SCHULMAN A INC (Form: 10-Q, Received: 01/09/2009 16:23:16)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2008


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File No. 0-7459

A. SCHULMAN, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		34-0514850

(State or Other Jurisdiction		(I.R.S. Employer Identification No.)
of Incorporation or Organization)

3550 West Market Street, Akron, Ohio		44333

(Address of Principal Executive Offices)		(ZIP Code)

Registrant’s telephone number, including area code: (330) 666-3751

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Number of shares of common stock, $1.00 par value, outstanding as of December 31, 2008 — 26,015,163

PART I — FINANCIAL INFORMATION

Item 1 — Consolidated Financial Statements

A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF INCOME


	Three months ended November 30,
	2008			2007
	Unaudited
	(In thousands except per share data)

Net sales	$	388,405		$	496,575
Cost of sales		347,352			440,985
Selling, general and administrative expenses		34,914			39,308
Minority interest		158			245
Interest expense		1,250			1,611
Interest income		(849	)		(482	)
Foreign currency transaction (gains) losses		(7,306	)		133
Other (income) expense		(222	)		332
Restructuring expense		601			6

		375,898			482,138


Income before taxes		12,507			14,437
Provision for U.S. and foreign income taxes		4,335			4,412

Net income		8,172			10,025

Less: Preferred stock dividends		(13	)		(13	)


Net income applicable to common stock	$	8,159		$	10,012


Weighted-average number of shares outstanding:
Basic		25,808			27,521
Diluted		26,026			27,770

Earnings per share of common stock:
Basic	$	0.32		$	0.36

Diluted	$	0.31		$	0.36

The accompanying notes are an integral part of the consolidated financial statements.

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A. SCHULMAN, INC.

CONSOLIDATED BALANCE SHEETS


	November 30,			August 31,
	2008			2008
	Unaudited
	(In thousands except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	115,763		$	97,728
Accounts receivable, less allowance for doubtful accounts of $7,518 at November 30, 2008 and $8,316 at August 31, 2008		244,365			320,926
Inventories, average cost or market, whichever is lower		182,214			224,964
Prepaid expenses and other current assets		20,494			18,499

Total current assets		562,836			662,117


Other assets:
Cash surrender value of life insurance		2,662			2,665
Deferred charges and other assets		19,932			23,017
Goodwill		9,160			10,679
Intangible assets		153			195

		31,907			36,556


Property, plant and equipment, at cost:
Land and improvements		15,460			17,026
Buildings and leasehold improvements		140,463			156,465
Machinery and equipment		311,562			346,999
Furniture and fixtures		36,558			41,272
Construction in progress		17,804			9,726

		521,847			571,488

Accumulated depreciation and investment grants of $935 at November 30, 2008 and $1,123 at August 31, 2008		342,407			379,740

Net property, plant and equipment		179,440			191,748

	$	774,183		$	890,421


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable	$	9,661		$	9,540
Accounts payable		138,632			174,226
U.S. and foreign income taxes payable		2,487			3,212
Accrued payrolls, taxes and related benefits		31,398			37,686
Other accrued liabilities		32,420			34,566

Total current liabilities		214,598			259,230


Long-term debt		99,221			104,298
Other long-term liabilities		77,358			88,235
Deferred income taxes		4,768			5,544
Minority interest		5,691			5,533
Commitments and contingencies		—			—
Stockholders’ equity:
Preferred stock, 5% cumulative, $100 par value, authorized, issued and outstanding — 10,564 shares at November 30, 2008 and August 31, 2008		1,057			1,057
Special stock, 1,000,000 shares authorized, none outstanding		—			—
Common stock $1 par value, authorized — 75,000,000 shares, issued — 42,234,194 shares at November 30, 2008 and 42,231,341 shares at August 31, 2008		42,234			42,231
Other capital		112,670			112,105
Accumulated other comprehensive income		21,297			79,903
Retained earnings		517,672			513,451
Treasury stock, at cost, 16,174,011 shares at November 30, 2008 and 16,095,491 shares at August 31, 2008		(322,383	)		(321,166	)

Common stockholders’ equity		371,490			426,524

Total stockholders’ equity		372,547			427,581

	$	774,183		$	890,421

The accompanying notes are an integral part of the consolidated financial statements.

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A. SCHULMAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three months ended November 30,
	2008			2007
	Unaudited
	(In thousands)
Provided from (used in) operating activities:
Net income	$	8,172		$	10,025
Adjustments to reconcile net income to net cash provided from (used in) operating activities:
Depreciation and amortization		5,871			7,079
Deferred tax provision		683			85
Pension and other deferred compensation		(1,252	)		2,710
Postretirement benefit obligation		(48	)		304
Net gains on asset sales		(152	)		(20	)
Minority interest in net income of subsidiaries		158			245
Restructuring charges		601			6
Changes in assets and liabilities:
Accounts receivable		34,926			(13,367	)
Inventories		17,224			(14,577	)
Accounts payable		(15,658	)		12,445
Restructuring payments		(452	)		(71	)
Income taxes		(2,711	)		(873	)
Accrued payrolls and other accrued liabilities		(677	)		3,377
Changes in other assets and other long-term liabilities		(2,416	)		1,397

Net cash provided from operating activities		44,269			8,765


Provided from (used in) investing activities:
Expenditures for property, plant and equipment		(11,294	)		(8,157	)
Proceeds from the sale of assets		213			158

Net cash used in investing activities		(11,081	)		(7,999	)


Provided from (used in) financing activities:
Cash dividends paid		(3,951	)		(4,063	)
Increase (decrease) in notes payable		12			(1,229	)
Borrowings on revolving credit facilities		15,000			34,628
Repayments on revolving credit facilities		(10,000	)		(32,073	)
Cash distributions to minority shareholders		—			(300	)
Common stock issued		65			861
Purchase of treasury stock		(1,217	)		—

Net cash used in financing activities		(91	)		(2,176	)

Effect of exchange rate changes on cash		(15,062	)		141

Net increase (decrease) in cash and cash equivalents		18,035			(1,269	)

Cash and cash equivalents at beginning of period		97,728			43,045

Cash and cash equivalents at end of period	$	115,763		$	41,776

The accompanying notes are an integral part of the consolidated financial statements.

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A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)		GENERAL

		The interim financial statements included reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of the interim period presented. All such adjustments are of a normal recurring nature.

		The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

		The results of operations for the three months ended November 30, 2008 are not necessarily indicative of the results expected for the year ending August 31, 2009.

		To identify reportable segments, A. Schulman, Inc. (the “Company”) considers its operating structure and the types of information subject to regular review by its President and Chief Executive Officer (“CEO”), who is the Chief Operating Decision Maker (“CODM”). Effective September 1, 2008, the Company named a general manager of Asia and a general manager of Europe. This change separated the responsibilities that were previously combined under the general manager of Europe, which then included Asia. Based on the Company’s new management structure and an evaluation of how the CODM reviews performance and allocates resources, the Company redefined its European segment to separate the Asian operations from the European operations beginning in the first quarter of fiscal 2009. The Company historically identified and presented the European segment to include Asia, based on how the CODM regularly reviewed information and allocated resources. Prior periods have been restated to reflect the current presentation. The Company’s segments are Europe, North America Polybatch (“NAPB”) (which comprises the masterbatch line of business), North America Engineered Plastics (“NAEP”), North America Distribution Services (“NADS”), Asia and A. Schulman Invision, Inc. (“Invision”). The segments are discussed further in footnote 10.

		The accounting policies for the periods presented are the same as described in Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2008, except for new accounting pronouncements which includes the adoption of Financial Accounting Standards Board (“FASB”) Statement No. 157, (“SFAS 157”), Fair Value Measurement and FASB Statement No. 159, (“SFAS 159”), The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115. The adoption of SFAS 157 and SFAS 159 is discussed in footnote 7.

		Certain items previously reported in specific financial statement captions have been reclassified to conform to the fiscal 2009 presentation.

(2)		CASH AND CASH EQUIVALENTS

		All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. Such investments amounted to $74.3 million at November 30, 2008 and $44.0 million at August 31, 2008. Investments with maturities between three and twelve months are considered to be short-term investments. The Company’s cash equivalents and investments are diversified with numerous financial institutions which management believes to have acceptable credit ratings. These investments are primarily money-market funds. Management continues to monitor the placement of its cash given the current credit market. The recorded amount of these investments approximates fair value.

- 5 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3)		PENSIONS AND OTHER POSTRETIREMENT BENEFIT PLANS

		The components of the Company’s net periodic benefit cost (income) for defined benefit pension plans and other postretirement benefits are shown below.


	Three months ended November 30,
	2008			2007
	(In thousands)
Net periodic pension cost (income) recognized included the following components:
Service cost	$	441		$	603
Interest cost		1,140			1,153
Expected return on plan assets		(254	)		(321	)
Net actuarial loss and net amortization of prior service cost and transition obligation		88			198

Net periodic benefit cost	$	1,415		$	1,633


Postretirement benefit cost (income) included the following components:
Service cost	$	14		$	167
Interest cost		222			311
Net amortization of prior service cost (credit) and unrecognized loss		(212	)		(121	)

Net periodic benefit cost	$	24		$	357

(4)		CONTINGENCIES

		The Company is engaged in various legal proceedings arising in the ordinary course of business. The ultimate outcome of these proceedings is not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

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A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5)		STATEMENTS OF SHAREHOLDERS’ EQUITY

		A summary of the stockholders’ equity section for the three months ended November 30, 2008 and 2007 is as follows:

(In thousands except per share data)
Unaudited


									Accumulated Other									Total
	Preferred		Common			Other			Comprehensive			Retained			Treasury			Stockholders’
	Stock		Stock			Capital			Income (Loss)			Earnings			Stock			Equity
Balance at September 1, 2008	$	1,057	$	42,231		$	112,105		$	79,903		$	513,451		$	(321,166	)	$	427,581
Comprehensive income (loss):
Net income		—		—			—			—			8,172			—
Foreign currency translation loss		—		—			—			(58,481	)		—			—
Amortization of unrecognized transition obligations, actuarial losses and prior service costs (credits), net		—		—			—			(125	)		—			—
Total comprehensive income (loss)																			(50,434	)
Cash dividends paid or accrued:
Preferred stock, $1.25 per share		—		—			—			—			(13	)		—			(13	)
Common stock, $0.15 per share		—		—			—			—			(3,938	)		—			(3,938	)
Stock options exercised		—		7			114			—			—			—			121
Redemption of common stock to cover tax withholdings		—		(4	)		(52	)		—			—			—			(56	)
Purchase of treasury stock		—		—			—			—			—			(1,217	)		(1,217	)
Non-cash stock based compensation		—		—			(23	)		—			—			—			(23	)
Amortization of restricted stock		—		—			526			—			—			—			526

Balance at November 30, 2008	$	1,057	$	42,234		$	112,670		$	21,297		$	517,672		$	(322,383	)	$	372,547


Balance at September 1, 2007	$	1,057	$	41,785		$	103,828		$	50,092		$	509,415		$	(279,164	)	$	427,013
Impact due to adoption of FIN 48		—		—			—			—			2,078			—			2,078

Adjusted balance at September 1, 2007	$	1,057	$	41,785		$	103,828		$	50,092		$	511,493		$	(279,164	)	$	429,091
Comprehensive income:
Net income		—		—			—			—			10,025			—
Foreign currency translation gain		—		—			—			19,751			—			—
Amortization of unrecognized transition obligations, actuarial losses and prior service costs (credits), net		—		—			—			77			—			—
Total comprehensive income																			29,853
Cash dividends paid or accrued:
Preferred stock, $1.25 per share		—		—			—			—			(13	)		—			(13	)
Common stock, $0.145 per share		—		—			—			—			(4,050	)		—			(4,050	)
Stock options exercised		—		44			817			—			—			—			861
Restricted stock issued, net of forfeitures		—		240			(240	)		—			—			—			—
Non-cash stock based compensation		—		—			259			—			—			—			259
Amortization of restricted stock		—		—			766			—			—			—			766

Balance at November 30, 2007	$	1,057	$	42,069		$	105,430		$	69,920		$	517,455		$	(279,164	)	$	456,767

- 7 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6)		ACCUMULATED OTHER COMPREHENSIVE INCOME

		The components of Accumulated Other Comprehensive Income are as follows:


	Foreign Currency			Unrecognized Losses and			Total Accumulated
	Translation			Prior Service Costs (credits),			Other Comprehensive
	Gain (Loss)			Net			Income
	(In thousands)
Balance as of August 31, 2008	$	76,112		$	3,791		$	79,903
Current period change		(58,481	)		(125	)		(58,606	)

Balance as of November 30, 2008	$	17,631		$	3,666		$	21,297

		Foreign currency translation gains do not have a tax effect, as such gains are considered permanently reinvested. Accumulated other comprehensive income adjustments related to pensions and other postretirement benefit plans are recorded net of tax using the applicable effective tax rate.

(7)		FAIR VALUE MEASUREMENT

		On September 15, 2006 the FASB issued SFAS 157 which addresses standardizing the measurement of fair value for companies who are required to use a fair value measure for recognition or disclosure purposes. The FASB defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measure date.” The Company’s adoption of the required portions of SFAS 157 as of September 1, 2008 did not have a material impact on the Company’s financial position, results of operations and cash flows. In February 2008, the FASB issued Staff Position (FSP) No. FAS 157-2, Effective Date of FASB Statement No.157 , which delayed the required adoption of portions of SFAS 157 related to nonfinancial assets and nonfinancial liabilities, except for items recognized or disclosed at fair value on a recurring basis. Accordingly, the Company will adopt the provisions of SFAS 157 related to nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value on a nonrecurring basis in fiscal 2010. The Company is currently evaluating the impact, if any, of the adoption of this portion of SFAS 157 on its financial position, results of operations and cash flows.

		SFAS 157 establishes a fair value hierarchy to prioritize the inputs used in valuation techniques into three levels as follows:

	•		Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;

	•		Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and

	•		Level 3: Unobservable inputs which reflect an entity’s own assumptions.

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A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information about the Company’s assets and liabilities recorded at fair value as of November 30, 2008 in the Company’s consolidated balance sheet:


				Quoted Prices in					Significant
				Active Markets for		Significant Other			Unobservable
	Total Measured at			Identical Assets		Observable Inputs			Inputs
	Fair Value			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Assets:
Cash equivalents	$	74,264		$	74,264	$	—		$	—
Derivative assets		366			—		366			—

Total assets at fair value	$	74,630		$	74,264	$	366		$	—


Liabilities:
Derivative liabilities	$	(84	)	$	—	$	(84	)	$	—

Total liabilities at fair value	$	(84	)	$	—	$	(84	)	$	—

		The fair value of cash equivalents, by their nature, is determined utilizing Level 1 inputs. The Company measures the fair value of the forward foreign exchange contracts using Level 2 inputs through observable market transactions in active markets provided by banks. The forward foreign exchange contracts are entered into with creditworthy multinational banks.

		The following information presents the supplemental fair value information about long-term fixed-rate debt at November 30, 2008. The Company’s long-term fixed-rate debt was issued in euros.


	November 30, 2008				August 31, 2008
	(In millions of $)		(In millions of € )		(In millions of $)		(In millions of € )
Carrying value of long-term fixed-rate debt	$	63.9	€	50.3	$	73.8	€	50.3
Fair value of long-term fixed-rate debt	$	48.8	€	38.4	$	63.7	€	43.4

		The fair value was calculated using discounted future cash flows. The decline in fair value is primarily related to the decline in quoted market interest rates.

		In February 2007, the FASB issued SFAS 159 which permits companies to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently measured at fair value. Unrealized gains and losses on items for which the fair value option has been elected would be reported in earnings at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred. The Company did not elect the fair value option for any of its existing financial instruments other than those already measured at fair value. Therefore, the Company’s adoption of SFAS 159 as of September 1, 2008 did not have an impact on the Company’s financial position, results of operations and cash flows.

(8)		INCENTIVE STOCK PLANS

		Effective in December 2002, the Company adopted the 2002 Equity Incentive Plan which provided for the grant of incentive stock options, nonqualified stock options, restricted stock awards and director deferred units for employees and non-employee directors. The option price of incentive stock options is the fair market value of the common shares on the date of the grant. In the case of nonqualified options, the Company grants options at 100% of the fair market value of the common shares on the date of the grant. All options become exercisable at the rate of 33 1/3% per year, commencing on the first anniversary date of the grant. Each option expires ten years from the date of the grant. Restricted stock awards under the 2002 Equity Incentive Plan vest ratably over four years following the date of grant.

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A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		On December 7, 2006, the Company adopted the 2006 Incentive Plan which provides for the grant of incentive stock options, nonqualified stock options, whole shares, restricted stock awards, restricted stock units, stock appreciation rights, performance shares, performance units, cash-based awards, dividend equivalents and performance-based awards. Upon adoption of the 2006 Incentive Plan, all remaining shares eligible for award under the 2002 Equity Incentive Plan were added to the 2006 Incentive Plan and no further awards could be made from the 2002 Equity Incentive Plan. The time-based nonqualified stock options granted under the 2006 Incentive Plan become exercisable at the rate of 33 1/3% per year, commencing on the first anniversary date of the grant. It has been the Company’s practice to issue new common shares upon stock option exercise. On November 30, 2008, there were approximately 2.7 million shares available for grant pursuant to the Company’s 2006 Incentive Plan.

		A summary of stock options is as follows:


	Three months ended November 30,
	2008					2007
	Outstanding					Outstanding
	Shares Under			Weighted-Average		Shares Under			Weighted-Average
	Option			Exercise Price		Option			Exercise Price
Outstanding at beginning of period		567,247		$	19.12		813,710		$	19.10
Granted		—			—		—			—
Exercised		(6,567	)		18.39		(44,333	)		19.43
Forfeited and expired		(2,000	)		18.41		(667	)		19.20

Outstanding at end of period		558,680			19.13		768,710			19.08

Exercisable at the end of the period		538,680			18.92		603,146			18.69

		The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of stock options exercised during the three months ended November 30, 2008 was insignificant and was approximately $0.1 million for the same period prior year. The intrinsic value for stock options exercisable at November 30, 2008 was $0.3 million with a remaining term for options exercisable of approximately 4.3 years. For stock options outstanding at November 30, 2008, exercise prices range from $11.62 to $24.69. The weighted average remaining contractual life for options outstanding at November 30, 2008 was approximately 4.4 years. Stock options vested and expected to vest at November 30, 2008 were approximately 558,562 with a remaining contractual term of approximately 4.4 years and a weighted-average exercise price of $19.13. The aggregate intrinsic value of stock options vested and expected to vest was $0.3 million at November 30, 2008. There were no grants of stock options during the first quarter of fiscal 2009 or fiscal 2008.

		Restricted stock awards under the 2002 Equity Incentive Plan vest over four years following the date of grant. Restricted stock awards under the 2006 Incentive Plan can vest over various periods. The restricted stock grants outstanding under the 2006 Incentive Plan have service vesting periods of three years following the date of grant. The following table summarizes the outstanding time-based restricted stock awards and weighted-average fair market value:


				Weighted-Average
	Outstanding Restricted			Fair Market Value
	Stock Awards			(per share)

Outstanding at August 31, 2008		232,757		$	20.81
Granted		—			—
Vested		(34,667	)		20.20
Forfeited		(417	)		21.09

Outstanding at November 30, 2008		197,673			20.91

No restricted stock was granted during the first quarter of fiscal 2009 or fiscal 2008.

- 10 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company also grants awards with market performance vesting criteria under the 2006 Incentive Plan. In the table below, the Company summarizes all performance-based awards which include performance-based restricted stock awards and Performance Shares.


				Weighted-Average
	Outstanding			Fair Market Value
	Performance-Based Awards			(per share)

Outstanding at August 31, 2008		286,256		$	15.50
Granted		—			—
Vested		—			—
Forfeited		(625	)		16.10

Outstanding at November 30, 2008		285,631			15.50

		There were no grants of performance-based awards during the first quarter of fiscal 2009 or fiscal 2008. Performance share awards (“Performance Shares”) are awards for which the vesting will occur based on both service and market performance criteria and do not have voting rights. Included in the outstanding performance-based awards at November 30, 2008 are 131,608 Performance Shares which earn dividends throughout the vesting period and approximately 65,803 Performance Shares which do not earn dividends. Also included in the balance are 88,220 awards of performance-based restricted stock awards from the fiscal 2007 grant with vesting based on both service and market performance criteria. The performance-based restricted stock awards have voting rights and earn dividends. At the vesting date of these performance-based restricted stock awards, approximately 44,110 additional shares could be issued and released if certain market conditions are met which are not included in the table. The additional shares do not earn dividends and do not have voting rights.

		The valuation for the awards included in the performance-based awards table above was based upon a Monte Carlo simulation, which is a binomial model that represents the characteristics of these grants. Vesting of the ultimate number of shares underlying performance awards, if any, will be dependent upon the Company’s total shareholder return in relation to the total shareholder return of a select group of peer companies over a three-year period. The probability of meeting the market criteria was considered when calculating the estimated fair market value on the date of grant using a Monte Carlo simulation. These awards were accounted for as awards with market conditions in accordance with FASB Statement No. 123(R), Share-Based Payment.

		Total unrecognized compensation cost, including a provision for forfeitures, related to nonvested share-based compensation arrangements at November 30, 2008 was approximately $4.7 million. This cost is expected to be recognized over a weighted-average period of approximately 1.6 years.

		The Company had approximately 209,000 restricted stock units and approximately 244,000 restricted stock units outstanding with various vesting periods and criteria at November 30, 2008 and 2007, respectively. Each restricted stock unit is equivalent to one share of the Company’s common stock on the vesting date. The Company did not grant any restricted stock units during the first quarter of fiscal 2009 or fiscal 2008. Certain restricted stock units earn dividends during the vesting period. Restricted stock units are settled only in cash at the vesting date and therefore are treated as a liability award. The Company records a liability for these restricted stock units in an amount equal to the total of (a) the mark-to-market adjustment of the units vested to date, and (b) accrued dividends on the units. As a result of these mark-to-market adjustments, these restricted stock units introduce volatility into the Company’s consolidated income statements. The Company has recorded approximately $1.4 million of income and $0.4 million of expense related to restricted stock units for the three months ended November 30, 2008 and 2007, respectively. The first quarter of fiscal 2009 experienced a significant decline in the expense due to the decline in the Company’s common stock price compared to the previous quarter’s price.

- 11 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the impact to the Company’s consolidated statements of income from stock-based compensation:


	Three months ended November 30,
	2008			2007
	(In thousands)
Stock Options	$	(23	)	$	259
Restricted Stock Awards and Performance-Based Awards		526			766
Restricted Stock Units		(1,393	)		383

Total stock-based compensation	$	(890	)	$	1,408

(9)		EARNINGS PER SHARE

		Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if common stock equivalents were exercised, and the impact of restricted stock and performance-based awards expected to vest, which would then share in the earnings of the Company.

		The difference between basic and diluted weighted-average common shares results from the assumed exercise of outstanding stock options and grants of restricted stock, calculated using the treasury stock method. The following presents the number of incremental weighted-average shares used in computing diluted per share amounts:


	Three months ended November 30,
	2008		2007
	(In thousands)
Weighted-average shares outstanding:
Basic		25,808		27,521
Incremental shares from stock options		14		73
Incremental shares from restricted stock		204		176

Diluted		26,026		27,770

		For the three months ended November 30, 2008 and 2007, there were approximately 0.5 million and 0.1 million, respectively, equivalent shares related to stock options that were excluded from diluted weighted-average shares outstanding because inclusion would have been anti-dilutive.

(10)		SEGMENT INFORMATION

		To identify reportable segments, the Company considers its operating structure and the types of information subject to regular review by its President and CEO, who is the CODM. Globally, the Company operates primarily in three lines of business: engineered plastics, masterbatch and distribution services. In North America, there is a general manager of each of these lines of business each of who report directly to the Company’s CEO. Also, in North America the Company operates in a specialty sheet line of business called “Invision” which has its own general manager who also reports to the CEO. Effective September 1, 2008, the Company named a general manager of Asia and a general manager of Europe. This change separated the responsibilities that were previously combined under the general manager of Europe, which then included Asia. Based on the Company’s new management structure and an evaluation of how the CODM reviews performance and allocates resources, the Company redefined its European segment to separate the Asian operations from the European operations beginning in the first quarter of fiscal 2009. The Company historically identified and presented the European segment to include Asia, based on how the CODM regularly reviewed information and allocated resources. Prior periods have been restated to reflect the current presentation. The Company’s Europe and Asia segments have managers of each line of business, who report to general managers of the respective segments who then report to the CEO. Currently, the Company’s CEO does not directly manage the business line level when reviewing performance and allocating resources for the Europe and Asia segments. The Company’s segments are Europe, NAPB (which comprises the masterbatch line of business), NAEP, NADS, Asia and Invision.

