**Exhibit 10.12****EMPLOYMENT AGREEMENT**     This Employment Agreement (this “Agreement”), dated as of August 8, 2007, is made by andbetween **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 thebest interests of the Company and its shareholders to assure that the Company will have thecontinued service and dedication of the Executive.     WHEREAS, the Board believes it is imperative to diminish the inevitable distraction of theExecutive by virtue of the personal uncertainties and risks created by a pending or threatenedChange of Control and to encourage the Executive’s full attention and dedication to the Companycurrently 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 andencourage 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 faceof potentially disruptive circumstances arising from the possibility of a Change of Control;     WHEREAS,the Company has determined that the payments and benefits contemplatedby this Agreement are to be paid for services currently performed bythe Executive;     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, andfor other good and valuable consideration, the receipt and adequacy of which is herebyacknowledged, the Company and the Executive hereby agree as follows:     1. Definitions.          “Affiliate” means, with respect to any Person, any other Person controlling, controlled by, orunder 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 themanagement and policies of such Person, directly or indirectly, whether through ownership of votingsecurities, by contract or otherwise; and the terms “controlling” and “controlled by” shall havethe meanings correlative to the foregoing.          “Cause” means, when used with respect to the termination of the employment of the Executive bythe Company, termination due to (a) an act or acts of personal dishonesty taken by the Executiveand intended to result in substantial personal enrichment of the Executive at the expense of theCompany; (b) the Executive’s continued failure to substantially perform the Executive’s employmentduties (other than any such failure resulting from the Executive’s incapacity due to physical ormental illness) which are demonstrably willful and deliberate on the Executive’s part and which arenot 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 constitutesa 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, bythe Executive in bad faith or without reasonable belief that the Executive’s action or omission wasin the best interests of the Company.     “Change of Control” means:     (i) The acquisition (whether by tender offer, exchange offer or other businesscombination or by the purchase of shares or other securities (including from theCompany), and whether in a single transaction or multiple transactions), by anyPerson or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the ExchangeAct) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under theExchange Act) of 50% or more of either the then outstanding shares of common stockof the Company (the “Outstanding Company Common Stock”) or the combined voting powerof the then outstanding voting securities of the Company entitled to vote generallyin the election of directors (the “Company Voting Securities”), provided, however,that any acquisition by the Company or its subsidiaries, or any employee benefitplan (or related trust) of the Company or its subsidiaries, or any corporation withrespect to which, following such acquisition, more than 50% of, respectively, thethen outstanding shares of common stock of such corporation and the combined votingpower of the then outstanding voting securities of such corporation entitled to votegenerally in the election of directors is then beneficially owned, directly orindirectly, by all or substantially all of the Persons who were the beneficialowners, respectively, of the Outstanding Company Common Stock and Company VotingSecurities immediately prior to such acquisition in substantially the sameproportion as their ownership, immediately prior to such acquisition, of theOutstanding 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 thepurposes of this Agreement the Convertible Preferred Stock shall be consideredCompany Voting Securities based on the equivalent number of shares of common stockof 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 theBoard, 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 atleast a majority of the directors then comprising the Incumbent Board shall beconsidered as though such individual were a member of the Incumbent Board, butexcluding, for this purpose, any such individual whose initial assumption of officeis in connection with an actual or threatened election contest relating to theelection of the directors of the Board (as such terms are used in Rule 14a-11 ofRegulation 14A promulgated under the Exchange Act); or     (iii) The Company entering into (x) a reorganization, merger, consolidation orother business combination, in each case, with respect to which all or substantiallyall of the Persons who were the respective beneficial owners of the OutstandingCompany Common Stock and Company Voting Securities immediately prior to suchreorganization, merger, business combination or
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consolidation do not, following such reorganization, merger, businesscombination or consolidation, beneficially own, directly or indirectly, more than50% of, respectively, the then outstanding shares of common stock and the combinedvoting power of the then outstanding voting securities entitled to vote generally inthe election of directors, as the case may be, of the corporation resulting fromsuch reorganization, merger, business combination or consolidation, or (y) acomplete liquidation or dissolution of the Company, or (z) the sale or otherdisposition of all or substantially all of the assets of the Company in onetransaction or series of related transactions.     (iv) Anything in this Agreement to the contrary notwithstanding, if an eventthat would, but for this paragraph, constitute a Change of Control results from orarises out of a purchase or other acquisition of the Company, directly orindirectly, by a Person in which the Executive has a direct or indirect equityinterest, such event shall not constitute a Change of Control; provided, however,that the limitation contained in this sentence shall not apply to any direct orindirect equity interest in a Person (1) which equity interest is part of a class ofequity interests which are publicly traded on any national securities exchange orother market system, (2) received by the Executive, without the Executive’sconcurrence or consent, as a result of a purchase or other acquisition of theCompany by such corporation or other entity, or (3) received by the Executive,without the Executive’s explicit concurrence or consent, in connection with apurchase or other acquisition of the Company by such Person in respect of any stockoptions 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 BPreferred 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 theExecutive 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 orwithout Cause or by the Executive for Good Reason or without Good Reason is effective, as the casemay be.          “Disability” means that the Executive has been unable, for the period specified in theCompany’s disability plan for senior executives, but not less than a period of 180 consecutivedays, to perform the Executive’s duties under this Agreement, as a result of physical or mentalillness 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 halfyears after the anniversary of such date; provided, however, that commencing on the date that isone year after the date hereof, and on each annual anniversary of such date (such date and eachannual anniversary thereof is hereinafter referred to as the “Renewal Date”), the Employment Periodshall be automatically extended without any action required of either party to this Agreement so asto terminate one and one half years from such Renewal Date, unless at least 180 days prior to theapplicable Renewal Date, either party gives written notice to the other that it wishes not toextend the Employment Period (the “Non-Renewal Notice”) in which event the Employment Period willexpire one and one half years from the date of the Non-Renewal Notice. The expiration of theEmployment Period resulting from the delivery of a Non-Renewal Notice will not be deemed atermination of the Executive’s employment without Cause. Notwithstanding the foregoing, unless theEmployment Period has already terminated, the Employment Period shall be automatically extendedupon 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 duringthe Change of Control Period for any one or more of the following reasons: (a) theassignment to the Executive of any duties inconsistent with the Executive’s position,authority, duties or responsibilities as contemplated by Section 3 of this Agreement, orany 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 theCompany promptly after receipt of notice thereof given by the Executive; (b) any failure bythe 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 forcomparable performance, and (ii) providing Welfare Benefit Plans, Vacation and FringeBenefits and Perquisites that are in the aggregate less favorable to the Executive thanthose in effect 90 days before the Change of Control) other than an isolated, insubstantialor inadvertent failure not occurring in bad faith and which is remedied by the Companypromptly after receipt of notice thereof given by the Executive; (c) the Company’srequiring the Executive to be based at any office or location other than the location wherethe Executive was employed immediately preceding the date of the Change of Control or anyoffice or location more than 50 miles from such location and in no event shall theExecutive be required to travel outside such location more often than 45 days in anycalendar year; (d) any purported termination by the Company of the Executive’s employmentotherwise than as expressly permitted by this Agreement; or (e) any failure by the Companyto comply with and satisfy Section 9.3 of this Agreement.“Good Reason” shall also mean the Executive’stermination of the Executive’s employment at any time if theCompany terminates the Executive’s employment other than asexpressly permitted by this Agreement.          “Notice of Termination” shall mean either a Notice of Termination for Cause underSection 5.2, Notice of Termination without Good Reason under Section 5.3, or a Notice ofTermination for Good Reason under Section 5.4.          “Person” means an individual, partnership, corporation, limited liability company, businesstrust, 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 thisAgreement, the Company shall continue to employ the Executive, and the Executive agrees to remainin the employ of the Company, for the Employment Period, unless either party terminates theExecutive’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 beemployed and shall serve as a senior corporate officer with such duties and responsibilities as arecustomarily assigned to a Vice President.          3.2 Best Efforts. During the Employment Period, and excluding any periods of vacationand sick leave to which the Executive is entitled, the Executive shall devote substantially alltheir attention and time during normal business hours to the business and affairs of the Companyand, to the extent necessary to discharge the responsibilities assigned to the Executive under thisAgreement, use the Executive’s reasonable best efforts to carry out such responsibilitiesfaithfully and efficiently. It shall not be considered a violation of the foregoing for theExecutive to (A) serve on corporate, civic or charitable boards or committees, (B) deliverlectures, fulfill speaking engagements or teach at educational institutions, and (C) managepersonal investments, so long as such activities do not significantly interfere with theperformance of the Executive’s responsibilities as an employee of the Company in accordance withthis Agreement.     4. Compensation and Other Benefits. The Executive’s compensation during theEmployment Period shall be determined by the Board upon recommendation of the committee of theBoard having responsibility for approving the compensation of senior executives, subject to theprovisions below:          4.1 Base Salary. During the Employment Period, the Executive shall receive an annualbase salary (“Base Salary”) at a rate of not less than 15% lower than $190,000. The Base Salaryshall be payable in accordance with the Company’s regular payroll practices for its seniorexecutives, as in effect from time to time. During the Employment Period, the Executive’s BaseSalary 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 otherobligation of the Company under this Agreement. The term “Base Salary” shall thereafter refer tothe Base Salary as so increased.          4.2 Annual Bonus. With respect to each year during the Employment Period, theExecutive shall be designated as a participant in the Company’s Management Incentive Bonus Plan orany similar bonus plan for senior executives (the “Bonus Plan”), which provides for bonus paymentsto the Executive, and subject to meeting the criteria of the Bonus Plan established by the Board inits discretion, shall receive the bonus award provided for therein (the “Annual Bonus”). Each suchAnnual Bonus shall be paid not later than the 15th day of the third month of the FiscalPeriod for which the Annual Bonus is awarded, unless the Executive elects to defer the receipt ofsuch Annual Bonus pursuant to a Company deferred compensation plan, if any.          4.3 Incentive, Retirement, and Savings Plans. During the Employment Period, theExecutive shall participate in all incentive, pension, retirement, supplemental retirement,savings, stock option, restricted stock and other stock grant and equity compensation plans, aswell
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as all other employee benefit plans and programs, which are made available from time to timeby 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 theirspouse and other eligible dependents shall participate in, and be covered by, all of the health andother welfare benefit plans, practices, policies and programs that are made available from time totime 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 beentitled to receive prompt reimbursement for all reasonable expenses, including reasonable businesstravel expenses, incurred by the Executive in performing the Executive’s duties andresponsibilities under this Agreement in accordance with the policies, programs, procedures andpractices of the Company as in effect at the time the expense was incurred, as the same may bechanged from time to time.          4.6 Vacation and Fringe Benefits. During the Employment Period, the Executive shallbe entitled to vacation days each Fiscal Period at such times which do not materially interferewith the performance of the Executive’s duties and responsibilities under this Agreement inaccordance with the vacation policy of the Company. In addition, during the Employment Period, theExecutive 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 totime to senior executives and/or other employees of the Company, collectively the foregoing arereferred to as “Vacation and Fringe Benefits”          4.7 Perquisites. During the Employment Period the Company will also pay for $1million of term life insurance assuming the Executive is insurable at standard rates and pay forthe Executive to have an annual physical examination, both in accordance with the Company’s currentpolicy, 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, shallterminate automatically upon the Executive’s death. The Company shall be entitled to terminate theExecutive’s employment because of the Executive’s Disability during the Employment Period. Atermination of the Executive’s employment by the Company for Disability shall be communicated tothe Executive by written notice, and shall be effective on the 30th day after receipt ofsuch notice by the Executive (“Disability Effective Date”) at which time the Employment Periodshall end, unless the Executive returns to full-time performance of the Executive’s duties beforethe Disability Effective Date.          5.2 Termination by the Company. The Company may terminate the Executive’s employmenthereunder for Cause or without Cause at any time during the Employment Period at which time theEmployment Period shall end. The Company shall give the Executive written notice of its intentionto terminate the Executive’s employment and the effective date of Executive’s termination ofemployment, and for terminations for Cause the notice shall set forth in
