shall return the sums so deposited, plus
such interest, to the Company or the Employer, as the case may be.
          The escrowed salary shall not be deemed to be liquidated damages but
the Employer shall be entitled to a credit against any such award to the extent
of the sums so delivered to the Employee.

2

--------------------------------------------------------------------------------

 

          5. COMPENSATION
          The Employer agrees to pay to the Employee as compensation for his
services hereunder a Base Salary initially equal to the fixed annual salary
currently being paid to the Employee by the Employer as shown on the Employer’s
employment records, payable in substantially equal weekly, biweekly, bimonthly
or monthly installments, as the case may be, in the manner currently being paid
to the Employee. The Base Salary may be discretionarily increased by the Chief
Executive Officer of the Company from time to time as the Chief Executive
Officer deems appropriate in its reasonable business judgment. The Base Salary
in effect from time to time shall not be decreased during the Term (except as
provided in Section 7.2).
          It is understood and agreed that the Employee’s compensation may not
be limited to his Base Salary and that the Employee may receive an annual bonus
in the amount, if any, determined annually by the Chief Executive Officer of the
Company.
          The Employee shall also participate in employee compensation and
benefit plans available generally to employees of the Employer on a level
appropriate to his position and shall receive the employee fringe benefits
available generally to employees of the Employer having comparable levels of
responsibility and status (including, without limitation, the use of a company
car).
          6. EXPENSES
          The Employee is authorized to incur reasonable expenses for promoting
the business of the Employer, including expenses for entertainment, travel and
similar items. The Employer shall reimburse the Employee for all such expenses
upon the presentation by the Employee, from time to time, of an itemized account
of such expenditures.
          7. PRE-TERMINATION COMPENSATION; DISABILITY
          7.l Normal Pre-Termination Compensation. If the Employee’s employment
shall be terminated for any reason during the Term (or, if later, prior to the
end of the Change-in-Control Protective Period), the Employer shall pay the
Employee’s Base Salary to the Employee through the Date of Termination at the
rate in effect at the time the Notice of Termination is given (subject to
Section 7.2 hereof), together with all compensation and benefits payable to the
Employee through the Date of Termination under the terms of any compensation or
benefit plan, program or arrangement maintained by the Employer during such
period. Subject to Sections 8, 9, 10 and 11 hereof, after completing the expense
reimbursements required by Section 6 hereof and making the payments and
providing the benefits required by this Section 7, the Employer shall have no
further obligations to the Employee under this Agreement.
          7.2 Disability Adjustment to Base Salary Payments. During the Term
(or, if later, at any time prior to the end of the Change-in-Control Protective
Period), during any period that the Employee fails to perform the Employee’s
full-time duties with the Employer as a result of incapacity due to physical or
mental illness (but in no event for more than twenty-four (24) months), the
Employer shall pay only sixty percent (60%) of the Employee’s Base Salary to the
Employee at the rate in effect at the commencement of any such period (less
amounts, if any,

3

--------------------------------------------------------------------------------

 