- 12 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		Certain portions of the Company’s North American operations are not managed separately and are included in All Other North America. The Company also includes in All Other North America any administrative costs that are not directly related or allocated to a North America business unit such as North American information technology, human resources, accounting and purchasing. The North American administrative costs are directly related to the four North American segments.

		The CODM uses net sales to unaffiliated customers, gross profit and operating income in order to make decisions, assess performance and allocate resources to each segment. Operating income does not include interest income or expense, other income or expense, restructuring expense or foreign currency transaction gains or losses. In some cases, the Company may choose to exclude from a segment’s results certain non-recurring items as determined by management. These items are included in the Corporate and Other section in the table below. Corporate expenses include the compensation of certain personnel, certain audit expenses, board of directors related costs, certain insurance costs and other miscellaneous legal and professional fees.

		Below the Company presents net sales, gross profit and operating income by segment. Also included is a reconciliation of operating income (loss) by segment to consolidated income before taxes.


	Three months ended November 30,
	2008			2007
	(In thousands)
Net Sales to Unaffiliated Customers
Europe	$	280,847		$	357,266
NAPB		28,044			34,975
NAEP		44,268			59,112
NADS		25,971			34,395
Asia		9,187			10,739
Invision		88			88

Total Net Sales to Unaffiliated Customers	$	388,405		$	496,575


Segment Gross Profit
Europe	$	34,395		$	45,313
NAPB		2,290			3,610
NAEP		2,757			5,040
NADS		1,845			2,413
Asia		714			777
Invision		(948	)		(1,563	)

Total Segment Gross Profit	$	41,053		$	55,590

- 13 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


	Three months ended November 30,
	2008			2007
	(In thousands)
Segment Operating Income
Europe	$	14,032		$	22,789
NAPB		692			1,919
NAEP		(941	)		(480	)
NADS		924			1,391
Asia		(290	)		(211	)
Invision		(1,067	)		(1,885	)
All other North America		(3,009	)		(4,105	)

Total Segment Operating Income	$	10,341		$	19,418

Corporate and other		(4,360	)		(3,381	)
Interest expense, net		(401	)		(1,129	)
Foreign currency transaction gains (losses)		7,306			(133	)
Other income (expense)		222			(332	)
Restructuring		(601	)		(6	)

Income Before Taxes	$	12,507		$	14,437

The majority of the Company’s sales for the three months ended November 30, 2008 and 2007 can be classified into five primary product families. The amount and percentage of consolidated sales for these product families are as follows:


	Three months ended November 30,
Product Family	2008					2007
			(In thousands, except for %’s)
Color and additive concentrates	$	149,378		39	%	$	178,955	36	%
Polyolefins		121,372		31			160,312	32
Engineered compounds		86,050		22			106,814	22
Polyvinyl chloride (PVC)		12,692		3			14,698	3
Tolling		2,571		1			5,958	1
Other		16,342		4			29,838	6

	$	388,405		100	%	$	496,575	100	%

(11)		INCOME TAXES

		At November 30, 2008, the Company’s gross unrecognized tax benefits totaled $3.4 million. If recognized, approximately $1.7 million of the total unrecognized tax benefits would favorably affect the Company’s effective tax rate. The Company reports interest and penalties related to income tax matters in income tax expense. At November 30, 2008, the Company had $0.8 million of accrued interest and penalties on unrecognized tax benefits.

		The Company is open to potential income tax examinations in the U.S. from fiscal 2005 onward and generally from fiscal year 2002 onward for most foreign jurisdictions. The Company is currently under examination in the U.S. for fiscal 2006 and in Belgium for fiscal 2006 and 2007. In addition, the Company is currently under examination in Germany for years 2001 through 2004.

		The amount of unrecognized tax benefits is expected to change in the next 12 months; however, the change is not expected to have a significant impact on the financial position of the Company.

- 14 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the statutory U.S. federal income tax rate of 35% with the effective tax rate is as follows:


	Three months ended					Three months ended
	November 30, 2008					November 30, 2007
	(In thousands except for %’s)
Statutory U.S. tax rate	$	4,377		35.0	%	$	5,053		35.0	%
Amount of foreign taxes at less than U.S. statutory tax rate		(3,811	)	(30.5	)		(3,150	)	(21.8	)
U.S. losses with no tax benefit		3,523		28.2			2,271		15.7
Other		246		2.0			238		1.7

Total income tax expense	$	4,335		34.7	%	$	4,412		30.6	%

		The effective tax rate of 34.7% for the three months ended November 30, 2008 is slightly below the U.S. statutory rate of 35.0% primarily because of the Company’s overall foreign rate being less than the U.S. statutory rate. This favorable effect on the Company’s tax rate was offset by no tax benefits being recognized for losses in the U.S. As compared to the effective rate of 30.6% for the three months ended November 30, 2007, the current quarter’s effective rate is driven by an increase in the U.S. pre-tax loss from continuing operations and other U.S. charges for which no tax benefit was recognized. This unfavorable effect on the Company’s tax rate was partially offset by a decrease in the overall foreign rate driven by an increase in foreign pre-tax income in lower rate jurisdictions.

(12)		RESTRUCTURING OF OPERATIONS

		*Fiscal 2009 Plan*

		In November 2008, management decided to take certain actions in a strategic effort to realign resources and reduce expenses within the Europe segment. As a result, the Company recorded charges of approximately $0.3 million for employee related costs for approximately 30 employees in the European segment which are included in restructuring expenses for the three months ended November 30, 2008.

		On December 10, 2008, the Company announced actions to restructure its operations and eliminate costs throughout the Company. These actions are part of the Company’s ongoing strategic plan to realign its resources, control costs and improve efficiency to profitably serve key growth markets.

		In the NAEP segment, the Company will reduce production capacity by temporarily idling one manufacturing line in addition to permanently shutting down two lines at the plant in Bellevue, Ohio. The Company also plans to temporarily idle one line and reduce shifts from seven to five days at its Nashville, Tennessee plant. The actions will reduce production capacity by approximately 50% in this segment and reduce headcount by 60 between these two facilities. The Company is also realigning its NAEP sales, marketing and technical customer service teams to focus its customer support on core markets, which will reduce headcount on those teams by approximately 15.

		The Company also plans to reduce its Akron-based North American administrative staff by six full-time employees and three contract positions. These actions are expected to begin in the second quarter of fiscal 2009 with completion by the end of the third quarter of fiscal 2009.

		In Europe, the Company is rationalizing its overall operations to better align its production capabilities with evolving customer needs and to address the increasingly deteriorating economic conditions in those markets. The Company is in the process of reducing its current capacity in Europe by 7% to 10%. Accordingly, the Company reduced related headcount by approximately 20 employees in November 2008 and will eliminate approximately an additional 30 full-time employees and 30 contract positions in the second quarter of fiscal 2009. The Company’s major European locations also plan to implement a “short work” schedule.

- 15 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		*Fiscal 2008 Plan*

		In January 2008, the Company announced two steps in its continuing effort to improve the profitability of its North American operations. The Company announced it would shut down its manufacturing facility in St. Thomas, Ontario, Canada and would pursue a sale of its manufacturing facility in Orange, Texas. All the restructuring costs related to the sale of the Orange, Texas and the St. Thomas, Ontario, Canada facilities are related to the NAEP reportable segment.

		The St. Thomas, Ontario, Canada facility primarily produced engineered plastics for the automotive market, with a capacity of approximately 74 million pounds per year and employed approximately 120 individuals. The facility was shutdown at the end of June 2008. The Company continues to finalize closing procedures into fiscal 2009.

		The Orange, Texas facility provided primarily North American third-party tolling services in which the Company processed customer-owned materials for a fee. Total annual capacity at the Orange, Texas facility was approximately 135 million pounds and employed approximately 100 employees. The Company completed the sale of this facility in March 2008 for total consideration of $3.7 million.

		The Company recorded charges related to the fiscal 2008 initiatives of approximately $0.2 million for employee related costs and $0.1 million for contract termination and other related restructuring costs during the three months ended November 30, 2008. The charges recorded in fiscal 2009 are related to the NAEP segment. Approximately $0.3 million remains accrued for employee related costs at November 30, 2008 related to the fiscal 2008 initiatives, which the Company anticipates the majority of the accrued balance for restructuring charges to be paid throughout fiscal 2009. No charges related to this plan were recorded in the first quarter of fiscal 2008.

		The following table summarizes the liabilities as of November 30, 2008 related to the announced restructuring plans in fiscal 2008 and fiscal 2009.


	Accrual Balance			Fiscal 2009		Fiscal 2009			Accrual Balance
	August 31, 2008			Charges		Paid			November 30, 2008
	(In thousands)
Employee related costs	$	507		$	497	$	(348	)	$	656
Other costs		—			104		(104	)		—
Translation effect		(22	)		—		—			(68	)

Restructuring charges	$	485		$	601	$	(452	)	$	588

		*Fiscal 2007 Plan*

		During fiscal 2007, the Company announced multiple phases of a restructuring plan to restore its NAEP segment to profitability. The Company recorded minimal charges in fiscal 2008 related to the fiscal 2007 initiatives as the plan was primarily completed in fiscal 2007. The total charge for this plan was approximately $2.1 million recorded primarily in fiscal 2007. The Company recorded insignificant restructuring charges and paid approximately $71,000 for employee related costs related to the fiscal 2007 plan in the three months ended November 30, 2007.

- 16 -

A. SCHULMAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13)		ACCOUNTING PRONOUNCEMENTS

		In December 2007, the FASB issued FASB Statement No. 141(R), Business Combinations (“SFAS 141R”). SFAS 141R replaces FASB Statement No. 141 and provides greater consistency in the accounting and financial reporting of business combinations. SFAS 141R requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction and any non-controlling interest in the acquiree at the acquisition date, measured at the fair value as of that date. This includes the measurement of the acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition-related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance and deferred taxes. SFAS 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is not permitted. The Company is required to adopt SFAS 141R in fiscal year 2010. The Company is assessing the impact that SFAS 141R may have on its financial position, results of operations and cash flows.

		In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS 160”). SFAS 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for the Company for the fiscal year 2010, with early adoption being prohibited. The Company is assessing the impact that SFAS 160 may have on its financial position, results of operations and cash flows.

(14)		SHARE REPURCHASE PROGRAM

		The Company has approximately 2.9 million shares authorized by the Board of Directors to be repurchased under the Company’s current share repurchase program. The Company did not repurchase any shares of its common stock during the three months ended November 30, 2007. During the three months ended November 30, 2008, the Company repurchased 78,520 shares of common stock at an average price of $15.50 per share.

- 17 -

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview of the Business and Recent Developments

A. Schulman, Inc. (the “Company”) is a leading international supplier of high-performance plastic compounds and resins headquartered in Akron, Ohio. The Company’s customers span a wide range of markets including consumer products, industrial, automotive and packaging. The Company has approximately 2,100 employees and 16 plants in countries in North America, Europe and Asia.

The Company sells such products as color and additive concentrates, polyolefins, engineered compounds and polyvinyl chloride (“PVC”) used in packaging, durable goods and commodity products. The Company also offers a limited amount of tolling service to customers through its European operations. The Company offers an Invision ^® sheet product which is a replacement for painted plastic.

To identify reportable segments, the Company considers its operating structure and the types of information subject to regular review by its President and Chief Executive Officer (“CEO”), who is the Chief Operating Decision Maker (“CODM”). Globally, the Company operates primarily in three lines of business: engineered plastics, masterbatch and distribution services. In North America, there is a general manager of each of these lines of business each of who report directly to the Company’s CEO. Also, in North America the Company operates in a specialty sheet line of business called “Invision” which has its own general manager who also reports to the CEO. The Company’s European segment has managers of each line of business, who report to a general manager of Europe who reports to the CEO. Effective September 1, 2008, the Company named a general manager of Asia and a general manager of Europe. This change separated the responsibilities that were previously combined under the general manager of Europe, which then included Asia. Based on the Company’s new management structure and an evaluation of how the CODM reviews performance and allocates resources, the Company redefined its European segment to separate the Asian operations from the European operations beginning in the first quarter of fiscal 2009. The Company historically identified and presented the European segment to include Asia, based on how the CODM regularly reviewed information and allocated resources. Prior periods have been restated to reflect the current presentation. The segments are Europe, North America Polybatch (“NAPB”) (which comprises the masterbatch line of business), North America Engineered Plastics (“NAEP”), North America Distribution Services (“NADS”), Asia and A. Schulman Invision, Inc. (“Invision”).

On December 10, 2008, the Company announced actions to restructure its operations and eliminate costs throughout the Company. These actions are part of the Company’s ongoing strategic plan to realign its resources, control costs and improve efficiency to profitably serve key growth markets. The plans primarily impact the Company’s NAEP segment and other North American administrative staff. In addition, in Europe, the Company is rationalizing its overall operations to better align its production capabilities with evolving customer needs and to address the increasingly deteriorating economic conditions in those markets. These actions are expected to begin in the second quarter of fiscal 2009 with completion by the end of the third quarter of fiscal 2009. See the Results of Operations section of Management’s Discussion and Analysis and Results of Operations for additional discussion.

Results of Operations

Net sales for the three months ended November 30, 2008 were $388.4 million, a decrease of $108.2 million or 21.8% compared to last year’s first-quarter sales of $496.6 million. The translation effect of foreign currencies, primarily the euro, decreased sales by $18.2 million for the three months ended November 30, 2008. The decline in sales, excluding the translation effect, was primarily a result of the deterioration of the global markets resulting in a significant decline in volume as well as the effect of the plant closures and capacity reductions primarily in North America. Capacity in North America declined from approximately 107.1 million pounds for the three months ended November 30, 2007 to approximately 50.2 million pounds for the three months ended November 20, 2008. The Company’s volume decline in November was especially significant as, globally, the effect of the recession was more severe.

- 18 -

A comparison of consolidated sales by segment for the three months ended November 30, 2008 and 2007 is as follows:


																	% Due to
					Total increase						% Due to			% Due to			price/
	Three months ended November 30,				(decrease)						tonnage			translation			product mix
Sales	2008		2007		$			%
	(In thousands, except for %’s)
Europe	$	280,847	$	357,266	$	(76,419	)		-21.4	%		-20.8	%		-4.4	%		3.8	%
NAPB		28,044		34,975		(6,931	)		-19.8	%		-29.8	%		-4.1	%		14.1	%
NAEP		44,268		59,112		(14,844	)		-25.1	%		-51.6	%		-2.0	%		28.5	%
NADS		25,971		34,395		(8,424	)		-24.5	%		-39.9	%		-0.4	%		15.8	%
Asia		9,187		10,739		(1,552	)		-14.5	%		-36.3	%		2.5	%		19.3	%
Invision		88		88		—			—			—			—			—

	$	388,405	$	496,575	$	(108,170	)		-21.8	%		-27.8	%		-3.7	%		9.7	%

The two largest markets served by the Company are the packaging and automotive markets. Other markets include appliances, construction, medical, consumer products, electrical/electronics, office equipment and agriculture . The approximate percentage of net consolidated sales by market for the three months ended November 30, 2008 compared to the same periods last year are as follows:


	Three months ended November 30,
	2008			2007

Packaging		40	%		38	%
Automotive		15	%		16	%
Other		45	%		46	%

		100	%		100	%


	Three months ended November 30,
Product Family	2008				2007
	(In thousands, except for %’s)
Color and additive concentrates	$	149,378	39	%	$	178,955	36	%
Polyolefins		121,372	31			160,312	32
Engineered compounds		86,050	22			106,814	22
Polyvinyl chloride (PVC)		12,692	3			14,698	3
Tolling		2,571	1			5,958	1
Other		16,342	4			29,838	6

	$	388,405	100	%	$	496,575	100	%

- 19 -

A comparison of gross profit dollars and percentages by segment for the three months ended November 30, 2008 and 2007 is as follows:


	Three months ended November 30,						Increase (decrease)
	2008			2007			$			%
	(In thousands, except for %’s)
Gross profit $
Europe	$	34,395		$	45,313		$	(10,918	)		(24.1	)%
NAPB		2,290			3,610			(1,320	)		(36.6	)
NAEP		2,757			5,040			(2,283	)		(45.3	)
NADS		1,845			2,413			(568	)		(23.5	)
Asia		714			777			(63	)		(8.1	)
Invision		(948	)		(1,563	)		615			39.3

Consolidated	$	41,053		$	55,590		$	(14,537	)		(26.2	)%


Gross profit %
Europe		12.2	%		12.7	%
NAPB		8.2	%		10.3	%
NAEP		6.2	%		8.5	%
NADS		7.1	%		7.0	%
Asia		7.8	%		7.2	%
Invision		—			—
Consolidated		10.6	%		11.2	%

The gross profit dollars decreased for Europe for the three months ended November 30, 2008 by $10.9 million, or 24.1%, compared to the same period in the prior year. European gross profits were negatively impacted by foreign currency translation losses of $1.7 million for the three months ended November 30, 2008. Excluding the foreign currency translation loss, gross profit for the three months ended November 30, 2008 for Europe decreased $9.2 million. The decline in Europe was caused by two primary factors (1) declining selling prices combined with a write-down of inventory related to decreasing market values, and (2) fixed manufacturing costs which were not aligned with lower production volumes. As a result of these factors, the Company announced on December 10, 2008 its initial measures to address the fixed manufacturing cost issue including reducing capacity and headcount and scheduling some manufacturing facilities on a four-day work week.

The gross profit dollars for the NAPB business have declined by $1.3 million, or 36.6%, for the three months ended November 30, 2008 compared to the same period last year. The decrease in gross profit dollars and percentages for NAPB are primarily the result of tonnage decreases of approximately 29.8%, reflecting the general business conditions, offset by the price increases realized of approximately 14.1%. In addition, the gross profit for NAPB includes approximately $0.4 million of start-up costs without sales related to the Company’s new masterbatch facility in Akron, Ohio.

The gross profit dollars for the NAEP business have declined by $2.3 million, or 45.3%, for the three months ended November 30, 2008 compared to the same period last year. The decline in gross profit dollars and percentages for NAEP are primarily related to significant declines in tonnage, which was mostly a result of the Company’s closure of its St. Thomas, Ontario, Canada facility and the sale of the Orange, Texas facility. These reductions in capacity and headcount provided benefit for the NAEP segment; however these savings were offset by weaker economic conditions. In order to offset the effects of weakening markets, in December 2008, the Company announced further restructuring efforts that plan to reduce capacity and headcount in this segment.

Gross profits dollars for the NADS business have declined to $1.8 million for the three months ended November 30, 2008, from $2.4 million for the comparable period last year. The NADS segment was able to maintain consistent margins in a weak market.

- 20 -

The Company’s Asia segment gross profit dollars decreased 8.1% but gross profit percentage increased. The decline in gross profit dollars is also a result of the global economic downturn. The Asia segment is primarily in the packaging market.

The Invision gross profit loss is due to the start-up nature of this business line. The Company has reduced spending on Invision as it refocuses the business to non-automotive markets and also considers strategic alternatives for the segment.

A comparison of capacity utilization levels for the three months ended November 30, 2008 and 2007 is as follows:


	Three months ended November 30,
	2008			2007
Europe		73	%		102	%
NAPB		87	%		114	%
NAEP		89	%		82	%
Asia		45	%		60	%
Worldwide		74	%		95	%

Europe capacity utilization declined primarily as a result of the significant global economic slowdown and working capital initiatives to reduce inventory.

The capacity utilization for NAPB declined significantly due to the weak North America marketplace. In addition, one of the NAPB plants experienced maintenance issues, which reduced capacity amounts for a short period of time resulting in lower production levels. Capacity utilization for the NAEP segment increased as a result of the restructuring efforts announced in fiscal 2008 to close the Company’s St. Thomas, Ontario, Canada facility and the sale of the Company’s Orange, Texas facility which was completed in March 2008.

The Company’s Asia segment is experiencing lower capacity utilization as a result of the weakened global markets and the start-up nature of a line in the Company’s China facility.

Overall worldwide utilization declined compared to the prior year reflecting the challenging marketplace facing the Company. The capacity utilization figures exclude production for the Invision product as this business is in a start-up phase. Capacity utilization is calculated by dividing actual production pounds by practical capacity at each plant.

The changes in selling, general and administrative expenses are summarized as follows:


	Three months ended November 30, 2008
	$ Increase (decrease)			% Increase (decrease)
	(In thousands, except for %’s)
Total change in selling, general and administrative expenses	$	(4,394	)		(11.2	)%
Less the effect of foreign currency translation		(1,358	)		(3.5	)

Total change in selling, general and administrative expenses, excluding the effect of foreign currency translation	$	(3,036	)		(7.7	)%

Selling, general and administrative expenses for the three months ended November 30, 2008 were down by $3.0 million, excluding the effect of foreign currency exchange, compared to the same period last fiscal year. As a percent of sales, selling, general and administrative expenses for the three months ended November 30, 2008 increased to 9.0% from 7.9% in the prior year comparable period. Costs are generally lower as a result of restructuring activities that have taken place over the past year. In addition, the decrease includes a benefit of $1.8 million from the mark-to-mark adjustments of restricted stock units and deferred directors units which were partially offset by $1.6 million of costs related to consulting for the development of a strategic plan.

- 21 -

Minority interest represents a 30% equity position of Mitsubishi Chemical MKV Company in a partnership with the Company and a 35% equity position of P.T. Prima Polycon Indah in an Indonesian joint venture with the Company.

Interest expense declined by approximately $0.4 million for the three months ended November 30, 2008, as compared to the same period last year, due to lower borrowing rates and overall lower debt levels.

Foreign currency transaction gains or losses represent changes in the value of currencies in major areas where the Company operates. The Company experienced $7.3 million in foreign currency transaction gains for the three months ended November 30, 2008. This included gains of $2.5 million and $4.1 million related to the changes in the value of the U.S. dollar compared to the Canadian dollar and Mexican peso, respectively. The Company experienced a foreign currency transaction loss of $0.1 million for the three months ended November 30, 2007. Generally, the foreign currency transaction gains or losses relate to the changes in the value of the U.S. dollar compared with the Canadian dollar and the Mexican peso and changes between the euro and other non-euro European currencies. From time to time, the Company enters into forward foreign exchange contracts to reduce the impact of changes in foreign exchange rates on the consolidated statements of income. These contracts reduce exposure to currency movements affecting existing foreign currency denominated assets and liabilities resulting primarily from trade receivables and payables. Any gains or losses associated with these contracts, as well as the offsetting gains or losses from the underlying assets or liabilities, are recognized on the foreign currency transaction line in the consolidated statements of operations. During the first quarter of fiscal 2009, while the U.S. dollar was strengthening, the Company was not completely hedged.

Restructurings

In November 2008, management decided to take certain actions in a strategic effort to realign resources and reduce expenses within the Europe segment. As a result, the Company recorded charges of approximately $0.3 million for employee related costs for approximately 30 employees in the European segment which are included in restructuring expenses for the three months ended November 30, 2008.

In the NAEP segment, the Company will reduce production capacity by temporarily idling one manufacturing line in addition to permanently shutting down two lines at the plant in Bellevue, Ohio. The Company also plans to temporarily idle one line and reduce shifts from seven to five days at its Nashville, Tennessee plant. The actions will reduce production capacity by approximately 50% in this segment and reduce headcount by 60 between these two facilities. The Company is also realigning its NAEP sales, marketing and technical customer service teams to focus its customer support on core markets, which will reduce headcount on those teams by approximately 15.

The Company also plans to reduce its Akron-based North American administrative staff by six full-time employees and three contract positions. The Company expects cost savings from all of its actions related to NAEP and North America administrative expenses to total approximately $10 million to $12 million, after tax, on an annualized basis. These actions are expected to begin in the second quarter of fiscal 2009 with completion by the end of the third quarter of fiscal 2009.