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reasonable detail the specific conduct of the Executive that it considers to constitute Causeand the specific provisions of this Agreement on which it relies (the “Notice of Termination forCause”).          5.3 Termination by Executive. The Executive may terminate their employment hereunderwithout the Company’s approval at any time during the Employment Period without Good Reason uponnot less than 60 nor more than 90 days advance written notice to the Company stating the date onwhich the Employment Period shall end (the “Notice of Termination without Good Reason”). Atermination of the Executive’s employment by the Executive without Good Reason shall be effected bygiving the Company written notice of the termination and setting forth the date of suchtermination. Notwithstanding the foregoing, the Company may elect to have any such terminationbecome effective immediately or at such other date, not later than the date specified in the Noticeof Termination without Good Reason, as the Company may determine, however it will continue theExecutive’s Base Salary, Welfare Benefit Plans, Vacation and Fringe Benefits, and Perquisitesthrough the date specified by the Executive for their termination in such Notice unless the Companyterminates the Executive’s employment pursuant to another section of this Agreement prior to suchdate.          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 Companywritten notice (“Notice of Termination for Good Reason”) of the termination, setting forth inreasonable detail the specific conduct of the Company that constitutes Good Reason and the specificprovision(s) of this Agreement on which the Executive relies. The failure by the Executive to setforth in the Notice of Termination for Good Reason any fact or circumstance which contributes to ashowing of Good Reason shall not waive any right of the Executive hereunder or preclude theExecutive from asserting such fact or circumstance in enforcing the Executive’s rights hereunder.     6. Obligations of the Company upon Termination of Employment.          6.1 Termination upon Death or Disability. If an Executive’s employment is terminatedby 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 theExecutive’s death, the Executive’s legal representative or the Executive’s estate if norepresentative has been appointed) in a lump sum in cash, within 30 days after the Date ofTermination, or as otherwise provided in this Section 6.1, any portion of the Executive’s BaseSalary through the Date of Termination that has not been paid plus any unpaid Annual Bonus,deferred compensation, if any, or other payments due the Executive,          (b) pay to the Executive a prorata portion of any bonus the Executive would have earned inthat year (based on the days covered by the Agreement in that year divided by the number of days inthe year) as if he had been employed for the full year, payable at time specified in Section 4.2,and          (c) make available to the Executive (or the Executive’s eligible dependents) any rights tocontinued health and welfare benefits provided by law (i.e., COBRA) or payable to the 
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Executive under the terms of such plans and programs in effect immediately prior to theExecutive’s death or Disability.          Anything in this Agreement to the contrary notwithstanding, if the Executive’s death orDisability occurs during the Change of Control Period, the Executive or Executive’s family shall beentitled to receive benefits at least equal to the most favorable benefits provided by the Companyand any of its Affiliates to disabled executives or the surviving families of peer executives ofthe Company and such Affiliates under such plans, programs, practices and policies relating tofamily disability or death benefits, if any, as in effect with respect to other peer executives andtheir families at any time during the 90-day period immediately preceding the Change of Control or,if more favorable to the Executive and/or the Executive’s family, as in effect on the date of theExecutive’s death or disability with respect to other peer executives of the Company and itsAffiliates and their families.          