Form 8-K SCHULMAN A INC For: Sep 22
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 22, 2016
A. SCHULMAN, INC. | ||||
(Exact name of registrant as specified in its charter)
Delaware | 0-7459 | 34-0514850 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
3637 Ridgewood Road, Fairlawn, Ohio | 44333 | ||||
(Address of principal executive offices) | (Zip Code) | ||||
(330) 666-3751 | ||||
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
On September 22, 2016, A. Schulman, Inc. (the “Company”) entered into an employment agreement with Joseph M. Gingo, Chief Executive Officer, President, and Chairman (the “Agreement”). A copy of the Agreement is attached hereto as Exhibit 10.1 and incorporated by reference herein. The Company previously announced on August 18, 2016 that Mr. Gingo had been re-appointed to the position of Chief Executive Officer and President. In connection with the signing of the Agreement, on September 22, 2016, Mr. Gingo was granted 25,000 unrestricted full value award shares, and 125,000 restricted stock units which are subject to vesting on a pro rata basis on each of the three anniversaries of the grant date (collectively, the “Equity Awards”). A copy of the Notice of Grant and Award Agreement relating to the Equity Awards (the “Award Agreement”) is attached hereto as Exhibit 10.2. A brief description of the terms and conditions of the Employment Agreement and the Equity Awards is set forth below and is qualified, in its entirety by reference to the text of the Agreement and the Award Agreement.
Employment Agreement
• | The term commenced September 22, 2016 and ends on August 31, 2018, provided, however, that the Company may, upon providing written notice to Employee at least ninety (90) days prior to August 18, 2018, extend the Term for one additional year until August 31, 2019. |
• | Mr. Gingo’s initial annual base salary is $920,000, which may be increased, from time to time, by the Compensation Committee of the Board of Directors as it deems appropriate in its reasonable business judgment, but which may not be decreased except as a result of Disability, as such term is defined in the Agreement. |
• | Mr. Gingo will be eligible to participate in the Company’s bonus program for senior executives, with a target level of 100% of base salary and leverage ranging from zero to 200% based upon the achievement of performance metrics determined by the Compensation Committee. |
• | Mr. Gingo will be eligible for restricted stock and performance stock grants, stock options/grants and other discretionary awards and/or cash equivalents as approved by the Board of Directors consistent with the Company's long-term equity incentive plans, compensation philosophy and annual benchmarking, commencing with the annual grant cycle for the 2017 fiscal year, provided, however, that all such awards will be subject to performance-based vesting. The target level of the initial long-term incentive award will be 150% of Mr. Gingo’s base salary, with leverage ranging from zero to 200% based upon performance metrics determined by the Compensation Committee. |
• | Mr. Gingo will be eligible to receive benefits made generally available to the Company’s executives in accordance with Company policies and will be eligible to participate in his discretion in all other employee compensation and benefit plans generally available to executives at a level appropriate for his position. |
• | Upon termination of Mr. Gingo’s employment during the term of the Agreement, he may be entitled to receive certain post-termination benefits depending upon whether such termination is by the Company without Cause, a Resignation for Cause by Mr. Gingo, or by reason of Mr. Gingo’s death or Disability (as such terms are defined in the Agreement). In the event the Company terminates Mr. Gingo’s employment without Cause or Mr. Gingo elects a Resignation for Cause prior to the expiration |
of the Agreement, Mr. Gingo will receive: (i) his base salary for the remaining term of the Agreement; (ii) bonus(es) with respect to each August 31 in the remaining term of the Agreement, payable in each case on the next October 31, each in an amount equal to 100% of his base salary; (iii) vesting of any outstanding equity award which has time-based vesting; and (iv) pro rata vesting of any outstanding equity award which has performance-based vesting, if, and only if, at the end of the applicable performance period the performance criteria for each performance-based award is achieved. In the event Mr. Gingo is terminated by reason of death, the Company shall pay a lump sum amount equal to 60% of his salary for 24 months to a designated beneficiary. In the event that Mr. Gingo becomes Disabled, the Company shall pay 60% of his base salary, plus medical benefits if Mr. Gingo elects to be a participant in connection with such benefits, for Mr. Gingo and his family during the period of his Disability (not to exceed 24 months). After six months of Disability, the Company shall have the right to terminate Mr. Gingo; provided, however, that the 60% payments and medical benefits, if any, shall continue for the remainder of the 24-month period.
• | Pursuant to the confidentiality, non-competition and non-solicitation provisions of the Agreement, for a period of one year following any termination of Mr. Gingo’s employment, he shall not, directly or indirectly, either as an individual for his own account or as an investor, or other participant in, or as an employee, agent, or representative of, any other business enterprise: (i) solicit, employ, entice, take away or interfere with, or attempt to solicit, employ, entice, take away or interfere with, any employee of the Company; or (ii) engage, participate in, finance, aid or be connected with any enterprise that competes with the business of the Company. |
• | Under the terms of the Agreement, Mr. Gingo is not entitled to receive a tax gross up from the Company for any excise tax imposed upon him under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or the Treasury Regulations promulgated thereunder. In the event that any payments or benefits paid or payable to Mr. Gingo pursuant to the Agreement would constitute a “parachute payment” within the meaning of Section 280G of the Code, then Mr. Gingo shall receive the greater of the net best effects of the following: (i) one dollar less than the amount which would cause the payments and benefits to constitute a “parachute payment;” or (ii) the amount of such payments and benefits, after taking into account all federal, state and local taxes, including the excise tax imposed under Section 4999 of the Code payable by the covered executive on such payments and benefits, if such amount would be greater than the cut-back amount, after taking into account all federal, state and local taxes. |
Equity Awards
• | Mr. Gingo received 25,000 unrestricted full-value shares under the Amended and Restated 2006 Incentive Plan on September 22, 2016. |
• | Mr. Gingo received 125,000 restricted stock units under the 2014 Equity Incentive Plan on September 22, 2016. These restricted stock units will be subject to vesting on a pro rata basis on each of the three anniversaries of the grant date. If Mr. Gingo’s employment terminates due to death, Disability (as defined in the Agreement) or Retirement (as defined in the Agreement), his unvested restricted stock units will fully vest on the date of his death, Disability, Retirement, Resignation for Cause, termination by the Company without Cause, or upon a Change in Control. If Mr. Gingo’s employment is terminated by the Company for Cause, all unvested restricted stock units will be forfeited on his termination date. Termination for Cause by the Company is the only event of forfeiture under the Award Agreement and the Agreement. |
Executive Officer Change-in-Control Agreements
On September 22, 2016, A. Schulman, Inc. (the “Company”) entered into change-in-control agreements (the “Change-in-Control Agreements”) with certain of its executive officers, including named executive officers Heinrich Lingnau-Schneider, Senior Vice President, General Manager - EMEA, and Gustavo Perez, Senior Vice President, General Manager - Latin America. The Change-in-Control Agreements supersede and replace all current change-in-control agreements previously executed by the Company with respect to such covered executives and other executive officers, which by their terms were scheduled to expire on December 31, 2017, although several of the Company’s more recently appointed executive officers had not executed the previous form of change-in-control agreement. The material provisions of the Change-in-Control Agreements, which have not changed other than with respect to term, are described below. The summary description is qualified in its entirety by reference to the complete text of the Change-in-Control Agreements, a form of which is attached hereto as Exhibit 10.3 and is incorporated by reference herein.
• | The term of the Change-in-Control Agreements commences on September 22, 2016 and ends on December 31, 2018. |
• | The Change-in-Control Agreements provide that in the event (i) a covered executive is terminated by the Company during a Change-in-Control Protection Period without Cause, or (ii) a covered executive resigns from the Company during a Change-in-Control Protection Period for Good Reason (as such terms are defined in the Change-in-Control Agreements), such covered executive shall be entitled to the following: (1) continued payment of compensation and the provision of benefits through the date of termination; (2) an amount equal to any accrued, but unused vacation days; (3) a lump sum cash payment equal to the sum of (a) 200% of the covered executive’s base salary for the calendar year immediately preceding the year in which the date of termination occurs, plus (b) 200% of the covered executive’s annual target bonus for the fiscal year in which termination occurs; and (4) the continuation of certain insurance benefits for a period of 18 months after the date of termination. |
• | Pursuant to the confidentiality, non-competition and non-solicitation provisions of the Change-in-Control Agreements, in the event that a covered executive becomes entitled to receive compensation under their respective Change-in-Control Agreement, then for a period of one year such covered executive shall not, directly or indirectly, either as an individual for his own account or as an investor, or other participant in, or as an employee, agent, or representative of, any other business enterprise: (i) solicit, employ, entice, take away or interfere with, or attempt to solicit, employ, entice, take away or interfere with, any employee of the Company; or (ii) engage, participate in, finance, aid or be connected with any enterprise that competes with the business of the Company. |
• | Under the terms of the Change-in-Control Agreements, covered executives are not entitled to receive a tax gross up from the Company for any excise tax imposed upon them under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended. |
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) | Exhibits. |
Exhibit Number | Description |
10.1 | Employment Agreement, by and between A. Schulman, Inc. and Joseph M. Gingo, dated September 22, 2016 (filed herewith). |
10.2 | Notice of Grant and Award Agreement, dated September 22, 2016 (filed herewith). |
10.3 | Form of Executive Officer Change-in-Control Agreement (filed herewith). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
A. Schulman, Inc.
By: /s/ Andrean Horton
Andrean Horton
Executive Vice President & Chief Legal Officer
Date: September 22, 2016
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of the 22nd day of September, 2016 by and between A. SCHULMAN, INC., a Delaware corporation (the "Employer" or "Company"), and Joseph M. Gingo (the "Employee").