In Europe, the Company is rationalizing its overall operations to better align its production capabilities with evolving customer needs and to address the increasingly deteriorating economic conditions in those markets. The Company is in the process of reducing its current capacity in Europe by 7% to 10%. Accordingly, the Company reduced related headcount by approximately 20 employees in November 2008 and will eliminate approximately an additional 30 full-time employees and 30 contract positions in the second quarter of fiscal 2009. The Company’s major European locations also plan to implement a “short work” schedule. The actions in the Europe segment are expected to result in total annualized cost savings of $4 million to $6 million, after tax.

In January 2008, the Company announced two steps in its continuing effort to improve the profitability of its North American operations. The Company announced it would shut down its manufacturing facility in St. Thomas, Ontario, Canada and would pursue a sale of its manufacturing facility in Orange, Texas. All the restructuring costs related to the sale of the Orange, Texas and the St. Thomas, Ontario, Canada facilities are related to the NAEP reportable segment.

- 22 -

The St. Thomas, Ontario, Canada facility primarily produced engineered plastics for the automotive market, with a capacity of approximately 74 million pounds per year and employed approximately 120 individuals. The facility was shutdown at the end of June 2008. The Company continues to finalize closing procedures into fiscal 2009.

The Orange, Texas facility provided primarily North American third-party tolling services in which the Company processed customer-owned materials for a fee. Total annual capacity at the Orange, Texas facility was approximately 135 million pounds and employed approximately 100 employees. The Company completed the sale of this facility in March 2008 for total consideration of $3.7 million.

The Company recorded charges related to the fiscal 2008 initiatives of approximately $0.2 million for employee related costs and $0.1 million for contract termination and other related restructuring costs during the three months ended November 30, 2008. The charges recorded in fiscal 2009 are related to the NAEP segment. Approximately $0.3 million remains accrued for employee related costs at November 30, 2008 related to the fiscal 2008 initiatives, which the Company anticipates the majority of the accrued balance for restructuring charges to be paid throughout fiscal 2009. No charges related to this plan were recorded in the first quarter of fiscal 2008.

The following table summarizes the liabilities as of November 30, 2008 related to the announced restructuring plans in fiscal 2008 and fiscal 2009.


	Accrual Balance			Fiscal 2009		Fiscal 2009			Accrual Balance
	August 31, 2008			Charges		Paid			November 30, 2008
	(In thousands)
Employee related costs	$	507		$	497	$	(348	)	$	656
Other costs		—			104		(104	)		—
Translation effect		(22	)		—		—			(68	)

Restructuring charges	$	485		$	601	$	(452	)	$	588

During fiscal 2007, the Company announced multiple phases of a restructuring plan to restore its NAEP segment to profitability. The Company recorded minimal charges in fiscal 2008 related to the fiscal 2007 initiatives as the plan was primarily completed in fiscal 2007. The total charge for this plan was approximately $2.1 million recorded primarily in fiscal 2007. The Company recorded insignificant restructuring charges and paid approximately $71,000 for employee related costs related to the fiscal 2007 plan in the three months ended November 30, 2007.

Certain portions of the Company’s North American operations are not managed separately and are included in All Other North America. The Company also includes in All Other North America any administrative costs that are not directly related or allocated to a North America business unit such as North American information technology, human resources, accounting and purchasing. The North American administrative costs are directly related to the four North American segments.

The CODM uses net sales to unaffiliated customers, gross profit and operating income in order to make decisions, assess performance and allocate resources to each segment. Operating income does not include interest income or expense, other income or expense, restructuring expense or foreign currency transaction gains or losses. In some cases, the Company may choose to exclude from a segment’s results certain non-recurring items as determined by management. These items are included in the Corporate and Other section in the table below. Corporate expenses include the compensation of certain personnel, certain audit expenses, board of directors related costs, certain insurance costs and other miscellaneous legal and professional fees.

- 23 -

A reconciliation of operating income (loss) by segment to consolidated income before taxes is presented below:


	Three months ended November 30,
	2008			2007
	(In thousands)

Europe	$	14,032		$	22,789
NAPB		692			1,919
NAEP		(941	)		(480	)
NADS		924			1,391
Asia		(290	)		(211	)
Invision		(1,067	)		(1,885	)
All other North America		(3,009	)		(4,105	)
Corporate and other		(4,360	)		(3,381	)
Interest expense, net		(401	)		(1,129	)
Foreign currency transaction gains (losses)		7,306			(133	)
Other income (expense)		222			(332	)
Restructuring expense		(601	)		(6	)


Income before taxes	$	12,507		$	14,437

European operating income decreased approximately $8.8 million, or 38.4%, for the three months ended November 30, 2008. The decrease was primarily due to the recessionary global marketplace impacting volume as well as the gross profit reductions resulting from rapid declines in pricing not completely offset by cost of goods sold declines. The decline in gross profit of $10.9 million was partially offset by a decline in selling, general and administrative expenses of $2.2 million.

Operating income for NAPB declined $1.2 million compared to same period in the prior year. The decline was primarily a result of the decline in gross profit and was partially offset by a decrease in selling, general and administrative costs.

The operating loss for the NAEP segment, which is the segment most exposed to the automotive market, increased by $0.5 million due to the decline in gross profit of $2.3 million. The decline of selling, general and administrative costs of $1.7 million for the NAEP segment partially offset the gross profit decrease. The NAEP segment experienced cost reductions initiated primarily in the prior year which almost completely offset the decline in volume. Unpredicted declines in volume resulted in another series of planned capacity reductions which were announced in December 2008.

The decline in operating income for NADS for the three months ended November 30, 2008 was due to the decline in gross profit of $0.6 million. A decline in NADS selling, general and administrative costs slightly offset the decline in gross profit.

A reconciliation of the statutory U.S. federal income tax rate of 35% with the effective tax rate is as follows:


	Three months ended					Three months ended
	November 30, 2008					November 30, 2007
	(In thousands except for %’s)
Statutory U.S. tax rate	$	4,377		35.0	%	$	5,053		35.0	%
Amount of foreign taxes at less than U.S. statutory tax rate		(3,811	)	(30.5	)		(3,150	)	(21.8	)
U.S. losses with no tax benefit		3,523		28.2			2,271		15.7
Other		246		2.0			238		1.7

Total income tax expense	$	4,335		34.7	%	$	4,412		30.6	%

- 24 -

The effective tax rate of 34.7% for the three months ended November 30, 2008 is slightly below the U.S. statutory rate of 35.0% primarily because of the Company’s overall foreign rate being less than the U.S. statutory rate. This favorable effect on the Company’s tax rate was offset by no tax benefits being recognized for losses in the U.S. As compared to the effective rate of 30.6% for the three months ended November 30, 2007, the current quarter’s effective rate is driven by an increase in the U.S. pre-tax loss from continuing operations and other U.S. charges, for which no tax benefit was recognized. This unfavorable effect on the Company’s tax rate was partially offset by a decrease in the overall foreign rate driven by an increase in foreign pre-tax income in lower rate jurisdictions.

The translation effect of foreign currencies decreased net income by $1.2 million for the three months ended November 30, 2008.

The Company uses the following non-GAAP financial measures of net income excluding unusual items and net income per diluted share excluding unusual items. These financial measures are used by management to monitor and evaluate the ongoing performance of the Company and to allocate resources. The Company believes that the additional measures are useful to investors for financial analysis. However, non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. The table below reconciles net income excluding unusual items and net income per diluted share excluding unusual items to net income and net income per diluted share.


	Three months ended				Three months ended
	November 30, 2008				November 30, 2007
			Diluted EPS				Diluted EPS
Net Income and Earnings Per Share Reconciliation	Income (loss)		Impact		Income (loss)		Impact
	(In thousands except share data)

Net income applicable to common stock	$	8,159	$	0.31	$	10,012	$	0.36

Adjustments, net of tax, per diluted share:
Restructuring expense		436		0.02		6		—
Other employee termination costs		101		—		674		0.02
Insurance claim settlement adjustment		—		—		368		0.01


Net income applicable to common stock before unusual items	$	8,696	$	0.33	$	11,060	$	0.39


Weighted-average number of shares outstanding — Diluted				26,026				27,770

Liquidity and Capital Resources

The major source of cash inflows is generally net income. The primary uses of cash for other than operations are generally cash dividends, common share repurchases and capital expenditures. Presently, the Company anticipates that cash flow from operations and availability under credit arrangements will be sufficient to meet its short and long-term operational requirements.

- 25 -

The Company has improved its liquidity position in the first quarter of fiscal 2009. Net cash provided from operations was $44.3 million and $8.8 million for the three months ended November 30, 2008 and 2007, respectively. The increase from last year was due to a decline in inventory and accounts receivable, compared to the increases in these areas in the prior year, primarily driven by lower sales and the Company’s efforts to reduce working capital. Days in receivables were 57 days at November 30, 2008 and 58 days at August 31, 2008 and 63 days at November 30, 2007. Days in inventory were 49 days at November 30, 2008 and 48 days at August 31, 2008 and 62 days at November 30, 2007. Days in payables at November 30, 2008 were 34 days, 34 days at August 31, 2008 and 31 days at November 30, 2007.


	November 30,		August 31,
	2008		2008		% Change
	(In millions, except for %’s)
Cash and cash equivalents	$	115.8	$	97.7		18.5	%
Working capital, excluding cash		232.5		305.2		(23.8	)
Long-term Debt		99.2		104.3		(4.9	)
Stockholders’ equity		372.5		427.6		(12.9	)

The Company’s cash and cash equivalents increased approximately $18.1 million from August 31, 2008. Working capital, excluding cash, was $232.5 million, a decrease of $72.7 million from August 31, 2008. The primary reason for the decrease in working capital was the decrease in accounts receivable of $76.6 million and the decrease in inventory of $42.8 million. The translation effect of foreign currencies, primarily the euro, decreased accounts receivable by $39.8 million and decreased inventory by $24.3 million. Excluding the impact of translation of foreign currencies, inventory decreased approximately $18.5 million, or 8.2%, and accounts receivable decreased $36.8 million, or 11.5%. The decreases are also attributable to the Company’s long-term working capital reduction program. Accounts payable decreased $35.6 million due primarily to the translation effect of foreign currencies of $19.0 million. The decrease in accounts payable is also attributable to the decrease in sales and sales volume which resulted in lower purchases.

The Company decreased total long-term debt by $5.1 million during the three months ended November 30, 2008. The translation effect of foreign currencies decreased long-term debt by approximately $9.9 million. The remaining increase of $4.8 million in borrowings was primarily a result of cash dividends and purchase of treasury stock.

Capital expenditures for the three months ended November 30, 2008 were $11.3 million compared with $8.2 million last year. The major component of the capital expenditures included additions related to the new Akron, Ohio plant and adding a new smaller line in the Nashville, Tennessee plant which is replacing an older inefficient line.

The Company has a $260.0 million credit facility (“Credit Facility”) which consists of credit lines of which the U.S. dollar equivalent of $160.0 million is available to certain of the Company’s foreign subsidiaries for borrowings in euros or other currencies. The Credit Facility, which matures on February 28, 2011, contains certain covenants that, among other things, limit the Company’s ability to incur indebtedness and enter into certain transactions beyond specified limits. The Company must also maintain a minimum interest coverage ratio and may not exceed a maximum net debt leverage ratio. As of November 30, 2008, the Company was not in violation of any of its covenants relating to the Credit Facility.

Interest rates on the Credit Facility are based on LIBOR or EURIBOR (depending on the borrowing currency) plus a spread determined by the Company’s total leverage ratio. The Company also pays a facility fee on the commitments whether used or unused. The Credit Facility allows for a provision which provides a portion of the funds available as a short-term swing-line loan. The swing-line loan interest rate varies based on a mutually agreed upon rate between the bank and the Company. At November 30, 2008, there were no borrowings on the Credit Facility which are considered short-term. At November 30, 2008, the Company had $5.0 million of long-term borrowings outstanding under the Credit Facility.

The Company has senior guaranteed notes outstanding (“Senior Notes”) in the private placement market consisting of the following:

•

$30.0 million of Senior Notes in the United States, maturing on March 1, 2013, with a variable interest rate of LIBOR plus 80 bps (“Dollar Notes”). Although there are no plans to do so, the Company may, at its option, prepay all or part of the Dollar Notes.

•

€50.3 million of Senior Notes in Germany, maturing on March 1, 2016, with a fixed interest rate of 4.485% (“Euro Notes”). The Euro Notes approximate $63.9 million at November 30, 2008. The fair market value of the Euro Notes is approximately €38.4 million at November 30, 2008, which approximates $48.8 million.

- 26 -

The Senior Notes are guaranteed by the Company’s wholly-owned domestic subsidiaries and contain covenants substantially identical to those in the $260.0 million revolving Credit Facility. As of November 30, 2008, the Company was not in violation of any of its covenants relating to the Senior Notes.

Both the Credit Facility and the Senior Notes are supported by up to 65% of the capital stock of certain of the Company’s directly owned foreign subsidiaries.

The Company had approximately $8.5 million of uncollateralized short-term lines of credit from various domestic banks at November 30, 2008. At November 30, 2008, there were borrowings of $7.1 million outstanding under these lines of credit.

The Company had approximately $47.7 million of uncollateralized short-term foreign lines of credit available to its subsidiaries at November 30, 2008. There was approximately $2.6 million outstanding under these lines of credit at November 30, 2008.

Below summarizes the Company’s available funds as of November 30, 2008 and August 31, 2008.


	As of November 30,		As of August 31,
	2008		2008
	(In millions)
Total gross available funds from credit lines and notes
Credit Facility	$	260.0	$	260.0
Uncollateralized short-term lines of credit — U.S.	$	8.5	$	8.5
Uncollateralized short-term lines of credit — Foreign	$	47.7	$	51.0
Borrowings outstanding
Credit Facility		5.0		7.0
Uncollateralized short-term lines of credit — U.S.		7.1		—
Uncollateralized short-term lines of credit — Foreign		2.6		2.5
Total net available funds from credit lines and notes
Credit Facility	$	255.0	$	253.0
Uncollateralized short-term lines of credit — U.S.	$	1.4	$	8.5
Uncollateralized short-term lines of credit — Foreign	$	45.1	$	48.5

The Company’s net debt, defined as debt minus cash, was in a net cash position of $6.9 million at November 30, 2008 which was an improvement of $23.0 million compared to the August 31, 2008 net debt of $16.1 million as a result of earnings and working capital reductions.

The Company adopted the required portions of FASB Statement No. 157, (“SFAS 157”), Fair Value Measurement, as of September 1, 2008. The adoption did not have a material impact on the Company’s financial position, results of operations and cash flows. In accordance with FASB issued Staff Position (“FSP”) No. FAS 157-2, Effective Date of FASB Statement No.157 , the Company delayed the adoption of portions of SFAS 157 related to nonfinancial assets and nonfinancial liabilities, except for items recognized or disclosed at fair value on a recurring basis. Accordingly, the Company will adopt the provisions of SFAS 157 related to nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value on a nonrecurring basis in fiscal 2010. The Company is currently evaluating the impact, if any, of the adoption of this portion of SFAS 157 on its financial position, results of operations and cash flows.

SFAS 157 establishes a fair value hierarchy to prioritize the inputs used in valuation techniques into three levels as follows:

•

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;

•

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and

•

Level 3: Unobservable inputs which reflect an entity’s own assumptions.

The fair value of cash equivalents, by their nature, is determined utilizing Level 1 inputs. The Company measures the fair value of the forward foreign exchange contracts using Level 2 inputs through observable market transactions in active markets provided by banks. The forward foreign exchange contracts are entered into with creditworthy multinational banks.

- 27 -

The Company adopted FASB Statement No. 159, (“SFAS 159”), The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115. However, the Company did not elect the fair value option for any of its existing financial instruments other than those already measured at fair value. Therefore, the Company’s adoption of SFAS 159 as of September 1, 2008 did not have a material impact on the Company’s financial position, results of operations and cash flows.

During the three months ended November 30, 2008, the Company has declared and paid quarterly cash dividends totaling $0.15 per common share. The total amount of these dividends was $3.9 million. Cash has been sufficient to fund the payment of these dividends. On January 7, 2009, the Company’s Board of Directors declared a regular cash dividend of $0.15 per common share payable February 2, 2009 to stockholders of record on January 19, 2009.

During the three months ended November 30, 2008, the Company repurchased 78,520 million shares of common stock at an average price of $15.50 per share. No shares were repurchased during the three months ended November 30, 2007. It is anticipated that the Company will continue repurchasing common stock under the Company’s current repurchase program through open market repurchases from time to time, subject to market conditions, capital considerations of the Company and compliance with applicable laws. Approximately 2.9 million shares remain available to be repurchased under the Company’s repurchase program

For the three months ended November 30, 2008, 6,567 common shares were issued upon the exercise of employee stock options. The total amount received from the exercise of these options was $0.1 million.

The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using current exchange rates. Income statement items are translated at average exchange rates prevailing during the period. The resulting translation adjustments are recorded in the Accumulated Other Comprehensive Income (Loss) account in stockholders’ equity. The change in the value of the U.S. dollar during the three months ended November 30, 2008 decreased this account by $58.5 million.

Contractual Obligations

As of November 30, 2008, there were no material changes to the Company’s future contractual obligations as previously reported in the Company’s 2008 Annual Report.

Operating lease information is provided in Footnote 12 to the Consolidated Financial Statements in the Company’s 2008 Annual Report on Form 10-K as there has been no significant changes.

The Company’s outstanding commercial commitments at November 30, 2008 are not material to the Company’s financial position, liquidity or results of operations.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements as of November 30, 2008.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Management bases its estimates on historical experience and other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. The following critical accounting policy should be read in conjunction with the critical accounting policies discussed in the Company’s 2008 Annual Report on Form 10-K.

- 28 -

New Accounting Pronouncements

In December 2007, the FASB issued FASB Statement No. 141(R), Business Combinations (“SFAS 141R”). SFAS 141R replaces FASB Statement No. 141 and provides greater consistency in the accounting and financial reporting of business combinations. SFAS 141R requires the acquiring entity in a business combination to recognize all assets acquired and liabilities assumed in the transaction and any non-controlling interest in the acquiree at the acquisition date, measured at the fair value as of that date. This includes the measurement of the acquirer shares issued in consideration for a business combination, the recognition of contingent consideration, the accounting for pre-acquisition gain and loss contingencies, the recognition of capitalized in-process research and development, the accounting for acquisition-related restructuring cost accruals, the treatment of acquisition related transaction costs and the recognition of changes in the acquirer’s income tax valuation allowance and deferred taxes. SFAS 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is not permitted. The Company is required to adopt SFAS 141R in fiscal year 2010. The Company is assessing the impact that SFAS 141R may have on its financial position, results of operations and cash flows.

In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS 160”). SFAS 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS 160 is effective for the Company for the fiscal year 2010, with early adoption being prohibited. The Company is assessing the impact that SFAS 160 may have on its financial position, results of operations and cash flows.

Cautionary Statements

Certain statements in this report may constitute forward-looking statements within the meaning of the Federal securities laws. These statements can be identified by the fact that they do not relate strictly to historic or current facts. They use such words as “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. These forward-looking statements are based on currently available information, but are subject to a variety of uncertainties, unknown risks and other factors concerning the Company’s operations and business environment, which are difficult to predict and are beyond the control of the Company. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company’s future financial performance are disclosed in the Company’s Annual Report on Form 10-K for the year ended August 31, 2008, include, but are not limited to, the following:

•

Worldwide and regional economic, business and political conditions, including continuing economic uncertainties in some or all of the Company’s major product markets;

•

Fluctuations in the value of currencies in major areas where the Company operates, including the U.S. dollar, euro, U.K. pound sterling, Canadian dollar, Mexican peso, Chinese yuan and Indonesian rupiah;

•

Fluctuations in the prices of sources of energy or plastic resins and other raw materials;

•

Changes in customer demand and requirements;

•

Escalation in the cost of providing employee health care;

•

Outcome of any legal claims known or unknown;

•

Performance of the North American automotive market;

•

Global financial market turbulence; and

•

Global or regional economic slowdown or recession.

The risks and uncertainties identified above are not the only risks the Company faces. Additional risks and uncertainties not presently known to the Company or that it believes to be immaterial also may adversely affect the Company. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Company’s business, financial condition and results of operations.

- 29 -

Item 3 — Quantitative and Qualitative Disclosure about Market Risk

The Company conducts business on a multinational basis in a variety of foreign currencies. The Company’s exposure to market risk for changes in foreign currency exchange rates arises from anticipated transactions from international trade and repatriation of foreign earnings. The Company’s principal foreign currency exposures relate to the euro, U. K. pound sterling, Canadian dollar, Mexican peso, Chinese yuan, and Indonesian rupiah.

The Company enters into forward exchange contracts to reduce its exposure to fluctuations in related foreign currencies. These contracts are with major financial institutions and the risk of loss is considered remote. The total value of open contracts and any risk to the Company as a result of these arrangements is not material to the Company’s financial position, liquidity or results of operations.

The Company’s exposure to market risk from changes in interest rates relates primarily to its debt obligations. Interest on the Revolving Facility is based on the London Inter-Bank Offered Rate (LIBOR) for U.S. dollar borrowings and the Euro Interbank Offered Rate (EURIBOR) for euro borrowings. At November 30, 2008, the Company had $5.0 million borrowed against its Credit Facility. Borrowing costs may fluctuate depending upon the volatility of LIBOR and amounts borrowed.

Item 4 — Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company carries out a variety of on-going procedures, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.

There has been no change in the Company’s internal controls over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II — OTHER INFORMATION

Items 1, 3, 4 and 5 are not applicable or the answer to such items is negative; therefore, the items have been omitted and no reference is required in this Report.

Item 1A — Risk Factors

There are no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended August 31, 2008.

- 30 -

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

On April 25, 2006, the Company announced that its Board of Directors authorized the repurchase of up to 6.75 million shares of its outstanding common stock (the “Repurchase Program”), representing approximately 23.3% of the Company’s outstanding shares at the authorization date. The Repurchase Program replaced the Company’s prior repurchase authorization, under which approximately 1.7 million shares had remained authorized for repurchase. On November 16, 2007, as a part of an agreement reached with the Barington Group, the Board agreed to increase to five million the number of shares authorized to be repurchased under the Repurchase Program. The Company repurchased two million shares under the program in the fiscal year ended August 31, 2008. It is anticipated that the Company will complete the remainder of the Repurchase Program through open market repurchases from time to time. The number of shares to be repurchased and the timing of repurchases will depend upon the prevailing market prices and any other considerations that may, in the opinion of the Board of Directors or management, affect the advisability of repurchasing shares. The Company’s purchases of its common stock under the Repurchase Program during the first quarter of fiscal 2009 were as follows:


					Total number of shares		Maximum number of
	Total number of shares		Average price		purchased as part of a		shares that may yet be
	repurchased		paid per share		publicly announced plan		purchased under the plan
Beginning shares available								3,018,486
September 1-30, 2008		9,520	$	24.00		9,520		3,008,966
October 1-31, 2008		—	$	—		—		3,008,966
November 1-30, 2008		69,000	$	14.33		69,000		2,939,966

Total		78,520	$	15.50		78,520		2,939,966

Item 6 — Exhibits

(a) Exhibits


Exhibit Number		Exhibit

	3.1	Amended and Restated Certificate of Incorporation of the Company (for purposes of Commission reporting compliance only) (filed herewith).

	3.2	Amended and Restated Bylaws of the Company (for purposes of Commission reporting compliance only) (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for fiscal quarter ended May 31, 2007).

	10.1	First Amendment to 2007 Agreement by and among the Company and the Barington Group, dated October 10, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 10, 2008).

	10.2	Agreement by and among the Company and the Ramius Group, dated November 11, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 12, 2008).

	10.3	Advisory Agreement, by and between the Company and Dr. Peggy G. Miller, dated November 7, 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on November 12, 2008).

	10.4	First Amendment to Employment Agreement of Joseph M. Gingo, dated December 17, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 23, 2008).

- 31 -


Exhibit Number		Exhibit

	10.5	Amended and Restated Employment Agreement of Paul F. DeSantis, dated December 17, 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on December 23, 2008).

