Document:

exv10w2

Exhibit 10.2

February 17, 2010

Attn: [          ]

PolyOne Corporation

POLYONE CORPORATION INCENTIVE AWARD

Grant of Stock-Settled SARs

THIS AGREEMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THE COMMON SHARES OF THE COMPANY ARE LISTED ON THE NEW YORK STOCK
EXCHANGE.

Dear [                    ]:

          Subject to the terms and conditions of the 2008 Equity and Performance Incentive Plan (the
“Plan”) and this letter agreement (this “Agreement”), the Compensation Committee of the Board of
Directors (the “Committee”) of PolyOne Corporation (“PolyOne”) has granted to you as of February
17, 2010, the following award:

     Stock-Settled Stock Appreciation Rights (“SARs”) in respect of an aggregate of [___]
common shares of PolyOne, having a par value of $0.01 per share (the “Common Shares”). The
price (the “Base Price”) to be used as the basis for determining the Spread (as defined
below) upon exercise of the SAR is $7.99, the fair market value of one Common Share on
February 17, 2010.

          A copy of the Plan is available for your review through the Corporate Secretary’s office.
Unless otherwise indicated, the capitalized terms used in this Agreement shall have the same
meanings as set forth in the Plan.

	1.	 	Vesting and Exercise of SARs.

	 	(a)	 	Subject to the provisions of the Plan and this Agreement, the SARs will
expire on February 17, 2017 and shall be exercisable on or before February 17, 2017.
Subject to Sections 2 and 3 of the Agreement, vesting of the SARs will occur as
follows, provided that you have been in the continuous employ of PolyOne or a
Subsidiary on each such vesting date specified below (except as provided in Section
3(ii)):

	 	•	 	One-third of the SARs will vest on February 17, 2011;
	 
	 	•	 	One-third of the SARs will vest on February 17, 2012; and

 

 

	 	•	 	The remaining one-third of the SARs will vest on February 17, 2013.

	 	(b)	 	The SARs may be exercised as provided in this Section 1(b) as to all or any
of the SARs that are exercisable in accordance with Section 1(a), as long as each
exercise covers the lesser of the number of fully vested SARs or 1,000 SARs. To
exercise the SARs, you must submit a SAR Exercise Form to PolyOne signed by you
stating the number of SARs you are exercising at that time and certifying that you are
in compliance with the terms and conditions of the Plan. PolyOne will then issue you
the number of Common Shares determined under Section 1(c).
	 
	 	(c)	 	The number of Common Shares to be issued will be determined by calculating
(i) the difference between the fair market value of a Common Share on the date of
exercise and the Base Price (the “Spread”); (ii) multiplied by the number of SARs
exercised; (iii) less any withholding taxes (federal, state, local or foreign taxes)
PolyOne determines are to be withheld in accordance with the Plan and with applicable
law. The result of this calculation will then be divided by the fair market value of
a Common Share on the date of exercise to determine the number of Common Shares to be
issued, rounded down to the nearest whole share. For purposes of this Section 1(c),
the term “fair market value” will mean the closing price of the Common Shares on the
date of exercise as reported on the New York Stock Exchange — Composite Transactions
Listing or similar report. In no event will you be entitled to acquire a fraction of
one Common Share pursuant to this Agreement.

	2.	 	Vesting Upon a Change of Control. If a Change of Control (as defined on Exhibit
A to this Agreement) occurs during the term of the SARs, the SARs, to the extent not
previously fully exercisable, will become immediately exercisable in full.
	 
	3.	 	Retirement, Disability or Death. If your employment with PolyOne or a Subsidiary
terminates before the expiration of the SARs due to (a) retirement at age 55 or older with at
least 10 years of service, (b) retirement at age 58 or older with at least 5 years of service,
(c) permanent and total disability (as defined under the relevant disability plan or program
of PolyOne or a Subsidiary in which you then participate) or (d) death, then:

	 	(i)	 	Any SARs that have vested prior to the date of the termination
of your employment as provided in Section 1(a) above, but have not been
exercised as of the time of the termination of your employment, may be
exercised in whole or in part, for the remainder of their term, but in no event
beyond February 17, 2017, after which such SARs will terminate; and
	 
	 	(ii)	 	A pro-rata portion of any SARs that remain unvested as of the
time of the termination of your employment will vest, based on the number of
days that you were employed by PolyOne or a Subsidiary during the period
commencing on the February 18th immediately preceding the date of
the termination of your employment and ending on February 17, 2013. You

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	 	 	 	or your executor or administrator, as the case may be, will be entitled to
exercise, in whole or in part, such vested SARs for the remainder of their
term, but in no event beyond February 17, 2017, after which such SARs will
terminate.