WHEREAS, Employee previously served the Company or the Companies (as defined herein) as its President and Chief Executive Officer from January 1, 2008 through December 31, 2014;
WHEREAS, Employee currently serves as the Chairman of the Board of Directors of the Company ("Board"); and
WHEREAS, on August 18, 2016, the Board approved the re-appointment of Employee as the Company's President and Chief Executive Officer effective August 18, 2016, and authorized the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the parties hereto agree as follows:
1.DEFINED TERMS
The definitions of capitalized terms used in this Agreement (unless stated where first used) are provided in Section 20 hereof.
2.EMPLOYMENT
During the Term of this Agreement, the Employer hereby agrees to employ Employee as President and Chief Executive Officer for the Employer, and the Employee hereby accepts such employment on the terms and conditions herein contained. Further, as a condition to this Agreement, it is anticipated that Employee will be nominated to be elected to the Board of Directors of the Company and, if elected, shall be appointed to serve as Chairman of the Board of Directors.
3.DUTIES AND CONDITIONS OF EMPLOYMENT
3.1 DUTIES. The Employee shall devote his entire business time, attention and energies to the Employer and shall not engage in any conduct which shall reflect adversely upon the Employer. The Employee shall perform such duties for the Employer as may be assigned to one in his executive status and capacity by the Board. The Employee shall serve diligently and to the best of his ability.
During his employment by the Employer, the Employee shall not, without the Company's prior written consent, be engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage, except that notwithstanding the foregoing, he may invest his personal funds for his own account; provided that such investment shall be passive and not controlling in any such investment and subject to the provisions of Section 13.2 hereof and provided further that he will not be required to provide any substantial services on behalf of such enterprise. Notwithstanding the foregoing, the Employee may serve on the boards of directors of other corporations during the Term as long as such service does not interfere with the performance of his duties hereunder and is in compliance with other applicable policies of the Company and the Board.
3.2 CONDITIONS. The Employee shall be provided with suitable office space, furnishings, secretarial and administrative assistance. Without the Employee's consent, the Employee shall not be required to report principally to an office located more than five hundred (500) miles from Akron, Ohio. In addition to the foregoing, Employee shall be entitled to receive the benefits and other compensation described in Exhibit A attached hereto, the terms of which are incorporated herein.
3.3 BOARD SERVICE AND FEES. Upon the effective date of this Agreement Employee shall no longer be eligible to receive fees as a director of the Board or as a member of any Board committee. Employee shall, however, continue to be eligible to serve on the Executive Committee and to continue to serve as Chairman of the Board, without additional consideration to his compensation as President and Chief Executive Officer as provided in this Agreement.
4. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT; ESCROW DURING DISPUTE
4.1 TERM OF AGREEMENT. The "Term" for this Agreement shall commence on September 22, 2016 and shall end on August 31, 2018, provided, however, that Employer may, upon providing written notice to Employee at least ninety (90) days prior to August 31, 2018, extend the Term for one additional year until August 31, 2019 (“Extension”). Nothing in this Agreement shall amend, modify or alter compensation paid or awards settled to the Employee prior to the commencement of the Term.
4.2 TERMINATION OF EMPLOYMENT. The Company may terminate the employment of the Employee for Cause pursuant to this Agreement. The Employee may terminate his employment pursuant to this Agreement if the Employer fails to make full and timely payments of any of the sums provided for in Exhibit A, Sections 5 and 6 hereof (subject to Section 7.2 hereof), or otherwise shall breach its covenants hereunder in any material respect, including but not limited to, (i) a diminution in Employee's title, authority, duties, responsibilities or reporting relationship; (ii) the Company's failure to nominate Employee for election to the Board and to use its best efforts to have him elected and re-elected, as applicable; (iii) failure to by appointed as Chairman if elected to the Board of Directors; or (iv) a material adverse change in the reporting structure applicable to the Employee ("Resignation for Cause"). A termination of employment by the Employee due to Resignation for Cause will entitle the Employee to the same benefits as if the Employee's employment was terminated without Cause. Employee may terminate his employment pursuant to this Agreement by providing written notice of voluntary termination of employment due to retirement. Any termination of employment other than a termination by the Company for Cause shall be a Retirement under any Equity Incentive Plan pursuant to which Awards are granted.
4.3 ESCROW DURING A TERMINATION DISPUTE. If the Employee is terminated for Cause, and, within thirty (30) days of such termination, Employee notifies the Employer of his intention to adjudicate such termination as improper, the Employer agrees that it will deposit with KeyBank, National Association (or any successor thereto), as Escrow Agent the installments of the Employee's Base Salary and any bonuses due to be paid (as provided in Section 5 below) as the same would have become payable but for such termination ("Escrow Amount"). In the event of a final adjudication by a tribunal of competent jurisdiction that such termination was not for Cause, then the Escrow Amount, plus any interest earned thereon, shall be delivered promptly to the Employee. If such adjudication shall be in favor of the Employer, the Escrow Agent shall return the Escrow Amount, plus such interest, to the Employer.
The Escrow Amount shall not be deemed to be liquidated damages but the Employer shall be entitled to a credit against any such award to the extent of the sums so delivered to the Employee.
5. COMPENSATION
The Employer agrees to pay to the Employee as compensation for his services hereunder a Base Salary equal to the fixed annual salary as shown on Exhibit A hereto and as will be shown on the Employer's employment records, payable in substantially equal weekly, biweekly, bimonthly or monthly installments, as the case may be, in a manner consistent with the Employer's payroll practices, as the same may be changed from time to time. The Base Salary may be discretionarily increased by the Compensation Committee of the Board from time to time as it deems appropriate in its reasonable business judgment. The Base Salary in effect from time to time shall not be decreased during the Term (except as provided in Section 7.2).
It is understood and agreed that the Employee's compensation may not be limited to his Base Salary and that the Employee may receive an Annual Bonus, incentive compensation and/or equity awards in the amounts, if any, determined annually by the Employer and/or as further described on Exhibit A.
The Employee shall also be entitled to participate (at Employee's election) in employee compensation and benefit plans available generally to executives of the Employer (including, without limitation, any tax-qualified profit sharing plan, nonqualified profit sharing plan, life insurance plan and health insurance plan) on a level appropriate with his position and on the same terms and conditions as offered to other executive officers of the Company, and shall receive the employee fringe benefits available generally to executives of the Employer in accordance with Employer policies.
The Employee will also be entitled to the other compensation elements described in Exhibit A in the manner set forth therein.
1.EXPENSES
6.1 GENERALLY. Employee is authorized to incur during the Term reasonable expenses for promoting the business of the Employer, including expenses for entertainment, travel and similar items. The Employer shall reimburse the Employee in accordance with the Employer's policy for all such expenses upon the presentation by the Employee, from time to time, of an itemized account of such expenditures.
6.2 ATTORNEY FEES. Employee is authorized to incur, and Employer will reimburse, reasonable attorney fees and accounting fees not to exceed $10,000 for reviewing this Agreement and advising Employee in connection with such review.
2.PRE-TERMINATION COMPENSATION; DISABILITY
7.1 NORMAL PRE-TERMINATION COMPENSATION. If the Employee's employment shall be terminated for any reason during the Term, the Employer shall pay the Employee's Base Salary to the Employee through the Date of Termination at the rate in effect at the time the Notice of Termination is given (subject to Section 7.2 hereof) within thirty (30) days following the Date of Termination, together with all compensation and benefits payable to the Employee through the Date of Termination under the terms of any compensation or benefit plan, program or arrangement maintained by the Employer during such period. Subject to Sections 8, 9, 10 and 11 hereof, after completing the expense reimbursements required by Section 6 hereof, making the payments and providing the benefits required by this Section 7, the Employer shall have no further obligations to the Employee under this Agreement.
7.2 DISABILITY ADJUSTMENT TO BASE SALARY PAYMENTS. During the Term, during any period that the Employee is Disabled, but in no event for more than twenty-four (24) months (the "Disability Period"), the Employer shall pay only sixty percent (60%) of the Employee's Base Salary to the Employee at the rate in effect at the commencement of any such Disability Period (less amounts, if any,
payable to the Employee at or prior to the time of any such Base Salary payment under disability benefit plans of the Employer or under the Social Security disability insurance program). After six (6) months of Disability, the Employer shall have the right to terminate the Employee's employment pursuant to this Agreement and all Base Salary payments shall cease; provided, however, that the sixty percent (60%) payments described in the foregoing sentence, as well as medical benefits for the Employee and his dependents if Employee elects to be a participant in connection with such benefits, shall continue for the Disability Period. All payments made pursuant to this Section 7.2 shall be made in accordance with the regular payroll practices of the Employer. Except to the extent provided in this Section 7.2, all Base Salary payments to the Employee shall be abated during the Disability Period. Subject to Sections 8, 9, 10 and 11 hereof, after completing the expense reimbursements required by Section 6 hereof, making the payments and providing the benefits required by this Section 7, the Employer shall have no further obligations to the Employee under this Agreement.
