Exhibit 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (this
“Agreement”), dated as of August 8, 2007, is made
by and between WELLMAN, INC . (the “Company”),
and Steven L. Ates (the “Executive”).
WITNESSETH
WHEREAS, the Board of Directors of
the Company (the “Board”) has determined that it is in
the best interests of the Company and its shareholders to assure
that the Company will have the continued service and dedication of
the Executive.
WHEREAS, the Board believes it is
imperative to diminish the inevitable distraction of the Executive
by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control;
WHEREAS, the Company has determined
that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the
Company’s executive management, including the Executive, to
their assigned duties with the Company, without distraction in the
face of potentially disruptive circumstances arising from the
possibility of a Change of Control;
WHEREAS, the Company has determined
that the payments and benefits contemplated by this Agreement are
to be paid for services currently performed by the Executive;
NOW, THEREFORE, in consideration of
the premises and mutual covenants herein contained, and for other
good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Company and the Executive hereby agree
as follows:
1. Definitions .
“Affiliate”
means, with respect to any Person, any other Person controlling,
controlled by, or under direct or indirect common control with such
Person. For the purposes of this definition “control”,
when used with respect to any specified Person, shall mean the
power to direct the management and policies of such Person,
directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms
“controlling” and “controlled by” shall
have the meanings correlative to the foregoing.
“Cause”
means, when used with respect to the termination of the employment
of the Executive by the Company, termination due to (a) an act
or acts of personal dishonesty taken by the Executive and intended
to result in substantial personal enrichment of the Executive at
the expense of the Company; (b) the Executive’s
continued failure to substantially perform the Executive’s
employment duties (other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness)
which are demonstrably willful and deliberate on the
Executive’s part and which are not remedied in a reasonable
period of time after receipt of written notice from the Company; or
(c) conviction of, or a plea of guilty or no contest by, the
Executive to a crime that constitutes a felony involving moral
turpitude. No act or failure to act on the part
of the
Executive shall be considered “willful” unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or
omission was in the best interests of the Company.
“Change of Control”
means:
(i) The acquisition (whether by
tender offer, exchange offer or other business combination or by
the purchase of shares or other securities (including from the
Company), and whether in a single transaction or multiple
transactions), by any Person or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either the
then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
(the “Company Voting Securities”), provided, however,
that any acquisition by the Company or its subsidiaries, or any
employee benefit plan (or related trust) of the Company or its
subsidiaries, or any corporation with respect to which, following
such acquisition, more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the Persons who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Company Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the Outstanding Company Common Stock
and Company Voting Securities, as the case may be, shall not
constitute a Change of Control and provided further, however, that
for the purposes of this Agreement the Convertible Preferred Stock
shall be considered Company Voting Securities based on the
equivalent number of shares of common stock of the Company that
could be voted at that time; or
(ii) Individuals who, as of
January 1, 2007, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to January 1, 2007 who is elected by the
Company’s shareholders or was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election
of the directors of the Board (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(iii) The Company entering into
(x) a reorganization, merger, consolidation or other business
combination, in each case, with respect to which all or
substantially all of the Persons who were the respective beneficial
owners of the Outstanding Company Common Stock and Company Voting
Securities immediately prior to such reorganization, merger,
business combination or
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consolidation
do not, following such reorganization, merger, business combination
or consolidation, beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such
reorganization, merger, business combination or consolidation, or
(y) a complete liquidation or dissolution of the Company, or
(z) the sale or other disposition of all or substantially all
of the assets of the Company in one transaction or series of
related transactions.
(iv) Anything in this Agreement to
the contrary notwithstanding, if an event that would, but for this
paragraph, constitute a Change of Control results from or arises
out of a purchase or other acquisition of the Company, directly or
indirectly, by a Person in which the Executive has a direct or
indirect equity interest, such event shall not constitute a Change
of Control; provided, however, that the limitation contained in
this sentence shall not apply to any direct or indirect equity
interest in a Person (1) which equity interest is part of a
class of equity interests which are publicly traded on any national
securities exchange or other market system, (2) received by
the Executive, without the Executive’s concurrence or
consent, as a result of a purchase or other acquisition of the
Company by such corporation or other entity, or (3) received
by the Executive, without the Executive’s explicit
concurrence or consent, in connection with a purchase or other
acquisition of the Company by such Person in respect of any stock
options or performance awards granted to the Executive by the
Company.
