Document:

EX-10.4

 

Execution Copy

Exhibit 10.4

Schedule 5.2

     Provide Administrative Agent, and in the case of documents to be delivered
monthly or annually, to the Agents, with each of the documents set forth below
at the following times in form satisfactory to Agents (and if so requested by
Administrative Agent, with copies for each Lender):

Weekly, provided,
however, that if,
at any time, Excess
Availability shall
be in an amount
less than
$1,500,000, the
documents
identified in (a),
(b) and (c) shall
be provided on a
daily basis until
such time as Excess
Availability shall
be in an amount
equal to or in
excess of
$1,500,000

     (a) an Account roll-forward with supporting details supplied from sales
journals, collection journals, credit registers and any other records,

     (b) notice of all claims, offsets, or disputes asserted by Account
Debtors with respect to Borrower’s and its Subsidiaries’ Accounts, and

     (c) copies of invoices together with corresponding shipping and delivery
documents, and credit memos together with corresponding supporting
documentation, with respect to invoices and credit memos in excess of an
amount determined in the sole discretion of Agents, from time to time,
and

     (d) a detailed report of all Investments made by Borrower to any of its
Subsidiaries during the prior week.

Each Monthly Period
(no later than the
10th Business Day
after the start of
such Monthly
Period)

     (e) a Borrowing Base Certificate,

     (f) a detailed aging, by total, of Borrower’s Accounts, together with a
reconciliation and supporting documentation for any reconciling items
noted (delivered electronically in an acceptable format, if Borrower has
implemented electronic reporting),

     (g) a detailed calculation of those Accounts that are not eligible for
the Borrowing Base, if Borrower has not implemented electronic reporting,

     (h) a report in form and substance satisfactory to Agents and certified
by Borrower as being accurate and complete listing all Accounts relating
to Government Contracts as of such date, which shall include the amount
and age of each such Account, showing separately those which are more
than 30, 60, 90 or 120 days old (delivered electronically in an
acceptable format, if Borrower has implemented electronic reporting) and
a description of all Liens, set-offs, defenses and counterclaims with
respect thereto, together with a reconciliation of such schedule with the
schedule delivered in the previous month,

     (i) Inventory system/perpetual reports specifying the cost and the
wholesale market value of Borrower’s and its Subsidiaries’ Inventory, by
category, with additional detail showing additions to and deletions
therefrom (delivered electronically in an acceptable format, if Borrower
has implemented electronic reporting),

 

 

     (j) a detailed Inventory system/perpetual report together with a
reconciliation to Borrower’s general ledger accounts (delivered
electronically in an acceptable format, if Borrower has implemented
electronic reporting),

     (k) a detailed calculation of Inventory categories that are not eligible
for the Borrowing Base, if Borrower has not implemented electronic
reporting,

     (l) a summary aging, by vendor, of Borrower’s and its Subsidiaries’
accounts payable and any book overdraft (delivered electronically in an
acceptable format, if Borrower has implemented electronic reporting) and
an aging, by vendor, of any held checks,

     (m) certified copies of tax receipts evidencing such payment by Borrower
of its taxes, including real estate and ad valorem taxes,

     (n) a detailed report of Borrower’s and its Subsidiaries’ backlog,

     (o) a detailed report regarding Borrower’s and its Subsidiaries’ cash and
Cash Equivalents, including an indication of which amounts constitute
Qualified Cash, and

     (p) a monthly Account roll-forward, in a format acceptable to Agents in
their discretion, tied to the beginning and ending account receivable
balances of Borrower’s general ledger.

Each Monthly Period
(on the last
Business Day of
such Monthly
Period)

     (q) a reconciliation of Accounts, trade accounts payable, and Inventory
of Borrower’s general ledger accounts to its monthly financial statements
including any book reserves related to each category, in each case with
respect to the prior Monthly Period.

Annually

     (r) a detailed list of Borrower’s and its Subsidiaries’ customers, with
address and contact information.

     (s) a physical Inventory.

Upon request by any
Agent

     (t) copies of purchase orders and invoices for Inventory acquired by
Borrower or its Subsidiaries, and

     (u) such other reports as to the Collateral or the financial condition of
Borrower and its Subsidiaries, as any Agent may reasonably request.

-2-EX-10.5

 

Execution Copy

Exhibit 10.5

Schedule 5.3

     Deliver to Agents, with copies to each Lender, each of the financial
statements, reports, or other items set forth set forth below at the following
times in form satisfactory to Agents:

Monthly (not later
than the last
Business Day of
each Monthly
Period)

(a) an unaudited consolidated and consolidating
balance sheet and income statement covering Borrower’s
and its Subsidiaries’ operations during such prior
month and during the period commencing on the first
day of the applicable fiscal year and ending on the
last day of the prior Monthly Period,

(b) a Compliance Certificate, and

(c) a report of any “deemed dividend” tax liability
assessed against the Borrower or any of its
Subsidiaries.

Quarterly (not
later than 45 days
after the end of
each fiscal quarter
of Borrower)

(d) an unaudited consolidated and consolidating
balance sheet, income statement, and statement of cash
flow covering Borrower’s and its Subsidiaries’
operations during such prior quarter and during the
period commencing on the first day of the applicable
fiscal year and ending on the last day of the prior
quarter, and

(e) copies of each Material Contract entered into
since the delivery of the previous Compliance
Certificate, together with any amendments to any
existing Material Contracts entered into since the
delivery of the previous Compliance Certificate,

(f) a Compliance Certificate.

Annually (not later
than 90 days after
the end of each of
Borrower’s fiscal
years)

(g) consolidated and consolidating financial
statements of Borrower and its Subsidiaries for each
such fiscal year, audited by independent certified
public accountants reasonably acceptable to Agents and
certified, without any qualifications (including any
(A) “going concern” or like qualification or
exception, (B) qualification or exception as to the
scope of such audit, or (C) qualification which
relates to the treatment or classification of any item
and which, as a condition to the removal of such
qualification, would require an adjustment to such
item, the effect of which would be to cause any
noncompliance with the provisions of Section 6.16), by
such accountants to have been prepared in accordance
with GAAP (such audited financial statements to
include a balance sheet, income statement, and
statement of cash flow and, if prepared, such
accountants’ letter to management), and

(h) a Compliance Certificate.

Annually (not later
than 30 days prior
to

(i) copies of the Projections, in form and substance
(including as to scope and underlying assumptions)
satisfactory to Agents, in their Permitted Discretion,
for the

 

 

the start of
each of Borrower’s
fiscal years)

forthcoming three (3) years, year by year, and
for the forthcoming fiscal year, month by month,
certified by the chief financial officer of Borrower
as being such officer’s good faith estimate of the
financial performance of Borrower during the period
covered thereby, and

(j) an accounting calendar for the forthcoming fiscal
year, which shall set forth the first and last dates
of each of Borrower’s Monthly Periods and fiscal
quarters in such year.

If and when filed
by Borrower,

(k) Form 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,

(l) any other filings made by Borrower with the SEC,
and

(m) any other information that is provided by Borrower
to its shareholders generally.

Promptly after the
commencement
thereof, but in any
event within five
(5) days after the
service of process
with respect
thereto on Borrower
or any of its
Subsidiaries,

(o) notice of all actions, suits, or proceedings
brought by or against Borrower or any of its
Subsidiaries before any Governmental Authority which
reasonably could be expected to result in a Material
Adverse Change.

Upon the request of
any Agent,

(p) any other information reasonably requested
relating to the financial condition of Borrower or its
Subsidiaries.