6.2 Termination by the Executive other than for Good Reason. If the Executivevoluntarily terminates employment during the Employment Period, other than during the Change ofControl Period for Good Reason, the Company shall pay to the Executive any portion of theExecutive’s Base Salary through the Date of Termination that has not been paid, plus any otheramounts due the Executive under this Agreement within 30 days and the Executive shall have anyrights to continued health and welfare benefits provided by law (i.e., COBRA) or payable to theExecutive under the terms of such plans and programs in effect immediately prior to the Date ofTermination. If the Executive voluntarily terminates employment during the Employment Period, otherthan during the Change of Control Period for Good Reason, then the Executive shall not be entitledto any Annual Bonus for the Fiscal Period that includes the Executive’s Date of Termination.          6.3 Termination by the Company for Cause. If the Executive’s employment is terminatedby the Company for Cause during the Employment Period, the Company shall pay to the Executive anyportion of the Executive’s Base Salary through the Date of Termination that has not been paid, plusany other amounts due the Executive under this Agreement within 30 days and the Executive shallhave any rights to continued health and welfare benefits to the extent provided by law (i.e.,COBRA) or payable to the Executive under the terms of such plans and programs as in effectimmediately prior to the Notice of Termination. If the Executive is terminated for Cause duringthe Employment Period, then the Executive shall not be entitled to any Annual Bonus for the FiscalPeriod that includes the date of the Notice of Termination for Cause.          6.4 Termination by the Company other than for Cause. If the Executive’s employment isterminated by the Company other than for Cause or due to death or Disability during the EmploymentPeriod and not during a Change of Control Period, the Company shall:          (a) pay to the Executive**,**in a lump sum within thirty days after the Date of Termination, anamount equal to 1.5 times the Executive’s Base Salary for the Fiscal Period in which the Date ofTermination occurs in lieu of any severance under the Company’s Severance Plan,          (b) pay to the Executive a prorata portion of any bonus the Executive would have earned inthat Fiscal Period (based on the days covered by the Agreement divided by the number
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of days in that Fiscal Period) as if he had been employed for the full Fiscal Period payableat the time specified in Section 4.2,          (c) pay 18 months of health and welfare (COBRA) benefits that provide the Executive withcoverage comparable to other executives that are employed by the Company during that time, and          (d) reimburse the executive for outplacement services incurred within one year of the Date ofTermination no later than 30 days after receipt of appropriate documentation, for an amount notgreater than the lesser of (i) 7.5% of the Executive’s Base Salary or (ii) $25,000.          6.5 Termination following a Change of Control. If (a) contemporaneously with orduring the Change of Control Period, the Executive’s employment is terminated (i) by the Company ora successor entity other than for Cause or (ii) by the Executive for Good Reason or (b) if theExecutive’s employment with the Company is terminated or the Executive ceases to be an officer ofthe Company prior to the date on which a Change of Control occurs and it is reasonably demonstratedthat such termination of employment (i) was at the request of a third party who has taken stepsreasonably calculated to effect the Change of Control or (ii) otherwise arose in connection with orin anticipation of the Change of Control, the Company shall:     (a) pay to the Executive, in a lump sum within thirty days after the Date ofTermination, an amount equal to (i) two (2) times the Base Salary and (ii) the CumulativeAnnual Bonus;     (b) continue benefits described in Sections 4.4, 4.6 and 4.7 of this Agreement to theExecutive or the Executive’s family from the Date of Termination through the end of theChange of Control Period, or such longer period as any plan, program, practice or policy mayprovide, at least equal to those which would have been provided to them in accordance withthe plans, programs, practices and policies described in Sections 4.4, 4.6 and 4.7 of thisAgreement if the Executive’s employment had not been terminated, in accordance with the mostfavorable plans, practices, programs or policies of the Company and its Affiliatesapplicable to other peer executives and their families during the 90-day period immediatelypreceding the Date of Termination, or, if more favorable to the Executive, as in effect atany time thereafter with respect to other peer executives of the Company and its Affiliatesand their families. For purposes of determining the amount an Executive is going toreceive, the Executive shall be considered as eligible for retiree benefits pursuant to suchplans, practices, programs and policies, the Executive shall be considered to have remainedemployed until the end of the Change of Control Period and to have retired on the last dayof such period; and     (c) reimburse the executive for outplacement services incurred within one year of the Date ofTermination no later than 30 days after receipt of appropriate documentation, for an amount notgreater than the lesser of (i) 7.5% of the Executive’s Base Salary or (ii) $25,000.          6.6 Non Disparagement. The Company agrees that the Company will not make anynegative of disparaging comments about the Executive unless required by legal process to do so.