	10.6	A. Schulman, Inc. Second Amended and Restated Directors Deferred Units Plan (filed herewith).

	10.7	First Amendment to Indemnification Agreement (filed herewith).

	10.8	A. Schulman, Inc. Amended and Restated Nonqualified Profit Sharing Plan (filed herewith).

	10.9	First Amendment to the A. Schulman, Inc. 2002 Equity Incentive Plan (filed herewith).

	10.10	A. Schulman, Inc. Amended and Restated 2006 Incentive Plan (filed herewith).

	10.11	First Amendment to the 2009 Cash Bonus Plan of A. Schulman, Inc. (filed herewith).

	10.12	Amended and Restated A. Schulman, Inc. Supplemental Executive Retirement Plan (filed herewith).

	31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).

	31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).

	32	Certifications of Principal Executive and Principal Financial Officers pursuant to 18 U.S.C. 1350.

- 32 -

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 thereunto duly authorized.


Date: January 9, 2009	A. Schulman, Inc. (Registrant)
	/s/ Paul F. DeSantis
	Paul F. DeSantis, Chief Financial Officer, Vice President and
	Treasurer of A. Schulman, Inc. (Signing on behalf of Registrant as a duly authorized officer of Registrant and signing as the Principal Financial Officer of Registrant)

- 33 -

EXHIBIT INDEX


Exhibit Number		Exhibit

	3.1	Amended and Restated Certificate of Incorporation of the Company (for purposes of Commission reporting compliance only) (filed herewith).

	3.2	Amended and Restated Bylaws of the Company (for purposes of Commission reporting compliance only) (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for fiscal quarter ended May 31, 2007).

	10.1	First Amendment to 2007 Agreement by and among the Company and the Barington Group, dated October 10, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 10, 2008).

	10.2	Agreement by and among the Company and the Ramius Group, dated November 11, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on November 12, 2008).

	10.3	Advisory Agreement, by and between the Company and Dr. Peggy G. Miller, dated November 7, 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on November 12, 2008).

	10.4	First Amendment to Employment Agreement of Joseph M. Gingo, dated December 17, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 23, 2008).

	10.5	Amended and Restated Employment Agreement of Paul F. DeSantis, dated December 17, 2008 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on December 23, 2008).

	10.6	A. Schulman, Inc. Second Amended and Restated Directors Deferred Units Plan (filed herewith).

	10.7	First Amendment to Indemnification Agreement (filed herewith).

	10.8	A. Schulman, Inc. Amended and Restated Nonqualified Profit Sharing Plan (filed herewith).

	10.9	First Amendment to the A. Schulman, Inc. 2002 Equity Incentive Plan (filed herewith).

	10.10	A. Schulman, Inc. Amended and Restated 2006 Incentive Plan (filed herewith).

	10.11	First Amendment to the 2009 Cash Bonus Plan of A. Schulman, Inc. (filed herewith).

	10.12	Amended and Restated A. Schulman, Inc. Supplemental Executive Retirement Plan (filed herewith).

	31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).

	31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).

	32	Certifications of Principal Executive and Principal Financial Officers pursuant to 18 U.S.C. 1350.

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Exhibit 3.1

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
A. SCHULMAN, INC.
(Reflecting Amendments as of December 18, 2008)

[For Purposes of SEC Reporting Compliance Only]

A. Schulman, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

1. The name of the Corporation is A. Schulman, Inc. The date of filing its original Certificate of Incorporation with the Secretary of State was August 20, 1969.

2. The Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Certificate of incorporation of this Corporation as heretofore amended or supplemented and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation.

3. The text of the Certificate of Incorporation as amended or supplemented heretofore is hereby restated without further amendments or charges to read as herein set forth in full:

FIRST. The name of the Corporation is A. Schulman, Inc.

SECOND. The registered office of the Corporation in the State of Delaware located at No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name and address of its registered agent therein is The Corporation Trust Company, No. 100 West Tenth Street, Wilmington, Delaware 19801.

THIRD. The nature of the business, or objects or purposes to be transacted, promoted, or carried on by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware, including the following:

(1) To manufacture, fabricate, buy, sell, export, import and generally trade and deal in and with all types of plastics, rubber, resins and related materials.

(2) To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, lease, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description and to render services of all kinds.

(3) To acquire, and pay for in cash, stock or bonds of this Corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation; to aid in any lawful manner, by loan, subsidy, guarantee or otherwise, any corporation whose stocks, bonds, notes, debentures or other securities are held or controlled directly or indirectly by the Corporation, and to do any and all lawful acts or things necessary or advisable to protect, preserve, improve or enhance the value of any such stocks, bonds, notes, debentures, or other securities or obligations; and to endorse or guarantee the payment of principal or interest or both, or dividends upon any stocks, bonds, obligations or other securities or evidences of indebtedness, and to guarantee the performance of any contracts or other undertakings in which the Corporation is or becomes interested of any corporation, association, partnership, firm, individual or others, or any country, nation or governmental or political authority.

(4) To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trade-marks and trade names, relating to or useful in connection with any business of this Corporation.

(5) To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, chooses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trust or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency or instrumentality, and as owner thereof to possess and exercise all the rights, powers and privileges and ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof.

(6) To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof.

(7) To make, enter into and carry out any arrangements which may be deemed to be for the benefit of the Corporation, with any domestic or foreign governmental, municipal or public authority, or with any corporation, partnership, association, combination, organization, entity or person; to obtain therefrom or otherwise to acquire by purchase, lease, assignment or otherwise, any powers, rights, privileges, immunities, franchises, guaranties, grants and concessions; to hold, own, exercise, exploit, dispose of and realize upon the same, and to undertake and prosecute any business dependent thereon which may lawfully be undertaken by a corporation organized under the laws of the State of Delaware; and to cause to be formed, to promote and to aid in any way in the formation of, any corporation, domestic or foreign, for any such purpose.

(8) To act in any and all parts of the world, in any capacity whatsoever as agent, general or special, for domestic and foreign corporations, individuals, partnerships, associations, combinations, organizations, entities, states, governments, and other public and private bodies.

(9) To borrow or raise moneys for any of the purposes of the Corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of or lien upon the whole or any part of the property of the Corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds, debentures or other obligations of the Corporation for its corporate purposes; to confer upon the holders of any bonds, debentures or obligations of the Corporation, secured or unsecured, the right to convert the principal thereof into stock of the Corporation upon such terms and conditions as may be deemed advisable; to create, issue, sell and otherwise dispose of, for money, property or other considerations deemed useful for the purpose of the Corporation, certificates entitling the holder to an interest in all or any part of the securities from time to time held by the Corporation; to permit the holders of any bonds, debentures or obligations of the Corporation, secured by specific securities, to share in the income of such securities in lieu of or in addition to, a fixed return on their investment; and to issue certificates for partly-paid stock of the Corporation.

(10) To the extent permitted by law, to lend to any person, firm or corporation any of its uninvested funds, either with or without security.

(11) To purchase or otherwise acquire, hold, sell and transfer the shares of its own capital stock; provided it shall not use its funds or property for the purchase or acquisition of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law, and provided further that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly.

(12) To have one or more offices, to carry on all or any of its operations and business and without restriction or limit as to amount to purchase or otherwise acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and personal property of every class and description in any of the states, districts, territories or colonies of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country.

(13) To acquire in whole or in part the business, good will, rights, property and assets of all kinds of any corporation, association, partnership, combination, organization, entity, or individual, domestic or foreign; and to pay for the same in cash, stocks, bonds, notes, debentures or other securities or obligations of the Corporation or otherwise; and to hold, possess and improve such properties and to conduct in any legal manner the whole or any part of the business so acquired; and to pledge, mortgage, sell or otherwise dispose of the same.

(14) To endorse or guarantee the payment of principal or interest, or both, or dividends upon any stocks, bonds, obligations or other securities or evidences of indebtedness issued or created by any other corporation of the State of Delaware or any other state, or of any country, nation or government, or political authority so far as the same may be permitted by law.

(15) To enter into any legal arrangement for sharing profits, union of interest, reciprocal concession, or cooperation with any person, partnership, association, combination, organization, entity or corporation carrying on or proposing to carry on any business which the Corporation is authorized to carry on, or any business transaction deemed necessary, convenient, or incidental to carrying out any of the object of the Corporation.

(16) The object and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause herein contained, but the objects and purposes specified in each of the foregoing clauses of this article, shall be regarded as independent objects and purposes.

FOURTH. The total number of, shares of stock which the Corporation shall have authority to issue is 76,010,707 shares, consisting of 1,000,000 shares of special stock without par value, 10,707 shares of preferred stock of the par value of $100.00 per share and 75,000,000 of common stock of the par value of $1.00 per share.

The designations and the powers, preferences and rights, and the qualifications, limitations and restrictions thereof are as follows:

The Board of Directors of the Corporation shall have the authority from time to time, in a resolution or resolutions duly adopted by it, to cause the issuance of the special stock for such lawful consideration as it shall deem appropriate. Such special stock shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, and relative, participating, optional or other special rights and qualifications, limitations or restrictions as shall be stated in the resolution or resolutions providing for the issuance of such stock.

The holders of the preferred shares shall be entitled to receive, when and as declared by the Board of Directors of the Corporation, cumulative dividends at the rate of Five Dollars ($5.00) per share per annum, and no more, payable as the Board of Directors may from time to time determine, in each year to shareholders of record at the close of business on such dates respectively preceding the payment thereof as may be fixed by the Board of Directors in declaring any such dividend. Such dividend shall be cumulative from the date of issue, so that if dividends on the outstanding preferred shares at said rate shall not have been paid or declared and set apart for payment for all past dividend periods, and payment of, or provision for the payment of all dividends thereon for the current dividend period shall not have been made, dividends to the amount of such deficiency, but without interest thereon, shall be paid or declared and set apart for payment before any dividends on the common shares shall be paid or declared and set apart for payment.

After full cumulative dividends as aforesaid upon the outstanding preferred shares shall have been paid for all past dividend periods, and after full dividends on the preferred shares for the current dividend period shall have been paid or declared and set apart for payment, then and not otherwise, dividends in cash, property or shares may be declared and paid upon the common shares to the exclusion of the holders of preferred shares. The preferred shares shall be preferred as to assets as well as dividends. Upon any dissolution, liquidation or winding up of the Corporation, the holders of preferred shares shall be entitled to receive in cash, before any payment shall be made to the holders of common shares, the sum of One Hundred Dollars ($100.00) per share, together with an amount equal to all accrued and unpaid dividends thereon to the date of payment. The consolidation or merger of the Corporation at any time or from time to time, with any other corporation or corporations, or a sale of all or substantially all of the assets of the Corporation, shall not be construed as a dissolution, liquidation or winding up of the Corporation within the meaning thereof.

After payment of the full preferential amounts aforesaid, the holders of preferred shares shall not be entitled to any further participation in any distribution of the assets or funds of the Corporation, and the remaining assets and funds of the Corporation shall be divided and distributed among the holders of the common shares then outstanding according to their respective interests.

The term “accrued and unpaid dividends” used with reference to the preferred shares shall mean an amount equal to Five Dollars ($5.00) per share per annum from the date on which the dividends thereon become cumulative to the date of computation, less the aggregate amount of dividends paid.

The preferred shares at any time outstanding may be redeemed by the Corporation, in whole or in part, at any time or from time to time, at its election expressed by resolution of the Board of Directors upon not less than thirty (30) days prior notice to the holders of record of the preferred share to be redeemed, given as hereinafter provided, at One Hundred Dollars ($100.00) per share plus an amount equal to the accrued and unpaid dividends thereon to the redemption date. If less than all of the outstanding preferred shares are to be redeemed, the redemption may be made either by lot or pro rata or by such other equitable method as the Board of Directors in its discretion may determine. Notice of such redemption, stating the redemption date and the redemption price and the place of payment thereof shall be given to the respective holders of the preferred shares to be redeemed by mailing the same first-class, postage prepaid, to such holders at their respective addresses as shown on the books of the corporation. Such notice shall be so mailed not less than thirty (30) days and not more than sixty (60) days prior to the redemption date specified therein. If such notice of redemption shall have been duly given and if, on or before the redemption date specified in such notice all funds necessary for such redemption shall have been set aside so as to be available therefor, then, notwithstanding that any certificate for preferred shares so called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding, the right to receive dividends thereon shall cease to accrue from and after the date of redemption so fixed, and all rights with respect to such preferred shares so called for redemption shall forthwith on such redemption date cease and terminate except only the right of the holders thereof to receive the amount payable upon redemption thereof, but without interest.

Subject to the provisions and limitations herein contained, the Board of Directors shall have full power and authority to prescribe the manner in which and the terms and conditions upon which preferred shares shall be redeemed.

The Corporation shall have the right to purchase preferred shares for the purpose or in anticipation of redemption at not to exceed the redemption price thereof. Preferred shares which have been redeemed or purchased by the Corporation shall be cancelled and not reissued.

Except as otherwise provided by statute, the holders of the preferred shares shall have no voting power and no holder thereof shall be entitled to receive notice of any meeting of shareholders.

Of the 1,000,000 shares of special stock without par value, the Board of Directors of the Corporation created, by resolution adopted January 11, 1996, a series of 100,000 shares of Special Stock designated as Series A Junior Participating Special Stock with the voting powers, preferences, special rights, qualifications, limitations or restrictions as follows:

Section 1. Dividends and Distributions.

(A) The holders of shares of Series A Junior Participating Special Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Special Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $0.01 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non- cash dividends or other distributions. other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, par value $1.00 per share, of the Corporation (the “Common Stock”) since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Special Stock. In the event the Corporation shall at any time after January 11, 1996 (the “Rights Declaration Date”) (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Special Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or distribution on the Series A Junior Participating Special Stock as provided in Paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per share on the Series A Junior Participating Special Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Special Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Special Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Special Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Special Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Special Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.

Section 2. Voting Rights. The holders of shares of Series A Junior Participating Special Stock shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Special Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Special Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) Except as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Special Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(C) (i) If at any time dividends on any Series A Junior Participating Special Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Participating Special Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Special Stock (including holders of the Series A Junior Participating Special Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) Directors.

(ii) During any default period, such voting right of the holders of Series A Junior Participating Special Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that such voting right shall not be exercised unless the holders of ten percent (10%) in number of shares of Special Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Special Stock of such voting right. At any meeting at which the holders of Special Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Special Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Special Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Special Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Special Stock.

(iii) Unless the holders of Special Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Special Stock outstanding, irrespective of series, may request, the calling of special meeting of the holders of Special Stock, which meeting shall thereupon be called by the President, a Vice-President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Special Stock are entitled to vote pursuant to this Paragraph (C)(iii) shall be given to each holder of record of Special Stock by mailing a copy of such notice to him or her at his or her last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Special Stock outstanding. Notwithstanding the provisions of this Paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders.

(iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Special Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Special Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in Paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this Paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence.

(v) Immediately upon the expiration of a default period, (x) the right of the holders of Special Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Special Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the certificate of incorporation or by-laws irrespective of any increase made pursuant to the provisions of Paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the certificate of incorporation or by-laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors.

(D) Except as set forth herein, holders of Series A Junior Participating Special Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

Section 3. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Special Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Special Stock outstanding shall have been paid in full, the Corporation shall not

(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating special Stock;

(ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Special Stock, except dividends paid ratably on the Series A Junior Participating Special Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Special Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Special Stock; or

(iv) purchase or otherwise acquire for consideration any shares of Series A Junior Participating Special Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Special Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under Paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 4. Reacquired Shares. Any shares of Series A Junior Participating Special Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Special Stock and may be reissued as part of a new series of Special Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

Section 5. Liquidation, Dissolution or Winding Up.

(A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Special Stock unless, prior thereto, the holders of shares of Series A Junior Participating Special Stock shall have received an amount equal to 1,000 times the Exercise Price, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A junior Participating Special Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Special Stock and Common Stock, respectively, holders of Series A Junior Participating Special Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Special Stock and Common Stock, on a per share basis, respectively.

(B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences, of all other series of special stock, if any, which rank on a parity with the Series A Junior Participating Special Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock.

(C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 6. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Participating Special Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Special Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 7. No Redemption. The shares of Series A Junior Participating Special Stock shall not be redeemable.

Section 8. Amendment. The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Participating Special Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Participating Special Stock, voting separately as a class.

Section 9. Fractional Shares. Series A Junior Participating Special Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holders fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Participating Special Stock.

FIFTH. No holder of shares of the Corporation of any class shall be entitled as of right to subscribe for, purchase, or receive any part of any new or additional issue of stock of any class, whether now or hereafter authorized, or of any bonds, debentures, or other securities convertible into stock of any class, and all such additional shares of stock, bonds, debentures or other securities convertible into stock may be issued and disposed of by the Board of Directors to such person or persons and on such terms and for such consideration (so far as may be permitted by law) as the Board of Directors, in their absolute discretion, may deem advisable.

SIXTH. The minimum amount of capital with which the Corporation will commence business is $1,000.00.

SEVENTH. The Corporation is to have perpetual existence.

EIGHTH.

(A) The number of Directors shall be fixed from time to time exclusively by the Board of Directors pursuant to resolution adopted by a majority of the Directors then in office, provided, however, that the number of Directors shall not be less than three.

(B) Directors of the Corporation shall be elected annually and shall hold office until the next annual meeting of stockholders (provided, however, that the foregoing shall not have the effect of shortening the term of any Director to which they have been previously elected) and their successors are elected, or until earlier resignation, removal from office or death.

(C) Subject to the rights of holders of any special stock, vacancies in the Board of Directors, however caused, and newly created directorships shall be filled solely by a majority vote of the Directors then in office, whether or not a quorum, or by a sole remaining Director, and any Director so chosen shall hold office for a term expiring at the next annual meeting of stockholders.

(D) Subject to the rights of holders of any special stock, any Director or the entire Board of Directors may be removed, with or without cause, by the affirmative vote of the holders of a majority of the shares of Common Stock of the Corporation outstanding and entitled to vote for the election of Directors at an annual meeting of stockholders

NINTH. The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever.

TENTH. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized:

(1) To make, alter or repeal the by-laws of the Corporation.

(2) To authorize and cause to be executed mortgages and liens upon the real and personal property of the Corporation.

(3) To set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and to reduce or abolish any such reserve in the manner in which it was created.

(4) By resolution passed by a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the Corporation which to the extent provided in the resolution or in the by-laws of the Corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the by-laws of the Corporation or as may be determined from time to time by resolution adopted by the Board of Directors.

(5) When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders’ meeting duly called for that purpose, or when authorized by the written consent of the holders of a majority of the voting stock issued and, outstanding, to sell, lease or exchange all of the property and assets of the Corporation, including its good will and its corporate franchises, on such terms and conditions and for such consideration, which may be in whole or in part shares of stock in, or other securities of, or both, any other corporation or corporations, as the Board of Directors shall deem expedient and for the best interests of the Corporation.

ELEVENTH. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title B of the Delaware Code, or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the, creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.

TWELFTH. In the absence of fraud, no contract or other transaction between this Corporation and any other person, firm or corporation or any partnership or association shall be affected or invalidited by the fact that any director or officer of this Corporation is pecuniarily or otherwise interested in or is a director, member or officer of such other corporation or of such person, firm, association or partnership or is a party to or is a pecuniarily or otherwise interested in such contract or other transaction or in any way connected with any person or persons, firm, association, partnership or corporation pecuniarily or otherwise interested therein; any director so interested may be counted in determining the existence of a quorum at any meeting of the Board of Directors of this Corporation for the purpose of authorizing any such contract or transaction with like force and effect as if he were not so interested, or were not a director, member or officer of such other corporation, firm, association or partnership. Any director whose interest in any such contract or transaction arises solely by reason of the fact that he is a stockholder, officer or creditor of such other corporation (or solely by reason of the fact that he is a director of such other corporation or partner in such firm where such dealing, contract or arrangement is made by officers or employees of the Corporation in the ordinary performance of their duties and without the actual participation of such director) shall not be deemed interested in such contract or other transaction under any of the provisions of this article, nor shall any such contract or transaction be void or voidable, nor shall any such director be liable to account because of such interest nor need any such interest be disclosed.

Apart from and in addition to the other provisions of this section, no contract or other transaction between the Corporation and any other corporation or firm which provides for the purchase or sale of securities by such other corporation or firm upon terms not less favorable to the Corporation than offered by such other corporation or firm to others, shall in any case be void or voidable because of the fact that directors of the Corporation are directors of such other corporation or partners in such firm, nor shall any such director be deemed interested in such contract or other transaction under any of the provisions of this article, nor shall any such director be liable to account in respect thereof.

No contract or other transaction between the Corporation and any other corporation, at least a majority of the stock of which having voting power is owned or controlled by the Corporation or which owns or controls at least a majority of the stock having voting power of the Corporation, shall in any case be void or voidable because of’ the fact that directors of the Corporation are directors of such other corporation, nor shall any such director be deemed interested in such contract or other transaction under any of the provisions of this article, nor shall any such director be liable to account because of such interest nor need any such interest be disclosed.

Any contract or act that shall be approved or ratified by the vote of the holders of a majority of the capital stock of the Corporation having power which is represented in person or by proxy at any annual meeting of stockholders or at any special meeting called for the purpose, among others, of considering the approval the ratification of the acts of officers or directors (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the Corporation and upon all its stockholders as though it had been approved or ratified by every stockholder of the Corporation.

THIRTEENTH. The Corporation shall indemnify to the full extent authorized by law any person made or threatened to be made a party to an action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the Corporation or serves or served any other enterprise as a director, officer, employee or agent at the request of the Corporation.

FOURTEENTH.

(A) Meetings of stockholders may be held outside of the State of Delaware, if the by-laws so provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the Corporation. Elections of Directors need not be by ballot unless the by-laws of the Corporation shall so provide.

(B) No action required to be taken or which may be taken at any annual or special meeting of the stockholders of the Corporation may be taken without a meeting and the power of stockholders to consent in writing, without a meeting, is specifically denied. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called only by the president or by the Board of Directors pursuant to a resolution adopted by a majority of the Directors then in office. The affirmative vote of the holders of not less than 80 percent of the outstanding voting shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall be required to alter, amend or repeal this Paragraph (B) of Article FOURTEENTH, provided, however, that this sentence shall not apply to, and such 80 percent vote shall not be required for, any alteration, amendment or repeal recommended by the affirmative vote of at least two-thirds of the Directors then in office.

FIFTEENTH. The Corporation reserves the right to amend, alter, charge or repeal any provision herein contained in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to the reservation.

SIXTEENTH. Notwithstanding that a lesser vote or no vote may be specified by law, the Certificate of Incorporation or the By-Laws of the Corporation, Section 5 of Article II, Section 1 and 2 of Article III and Article IX of the By-Laws and this Article SIXTEENTH may be amended, altered or repealed only by (1) the affirmative vote of the holders of 80 percent or more of the outstanding shares of capital stock of the Corporation entitled to vote in the election of Directors, voting together as a single class, or (2) the vote of at least two-thirds of the Directors then in office.

SEVENTEENTH. Repealed 12/08/2005

EIGHTEENTH. No Director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except for liability (i) for any breach of the Director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the Director derived an improper personal benefit.

Exhibit 10.6

A. SCHULMAN, INC.
DIRECTORS DEFERRED UNITS PLAN
Second Amended and Restated Effective December 18, 2008

1.00 Background and Purpose

Effective December 5, 2002 and as part of the A. Schulman, Inc. 2002 Equity Incentive Plan, A. Schulman, Inc. adopted a procedure through which its non-employee directors could defer receipt of their board and committee fees. Effective October 17, 2006 (“Effective Date”), that procedure is amended and restated in the form of the A. Schulman, Inc. Directors Deferred Units Plan. The Plan is intended to be an unfunded, nonqualified program of deferred compensation within the meaning of Title I of ERISA. The Plan is hereby amended and restated in its entirety effective December 18, 2008 (the “Restatement Effective Date”) for compliance with Code §409A.

2.00 Definitions

Whenever used in this Plan, the following words, terms and phrases will have the meanings given to them in this section, unless another meaning is expressly provided elsewhere in this document or clearly is required by the context. Also, the form of any defined term or of any word, term or phrase will include all of its other forms.

Account: The Account established under Section 4.01 for each Participant.

Beneficiary: The person a Member designates to receive any Plan benefit that is undistributed (or unexercised) when the Member dies. A Beneficiary may be designated only by following the procedures described in Section 11.06.