	4.	 	Termination Following Change of Control.

	 	(a)	 	If your employment with PolyOne or a Subsidiary terminates following a Change
of Control because (i) your employment is involuntarily terminated without “Cause” (as
defined below), or (ii) you terminate your employment for “Good Reason” (as defined
below), notwithstanding anything herein to the contrary, the SARs may be exercised in
whole or in part at any time and from time to time for the remainder of their term,
but in no event beyond February 17, 2017, after which the SARs will terminate.
	 
	 	(b)	 	For purposes of Section 4(a) above:

	 	(i)	 	If you are a party to a Management Continuity Agreement,
“Cause” shall mean “Cause” and “Good Reason” shall mean “Good Reason,” each as
defined in your Management Continuity Agreement;
	 
	 	(ii)	 	If you are not a party to a Management Continuity Agreement,
“Cause” shall mean: (A) the willful and continued failure by you to
substantially perform your duties with PolyOne or a Subsidiary, which failure
causes material and demonstrable injury to PolyOne or a Subsidiary (other than
any such failure resulting from your incapacity due to physical or mental
illness), after a demand for substantial performance is delivered to you by
PolyOne or a Subsidiary which specifically identifies the manner in which you
have not substantially performed your duties, and after you have been given a
period (hereinafter known as the “Cure Period”) of at least thirty (30) days to
correct your performance, or (B) the willful engaging by you in other gross
misconduct materially and demonstrably injurious to PolyOne or a Subsidiary.
For purposes of this Section 4(b)(ii), no act, or failure to act, on your part
shall be considered “willful” unless conclusively demonstrated to have been
done, or omitted to be done, by you not in good faith and without reasonable
belief that your action or omission was in the best interests of PolyOne or a
Subsidiary; and
	 
	 	(iii)	 	If you are not a party to a Management Continuity Agreement,
“Good Reason” shall mean, without your express written consent: (A) your
permanent assignment to a new work location that would either increase your
routine one-way commute by fifty (50) or more miles, measured by the shortest
commonly traveled routes between your then-current residence and new reporting
or work location, or make your routine one-way commute sixty (60) or more
miles, or (B) a reduction in your base salary, target annual incentive amount
or employer-provided benefits, if immediately after the reduction the aggregate
total of your base salary,

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	 	 	 	target annual incentive amount and value of employer-provided benefits is
less than eighty percent (80%) of the aggregate total of your salary, target
annual incentive amount and the value of employer-provided benefits
immediately prior to the Change of Control.

	5.	 	Other Termination. If your employment with PolyOne or a Subsidiary terminates before
the expiration of the SARs for any reason other than as set forth in Sections 3 or 4 above,
the SARs that are exercisable shall be limited to the number of SARs that could have been
exercised under Section 1 above at the time of your termination of employment and shall
terminate as to the remaining SARs and may be exercised as to such limited number of SARs at
any time within ninety (90) days of your termination of employment, but in no event beyond
February 17, 2017, after which the SARs will terminate.
	 
	6.	 	Non-Assignability. The SARs are personal to you and are not transferable by you
other than by will or the laws of descent and distribution. They are exercisable during your
lifetime only by you or by your guardian or legal representative.
	 
	7.	 	Adjustments. In the event of any change in the number of Common Shares by reason of
a merger, consolidation, reorganization, recapitalization, or similar transaction, or in the
event of a stock dividend, stock split, or distribution to shareholders (other than normal
cash dividends), the number and class of shares subject to outstanding SARs, the Base Price
applicable to outstanding SARs and other value determinations, if any, applicable to
outstanding SARs will be adjusted. Such adjustment shall be made automatically on the
customary arithmetical basis in the case of any stock split, including a stock split effected
by means of a stock dividend, and in the case of any other dividend paid in Common Shares. If
any such transaction or event occurs, the Committee may provide in substitution for
outstanding SARs such alternative consideration (including, without limitation, in the form of
cash, securities or other property) as it may determine to be equitable in the circumstances
and may require in connection therewith the surrender of the SARs subject to this Agreement.
No adjustment provided for in this Section 7 will require PolyOne to issue any fractional
shares.
	 