8. NORMAL POST-TERMINATION PAYMENTS; CONTINUATION PAY; TERMINATION PAY; PROMPT PAYMENT
Wherever used in this Agreement, the words "terminate," "terminated" or "termination" in connection with the Employee's employment shall mean the Employee's "separation from service," within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-1(h), from the Employer and any person with whom the Employer would be considered a single employer under Sections 414(b) and (c) of the Code.
8.1 NORMAL POST-TERMINATION PAYMENTS. If the Employee's employment shall be terminated for any reason during the Term of this Agreement, the Employer shall pay the Employee's normal post-termination compensation and benefits to the Employee as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Employer's retirement, insurance and other compensation or benefit plans, programs and arrangements (other than this Agreement).
8.2 CONTINUATION PAY; TERMINATION PAY. Notwithstanding anything to the contrary in Sections 7.2, 9.1 or 10.1 hereof, if the laws governing this Agreement shall require that the Employer continue to pay or otherwise compensate the Employee for any period of time following termination of the Employee's employment ("Continuation Pay") or if such laws require certain amounts of severance pay, termination compensation or the like (collectively, "Termination Pay"), then to the fullest extent permitted by law any payments to the Employee pursuant to Section 7.2, 9.1 or 10.1 hereof shall be included in the calculation of Continuation Pay and Termination Pay and such payments shall be deducted from the amount of Continuation Pay or Termination Pay due the Employee.
8.3 TIME OF PAYMENTS. Any payments due under Sections 5, 6, 7 or 9 hereof or this Section 8 shall be made as specified in such sections and shall be made to the Employee or in accordance with Section 14.2 hereof, as the case may be. Notwithstanding anything in this Agreement to the contrary, if the Employee is a "specified employee," within the meaning of Section 409A of the Code and as determined under the Company's policy for determining specified employees, on the Date of Termination, all payments under this Agreement that are subject to Section 409A of the Code and become payable in connection with the Employee's termination shall not be paid (or commence to be paid) until the first business day of the seventh month following the Date of Termination (or, if earlier, the Employee's death). The first payment that can be made shall include the cumulative amount of any amounts that could not be paid during such postponement period.
1.POST-TERMINATION PAYMENTS UPON TERMINATION BY DEATH OR BY THE EMPLOYER WITHOUT CAUSE
9.1 DEATH BENEFIT. If the Employee's employment shall be terminated by death during the Term, then, in addition to the compensation and benefits provided by Sections 7.1 and 8 hereof, within ninety (90) days following the Employee's death, the Employer shall pay a lump sum amount equal to sixty percent (60%) of the Base Salary for twenty-four (24) months in accordance with Section 14.2.
9.2 TERMINATION BY THE EMPLOYER WITHOUT CAUSE. If the Employer shall terminate the Employee's employment during the Term without Cause (but not for Disability or in connection with the Employee's death), the Employer shall pay the Employee commencing within sixty (60) days following termination (or with respect to Section 9.2(d) below within sixty (60) days following the end of the respective performance period), in consideration of Employee's obligations under Section 13.2, and only if those obligations continue to be met during this payment period: (a) his Base Salary until the end of the Term, in accordance with Employer's regular payroll practices; (b) Bonus(es) with respect to each August 31 remaining in the Term in amount(s) equal to Employee's annual Base Salary and payable in each case on the next October 31; (c) vesting of any equity award which has time-based vesting (a "Time-Based Award"); and (d) vesting of any equity award which has performance-based vesting (a "Performance-Based Award" and, collectively with the Time-Based Award, the "Awards") in accordance with the terms of the agreements for such Awards. Notwithstanding the foregoing, any Performance-Based Award shall vest if, and only if, at the end of the applicable performance period the performance criteria for each Performance-Based Award is achieved and then only to the extent of such achievement.
2.SEVERANCE PAYMENTS; BEST NET EFFECTS
10.1 SEVERANCE PAYMENTS. Upon the termination of the Employee's employment following a Change in Control, Employee shall not be entitled to any additional payments or benefits but shall remain entitled to those payments and benefits payable under Sections 5, 6, 7, 8 or 9 hereof as the case may be. Notwithstanding the foregoing, a termination by the Employee due to Good Reason will entitle the Employee to the same benefits as if the Employee's employment was terminated without Cause.
10.2 EXCESS PARACHUTE PAYMENT. Notwithstanding anything to the contrary in this Agreement, if any payments or benefits paid or payable to the Employee pursuant to this Agreement or any other plan, program or arrangement maintained by the Company or an Affiliate would constitute a "parachute payment" within the meaning of Section 280G of the Code, then the Employee shall receive the greater of: (a) one dollar ($1.00) less than the amount which would cause the payments and benefits to constitute a "parachute payment" or (b) the amount of such payments and benefits, after taking into account all federal, state and local taxes, including the excise tax imposed under Section 4999 of the Code payable by the Employee on such payments and benefits, if such amount would be greater than the amount specified in Section 10.2(a), after taking into account all federal, state and local taxes payable by the Employee on such payments and benefits. Any reduction to any payment made pursuant to this Section 10.2 shall be made consistent with the requirements of Section 409A of the Code.
10.3 At the time that payments are made under this Agreement that are reduced in accordance with Section 10.2, the Employer shall provide the Employee with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Employer has received from auditors or consultants (and any advice which is in writing shall be attached to the statement).
10.4 The Employer also shall pay to the Employee all professional fees and expenses incurred by the Employee (including specifically legal, accounting and tax advisory fees) (i) in disputing in good faith any issue relating to the termination of the Employee's employment and the application, if any, of Section 10.2, (ii) in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement, or (iii) in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Employee's written requests for payment accompanied with such evidence of fees and expenses incurred as the Employer reasonably may require.
10.5 In consideration of, and as a pre-condition to, receipt of any of the payments or benefits set forth in this Section 10 or under Section 9 hereof, Employee shall execute and deliver to Employer a written release no later than thirty (30) days after the event of termination, in a manner compliant with the respective requirements for release of claims under the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act, pursuant to which Employee shall fully and forever surrender, release, acquit and discharge the Employer, and its principals, stockholders, directors, officers, agents, administrators, insurers, subsidiaries, affiliates, employees, successors, assigns, related entities, and legal representatives, personally and in their representative capacities, and each of them (collectively, "Released Parties"), of and from any and all claims for costs of attorneys' fees, expenses, compensation, and all losses, demands and damage of whatsoever nature or kind in law or in equity, whether known or unknown, including without limitation those claims arising out of, under, or by reason of Employee's employment with the Employer or any of the Companies, Employee's relationship with the Employer or any of the Companies and/or any termination of Employee's employment relationship and any and all claims which were or could have been asserted in any charge, complaint, or related lawsuit. Notwithstanding the foregoing, no such release shall constitute a waiver of, or in any manner restrict or limit: (i) the Employee's rights of indemnification relating to his status as an officer and/or director of the Employer, whether arising under Delaware law, contractually, or under Employer's insurance coverage, and; (ii) Employee’s rights as a shareholder, except that Employee waives any right to engage in any litigation as a shareholder, whether as a class action participant or on a derivative basis, based upon alleged acts or omissions during his employment or while he was a director. If the thirty (30) day period during which Employee must executive and deliver the written release contemplated by this Section 10.5 begins in one calendar year and ends in a second calendar year, the payments or benefits set forth in this Section 10 or Section 9 hereof shall not commence until the first day of the second calendar year.
11. TERMINATION PROCEDURES
11.1 NOTICE OF TERMINATION. During the Term, any purported termination of the Employee's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 15 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee's employment under the provision so indicated. Further, with respect to any purported termination of the Employee's employment after a Change in Control, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Employee and an opportunity for the Employee, together with the Employee's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth in the definition of Cause herein, and specifying the particulars thereof in detail.
11.2 DATE OF TERMINATION. "Date of Termination," with respect to any purported termination of the Employee's employment during the Term, shall mean the date of the Employee's "separation from service" within the meaning of Section 409A of the Code and Treasury Regulation Section 1.409A-1(h). Any Notice of Termination relating to a termination for Disability shall be provided thirty (30) days prior to the Date of Termination (provided that the Employee shall not have returned to the full-time performance of the Employee's duties during such thirty (30) day period). Any Notice of Termination relating to the termination of the Employee's employment by the Employer for any other reason shall be provided not less than thirty (30) days prior to the Date of Termination (except in the case of a termination for Cause). Any Notice of Termination relating to the termination of the Employee's employment by the Employee for any other reason shall be provided not less than fifteen (15) days nor more than sixty (60) days prior to the Date of Termination.
1.NO MITIGATION
The Employer agrees that, if the Employee's employment with the Employer terminates, the Employee is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Employee by the Employer pursuant to this Agreement. Further, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Employee as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Employee to the Employer, or otherwise.