-2-<PAGE>
                                 EXHIBIT 10(n)

                                                                          1/9/04

                                A. SCHULMAN, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                                                       EFFECTIVE JANUARY 1, 2004
                              APPROVED BY THE BOARD OF DIRECTORS JANUARY 9, 2004
<PAGE>

                                A. SCHULMAN, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----
<S>                                                                                              <C>
                             ARTICLE 1 - DEFINITIONS
1.1  Definitions.........................................................................          2
1.2  General Interpretation..............................................................          6

                          ARTICLE 2 - YEARS OF SERVICE

2.1  Types of Service....................................................................          7
2.2  Eligibility Service.................................................................          7
2.3  Benefit Service.....................................................................          7
2.4  Suspension and Cancellation of Service..............................................          7
2.6  Rounding of Service.................................................................          7

                           ARTICLE 3 - ACCRUED BENEFIT

3.1  Definition of Accrued Benefit.......................................................          8
3.2  General Accrued Benefit Formula.....................................................          8
3.3  Special Definitions.................................................................          8
3.4  Benefit Offsets.....................................................................          9

                            ARTICLE 4 - PARTICIPATION

4.1  Plan Participation..................................................................         11
4.2  Status as a Participant.............................................................         11
4.3  Transferred Employees...............................................................         11
4.4  Reentry of Former Active Participants...............................................         12

           ARTICLE 5 - ELIGIBILITY FOR AND AMOUNT OF PENSION BENEFITS

5.1  Normal Retirement Pension...........................................................         13
5.2  Early Retirement Pension............................................................         13
5.3  Disability Retirement Pension.......................................................         14
5.4  No Death Benefit....................................................................         15

                         ARTICLE 6 - PAYMENT OF PENSIONS

6.1  Normal Form.........................................................................         16
</TABLE>

                                     - i -
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----
<S>                                                                                              <C>
6.2  Optional Forms of Pension Payments..................................................         16
6.3  Additional Rules Applicable to Optional Forms of Pension
         Payment.........................................................................         17
6.4  Application for Pension.............................................................         18
6.5  Information to Be Furnished to Participants.........................................         18

                            ARTICLE 7 - DEATH BENEFIT

7.1  Eligibility for Death Benefits......................................................         19
7.2  Amount of Death Benefit.............................................................         19
7.3  Form of Payment.....................................................................         19
7.4  Designations of Beneficiary.........................................................         20
7.5  Other Survivor Benefits Superseded..................................................         21

            ARTICLE 8 - MISCELLANEOUS PROVISIONS RELATING TO BENEFITS

8.1  Vesting and Forfeiture..............................................................         22
8.2  Prohibition Against Alienation or Attachment........................................         22
8.3  Re-employment.......................................................................         22
8.4  No Benefits Payable If Transferred to Successor Plan................................         23
8.5  Provision with Respect to Uniformed Services Employment and Reemployment
         Rights Act of 1994..............................................................         23

                               ARTICLE 9 - FUNDING

9.1  Funding  .........................................................................           24

                        ARTICLE 10 - PLAN ADMINISTRATION

10.1 Administrator.......................................................................         25
10.2 General Powers of Administrator.....................................................         25
10.3 Claims Procedure....................................................................         25
10.4 Liability of the Administrator......................................................         27

                         ARTICLE 11 - GENERAL PROVISIONS

11.1 Amendment of Plan...................................................................         28
11.2 Payment of Benefits to Others.......................................................         28
11.3 Overpayments........................................................................         28
11.4 Taxes    ...........................................................................         28
11.5 No Right of Employment..............................................................         28
11.6 Applicable Law......................................................................         29
11.7 Construction........................................................................         29
11.8 Titles   ...........................................................................         29
</TABLE>

                                     - ii -
<PAGE>

                                                     1A - EFFECTIVE DATE OF PLAN

                                  INTRODUCTION

      This is the A. Schulman, Inc. Supplemental Executive Retirement Plan. This
Plan is effective as of January 1, 2004.

      This Plan is intended to be unfunded and maintained by A. Schulman, Inc.
primarily for the purpose of providing deferred compensation to a select group
of management or highly compensated employees. Accordingly, the Plan is intended
to be exempt from the requirements of Parts 2, 3 and 4 of Title I of the
Employee Retirement Income Security Act of 1974, as amended, and shall be
administered, interpreted and construed in accordance with such intent.

      This Plan is not intended to be a qualified plan under Sections 401(a) of
the Internal Revenue Code. However, it is intended to provided benefit to
Participants and Beneficiaries on a tax-deferred basis and shall likewise be
administered, interpreted and construed in accordance with such intent

                                     - 1 -
<PAGE>

                             ARTICLE 1 - DEFINITIONS

      1.1 DEFINITIONS. Whenever used herein, the following words shall have the
meaning set forth below unless otherwise clearly required by the context:

      ACCRUED BENEFIT is defined in SECTION 3.1.

      ACTIVE PARTICIPANT is defined in ARTICLE 4.

      ACTUARIAL EQUIVALENCE. Unless otherwise specified by the terms of the
Plan, any determination of actuarial value or actuarial equivalency or similar
actuarial determination required under the terms of the Plan with respect to the
Benefit of any Participant or Beneficiary shall be determined on the basis of
the interest assumption and mortality assumption that are in effect on the
Benefit valuation date purposes of valuing the liabilities of this Plan under
the requirements of FAS 87 (or any successor thereto).

      ADMINISTRATOR means the Company.

      BENEFICIARY means a person who, in compliance with the terms of the Plan,
is currently designated to receive a Benefit as the survivor of a Participant or
is currently receiving such Benefit as the eligible survivor of a deceased
Participant.

      BENEFIT where the term is capitalized, means a Pension provided under the
terms of the Plan and any survivor benefit provided under the terms of the Plan
to a Beneficiary.

      BENEFIT OFFSET PLAN. A Benefit Offset Plan is any plan, deferred
compensation arrangement or other type of compensation arrangement that is
either (a) included in SECTION 3.4 of this Plan, or (b) identified as such by
action of the Board.

      BENEFIT SERVICE of a Participant is determined under ARTICLE 2.

      BOARD OF DIRECTORS means the Board of Directors of the Company.

      CODE means the Internal Revenue Code of 1986, as amended from time to
time. Reference to a Section of the Code includes all rulings, regulations,
notices, announcements, decisions, orders and other pronouncements that are
issued by the United States Department of the Treasury, the Internal Revenue
Service, or any Court of competent jurisdiction that are lawful and pertinent to
the interpretation, application or effectiveness of such Section with respect to
this Plan or the Prior Plan.

      COMMENCEMENT DATE means the first day of a month that has been designated
as the Commencement Date for the Participant's Pension pursuant to the
provisions of Article 5 or by the Participant pursuant to a written application
that the Participant has filed with the Plan Administrator in accordance with
the provisions of ARTICLE 5. The Participant's designation of a Commencement
Date shall be subject to the following rules:

                                     - 2 -
<PAGE>

            (a)   The Commencement Date of the Pension may not be any earlier
                  than the first day that the Pension could be payable under the
                  applicable provisions of SECTIONS 5.1, 5.2 or 5.3 of the Plan.

            (b)   If the Participant elects to defer the Commencement Date of a
                  Pension payable under SECTION 5.2 or SECTION 5.3, any such
                  election must be filed and shall become irrevocable in
                  accordance with the requirements of SECTION 5.2 or SECTION
                  5.3.

      COMMITTEE means the committee provided for in ARTICLE 10.

      COMPANY means A. Schulman, Inc.

      COVERED EMPLOYEE means a Participant who is employed in Covered
Employment.

      COVERED EMPLOYMENT means all of a Participant's Employment with the
Company or a Related Company in a position of employment that the Board has
designated as being an Active Participant position of employment in regard to
this Plan and, except as may otherwise be provided by action of the Board, an
Active Participant's periods of Employment with the Company and Related
Companies prior to becoming an Active Participant in this Plan. If an Active
Participant is absent from Covered Employment during a period that qualifies as
a leave of absence or a Military Absence and was employed in Covered Employment
at the start of such leave or Military Absence, he shall be deemed to have
continued to be employed in Covered Employment during such leave, or Military
Absence.

      ELIGIBILITY SERVICE of a Participant is determined under ARTICLE 2.

      DEFERRED PENSIONER means a Retired Participant who has not yet attained
the Commencement Date of his Pension.