payable to the Employee at or prior to the time of any such Base Salary payment
under disability benefit plans of the Employer or under any governmental
disability insurance program). After six (6) months of Disability, the Employer
shall have the right to terminate the Employee’s employment pursuant to this
Agreement and all Base Salary payments (except the sixty percent (60%) payments
pursuant to the foregoing sentence) shall cease. Except to the extent provided
in this Section 7.2, all Base Salary payments to the Employee shall be abated
during the period of Disability. Subject to Sections 8, 9, 10 and 11 hereof,
after completing the expense reimbursements required by Section 6 hereof and
making the payments and providing the benefits required by this Section 7, the
Employer shall have no further obligations to the Employee under this Agreement.
          8. NORMAL POST-TERMINATION PAYMENTS; CONTINUATION PAY; TERMINATION
PAY; PROMPT PAYMENT
          8.1 Normal Post-Termination Payments. If the Employee’s employment
shall be terminated for any reason during the Term of this Agreement (or, if
later, prior to the end of the Change-in-Control Protective Period), the
Employer shall pay the Employee’s normal post-termination compensation and
benefits to the Employee as such payments become due. Subject to Section 10
hereof, such post-termination compensation and benefits shall be determined
under, and paid in accordance with, the Employer’s retirement, insurance and
other compensation or benefit plans, programs and arrangements (other than this
Agreement).
          8.2 Continuation Pay; Termination Pay. Notwithstanding anything to the
contrary in Section 7.2, 9.1 or 10.1(A) hereof, if the laws governing this
Agreement (or the laws governing the effects of any termination of the
employment of the Employee) shall require that the Employer continue to pay or
otherwise compensate the Employee for any period of time following termination
of the Employee’s employment (“Continuation Pay”) or if such laws require
certain amounts of severance pay, termination compensation or the like
(collectively, “Termination Pay”), then to the fullest extent permitted by law
any payments to the Employee pursuant to Section 7.2, 9.1 or 10.1(A) hereof
shall be included in the calculation of Continuation Pay and Termination Pay and
such payments shall be deducted from the amount of Continuation Pay or
Termination Pay due the Employee.
          8.3 Prompt Payment. Any payments due under Section 5, 6, 7 or 9 hereof
or this Section 8 shall be made promptly after the event giving rise to the
obligation and shall be made to the Employee or in accordance with Section 14.2
hereof, as the case may be.
          9. POST-TERMINATION PAYMENTS UPON TERMINATION (PRIOR TO A CHANGE IN
CONTROL) BY DEATH OR BY THE EMPLOYER WITHOUT CAUSE
          9.1 Death Benefit. If the Employee’s employment shall be terminated by
death during the Term (or, if later, prior to the end of the Change-in-Control
Protective Period), then, in addition to the compensation and benefits provided
by Sections 7.1 and 8 hereof, the Employer shall pay a lump sum amount equal to
sixty percent (60%) of the Base Salary for twenty-four (24) months in accordance
with Section 14.2.

4

--------------------------------------------------------------------------------

 

          9.2 Termination by the Employer without Cause. If the Employer shall
terminate the Employee’s employment during the Term and prior to a Change in
Control, without Cause (and not for Disability or in connection with the
Employee’s death), the Employer shall pay the Employee his Base Salary
throughout the remaining Term and annual bonuses during the remaining Term, each
of which bonuses shall be equal to one-half (1/2) times the average annual bonus
paid to the Employee during the most recent five (5) calendar years of the
Employee’s employment by any of the Companies (prorated for any partial years in
the remaining Term).
          10. SEVERANCE PAYMENTS; TOTAL PAYMENTS.
          10.1 Severance Payments.
          The Employer shall pay the Employee the payments described in this
Section 10.1 (the “Severance Payments”) upon the termination of the Employee’s
employment following a Change in Control and prior to the end of the
Change-in-Control Protective Period, in addition to any payments and benefits to
which the Employee is entitled under Sections 5, 6, 7 and 8.1 hereof, unless
such termination is (i) by the Company for Cause, (ii) by reason of death or
Disability, or (iii) by the Employee without Good Reason. For purposes of this
Agreement, the Employee’s employment shall be deemed to have been terminated by
the Company without Cause following a Change in Control or by the Employee with
Good Reason following a Change in Control, as the case may be, if (i) the
Employee’s employment is terminated without Cause prior to a Change in Control
and such termination was at the request or direction of a Person who has entered
into an agreement with the Company the consummation of which would constitute a
Change in Control, (ii) the Employee terminates his employment with Good Reason
prior to a Change in Control and the circumstance or event which constitutes
Good Reason occurs at the request or direction of such Person, or (iii) the
Employee’s employment is terminated by the Company without Cause prior to a
Change in Control (but following a Potential Change in Control) and such
termination is otherwise in connection with or in anticipation of a Change in
Control which actually occurs. For purposes of any determination regarding the
applicability of the immediately preceding sentence, any position taken by the
Employee shall be presumed to be correct unless the Company establishes to the
Committee by clear and convincing evidence that such position is not correct.
               (A) In lieu of any further salary payments to the Employee for
periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Employee, the Employer shall pay to the
Employee a lump sum severance payment, in cash, equal to three (3) times the sum
of (i) the higher of the Employee’s Base Salary in effect immediately prior to
the occurrence of the event or circumstance upon which the Notice of Termination
is based or the Employee’s Base Salary in effect immediately prior to the Change
in Control, and (ii) the higher of the annual bonus earned by the Employee from
the Employer in respect of the Employer’s fiscal year immediately preceding that
in which the Date of Termination occurs or the average annual bonus so earned in
respect of the three fiscal years immediately preceding that in which the Change
in Control occurs.