2.CONFIDENTIALITY; NON-COMPETITION AND NON-SOLICITATION
13.1 CONFIDENTIALITY. The Companies' methods, plans for doing business, processes, pricing, compounds, customers and suppliers are vital to the Companies and, to the extent not made public by the Companies, constitute confidential information subject to the Companies' proprietary rights therein. The Employee covenants and agrees that during the Term and at all times thereafter, the Employee will not, directly or indirectly, make known, divulge, furnish, make available or use, otherwise than in the regular course of the Employee's employment by the Employer, any invention, product, process, apparatus or design of any of the Companies, or any knowledge or information in respect thereof (including, but not limited to, business methods and techniques), or any other confidential or so-called "insider" information of any of the Companies. This covenant shall apply without regard to the time or circumstances of any termination of the Employee's employment. The covenants in this Section 13.1 do not apply to information that Employee can affirmatively demonstrate (i) is in the public domain through no act or omission of the Employee; (ii) was lawfully in the Employee's possession prior to the date of this Agreement; or (iii) was lawfully disclosed by a third party to the Employee after the Date of Termination.
13.2 NON-COMPETITION AND NON-SOLICITATION. The Employee covenants and agrees that during the period of one (1) year following any termination of the Employee's employment, the Employee will not, directly or indirectly, either as an individual for the Employee's own account or as an investor, or other participant in, or as an employee, agent, or representative of, any other business enterprise:
(i)solicit, employ, entice, take away or interfere with, or attempt to solicit, employ, entice, take away or interfere with, any employee of the Employer or the Companies if such employee was employed by the Employer or the Companies at any time within six months of the Date of Termination; or
(ii)engage or participate in or finance, aid or be connected with any enterprise which competes with the business of the Companies, or any of them.
The geographical limitations of the foregoing shall include any country in which the Companies or any of them shall be doing business as of such date of such termination.
13.3 The Employee acknowledges that the covenants contained in this Section 13 are of the essence of this Agreement and said covenants shall be construed as independent of any other provisions of this Agreement. Recognizing the irreparable nature of the injury that could result from the Employee's violation of any of the covenants and agreement to be performed and/or observed by the Employee pursuant to the provisions of this Section 13, and that damages would be inadequate compensation, it is agreed that any violations by the Employee of the provisions of this Section 13, shall be the proper subject for immediate injunctive and other equitable relief to the Employer.
14. SUCCESSORS; BINDING AGREEMENT
14.1 In addition to any obligations imposed by law upon any successor to the Employer, the Employer will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Employer to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Employer would be required to perform it if no such succession had taken place. Failure of the Employer to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Employee to terminate the Employee's employment for Good Reason after a Change in Control. Except as provided in this Section 14.1, this Agreement shall not be assignable by either party without the written consent of the other party hereto.
14.2 This Agreement shall inure to the benefit of and be enforceable by the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee shall die while any amount would still be payable to the Employee hereunder (other than amounts which, by their terms, terminate upon the death of the Employee) if the Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Employee's estate.
1.NOTICES
For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Employee, to the address shown for the Employee in the personnel records of the Employer and, if to the Employer, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:
To the Employer:
Chief Legal Officer
A. Schulman, Inc.
3637 Ridgewood Road
Fairlawn, Ohio 44333
With a copy to:
J. Bret Treier
Vorys, Sater, Seymour and Pease LLP
106 South Main Street, Suite 1100
Akron, Ohio 44308
2.MISCELLANEOUS
No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Employee and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes all other agreements or representations, written, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party, except as expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Employee has agreed. The obligations of the Employer and the Employee under this Agreement which by their nature may require (partial or total) performance after the expiration of the Term (including, without limitation, those under Sections 5 through 11 and Section 13 hereof) shall survive such expiration.
1.VALIDITY
The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
2.COUNTERPARTS
This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
3.SETTLEMENT OF DISPUTES AFTER CHANGE IN CONTROL; ARBITRATION
After a Change in Control, all claims by the Employee for benefits under this Agreement shall be directed to and determined by the Committee and shall be in writing. Any denial by the Committee of a claim for benefits under this Agreement shall be delivered to the Employee in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Committee shall afford a reasonable opportunity to the Employee for a review of the decision denying a claim and shall further allow the Employee to appeal to the Committee a decision of the Committee within sixty (60) days after notification by the Committee that the Employee's claim has been denied. Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Akron, Ohio, in accordance with the rules of the American Arbitration Association with respect to employment disputes then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Employee shall be entitled to seek specific performance of the Employee's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.
4.DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings indicated below:
(A)"Annual Bonus" has the meaning set forth on Exhibit A.
(B)"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act.
(C)"Board" shall mean the Board of Directors of the Employer.
(D)"Cause" for termination by the Employer of the Employee's employment shall mean the following:
(I)Any act of fraud, embezzlement, misappropriation or conversion by the Executive of the assets or business opportunities of the Employer;
(II)Conviction of the Employee of (or plea by the Executive of guilty to) a felony (or a misdemeanor that originally was charged as a felony but was reduced to a misdemeanor as part of a plea bargain);
(III)Intentional and repeated material violations by the Employee of the Employer's written policies or procedures or intentional and material breach of any contract with or violation of any legal obligation owed to the Employer provided that a breach or violation shall be considered intentional and material only if the Employee fails to cure to the best of the Employee's ability such breach within thirty (30) days after delivery to the Employee of a notice from the Board specifying such breach; or
(IV)Willful engagement in gross misconduct or intentional misrepresentation that is materially and demonstrably injurious to the Employer, provided that such breach is not cured within thirty (30) days after delivery to the Employee of a written notice from the Board requesting cure.
For purposes of the above definition, no act or failure to act, on Employee's part shall be deemed "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee's act or failure to act, was in the best interest of the Employer. In the event of a dispute concerning the application of the definition of Cause, no claim by the Employer that Cause exists shall be given effect unless the Employer establishes to the Committee by clear and convincing evidence that Cause exists.
(E) A "Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
(I)the acquisition by any person (as defined under Section 409A of the Code), or more than one person acting as a group (as defined under Section 409A of the Code), of stock of the Company that, together with the stock of the Company held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company;
(II)the acquisition by any person, or more than one person acting as a group, within any twelve (12) month period, of stock of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company;
(III)a majority of the members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or
(IV) the acquisition by any person, or more than one person acting as a group, within any twelve (12) month period, of assets from the Company that have a total gross fair market value equal to or
more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.
This definition of Change in Control shall be interpreted in a manner that is consistent with the definition of "change in control event" under Section 409A of the Code and the Treasury Regulations promulgated thereunder.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Employer immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Employer immediately following such transaction or series of transactions.
Further, notwithstanding the foregoing, any event or transaction which would otherwise constitute a Change in Control (a "Transaction") shall not constitute a Change in Control for purposes of this Agreement if, in connection with the Transaction, the Employee participates as an equity investor in the acquiring entity or any of its affiliates (the "Acquiror"). For purposes of the preceding sentence, the Employee shall not be deemed to have participated as an equity investor in the Acquiror by virtue of (i) obtaining beneficial ownership of any equity interest in the Acquiror as a result of the grant to the Employee of an incentive compensation award under one or more incentive plans of the Acquiror (including, but not limited to, the conversion in connection with the Transaction of incentive compensation awards of the Employer into incentive compensation awards of the Acquiror), on terms and conditions substantially equivalent to those applicable to other executives of the Employer immediately prior to the Transaction, after taking into account normal differences attributable to job responsibilities, title and similar matters, (ii) obtaining beneficial ownership of any equity interest in the Acquiror on terms and conditions substantially equivalent to those obtained in the Transaction by all other stockholders of the Employer, or (iii) passive ownership of less than three percent (3%) of the stock of the Acquiror.
(A)Reserved.
(B)"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
(A)"Committee" shall mean (i) the individuals (not fewer than three (3) in number) who, immediately prior to a Potential Change in Control, constitute the Compensation Committee of the Board, plus (ii) in the event that fewer than three (3) individuals are available from the group specified in clause (i) above for any reason, such individuals as may be appointed by the individual or individuals so available (including for this purpose any individual or individuals previously so appointed under this clause (ii)); provided, however, that the maximum number of individuals constituting the Committee shall not exceed five (5).
(B)"Companies" shall mean, collectively, the Employer and each entity which was, is now and hereafter shall become a subsidiary of, or a parent of, the Employer, together with their respective successors and assigns.
(C)"Continuation Pay" shall mean those payments so described in Section 8.2 hereof.
(D)"Date of Termination" shall have the meaning stated in Section 11.2 hereof.
(E)"Disability" or "Disabled" shall mean: (i) the Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less
than twelve (12) months; (ii) the Employee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Employer; (iii) the Employee is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board; or (iv) Employee's physician renders a written opinion that Employee, by reason of any medically determinable physical or mental impairment, is no longer capable of substantially performing the duties contemplated by this Agreement.
(F)"Disability Period" shall have the meaning stated in Section 7.2 hereof.
(G)"Employee" shall mean the individual named in the first paragraph of this Agreement.
(O) "Employer" shall mean A. Schulman, Inc. and, except in determining under Section 20(E) hereof whether or not any Change in Control of the Employer has occurred, any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.
(A)"Escrow Amount" has the meaning set forth in Section 4.3.
(B)"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.