	8.	 	Miscellaneous.

	 	(a)	 	The contents of this Agreement are subject in all respects to the terms and
conditions of the Plan as approved by the Board and the shareholders of PolyOne, which
are controlling. The interpretation and construction by the Board and/or the
Committee of any provision of the Plan or this Agreement shall be final and conclusive
upon you, your estate, executor, administrator, beneficiaries, personal representative
and guardian and PolyOne and its successors and assigns.
	 
	 	(b)	 	The grant of the SARs is discretionary and will not be considered to be an
employment contract or a part of your terms and conditions of employment or of your
salary or compensation. Information about you and your participation in the Plan,
including, without limitation, your name, home address and telephone

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	 	 	 	number, date of birth, social insurance number or other identification number,
salary, nationality, job title, any shares of stock or directorships held in
PolyOne, and details of the SARs or other entitlement to shares of stock awarded,
cancelled, exercised, vested, unvested or outstanding in your favor may be
collected, recorded, held, used and disclosed by PolyOne and any of its Subsidiaries
and any non-PolyOne entities engaged by PolyOne to provide services in connection
with this grant (a “Third Party Administrator”), for any purpose related to the
administration of the Plan. You understand that PolyOne and its Subsidiaries may
transfer such information to Third Party Administrators, regardless of whether such
Third Party Administrators are located within your country of residence, the
European Economic Area or in countries outside of the European Economic Area,
including the United States of America. You consent to the processing of
information relating to you and your participation in the Plan in any one or more of
the ways referred to above. This consent may be withdrawn at any time in writing by
sending a declaration of withdrawal to PolyOne’s chief human resources officer.
	 
	 	(c)	 	Any amendment to the Plan shall be deemed to be an amendment to this
Agreement to the extent that the amendment is applicable hereto. The terms and
conditions of this Agreement may not be modified, amended or waived, except by an
instrument in writing signed by a duly authorized executive officer at PolyOne.
Notwithstanding the foregoing, no amendment shall adversely affect your rights under
this Agreement without your consent.
	 
	 	(d)	 	By signing this Agreement, you acknowledge that you have entered into an
Employee Agreement [(the “Employee Agreement”)] with PolyOne. You understand that, as
set forth in Paragraph 5 and Attachment A of the Employee Agreement, you have agreed
not to engage in certain prohibited practices in competition with PolyOne following
the termination of your employment (hereinafter referred to as the “Covenant Not to
Compete”). You further acknowledge that as consideration for entering into the
Covenant Not to Compete, PolyOne is providing you the opportunity to participate in
PolyOne’s long-term incentive plan and receive the award set forth in this Agreement.
You understand that eligibility for participation in the long-term incentive plan was
conditioned upon entering into the Covenant Not to Compete. You further understand
and acknowledge that you would have been ineligible to participate in the long-term
incentive plan and receive this award had you decided not to agree to the Covenant Not
to Compete. You understand that the acknowledgment contained in this sub-section is a
part of the Employee Agreement and is to be interpreted in a manner consistent with
its terms.

	9.	 	Notice. All notices under this Agreement to PolyOne must be delivered personally or
mailed to PolyOne Corporation at PolyOne Center, Avon Lake, Ohio 44012, Attention: Corporate
Secretary. PolyOne’s address may be changed at any time by written notice of such change to
you. Also, all notices under this Agreement to you will be delivered personally or mailed to
you at your address as shown from time to time in PolyOne’s records.

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	10.	 	Compliance with Section 409A of the Code.

	 	(a)	 	To the extent applicable, it is intended that this Agreement and the Plan
comply with the provisions of Section 409A of the Code, so that the income inclusion
provisions of Section 409A(a)(1) of the Code do not apply to you. This Agreement and
the Plan shall be administered in a manner consistent with this intent.
	 
	 	(b)	 	Reference to Section 409A of the Code will also include any proposed,
temporary or final regulations, or any other guidance, promulgated with respect to
such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

	11.	 	Counterparts. This Agreement may be executed in separate counterparts, each of which
shall be deemed to be an original and both of which taken together shall constitute one and
the same agreement.
	 
	12.	 	Severability. If one or more of the provisions of this Agreement is invalidated for
any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed
to be separable from the other provisions hereof, and the remaining provisions hereof shall
continue to be valid and fully enforceable.

          This Agreement, and the terms and conditions of the Plan, shall bind, and inure to the benefit
of you, your estate, executor, administrator, beneficiaries, personal representative and guardian
and PolyOne and its successors and assigns.