5

--------------------------------------------------------------------------------

 

               (B) Notwithstanding any provision of any annual incentive plan to
the contrary, the Employer shall pay to the Employee a lump sum amount, in cash,
equal to the sum of (i) any annual incentive compensation which has been
allocated or awarded to the Employee by the Employer for a completed fiscal year
preceding the Date of Termination and which, as of the Date of Termination, is
contingent only upon the continued employment of the Employee to a subsequent
date, and (ii) a pro rata portion to the Date of Termination of a deemed annual
bonus for the Employer’s fiscal year in which the Date of Termination occurs,
calculated by multiplying (i) the higher of the annual bonus earned by the
Employee from the Employer with respect to the immediately preceding fiscal year
or the average annual bonus earned by the Employee with respect to the
immediately preceding three fiscal years of the Employer by (ii) the fraction
obtained by dividing the number of days in the fiscal year of the Employer in
which termination occurs up to and including the Date of Termination by 365.
               (C) For the thirty-six (36) month period immediately following
the Date of Termination, the Employer shall arrange to provide the Employee with
life, disability, accident and health insurance benefits substantially similar
to those which the Employee is receiving immediately prior to the Notice of
Termination (without giving effect to any amendment to such benefits made
subsequent to a Change in Control, which amendment adversely affects in any
manner the Employee’s entitlement to or the amount of such benefits). Benefits
otherwise receivable by the Employee pursuant to this Section 10.1(C) shall be
reduced to the extent comparable benefits are actually received by or made
available to the Employee without cost during the thirty-six (36) month period
following the Employee’s termination of employment (and any such benefits
actually received by or made available to the Employee shall be reported to the
Employer by the Employee).
          10.2 The payments provided in Sections 10.1(A) and (B) hereof shall be
made not later than the fifth day following the Date of Termination; provided,
however, that if the amounts of such payments cannot be finally determined on or
before such day, the Employer shall pay to the Employee on such day an estimate,
as determined in good faith by the Employer of the minimum amount of such
payments to which the Employee is clearly entitled and shall pay the remainder
of such payments (together with interest at one hundred twenty percent (120%) of
the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth (30th) day
after the Date of Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by the Employer to the Employee, payable on the
fifth (5th) business day after demand by the Employer (together with interest at
one hundred twenty percent (120%) of the rate provided in section 1274(b)(2)(B)
of the Code). At the time that payments are made under this Section, the
Employer shall provide the Employee with a written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Employer has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement). In the event the Employer should fail to pay when due the amounts
described in Sections 10.1(A), (B) and (C) hereof, the Employee shall also be
entitled to receive from the Employer an amount representing interest on any
such unpaid amounts from the due date, as determined under this Section 10.2

6

--------------------------------------------------------------------------------

 

(without regard to any extension of the Date of Termination pursuant to
Section 11.3 hereof), to the date of payment at one hundred twenty percent
(120%) of the rate provided in section 1274(b)(2)(B) of the Code.
          10.3 The Employer also shall pay to the Employee all legal fees and
expenses incurred by the Employee (i) in disputing in good faith any issue
relating to the termination of the Employee’s employment following a Change in
Control and prior to the end of the Change-in-Control Protective Period, or
(ii) in seeking in good faith to obtain or enforce any benefit or right provided
by this Agreement. Such payments shall be made within five (5) business days
after delivery of the Employee’s written requests for payment accompanied with
such evidence of fees and expenses incurred as the Employer reasonably may
require.
          11. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
          11.1 Notice of Termination. During the Term (and, if longer, until the
end of the Change-in-Control Protective Period), any purported termination of
the Employee’s employment (other than by reason of death) shall be communicated
by written Notice of Termination from the Employee to the Employer and the
Company or from the Employer or the Company to the Employee in accordance with
Section 15 hereof. For purposes of this Agreement, a “Notice of Termination”
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated. Further, with respect to any
purported termination of the Employee’s employment after a Change in Control and
prior to the end of the Change-in-Control Protective Period, a Notice of
Termination for Cause is required to include a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board, which was called and held for
the purpose of considering such termination (after reasonable notice to the
Employee and an opportunity for the Employee, together with the Employee’s
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Employee was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
          11.2 Date of Termination. “Date of Termination,” with respect to any
purported termination of the Employee’s employment during the Term (and, if
longer, prior to the end of the Change-in-Control Protective Period), shall mean
(i) if the Employee’s employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that the Employee shall not have
returned to the full-time performance of the Employee’s duties during such
thirty (30) day period), and (ii) if the Employee’s employment is terminated for
any other reason, the date specified in the Notice of Termination (which, in the
case of a termination by the Employer, shall not be less than thirty (30) days
(except in the case of a termination for Cause) and, in the case of a
termination by the Employee, shall not be less than fifteen (15) days nor more
than sixty (60) days, respectively, from the date such Notice of Termination is
given).
          11.3 Dispute Concerning Termination. With respect to any purported
termination of the Employee’s employment after a Change in Control and prior to
the end of the