(C)"Good Reason" for termination by the Employee of the Employee's employment shall mean the occurrence (without the Employee's express prior written consent) after any Change in Control, or after any Potential Change in Control, of any one of the following acts by the Employer, or failures by the Employer to act, unless such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:
(I)a diminution in the Employee's base compensation or incentive compensation opportunity;
(II)the failure by the Company, to pay to the Employee any portion of the Employee's current compensation, or to pay to the Employee any portion of an installment of deferred compensation under any deferred compensation program of the Employer, within seven (7) days of the date such compensation is due;
(III)the failure by the Company to continue in effect any compensation plan in which the Employee participates immediately prior to the Change in Control which is material to the Employee's total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Employee's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Employee's participation relative to other participants, as existed at the time of the Change in Control;
(IV)the failure by the Company to continue to provide the Employee with benefits substantially similar to those enjoyed by the Employee under any of the Company's pension, life insurance, or disability plans in which the Employee was participating at the time of the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Employee of any material fringe benefit enjoyed by the Employee at the time of the Change in Control, or the failure by the Company to provide the Employee with the number of paid vacation days to which the Employee is entitled on the basis of years of service
with the Company in accordance with the Employer's normal vacation policy in effect at the time of the Change in Control; or
(V)a diminution in the Employee's title, authority, duties, responsibilities or reporting relationship;
(VI)a reassignment of the Employee to an office location twenty-five (25) miles or more from the office location of the Employee prior to a Change in Control, except for required travel to an extent substantially consistent with the Employee's business travel obligations prior to a Change in Control;
(VII)the failure by the Company, in the event the Employee consents to a relocation at the request of the Company or its successor, to pay (or reimburse the Employee) for all reasonable moving expenses incurred by the Employee relating to a change of the Employee's principal residence in connection with such relocation and to indemnify the Employee against any loss realized on the sale of the Employee's principal residence in connection with any such change of residence; or
(VIII)any purported termination of the Employee's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 11.1 hereof; for purposes of this Agreement, no such purported termination shall be effective.
The Employee's right to terminate the Employee's employment for Good Reason shall not be affected by the Employee's incapacity due to physical or mental illness. The Employee's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good Reason, any claim by the Employee that Good Reason exists shall be presumed to be correct unless the Employer establishes to the Committee by clear and convincing evidence that Good Reason does not exist.
(S) "Notice of Termination" shall have the meaning stated in Section 11.1 hereof.
(T) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Employer or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Employer or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Employer in substantially the same proportions as their ownership of stock of the Employer.
(U) "Potential Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:
(I)the Employer enters into an agreement, the consummation of which would result in the occurrence of a Change in Control within six (6) months following the Date of Termination;
(II)the Employer or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;
(III)any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Employer representing fifteen percent (15%) or more of either the then outstanding shares of common
stock of the Employer or the combined voting power of the Employer's then outstanding securities; or
(IV)the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.
(V) "Severance Payments” shall mean those payments described in Section 10.1 hereof.
(W) "Term" shall mean the period of time described in Section 4.1 hereof (including any extension or continuation described therein).
(W) "Termination Pay" shall mean those payments so described in Section 8.2 hereof.
21. SECTION 409A OF THE CODE
It is intended that this Agreement comply with Section 409A of the Code and the Treasury Regulations promulgated thereunder (and any subsequent notices or guidance issued by the Internal Revenue Service), and this Agreement will be interpreted, administered and operated accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to the Employee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed (the corporate signatory by the respective officer duly authorized) as of the day and year first above written.
EMPLOYEE: EMPLOYER:
A. Schulman, Inc.
/s/ Joseph M. Gingo By: /s/ Andrean Horton
Joseph M. Gingo Name: Andrean Horton
Its: Executive Vice President and
Chief Legal Officer
EXHIBIT A
1. | Employee's initial annual Base Salary will be $920,000. |
2. | Upon the effective date of the Agreement, Employee will receive the following initial grants under the Company’s long-term equity incentive plans: (i) an award of 25,000 full-value shares subject to immediate vesting, and (ii) an award of 125,000 restricted stock units subject to three-year vesting on a pro-rata basis (one-third on each anniversary of the date of grant). |
3. | Employee will be entitled to participate in the Company's management bonus program ("Bonus Program") each fiscal year or partial fiscal year of the Company occurring during the Term of this Agreement commencing with the 2017 fiscal year. Unless otherwise mutually agreed, the Employee will participate in the Bonus Program at a target level of 100% of Employee’s Base Salary, with leverage ranging from 0% to 200% based upon performance metrics determined by the Compensation Committee ("Annual Bonus"). |
4. | Employee will be eligible for restricted stock and performance stock grants, stock options/grants and other discretionary awards and/or cash equivalents as approved by the Board consistent with the Company's long-term equity incentive plans (provided that all such awards shall be subject to performance-based vesting), compensation philosophy and annual benchmarking, commencing with the annual grant cycle for the 2017 fiscal year. The target level of Employee's initial long-term incentive award shall be 150% of the Employee’s Base Salary, with leverage ranging from 0% to 200% based upon performance metrics determined by the Compensation Committee. Consistent with the terms of the Company’s standard form of award agreement, Employee will immediately vest in the number of performance-based long-term incentive awards at the “target” level of performance in the event of a Change in Control during a performance period. |
5. | Employee will be eligible for five weeks of paid vacation during each calendar year as an executive officer of the Company, which shall be taken in accordance with, and otherwise subject to, Employer's vacation rules and policies. |
9/21/2016 25283686 V.14
THIS AGREEMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE SHARES OF THE COMPANY ARE LISTED ON THE NASDAQ STOCK MARKET.
EXHIBIT 10.2
Notice of Grant of Full Value Award Shares and Restricted Stock Units |
Joseph M. Gingo |
Subject to the terms and conditions of the Amended and Restated 2006 Incentive Plan (the “2006 Plan”) and the 2014 Equity Incentive Plan (the “2014 Plan”) (collectively the “Plans”) and the Award Agreement attached hereto, you have been granted an award of Full Value Shares from the 2014 Plan and an award of Restricted Stock Units from the 2006 Plan (the “Awards”), as follows:
Grant Date: | September 22, 2016 |
Number of Shares: | Your Awards consist of the following: 25,000 unrestricted Full Value Award Shares (each a Full Value Share”), and 125,000 Restricted Stock Units (each a “Unit” and collectively the “Units”) |
Vesting Schedule: | Your Full Value Shares are fully vested upon the Grant Date Your Units will be subject to vesting on a pro rata basis on each of the three anniversaries of the Grant Date |
Settlement: | Your Awards will be settled in Shares, depending on whether the terms and conditions described in the Award Agreement, this Notice of Grant, and the applicable Plan are satisfied |
This Notice of Grant and Award Agreement describe your Awards and the terms and conditions of your Awards. To ensure you fully understand these terms and conditions, you should:
• | Read the Plans carefully to ensure you understand how the Plan works; and |
• | Read this Notice of Grant and the corresponding Award Agreement carefully to ensure you understand the nature of your Awards and what you must do to earn it. |
You may contact Katie Pickle, Global Total Rewards Manager, by telephone ((832) 663-3107) or email ([email protected]) if you have any questions about your Awards or the Award Agreement.
9/22/2016 25432518 V.10
A. SCHULMAN, INC.
AWARD AGREEMENT
A. Schulman, Inc. (the “Company”) believes that its business interests are best served by extending to you an opportunity to earn additional compensation based on the growth of the Company’s business. To this end, the Company adopted, and its stockholders approved, the Amended and Restated 2006 Incentive Plan (the “2006 Plan”) and the 2014 Equity Incentive Plan (the “2014 Plan”) (collectively the “Plans”) as a means through which employees like you may share in the Company’s success. Capitalized terms that are not defined herein shall have the same meanings as in the applicable Plan.