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     7. Effect of Termination. The provisions of this Section 7 shall apply in the eventof termination of the Executive’s employment, pursuant to Section 5 or otherwise.          7.1 Payment in Full. Payment by the Company to Executive of any Base Salary and otherspecified amounts or benefits which are due the Executive (or, as the case may be, the Executive’sdesignated beneficiary, estate, surviving spouse or dependents) under the applicable terminationprovision of Sections 6.1, 6.2, 6.3, 6.4 or 6.5 shall constitute the entire obligation of theCompany to the Executive under this Agreement, except that nothing in this Section 7.1 is intendedor shall be construed to affect the rights and obligations of the Company (or its Affiliates), onthe one hand, and the Executive, on the other, with respect to any option plans, option agreements,restricted stock grants, awards or agreements, subscription agreements, stockholders agreements,employee benefit plans or other equity arrangements or agreements to the extent said rights orobligations survive termination of employment under the provisions of documents relating thereto.The Executive shall only be eligible to receive the benefits of Sections 6.1, 6.2, 6.3, 6.4 or 6.5of this Agreement and shall not be entitled to receive benefits under more than one such section.The Company’s obligation to provide payment and/or benefits set forth herein shall be conditionedupon the Executive’s (or the Executive’s executor or legal representative) execution of aSeparation and Release Agreement consistent with the terms of this Agreement in a form agreeable tothe Company.          7.2 Termination of Benefits. Except as set forth above and for any right ofcontinuation of health coverage at the Executive’s cost to the extent provided by Sections 601through 608 of ERISA, all of the Executive’s rights to any benefits under the Welfare Benefit Plansshall terminate pursuant to the terms of the applicable benefit plans based on the Date ofTermination.          7.3 Return of Property. Within a reasonable time after the Date of Termination ofemployment, the Executive shall return to the Company all of the Company’s property of which he isin possession, including, without limitation, any material and documentation that constitutesConfidential Information, credit cards, computers, and keys.     8. Executives Commitment to the Company.          8.1 Confidentiality. The Executive shall not, during the Employment Period or for twoyears after the Employment Period (and for an indefinite period for Confidential Informationcomposed of trade secrets of the Company), disclose any Confidential Information (as such term isdefined herein) to any Person for any reason or purpose whatsoever, other than in connection withthe performance of the Executive’s duties under this Agreement. The term “ConfidentialInformation” shall mean all confidential information of or relating to the Company and any of itsAffiliates, including without limitation, financial information and data, business plans andinformation regarding prospects and opportunities (such as, by way of example only, client andcustomer lists and acquisition, disposition, expansion, product development and other strategicplans), but does not include any information that is or becomes public knowledge by means otherthan the Executive’s breach or nonobservance of the Executive’s obligations described in thisSection 8.1. Notwithstanding the foregoing, the Executive may disclose such ConfidentialInformation as he may be legally required to do so on the advice of counsel in connection with anylegal or regulatory proceeding; provided, however, that the Executive shall provide the Companywith prior written notice of any such required or potentially required
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disclosure and shall cooperate with the Company and use their best efforts under suchcircumstances to obtain appropriate confidential treatment of any such Confidential Informationthat may be so required to be disclosed in connection with any such legal or regulatory proceeding.In no event shall an asserted violation of the provisions of this Section 8 constitute a basis fordeferring or withholding any amounts otherwise payable to the Executive under this Agreement duringor with respect to the Change of Control Period.          8.2 Litigation. The Executive agrees to cooperate fully with the Company, or itsassignee, and counsel for the Company, or its assignee, in any and all matters involvinglitigation, administrative proceedings, arbitration or governmental investigations. The Executive’scooperation shall include being reasonably available for, without limitation, interviews,depositions, and trial testimony. To the extent that the Executive’s cooperation involves travel,the Company or its assignee will reimburse the Executive for their reasonable travel expenses. Tothe extent that the Executive’s cooperation requires him to incur out-of-pocket expenses, includingwithout limitation reasonable attorney’s fees, the Company or its assignee will reimburse suchexpenses, provided they are reasonable and supported by reasonable documentation. The Executivewill make available, at the expense of the Company or its assignee, copies of all documents andfiles requested by the Company in connection with this duty of cooperation, excluding only thosedocuments and files which are subject to any attorney-client privilege, work product doctrine, orother legal protection from disclosure that is held solely by the Executive in their individualcapacity, as opposed to any privilege or legal protection from disclosure held by the Company.          8.3 Compliance with Securities Laws. The Executive agrees not to directly orindirectly buy or sell the Company stock or other securities as long as he possesses “materialnon-public information” as that term is defined by interpretations of the Securities Exchange Actof 1934 and the rules and regulations there under. Without limiting the generality of theforegoing, the Executive further agrees to abide by the Company’s Insider Trading policy as ineffect during the Employment Period until three (3) business days after the public release of thefinancial results for the fiscal quarter ending after the Executive’s Date of Termination.          8.4 Position as Officer and Director. Upon the Executive’s termination of employmentthe Executive shall resign as an Officer/Director from the Company and all Affiliates and anyadministrative roles in any plans sponsored by the Company and its Affiliates and will execute allinstruments and documents requested by the Company to effectuate this.          8.5 Non Compete. The Executive agrees not to directly or indirectly compete with thebusiness of the Company and its successors and assigns during the Employment Period and for aperiod of one year following the Executive’s termination of employment. The term “not compete” asused herein shall mean that the Executive shall not own, manage, operate, consult or be an employeein a business that has operations in the United States that are substantially similar to orcompetitive with the business activity of the Company or any of its Affiliates at the ExecutiveTermination Date. Notwithstanding the foregoing the Executive may own up to 5% of any stock orsecurity that is publicly traded on any national securities exchange or other market system.