      DISABILITY RETIREMENT PENSION means the Pension provided for in SECTION
5.3.

      EARLY RETIREMENT PENSION means the Pension provided for in SECTION 5.2.

      EMPLOYEE means a person who is a common-law employee of the Company or of
any of the Related Companies. A person who is an Employee at the start of a
leave of absence shall continue to be an Employee during the period of such
leave. A person who was an Employee at the start of a period that has
subsequently qualified as a Military Absence shall be deemed to have continued
as an Employee for the purpose of this Plan during such Military Absence. A
member of the Board of Directors (or the board of directors of a Related
Company), solely as such, is not an Employee. An independent contractor engaged
by an the Company or a or a Related Company is not an Employee.

      EMPLOYMENT refers to a person's status as an Employee (so that a period of
Employment of any person means a period during which the person was or is an
Employee).

                                     - 3 -
<PAGE>

      ERISA means Public Law No. 93-406, the Employee Retirement Income Security
Act of 1974, as amended from time to time.

      MILITARY ABSENCE means:

            (a)   for periods on and after December 12, 1994, a period of
                  interruption of the Employment of an Employee:

                  (i)   necessitated by reason of service in the uniformed
                        services (as defined in the Uniformed Services
                        Employment and Reemployment Rights Act of 1994, as
                        amended ("USERRA")) under such circumstances that he
                        thereby shall have become entitled to reemployment
                        rights under USERRA, and

                  (ii)  that is followed by his return to Employment pursuant to
                        the provisions of Section 4313 of USERRA, and

            (b)   for periods prior to December 12, 1994, a period of
                  interruption of the Employment of an Employee:

                  (i)   caused by his entrance into, or commencement of active
                        duty with, the Armed Forces of the United States
                        (including the United States Coast Guard) under such
                        circumstances that he thereby shall have become entitled
                        to reemployment rights under federal law, and

                  (ii)  that is followed by his return to Regular Employment
                        prior to the expiration of such reemployment rights and
                        in compliance with the terms and conditions of such
                        rights.

If the Employee shall not have returned to regular Employment pursuant to the
provisions of Section 4313 of USERRA (or, as applicable, the provisions of prior
federal law), his absence shall be deemed not to have been a Military Absence,
and he shall be deemed to have Terminated Employment by reason of a quit on the
last day he was an Employee prior to the event described in clause (a).

      NORMAL COMMENCEMENT DATE means the first day of the first calendar month
that begins on or after a Participant's Normal Retirement Date.

      NORMAL RETIREMENT DATE means the sixty-fifth (65th) birthday of the
Participant.

      NORMAL RETIREMENT PENSION means the Pension provided for in SECTION 5.1.

      PARTICIPANT means an Employee who has qualified as a Participant in
accordance with Article 4 and, as appropriate to the context in which the term
is used, includes a person who is either (a) an Active Participant, or (b) a
Transferred Employee, or (c) a Retired Participant.

                                     - 4 -
<PAGE>

      PENSION where the term is capitalized, means a Normal Retirement Pension,
Early Retirement Pension, or Disability Retirement Pension, as appropriate to
the context in which the term is used.

      PENSION CALCULATION DATE is defined in SECTION 3.3.

      PENSIONER means a Retired Participant who has attained the Commencement
Date of his Pension under the Plan.

      PLAN means this A. Schulman, Inc. Supplemental Executive Retirement Plan,
as set forth in this document effective as of January 1, 2004 together with all
subsequent amendments thereto.

      PLAN YEAR means the calendar year.

      RELATED COMPANY means (a) any corporation other than the Company during
the period that it and the Company are members of the same "controlled group of
corporations" as described in Section 414(b) of the Code; (b) any other trade or
business (whether or not incorporated) other than the Company during the period
that it AND the Company are trades or businesses under common control as
described in Section 414(c) of the Code; and (c) any organization (whether or
not incorporated) other than the Company during the period that it and the
Company are members of the same "affiliated service group" as described in
Section 414(m) of the Code or are otherwise required to be aggregated pursuant
to Section 414(o) of the Code (but only for the period in which the pertinent
provision of Code Section 414(m) or (o) is in effect).

      RETIRE OR RETIREMENT refers to a Participant's Termination of Employment
of a Participant either (a) at a time when he is eligible to receive a Normal
Retirement Pension under SECTION 5.1, (b) under circumstances that entitle him
to receive an Early Retirement Pension under SECTION 5.2 (including for this
purpose, the required approval of the Board), or (c) under circumstances that
make him eligible to receive a Disability Retirement Pension under SECTION 5.3.

      RETIRED PARTICIPANT means a Participant who has Retired and is thereby
entitled to receive payment of a Normal Retirement Pension, Early Retirement
Pension or Disability Retirement Pension.

      SERVICE COMMENCEMENT DATE is the last day that a Participant became an
Employee of the Company that has not been followed by a Termination of
Employment.

      TERMINATION OF EMPLOYMENT, TERMINATE EMPLOYMENT AND SIMILAR TERMS refer to
the termination of an Employee's status as an Employee, whether by discharge,
quit, Retirement, death or otherwise. Accordingly:

            (a)   An Employee will not incur (and will not be deemed to have
                  incurred) a Termination of Employment merely because of a
                  change in his status from

                                     - 5 -
<PAGE>

                  an Employee of the Company to an Employee of a Related
                  Company, or from an Employee of a Related Company to an
                  Employee of the Company or another Related Company.

            (b)   A person who is an Employee of a corporation, trade or
                  business that has qualified as a Related Company will be
                  deemed to have ceased to be an Employee (and therefore to have
                  incurred a Termination of Employment) if and when such
                  corporation, trade or business ceases to qualify as a Related
                  Company, even if such person continues as a common law
                  employee of such corporation, trade or business unless (i) the
                  person continues as an Employee of the Company or
                  another Related Company, or (ii) this Plan is amended to
                  include such corporation, trade or business as a sponsoring
                  employer or participating employer under the Plan.

      TOTAL AND PERMANENT DISABILITY. A Participant in this Plan shall be
considered to be Totally and Permanently disabled if, and only if, while he is
an Active Participant in this Plan, he Terminates Employment on account of a
total and permanent incapacity to perform the usual duties of his Covered
Employment classification and inability to be gainfully employed by the Company
by reason of any medically determinable physical or mental impairment; such
incapacity and inability shall be considered to exist only if certified by a
disinterested physician appointed by the Administrator.

      TRANSFERRED EMPLOYEE is defined in Section 4.3.

      VESTED refers to a right to a Benefit that is nonforfeitable other than by
death, as described in SECTION 8.1

      1.2 GENERAL INTERPRETATION. Words in this Plan used in the masculine or
feminine shall be deemed to refer to both the masculine and feminine, as
appropriate in the context.

                                     - 6 -
<PAGE>

                                    ARTICLE 2

                                YEARS OF SERVICE

      2.1 TYPES OF SERVICE. This Plan provides for the following types of
service:

            (a)   Eligibility Service (which is applied to determine whether a
                  Participant may be eligible for an Early Retirement Pension);
                  and

            (b)   Benefit Service (which is applied to calculate the amount of a
                  Participant's Accrued Benefit).

      2.2 ELIGIBILITY SERVICE. A Participant's Eligibility Service is the total
period of all of his periods of Employment from his Service Commencement Date to
the Date of his Termination of Employment. All Eligibility Service that has been
credited to any person is nevertheless subject to suspension and cancellation in
accordance with the terms of SECTION 2.4.

      2.3 BENEFIT SERVICE. A Participant's Benefit Service is the total of all
periods of his Covered Employment from his Service Commencement Date to the Date
of his Termination of Employment. All Benefit Service that has been credited to
any person is nevertheless subject to suspension and cancellation in accordance
with the terms of SECTION 2.4. A Participant who is a Transferred Employee at
the time of his Termination of Employment shall have his Benefit Service
hereunder determined as of the last date on which he was an Active Participant.