1. | Nature of Award. Effective as of the date specified (the “Grant Date”) in the attached Notice of Grant (the “Grant Notice”), the Company hereby grants to the individual identified in the Grant Notice (the “Participant”) awards as set forth in the Grant Notice (the “Awards”). The Awards are subject to the terms and conditions described in the Grant Notice, this Award Agreement, and the applicable Plan. |
2. | Number of Shares and Units. The number of Full Value Shares and Units in your Awards are set forth in the Grant Notice. For purposes of this Award Agreement, each Full Value Share or Unit represents the right to receive one Share upon settlement of the Awards, as applicable under the Grant Notice. |
3. | Vesting. Your Full Value Shares and Units will be settled or will be forfeited depending on whether the terms and conditions described in this Award Agreement, the applicable Plan and the Grant Notice are satisfied. |
(a) | Normal Vesting Date. Your Units will be subject to vesting in accordance with the schedule identified in the Grant Notice (the “Normal Vesting Date”). If the scheduled Normal Vesting Date is a non-business day, the next following business day will be considered the Normal Vesting Date. |
(b) | Full Value Shares. All of your Full Value Shares vested immediately upon the Grant Date. |
(c) | Units. Your Units will vest on a pro rata basis on each of the first three anniversaries of the Grant Date (one-third each year), provided your employment has not terminated for Cause (as defined by your Employment Agreement dated September 22, 2016) prior to that date. |
(d) | Change in Control. Notwithstanding the foregoing, in the event of a Change in Control, your Units will immediately vest in the event of a Change in Control. To the extent that your Units and any Shares related thereto are subject to the requirements of Section 409A of the Code, any Change in Control must also constitute a “change in control event” as defined in Section 409A of the Code. |
4. | Effect of Termination. You may forfeit certain of your Award of Units if you terminate employment prior to the Normal Vesting Date, although this will depend on the reason for your termination, as provided below: |
(a) | Termination Due to Death, Disability, Retirement, Resignation for Cause, Termination by the Company without Cause, or Termination due to Good Reason. If your employment terminates due to (i) death, (ii) Disability, (iii) Retirement, (iv) Resignation for Cause, (v) termination by the Company without Cause, or (vi) termination by you due to Good Reason (each of (ii)-(vi) as set forth in or based upon circumstances contemplated by your Employment Agreement), your Units will fully vest on the date of your death, Disability, Retirement, Resignation for Cause, termination by the Company without Cause, or termination by you due to Good Reason. |
(b) | Termination for Cause. If your employment is terminated by the Company for Cause, all unvested Units will be forfeited on your termination date. Termination for Cause by the Company is the only event of forfeiture under this Agreement and the Employment Agreement. |
5. | Settlement. If all applicable terms and conditions have been met, your Awards will be settled according to the terms in the Grant Notice as soon as administratively practicable, but no later than 60 days after the Normal Vesting Date except as otherwise required to comply with Section 409A of the Code. |
6. | Other Terms and Conditions. |
(a) | Rights Prior to Vesting for Units. |
(i) | Voting Rights. You will have no voting rights with respect to the Shares underlying your Units prior to vesting. |
(ii) | Dividend Rights. You shall be entitled to receive any cash dividends that are declared and paid with respect to the Shares underlying your Units, subject to the terms and conditions of the 2006 Plan and this Award Agreement. Such dividends shall be subject to the same terms and conditions as the related Units and shall vest and be settled in cash if, when and only to the extent the related Units vest and are settled. In the event a Unit is forfeited under this Agreement, the related dividend equivalent right will also be forfeited. |
(b) | Beneficiary Designation. You may name a beneficiary(ies) to receive any portion of your Awards and any other right under the Plans that is unsettled at your death. To do so, you must complete a beneficiary designation form by contacting Katie Pickle, Global Total Rewards Manager, by telephone ((832) 663-3107) or email ([email protected]). If you previously completed a valid beneficiary designation form, such form will apply to the Awards until it is changed or revoked. If you die without correctly completing a beneficiary designation form, or if your designated beneficiary does not survive you, your beneficiary will be your surviving spouse or, if you do not have a surviving spouse, your estate. |
(c) | Tax Withholding. The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the Awards. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to you (e.g. from your salary), (ii) withheld from the value of any Awards being settled or any Shares transferred in connection with payment of the Awards, (iii) withheld from the vested portion of any Awards (including Shares transferable thereunder), whether or not being paid at the time the taxable event arises, or (iv) collected directly from you. |
Subject to the approval of the Committee, you may elect to satisfy the withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Shares would otherwise be distributable at the time of the withholding and if such Shares are not otherwise distributable at the time of the withholding, provided that you have a vested right to distribution of such Shares at such time. All
such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.
(d) | Transferring Your Awards. Normally, your Awards may not be transferred to another person. However, as described above, you may complete a beneficiary designation form to name the person to receive any portion of your Awards that are settled after you die. |
(e) | Governing Law. This Award Agreement will be construed in accordance with and governed by the laws (other than laws governing conflicts of laws) of the State of Ohio, except to the extent that the Delaware General Corporation Law is mandatorily applicable. |
(f) | Other Agreements. Your Awards are subject to the terms of any other written agreements between you and the Company or a Related Entity or Affiliate to the extent that those other agreements do not directly conflict with the terms of the Plans or this Award Agreement. |
(g) | Adjustments to Your Awards. Subject to the terms of the Plans, your Awards will be adjusted, if appropriate, to reflect any change to the Company’s capital structure (e.g., the number of your Shares will be adjusted to reflect a stock split, a stock dividend, recapitalization, including an extraordinary dividend, merger, consolidation, combination, spin-off, distribution of assets to stockholders, exchange of Shares or other similar corporate change affecting Shares). |
(h) | Other Rules. Your Awards are subject to additional rules as described in the applicable Plan. You should read the Plans carefully to ensure you fully understand all the terms and conditions of your Awards. |
EXHIBIT 10.3
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (this “Agreement”) between _________________ (the “Employee”) and A. Schulman, Inc., a Delaware corporation (the “Corporation”), is effective as of September 22, 2016 (“Effective Date”).
WHEREAS, the Employee currently is employed by the Corporation; and
WHEREAS, in order to induce the Employee to remain in the employ of the Corporation, the Corporation desires to provide the Employee with certain severance benefits in the event his employment with the Corporation terminates in connection with a Change in Control under the circumstances described herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements hereinafter set forth, the Corporation and the Employee agree as follows:
Section 1. Definitions
When used in this Agreement, the following terms will have the meanings given to them in this section unless another meaning is expressly provided elsewhere in this Agreement. When applying these definitions, the form of any term or word will include any of its other forms.
1.1 “Affiliate” shall mean any entity with whom the Corporation would be considered a single employer under Sections 414(b) and 414(c) of the Code.
1.2 “Board” shall mean the Corporation’s Board of Directors.
1.3 “Cause” shall mean:
(a) any act of fraud, embezzlement, misappropriation or conversion by the Employee of the assets or business opportunities of the Corporation and its Affiliates;
(b) the Employee’s conviction of (or plea of guilty or nolo contendere to) a felony or a misdemeanor that originally was charged as a felony but was reduced to a misdemeanor as part of a plea bargain;
(c) intentional and repeated material violations by the Employee of the written policies or procedures of the Corporation or, to the extent applicable to the Employee, any of its Affiliates, or the intentional and material breach of any contract with, or violation of any legal obligation owed to, the Corporation or any of its Affiliates, provided that the Employee fails to cure, to the best of the Employee’s ability and to the extent that the breach is amenable to cure, such breach within thirty (30) days after delivery to the Employee of a notice from the Board specifying such breach; or
(d) the Employee’s willful engagement in gross misconduct or intentional misrepresentation that is materially and demonstrably injurious to the Corporation or any of its Affiliates, provided that such breach is not cured to the best of the Employee’s ability and to the extent that the breach is amenable to cure within thirty (30) days after delivery to the Employee of a notice from the Board specifying such breach.
For purposes of this definition, no act or failure to act, on the Employee’s part shall be deemed “willful” unless done or omitted to be done, by Employee, not in good faith and without a reasonable belief that Employee’s act or failure to act was in the best interest of the Corporation or any Affiliate. In the event of a dispute concerning this definition of Cause, no claim by the Corporation or an Affiliate that Cause exists shall be given effect unless the Corporation establishes by clear and convincing evidence that Cause exists.
1.4 “Change in Control” shall mean the occurrence of any of the following:
(a) the acquisition by any person (as defined under Section 409A of the Code), or more than one person acting as a group (as defined under Section 409A of the Code), of stock of the Corporation that, together with the stock of the Corporation held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Corporation;
(b) the acquisition by any person, or more than one person acting as a group, within any twelve (12) month period, of stock of the Corporation possessing thirty percent (30%) or more of the total voting power of the stock of the Corporation;
(c) a majority of the members of the Board are replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or
(d) the acquisition by any person, or more than one person acting as a group, within any twelve (12) month period, of assets from the Corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Corporation immediately prior to such acquisition or acquisitions.
This definition of Change in Control shall be interpreted in a manner that is consistent with the definition of a “change in control event” under Section 409A of the Code and the Treasury Regulations promulgated thereunder.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Corporation immediately following such transaction or series of transactions.
Further, notwithstanding the foregoing, any event or transaction which would otherwise constitute a Change in Control (a “Transaction”) shall not constitute a Change in Control for purposes of this Agreement if, in connection with the Transaction, the Employee participates as an equity investor in the acquiring entity or any of its affiliates (the “Acquiror”). For purposes of the preceding sentence, the Employee shall not be deemed to have participated as an equity investor in the Acquiror by virtue of: (i) obtaining beneficial ownership of any equity interest in the Acquiror as a result of the grant to the Employee of an incentive compensation award under one or more incentive plans of the Acquiror (including, but not limited to, the conversion in connection with the Transaction of incentive compensation awards of the Corporation into incentive compensation awards of the Acquiror), on terms and conditions substantially equivalent to those applicable to other employees of the Corporation and its Affiliates immediately prior to the Transaction, after taking into account normal differences attributable to job responsibilities, title and similar matters; (ii) obtaining beneficial ownership of any equity interest in the Acquiror on terms and conditions substantially equivalent to those obtained in the Transaction by all other stockholders of the Corporation; or (iii) passive ownership of less than three percent (3%) of the stock of the Acquiror.
1.5 “Change in Control Protection Period” shall mean the period from the occurrence of a Change in Control and ending on the second anniversary thereof, even if such period extends beyond the Expiration Date (as defined in Section 2).
1.6 “Code” shall mean the Internal Revenue Code of 1986, as amended.