Board: The Company’s board of directors.

Change in Control: The occurrence of any one of the following actions or events:

[1] The acquisition by any person (as defined under Code §409A), or more than one person acting as a group (as defined under Code §409A), of stock of the Company that, together with the stock of the Company held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company;

[2] The acquisition by any person, or more than one person acting as a group, within any 12-month period, of stock of the Company possessing 30 percent or more of the total voting power of the stock of the Company;

[3] A majority of the members of the Board is replaced during any 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

[4] The acquisition by any person, or more than one person acting as a group, within any 12-month period, of assets from the Company that have a total gross fair market value equal to or more than 40 percent 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 Code §409A and the Treasury Regulations promulgated thereunder.

Code: The Internal Revenue Code of 1986, as amended, and all pertinent regulations and rulings directly related to the Plan and published Internal Revenue Service rulings of general application issued under the Code.

Committee: The administrative committee described in Section 7.00.

Company: A. Schulman, Inc., a Delaware corporation.

Deferred Unit or Unit: A notional Share.

Director: A person who [1] is an elected member of the Board or of the board of directors of a Related Entity (or has been appointed to the Board or to the board of directors of a Related Entity to fill an unexpired term and will continue to serve at the expiration of that term only if elected by shareholders) and [2] is not an employee of the Company or any Related Entity.

Director Fees: The cash compensation each Director is entitled to receive in exchange for his or her services as a Director.

Disability: The Participant is [1] 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; or [2] the Participant is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.

ERISA: The Employee Retirement Income Security Act of 1974, as amended.

Fair Market Value: The value of one Share on any relevant date, determined under the following rules:

[1] If the Shares are traded on an exchange, the reported “closing price” on the relevant date, if it is a trading day, otherwise on the next trading day;

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[2] If the Shares are traded over-the-counter with no reported closing price, the mean between the highest and lowest selling prices on the relevant date, if it is a trading day, otherwise on the next trading day; or

[3] If neither subsections [1] or [2] of this definition apply, the fair market value as determined by the Committee in good faith and consistent with any applicable provisions under the Code.

Grandfathered Amount: T he portion, if any, of a Participant’s Account that was earned and vested (within the meaning of Code §409A) under the Plan before January 1, 2005 and any earnings (whether actual or notional) attributable to such portion of the Participant’s Account and any earnings (whether actual or notional) thereon.

Inactive Participant: A person who [1] is serving as a Director but who no longer is deferring Director Fees into the Plan or [2] has Terminated but has not received a complete distribution of his or her Plan Benefit.

Member: Collectively, [1] a Participant, [2] an Inactive Participant and [3] as appropriate, the Beneficiary of a dead Member.

Participant: A Director who meets the conditions described in Section 3.00.

Participation Agreement: The agreement that each Director must complete and return to the Committee as a condition of becoming a Participant.

Plan: The A. Schulman, Inc. Directors Deferred Units Plan, as described in this document and any amendments to it.

Plan Benefit: The balance of a Member’s Account as of any Valuation Date.

Plan Year: Each calendar year during which the Plan is in effect.

Related Entity: Any person who would be considered a single employer with the Company under Code §414(b) or (c).

Section 409A Amount: The portion, if any, of a Participant’s Account that is not a Grandfathered Amount.

Share: A share of common stock, par value $1.00 per share, of the Company or any security of the Company issued in substitution, exchange or in place of these shares.

Termination: A “separation from service” as defined under Code §409A from the Company and all Related Entities.

Valuation Date: The last day of each calendar quarter and the date of a Director’s Termination or Disability or a Change in Control.

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3.00 Eligibility and Participation

3.01 Participation. Any Director may become a Participant by returning a completed Participation Agreement to the Committee as described in Section 3.03. Notwithstanding the foregoing, each Director who was a Participant as of the Restatement Effective Date shall remain a Participant.

3.02 Duration of Participation. A Director who complies with Section 3.01 will continue to be a Participant until the earlier of the date he or she [1] no longer is a Director or [2] revokes his or her election to defer Director Fees, subject to Section 3.03[1].

3.03 Participation Agreement.

[1] Each Director may become a Participant by returning a completed Participation Agreement to the Committee specifying the amount of his or her Director Fees to be deferred and providing any other information the Committee requires to administer that election. This deferral election will be effective [a] on the first day of the calendar year beginning after the Committee receives the completed Participation Agreement or [b] upon receipt of a completed Participation Agreement by the Committee within 30 days after he or she first becomes a Director (although this election will apply only to Director Fees paid with respect to services to be performed after the Committee receives the completed Participation Agreement). For purposes of this subsection, a Director is first eligible to participate in this Plan only if the Director is not eligible to participate in any other arrangement that, along with this Plan, would be treated as a single nonqualified deferred compensation plan under Treasury Regulation Section 1.409A-1(c)(2).

[2] A Participation Agreement will remain in effect until amended or revoked under the rules described in this subsection. A Director may amend his or her Participation Agreement by returning a new Participation Agreement to the Committee specifying the changes made. Any change to a previously filed Participation Agreement that does affect the amount of Director Fees deferred (including a complete revocation of an election to defer Director Fees) will be effective no earlier than the first day of the calendar year that begins after the Committee receives the new Participation Agreement.

4.00 Credits to Accounts

4.01 Members’ Accounts. Subject to the rules described in this section and elsewhere in the Plan, the Committee will establish one or more Accounts for each Participant to which it will credit [1] the number of Units and dividends credited under the Plan before the Effective Date and [2] the number of additional Units determined under Section 4.02.

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4.02 Establishing/Valuing Units.

[1] As of each Valuation Date, the Committee will [a] calculate the number of Units to be credited to each Participant’s Account attributable to deferrals described in Section 4.01[2] by dividing the amount of Director Fees deferred since the preceding Valuation Date (without adjustment for the time value of money) by the Fair Market Value of a Share on the Valuation Date to produce the number of whole and fractional Units (calculated to the nearest hundredth of the Fair Market Value of a Share on the Valuation Date) and [b] add the number of Units calculated under Section 4.02[1][a] to the Units credited to the Director’s Account as of the preceding Valuation Date.

[2] As of each Valuation Date, the Committee also will credit each Member’s Account with the amount of any dividends that would have been paid to the Member had he or she actually owned a number of Shares equal to the number of Units credited to his or her Account, although no dividends will be credited with respect to any cash amounts held in a Member’s Account (including any Director Fees credited between Valuation Dates). Simultaneously, these amounts will be converted to whole and fractional Units (with a fractional Units calculated to the nearest hundredth of the Fair Market Value of a Share on the Valuation Date).

4.03 Vesting. A Member will always be 100 percent vested in the amount credited to his or her Accounts.

5.00 Distribution of Plan Benefits

5.01 Time, Schedule and Form of Payment. Grandfathered Amounts will be distributed in a single cash payment equal to the Member’s entire Account and will be made no later than March 15 of the calendar year that begins after the calendar year during which the earliest of any of the following occurs: a Change in Control, the Member’s Termination or Disability or as provided in Section 9.02. Section 409A Amounts will be distributed in a single cash payment equal to the Member’s entire Account and will be made within 90 days following the earliest of any of the following to occur: a Change in Control, the Member’s Termination or Disability or as provided in Section 9.02. A Member may change the time and/or form of distribution of the Member’s Section 409A Amount; provided that (i) such change may not take effect until at least 12 months after the date on which such change is made and (ii) the distribution with respect to which such change is made must be deferred (other than a distribution upon death) for at least five years from the date the amount otherwise would have been distributed.

5.02 Full Discharge. Once a Member’s Account has been fully distributed, none of the Company, any Related Entity, the Committee or the Plan will have any further liability to the Member.

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6.00 Taxes

Each Member is responsible for payment of any federal, state and local income, employment and wage taxes associated with his or her participation in the Plan and neither the Company nor any Related Entity will withhold any amounts in advance payment of these taxes.

7.00 Administration

7.01 Committee . The Board will designate the members of the Committee that administer this Plan. Any action by the Committee under the Plan may be taken by resolution of the Committee, by an officer of the Company or by any other person or persons duly authorized by resolution of the Committee.

7.02 Committee Duties. The Committee is responsible for the general administration and management of the Plan and has all powers and duties necessary to fulfill its responsibilities, including the following:

[1] To determine all questions relating to the eligibility of a Director to become a Participant;

[2] To determine, compute and certify the amount and kind of benefits payable to Members;

[3] To authorize payment of Plan Benefits;

[4] To maintain all records necessary for the administration of the Plan, other than those maintained by each Related Entity;

[5] To provide for disclosure of all information and filings or provision of all reports and statements to Members or governmental bodies that are required by the Code, ERISA or any other applicable law;

[6] To adopt or modify rules for the regulation or application of the Plan;

[7] To delegate any power or duty to any firm or person in accordance with Section 7.03;

[8] To decide all other questions or disputes arising from the operation of the Plan;

[9] To exercise all other powers or duties granted to the Committee by other Plan provisions; and

[10] At least annually, apprise the Board of the Plan’s operation, including the value of Plan Benefits.

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7.03 Delegation of Administrative Responsibility

[1] The Committee may delegate all or any portion of its administrative responsibilities with respect to the Plan, subject to the terms of this section.

[2] A delegation under this section may be made only through a written instrument signed by the Committee that specifies the responsibilities delegated to that delegate. Any delegation of responsibilities will be effective upon the date specified in the delegation, subject to written acceptance by the delegate. At least annually, any delegate must report to the Committee any information necessary to fully inform the Committee of the status and operation of the Plan and of the delegate’s discharge of the responsibilities delegated.

7.04 Compensation, Expenses and Indemnity

[1] The Committee and any delegate under Section 7.03 who is an employee of the Company or any Related Entity will serve without compensation for services to the Plan. The Company will furnish the Committee and any delegate under Section 7.03 with all clerical or other assistance necessary to perform his or her duties. The Committee is authorized to employ any legal counsel and advisors as it may deem advisable to assist in the performance of its duties hereunder.

[2] The Company will pay all expenses of administering the Plan.

[3] Each individual who is or was a member of the Committee (or to whom any duties have been delegated under Section 7.03) is entitled, in good faith, to rely on or to act upon any report or other information furnished by any executive officer, other officer or other employee of the Company or any Related Entity, the Company’s independent auditors, consultants or any other agents assisting in the administration of the Plan. Committee members (and any person to whom any duties have been delegated under Section 7.03) and any officer of the Company or any Related Entity acting at the direction or in behalf of the Committee or a delegee will not be personally liable for any action or determination taken or made in good faith with respect to the Plan and will, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any act or determination just described.

7.05 Effect of Committee Action.

[1] All actions taken and all determinations made by the Committee in good faith will be final and binding upon all Members, the Company, each Related Entity and any other person interested in the Plan. To the extent the Committee has been granted discretionary authority under the Plan, its prior exercise of this authority will not subsequently obligate the Committee to exercise its authority in a like fashion.

[2] The Plan will be interpreted by the Committee in accordance with its terms and their intended meaning. The construction and interpretation of Plan provisions are vested with the Committee, in its absolute discretion, including the determination of Plan Benefits, eligibility and interpretation of Plan provisions. All decisions, determinations and interpretations will be final, conclusive and binding upon all parties having an interest in the Plan.

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8.00 Amendments

8.01 Company’s Right to Amend Plan. The Company reserves the right to make, from time to time, any amendment or amendments to the Plan. By adopting this Plan, each Related Entity delegates to the Company the authority described in this section. Without the affected Member’s written consent, no amendment to the Plan will be effective to the extent that it retroactively decreases a Member’s Plan Benefit. However, nothing in this section will restrict the Company’s right to amend the Plan without any additional consideration to affected Participants to the extent necessary to avoid penalties arising under Code §409A, even if those amendments reduce, restrict or eliminate rights vested or accrued under the Plan before those amendments are adopted.

8.02 Amendment of Vesting Rights. If any amendment to the Plan changes the basis for calculating a Member’s nonforfeitable rights to Plan Benefits, that amendment will be applied only to amounts credited to the Participant’s Account after the date the amendment is adopted and each Member credited with at least three years of service may elect, during the period beginning on the date the amendment is adopted and ending no earlier than the latest of [1] 60 days after the amendment’s adoption, [2] 60 days after the amendment’s effective date or [3] 60 days after the Member is issued a written notice of the amendment, to have his or her nonforfeitable rights calculated without regard to the amendment. If this election is made, a Member’s nonforfeitable right to his or her Plan Benefit will be not less than his or her nonforfeitable right before that election.

8.03 Action by Company. Any action by the Company under this Section 8.00 may be taken by resolution of the Board, by an officer of the Company or by any other person or persons duly authorized by resolution of the Board.

9.00 Termination/Withdrawal

9.01 Right to Terminate. The Company may terminate the Plan at any time with respect to some or all Members and no further Plan Benefits will accrue after the effective date of that termination. By adopting this Plan, each Related Entity delegates to the Company the authority described in this section.

9.02 Distribution of Plan Benefits After Plan Termination. Except as otherwise permitted by Code §409A, termination of the Plan will not accelerate the distribution of any Plan Benefits. Instead, Plan Benefits will be distributed on the date the Plan Benefits would have been distributed had the Plan not been terminated.

9.03 Withdrawal. By action of its board of directors or other governing entity, any Related Entity may withdraw from the Plan. However, this withdrawal [1] will not be effective until the first day of the Plan Year beginning after the date of that action and [2] will not result in the accelerated liquidation or payment of Plan Benefits earned by the withdrawing Directors. Instead, these amounts will be distributed according to the terms of this document without regard to that withdrawal.

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10.00 Funding

The Plan is an unfunded, unsecured promise, within the meaning of Title I of ERISA, to pay only those Plan Benefits that are accrued by Members while Directors under the terms of the Plan. Neither the Company nor any Related Entity is required to segregate any assets into a fund established exclusively to pay Plan Benefits unless the Company, in its sole discretion, establishes a trust for this purpose. Neither the Company nor any Related Entity will be liable for the payment of Plan Benefits that are actually distributed from a trust established for that purpose. Also, Members have only the rights of a general unsecured creditor and do not have any interest in or right to any specific asset of the Company or any Related Entity. Nothing in this Plan constitutes a guarantee by the Company or any Related Entity or any other entity or person that its assets will be sufficient to pay Plan Benefits.

11.00 Miscellaneous

11.01 Mistakes and Misstatements. In the event of a mistake or a misstatement by a Member as to any item of information that is furnished pursuant to the terms of the Plan that has an effect on the amount distributed or to be distributed to that Member, or a mistake by the Plan as to the amount distributed or to be distributed to a Member, the Committee will take any action which in its judgment will result in the payment to which the Member is properly entitled under the Plan. The actions to be taken by the Committee may include the reduction of future payments to the Member, the restatement of the Member’s Plan Benefit, a demand that the Member repay the amounts distributed in error or any other action the Committee believes appropriate.

11.02 No Contract. The adoption and maintenance of this Plan is no guarantee that any Director will be nominated for or elected to the Board or the board of directors of any Related Entity.

11.03 Service of Process. The Company’s Secretary is designated as agent for the service of legal process on the Plan.

11.04 Merger or Consolidation. Subject to other terms of the Plan, in case of any merger or consolidation with, or transfer of assets or liabilities to, any other plan, each Member will be entitled to receive immediately after the merger, consolidation or transfer a Plan Benefit that is equal to, or greater than, the Plan Benefit he or she would have been entitled to receive immediately before the merger, consolidation or transfer.

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11.05 No Alienation. The right of a Member or any other person to receive Plan Benefits may not be assigned, transferred, pledged or encumbered except as provided in the Member’s designation of a Beneficiary, by will or by applicable laws of descent and distribution. Any attempt to assign, transfer, pledge or encumber a Plan Benefit will be null and void and of no legal effect. Any attempted action contrary to this section will be null and void and of no effect whatsoever; the Company, each Related Entity and the Committee (and each member of the Committee) may disregard that action and will not be in any manner bound by it; and they, and each of them, will suffer no liability by reason of it. Consistent with Code §409A, if any Member or other person attempts to take any action contrary to this section, the Company, each Related Entity and the Committee (and each member of the Committee) will be reimbursed and indemnified on demand out of the interest of that Member in the Plan for any loss, cost or expense incurred as a result of disregarding or of acting in disregard of that action.

11.06 Beneficiary Designation. Each Member may name a Beneficiary or Beneficiaries (who may be named contingently or successively) to receive any vested Plan Benefit that is undistributed at the Member’s death. Unless otherwise provided in the Beneficiary designation, each designation made will revoke all earlier designations made by the same Member, must be made on a form prescribed by the Committee and will be effective only when filed in writing with the Committee. If a Member has not made an effective Beneficiary designation, the deceased Member’s Beneficiary will be his or her surviving spouse or, if none, the deceased Member’s estate. The identity of a Member’s designated Beneficiary will be based only on the information included in the latest Beneficiary designation form completed by the Member and will not be inferred from any other evidence.

11.07 Applicable Law. The Plan, and all agreements hereunder, 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.

11.08 Headings. Headings and subheadings in this document are inserted for convenience of reference only. They constitute no part of the Plan.

11.09 Invalid Provision. If any provision of this Plan is held to be illegal or invalid for any reason, the Plan will be construed and enforced as if the offending provision had not been included in the Plan. However, that determination will not affect the legality or validity of the remaining parts of this Plan.

11.10 One Plan. This Plan may be executed in any number of counterparts, each of which will be deemed to be an original.

11.11 Coordination with Other Plans. Members’ rights to any Plan Benefits will be determined solely by reference to the terms of this Plan document and will be unaffected by any other document or agreement between Members, the Company or any Related Entity.

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11.12 Offset. Regardless of any other Plan provision but only to the extent permitted under Code §409A, the Company may offset any Plan Benefit payable to any Member against any other amounts the Member may owe to the Company or any Related Entity, whether or not that obligation originated under the terms of the Plan or elsewise.

11.13 Extension of Plan to Related Entities. By action of its Board, the Company may extend this Plan to a Related Entity, but only if the board of directors or governing body of the Related Entity accepts participation in the Plan, agrees to the terms of the Plan and delegates to the Company and the Committee the authority to amend, terminate and administer the Plan according to its terms.

11.14 Successors. The Plan will be binding on all successors and assigns of the Company and a Participant, including without limitation, the estate of the Participant and the executor, administrator or trustee of the estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.

11.15 No Guarantee of Continuing Services. Except as otherwise specified in the Plan, nothing in the Plan may be construed as:

[1] Conferring on any Participant any right to continue as a Director;

[2] Guaranteeing that amount (if any) of any Director Fees; or

[3] Guaranteeing that the Company will pay any dividends.

11.16 Compliance with Code §409A. It is intended that the Section 409A Amounts comply with Code §409A and the Treasury Regulations promulgated thereunder, and the Plan will be interpreted, administered and operated accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a Member, and none of the Company, any of its Subsidiaries, the Board or the Committee shall have any liability with respect to any failure to comply with the requirements of Code §409A.

5.6 Payments Upon Income Inclusion under Code §409a. The Company may accelerate the time or schedule of a distribution of Section 409A Amounts to a Member at any time the Plan fails to meet the requirements of Code §409A and the Treasury Regulations promulgated thereunder. Such distribution may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code §409A and the Treasury Regulations promulgated thereunder.


A. SCHULMAN, INC.
By:	/s/ Paul F. DeSantis
	Title:	Vice President, Chief Financial Officer and Treasurer

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Exhibit 10.7

FIRST AMENDMENT TO
INDEMNIFICATION AGREEMENT

This First Amendment to the Indemnification Agreement (the “Agreement”) is made and entered into effective as of December 31, 2008, by and between A. Schulman, Inc., a Delaware corporation (the “Company”), and _____ (“Indemnitee”).

WHEREAS, the Company and Indemnitee previously entered into an Indemnification Agreement; and

WHEREAS, the parties desire to amend the Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as amended, as set forth herein;

NOW, THEREFORE, the parties hereto agree to amend the Agreement as follows:

1. The Agreement is hereby amended by adding the following Section 16 to the end thereof:

16. SPECIAL RULES FOR REIMBURSEMENTS SUBJECT TO SECTION 409A . Notwithstanding any other provision of this Agreement and solely to the extent that any payment or reimbursement of Indemnitee’s Expenses under this Agreement (including judgments, fines and settlement amounts) would not be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, all of the following conditions shall apply:

(a) Indemnitee shall only be entitled to the payment or reimbursement of Expenses incurred during the lifetime of the Indemnitee;

(b) The amount of Expenses paid or reimbursed during one taxable year of Indemnitee shall not affect the amount of Expenses eligible for payment or reimbursement in any other taxable year of Indemnitee;

(c) Any reimbursement shall be made on or before the last day of Indemnitee’s taxable year following the taxable year in which the Expense was incurred; and

(d) The right to payment or reimbursement of Expenses shall not be subject to liquidation or exchange for another benefit.

IN WITNESS WHEREOF, Indemnitee has executed this Amendment and the Company has caused this Amendment to be executed by its duly authorized officer, effective as of the date set forth above.


		A. SCHULMAN, INC.

		Printed Name:

		Its:

		INDEMNITEE

		Printed Name:

Exhibit 10.8

A. SCHULMAN, INC.
AMENDED AND RESTATED
NONQUALIFIED PROFIT SHARING PLAN

ARTICLE I
ESTABLISHMENT AND PURPOSE

1.1 ESTABLISHMENT OF PLAN. A. Schulman, Inc., a Delaware corporation (the “Company”), hereby establishes a nonqualified profit sharing plan to be known as the “A. Schulman, Inc. Amended and Restated Nonqualified Profit Sharing Plan” (the “Plan”) as set forth in this document. The Plan permits the unfunded accrual of benefits to Plan participants.

1.2 PURPOSE OF PLAN. The purpose of the Plan is to promote the long term growth and profitability of the Company by providing key employees of the Company and its Subsidiaries with the benefits which they would have received under the Company’s Profit Sharing Plan but for the reduction of the compensation limit under Code Section 401(a)(17), effective for plan years beginning after December 31, 1993.

ARTICLE II
DEFINITIONS

“Board” means the Board of Directors of the Company.

“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute.

“Committee” means the Compensation Committee of the Board.

“Company” means A. Schulman, Inc. or any successor thereto.

“Fiscal Year” means the Company’s fiscal year beginning September 1 and ending on the following August 31.

“Grandfathered Amount” means the portion, if any, of a Participant’s account balance under the Plan that was earned and vested (within the meaning of Section 409A of the Code) under the Plan before January 1, 2005 and any earnings (whether actual or notional) attributable to such portion of the Participant’s account and any earnings (whether actual or notional) thereon.

“Participant” means an employee of the Company or any Subsidiary who is designated by the Committee to participate in the Plan.

“Profit Sharing Plan” means the A. Schulman, Inc. Retirement Plan.

“Section 409A Amount” means the portion, if any, of a Participant’s account balance under the Plan that is not a Grandfathered Amount.

“Subsidiary” means: (i) with respect to Grandfathered Amounts, a corporation of which the Company owns, directly or indirectly, at least a majority of the shares having voting power in the election of directors; and (ii) with respect to Section 409A Amounts, any person with whom the Company would be considered a single employer under Section 414(b) or (c) of the Code.

“Termination” means a “separation from service” within the meaning of Section 409A of the Code by a Participant with the Company and all of its Subsidiaries.

ARTICLE III
PARTICIPANTS AND PLAN ACCRUALS

3.1 DESIGNATION OF PARTICIPANTS. The Committee shall meet at least once in each Fiscal Year and irrevocably specify, before the end of such fiscal year, the name of each employee of the Company or a Subsidiary who is entitled to participate in the Plan for such Fiscal Year.

3.2 DETERMINATION OF ACCRUALS. The amount to be accrued under the Plan for a Participant for a Fiscal Year shall be equal to the excess of (i) the product of (x) the Participant’s compensation for such Fiscal Year (excluding bonuses) multiplied by (y) the percentage determined by the Board or the Committee for purposes of calculating the Company’s contribution to the Profit Sharing Plan for such Fiscal Year, OVER (ii) the Company contribution allocated to such Participant under the Profit Sharing Plan for such Fiscal Year.

3.3 EMPLOYMENT RIGHTS. Nothing in this Plan shall confer any right on an employee to continue in the employ of the Company or any Subsidiary or shall interfere in any way with the right of the Company or any Subsidiary to terminate an employee at any time.