      2.4 SUSPENSION AND CANCELLATION OF SERVICE. If a Participant incurs a
Termination of Employment and is not entitled to the payment of a Pension, all
of his Eligibility Service and Benefit Service shall be permanently cancelled
and shall cease to be credited to him under this Plan.

      2.5 ROUNDING OF SERVICE. Eligibility Service and Benefit Service shall
calculated under this Plan will be calculated in full and fractional years.
Fractional years shall be calculated to the 100th percentile, based on the
Employee's days of employment in excess of his whole years of service, divided
by 365 days.

                                     - 7 -
<PAGE>

                                    ARTICLE 3

                                 ACCRUED BENEFIT

      3.1 DEFINITION OF ACCRUED BENEFIT. The Accrued Benefit of a Participant on
any Pension Calculation Date will be an annuity payable for the Participant's
life, beginning on the Participant's Normal Commencement Date (or beginning on
the Commencement Date of the Participant's Pension if the Participant Retires
after his Normal Commencement Date) and continuing each month thereafter to and
including the month of the Participant's death. The amount of the Annuity will
be equal to the monthly amount determined under the formula provided in SECTION
3.2

      3.2 GENERAL ACCRUED BENEFIT FORMULA. The monthly amount determined for a
Participant under this Section shall be one-twelfth (1/12) of (a) minus (b):

      (a)   the Participant's Final Average Plan Compensation, multiplied by a
            percentage equal to:

            (i)   thirty percent (30.00%), plus

            (ii)  one percent (1.00%) for each year of the Participant's Benefit
                  Service (up to a maximum of thirty (30) years of Benefit
                  Service for the Chief Executive Officer or Chief Financial
                  Officer and twenty-five (25) years of Benefit Service for all
                  other Participants).

      (b)   The Actuarial Equivalent of the Benefit Offsets, determined as
            provided in SECTION 3.4.

      3.3 SPECIAL DEFINITIONS.

      (a)   PLAN COMPENSATION. The term "Plan Compensation" shall mean an Active
            Participant's base salary and any cash bonus that is paid to an
            employee and includible in his gross income for Covered Employment
            and other employment with the Company prior to becoming an Active
            Participant. Compensation shall be taken into account only at the
            time it is paid. In addition, Plan Compensation shall include any
            amount by which the Participant's gross base salary or other cash
            compensation has been reduced (for federal income tax purposes) on
            account of elective contributions that are excluded from income
            under (i) Section 125 of the Code, (ii) Section 402(e)(3) of the
            Code, (iii) Section 132(f)(4) of the Code, and (iv) a non-qualified
            elective deferred compensation plan. Severance pay and other types
            of compensation not described above shall not be treated as Plan
            Compensation at any time.

      (b)   FINAL AVERAGE PLAN COMPENSATION. A Participant's Final Average Plan
            Compensation is one-third (1/3) of the Participant's Plan
            Compensation during

                                     - 8 -
<PAGE>

            the thirty-six (36) consecutive calendar months in which the
            Participant's Plan Compensation was highest during the last 60
            consecutive months preceding the Participant's Pension Calculation
            Date.

            (i)   If the Participant shall have fewer than thirty-six (36)
                  calendar months of Employment, his Plan Compensation shall be
                  the amount determined by dividing his Plan Compensation for
                  his years of Benefit Service by his years of Benefit Service.

            (ii)  If the Participant's active Employment as a Participant has
                  been interrupted by a leave of absence or Military Absence
                  followed by his return to Covered Employment, the last
                  calendar month preceding the start of such leave of absence or
                  Military Absence and the first calendar month in which he
                  engages in Covered Employment thereafter will be considered
                  consecutive calendar months.

      (c)   PENSION CALCULATION DATE. A Participant's "Pension Calculation Date"
            is:

            (i)   The last day on which he is an Active Participant that is
                  followed by or coincides with the date of (A) his Retirement,
                  (B) the date he becomes a Transferred Employee, or (C) the
                  termination of the Plan (whichever occurs first); or

            (ii)  Any other date that is expressly deemed to be a Pension
                  Calculation Date under the terms of the Plan.

      3.4 BENEFIT OFFSETS.

      (a)   For purposes of Section 3.2 of this Plan, the following shall be
            considered Benefit Offset Plans:

            (i)   The A. Schulman, Inc. Employees' Profit Sharing Trust.

            (ii)  The A. Schulman, Inc. Nonqualified Profit Sharing Plan.

            (iii) The amount of the Participant's "Primary Insurance Amount" (as
                  defined below).

            (iv)  For Robert A. Stefanko, the Agreements providing for deferred
                  benefits that are dated as of August 1, 1985 and March 21,
                  1991, without regard to any forfeiture of or other loss of
                  benefits that may occur under such arrangements on account of
                  a "Termination for Cause" or for any other reason.

            (v)   For Terry L. Haines, the Agreement providing for deferred
                  benefits that is dated as of March 21, 1991, without regard to
                  any forfeiture of or other

                                     - 9 -
<PAGE>

                  loss of benefits that may occur under such arrangement on
                  account of a "Termination for Cause" for any other reason.

      (b)   The Benefit Offset amount shall be the Actuarial Equivalent of the
            benefits payable under the Benefit Offset Plans, expressed in the
            Normal Form of payment (a life annuity) as of the Participant's
            Normal Commencement Date (or, if the Participant is, or was,
            deceased past his Normal Commencement Date, the Participant's actual
            Commencement Date). If a Participant has previously received a lump
            sum payment or other payment of benefits from a Benefit Offset Plan,
            the amounts previously paid to the participant shall nevertheless
            continue to be considered in determining the Benefit Offset amount
            under this Plan.

      (c)   For purposes of this Plan, the Participant's "Primary Insurance
            Amount" shall be the Participant's "PIA" determined under Treasury
            Regulations Section 1.401(l)-1.

                                     - 10 -
<PAGE>

                                    ARTICLE 4

                                  PARTICIPATION

      4.1 PLAN PARTICIPATION. An Employee of the Company or a Related Company
shall become an Active Participant in the Plan if the Board shall adopt a
resolution that specifically names him as an Active Participant in this Plan
while employed in a position of employment with the Company or a Related Company
that the Board has likewise designated as Covered Employment under this Plan.
The effective date of Plan participation shall be the date of such resolution
unless another date is specified in that resolution.

      4.2 STATUS AS A PARTICIPANT.

      (a)   The status of a Participant who has become an Active Participant is
            determined as follows:

            (i)   He will continue as an Active Participant so long as he
                  continues to be employed in Covered Employment, even if he is
                  absent from Covered Employment on a leave of absence or during
                  a period that has qualified as a Military Absence; and he will
                  cease to be an Active Participant when he shall have ceased to
                  be employed in Covered Employment. Notwithstanding the
                  foregoing, by resolution, the Board may suspend or terminate a
                  Participant's Active Participation in this Plan, effective as
                  of any date specified in such resolution.

            (ii)  A Transferred Employee is a Participant (but not an Active
                  Participant), and his status under the Plan is determined in
                  accordance with SECTION 4.3.

      (b)   If a Participant Retires with eligibility for a Pension, he will
            thereupon become a Retired Participant.

      (c)   A Participant shall immediately cease to be a Participant in this
            Plan if he Terminates Employment and is not entitled to a Pension.
            In addition, a Participant may immediately cease to be a Participant
            in this Plan by resolution of the Board.

      4.3 TRANSFERRED EMPLOYEES. A Transferred Employee is a Participant who has
ceased to be employed in Covered Employment but has not Terminated Employment. A
Transferred Employee will be considered a Participant (but not an Active
Participant) for the purposes of this Plan. Notwithstanding any other provisions
of this Plan to the contrary:

      (a)   The Accrued Benefit of a Transferred Employee shall not exceed the
            amount of his Accrued Benefit as of the last day on which he was in
            Covered Employment

                                     - 11 -
<PAGE>

            under the Plan, unless he again becomes an Active Participant and
            thereafter earns an increased Accrued Benefit.