1.7 “Good Reason” shall mean the occurrence of any of the following without the Employee’s express prior written consent:
(a) a diminution in the Employee’s base compensation or incentive compensation opportunity;
(b) the failure by the Corporation, to pay to the Employee any portion of the Employee's current compensation, or to pay to the Employee any portion of an installment of deferred compensation under any deferred compensation program of the Employer, within seven (7) days of the date such compensation is due;
(c) the failure by the Corporation to continue in effect any compensation plan in which the Employee participates immediately prior to the Change in Control which is material to the Employee's total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Corporation to continue the Employee's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Employee's participation relative to other participants, as existed at the time of the Change in Control;
(d) the failure by the Corporation to continue to provide the Employee with benefits substantially similar to those enjoyed by the Employee under any of the Corporation's pension, life insurance, medical, health and accident, or disability plans in which the Employee was participating at the time of the Change in Control, the taking of any action by the Corporation which would directly or indirectly materially reduce any of such benefits or deprive the Employee of any material fringe benefit enjoyed by the Employee at the time of the Change in Control, or the failure by the Corporation to provide the Employee with the number of paid vacation days to which the Employee is entitled on the basis of years of service with the Corporation in accordance with the Employer's normal vacation policy in effect at the time of the Change in Control; or
(e) a diminution in the Employee’s title, authority, duties, responsibilities or reporting relationships, including the requirement that the Employee report to a corporate officer or employee instead of to the Board;
(f) a diminution in the authority, duties, or responsibilities of the supervisor to whom the Employee is required to report;
(g) a diminution in the budget over which the Employee retains authority;
(h) a reassignment of the Employee to an office location twenty-five (25) miles or more from the office location of the Employee prior to a Change in Control, except for required travel to an extent substantially consistent with the Employee’s business travel obligations prior to a Change in Control;
(i) the failure by the Corporation, in the event the Employee consents to a relocation at the request of the Corporation or its successor, to pay (or reimburse the Employee) for all reasonable moving expenses incurred by the Employee relating to a change of the Employee’s principal residence in connection
with such relocation and to indemnify the Employee against any loss realized on the sale of the Employee’s principal residence in connection with any such change of residence; or
(j) any other action or inaction that constitutes a material breach of the terms of this Agreement.
1.8 “Notice of Termination” shall mean a written notice that describes in reasonable detail the facts and circumstances claimed to provide a basis for Termination.
1.9 “Termination” shall mean a “separation from service” with the Corporation and its Affiliates within the meaning of Treasury Regulation §1.409A-l(h).
Section 2. Term of Agreement
Subject to Sections 1.5, 5.3 and 6.3, the term of this Agreement shall commence on the Effective Date and end on December 31, 2018 (the “Expiration Date”).
Section 3. Effect of Termination
3.1 Termination for Any Reason Prior to or After the Change in Control Protection Period. The Employee’s employment may be Terminated by the Corporation or by the Employee, in each case by delivering a Notice of Termination, for any reason prior to a Change in Control or following the expiration of the Change in Control Protection Period, and the Employee will not be entitled to any payments or benefits under this Agreement.
3.2 Termination During a Change in Control Protection Period.
(a) Termination Without Cause or for Good Reason. The Employee will be entitled to receive the payments and benefits described in Section 4.1 if, during a Change in Control Protection Period:
(i) The Corporation Terminates the Employee without Cause by delivering to the Employee a Notice of Termination; or
(ii) The Employee Terminates for Good Reason by delivering to the Corporation a Notice of Termination for Good Reason, provided that such Notice of Termination is delivered within ninety (90) days of the initial existence of the condition constituting Good Reason and the Corporation does not remedy the condition constituting Good Reason within thirty (30) days of the date of such Notice of Termination. If the Employee fails to provide such written notice to the Corporation within the period described above, then the Employee will be deemed to have consented to such condition and the Corporation shall have no obligation to pay the compensation and benefits described in Section 4.1 with respect to such condition.
(b) Termination for Any Other Reason. If, during a Change in Control Protection Period, the Employee is Terminated or Terminates for any reason other than as described in Section 3.2(a), including a Termination for Cause by the Corporation or due to the Employee’s death or disability (within the meaning of Section 409A of the Code), the Employee will not be entitled to any payments or benefits under this Agreement.
Section 4. Change in Control Severance Payments
4.1 Calculation of Severance Payments. Subject to the terms of this Agreement, if the Employee is Terminated or Terminates for any reason described in Section 3.2(a), the Employee shall be entitled to the following:
(a) Continued payment of the Employee’s compensation and provision of benefits through the date of Termination. Any accrued, but unpaid amounts or benefits shall be paid in a lump sum within thirty (30) days following the Employee’s date of Termination or, if earlier, the date specified in the applicable plan, program or arrangement.
(b) An amount equal to any accrued, but unused vacation days, as determined under the Corporation’s personnel policy, which amount shall be paid in a lump sum within thirty (30) days following the Employee’s date of Termination.
(c) A lump sum cash payment, which shall be paid within thirty (30) days following the Employee’s date of Termination, equal to the sum of: (i) two hundred percent (200%) of the Employee’s base salary for the calendar year immediately preceding the year in which the date of Termination occurs; plus (ii) two hundred percent (200%) of the Employee’s annual target bonus for the fiscal year in which the date of Termination occurs.
(d) For 18 months after the Employee’s date of Termination, the Corporation will maintain in full force and effect, for the Employee’s continued benefit (and that of all family members and other dependents who were enrolled in the programs on the Employee’s date of Termination) all life, medical and dental insurance programs in which the Employee (and members of the Employee’s family or other dependents) were participating or by which such individuals were covered immediately before the Employee’s date of Termination. If the terms of any of such programs do not allow the continued participation described in the preceding sentence, the Corporation will: (i) provide benefits that are substantially similar (including eligibility conditions, conditions on benefits, the value of benefits and the scope of coverage) to those provided by the life, medical and dental insurance programs in which the Employee, members of the Employee’s family and dependents were participating immediately before the Employee’s date of Termination; and (ii) ensure that any eligibility or other conditions on benefits under these programs, including deductibles and co-payments, will be administered by applying the Employee’s experience under any predecessor program in which the Employee (and members of the Employee’s family and dependents) were participating before Termination. With respect to this Section 4.1(d), any benefits or payments relating to medical and dental insurance that are provided after completion of the applicable continuation period permitted under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, and any benefits or payments relating to life insurance shall be subject to the following: (A) the amount of expenses eligible for reimbursement or the benefits or payments provided during any taxable year of the Employee may not affect the expenses eligible for reimbursement or the benefits or payments to be provided to the Employee in any other taxable year; (B) reimbursement of any eligible expense must be made on or before the last day of the Employee’s taxable year following the taxable year in which the expense was incurred; and (C) the right to reimbursement or to such benefits or payments is not subject to liquidation or exchange for another benefit. To the extent that any benefit extended under this Section 4.1(d) would result in taxable compensation for the Employee, the Employee shall be solely responsible for any such taxes.
(e) Reimbursement for all legal fees and expenses incurred by the Employee: (i) in disputing in good faith any issue relating to the Termination of the Employee’s employment during the Change-in-Control Protection Period; (ii) in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement; or (iii) in connection with any good faith dispute regarding the application of
Section 4.2 of this Agreement, including, but not limited to, any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided thereunder. Such payments shall be made within five (5) business days after delivery of the Employee's written requests for payment accompanied with such evidence of fees and expenses incurred as the Corporation reasonably may require.
(f) Any other change in control benefits to which the Employee is entitled under any other plan, program or agreement with the Corporation or any Affiliate. Such benefits shall be provided in accordance with the terms and conditions of the applicable plan, program or agreement.
4.2 Excess Parachute Payment.
(a) Notwithstanding anything to the contrary in this Agreement, if any payments or benefits paid or payable to the Employee pursuant to this Agreement or any other plan, program or arrangement maintained by the Corporation or an Affiliate would constitute a “parachute payment” within the meaning of Section 280G of the Code, then the Employee shall receive the greater of: (i) one dollar ($1.00) less than the amount which would cause the payments and benefits to constitute a “parachute payment”; or (ii) the amount of such payments and benefits, after taking into account all federal, state and local taxes, including the excise tax imposed under Section 4999 of the Code, if such amount would be greater than the amount specified in Section 4.2(a), after taking into account all federal, state and local taxes. Any reduction to any payment made pursuant to Section 4.2(a) shall be made consistent with the requirements of Section 409A of the Code.
(b) All determinations required to be made under this Section 4.2 shall be made by a public accounting firm that is retained by the Corporation to provide tax advice as of the date immediately prior to the Change in Control (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Corporation and the Employee within 15 business days of the receipt of notice from the Corporation or the Employee that there has been a potential “parachute payment” within the meaning of Section 280G of the Code, or such earlier time as requested by the Corporation. Notwithstanding the foregoing, in the event: (i) that the Accounting Firm is precluded from performing such services under applicable auditor independence rules; or (ii) the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Corporation shall appoint another nationally recognized public accounting firm to be the Accounting Firm.
