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EXHIBIT 10(F)
EMPLOYMENT AGREEMENT
This Employment
Agreement (this "Agreement"), dated as of March 14, 2005,
is made by and between WELLMAN, INC. (the
"Company"), and Mark J. Ruday (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;
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
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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, 2005, 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,
2005 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
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the Outstanding
Company Common Stock and Company Voting Securities
immediately
prior to such reorganization, merger, business combination or
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 36-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.
"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 business
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 on the second 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 two years from
such Renewal Date, unless at least
360 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 two 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 three years from the date of the
Change of Control.
"Fiscal Period" shall mean either (i) a full calendar year or (ii)
the
period from January 1 through the
Termination Date, the date of a Change of
Control or other applicable measurement
date that is less than a 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.
"Highest Annual Bonus" is the greater of (a) the Annual Bonus paid
or
payable to the Executive for Fiscal Period
ending on the date of a Change of
Control and
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(b) the average Annual Bonus for the two
preceding Fiscal Periods, each
annualized for any Fiscal Period consisting
of less than twelve full months.
"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.
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 such positions.
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 $150,000. 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.
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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 15th day of the
third month of the Fiscal Period following
the Fiscal Year for which the Annual
Bonus is awarded, unless the Executive
shall elect to defer the receipt of such
Annual Bonus.
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 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
(a) pay 9.5% of the Executive's Base Salary
for life insurance premiums (b)
provide a car for the Executive's use and
(c)pay for the Executive to have an
annual physical examination, all of the
above in accordance with the Company's
current policy, collectively the foregoing
are referred to as "Perquisites".
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5. Termination
of Employment.
5.1 Death or Disability. The Executive's employment, and
the
Employment Period, shall terminate
automatically upon the Executive's death. The
Company shall be entitled to terminate the
Executive's employment because of the
Executive's Disability during the
Employment Period. A termination of the
Executive's employment by the Company for
Disability shall be communicated to
the Executive by written notice, and shall
be effective on the 30th day after
receipt of such notice by the Executive
("Disability Effective Date") at which
time the Employment Period shall end,
unless the Executive returns to full-time
performance of the Executive's duties
before the Disability Effective Date.
5.2 Termination by the Company. The Company may terminate the
Executive's employment hereunder for Cause
or without Cause at any time during
the Employment Period at which time the
Employment Period shall end. The Company
shall give the Executive written notice of
its intention to terminate the
Executive's employment and the effective
date of Executive's termination of
employment, and for terminations for Cause
the notice shall set forth in
reasonable detail the specific conduct of
the Executive that it considers to
constitute Cause and the specific
provisions of this Agreement on which it
relies (the "Notice of Termination for
Cause").
5.3 Termination by Executive. The Executive may terminate
their
employment hereunder without the Company's
approval at any time during the
Employment Period without Good Reason upon
not less than 60 nor more than 90
days advance written notice to the Company
stating the date on which the
Employment Period shall end (the "Notice of
Termination without Good Reason"). A
termination of the Executive's employment
by the Executive without Good Reason
shall be effected by giving the Company
written notice of the termination and
setting forth the date of such termination.
Notwithstanding the foregoing, the
Company may elect to have any such
termination become effective immediately or
at such other date, not later than the date
specified in the Notice of
Termination without Good Reason, as the
Company may determine, however it will
continue the Executive's Base Salary,
Welfare Benefit Plans, Vacation and Fringe
Benefits, and Perquisites through the date
specified by the Executive for their
termination in such Notice unless the
Company terminates the Executive's
employment pursuant to this Agreement prior
to such date.
5.4 Termination by Executive for Good Reason. During the Change of
Control Period, the Executive may terminate
their employment hereunder for Good
Reason by giving the Company written notice
("Notice of Termination for Good
Reason") of the termination, setting forth
in reasonable detail the specific
conduct of the Company that constitutes
Good Reason and the specific
provision(s) of this Agreement on which the
Executive relies. The failure by the
Executive to set forth in the Notice of
Termination for Good Reason any fact or
circumstance which contributes to a showing
of Good Reason shall not waive any
right of the Executive hereunder or
preclude the Executive from asserting such
fact or circumstance in enforcing the
Executive's rights hereunder.
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6. Obligations
of the Company upon Termination of Employment.
6.1 Termination upon Death or Disability. If an Executive's
employment is terminated by death or the
Company terminates the Executive's
employment for Disability the Company
shall:
(a) pay to the Executive (or in the event of termination of
employment
by reason of the Executive's death, the
Executive's legal representative or the
Executiv