	 	 	 	 	 
	 	Very Truly Yours,

POLYONE CORPORATION

 	 
	 	By:  	
 	 
	 	 	Kenneth M. Smith, Senior Vice President, 	 
	 	 	Chief Information and Human Resources Officer 	 
	 

Accepted:

                                                                 

                                                        (Date)

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Exhibit A

A “Change of Control” means:

(a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
voting securities of PolyOne where such acquisition causes such Person to own 25% or more of the
combined voting power of the then outstanding voting securities of PolyOne entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this paragraph (a), the following acquisitions shall not be deemed to
result in a Change of Control: (i) any acquisition directly from PolyOne that is approved by the
Incumbent Board (as defined in paragraph (b) below), (ii) any acquisition by PolyOne, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by PolyOne or
any corporation controlled by PolyOne or (iv) any acquisition by any corporation pursuant to a
transaction that complies with clauses (i), (ii) and (iii) of paragraph (c) below; provided,
further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities
reaches or exceeds 25% as a result of a transaction described in clause (i) or (ii) above, and such
Person subsequently acquires beneficial ownership of additional voting securities of PolyOne, such
subsequent acquisition shall be treated as an acquisition that causes such Person to own 25% or
more of the Outstanding Company Voting Securities; and provided, further, that if at least a
majority of the members of the Incumbent Board determines in good faith that a Person has acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25%
or more of the Outstanding Company Voting Securities inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares so that such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) less than 25% of the Outstanding
Company Voting Securities, then no Change of Control shall have occurred as a result of such
Person’s acquisition; or

(b) individuals who, as of August 31, 2000, constitute the Board (the “Incumbent Board” as modified
by this paragraph (b)) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to August 31, 2000 whose
election, or nomination for election by PolyOne’s shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board (either by specific vote or by
approval of the proxy statement of PolyOne in which such person is named as a nominee for director,
without objection to such nomination) shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

(c) the consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of PolyOne or the acquisition of assets of another
corporation or other transaction (“Business Combination”); excluding, however, such a Business
Combination pursuant to which (i) the individuals and entities who were the beneficial

A-1

 

owners of the Outstanding Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an entity that as a result
of such transaction owns PolyOne or all or substantially all of PolyOne’s assets either directly or
through one or more subsidiaries), (ii) no Person (excluding any employee benefit plan (or related
trust) of PolyOne, PolyOne or such entity resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the entity resulting from
such Business Combination and (iii) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of the Board, providing for such
Business Combination; or

(d) approval by the shareholders of PolyOne of a complete liquidation or dissolution of PolyOne
except pursuant to a Business Combination that complies with clauses (i), (ii) and (iii) of
paragraph (c) above.

A-2exv10w3

Exhibit 10.3

     February 17, 2010

Attn: [                    ]

PolyOne Corporation

POLYONE CORPORATION INCENTIVE AWARD

Grant of Performance Units

THIS AGREEMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THE COMMON SHARES OF THE COMPANY ARE LISTED ON THE NEW YORK STOCK
EXCHANGE.

Dear [                                                   ]:

          Subject to the terms and conditions of the 2008 Equity and Performance Incentive Plan (the
“Plan”) and this letter agreement (this “Agreement”), the Compensation Committee of the Board of
Directors (the “Committee”) of PolyOne Corporation (“PolyOne”) (or a subcommittee thereof) has
granted to you as of February 17, 2010, the following award:

     [          ] performance units (the “Performance Units”), with each such Performance Unit being
equal in value to $1.00, payment of which depends on PolyOne’s performance as set forth in
this Agreement and in your Statement of Performance Goals.

          A copy of the Plan is available for your review through the Corporate Secretary’s office.
Unless otherwise indicated, the capitalized terms used in this Agreement shall have the same
meanings as set forth in the Plan.

	1.	 	Performance Units.

	 	(a)	 	Your right to receive all or any portion of the Performance Units will be
contingent upon the achievement of certain management objectives (the “Management
Objectives”), as set forth in your Statement of Performance Goals. The achievement of
the Management Objectives will be measured during the period from January 1, 2010
through December 31, 2010 (the “Performance Period”).
	 
	 	(b)	 	The Management Objectives for the Performance Period will be based solely on
achievement of performance goals relating to PolyOne’s Consolidated Working

 

 

	 	 	 	Capital Percentage of Sales (“Working Capital”), as defined in your Statement of
Performance Goals.