(c) If, pursuant to Section 4.2(a), any payment or benefit payable hereunder is required to be reduced, the Accounting Firm shall provide a written opinion to the Employee that: (i) such reduction is necessary in order for the Employee to avoid having to pay or report any excise tax pursuant to Section 4999 of the Code; and (ii) that the Employee is not required to pay or report any excise tax under Section 4999 of the Code on the Employee’s federal income tax return.
(d) All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by the Corporation. The determination by the Accounting Firm shall be binding upon the Corporation and the Employee.
4.3 Conditions Affecting Payments.
(a) Except as expressly provided in this Agreement, the Employee’s right to receive the payments and benefits described in this Agreement will not decrease the amount of, or otherwise adversely affect, any other benefits payable to the Employee under any plan, agreement or arrangement between the Employee and the Corporation or any Affiliate.
(b) The Employee is not required to mitigate the amount of any payment or benefit described in this Agreement by seeking other employment or otherwise, nor will the amount of any payment or benefit provided for in this Agreement be reduced by any compensation that the Employee earns in any capacity after Termination or by reason of the Employee’s receipt of or right to receive any retirement or other benefits on or after Termination.
(c) The amount of any payment made under this Agreement will be reduced by amounts the Corporation or any Affiliate is required to withhold with respect to any income, wage or employment taxes imposed on the payment.
(d) Notwithstanding anything in this Agreement to the contrary, if the Employee is a “specified employee” (within the meaning of Treasury Regulation §1.409A-l(i) and as determined under the Corporation’s policy for determining specified employees) on the date of Termination and any payment pursuant to Section 4.1(b) or 4.1(c) is subject to Section 409A of the Code, then such payment shall not be paid to the Employee until the first day of the seventh month following the Employee’s date of Termination or, if earlier, the date of the Employee’s death.
Section 5. Employee’s Obligations
5.1 Confidential Information. The Corporation’s and its Affiliates’ methods, plans for doing business, processes, pricing, compounds, customers and supplies are vital and, to the extent not made public by the Corporation or its Affiliates, constitute confidential information subject to their proprietary rights therein. The Employee covenants and agrees that during the term of this Agreement and at all times thereafter, the Employee will not, directly or indirectly, make known, divulge, furnish, make available or use, otherwise than in the regular course of the Employee’s employment or to the extent that disclosure is required pursuant to a compulsory proceeding in which the Employee’s failure to disclosure such confidential information would subject the Employee to criminal or civil sanctions, but only to the extent that Employee provides reasonable prior notice to the Corporation prior to disclosure, any invention, product, process, apparatus or design of the Corporation or its Affiliates, or any knowledge or information in respect thereof (including, but not limited to, business methods and techniques), or any other confidential or so-called “insider” information of the Corporation or its Affiliates. This covenant shall apply without regard to the time or circumstances of any Termination of the Employee’s employment.
5.2 Non-Competition and Non-Solicitation. If within the Change in Control Protection Period, the Employee shall have an involuntary Termination of employment by the Corporation other than for Cause, or shall have a voluntary Termination of employment for Good Reason, then and for a period of one (1) year immediately following the Termination Date, the Employee shall not, directly or indirectly, either as an individual for the Employee’s own account or as an investor, or other participant in, or as an employee agent, or representative of, any other business enterprise: (a) solicit, employ, entice, take away or interfere with, or attempt to solicit, employ, entice, take away or interfere with, the employment of any person who was an employee of the Corporation or any Affiliate during the term of this Agreement; or (b) engage or participate in or finance, aid or be connected with any enterprise which competes with the Corporation or any Affiliate during the term of this Agreement. The geographical limitations of the foregoing shall include any country in which the Corporation or any Affiliate shall be doing business as of the Termination Date.
5.3 Effect of Breach of Obligations. If the Employee breaches any obligation described in this Agreement and such breach occurs before a Change in Control or before the Employee has Terminated, this Agreement will terminate as of the date of the breach, even if the fact of the breach becomes apparent at a later date.
Section 6. Waiver; Amendment; Termination
6.1 Waiver. No provisions of this Agreement may be waived or discharged unless such waiver or discharge is expressly agreed to in writing signed by the Employee and such officer as may be specifically designated by the Corporation. In the event that the Employee continues his or her employment during the Change in Control Protection Period, such continued employment shall not constitute a waiver or diminish or eliminate, in any way whatsoever, any of Employee’s rights or obligations under this Agreement, including the Employee’s right to Terminate for Good Reason under Section 3.2(a). No waiver by either party hereto at any time of any breach by the other party hereto of or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
6.2 Amendment. This Agreement may be amended at any time by written agreement between the Employee and the Corporation.
6.3 Termination. Except as provided in Section 5.3, this Agreement will terminate prior to the Expiration Date upon the earliest of the following to occur:
(a) The Employee’s Termination pursuant to Sections 3.1 or 3.2(b);
(b) The mutual written agreement of the Corporation and the Employee to terminate this Agreement, whether or not it is replaced with a similar agreement; or
(c) The full payment and provision of all payments and benefits due under this Agreement have been fully paid and provided.
6.4 Reimbursement of Legal Fees. If during the term of this Agreement, the Corporation seeks the Employee’s express written consent to a waiver or amendment of this Agreement (as required under Sections 6.1 and 6.2 hereof) or the termination of this Agreement under Section 6.3(b), the Corporation shall reimburse the Employee for all legal fees and expenses incurred in good faith by the Employee in relation to such requested waiver, amendment or termination. Such payments shall be made within five (5) business days after delivery of the Employee's written requests for payment accompanied with such evidence of fees and expenses incurred as the Corporation reasonably may require.
Section 7. Equitable Relief; Dispute Resolution
7.1 Uniqueness of Obligations. The Employee’s obligations described in Section 5 of this Agreement are of a special and unique character which gives them a peculiar value to the Corporation and its Affiliates and the Corporation and its Affiliates cannot be reasonably or adequately compensated in damages in an action at law if the Employee breaches those obligations. The Employee therefore expressly agrees that, in addition to any other rights or remedies that the Corporation or its Affiliates may have, the Corporation or its Affiliates will be entitled to injunctive and other equitable relief in the form of preliminary and permanent injunctions without bond or other security if the Employee actually breaches (or threatens to breach) any obligation under this Agreement.
7.2 Arbitration. Except as provided in Section 7.1, any: (a) disagreement concerning the calculation of any payment due under this Agreement; (b) breach of any term of this Agreement; or (c) other dispute or controversy arising out of or relating to this Agreement, including the basis on which the Employee is Terminated, will be resolved by arbitration in accordance with the rules of the American Arbitration Association. The award of the arbitrator will be final, conclusive and nonappealable and judgment upon the award rendered by the arbitrator may be entered in any court having competent jurisdiction. The arbitrator must be an arbitrator qualified to serve in accordance with the rules of the American Arbitration Association and one who is approved by the Corporation and the Employee. If the Employee and the Corporation fail to agree on an arbitrator, each must designate a person qualified to serve as an arbitrator in accordance with the rules of the American Arbitration Association and these persons will select the arbitrator from among those persons qualified to serve in accordance with the rules of the American Arbitration Association. Any arbitration relating to this Agreement will be held in Akron, Ohio. Each party shall bear its own costs of arbitration, except that that the parties will equally share in the cost of the arbitrator.
Section 8. Miscellaneous
8.1 Nonassignment. The right of the Employee or any other person to receive any payment or benefit under this Agreement may not be assigned, transferred, pledged or encumbered except by will or by applicable laws of descent and distribution. Any attempt to assign, transfer, pledge or encumber any payment or benefit that is or may be receivable under this Agreement will be null and void and of no legal effect.
8.2 Successors to the Employee. Subject to Section 6.3, this Agreement inures to the benefit of and may be enforced by the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
8.3 Notices. All notices and other communications provided for in this Agreement must be in writing and will be deemed to have been given when deposited with a reputable delivery service or in United States registered mail, return receipt requested, postage prepaid. For purposes of this Agreement:
(a) all notices must be directed to the addresses shown on the last page of this Agreement;
(b) notices and other communications to the Corporation will not be deemed to have been given unless they are directed to the attention of the Corporation’s Director of Human Resources and copies are sent to the Corporation’s Secretary; and
(c) neither party will be required to use any address other than that shown on the last page of this Agreement unless notified of a change in the other party’s address. Any change in either party’s address must be given in writing to the other party and will be effective only upon receipt.
8.4 Complete Agreement. This Agreement supersedes any and all prior agreement between the parties with respect to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement have been made by either party that are not set forth expressly in this Agreement.
8.5 Applicable Law. The validity, interpretation, construction and performance of this Agreement will be governed by the laws (but not the law of conflicts of laws) of the State of Ohio.
8.6 Validity. The invalidity or unenforceability of any provisions of this Agreement will not affect the validity or enforceability of any other provisions of this Agreement, which will remain in full force and effect.
8.7 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
8.8 Section 409A of the Code. This Agreement is intended to comply with or be exempt from Section 409A of the Code and shall be interpreted, construed and operated consistent with this intent.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK/SIGNATURES OF FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date and year first above written.
A. SCHULMAN, INC.
By: ____________________________________
Title: ____________________________________
Address: 3637 Ridgewood Road
Fairlawn, Ohio 44333
[NAME OF EXECUTIVE]
__________________________________________
Address:
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