7

--------------------------------------------------------------------------------

 

Change-in-Control Protective Period, if within fifteen (15) days after any
Notice of Termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this Section 11.3), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be extended until the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
however, that the Date of Termination shall be extended by a notice of dispute
given by the Employee only if such notice is given in good faith and the
Employee pursues the resolution of such dispute with reasonable diligence.
          11.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control and prior to the end of the Change-in-Control
Protective Period and the Date of Termination is extended in accordance with
Section 11.3 hereof, the Employer shall continue to pay the Employee the full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, salary) and continue the Employee as a
participant in all compensation, benefit and insurance plans in which the
Employee was participating when the notice giving rise to the dispute was given,
until the Date of Termination, as determined in accordance with Section 11.3
hereof. Amounts paid under this Section 11.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 7.1 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement.
          12. NO MITIGATION
          The Employer agrees that, if the Employee’s employment with the
Employer terminates following a Change in Control and prior to the end of the
Change-in-Control Protective Period, the Employee is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Employee by the Employer pursuant to Section 10 hereof or Section 11.4 hereof.
Further, the amount of any payment or benefit provided for in this Agreement
(other than Section 10.1(C) hereof) shall not be reduced by any compensation
earned by the Employee as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Employee to the Employer, or otherwise.
          13. CONFIDENTIALITY; NON-COMPETITION AND NON SOLICITATION
          13.1 Confidentiality. The Companies’ methods, plans for doing
business, processes, pricing, compounds, customers and supplies are vital to the
Companies and, to the extent not made public by the Companies, constitute
confidential information subject to the Companies’ proprietary rights therein.
The Employee covenants and agrees that during the Term and at all times
thereafter, the Employee will not, directly or indirectly, make known, divulge,
furnish, make available or use, otherwise than in the regular course of the
Employee’s employment by the Employer, any invention, product, process,
apparatus or design of any of the Companies, or any knowledge or information in
respect thereof (including, but not limited to, business methods and
techniques), or any other confidential or so-called “insider” information of

8

--------------------------------------------------------------------------------

 

any of the Companies. This covenant shall apply without regard to the time or
circumstances of any termination of the Employee’s employment.
          13.2 Non-competition and Non-solicitation. The Employee covenants and
agrees that during the period of three (3) years following any termination of
the Employee’s employment which occurs prior to a Change in Control, the
Employee will not, directly or indirectly, either as an individual for the
Employee’s own account or as an investor, or other participant in, or as an
employee, agent, or representative of, any other business enterprise:

  (i)   solicit, employ, entice, take away or interfere with, or attempt to
solicit, employ, entice, take away or interfere with, any employee of the
Employer or the Companies; or     (ii)   engage or participate in or finance,
aid or be connected with any enterprise which competes with the business of the
Companies, or any of them.

The geographical limitations of the foregoing shall include any country in which
the Companies or any of them shall be doing business as of such date of such
termination. This covenant shall apply without regard to the circumstances of
any termination of the Employee’s employment which occurs prior to a Change in
Control.
          13.3 The Employee acknowledges that the covenants contained in this
Section 13 are of the essence of this Agreement and said covenants shall be
construed as independent of any other provisions of this Agreement. Recognizing
the irreparable nature of the injury that could result from the Employee’s
violation of any of the covenants and agreement to be performed and/or observed
by the Employee pursuant to the provisions of this Section 13, and that damages
would be inadequate compensation, it is agreed that any violations by the
Employee of the provisions of this Section 13, shall be the proper subject for
immediate injunctive and other equitable relief to the Company or the Employer,
as the case may be.
          14. SUCCESSORS; BINDING AGREEMENT
          14.1 In addition to any obligations imposed by law upon any successor
to the Company or the Employer, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Employee to compensation from the Employer in
the same amount and on the same terms as the Employee would be entitled to
hereunder if the Employee were to terminate the Employee’s employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. Except as provided in this Section 14.1, this
Agreement shall not be assignable by any party without the written consent of
the other parties hereto.
          14.2 This Agreement shall inure to the benefit of and be enforceable
by the Employee’s personal or legal representatives, executors, administrators,
successors, heirs,