      (b)   A Transferred Employee shall not be credited with Plan Compensation
            or Benefit Service for any period during which he is a Transferred
            Employee (but will be credited with Eligibility Service that he
            earns for such period under the terms of ARTICLE 2).

      (c)   If a Transferred Employee Retires with eligibility for a Pension, he
            will thereupon become a Retired Participant. He will be a
            Participant only as long as he is a Transferred Employee or a
            Retired Participant (or if he again becomes an Active Participant).
            He shall cease to be a Participant if he Terminates Employment and
            is not entitled to a Pension.

      4.4 REENTRY OF FORMER ACTIVE PARTICIPANTS. A former Active Participant
(including a Transferred Employee) may again become an Active Participant in
accordance with the provisions of Section 4.1 on the date designated by the
Board.

                                     - 12 -
<PAGE>

                                    ARTICLE 5

                 ELIGIBILITY FOR AND AMOUNT OF PENSION BENEFITS

      5.1 NORMAL RETIREMENT PENSION. A Participant whose Employment Terminates
for any reason (other than death) at any time after he has attained his Normal
Retirement Date will thereupon be eligible for a Normal Retirement Pension. The
Normal Retirement Pension shall be payable beginning on the first day of the
first calendar month that begins on or after the date on which the Participant's
Retirement occurs.

      If paid in the Normal Form described in SECTION 6.1 (a life annuity), the
Normal Retirement Pension will be a monthly Pension equal to the Participant's
Accrued Benefit as of his Pension Calculation Date coinciding with or next
preceding the date of his Retirement.

      The Normal Retirement Pension may also be paid in forms other than the
Normal Form, as provided in ARTICLE 6.

      5.2 EARLY RETIREMENT PENSION. A Participant shall be entitled to an Early
Retirement Pension if all of the following requirements are met:

      (i)   He Terminates Employment (other than by death) before his Normal
            Retirement Date;

      (ii)  At the time of his Termination of Employment, he has attained at
            least age 55 and is credited with at least ten (10) years of
            Eligibility Service; and

      (ii)  The Board has adopted a resolution approving the payment of an Early
            Retirement Benefit to him.

The Early Retirement Pension will be the Pension described in subsection (a) or
(b) below, whichever the Participant elects.

      (a)   A deferred monthly Pension, payable beginning on his Normal
            Commencement Date. If paid in the Normal Form described in SECTION
            6.1 (a life annuity), the monthly amount of such Pension will equal
            the monthly amount of the Participant's Accrued Benefit as of his
            Pension Calculation Date coinciding with or next preceding the date
            of his Early Retirement, or

      (b)   A reduced accelerated monthly Pension, payable beginning with the
            first day of the first calendar month following the calendar month
            in which his Early Retirement occurs, or the first day of any later
            calendar month elected by the Participant that begins prior to his
            Normal Commencement. If paid in the Normal Form described in SECTION
            6.1 (a life annuity), the monthly amount of the reduced monthly
            Pension will be the monthly amount of the full Pension defined in
            Paragraph (a), reduced by one half of one percent (0.5%) for each
            full calendar

                                     - 13 -
<PAGE>

            month by which the Commencement Date precedes the Participant's
            Normal Commencement Date.

      Unless the Participant otherwise elects, payment of the Early Retirement
Pension shall commence as of the first day of the first calendar month following
the calendar month in which his Early Retirement occurs. Any election of a later
Commencement Date must be made by the Participant in writing and filed with the
Administrator at least 90 days prior to the date of his Termination of
Employment, and shall be irrevocable after the 90th day preceding the date of
his Termination of Employment.

      The Early Retirement Pension may also be paid in forms other than the
Normal Form, as provided in ARTICLE 6.

      5.3 DISABILITY RETIREMENT PENSION. A Participant shall be entitled to a
Disability Retirement Pension if he has ten (10) years of Eligibility Service
and is Totally and Permanently Disabled prior to his Normal Retirement Date.

      The Disability Retirement Pension will be the Pension described in
subsection (a) or (b) below, whichever the Participant elects in his
application:

      (a)   A deferred monthly Pension, payable beginning on his Normal
            Commencement Date. If paid in the Normal Form described in SECTION
            6.1 (a life annuity), the monthly amount of such Pension will equal
            the monthly amount of the Participant's Accrued Benefit as of his
            Pension Calculation Date coinciding with or next preceding the date
            of his Disability Retirement, or

      (b)   A reduced accelerated monthly Pension, payable beginning with the
            first day of the first calendar month following the calendar month
            in which his Disability Retirement occurs, or the first day of any
            later calendar month elected by the Participant that begins prior to
            his Normal Commencement Date. If paid in the Normal Form described
            in SECTION 6.1 (a life annuity), the monthly amount of the reduced
            monthly Pension will be the monthly amount of the full Pension
            defined in Paragraph (a), reduced by one half of one percent (0.5%)
            for each full calendar month by which the Commencement Date precedes
            the Participant's Normal Commencement Date.

      Unless the Participant otherwise elects, payment of the Disability
Retirement Pension shall commence as of the first day of the first calendar
month following the calendar month in which his Disability Retirement occurs.
Any election of a later Commencement Date must be made by the Participant in
writing and filed with the Administrator at least 90 days prior to the date of
his Termination of Employment, and shall be irrevocable after the 90th day
preceding the date of his Termination of Employment.

      The Disability Retirement Pension may also be paid in forms other than the
Normal Form, as provided in ARTICLE 6.

                                     - 14 -
<PAGE>

      5.4 NO DEATH BENEFIT. Except to the extent that a survivor benefit is
payable under an optional form of payment in effect under ARTICLE 6 or a Death
Benefit payable under the terms of ARTICLE 7, no Benefit shall be payable under
this Plan on account of the death of any Participant.

                                     - 15 -
<PAGE>

                                    ARTICLE 6

                               PAYMENT OF PENSIONS

      6.1 NORMAL FORM. The Normal Form of Pension payment under this Plan is a
life annuity under which a monthly Pension is payable to the Participant
beginning on the Commencement Date of the Participant's Pension and continuing
each month thereafter to and including the month of the Participant's death.
Each Pension will automatically be paid in the Normal Form unless an optional
form of Pension payment under SECTION 6.2 is in effect on the Commencement Date
of the Pension.

      6.2 OPTIONAL FORMS OF PENSION PAYMENTS. A Participant may elect to convert
the Normal Form of any Pension payable to him into one of the following optional
forms of Pension payment he may elect; provided, however that the election of a
lump sum or installment payments shall be subject to the approval of the Board.

      Payment of the Participant's Pension shall be made in an optional form
only if the Participant files with the plan Administrator a written election of
an optional form of payment by filing a written election at least 90 days prior
to the date of his Termination of Employment; and any such election shall be
irrevocable after the 90th day preceding the date of his Termination of
Employment.

      Each such optional form of payment shall be the Actuarial Equivalent of
the Pension otherwise payable to the Participant in the Normal Form, and the
payments thereunder shall be adjusted accordingly.

      (a)   JOINT AND SURVIVOR ANNUITY OPTION. A Joint and Survivor Annuity
            under which (i) a reduced monthly Pension will be payable to the
            Participant beginning on the Commencement Date of his Pension and
            continuing to and including the month of his death, and (ii) if the
            Participant is survived by the Beneficiary he has designated at the
            time of his election, a designated percentage not more than 100% of
            the Participant's reduced monthly Pension (as designated by the
            Participant when electing this option) will be paid as a survivor
            benefit to the Beneficiary, beginning with the month following the
            Participant's death and continuing to and including the month in
            which the Beneficiary dies.

      (b)   LIFE AND 60, 120 OR 180 MONTHS CERTAIN OPTION. An annuity under
            which a reduced monthly Pension is payable to the Participant
            beginning on the Commencement Date of his Pension and continuing to
            and including the month of his death, with a provision that if the
            Participant dies prior to having received 60, 120 or 180 monthly
            payments, as elected by the Participant, the remainder of the 60,
            120 or 180 monthly payments will continue to be paid, at the same
            monthly rate, as a survivor benefit to the Beneficiary designated by
            the Participant.