ARTICLE IV
VESTING, EARNINGS, FORFEITURES AND DISTRIBUTIONS

4.1 PARTICIPANT ACCOUNTS. The Committee shall cause a memorandum account to be kept in the name of each Participant.

4.2 VESTING OF ACCOUNTS. A Participant’s account balance shall become vested and non-forfeitable in accordance with the following schedule:


Years of Employment	Percent Vested

Less than 3		0	%
3 but less than 4		20	%
4 but less than 5		40	%
5 but less than 6		60	%
6 but less than 7		80	%
7 or more		100	%

“Years of Employment” shall be determined in accordance with applicable provisions of the Profit Sharing Plan. Notwithstanding the above, a Participant’s account balance shall become 100% vested upon the Participant’s death while an employee of the Company or disability (as determined under the Profit Sharing Plan).

4.3 EARNINGS. At the end of each Fiscal Year, a Participant’s account shall be credited with an estimated amount (the “Earnings”) equal to the product of (i) the average yield received by such Participant’s funds in the Profit Sharing Plan for the preceding Fiscal Year, multiplied by (ii) the Participant’s account balance under this Plan at the beginning of the Fiscal Year. Upon final determination of the average yields earned by the Profit Sharing Plan for a Fiscal Year, the Earnings credited to a Participant’s account in respect of such Fiscal Year shall be adjusted appropriately.

4.4 DISTRIBUTIONS. Payment of a Participant’s vested account balance shall be made: (i) with respect to Grandfathered Amounts, at the time and in the manner that such Participant (or his or her designated beneficiary) is entitled to payment under the Profit Sharing Plan; and (ii) with respect to Section 409A Amounts, subject to Section 4.7, in a lump sum payment within 90 days following the Participant’s Termination.

4.5 BENEFICIARIES. Each Participant shall have the right to designate one or more beneficiaries in accordance with the procedures set forth in the Profit Sharing Plan.

4.6 STATUS OF PARTICIPANTS AS UNSECURED CREDITORS. Until a Participant’s account balance becomes vested, the interest of a Participant (and his or her beneficiaries) is contingent and subject to forfeiture. To the extent that a Participant’s account balance becomes vested, such Participant shall have the rights of an unsecured general creditor of the Company. The Company shall not be required to set aside any assets to meet its payment obligations hereunder, and Participants shall not have any property interest in any specific assets which are in fact set aside. Nothing in this Plan shall be deemed to create a trust of any kind or create a fiduciary relationship.

4.7 SIX MONTH DISTRIBUTION DELAY FOR SPECIFIED EMPLOYEES. Notwithstanding anything in this Plan to the contrary, if a Participant 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 Participant’s Termination and the Participant is entitled to a payment under this Plan that is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code, then such payment shall not be paid until the first business day of the seventh month following the date of the Participant’s Termination (or, if earlier, the date of the Participant’s death).

ARTICLE V
ADMINISTRATION

5.1 RECORDS. The records to be maintained for the Plan shall be maintained by the Company at its expense and subject to the supervision and control of the Committee. All expenses of administration of the Plan shall be paid by the Company and shall not be charged against Participants’ accounts.

5.2 ALIENATION. To the extent permitted by law, the right of any Participant or beneficiary in any benefit or payment hereunder shall not be subject in any manner to attachment or other legal process for the debts of such Participant or beneficiary, nor shall any such benefit or payment be subject to anticipation, alienation, sale, transfer, assignment or encumbrance.

5.3 COMPANY LIABILITY. No member of the Board or the Committee and no officer or employee of the Company shall be liable to any person for any action taken or omitted in connection with the administration of this Plan unless attributable to his own fraud or willful misconduct. The Company shall not be liable to any person for any such action unless attributable to fraud or the willful misconduct of a director, officer or employee of the Company.

5.4 CLAIMS PROCEDURE. The Committee shall have sole and exclusive authority to make all initial and final determinations regarding benefits payable hereunder to Participants or their beneficiaries and to adopt claims and review procedures, application forms and other documents. A claim for a benefit is made whenever a Participant or beneficiary (the “claimant”) submits a written application for the benefit to the Committee.

If a claim is wholly or partially denied, the Committee will send the claimant written notification of the denial within 90 days (45 days for a claim for a benefit because of disability) of the date on which the claim has been filed. The Committee can extend the 90-day period for claims (other than for disability benefits) for up to an additional 90 days by sending written notice of the extension to the claimant before the initial period elapses. The Committee can extend the 45-day period for a claim for disability benefits for up to an additional 30 days by sending written notice of the extension to the claimant before the initial period elapses, and the first 30-day extension period may be extended for an additional 30 days. Any notice of extension will state the reason for the extension and the date by which a final decision may be expected.

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

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

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

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

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

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

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

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

(b) the specific portions of the denial of the claim that the claimant requests the Board to review;

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

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

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

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

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

The decision of the Committee will be final and binding on all affected parties, except that the claimant will have a right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.

5.5 COMPLIANCE WITH SECTION 409A OF THE CODE. It is intended that Section 409A Amounts comply with Section 409A of the Code and the Treasury Regulations promulgated thereunder, and the Plan will be interpreted, administered and operated accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a Participant, and none of the Company, any of its Subsidiaries, the Board or the Committee shall have any liability with respect to any failure to comply with the requirements of Section 409A of the Code.

5.6 PAYMENTS UPON INCOME INCLUSION UNDER SECTION 409A OF THE CODE. The Company may accelerate the time or schedule of a distribution of Section 409A Amounts to a Participant at any time the Plan fails to meet the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder. Such distribution may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder.

ARTICLE VI
EFFECTIVE DATE AND AMENDMENT

6.1 EFFECTIVE DATE. The Plan was effective as of September 1, 1994. Effective December 18, 2008, the Plan is amended and restated in its entirety for compliance with Section 409A of the Code.

6.2 AMENDMENT AND TERMINATION. The Plan may be amended or terminated by the Board at any time. Notice of any such action shall be given to each Participant and each beneficiary of a deceased Participant.

ARTICLE VII
CHANGE IN CONTROL

7.1 CHANGE IN CONTROL.

(a) Notwithstanding any provision hereof to the contrary:

(i) Upon the occurrence of a Change in Control (as defined in Section 7.1(b) hereof), each Participant’s account balance shall immediately become one hundred percent (100%) vested and non-forfeitable;

(ii) If a Participant’s employment shall be Terminated for any reason during the Change-in-Control Protective Period (as defined in Section 7.1(e) hereof), payment of the Participant’s vested account balance shall be made in a lump sum payment within the five-day period immediately following such Termination; and

(iii) Following a Change in Control, no termination or amendment of the Plan shall adversely affect the rights of Participants in and to their respective vested account balances hereunder.

(b) For purposes of this Plan, 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) any Person (as defined in Section 7.1(d) hereof) is or becomes the Beneficial Owner (as defined in Section 7.1(c)hereof), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing 25% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

(ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved; or

(iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation or approve the issuance of voting securities of the Company in connection with a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) pursuant to applicable stock exchange requirements, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 75% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its subsidiaries other than in connection with the acquisition by the Company or its subsidiaries of a business) representing 25% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

(iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by stockholders in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, no ‘Change in Control’ shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

Further, notwithstanding the foregoing, any event or transaction which would otherwise constitute a Change in Control (a ‘Transaction’) shall not constitute a Change in Control for purposes of this Plan if, in connection with the Transaction, the Eligible Director participates as an equity investor in the acquiring entity or any of its affiliates (the ‘Acquiror’). For purposes of the preceding sentence, the Eligible Director 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 Eligible Director 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 Company into incentive compensation awards of the Acquiror), on terms and conditions substantially equivalent to those applicable to other executives of the Company immediately prior to the Transaction, after taking into account normal differences attributable to job responsibilities, title and similar matters, (ii) obtaining beneficial ownership of any equity interest in the Acquiror on terms and conditions substantially equivalent to those obtained in the Transaction by all other stockholders of the Company, or (iii) passive ownership of less than three percent (3%) of the stock of the Acquiror.

Further, notwithstanding the foregoing, with respect to the application of Section 7.1(a)(ii) to Section 409A Amounts, a Change of Control shall not be deemed to occur unless the events constituting a Change of Control also constitute a “change of control event” under Section 409A of the Code and the Treasury Regulations promulgated thereunder.

(c) For purposes of this Plan, ‘Beneficial Owner’ shall have the meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended from time to time (the ‘Exchange Act’).

(d) For purposes of this Plan, ‘Person’ shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(e) For purposes of this Plan, ‘Change-in-Control Protective Period’ shall mean the period from the occurrence of a Change in Control until the later of the second anniversary of such Change in Control or, with respect to Grandfathered Amounts only, if such Change in Control shall be caused by the stockholder approval of a merger or consolidation described in Section 7.1(b)(iii) hereof, the second anniversary of the consummation of such merger or consolidation.


		A. SCHULMAN, INC.

		/s/ Paul F. DeSantis

		Print Name: Paul F. DeSantis
		Title:		Vice President, Chief Financial Officer and Treasurer

Exhibit 10.9

FIRST AMENDMENT TO THE
A. SCHULMAN, INC.
2002 EQUITY INCENTIVE PLAN

This First Amendment (this “Amendment”) to the A. Schulman, Inc. 2002 Equity Incentive Plan (the “Plan”) is effective as of December 18, 2008.

WHEREAS, A. Schulman, Inc. (the “Company”) previously adopted the Plan; and

WHEREAS, pursuant to Section 13.1 of the Plan, the Company desires to amend the Plan for compliance with Section 409A of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, the Plan is hereby amended as follows:

1. Section 2.6 of the Plan is hereby amended by adding the following to the end thereof:

Notwithstanding the foregoing, with respect to the payment, exercise or settlement of any Award that is subject to Code Section 409A, a Change in Control shall not be deemed to occur unless the events constituting a Change in Control also constitute a “change in control event” under Code Section 409A and the Treasury Regulations promulgated thereunder.

2. Section 2.13 of the Plan is hereby amended by adding the following to the end thereof:

Notwithstanding the foregoing, with respect to the payment, exercise or settlement of any Award that is subject to Code Section 409A, a Disability shall not be deemed to exist unless the conditions constituting a Disability also constitute a “disability” under Code Section 409A and the Treasury Regulations promulgated thereunder.

3. Section 2.17 of the Plan is hereby deleted in its entirety and the following is substituted therefor:

The value of one Share on any relevant date, determined under the following rules: (a) if the Shares are traded on an exchange, the reported “closing price” on the relevant date, if it is a trading day, otherwise on the next trading day; (b) if the Shares are traded over-the-counter with no reported closing price, the mean between the highest and lowest selling prices on the relevant date, if it is a trading day, otherwise on the next trading day; or (c) if neither subsection (a) nor (b) of this definition apply, (i) with respect to any Nonqualified Stock Option or Stock Appreciation Right, the value as determined by the Committee through reasonable application of a reasonable valuation method, taking into account all information material to the value of the Company, within the meaning of Code Section 409A and the Treasury Regulations promulgated thereunder; and (ii) with respect to any other Award, the fair market value as determined by the Committee in good faith and consistent with any applicable provisions under the Code.

4. Section 2.34 of the Plan is hereby amended by adding the following to the end thereof:

Notwithstanding the foregoing, “Subsidiary” means: (i) with respect to Incentive Stock Options, a “subsidiary corporation” as defined under Code Section 424(f); and (ii) with respect to Nonqualified Stock Options and SARS, any person with whom the Company would be considered a single employer under Code Section 414(b) or (c).

5. Section 4.2 of the Plan is hereby amended by adding the following to the end thereof:

Notwithstanding the foregoing, an adjustment pursuant to this Section 4.2 shall be made only to the extent such adjustment complies, to the extent applicable, with Code Section 409A.

6. Section 7.4 of the Plan is hereby amended by adding the following to the end thereof:

Restricted Stock Units will be settled within 60 days after the applicable terms and conditions have been met.

7. Article 8 of the Plan is hereby deleted in its entirety and the following is substituted therefor:

Effective December 5, 2002 and as part of the Plan, the Company adopted a procedure through which its non-employee directors could defer receipt of their board and committee fees. Effective October 17, 2006, that procedure was amended and restated in the form of the A. Schulman, Inc. Directors Deferred Units Plan, which is intended to be an unfunded, nonqualified program of deferred compensation within the meaning of Title I of ERISA.

8. Section 13.2 of the Plan is hereby amended by adding the following to the end thereof:

Notwithstanding the foregoing, an adjustment pursuant to Section 13.2 shall be made only to the extent such adjustment complies, to the extent applicable, with Code Section 409A.

9. The Plan is hereby amended by adding the following Sections 16.17 and 16.18 to the end thereof:

16.17 Separation from Service and Six-Month Distribution Delay for Specified Employees.

Regardless of any other provision in the Plan or any Award Agreement:

(a) Subject to Section 16.17(b), if a Participant becomes entitled to the payment, exercise or settlement of any Award that is subject to Code Section 409A upon the Participant’s termination of employment, the payment, exercise, or settlement of such Award will not be made or permitted before the Participant “separates from service” within the meaning of Code Section 409A with the Company and all persons with whom the Company would be considered a single employer under Code Sections 414(b) and (c) (a “Termination”).

(b) If a Participant is a Key Employee and becomes entitled to the payment, exercise or settlement of any Award that is subject to Code Section 409A upon the Participant’s Termination, such payment, exercise or settlement of any Award shall not be made until the first day of the seventh month following such Termination or, if earlier, the Participant’s death. For purposes of the Plan, “Key Employee” shall mean a “specified employee” within the meaning of Treasury Regulation §1.409A-1(i) and as determined under the Company’s policy for determining specified employees.

16.18 Compliance with Code Section 409A. It is intended that the Awards granted under the Plan be exempt from, or comply with, Code Section 409A and the Treasury Regulations promulgated thereunder, and the Plan shall be interpreted, administered and operated accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a Participant. None of the Company, the Board, the Committee or any Related Entity shall have any liability with respect to any failure to comply with the requirements of Code Section 409A.

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its duly authorized officer effective as of the date set forth above.


		A. SCHULMAN, INC.

		/s/ Paul F. DeSantis

		Printed Name: Paul F. DeSantis
		Its:		Vice President, Chief Financial Officer and Treasurer

Exhibit 10.10

A. SCHULMAN, INC.
AMENDED AND RESTATED
2006 INCENTIVE PLAN

1.00 PURPOSE AND EFFECTIVE DATE

1.01 Purpose. The Plan is intended to foster and promote the long-term financial success of the Company and Related Entities and to increase stockholder value by [1] providing Participants an opportunity to acquire and maintain an ownership interest in the Company and [2] enabling the Company and Related Entities to attract and retain the services of outstanding individuals upon whose judgment and special efforts the successful conduct of the Group’s business is largely dependent.

1.02 Effective Date. The Plan was originally adopted effective October 17, 2006 (the “Effective Date”). The Plan is amended and restated in its entirety effective December 18, 2008.

2.00 DEFINITIONS

When used in the Plan, the following words, terms and phrases have the meanings given to them in this section unless another meaning is expressly provided elsewhere in this document or clearly required by the context. When applying these definitions and any other word, term or phrase used in the Plan, the form of any defined term or of any word, term or phrase will include any and all of its other forms.

Act. The Securities Exchange Act of 1934, as amended, or any successor statute of similar effect even if the Company is not subject to the Act.

Annual Meeting. The annual meeting of the Company’s stockholders.

Award. Any Dividend Equivalent, Cash-Based Award, Incentive Stock Option, Nonqualified Stock Option, Performance Share, Performance Unit, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right or Whole Share granted under the Plan.

Award Agreement. The written or electronic agreement between the Company and each Participant that describes the terms and conditions of each Award. If there is a conflict between the terms of the Plan and the terms of any Award Agreement, the terms of the Plan will govern.

Beneficial Owner. A “beneficial owner” as defined in Rule 13d-3 under the Act.

Board. The Company’s board of directors.

Business Combination. With respect to the payment, exercise or settlement of any Award that is subject to Code §409A, the occurrence of any one of the following actions or events:

This definition of Business Combination shall be interpreted in a manner that is consistent with the definition of “change in control event” under Code §409A and the Treasury Regulations promulgated thereunder.

Cash-Based Award. An Award granted under Section 13.00.

Cause. Unless otherwise specified in the associated Award Agreement or in any employment agreement between the Participant and the Company or any Related Entity or in any change in control agreement between the Participant and the Company or any Related Entity (but only within the context of the events contemplated by the employment agreement or change in control agreement, as applicable):

[1] Gross neglect of duties the Participant owes to the Company or to the Participant’s Service Recipient;

[2] The Participant knowingly committing misfeasance or knowingly permitting nonfeasance of duties in any material respect; or

[3] The Participant commits a felony.

Change in Control. With respect to the payment, exercise or settlement of any Award not subject to Code §409A and unless otherwise specified in the associated Award Agreement or in any employment agreement between the Participant and the Company or any Related Entity or in any change in control agreement between the Participant and the Company or any Related Entity (but only within the context of the events contemplated by the employment agreement or change in control agreement, as applicable):

[1] Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 25 percent or more of either the then outstanding Shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

[2] The following individuals cease for any reason to constitute a majority of the number of persons then serving on the Board (“Board Members”): individuals who, on the date hereof, constitute the Board and any new Board Member (other than a Board Member whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to, a consent solicitation relating to the election of Board Members) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the Board Members then still in office who either were Board Members on the date hereof or whose appointment, election or nomination for election was previously so approved; or

[3] The stockholders of the Company approve a merger or consolidation of the Company with any other corporation or approve the issuance of voting securities of the Company in connection with a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) pursuant to applicable stock exchange requirements, other than [a] a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 75 percent of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation or [b] a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Subsidiaries other than in connection with the acquisition by the Company or its Subsidiaries of a business) representing 25 percent or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; or

[4] The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 75 percent of the combined voting power of the voting securities of which are owned by stockholders in substantially the same proportions as their ownership of the Company immediately prior to such sale.

Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common Shares of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

Further, notwithstanding the foregoing, any event or transaction which would otherwise constitute a Change in Control (a “Transaction”) shall not constitute a Change in Control for purposes of this Plan if, with respect to a Participant, the Participant participates as an equity investor in the acquiring entity or any of its Affiliates (the “Acquiror”). For purposes of the preceding sentence, such Participant shall not be deemed to have participated as an equity investor in the Acquiror by virtue of [a] obtaining Beneficial Ownership of any equity interest in the Acquiror as a result of the grant to the Participant 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 Company into incentive compensation awards of the Acquiror), on terms and conditions substantially equivalent to those applicable to other executives of the Company immediately prior to the Transaction, after taking into account normal differences attributable to job responsibilities, title and similar matters, [b] obtaining Beneficial Ownership of any equity interest in the Acquiror on terms and conditions substantially equivalent to those obtained in the Transaction by all other stockholders of the Company or [c] passive ownership of less than 3 percent of the stock of the Acquiror.

For purposes of this definition, “Person” has the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d) thereof, except that the term will not include [a] the Company or any Related Entity, [b] a trustee or other fiduciary holding securities under any employee benefit plan of the Company or any Related Entity, [c] an underwriter temporarily holding securities pursuant to an offering of those securities, or [d] a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

Code. The Internal Revenue Code of 1986, as amended or superseded, and all pertinent regulations and rulings directly related to the Plan and published IRS rulings of general application issued under the Code.

Committee. [1] In the case of Awards to Directors, the entire Board; and [2] in the case of all other Awards, the Board’s Compensation Committee which also constitutes a “compensation committee” within the meaning of Treas. Reg. §1.162-27(c)(4). The Committee will be comprised of at least three persons [1] each of whom is [a] an outside director, as defined in Treas. Reg. §1.162-27(e)(3)(i) and [b] a “non-employee” director within the meaning of Rule 16b-3 under the Act and [2] none of whom may receive remuneration from the Company or any Related Entity in any capacity other than as a director, except as permitted under Treas. Reg. §1.162-27(e)(3)(ii).

Company. A. Schulman, Inc., a Delaware corporation, and any and all successors to it.

Consultant. Any person who performs services for the Company or any Related Entity other than an Employee or a Director. A person’s status as a Consultant will be determined as of the Grant Date of each Award made to that person.

Covered Officer. Those Employees whose compensation is (or likely will be) subject to limited deductibility under Code §162(m) as of the last day of any calendar year.

Director. A person who, on an applicable Grant Date, [1] is an elected member of the Board or of a Related Board (or has been appointed to the Board or to a Related Board to fill an unexpired term and will continue to serve at the expiration of that term only if elected by stockholders) and [2] is not an Employee. A person’s status as a Director will be determined as of the Grant Date of each Award made to that person.

Disability. Unless otherwise specified in the associated Award Agreement or in any employment agreement between the Participant and the Company or any Related Entity or in any change in control agreement between the Participant and the Company or any Related Entity (but only within the context of the events contemplated by the employment agreement or change in control agreement, as applicable):

[1] With respect to the payment, exercise or settlement of any Award that is (or becomes) subject to Code §409A, [a] the Participant 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; [b] the Participant 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 Participant’s employer; or [c] the Participant is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board; and

[2] With respect to any Award not described in subsection [1] of this definition, “disability” as defined in Code §22(e)(3).

Disability will be determined by the Committee in good faith upon receipt of sufficient medical advice from one or more individuals, selected by the Committee, who are qualified to give professional medical advice.

Dividend Equivalents. An Award granted under Section 14.00.

Employee. Any person who performs services for the Company or any Related Entity as a common-law employee. A person’s status as an Employee will be determined as of the Grant Date of each Award made to that person. A worker who is classified as other than a common law employee but who is subsequently reclassified as a common-law employee of the Company or any Related Entity for any reason and on any basis will be treated as a common-law employee only from the date that reclassification occurs and will not retroactively be reclassified as an Employee for any purpose under the Plan.

Exercise Price. The amount, if any, a Participant must pay to exercise an Option or the amount upon which the value of a Stock Appreciation Right is based.

Expiration Date. The last date that an Option or Stock Appreciation Right may be exercised.

Fair Market Value. The value of one Share on any relevant date, determined under the following rules:

[1] If the Shares are traded on an exchange, the reported “closing price” on the relevant date, if it is a trading day, otherwise on the next trading day;

[3] If neither subsection [1] nor [2] of this definition apply, [a] with respect to any Nonqualified Stock Option or Stock Appreciation Right, the value as determined by the Committee through the reasonable application of a reasonable valuation method, taking into account all information material to the value of the Company, within the meaning of Code §409A and the Treasury Regulations promulgated thereunder; and [b] with respect to any other Award, the fair market value as determined by the Committee in good faith and consistent with any applicable provisions under the Code.

Full Value Award. Performance Shares, Performance Units, Restricted Stock, Restricted Stock Units and Whole Shares.

Grant Date. The date an Award is granted.

Group. The Company and all Related Entities. The composition of the Group will be determined as of any relevant date.

Group Member. Each entity that is a member of the Group.

Incentive Stock Option. An Option that, on the Grant Date, meets the conditions imposed under Code §422 and is not subsequently modified in a manner inconsistent with Code §422.

Key Employee. A “specified employee” within the meaning of Treasury Regulation §1.409A-1(i) and as determined under the Company’s policy for determining specified employees.

Nonqualified Stock Option. Any Option that is not an Incentive Stock Option.

Option. An Award granted under Section 6.00. An Option may be either [1] an Incentive Stock Option or [2] a Nonqualified Stock Option.

Participant. Any Employee, Consultant or Director to whom an Award has been granted and which is still outstanding.

Performance-Based Award. An Award granted subject to Section 15.00.

Performance Criteria. The criteria described in Section 15.02.

Performance Period. The period over which the Committee will determine if applicable Performance Criteria have been met.

Performance Share. An Award granted under Section 11.00.

Performance Unit. An Award granted under Section 12.00.

Plan. The A. Schulman, Inc. Amended and Restated 2006 Incentive Plan.

Plan Year. The Company’s fiscal year.