	2.	 	Earning of Performance Units.

	 	(a)	 	The Performance Units shall be earned as follows:

	 	(i)	 	If, upon the conclusion of the Performance Period, Working
Capital equals or exceeds the threshold level, but is less than the 100% target
level, as set forth in the Performance Matrix contained in your Statement of
Performance Goals, a proportionate number of the Performance Units shall become
earned, as determined by mathematical interpolation and rounded up to the
nearest whole unit.
	 
	 	(ii)	 	If, upon the conclusion of the Performance Period, Working
Capital equals or exceeds the 100% target level, but is less than the maximum
level, as set forth in the Performance Matrix contained in your Statement of
Performance Goals, a proportionate number of the Performance Units shall become
earned, as determined by mathematical interpolation and rounded up to the
nearest whole unit.
	 
	 	(iii)	 	If, upon the conclusion of the Performance Period, Working
Capital equals or exceeds the maximum level, as set forth in the Performance
Matrix contained in your Statement of Performance Goals, 200% of the
Performance Units shall become earned.

	 	(b)	 	In no event shall any Performance Units become earned if actual performance
falls below the threshold level for Working Capital or if the Board does not certify
that the Management Objectives have been satisfied.
	 
	 	(c)	 	If the Committee determines that a change in the business, operations,
corporate structure or capital structure of PolyOne, the manner in which it conducts
business or other events or circumstances render the Management Objectives to be
unsuitable, the Committee may modify such Management Objectives or the related levels
of achievement, in whole or in part, as the Committee deems appropriate;
provided, however, that no such action will be made in the case of a
Covered Employee where such action may result in the loss of the otherwise available
exemption of the award under Section 162(m) of the Code.
	 
	 	(d)	 	Subject to the provisions of Sections 3 and 4, your right to receive any
Performance Units is contingent upon your remaining in the continuous employ of PolyOne
or a Subsidiary through the payment date, which shall be a date in 2013 determined by
the Board and shall occur no later than March 15, 2013 (the “Payment Date”). For
awards to Covered Employees, the Committee shall only have the ability and authority to
reduce, but not increase, the amount of Performance Units that become earned hereunder.

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	3.	 	Change of Control. Subject to Section 6,

	 	(a)	 	if a Change of Control (as defined on Exhibit A to this Agreement)
occurs prior to the end of the Performance Period, PolyOne shall pay to you 100% of the
Performance Units as soon as administratively practicable after, but in all events no
later than 30 days following, the Change of Control; and
	 
	 	(b)	 	if a Change of Control (as defined on Exhibit A to this Agreement)
occurs after the end of the Performance Period but on or prior to the Payment Date,
PolyOne shall pay to you the actual number of Performance Units earned pursuant to
Section 2(a) as soon as administratively practicable after, but in all events no later
than 30 days following, the Change of Control.

	4.	 	Retirement, Disability or Death. Subject to Section 6, if your employment with
PolyOne or a Subsidiary terminates after the end of the Performance Period but on or prior to
the Payment Date due to (a) retirement at age 55 or older with at least 10 years of service,
(b) retirement at age 58 or older with at least 5 years of service, (c) permanent and total
disability (as defined under the relevant disability plan or program of PolyOne or a
Subsidiary in which you then participate) or (d) death, PolyOne shall pay to you or your
executor or administrator, as the case may be, the actual number of Performance Units earned
pursuant to Section 2(a) as soon as administratively practicable after, but in all events no
later than 30 days following, the date of the termination of your employment.
	 
	5.	 	Other Termination. If your employment with PolyOne or a Subsidiary terminates before
the Payment Date for any reason other than as set forth in Section 4 above or before a Change
of Control, the Performance Units will be forfeited.
	 
	6.	 	Payment of Performance Units.

	 	(a)	 	Payment of any Performance Units that become earned as set forth herein will be
made in the form of cash. The amount of the cash payment to be made shall be
determined by multiplying (i) the number of Performance Units earned pursuant to
Sections 2, 3 or 4 above by (ii) $1.00. Except as provided in Sections 3, 4 and 6(b),
payment will be made on the Payment Date. If PolyOne determines that it is required to
withhold any federal, state, local or foreign taxes from any payment, PolyOne will
withhold the amount of these taxes from the payment.
	 