                                     - 16 -
<PAGE>

      (c)   LUMP SUM PAYMENT. A lump sum payment that is equal to the Actuarial
            Equivalent of the monthly Pension otherwise payable to the
            Participant, in the Normal Form as of the Normal Commencement Date
            for the Participant's Pension.

      (d)   INSTALLMENTS PAYMENTS OVER 60, 120 OR 180 MONTHS. The Participant
            may elect to receive installment payments of his Pension beginning
            on the Commencement Date of his Pension for a fixed period of 60,
            120 or 180 months, as elected by the Participant. If the Participant
            receives all of the designated payments, no further Benefits are
            payable to the Participant. If the Participant dies prior to having
            received 60, 120 or 180 monthly payments, as elected by the
            Participant, the remainder of the 60, 120 or 180 monthly payments
            will continue to be paid, to a Beneficiary designated by the
            Participant.

      6.3 ADDITIONAL RULES APPLICABLE TO OPTIONAL FORMS OF PENSION PAYMENT.

      (a)   An optional form of Pension payment elected by a Participant will be
            effective if and only if the following requirements are satisfied:

            (i)   The Participant's election of an option must be made in
                  writing on a form satisfactory to the Administrator and signed
                  by the Participant.

            (ii)  The election must be filed with the Administrator prior to the
                  Participant's designated Commencement Date.

            (iii) Unless the Normal Form is elected, the election must designate
                  the Beneficiary of the Survivor Benefit payable under the
                  optional form. If a Joint and Survivor Annuity Option is
                  elected, the election must also provide evidence satisfactory
                  to the Committee of the date of birth of the Participant and
                  the Beneficiary.

      (b)   If the Joint and Survivor Annuity Option has been elected by a
            Participant, the following additional rules will be applied:

            (i)   If the Beneficiary designated in writing by the Participant
                  dies before the Commencement Date of the Participant's
                  Pension, the election of the option will automatically be
                  revoked. If another optional form of Pension payment is not
                  thereafter elected during the Election Period in compliance
                  with the applicable requirements of this Article, the
                  Participant's Pension will be paid in the Normal Form.

            (ii)  If the designated Beneficiary dies on or after the
                  Commencement Date of the Participant's Pension, the monthly
                  Pension payments thereafter payable to the Participant will
                  continue to be paid in the reduced amount; and no survivor
                  benefit will be payable after the Participant's death.

                                     - 17 -
<PAGE>

      (c)   If the Life and 60, 120 or 180 months Certain Option has been
            elected by a Participant, the following rules will apply:

            (i)   If the Beneficiary designated in writing by the Participant
                  dies before the Commencement Date of the Participant's
                  Pension, the Participant may either revoke the option election
                  or designate another Beneficiary.

            (ii)  If the designated Beneficiary dies on or after the
                  Commencement Date of the Participant's Pension, the
                  Participant may not revoke the option but may designate
                  another Beneficiary.

      (d)   If the lump sum payment option has been elected by a Participant,
            payment of the lump sum shall fully discharge and satisfy payment of
            al of the Participant's benefits under the Plan and his or her
            Beneficiaries.

      (e)   Any option election will automatically be revoked upon the
            Participant's death prior to the Commencement Date of his Pension
            and no survivor benefit will be payable thereafter (except as
            provided in ARTICLE 7).

      6.4 APPLICATION FOR PENSION. As a prerequisite to receiving payment of any
Pension, a Participant who is otherwise eligible therefor shall file with the
Administrator a complete application for the Pension in a form satisfactory to
the Administrator. No Pension will be payable before the first day of the first
calendar month that begins after the date (or on the date) on which a complete
application therefor has been received by the Administrator.

      6.5 INFORMATION TO BE FURNISHED TO PARTICIPANTS. After receiving the
Participant's application for a Pension, the Administrator shall furnish
Participants with a written explanation of the material terms and conditions of
the Normal Form of Pension and the optional forms of Pension payment available
to the Participant and the right of a Participant to elect another form of
payment.

                                     - 18 -
<PAGE>

                                    ARTICLE 7

                                  DEATH BENEFIT

      7.1 ELIGIBILITY FOR DEATH BENEFITS. A Death Benefit shall be payable under
this Plan to the Beneficiary of a Participant if:

      (a)   The Participant has ten (10) or more years of Eligibility Service
            and dies prior to Retirement,

      (b)   The Participant dies on or after Normal Retirement Age and prior to
            Retirement, or

      (c)   The Participant dies after Retirement and prior to the Commencement
            Date of his Pension.

      7.2 AMOUNT OF THE DEATH BENEFIT. The Death Benefit payable to the
Beneficiary shall be a percentage specified below of the lump sum Actuarial
Equivalent value of the Participant's Accrued Benefit. The percentage of the
lump sum Actuarial Equivalent that is the Death Benefit payable to the
Beneficiary shall be determined as follows:

      (a)   One hundred percent (100%) if the Participant dies:

            (i)   On or after Normal Retirement Age and prior to Retirement;

            (ii)  On or after attaining age 55 and being credited with (10) or
                  more years of Eligibility Service; or

            (iii) After Retirement and prior to the Commencement Date of his
                  Pension.

      (b)   Sixty Six and two-thirds percent (66-2/3%) if the Participant dies
            after being credited with (10) or more years of Eligibility Service,
            but prior to attaining age 55.

For this purpose, Actuarial Equivalent shall be determined as of the
Commencement Date of the Death Benefit, as if the Participant had survived,
elected such date as the Commencement Date for his Pension, and elected payment
in a lump sum form of payment.

      7.3 FORM OF PAYMENT. To the extent that the Beneficiary of the Participant
is the surviving spouse of the Participant, the surviving spouse may elect to
receive payment of the Death Benefit as a life annuity or in any of the optional
forms of payment described in Section 6.2, subject to the consent of the Board
for a lump sum payment. To the extent that the Beneficiary of the Participant is
other than the surviving spouse of the Participant, the Beneficiary may elect to
receive payment of the Death Benefit under an installment payment method
described in Section 6.2 or, with the consent of the Board, as a lump sum
payment. Any

                                     - 19 -
<PAGE>

optional form of payment elected by a surviving spouse or another Beneficiary
shall be the Actuarial Equivalent of the lump sum Death Benefit amount.

      7.4 DESIGNATIONS OF BENEFICIARY

      (a)   Each Participant may designate a Beneficiary (or Beneficiaries) who
            is to receive payment under the Plan in the event of his or death. A
            Participant may designate as his Beneficiary, one or more natural
            persons, trusts or organizations exempt from income tax (pursuant to
            Section 501(c)(3) of the Code).

      (b)   If a Participant does not have a Beneficiary designation under the
            Plan, then such Participant's Beneficiary shall be his or her spouse
            if such Participant is married at the date of his death; and if the
            Participant is unmarried at the date of his death, the Beneficiary
            shall be his or her estate.

      (c)   If a married Participant designates his spouse as Beneficiary
            (whether by name or designation as the spouse), the designation of
            the spouse as Beneficiary shall automatically be void as a result of
            a subsequent termination of the marriage through divorce,
            dissolution, annulment or otherwise. Accordingly, except as
            otherwise may be required under a domestic relations order that
            meets the requirements of Section 414(p) of the Code, the prior
            designation of beneficiary shall cease to be recognized under this
            Plan. If a Participant is then receiving payment in the form of
            Joint and Survivor Annuity, the Participant's Pension shall be
            readjusted to be paid in the form of a the life annuity that would
            have been payable to him as of his Commencement Date.

      (d)   If a Beneficiary is receiving Death Benefit payments under the
            installment method and dies prior to receiving the entire amount to
            which he or she is entitled, the remaining payments shall be made to
            a beneficiary named by the deceased Beneficiary. If the deceased
            Beneficiary has not named a beneficiary, the lump sum Actuarial
            Equivalent of the remaining payments shall be paid as soon as
            practicable to the estate of such deceased Beneficiary.