“Change
of Control Period” means the 24-month period following a
Change of Control; provided, that for purposes of this Agreement
there can be no more than one Change of Control Period.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Convertible
Preferred Stock” means the Company’s Series A
Preferred Stock and Series B Preferred Stock with a par value
of $0.001 per share issued and outstanding from time to time.
“Cumulative
Annual Bonus” is the most recent two Annual Bonuses paid or
payable to the Executive within 24 months preceding a Change
of Control.
“Date
of Termination” means the date of the Executive’s
death, the Disability Effective Date, or the date on which the
termination of the Executive’s employment by the Company for
Cause or without Cause or by the Executive for Good Reason or
without Good Reason is effective, as the case may be.
“Disability”
means that the Executive has been unable, for the period specified
in the Company’s disability plan for senior executives, but
not less than a period of 180 consecutive days, to perform the
Executive’s duties under this Agreement, as a result of
physical or mental illness or injury.
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“Disability
Effective Date” has the meaning given such term in
Section 5.1.
“Employment
Period” means the period commencing on the date hereof and
ending one and one half years after the anniversary of such date;
provided, however, that commencing on the date that is one year
after the date hereof, and on each annual anniversary of such date
(such date and each annual anniversary thereof is hereinafter
referred to as the “Renewal Date”), the Employment
Period shall be automatically extended without any action required
of either party to this Agreement so as to terminate one and one
half years from such Renewal Date, unless at least 180 days
prior to the applicable Renewal Date, either party gives written
notice to the other that it wishes not to extend the Employment
Period (the “Non-Renewal Notice”) in which event the
Employment Period will expire one and one half years from the date
of the Non-Renewal Notice. The expiration of the Employment Period
resulting from the delivery of a Non-Renewal Notice will not be
deemed a termination of the Executive’s employment without
Cause. Notwithstanding the foregoing, unless the Employment Period
has already terminated, the Employment Period shall be
automatically extended upon a Change of Control so as to terminate
two years from the date of the Change of Control.
“Fiscal
Period” shall mean a full calendar year.
“Good
Reason” means the Executive’s termination of the
Executive’s employment during the Change of Control Period
for any one or more of the following reasons: (a) the
assignment to the Executive of any duties inconsistent with the
Executive’s position, authority, duties or responsibilities
as contemplated by Section 3 of this Agreement, or any other
action by the Company which results in a diminution in such
position, authority, comparable duties or responsibilities,
excluding for these purposes an isolated, insubstantial or
inadvertent action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Executive; (b) any failure by the Company to comply with any
of the provisions of Section 4 of this Agreement (including
(i) adopting a bonus plan that does not have substantially
similar terms and payments for comparable performance, and
(ii) providing Welfare Benefit Plans, Vacation and Fringe
Benefits and Perquisites that are in the aggregate less favorable
to the Executive than those in effect 90 days before the
Change of Control) other than an isolated, insubstantial or
inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive; (c) the Company’s requiring the
Executive to be based at any office or location other than the
location where the Executive was employed immediately preceding the
date of the Change of Control or any office or location more than
50 miles from such location and in no event shall the Executive be
required to travel outside such location more often than
45 days in any calendar year; (d) any purported
termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement; or
(e) any failure by the Company to comply with and satisfy
Section 9.3 of this Agreement. “Good Reason” shall
also mean the Executive’s termination of the
Executive’s employment at any time if the Company terminates
the Executive’s employment other than as expressly permitted
by this Agreement.
“Notice
of Termination” shall mean either a Notice of Termination for
Cause under Section 5.2, Notice of Termination without Good
Reason under Section 5.3, or a Notice of Termination for Good
Reason under Section 5.4.
“Person”
means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association or joint venture.
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2. Term of Employment .