Prior Plan. The A. Schulman, Inc. 2002 Equity Incentive Plan. Upon approval of the Plan by the Company’s stockholders, no more awards were granted under the Prior Plan, although awards may be granted under the Prior Plan up to the date the Company’s stockholders approve the Plan, and the Prior Plan will remain in effect after the Company’s stockholders approve the Plan for purposes of determining any grantee’s right to awards issued under the Prior Plan before that date. If the Company’s stockholders do not approve the Plan, the Prior Plan will remain in effect until the expiration date specified in its governing documents.

Related Board. The board of directors of any incorporated Related Entity or the governing body of any unincorporated Related Entity.

Related Entity. Any entity with whom the Company would be considered a single employer under Code §414(b) or (c), but modified as permitted under rules issued under any Code section relevant to the purpose for which the definition is applied.

Restricted Stock. An Award granted under Section 8.00.

Restricted Stock Unit. An Award granted under Section 9.00.

Restriction Period. The period over which the Committee will determine if a Participant has met conditions placed on Restricted Stock or Restricted Stock Units.

Retirement. Unless otherwise specified in the associated Award Agreement or in any employment agreement between the Participant and the Company or any Related Entity or in any change in control agreement between the Participant and the Company or any Related Entity (but only within the context of the events contemplated in any employment agreement or change in control agreement, if applicable):

[1] With respect to Participants who are Employees, Termination after age 60; and

[2] With respect to Participants who are Directors, Termination of service as a Director [a] after serving one full term as an elected Director and [b] being nominated for election to a second consecutive full term.

Separation from Service. A “separation from service” within the meaning of Treasury Regulation § 1.409A-1(h) by the Participant from the Group.

Service Recipient. The Group Member with whom an Employee, Consultant or Director has a direct service relationship.

Shares. Shares of common stock, par value $1.00 per share, of the Company or any security of the Company issued in substitution, exchange or in place of these shares.

Stock Appreciation Right (“SAR”). An Award granted under Section 10.00.

Subsidiary. A “subsidiary corporation” as defined under Code §424(f).

Termination.

[1] If a Participant is an Employee, a termination of the Employee’s common-law employment relationship with the Company and all Related Entities for any reason, although a Termination will not occur if the Employee becomes a Consultant who provides bona fide services to the Company or any Related Entity;

[2] If a Participant is a Consultant, a termination of the Consultant’s service relationship with the Company and all Related Entities for any reason; and

[3] If a Participant is a Director, a termination of the Director’s service on the Board and any Related Board for any reason.

Whole Share. An Award granted under Section 7.00.

3.00 PARTICIPATION

3.01 Awards.

[1] Consistent with the terms of the Plan and subject to Section 3.02, the Committee will [a] decide which Employees, Consultants and Directors will be granted Awards and [b] establish the types of Awards to be granted and the terms and conditions relating to those Awards.

[2] The Committee may establish different terms and conditions [a] for each type of Award granted, [b] for each Participant receiving the same type of Award and [c] for the same Participant for each Award received, whether or not those Awards are granted at different times.

[3] In the sole discretion of the Committee, and consistent with applicable law, Awards also may be made, subject to the restrictions set forth in 4.04 and in connection with a “corporate transaction” as defined under Code §424, in assumption of, or in substitution for, outstanding awards previously granted by the Company or any Related Entity or a company acquired by the Company or with which the Company combines.

3.02 Conditions of Participation. By accepting an Award, each Participant agrees:

[1] To be bound by the terms of the Award Agreement and the Plan and to comply with other terms and conditions imposed on the Award; and

[2] That the Board or the Committee, as appropriate, may amend the Plan and any Award Agreement without any additional consideration to the extent necessary to avoid penalties arising under Code §409A, even if those amendments reduce, restrict or eliminate rights granted under the Plan or an outstanding Award Agreement.

4.00 ADMINISTRATION

4.01 Duties. The Committee is responsible for administering the Plan and has all powers appropriate and necessary to that purpose. Consistent with the Plan’s objectives, the Committee may adopt, amend and rescind rules and regulations relating to the Plan and has complete discretion to make all other decisions necessary or advisable for the administration and interpretation of the Plan. Any action by the Committee will be final, binding and conclusive for all purposes and upon all persons.

4.02 Delegation of Duties. In its sole discretion, the Committee may delegate any ministerial duties associated with the Plan to any person that it deems appropriate and the authority to grant Awards covering up to 25,000 Shares quarterly to Participants (or prospective Participants) who are not Covered Officers. However, and except to the extent provided in the preceding sentence, the Committee may not delegate any discretionary duties assigned to it or any duty that the Committee is required to discharge to comply with Code §162(m) or other applicable laws.

4.03 Award Agreement. As soon as administratively feasible after the Grant Date, the Committee will prepare and deliver or cause to be prepared and delivered an Award Agreement to each affected Participant. The Award Agreement will describe:

[1] The terms of the Award, including, to the extent applicable, [a] the type of Award, [b] when and how the Award may be exercised, [c] any Exercise Price associated with the Award and [d] how the Award will or may be settled; and

[2] To the extent different from the terms of the Plan, any other terms and conditions affecting the Award.

4.04 Restriction on Repricing. No Award (including Options and SARs) may be “repriced.” For purposes of this restriction, “repricing” means any of the following or any other action that has the same effect: [1] lowering the Exercise Price of an Option or SAR after it is granted, [2] any other action that is treated as a repricing under generally accepted accounting principles or [3] canceling an Option at a time when its Exercise Price exceeds the Fair Market Value of the underlying stock, in exchange for another Option, Restricted Stock or other Award, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction.

5.00 LIMITS ON STOCK SUBJECT TO AWARDS

5.01 Number of Authorized Shares of Stock. Subject to Section 5.03, the aggregate number of Shares reserved and available for Awards or which may be used to provide a basis of measurement for or to determine the value of an Award may not be more than the sum of:

[1] The number of Shares that, on the date the Plan was approved by the Company’s stockholders, was authorized to be granted under the Prior Plan but which are not then subject to outstanding awards under the Prior Plan; plus

[2] The number of Shares that, on the date the Plan was approved by the Company’s stockholders, was subject to awards issued under the Prior Plan but which were or are subsequently forfeited under the terms of the Prior Plan; plus

[3] 1,750,000.

Any Shares described in this section, including those described in Sections 5.01[1] and [2], may be subject to Awards issued under the terms and conditions described in the Plan and Award Agreements issued under the Plan.

The Shares to be delivered under the Plan may consist, in whole or in part, of Treasury Shares or authorized but unissued Shares not reserved for any other purpose.

5.02 Reduction Ratio. As appropriate, the limits imposed under Sections 5.01, 5.04 and 5.05 will be:

[1] Conditionally reduced by the number of Shares underlying each Award (including SARs) that is not a Full Value Award and by 1.77 times the number of Shares underlying each Award that is a Full Value Award; and

[2] Absolutely reduced by [a] the number of Shares underlying any exercised or settled Award (including SARs) that is not a Full Value Award and [b] 1.77 times the number of Shares underlying any settled Full Value Award; and

[3] Increased by the number of Shares by which the limits imposed under Sections 5.01, 5.04 and 5.05 were conditionally reduced when any Award (including SARs) was granted that is forfeited, cancelled, terminated, relinquished, exchanged or otherwise settled without issuing Shares or without the payment of cash or a cash equivalent.

The number of Shares (if any) withheld to pay any Exercise Price or to satisfy any tax withholding obligation associated with the exercise or settlement of an Award (or part of an Award) will not be recredited to the number of authorized Shares.

5.03 Adjustment in Capitalization. If, after the Effective Date, there is a Share dividend or Share split, recapitalization (including payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to stockholders, exchange of Shares or other similar corporate change affecting Shares, the Committee will appropriately adjust [1] the number of Shares that may be issued subject to Awards that may or will be granted to Participants during any period, [2] the aggregate number of Shares available for Awards or subject to outstanding Awards (as well as any share-based limits imposed under the Plan), [3] the respective Exercise Price, number of Shares and other limitations applicable to outstanding or subsequently granted Awards and [4] any other factors, limits or terms affecting any outstanding or subsequently granted Awards. Notwithstanding the foregoing, an adjustment pursuant to this Section 5.03 shall be made only to the extent such adjustment complies, to the extent applicable, with Code §409A.

5.04 Limits on Incentive Stock Options. Subject to Section 5.03, of the Shares authorized under Section 5.01, up to 500,000 may be issued subject to Incentive Stock Options.

5.05 Limits on Awards to Covered Officers. Subject to Section 5.03, during any Plan Year, no Covered Officer may be granted [1] Options covering more than 250,000 Shares , including Awards that are deemed to have been cancelled under Treas. Reg. §1.162-27(e)(2)(vi)(B), [2] SARs covering more than 250,000 Shares , including Awards that are deemed to have been cancelled under Treas. Reg. §1.162-27(e)(2)(vi)(B), [3] Performance-Based Awards that are to be settled in Shares covering more than 100,000 Shares and [4] more than $2,500,000 in cash paid in settlement of Performance-Based Awards.

6.00 OPTIONS

6.01 Nature of Award. An Option gives a Participant the right to purchase a specified number of Shares if the terms and conditions described in the Plan and the associated Award Agreement (including paying the Exercise Price) are met before the Expiration Date. However, an Option will be forfeited to the extent that applicable terms and conditions have not been met before the Expiration Date or to the extent that the Option is not exercised before the Expiration Date.

6.02 Granting Options. At any time during the term of the Plan, the Committee may grant [1] Incentive Stock Options to employees of the Company or of any Subsidiary and [2] Nonqualified Stock Options to Employees, Consultants and Directors. The Award Agreement associated with each Option grant will describe the Exercise Price, the Expiration Date (which may never be later than the tenth anniversary of the Grant Date), the first date that the Option may be exercised, procedures for exercising the Option and any other terms and conditions affecting the Option and may specify that the Option is a Performance-Based Award under Section 15.00.

6.03 Exercise Price. Except as provided in Section 6.04[4] or to the extent necessary to implement Section 3.01[3], each Option will bear an Exercise Price at least equal to the Fair Market Value of a Share on the Grant Date.

6.04 Special Rules Affecting Incentive Stock Options. Regardless of any other Plan provision:

[1] No provision of the Plan relating to Incentive Stock Options will be interpreted, amended or altered, nor will any discretion or authority granted under the Plan be exercised, in a manner that is inconsistent with Code §422.

[2] The aggregate Fair Market Value of the Shares (determined as of the Grant Date) with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all option plans of the Company and all Related Entities) may not be greater than $100,000 [or other amount specified in Code §422(d)], as calculated under Code §422.

[3] No Incentive Stock Option may be exercised after the tenth anniversary of its Grant Date [or the fifth anniversary of its Grant Date in the case of an Incentive Stock Option granted to a 10% Owner (as defined below)].

[4] The Exercise Price of an Incentive Stock Option may never be less than 100 percent (110 percent in the case of a 10% Owner) of the Fair Market Value of a Share underlying the Incentive Stock Option, measured as of the Grant Date.

For purposes of this section, a “10% Owner” means any Employee who, at the time an Incentive Stock Option is granted, owns (or is treated as owning) [as defined in Code §424(d)] more than ten percent of the total combined voting power of all classes of stock of the Company or of any Subsidiary.

6.05 Exercising Options. An Option may be exercised only if all applicable terms and conditions have been met before the Expiration Date and only by sending to the Committee (or its designee) a completed exercise notice (in the form prescribed by the Committee) along with payment of the Exercise Price in accordance with the method or methods described in the associated Award Agreement. Options may be exercised only to purchase whole Shares; the portion of any Option to purchase a fractional Share will be cancelled without any consideration to the affected Participant.

6.06 Rights Associated With Options. Unless otherwise specified in the associated Award Agreement, a Participant will have no voting or dividend rights with respect to the Shares underlying an unexercised Option.

7.00 WHOLE SHARES

At any time during the term of the Plan, the Committee may grant Whole Shares to Employees, Consultants and Directors, although no more than 250,000 Shares may be issued as Whole Shares. Whole Shares may be granted on any basis and subject to any terms and conditions that the Committee or the Board, as the case may be, believes to be appropriate.

8.00 RESTRICTED STOCK

8.01 Nature of Award. Restricted Stock are Shares issued on the Award’s Grant Date which are subject to specified restrictions on transferability and forfeitability. Any restrictions on transferability and forfeitability will lapse at the end of the associated Restriction Period only if the terms and conditions specified in the Plan and the associated Award Agreement are met during the Restriction Period. However, Restricted Stock will be forfeited to the extent that applicable terms and conditions have not been met before the end of the Restriction Period.

8.02 Granting Restricted Stock. At any time during the term of the Plan, the Committee may grant Restricted Stock to Employees, Consultants and Directors. The Award Agreement associated with each Restricted Stock grant will describe the terms and conditions that must be met during the Restriction Period if the Award is to be earned and settled and any other terms and conditions affecting the Restricted Stock and may specify that the Restricted Stock is a Performance-Based Award under Section 15.00.

8.03 Earning Restricted Stock. Restricted Stock will be held by the Company as escrow agent and will be:

[1] Forfeited, if the applicable terms and conditions have not been met; or

[2] Released from escrow and distributed to the Participant as soon as administratively feasible after the last day of the Restriction Period, if the applicable terms and conditions have been met.

Unless specifically provided otherwise in this Plan, the Award Agreement relating to Restricted Stock that is not a Performance-Based Award may not provide that the Restricted Stock will be earned more rapidly than 33-1/3 percent annually beginning on the first anniversary of the Grant Date.

Any fractional Share of Restricted Stock will be cancelled without any consideration to the affected Participant.

8.04 Rights Associated With Restricted Stock. During the Restriction Period and unless otherwise specified in the associated Award Agreement, each Participant to whom Restricted Stock has been issued:

[1] May exercise full voting rights associated with that Restricted Stock; and

[2] Will be entitled to receive all dividends and other distributions paid with respect to that Restricted Stock, although any dividends or other distributions paid in Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were issued.

9.00 RESTRICTED STOCK UNITS

9.01 Nature of Award. Restricted Stock Units give a Participant the right to receive a specified number of Shares (or cash equal to the Fair Market Value of those Shares) if the terms and conditions described in the Plan and the associated Award Agreement are met during the Restriction Period. However, Restricted Stock Units will be forfeited to the extent that applicable terms and conditions have not been met before the end of the Restriction Period.

9.02 Granting Restricted Stock Units. At any time during the term of the Plan, the Committee may grant Restricted Stock Units to Employees, Consultants and Directors. The Award Agreement associated with each Restricted Stock Unit grant will describe the terms and conditions that must be met during the Restriction Period if the Award is to be earned and settled, the form in which the Award will be settled if it is earned and any other terms and conditions affecting the Restricted Stock Units and may specify that the Restricted Stock Units are a Performance-Based Award under Section 15.00.

9.03 Earning Restricted Stock Units. Restricted Stock Units will be:

[1] Forfeited, if the applicable terms and conditions have not been met; or

[2] Settled in the manner described in Section 9.04, if the applicable terms and conditions have been met.

Unless specifically provided otherwise in this Plan, the Award Agreement relating to Restricted Stock Units that are not a Performance-Based Award may not provide that the Restricted Stock Units will be earned more rapidly than 33-1/3 percent annually beginning on the first anniversary of the Grant Date.

9.04 Settling Restricted Stock Units. As soon as administratively feasible, but no later than 60 days, after the applicable terms and conditions have been met, Restricted Stock Units will be settled [1] in full Shares equal to the number of Restricted Stock Units to be settled and all Restricted Stock Units relating to fractional Shares will be cancelled without any consideration to the affected Participant, [2] for cash equal to the whole number of Restricted Stock Units to be settled, multiplied by the Fair Market Value of a Share on the settlement date and all Restricted Stock Units relating to fractional Shares will be cancelled without any consideration to the affected Participant or [3] in a combination of Shares and cash computed under Sections 9.04[1] and [2].

The method of settling Restricted Stock Units will be described in the associated Award Agreement.

9.05 Rights Associated With Restricted Stock Units. During the Restriction Period and unless specified otherwise in the associated Award Agreement, a Participant will have no voting or dividend rights with respect to the Shares underlying Restricted Stock Units.

10.00 STOCK APPRECIATION RIGHTS

10.01 Nature of Award. A SAR gives a Participant the right to receive the difference between the SAR’s Exercise Price and the Fair Market Value of a Share on the date the SAR is exercised, but only if the terms and conditions described in the Plan and the associated Award Agreement are met before the Expiration Date. However, a SAR will be forfeited to the extent that applicable terms and conditions have not been met before the Expiration Date or to the extent that the SAR is not exercised before the Expiration Date.

10.02 Granting SARs. At any time during the term of the Plan, the Committee may grant SARs to Employees, Consultants and Directors. The Award Agreement associated with each SAR grant will describe the Exercise Price, the Expiration Date (which may never be later than the tenth anniversary of the Grant Date), the first date that the SAR may be exercised, procedures for exercising the SAR, the form in which the SAR will be settled if the SAR is earned and any other terms and conditions affecting the SAR and may specify that the SAR is a Performance-Based Award under Section 15.00.

10.03 Exercise Price. Except to the extent necessary to implement Section 3.01[3], each SAR will bear an Exercise Price at least equal to the Fair Market Value of a Share on the Grant Date.

10.04 Exercising and Settling SARs. SARs may be exercised only if all applicable terms and conditions have been met before the Expiration Date and only by sending to the Committee (or its designee) a completed exercise notice (in the form prescribed by the Committee). As soon as administratively feasible after the SARs are exercised, SARs will be settled in [1] full Shares equal to the difference between the Fair Market Value of a Share on the date the SARs are exercised and the Exercise Price, multiplied by [a] the number of SARs being exercised, and divided by [b] the Fair Market Value of a Share on the date the SARs are exercised, [2] cash equal to [a] the difference between the Fair Market Value of a Share on the date the SARs are exercised and the Exercise Price, multiplied by [b] the whole number of SARs being exercised or [3] a combination of full Shares and cash computed under Sections 10.04[1] and [2]. The method of settling SARs will be specified in the associated Award Agreement. However, in no case may SARs relating to fractional Shares be exercised; any SAR relating to a fractional Share will be automatically cancelled without any consideration to the affected Participant.

10.05 Rights Associated With SARs. Unless specified otherwise in the associated Award Agreement, a Participant will have no voting or dividend rights with respect to the Shares underlying an unexercised SAR.

11.00 PERFORMANCE SHARES

11.01 Nature of Award. Performance Shares give a Participant the right to receive a specified number of Shares if the terms and conditions described in the Plan and the associated Award Agreement (including those based on Performance Criteria) are met at the end of the Performance Period. However, Performance Shares will be forfeited to the extent that applicable terms and conditions have not been met at the end of the Performance Period.

11.02 Granting Performance Shares. The Committee may grant Performance Shares to Employees, Consultants and Directors. The Award Agreement associated with each Performance Share grant will describe the terms and conditions that must be met at the end of the Performance Period if the Award is to be earned and settled (including any performance objectives), the duration of the Performance Period, the number of Performance Shares subject to the Award and any other terms and conditions affecting the Performance Shares and may specify that the Performance Shares are a Performance-Based Award under Section 15.00.

11.03 Earning Performance Shares. After the end of a Performance Period, the Committee will certify the extent to which each Participant has or has not met applicable performance objectives and other terms and conditions specified in the associated Award Agreement. Performance Shares will be settled or forfeited depending on the extent to which the applicable performance objectives have been met at the end of the Performance Period. As soon as administratively feasible after the Committee’s certification (but no later than 60 days following the last day of the Performance Period), a Participant will receive one Share for each Performance Share earned, and any fractional Share relating to an earned Performance Share will be cancelled without any consideration to the affected Participant.

11.04 Rights Associated With Performance Shares. During the Performance Period and unless specified otherwise in the associated Award Agreement, a Participant will have no voting or dividend rights with respect to Shares underlying the Performance Shares.

12.00 PERFORMANCE UNITS

12.01 Nature of Award. Performance Units give a Participant the right to receive cash equal to the Fair Market Value of a specified number of Shares if the terms and conditions described in the Plan and the associated Award Agreement (including those based on Performance Criteria) are met at the end of the Performance Period. However, Performance Units will be forfeited to the extent that applicable terms and conditions have not been met at the end of the Performance Period.

12.02 Granting Performance Units. The Committee may grant Performance Units to Employees, Consultants and Directors. The Award Agreement associated with each Performance Unit grant will describe the terms and conditions that must be met at the end of the Performance Period if the Award is to be earned and settled (including any performance objectives), the duration of the Performance Period, the number of Performance Units subject to the Award and any other terms and conditions affecting the Performance Units and may specify that the Performance Units are a Performance-Based Award under Section 15.00.

12.03 Earning Performance Units. After the end of a Performance Period, the Committee will certify the extent to which each Participant has or has not met applicable performance objectives and other terms and conditions specified in the associated Award Agreement. Performance Units will be settled or forfeited depending on the extent to which the applicable performance objectives have been met at the end of the Performance Period. As soon as administratively feasible after the Committee’s certification (but no later than 60 days following the last day of the Performance Period), each Participant will receive cash equal to the number of Performance Units to be settled, multiplied by the Fair Market Value of a Share on the settlement date.

12.04 Rights Associated With Performance Units. During the Performance Period and unless specified otherwise in the associated Award Agreement, a Participant will have no voting or dividend rights with respect to the Performance Units or the Shares underlying the Performance Units.

13.00 CASH-BASED AWARDS

The Committee may grant Cash-Based Awards to Employees, Consultants and Directors. The Award Agreement associated with each Cash-Based Award grant will describe the terms and conditions affecting the Cash-Based Award and may specify that the Cash-Based Award is a Performance-Based Award under Section 15.00.

14.00 DIVIDEND EQUIVALENTS

14.01 Nature of Award. Dividend Equivalents give a Participant the right to receive the same dividends the Participant would have received had he or she actually owned the Shares underlying the Dividend Equivalent Award but only if the terms and conditions described in the associated Award Agreement are met. If those conditions are not met, the Dividend Equivalent will be forfeited.

14.02 Granting Dividend Equivalents. At any time during the term of the Plan, the Committee may grant Dividend Equivalents to Employees, Consultants and Directors. The Award Agreement associated with each Dividend Equivalent grant will describe the terms and conditions that must be met if the Award is to be earned and settled, the form in which the Award will be settled if it is earned and any other terms and conditions affecting the Dividend Equivalents and may specify that the Dividend Equivalents are a Performance-Based Award under Section 15.00.

14.03 Earning Dividend Equivalents. Dividend Equivalents will be:

[1] Forfeited, if the applicable terms and conditions have not been met; or

[2] Settled in the manner described in Section 14.04, if the applicable terms and conditions have been met.

14.04 Settling Dividend Equivalents. If the terms and conditions specified in the associated Award Agreement are met, Dividend Equivalents will be settled in cash without any adjustment to reflect the time-value of money during the period beginning on the date that the dividend would have been paid had the Participant actually owned the underlying Shares and the date the Dividend Equivalents are settled. The date Dividend Equivalents are settled will be specified in the associated Award Agreement.

15.00 PERFORMANCE-BASED AWARDS

15.01 Nature of the Award. A Performance-Based Award may be granted to any Participant in any form of Award, and the associated Award Agreement may specify that the Award is intended to be qualified performance-based compensation under Code §162(m). As determined by the Committee in its sole discretion, the grant, vesting, exercisability and/or settlement of any Performance-Based Award will be conditioned on the attainment of performance objectives derived from one or more Performance Criteria over a Performance Period.

15.02 Performance Criteria.

[1] The performance objectives relating to a Performance-Based Award will be derived from one or more of the following Performance Criteria:

[a] Net earnings;

[b] Earnings per Share;

[c] Net sales;

[d] Net income (before and after taxes);

[e] Net income;

[f] Net operating profit;

[g] Return measures (including return on assets, capital, equity or sales);

[h] Cash flow (including operating cash flow and free cash flow);

[i] Cash flow return on capital;

[j] Earnings before and after taxes, interest, depreciation and/or amortization;

[k] Gross or operating margins;

[l] Productivity ratios;

[m] Share price (including total stockholder return);

[n] Expense targets; and

[o] Margins.

[2] Different Performance Criteria may be applied to individual Participants or to groups of Participants and, as specified by the Committee, may be based on the results achieved [a] separately by the Company and/or any Related Entity, [b] by any combination of the Company and its Related Entities or [c] by any combination of segments, products or divisions of the Company and Related Entities. In addition, the performance objectives may be measured on an absolute or cumulative basis or measured relative to selected peer companies or a market index.