9

--------------------------------------------------------------------------------

 

distributees, devisees and legatees. If the Employee shall die while any amount
would still be payable to the Employee hereunder (other than amounts which, by
their terms, terminate upon the death of the Employee) if the Employee had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Employee’s estate.
          15. NOTICES
          For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid (or the international equivalent
thereof), addressed, if to the Employee, to the address shown for the Employee
in the personnel records of the Employer and, if to the Employer or the Company,
to the address set forth below, or to such other address as such party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Employer or the Company:
Robert A. Stefanko
Chief Financial Officer and Executive Vice President-Finance and Administration
A. Schulman, Inc.
P.O. Box 1710
Akron, Ohio 44309-1710
With a copy to:
Laura D. Nemeth, Esq.
Squire, Sanders & Dempsey LLP
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114
          16. MISCELLANEOUS
          No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by the Employee and such officers of the Company and the Employer as may be
specifically designated by their respective Boards. No waiver by any party
hereto at any time of any breach by any other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. This Agreement supersedes any
other agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party,
except as expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Ohio. All references to sections of the Exchange Act or the Code
shall be

10

--------------------------------------------------------------------------------

 

deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional withholding to which the
Employee has agreed. The obligations of the Company, the Employer and the
Employee under this Agreement which by their nature may require (partial or
total) performance after the expiration of the Term or the Change-in-Control
Protective Period (including, without limitation, those under Sections 5 through
11 and Section 13 hereof) shall survive such expiration.
          17. VALIDITY
          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.
          18. COUNTERPARTS
          This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
          19. SETTLEMENT OF DISPUTES AFTER CHANGE IN CONTROL; ARBITRATION
          After a Change in Control and prior to the end of the
Change-in-Control Protective Period, all claims by the Employee for benefits
under this Agreement shall be directed to and determined by the Committee and
shall be in writing. Any denial by the Committee of a claim for benefits under
this Agreement shall be delivered to the Employee in writing and shall set forth
the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Committee shall afford a reasonable opportunity to
the Employee for a review of the decision denying a claim and shall further
allow the Employee to appeal to the Committee a decision of the Committee within
sixty (60) days after notification by the Committee that the Employee’s claim
has been denied. Notwithstanding any provision of this Agreement to the
contrary, the Employee shall be entitled to seek specific performance of the
Employee’s right to be paid until the Date of Termination during the pendency of
any dispute or controversy arising under or in connection with this Agreement.
          20. GUARANTEE OF EMPLOYER’S OBLIGATIONS
          The Company hereby guarantees all the obligations of the Employer
created by this Agreement. The guarantee of the Company shall be called upon
only to the extent that the Employer’s obligations are not satisfied by the
Employer.

11

--------------------------------------------------------------------------------

 

          21. DEFINITIONS
          For purposes of this Agreement, the following terms shall have the
meanings indicated below:
          (A) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
          (B) “Board” shall mean the Board of Directors of a corporation; unless
otherwise indicated, “Board” shall mean the Board of Directors of the Company.
          (C) “Cause” for termination by the Company of the Employee’s
employment (which the Company has the authority to do so through its control of
the Employer as its parent company) shall mean the following:
          (I) with respect to a termination as to which the Notice of
Termination is duly given prior to a Change in Control, the Employee’s breach of
his covenants herein contained, the Employee’s gross neglect of his duties
hereunder, the Employee’s knowingly committing misfeasance or knowingly
permitting nonfeasance of his duties in any material respect, or the Employee’s
committing a felony; and
          (II) with respect to a termination as to which the Notice of
Termination is duly given following a Change in Control, (i) the willful and
continued failure by the Employee to substantially perform the Employee’s duties
with the Employer (other than any such failure resulting from the Employee’s
incapacity due to physical or mental illness or any such actual or anticipated
failure after the issuance of a Notice of Termination for Good Reason by the
Employee pursuant to Section 11.1 hereof) after a written demand for substantial
performance is delivered to the Employee by the Board, which demand specifically
identifies the manner in which the Board believes that the Employee has not
substantially performed the Employee’s duties, or (ii) the willful engaging by
the Employee in conduct which is demonstrably and materially injurious to the
Company or its subsidiaries, monetarily or otherwise. For purposes of clauses
(i) and (ii) of this definition, (x) 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 Employer and (y) in the
event of a dispute concerning the application of this provision, no claim by the
Company or the Employer that Cause exists shall be given effect unless the
Company or the Employer establishes to the Committee by clear and convincing
evidence that Cause exists.
          (D) A “Change in Control” shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:

12

--------------------------------------------------------------------------------

 

          (I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 25% or more of either the
then outstanding shares of common stock of the Company or the combined voting
power of the Company’s then outstanding securities; or
          (II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment, election or
nomination for election was previously so approved; or
          (III) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or approve the issuance
of voting securities of the Company in connection with a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof), in combination with the ownership
of any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least 75% of the
combined voting power of the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its subsidiaries other than in
connection with the acquisition by the Company or its subsidiaries of a
business) representing 25% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the Company’s then
outstanding securities; or
          (IV) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least 75% of the combined voting power of
the

13

--------------------------------------------------------------------------------

 

voting securities of which are owned by stockholders in substantially the same
proportions as their ownership of the Company immediately prior to such sale.
          Notwithstanding the foregoing, no “Change in Control” shall be deemed
to have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company 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 Company 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 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 Employer into incentive
compensation awards of the Acquiror), on terms and conditions substantially
equivalent to those applicable to other employees of the Employer with
comparable levels of responsibility and status 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
Company, or (iii) passive ownership of less than three percent (3%) of the stock
of the Acquiror.
          (E) “Change-in-Control Protective Period” shall mean the period from
the occurrence of a Change in Control until the later of the second anniversary
of such Change in Control or, if such Change in Control shall be caused by the
stockholder approval of a merger or consolidation described in
Section 21(D)(III) hereof, the second anniversary of the consummation of such
merger or consolidation.
          (F) “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.
          (G) “Committee” shall mean (i) the individuals (not fewer than three
in number) who, immediately prior to a Potential Change in Control, constitute
the Compensation Committee of the Board, plus (ii) in the event that fewer than
three individuals are available from the group specified in clause (i) above for
any reason, such individuals as may be appointed by the individual or
individuals so available (including for this purpose any individual or
individuals previously so appointed under this clause (ii)); provided, however,
that the maximum number of individuals constituting the Committee shall not
exceed five.
          (H) “Companies” shall mean, collectively, the Company and each
corporation which is now and hereafter shall become a subsidiary of, or a parent
of, the Company, together with their respective successors and assigns.

14

--------------------------------------------------------------------------------

 

          (I) “Company” shall have the meaning stated in the introductory
paragraph to this Agreement and, except in determining under Section 21(D)
hereof whether or not any Change in Control of the Company has occurred, any
successor to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
          (J) “Continuation Pay” shall mean those payments so described in
Section 8.2 hereof.
          (K) “Date of Termination” shall have the meaning stated in
Section 11.2 hereof.
          (L) “Disability” shall be deemed the reason for the termination by the
Employer of the Employee’s employment, if, as a result of the Employee’s
incapacity due to physical or mental illness, the Employee shall have been
absent from the full-time performance of the Employee’s duties with the Employer
for a period of six (6) consecutive months, the Employer shall have given the
Employee a Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Employee shall not have returned
to the full-time performance of the Employee’s duties.
          (M) “Employee” shall mean the individual named in the first paragraph
of this Agreement.
          (N) “Employer” shall have the meaning stated in the introductory
paragraph to this Agreement. The status of such corporation as an Employer shall
continue only so long as the corporation (or any successor to its business
and/or assets) is a direct or indirect subsidiary of the Company.
          (O) “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.
          (P) “Good Reason” for termination by the Employee of the Employee’s
employment shall mean the occurrence (without the Employee’s express prior
written consent) after any Change in Control, or after any Potential Change in
Control under the circumstances described in the second sentence of Section 10.1
hereof (treating all references in paragraphs (I) through (VII) below to a
“Change in Control” as references to a “Potential Change in Control”), of any
one of the following acts by the Employer, or failures by the Employer to act,
unless, in the case of any act or failure to act described in paragraph (I),
(V), (VI) or (VII) below, such act or failure to act is corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
          (I) the assignment to the Employee of any duties inconsistent with the
Employee’s employment status with the Employer in effect immediately prior to a
Change in Control or a substantial adverse alteration in the nature or status of
the Employee’s responsibilities from those in effect immediately prior to the
Change in Control (other than any such alteration primarily attributable to the
fact that the Company may no longer be a public company);