	 	(b)	 	If the event triggering the right to payment under Section 3 or 4 above does
not constitute a permitted distribution event under Section 409A(a)(2) of the Code,
then notwithstanding anything herein to the contrary, the cash payment will be made to
you, to the extent necessary to comply with Section 409A of the Code, on the earliest
of (i) your “separation from service” with PolyOne or a Subsidiary (determined in
accordance with Section 409A) that occurs after the event giving rise to payment; (ii)
the Payment Date (to the extent it constitutes a permitted distribution event); or
(iii) your death. In addition, if you are a “key employee” as determined pursuant to
procedures adopted by PolyOne in compliance with

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	 	 	 	Section 409A of the Code and any payment made pursuant to this Agreement is
considered to be a “deferral of compensation” (as such phrase is defined for
purposes of Section 409A of the Code) that is payable upon your “separation from
service” (within the meaning of Section 409A of the Code), then the payment date for
such payment shall be the date that is the first business day of the seventh month
after the date of your “separation from service” with PolyOne or a Subsidiary
(determined in accordance with Section 409A of the Code).

	7.	 	Non-Assignability. The Performance Units subject to this grant of Performance Units
are personal to you and may not be sold, exchanged, assigned, transferred, pledged, encumbered
or otherwise disposed of by you until they become earned as provided in this Agreement;
provided, however, that your rights with respect to such Performance Units may
be transferred by will or pursuant to the laws of descent and distribution. Any purported
transfer or encumbrance in violation of the provisions of this Section 7 shall be void, and
the other party to any such purported transaction shall not obtain any rights to or interest
in such Performance Units.
	 
	8.	 	Miscellaneous.

	 	(a)	 	The contents of this Agreement are subject in all respects to the terms and
conditions of the Plan as approved by the Board and the shareholders of PolyOne, which
are controlling. The interpretation and construction by the Board and/or the Committee
of any provision of the Plan or this Agreement shall be final and conclusive upon you,
your estate, executor, administrator, beneficiaries, personal representative and
guardian and PolyOne and its successors and assigns.
	 
	 	(b)	 	The grant of the Performance Units is discretionary and will not be considered
to be an employment contract or a part of your terms and conditions of employment or of
your salary or compensation. Information about you and your participation in the Plan,
including, without limitation, your name, home address and telephone number, date of
birth, social security number or other identification number, salary, nationality, job
title, any shares of stock or directorships held in PolyOne, and details of the
Performance Units or other entitlement to shares of stock awarded, cancelled,
exercised, vested, unvested or outstanding in your favor may be collected, recorded,
held, used and disclosed by PolyOne and any of its Subsidiaries and any non-PolyOne
entities engaged by PolyOne to provide services in connection with this grant (a “Third
Party Administrator”), for any purpose related to the administration of the Plan. You
understand that PolyOne and its Subsidiaries may transfer such information to Third
Party Administrators, regardless of whether such Third Party Administrators are located
within your country of residence, the European Economic Area or in countries outside of
the European Economic Area, including the United States of America. You consent to the
processing of information relating to you and your participation in the Plan in any one
or more of the ways referred to above. This consent may be withdrawn at any time in
writing by sending a declaration of withdrawal to PolyOne’s chief human resources
officer.

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	 	(c)	 	Any amendment to the Plan shall be deemed to be an amendment to this Agreement
to the extent that the amendment is applicable hereto. The terms and conditions of
this Agreement may not be modified, amended or waived, except by an instrument in
writing signed by a duly authorized executive officer at PolyOne. Notwithstanding the
foregoing, no amendment shall adversely affect your rights under this Agreement without
your consent.
	 
	 	(d)	 	By signing this Agreement, you acknowledge that you have entered into an
Employee Agreement [(the “Employee Agreement”)] with PolyOne. You understand that, as
set forth in Paragraph 5 and Attachment A of the Employee Agreement, you have agreed
not to engage in certain prohibited practices in competition with PolyOne following the
termination of your employment (hereinafter referred to as the “Covenant Not to
Compete”). You further acknowledge that as consideration for entering into the
Covenant Not to Compete, PolyOne is providing you the opportunity to participate in
PolyOne’s long-term incentive plan and receive the award set forth in this Agreement.
You understand that eligibility for participation in the long-term incentive plan was
conditioned upon entering into the Covenant Not to Compete. You further understand and
acknowledge that you would have been ineligible to participate in the long-term
incentive plan and receive this award had you decided not to agree to the Covenant Not
to Compete. You understand that the acknowledgment contained in this sub-section is a
part of the Employee Agreement and is to be interpreted in a manner consistent with its
terms.