      (e)   To be valid under this Plan, a designation of Beneficiary must be
            made on a form approved by the Plan Administrator (or its designee)
            and delivered to the Plan Administrator prior to the Participant's
            death. Designation of Beneficiary forms shall be maintained in files
            held by the Plan Administrator or its designee.

      (f)   The Participant may from time to time change his Beneficiary by
            completing new Beneficiary designation forms. Upon any such change,
            the rights of all previously designated Beneficiaries to receive any
            benefits under this Plan shall cease.

      (g)   The interpretation of the Plan Administrator with respect to any
            Beneficiary designation shall be binding and conclusive upon all
            parties, and no person who claims to be a Beneficiary, or any other
            person, shall have the right to question any action of the Plan
            Administrator which, in the judgment of the Plan Administrator,
            fulfills the intent of the Participant who filed such designation.

                                     - 20 -
<PAGE>

      7.5 OTHER SURVIVOR BENEFITS SUPERSEDED. Notwithstanding any other
provision of this Plan to the contrary, if a Death Benefit is payable with
respect to the death of a Participant, no other Benefit will be payable under
this Plan on account of the Participant's death.

                                     - 21 -
<PAGE>

                                    ARTICLE 8

                  MISCELLANEOUS PROVISIONS RELATING TO BENEFITS

      8.1 VESTING AND FORFEITURE.

      (a)   A Participant or Transferred Employee who is an Employee on or after
            his Normal Retirement Date shall have a Vested right to Retire and,
            upon Retirement, shall have a Vested right to a Normal Retirement
            Pension. Otherwise, a Participant in this Plan shall have a Vested
            right to the payment of a Pension only if he Terminates Employment
            and is thereby entitled to the payment of an Early Retirement
            Pension under SECTION 5.2 or a Disability Retirement Pension under
            SECTION 5.3.

      (b)   The Benefits of any Participant or former Participant and his
            Beneficiary (if any) that are not Vested shall be permanently
            forfeited and disregarded under this Plan if the Participant
            Terminates Employment prior to Retirement.

      8.2 PROHIBITION AGAINST ALIENATION OR ATTACHMENT. Except as provided in
SECTION 8.5 or as otherwise required by law, no Benefit shall be transferable,
assignable or subject to alienation, encumbrance, garnishment, attachment,
anticipation, execution or levy of any kind, voluntary or involuntary, prior to
the actual payment of the Benefit to the Participant, Pensioner, Deferred
Pensioner or Beneficiary who is entitled thereto under the terms of this Plan.

      8.3 RE-EMPLOYMENT.

      (a)   If a Pensioner or Deferred Pensioner shall be re-employed by the
            Company or a Related Company, his right to receive payment of the
            Benefit for which he had theretofore been eligible (and the right of
            his Eligible Spouse or other Beneficiary to any survivor benefit
            provided under the form of payment in effect for such Benefit) shall
            not be affected by his reemployment. Accordingly, a Reemployed
            Pensioner shall continue to receive payment of any Pension to which
            he is entitled by virtue of a prior Retirement.

      (b)   Notwithstanding the foregoing, a rehired Pensioner or Deferred
            Pensioner may agree to the suspension of payment of his Pension
            during any period of reemployment. The terms and conditions of any
            such suspension shall be determined by such agreement; and if the
            rehired Pensioner shall recommence participation in this Plan, such
            terms may likewise provide for the payment of a new Pension upon the
            Participant's subsequent Retirement or other Termination of
            Employment.

      (c)   If a Retired Participant has received a lump sum payment under the
            Plan or otherwise has received full payment of his benefits under
            the Plan, if such Participant shall be reemployed and again become a
            Participant in the Plan, his

                                     - 22 -
<PAGE>

            future entitlement to a Pension hereunder shall be made without
            regard to the prior Plan participation, Benefit Service, Plan
            Compensation and Benefits of such person.

      8.4 NO BENEFITS PAYABLE IF TRANSFERRED TO SUCCESSOR PLAN. The liabilities
of this Plan may be transferred to another plan of the Company or a Related
Company. Any Benefit that is or may become payable under the terms of this Plan
will not be due and payable from this Plan if and when the liability of this
Plan for the payment of such Benefit is transferred to another plan of the
Company or a Related Company.

      8.5 PROVISION WITH RESPECT TO UNIFORMED SERVICES EMPLOYMENT AND
REEMPLOYMENT RIGHTS ACT OF 1994. Notwithstanding any provision of the Plan to
the contrary benefits, service credit and compensation under this Plan shall be
calculated in accordance with the requirements of the Uniformed Services
Employment and Reemployment Rights Act of 1994.

                                     - 23 -
<PAGE>

                                    ARTICLE 9

                                     FUNDING

      9.1 FUNDING.

      (a)   The obligations of the Company under this Plan constitute the
            unsecured promise of the Company. No Participant or Beneficiary
            shall have any rights whatsoever in or with respect to any funds or
            other assets owned or held by the Company. The rights of a
            Participant or Beneficiary under this Plan are solely those of a
            general unsecured creditor of the Company. Accordingly, the
            maintenance of any accounts or other records under this Plan shall
            be solely for Plan bookkeeping purposes and shall not be deemed to
            create any trust or other special relationship with a Plan
            Participant or Beneficiary.

      (b)   Notwithstanding the provisions of paragraph (a), the Company may
            establish or participate in one or more trusts, including group or
            collective trusts, or purchase or participate in one or more
            insurance contracts (including group contracts), or otherwise invest
            or segregate funds for purposes relating to this Plan. However, the
            assets of such trusts, the rights under and assets of such insurance
            contracts, and the funds otherwise so invested or segregated shall
            at all times remain the property of and be subject to the claims of
            the general creditors of the Company; and no Participant or
            Beneficiary shall have any rights whatsoever in or with respect to
            any such trust, insurance contract or other investment or fund, or
            the assets thereof, the rights of such person being solely those of
            an unsecured general creditor of the Company.

                                     - 24 -
<PAGE>

                        ARTICLE 10 - PLAN ADMINISTRATION

      10.1 ADMINISTRATOR. The Company shall be the "Administrator" of the Plan
within the meaning of Section 3(16)(A) of ERISA. However, to assure the
efficient administration of the Plan, the authority and responsibility of the
Company as "Administrator" shall be exercised by a Committee appointed by the
Board. The Committee may be comprised of members of the Board, officers or
employees of the Company, and such other persons as the Board shall appoint
thereto. The Committee shall act by the vote of a majority of its members,
either at a meeting or, in the absence of a meeting, by a written instrument
signed by a majority of the members. The Committee may designate any one or more
of its members to execute instructions to the funding agency and other documents
on behalf of the Committee, and shall designate one of its members as Chairman
and shall appoint a Secretary who may or may not be a member of the Committee.
The Secretary shall keep minutes of all meetings of the Committee and records of
all actions of the Committee, together with copies of all notices,
certifications and instructions rendered to the Committee by the Company, the
funding agency or any other person. For purposes of this Plan, references to the
Administrator are deemed to include such Committee or such officers and
employees acting on behalf of the Company as Administrator.

      10.2 GENERAL POWERS OF ADMINISTRATOR. The Administrator shall have all
authority for the administration and operation of the Plan. Specifically, but
without limiting the general scope of its authority, the Administrator may
establish rules and procedures for the administration of the Plan (including,
without limitation, forms and procedures for applying for Benefits and electing
forms of payment), shall have the exclusive right to construe and interpret the
terms of the Plan (including any such terms as are unclear or ambiguous), and to
resolve any questions or disputes arising in the administration and operation of
the Plan. Constructions, interpretations and decisions of the Administrator
shall be conclusive and binding on all persons. The Administrator shall exercise
its authority to construe and interpret the terms of the Plan, and to resolve
questions and disputes, so as to preserve the status of the Plan as tax deferred
compensation plan, to correct any scriveners' errors or omissions in the Plan
language, and to assure a reasonable and consistent application of the Plan to
all Participants and Beneficiaries. If and to the extent any of the authority of
the Administrator referred to in this SECTION 10.2 is allocated to another
person, references herein to the Administrator with respect to such authority
shall be deemed to refer to the other person to whom such authority has been
allocated.