Subject to the terms and provisions set forth in this Agreement,
the Company shall continue to employ the Executive, and the
Executive agrees to remain in the employ of the Company, for the
Employment Period, unless either party terminates the
Executive’s employment pursuant to the terms of this
Agreement.
3. Position and Duties
.
3.1
Positions and Duties . During the Employment Period, the
Executive shall be employed and shall serve as a senior corporate
officer with such duties and responsibilities as are customarily
assigned to a Vice President.
3.2
Best Efforts . During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote substantially all their
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive under this
Agreement, use the Executive’s reasonable best efforts to
carry out such responsibilities faithfully and efficiently. It
shall not be considered a violation of the foregoing for the
Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions, and
(C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in
accordance with this Agreement.
4. Compensation and Other
Benefits . The Executive’s compensation during the
Employment Period shall be determined by the Board upon
recommendation of the committee of the Board having responsibility
for approving the compensation of senior executives, subject to the
provisions below:
4.1
Base Salary . During the Employment Period, the Executive
shall receive an annual base salary (“Base Salary”) at
a rate of not less than 15% lower than $190,000. The Base Salary
shall be payable in accordance with the Company’s regular
payroll practices for its senior executives, as in effect from time
to time. During the Employment Period, the Executive’s Base
Salary will be reviewed at least annually by the Board, and the
Board may, in its sole discretion, increase the Base Salary. Any
increase in the Base Salary shall not limit or reduce any other
obligation of the Company under this Agreement. The term
“Base Salary” shall thereafter refer to the Base Salary
as so increased.
4.2
Annual Bonus . With respect to each year during the
Employment Period, the Executive shall be designated as a
participant in the Company’s Management Incentive Bonus Plan
or any similar bonus plan for senior executives (the “Bonus
Plan”), which provides for bonus payments to the Executive,
and subject to meeting the criteria of the Bonus Plan established
by the Board in its discretion, shall receive the bonus award
provided for therein (the “Annual Bonus”). Each such
Annual Bonus shall be paid not later than the 15 th day of the
third month of the Fiscal Period for which the Annual Bonus is
awarded, unless the Executive elects to defer the receipt of such
Annual Bonus pursuant to a Company deferred compensation plan, if
any.
4.3
Incentive, Retirement, and Savings Plans . During the
Employment Period, the Executive shall participate in all
incentive, pension, retirement, supplemental retirement, savings,
stock option, restricted stock and other stock grant and equity
compensation plans, as well
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as all
other employee benefit plans and programs, which are made available
from time to time by the Company for the benefit of similarly
situated senior executives of the Company.
4.4
Welfare Benefit Plans . During the Employment Period, the
Executive and their spouse and other eligible dependents shall
participate in, and be covered by, all of the health and other
welfare benefit plans, practices, policies and programs that are
made available from time to time by the Company for the benefit of
senior executives and/or other employees of the Company,
collectively the “Welfare Benefit Plans”.
4.5
Expense Reimbursement . During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses, including reasonable business travel expenses,
incurred by the Executive in performing the Executive’s
duties and responsibilities under this Agreement in accordance with
the policies, programs, procedures and practices of the Company as
in effect at the time the expense was incurred, as the same may be
changed from time to time.
4.6
Vacation and Fringe Benefits . During the Employment Period,
the Executive shall be entitled to vacation days each Fiscal Period
at such times which do not materially interfere with the
performance of the Executive’s duties and responsibilities
under this Agreement in accordance with the vacation policy of the
Company. In addition, during the Employment Period, the Executive
shall be eligible to benefit from such fringe benefits, in
accordance with the policies, programs, procedures and practices of
the Company, as may be in effect and provided from time to time to
senior executives and/or other employees of the Company,
collectively the foregoing are referred to as “Vacation and
Fringe Benefits”
4.7
Perquisites. During the Employment Period the Company will
also pay for $1 million of term life insurance assuming the
Executive is insurable at standard rates and pay for the Executive
to have an annual physical examination, both in accordance with the
Company’s current policy, collectively the foregoing are
referred to as “Perquisites”.
5. Termination of
Employment .
5.1
Death or Disability . The Executive’s employment, and
the Employment Period,
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