	9.	 	Notice. All notices under this Agreement to PolyOne must be delivered personally or
mailed to PolyOne Corporation at PolyOne Center, Avon Lake, Ohio 44012, Attention: Corporate
Secretary. PolyOne’s address may be changed at any time by written notice of such change to
you. Also, all notices under this Agreement to you will be delivered personally or mailed to
you at your address as shown from time to time in PolyOne’s records.
	 
	10.	 	Compliance with Section 409A of the Code.

	 	(a)	 	To the extent applicable, it is intended that this Agreement and the Plan
comply with the provisions of Section 409A of the Code, so that the income inclusion
provisions of Section 409A(a)(1) of the Code do not apply to you. This Agreement and
the Plan shall be administered in a manner consistent with this intent.
	 
	 	(b)	 	Reference to Section 409A of the Code will also include any proposed, temporary
or final regulations, or any other guidance, promulgated with respect to such Section
by the U.S. Department of the Treasury or the Internal Revenue Service.

5

 

	11.	 	Counterparts. This Agreement may be executed in separate counterparts, each of which
shall be deemed to be an original and both of which taken together shall constitute one and
the same agreement.
	 
	12.	 	Severability. If one or more of the provisions of this Agreement is invalidated for
any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed
to be separable from the other provisions hereof, and the remaining provisions hereof shall
continue to be valid and fully enforceable.

          This Agreement, and the terms and conditions of the Plan, shall bind, and inure to the benefit
of you, your estate, executor, administrator, beneficiaries, personal representative and guardian
and PolyOne and its successors and assigns.

	 	 	 	 	 
	 	Very Truly Yours,

POLYONE CORPORATION

 	 
	 	By:  	
 	 
	 	 	 	 
	 	 	Kenneth M. Smith, Senior Vice President,
Chief Information and Human Resources Officer 	 
	 

Accepted:

                                                            

                                                  

                                                   (Date)

6

 

Exhibit A

A “Change of Control” means:

(a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
voting securities of PolyOne where such acquisition causes such Person to own 25% or more of the
combined voting power of the then outstanding voting securities of PolyOne entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this paragraph (a), the following acquisitions shall not be deemed to
result in a Change of Control: (i) any acquisition directly from PolyOne that is approved by the
Incumbent Board (as defined in paragraph (b) below), (ii) any acquisition by PolyOne, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by PolyOne or
any corporation controlled by PolyOne or (iv) any acquisition by any corporation pursuant to a
transaction that complies with clauses (i), (ii) and (iii) of paragraph (c) below; provided,
further, that if any Person’s beneficial ownership of the Outstanding Company Voting Securities
reaches or exceeds 25% as a result of a transaction described in clause (i) or (ii) above, and such
Person subsequently acquires beneficial ownership of additional voting securities of PolyOne, such
subsequent acquisition shall be treated as an acquisition that causes such Person to own 25% or
more of the Outstanding Company Voting Securities; and provided, further, that if at least a
majority of the members of the Incumbent Board determines in good faith that a Person has acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25%
or more of the Outstanding Company Voting Securities inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares so that such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) less than 25% of the Outstanding
Company Voting Securities, then no Change of Control shall have occurred as a result of such
Person’s acquisition; or

(b) individuals who, as of August 31, 2000, constitute the Board (the “Incumbent Board” as modified
by this paragraph (b)) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to August 31, 2000 whose
election, or nomination for election by PolyOne’s shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board (either by specific vote or by
approval of the proxy statement of PolyOne in which such person is named as a nominee for director,
without objection to such nomination) shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

(c) the consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of PolyOne or the acquisition of assets of another
corporation or other transaction (“Business Combination”) excluding, however, such a Business
Combination pursuant to which (i) the individuals and entities who were the beneficial

 

 

owners of the Outstanding Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an entity that as a result
of such transaction owns PolyOne or all or substantially all of PolyOne’s assets either directly or
through one or more subsidiaries), (ii) no Person (excluding any employee benefit plan (or related
trust) of PolyOne, PolyOne or such entity resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the entity resulting from
such Business Combination and (iii) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of the Board, providing for such
Business Combination; or

(d) approval by the shareholders of PolyOne of a complete liquidation or dissolution of PolyOne
except pursuant to a Business Combination that complies with clauses (i), (ii) and (iii) of
paragraph (c) above.

- 8 -

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