      10.3 CLAIMS PROCEDURE. The Administrator shall have sole and exclusive
authority to make all initial and final determinations regarding Benefits
payable hereunder to Participants or their Beneficiaries and to adopt claims and
review procedures, application forms and other documents.

      A claim for a benefit is made whenever a Participant or Beneficiary
submits a written application for the benefit to the Administrator. In
accordance with its authority to construe and interpret the Plan, the Board
shall review claims for benefits under the Plan.

      If a claim is wholly or partially denied, the Administrator will send the
claimant written notification of the denial within 90 days (45 days for a claim
for a benefit because of disability)

                                      25
<PAGE>

of the date on which the claim has been filed. The Administrator can extend the
90-day period for claims (other than for disability benefits) for up to an
additional 90 days by sending written notice of the extension to the claimant
before the initial period elapses. The Administrator can extend the 45-day
period for a claim for disability benefits for up to an additional 30 days by
sending written notice of the extension to the claimant before the initial
period elapses, and the first 30-day extension period may be extended for an
additional 30 days. Any notice of extension will state the reason for the
extension and the date by which a final decision may be expected.

      The written notification of a denial of a claim should contain the
following information:

            (a)   the specific reason or reasons for the denial;

            (b)   reference to specific Plan provisions upon which the denial is
                  based;

            (c)   a description of additional material or information (if any)
                  that would be necessary for the claim to be approved and an
                  explanation of why the material or information is necessary;
                  and

            (d)   an explanation of the claim review procedure, including a
                  statement of the claimant's right to bring a civil action
                  under Section 502(a) of the Employee Retirement Income
                  Security Act of 1974, as amended, following an adverse benefit
                  determination on review.

      If the claimant does not receive notice of the decision on the claim
within the initial decision period following the filing of the claim, or within
the additional period if the response time has been extended, the claimant
should consider the claim denied as of the end of the pertinent period. The
denial will be final and binding unless the claimant invokes the claim review
procedure in accordance with the following terms.

      If a claim has been denied in whole or in part, the claimant or his or her
authorized representative can submit a written request for a full and fair
review of the denial of the claim. The completed written request for review must
be submitted to the Administrator within 60 days (180 days for a claim for
disability benefits) of the date on which the claimant is notified that the
claim has been denied. The request must contain the following information:

         -        the date on which the claimant's request for review is filed
                  with the Board; provided that the date on which the claimant's
                  request for review is in fact filed with the Board shall
                  control in the event the date of the actual filing is later
                  than the date stated by the claimant;

         -        the specific portions of the denial of the claim that the
                  claimant requests the Board to review;

                                      26
<PAGE>

         -        a statement of the claimant setting forth the basis upon which
                  he or she believes the Board should reverse its previous
                  denial of the claim and accept the claim as made; and

         -        any written material (offered as exhibits) that the claimant
                  requests the Board to examine in its consideration of the
                  claimant's position.

      The claimant or the claimant's authorized representative may review
pertinent Plan documents and request copies of them, free of charge, within the
60-day period (180-day period for a claim for disability benefits).

      The Administrator will consider the written request for review in light of
any additional information or comments that have been presented. Within 30 days
after filing the written request for review, the claimant may also request a
hearing before a representative of the Administrator, which the claimant or his
or her authorized representative may attend. The Company will usually issue a
decision within 60 days (45 days for review of a disability benefit claim) of
the date on which the written request for review is filed; but the review period
may be extended by the Administrator for up to an additional 60 days (45 days
for review of a disability benefit claim) by written notice to the claimant
before the initial review period elapses. If the claimant has not received
notice of the decision within the initial review period, or within the
additional review period if the response time has been extended, the claimant
should consider the claim denied.

      If the claim is denied on review, the decision will cite the specific
reasons and the Plan provisions on which the denial is based. The decision will
also state that the claimant or the claimant's authorized representative may
review pertinent Plan documents and request copies of them, free of charge.

      The decision of the Administrator will be final and binding on all
affected parties, except that the claimant will have a right to bring a civil
action under Section 502(a) of the Employee Retirement Income Security Act of
1974, as amended, following an adverse benefit determination on review.

      10.4 LIABILITY OF THE ADMINISTRATOR. No Committee member or other person
authorized to act on behalf of the Administrator shall be responsible for
improper actions or omissions of any such Administrator member or person (other
than himself).

                                      27
<PAGE>

                                   ARTICLE 11

                               GENERAL PROVISIONS

      11.1 AMENDMENT OF PLAN. This Plan may be amended or terminated at any time
or from time to time in any respect, by written action of the Board.
Notwithstanding the foregoing, no amendment or termination shall reduce the
Vested Accrued Benefit of any Participant, the Normal, Early or Disability
Retirement Benefit of a Pensioner or Deferred Pensioner, or his Vested interest
therein, or the Death Benefits payable to a Beneficiary, each as is determined
through the date of the amendment; and the Company shall remain obligated for
the payment of such Benefits as accrued or determined to be payable under the
Plan through the date of the Plan amendment or termination.

      11.2 PAYMENT OF BENEFITS TO OTHERS. If any Participant or Beneficiary to
whom a Benefit is payable is unable to care for his affairs because of illness
or accident, any payment due (unless prior claim therefor shall have been made
by a duly qualified guardian or other legal representative) may be paid to any
individual deemed by the Administrator to be maintaining or responsible for the
maintenance of such person. Any payment made in accordance with the provisions
of this Section shall be a complete discharge of any liability of the Plan with
respect to the benefit so paid.

      11.3 OVERPAYMENTS. In the event that the Administrator determines that the
benefits actually paid under this Plan exceed the benefits that were properly
payable to a Participant or Beneficiary pursuant to this Plan, the Administrator
may, in addition to exercising any other legal remedies available, reduce or
suspend future benefit payments in any manner that the Administrator, in its
sole discretion, deems equitable.

      11.4 TAXES. Income, employment and any other applicable taxes shall be
withheld from any distribution hereunder to the extent that the Company believes
is required by law. A Participant or Beneficiary who receives payment hereunder
also shall be issued a Form W-2, Form 1099 or other report as required by law,
and such report shall be filed with taxing authorities as is required by law.

      In addition, any applicable employment or other payroll taxes that are a
liability of a Participant prior to the time that the Participant receives
payment of Benefits under this Plan shall be deducted from other compensation
payable to the Participant.

      It is the intention of the Company that amounts payable to a Participant
or a Beneficiary under this Plan shall not be included in the gross income of
the Participant or Beneficiary until such time as payments are made under the
provisions of this Plan. However, neither the Company, the Board, nor the
Administrator guarantee any tax consequences associated with this Plan.

                                      28
<PAGE>

      11.5 NO RIGHT OF EMPLOYMENT. The Plan shall not confer upon any
Participant or Employee any right of Employment, nor shall any provision of the
Plan interfere with the right of the Company or a Related Company to discharge
any Participant or other Employee.

      11.6 APPLICABLE LAW. All provisions of the Plan shall be construed
according to the laws of the State of Ohio, except when federal law is
controlling.

      11.7 CONSTRUCTION. Words used in the masculine gender include the
feminine, and words in the singular shall include the plural, where the context
requires.

      11.8 TITLES. Titles of Articles and Sections are inserted for convenience
only and shall not affect the meaning, construction or interpretation of the
Plan.

                                   * * * * * *

                                A. SCHULMAN, INC.

                       By: /s/ Terry L. Haines
                           --------------------------------------------

                              Title: President and Chief Executive Officer

                       And: /s/ Robert A. Stefanko
                            -----------------------------------------------

                              Title: Chairman of the Board, Chief Financial
                                     Officer and Executive Vice President -
                                     Finance and Administration

                                      29

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