15.03 Establishing Performance Objectives.

[1] With respect to Participants who are Covered Officers, the Committee will establish in writing [a] the performance objectives to be applied to each Performance-Based Award granted to a Covered Officer and the Performance Period over which their attainment will be measured, [b] the method for computing the Performance-Based Award that will be granted, vested, exercisable and/or settled if (and to the extent that) the Covered Officer meets those performance objectives and [c] the Covered Officer or class of Covered Officers meets to which the performance objectives apply.

[2] Performance objectives relating to Covered Officers must be established in writing [a] while the outcome for that Performance Period is substantially uncertain and [b] no later than 90 days after the beginning of the applicable Performance Period or, if earlier, after 25 percent of the applicable Performance Period has elapsed.

[3] The Committee may grant Performance-Based Awards to Participants who are not Covered Officers either by [a] following the procedures described in Sections 15.03[1] and [2] or [b] by following any other procedure the Committee believes is appropriate.

15.04 Certification of Performance. The Committee will certify in writing whether the performance objectives and other terms and conditions imposed on a Performance-Based Award granted to a Covered Officer have been met at the end of the related Performance Period and no Performance-Based Award will be granted, vested, exercisable and/or settled to or with respect to a Covered Officer until the Committee makes this certification. The Committee may adopt this same procedure (or apply another procedure it believes to be appropriate) to establish whether the terms and conditions associated with Performance-Based Awards granted to Participants who are not Covered Officers have been met.

15.05 Modifying Performance-Based Awards. Once established, the Committee may not revise any performance objectives associated with a Performance-Based Award granted to a Covered Officer or increase the amount of the Performance-Based Award that may be granted, vested, exercisable and/or settled to or with respect to a Covered Officer if those performance objectives are met. However, to the extent consistent with Code §162(m), performance objectives affecting Covered Officers may be calculated without regard to extraordinary items or unforeseen events. In addition, the Committee may reduce or eliminate the amount of any Cash-Based Award that may be granted, vested, exercisable and/or settled if the performance objectives are met.

16.00 TERMINATION/OTHER LIMITS ON EXERCISABILITY

16.01 Effect of Termination on Awards Other Than Performance-Based Awards. Unless specified otherwise in the associated Award Agreement or the Plan (including Section 16.03), the following treatment will apply to Awards other than Performance-Based Awards upon a Termination:

[1] Retirement. If a Participant Terminates due to Retirement:

[a] All Options and SARs then held by the Participant (whether or not then exercisable) will be fully exercisable on the Retirement date and may be exercised at any time before the earlier of [i] the Expiration Date specified in the Award Agreement or [ii] 24 months after the Retirement date. However, an Incentive Stock Option that is not exercised within three months after the Retirement date will be treated as a Nonqualified Stock Option.

[b] A prorata portion of all Dividend Equivalents, Restricted Stock and Restricted Stock Units granted to the Participant will be vested on the Retirement date. The amount vested will equal the number of Restricted Stock, Restricted Stock Units and Dividend Equivalents that are, by their terms, unvested at Retirement multiplied by the number of whole months between the Grant Date and the Retirement date and divided by the number of whole months specified in the Award Agreement over which the Award otherwise would vest.

[c] All Whole Shares will vest or be forfeited as provided in the Award Agreement.

[d] All other Awards granted to the Participant that have not been designated as Performance-Based Awards and which are unvested or have not been earned or settled when the Participant Retires will be forfeited on the Retirement date.

[2] Death or Disability. If a Participant Terminates due to death or Disability:

[a] All Options and SARs then held by the Participant (whether or not then exercisable) will be fully exercisable on the Termination date and may be exercised at any time before the earlier of [i] the Expiration Date specified in the Award Agreement or [ii] 24 months after Termination due to death or Disability. However, an Incentive Stock Option that is not exercised within 12 months after Termination due to death or Disability will be treated as a Nonqualified Stock Option.

[b] All outstanding Dividend Equivalents, Restricted Stock and Restricted Stock Units granted to the Participant will be vested on the Termination date.

[c] All Whole Shares will vest or be forfeited as provided in the Award Agreement.

[3] Cause. When (and if) a Participant commits an act that constitutes Cause, all Awards that are outstanding (whether or not then exercisable) will be forfeited on the date of that occurrence.

[4] Termination for any Other Reason. If a Participant Terminates for any reason not described in Section 16.01[1], [2] or [3], [a] all outstanding unvested Awards that have not been designated as Performance-Based Awards will be forfeited on the Termination date and [b] all vested Options and SARs then held by a Terminating Participant and that have not been designated as Performance-Based Awards may be exercised before the earlier of [i] 90 days after Termination or [ii] the Expiration Date specified in the associated Award Agreement.

16.02 Effect of Termination on Performance-Based Awards. Unless specified otherwise in the associated Award Agreement and subject to Section 16.03:

[1] A Participant who Terminates due to death, Disability or Retirement will receive a prorata portion of all Performance-Based Awards then held by the Participant that are then subject to a pending Performance Period will be settled at the end of that Performance Period but only if at the end of the pending Performance Period, the Committee certifies that the associated performance objectives have been met. The portion of the Award to be settled under this section will be the amount of the Award that would have been due if the Participant had not Terminated due to death, Disability or Retirement multiplied by the number of whole months between the Grant Date and the Termination date and divided by the number of whole months specified in the Award Agreement over which the Award otherwise will be earned.

[2] A Participant who Terminates for any reason other than death, Disability or Retirement during a pending Performance Period will forfeit any Award that otherwise might have been earned during that Performance Period, whether or not the performance objectives established for that Performance Period are met at any time during that Performance Period.

16.03 Code §409A. Regardless of any other provision in the Plan or any Award Agreement:

[1] Subject to Section 16.03[2], if a Participant becomes entitled to the payment, exercise or settlement of any Award that is subject to Code §409A upon the Participant’s Termination, the payment, exercise, or settlement of such Award will not be made or permitted before the Participant Separates from Service.

[2] If a Participant is a Key Employee and becomes entitled to the payment, exercise or settlement of any Award that is subject to Code §409A upon the Participant’s Separation from Service, such payment, exercise or settlement of any Award shall not be made until the first day of the seventh month following such Separation from Service or, if earlier, the Participant’s death.

16.04 Other Limits on Exercisability. Unless otherwise specified in the associated Award Agreement or other written agreement between an Employee or a Consultant and the Company or any Related Entity and regardless of any other Plan provision, all Awards granted to an Employee or a Consultant that have not been exercised or settled will be forfeited if the Employee or Consultant:

[1] Without the Committee’s written consent, which may be withheld for any reason or for no reason, serves (or agrees to serve) as an officer, director, consultant or employee of any proprietorship, partnership, corporation or limited liability company or becomes the owner of a business or a member of a partnership that competes with any portion of the Company’s or a Related Entity’s business or renders any service to entities that compete with any portion of the Company’s or a Related Entity’s business;

[2] Refuses or fails to consult with, supply information to, or otherwise cooperate with, the Company or any Related Entity after having been requested to do so; or

[3] Deliberately engages in any action that the Committee concludes could harm the Company or any Related Entity.

17.00 EFFECT OF BUSINESS COMBINATION OR CHANGE IN CONTROL

17.01 Exercise and Settlement. Upon, as appropriate and depending on whether the Award is or is not subject to Code §409A, the occurrence of a Change in Control and, unless specified otherwise in the associated Award Agreement or in a separate change in control agreement (or written agreement of similar import),

[1] All of a Participant’s Awards will be fully vested;

[2] All performance objectives relating to a Participant’s Awards will be deemed to have been met as of the date of such Change in Control;

[3] All Options and SARs will be fully exercisable; and

[4] All Awards other than Options and SARs will be paid or settled, as the case may be, within 60 days following the date of such Change in Control; provided, however, that any such Awards that are subject to Code §409A will not be paid or settled pursuant to this Section 17.01 unless the Change in Control constitutes a Business Combination.

17.02 Effect of Code §280G. Unless specified otherwise in the associated Award Agreement or in another written agreement between the Participant and the Company or a Related Entity, if the Company concludes that any payment or benefit due to a Participant under the Plan, when combined with any other payment or benefit due to the Participant from the Company or any other entity (collectively, the “Payor”), would be subject to the excise tax imposed by Code §4999:

[1] The Payor will consider the feasibility of offering substitute awards that would not constitute “parachute payments” under Code §280G and that would not generate penalties under Code §409A; and

[2] To the extent that a substitution is not feasible or that the payments and benefits due to the Participant still would be subject to the excise tax imposed by Code §4999, the Payor will reduce the payments and benefits due to the Participant under the Plan to the greater of $0.00 or an amount that is $1.00 less than the amount that otherwise would generate the excise tax under Code §4999. Any reduction pursuant to this Section 17.02[2] shall be made in accordance with Code §409A and the Treasury Regulations promulgated thereunder.

18.00 TERMINATION, SUSPENSION AND AMENDMENT OF PLAN AND AWARD AGREEMENTS

18.01 Termination, Suspension or Amendment of the Plan. The Board may terminate, suspend or amend the Plan at any time without stockholder approval except to the extent that stockholder approval is required to satisfy applicable requirements imposed by [1] applicable requirements of the law or [2] any securities exchange, market or other quotation system on or through which the Company’s securities are listed or traded. Also, no Plan amendment may [3] result in the loss of a Committee member’s status as a “non-employee director” as defined in Rule 16b-3 under the Act with respect to any employee benefit plan of the Company, or [4] without the consent of the affected Participant (and except as specifically provided in the Plan or the Award Agreement), adversely affect any Award granted before the termination, suspension or amendment. However, nothing in this section will restrict the Board’s right to amend the Plan without any additional consideration to affected Participants to the extent necessary to avoid penalties arising under Code §409A, even if those amendments reduce, restrict or eliminate rights granted under the Plan or any Award Agreement before those amendments are adopted.

18.02 Amendment and Termination of Award Agreements. Without the mutual written consent of both the Company and the affected Participant, once issued, an Award Agreement may not be amended except as specifically provided in the Plan or the Award Agreement. However, nothing in this section will restrict the Committee’s right to amend an Award Agreement without additional consideration to the affected Participant to the extent necessary to avoid penalties arising under Code §409A, even if those amendments reduce, restrict or eliminate rights granted under the Award Agreement before those amendments are adopted.

19.00 MISCELLANEOUS

19.01 Assignability. Except as described in this section or as provided in Section 19.02, an Award may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution and, during a Participant’s lifetime, may be exercised only by the Participant or the Participant’s guardian or legal representative. However, with the permission of the Committee, a Participant or a specified group of Participants may transfer Awards (other than Incentive Stock Options) to a revocable inter vivos trust of which the Participant is the settlor, or may transfer Awards (other than Incentive Stock Options) to any member of the Participant’s immediate family, any trust, whether revocable or irrevocable, established solely for the benefit of the Participant’s immediate family, any partnership or limited liability company whose only partners or members are members of the Participant’s immediate family or an organization described in Code §501(c)(3) (“Permissible Transferees”). Any Award transferred to a Permissible Transferee will continue to be subject to all of the terms and conditions that applied to the Award before the transfer and to any other rules prescribed by the Committee. A Permissible Transferee may not retransfer an Award except by will or the laws of descent and distribution and then only to another Permissible Transferee.

19.02 Beneficiary Designation. Each Participant may name a beneficiary or beneficiaries (who may be named contingently or successively) to receive or to exercise any vested Award that is unpaid or unexercised at the Participant’s death. Unless otherwise provided in the beneficiary designation, each designation made will revoke all prior designations made by the same Participant, must be made on a form prescribed by the Committee and will be effective only when filed in writing with the Committee. If a Participant has not made an effective beneficiary designation, the deceased Participant’s beneficiary will be his or her surviving spouse or, if none, the deceased Participant’s estate. The identity of a Participant’s designated beneficiary will be based only on the information included in the latest beneficiary designation form completed by the Participant and will not be inferred from any other evidence.

19.03 No Guarantee of Continuing Services. Except as otherwise specified in the Plan, nothing in the Plan may be construed as:

[1] Interfering with or limiting the right of the Company or any Service Provider to Terminate any Employee or Consultant at any time;

[2] Conferring on any Participant any right to continue as an Employee, Consultant or Director;

[3] Guaranteeing that any Employee, Consultant or Director will be selected to be a Participant; or

[4] Guaranteeing that any Participant will receive any future Awards.

19.04 Tax Withholding. The Service Recipient or other responsible person will withhold or collect any amount required to be remitted in advance payment of any taxes associated with the exercise or settlement of any Award. This amount may be [1] withheld from other amounts due to the Participant, [2] withheld from the value of any Award being settled or any Shares being transferred in connection with the exercise or settlement of an Award or [3] collected directly from the Participant.

19.05 Indemnification. Each individual who is or was a member of the Committee (or to whom any duties have been delegated under Section 4.02) is entitled, in good faith, to rely on or to act upon any report or other information furnished by any executive officer, other officer or other employee of the Company or any Related Entity, the Company’s independent auditors, consultants or any other agents assisting in the administration of the Plan. Committee members (and any person to whom any duties have been delegated under Section 4.02) and any officer of the Company or any Related Entity acting at the direction or in behalf of the Committee or a delegee will not be personally liable for any action or determination taken or made in good faith with respect to the Plan and will, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any act or determination just described.

19.06 No Limitation on Compensation. Nothing in the Plan is to be construed to limit the right of the Company or any Related Entity to establish other plans or to pay compensation to its employees, consultants or directors, in cash or property, in a manner not expressly authorized under the Plan.

19.07 Requirements of Law. The grant of Awards and the issuance of Shares will be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. Certificates for Shares delivered under the Plan may be subject to any stock transfer orders and other restrictions that the Committee believes to be advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or other recognized market or quotation system upon which the Shares are then listed or traded, or any other applicable federal or state securities law. The Committee may cause a legend or legends to be placed on any certificates issued under the Plan to make appropriate reference to restrictions within the scope of this section.

19.08 Governing Law. The Plan, and all agreements hereunder, 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.

19.09 No Impact on Benefits. Awards are not compensation for purposes of calculating a Participant’s rights under any employee benefit plan that does not specifically require the inclusion of Awards in calculating benefits.

19.10 Term of the Plan. The Plan will be effective on the Effective Date. Subject to Section 18.00, the Plan will continue until the tenth anniversary of the Effective Date. However, the Committee’s authority to issue any Performance-Based Awards to Covered Officers will expire no later than the first Annual Meeting that occurs in the fifth year following the year in which the Company’s stockholders approve the Plan.

19.11 Rights as Stockholders. Unless otherwise specified in the associated Award Agreement or as otherwise specifically provided in the Plan, Shares acquired through an Award [1] will bear all dividend and voting rights associated with all Shares and [2] will be transferable, subject to applicable federal securities laws, the requirements of any national securities exchange or system on which Shares are then listed or traded or any blue sky or state securities laws.

19.12 Successors. The Plan will be binding on all successors and assigns of the Company and a Participant, including without limitation, the estate of the Participant and the executor, administrator or trustee of the estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.

19.13 International Employees. To provide the same motivation to materially increase stockholder value and to enable the Company to attract and retain the services of outstanding managers at its international locations, the Company will adopt incentives for its foreign locations that provide, as closely as possible, the same motivational effect as Awards provided to domestic Participants. Also, the Committee may grant Awards to Employees who are subject to the tax laws of nations other than the United States under terms and conditions that differ from other Awards granted under the Plan but which are required to comply with applicable foreign tax laws.

19.14 Compliance with Code §409A. It is intended that the Awards granted under the Plan be exempt from, or comply with, Code §409A and the Treasury Regulations promulgated thereunder, and the Plan shall be interpreted, administered and operated accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a Participant. None of the Company, the Board, the Committee or any Related Entity shall have any liability with respect to any failure to comply with the requirements of Code §409A.

Exhibit 10.11

FIRST AMENDMENT
TO THE
2009 CASH BONUS PLAN OF
A. SCHULMAN, INC.

WHEREAS, A. Schulman, Inc. (the “Company”) adopted a cash bonus plan (the “Plan”) for certain employees on October 17, 2008; and

WHEREAS, the Company desires to amend the Plan for compliance with Section 409A of the Internal Revenue Code of 1986, as amended, as set forth herein.

NOW, THEREFORE, the company hereby amends the Plan, effective as of December 18, 2008, as follows:

1. The Plan shall be amended by adding the following to the end thereof:

Bonus Payments

Any bonus payment made pursuant to the Plan shall be distributed no later than the 15 ^th day of the third month following the later of (i) the end of the employee’s first taxable year in which such bonus is no longer subject to a substantial risk of forfeiture (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) or (ii) the end of the first taxable year of the Company in which such bonus is no longer subject to a substantial risk of forfeiture.

Section 409A of the Code

It is intended that this Plan be exempt from Code Section 409A and the Treasury Regulations promulgated thereunder, and this Plan will be interpreted, administered and operated accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a participant, and none of the Company or any of its affiliates shall have any liability with respect to any failure to comply with the requirements of Code Section 409A.

IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of the date set forth above.


A. SCHULMAN, INC.

By:	/s/ Paul F. DeSantis

	Print Name: Paul F. DeSantis
	Its:	Vice President, Chief Financial Officer and Treasurer

Date: 12/30/2008

Exhibit 10.12

AMENDED AND RESTATED
A. SCHULMAN, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

WHEREAS, A. Schulman, Inc. (the “Company”) previously adopted the A. Schulman, Inc. Supplemental Executive Retirement Plan, effective January 1, 2004 (the “Plan”); and

WHEREAS, since January 1, 2005, the Company administered the Plan in good faith compliance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); and

WHEREAS, as of the Effective Date (as defined below), only one participant in the Plan has not yet received distribution of his Plan benefit; and

WHEREAS, the Company desires to amend the Plan as described herein to freeze the Plan as of the Effective Date and to comply with Section 409A.

AGREEMENT

NOW, THEREFORE, the Plan is hereby amended and restated in its entirety effective as of this 30th day of December, 2008 (“Effective Date”) as follows:

1. Participation . Participation in the Plan shall be limited to any person who was participating in the Plan as of the Effective Date and who had not yet received or begun to receive payment of his or her Benefit (as defined below) pursuant to the Plan (a “Participant”). As of the Effective Date, no individuals shall become eligible to participate in the Plan.

2. Benefit . The “Benefit” of any Participant under this Plan shall be equal to the amount the Participant would have been entitled under the terms of the Plan as in effect immediately prior to the Effective Date and calculated as provided therein. As of the Effective Date, no benefits shall accrue under the Plan.

3. Distribution of Benefit . A Participant shall be entitled to distribution of his or her Benefit in the form of a life annuity payable in substantially equal monthly installments beginning on the first day of the first calendar month that begins on or after the date the Participant attains age 65 (the “Normal Retirement Date”) and continues each month thereafter until the Participant’s death. Notwithstanding the foregoing, if a Participant dies before his or her Normal Retirement Date, the Participant’s beneficiary shall be entitled to receive payment of the Participant’s Benefit in the form of a life annuity commencing within 90 days following the Participant’s death.

4. Changes to the Time/Form of Payment . A Participant may change the time and/or form of distribution of his or her Benefit subject to the following limitations:

(a) Prior to December 31, 2008 . On or before December 31, 2008, a Participant may change the time or form of distribution of his or her Benefit by submitting a written deferral election to the Company on or before December 31, 2008; provided, however, that: (i) such election will not apply to any amount otherwise payable in calendar year 2008; and (ii) such election may not cause an amount to be paid in calendar year 2008 that would not otherwise be payable in calendar year 2008. After December 31, 2008, any election made pursuant to this Section 4(a) may be changed or revoked only as provided in Section 4(b).

(b) After December 31, 2008 . A Participant may change the time or form of distribution of his or her Benefit by submitting a written deferral election to the Company; provided, however, that (i) any such change to an existing election may not take effect until at least 12 months after the date on which the election is submitted; (ii) the payment with respect to which such election is made must be deferred (other than due to death) for a period of at least five years from the date such payment would otherwise have been made (or, in the case of installment payments treated as a single payment, five years from the date the first amount was scheduled to be paid); and (iii) any election affecting a distribution at a specified time must be made not less than 12 months before the date the amount is scheduled to be paid (or, in the case of installment payments treated as a single payment, 12 months before the date the first amount was scheduled to be paid).

5. Six-Month Distribution Delay . Notwithstanding anything in this Plan to the contrary, if a Participant is a “specified employee” (within the meaning of Section 409A and as determined under the Company’s policy for determining specified employees) and the Participant is entitled to payment of a Benefit under this Plan upon a “separation from service” (within the meaning of Section 409A) that is required to be delayed pursuant to Section 409A, then such payment shall not be paid or provided (or begin to be paid or provided) until the first business day of the seventh month following the date of the Participant’s separation from service (or, if earlier, the date of the Participant’s death). The first payment that can be made to the Participant following such postponement period shall include the cumulative amount of any payments that could not be distributed during such postponement period due to the application of Section 409A.

6. Taxes . All distributions provided for hereunder shall be subject to applicable withholding and other deductions as shall be required of the Company under any applicable local, state or federal law.

7. Administration . This Plan shall be administered by the Company or its designee, which shall have all powers necessary for the administration the Plan. Any determinations by the administrator in carrying out its duties shall be made in its sole discretion. The administrator shall have no liability to any Participant with respect to the administration of this Plan.

8. Claims Procedure . Any claim for benefits by a Participant under this Plan shall be reviewed by the administrator using the same procedures described in any qualified retirement plan maintained by the Company.

9. Miscellaneous .

(a) The Company reserves the right to amend or terminate the Plan at any time, without the consent of the Participants; provided, however, that no such amendment or termination shall reduce a Participant’s right to payment of his or her Benefit without the Participant’s consent.

(b) This Plan represents nothing more than an unfunded, unsecured promise to pay money or property in the future and no Participant shall have any greater claim to payment of a Benefit under this Plan than an unsecured general creditor of the Company. Nothing herein shall be construed as giving any Participant any right to specific property or assets of the Company. The Company may establish one or more trusts for the purpose of paying Benefits under this Plan, consistent with the foregoing.

(c) Each Participant may designate a beneficiary (or beneficiaries) to receive distributions under the Plan in the event of the Participant’s death. If a Participant does not designate a beneficiary, then such Participant’s beneficiary shall be his or her spouse and, if no spouse exists, his or her estate.

(d) This Plan shall be governed by the laws of the State of Ohio, except to the extent that Federal law is controlling.

(e) Headings in this Plan are for convenience only and shall not affect the meaning, construction or interpretation of the Plan. As used herein unless the context requires otherwise, words in the singular may be construed to be in the plural and words in any gender may be construed to be in any other gender.

(f) This Plan is intended to comply with the requirements of Section 409A and, to the maximum extent permitted by law, shall be interpreted, administered and operated consistent with this intent. Nothing herein shall be construed as the entitlement to or the guarantee of any particular tax treatment to a Participant. None of the Company, the administrator or any other person shall have any liability in the event that this Plan fails to comply with the requirements of Section 409A.

IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer as of the date set forth above.


A. SCHULMAN, INC.

By:	/s/ Paul F. DeSantis

	Its:	Vice President, Chief Financial Officer and Treasurer

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Joseph M. Gingo, certify that:

I have reviewed this Quarterly Report on Form 10-Q of A. Schulman, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 9, 2009


	/s/ Joseph M. Gingo
	Joseph M. Gingo
	President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Paul F. DeSantis, certify that:

I have reviewed this Quarterly Report on Form 10-Q of A. Schulman, Inc.;

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 9, 2009


	/s/ Paul F. DeSantis
	Paul F. DeSantis
	Chief Financial Officer, Vice President and Treasurer

Exhibit 32

Certifications of Principal Executive and Principal Financial Officers
Pursuant to 18 U.S.C. 1350

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of A. Schulman, Inc. (the “Company”) on Form 10-Q for the period ending November 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company does hereby certify that:

(a)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


	/s/ Joseph M. Gingo
	Joseph M. Gingo
	President and Chief Executive Officer of A. Schulman, Inc. January 9, 2009

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

(a)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


	/s/ Paul F. DeSantis
	Paul F. DeSantis
	Chief Financial Officer, Vice President and Treasurer of A. Schulman, Inc. January 9, 2009