15

--------------------------------------------------------------------------------

 

          (II) a reduction by the Employer in the Employee’s annual base salary
as in effect on the date hereof or as the same may be increased from time to
time except for across-the-board salary reductions similarly affecting all
employees of the Employer and all employees of any Person in control of the
Employer with comparable levels of responsibility and status to Employee;
          (III) the relocation of the Employer’s principal executive offices to
a location more than fifty (50) miles from the location of such offices
immediately prior to the Change in Control or the Employer’s requiring the
Employee to be based anywhere other than the Employer’s principal executive
offices except for required travel on the Employer’s business to an extent
substantially consistent with the Employee’s present business travel
obligations;
          (IV) the failure by the Employer, without the Employee’s consent, to
pay to the Employee any portion of the Employee’s current compensation, or to
pay to the Employee any portion of an installment of deferred compensation under
any deferred compensation program of the Employer, within seven (7) days of the
date such compensation is due;
          (V) the failure by the Employer to continue in effect any compensation
plan in which the Employee participates immediately prior to the Change in
Control which is material to the Employee’s total compensation, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Employer to
continue the Employee’s participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of the Employee’s participation
relative to other participants, as existed at the time of the Change in Control;
          (VI) the failure by the Employer to continue to provide the Employee
with benefits substantially similar to those enjoyed by the Employee under any
of the Employer’s pension, life insurance, medical, health and accident, or
disability plans in which the Employee was participating at the time of the
Change in Control, the taking of any action by the Employer which would directly
or indirectly materially reduce any of such benefits or deprive the Employee of
any material fringe benefit enjoyed by the Employee at the time of the Change in
Control, or the failure by the Employer to provide the Employee with the number
of paid vacation days to which the Employee is entitled on the basis of years of
service with the Employer in accordance with the Employer’s normal vacation
policy in effect at the time of the Change in Control; or
          (VII) any purported termination of the Employee’s employment which is
not effected pursuant to a Notice of Termination satisfying the requirements of
Section 11.1 hereof; for purposes of this Agreement, no such purported
termination shall be effective.

16

--------------------------------------------------------------------------------

 

          The Employee’s right to terminate the Employee’s employment for Good
Reason shall not be affected by the Employee’s incapacity due to physical or
mental illness. The Employee’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
          For purposes of any determination regarding the existence of Good
Reason, any claim by the Employee that Good Reason exists shall be presumed to
be correct unless the Employer establishes to the Committee by clear and
convincing evidence that Good Reason does not exist.
          (Q) “Notice of Termination” shall have the meaning stated in
Section 11.1 hereof.
          (R) “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, except
that such term 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 stock of the Company.
          (S) “Potential Change in Control” shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
          (1) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
          (2) the Company or any Person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a Change
in Control;
          (3) any Person becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing 15% or more of either the then
outstanding shares of common stock of the Company or the combined voting power
of the Company’s then outstanding securities; or
          (4) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred.
          (T) “Severance Payments” shall mean those payments described in
Section 10.1 hereof.
          (U) “Term” shall mean the period of time described in Section 4.1
hereof (including any extension or continuation described therein).
          (V) “Termination Pay” shall mean those payments so described in
Section 8.2 hereof.

17

--------------------------------------------------------------------------------

 

          (W) “Total Payments” shall mean those payments described in
Section 10.2 hereof.
          IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed (the corporate signatory by the respective officer duly authorized)
as of the day and year first above written.

                  /s/ Jack B. Taylor       JACK B. TAYLOR (“Employee”)         
          A. SCHULMAN INC. LIMITED (“Employer”)
      By   /s/ Terry L. Haines         Terry L. Haines, Director             
By   /s/ Robert A. Stefanko         Robert A. Stefanko, Director                
A. SCHULMAN, INC. (“Company”)
      By   /s/ Terry L. Haines         Terry L. Haines, President           
By   /s/ Robert A. Stefanko         Robert A. Stefanko, Executive Vice
President     

18