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          8.6 Non-Solicitation. The Executive agrees for a period of one year from theExecutive’s Termination Date that the Executive will not without the prior written approval of theCompany directly or indirectly: (i) solicit for hire any employees of the Company or any Affiliate,or (ii) induce any employee of the Company or any Affiliate to terminate their relationship withthe Company or Affiliate. The foregoing will not apply to individuals hired as a result of the useof an independent employment agency (so long as the agency was not directed to solicit a particularindividual) or as a result of the use of a general solicitation not specifically directed toCompany or its Affiliate’s employees.          8.7 Non Disparagement. The Executive agrees that the Executive will not make anynegative of disparaging comments about the Company unless required by legal process to do so.          8.8 Injunctive Relief. The Executive acknowledges and agrees that the Company willhave no adequate remedy at law, and would be irreparably harmed, if the Executive breaches orthreatens to breach any of the provisions of this Section 8. The Executive agrees that the Companyshall be entitled to equitable and/or injunctive relief to prevent any breach or threatened breachof this Section 8, and to specific performance of each of the terms of this Section 8 in additionto any other legal or equitable remedies that the Company may have. The Executive further agreesthat he shall not, in any equity proceeding relating to the enforcement of the terms of thisSection 8, raise the defense that the Company has an adequate remedy at law.          8.9 Special Severability. The terms and provisions of this Section 8 are intended tobe separate and divisible provisions and if, for any reason, any one or more of them is held to beinvalid or unenforceable, and neither the validity nor the enforceability of any other provision ofthis Agreement shall thereby be affected.     9. Successors.          9.1 The Executive. This Agreement is personal to the Executive and, without the priorwritten consent of the Company, shall not be assignable by the Executive, other than by will or thelaws of descent and distribution. This Agreement shall inure to the benefit of and be enforceableby the Executive’s heirs, beneficiaries and/or legal representatives.          9.2 The Company. This Agreement shall inure to the benefit of and be binding upon theCompany and its successors and assigns.          9.3 Successors. The Company will require any successor (whether direct or indirect,by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/orassets of the Company to assume expressly and agree to perform this Agreement in the same mannerand to the same extent that the Company would be required to perform it if no such succession hadtaken place and the Executive will consent to such successor’s assumption. As used in thisAgreement, “Company” shall mean the Company as previously defined and any successor to its businessand/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of lawor otherwise.     10. Full Settlement; Mitigation. The Company’s obligation to make the paymentsprovided for in, and otherwise to perform its obligations under, this Agreement shall not be
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affected by any set-off, counterclaim, recoupment, defense or other claim, right or actionthat the Company may have against the Executive or others other than a claim, right or action forfraud after the individual is judicially determined to have committed such action. In no eventshall the Executive be obligated to seek other employment or take any other action by way ofmitigation of the amounts payable to the Executive under any of the provisions of this Agreementand such amounts shall not be reduced, regardless of whether the Executive obtains otheremployment.     11. Indemnification. The Company shall pay or indemnify the Executive to the fullextent permitted by law and the by-laws of the Company for all expenses, costs, liabilities andlegal fees which the Executive may incur in the discharge of the Executive’s duties hereunder.     12. Miscellaneous.          12.1 Applicable Law. This Agreement shall, to the extent not superseded by federallaw, be governed by and construed in accordance with the laws of the State of Delaware, withoutregard to principles of conflict of laws.          12.2 Amendments/Waiver. This Agreement may not be amended, waived, or modifiedotherwise than by a written agreement executed by the parties to this Agreement or their respectivesuccessors and legal representatives. No waiver by any party to this Agreement of any breach ofany term, provision or condition of this Agreement by the other party shall be deemed a waiver of asimilar or dissimilar condition or provision at the same time, or any prior or subsequent time.          12.3 Notices. All notices and other communications hereunder shall be in writing andshall be deemed given when received by hand-delivery to the other party, by overnight courier, orby registered or certified mail, return receipt requested, postage prepaid, addressed, addressed asfollows:          If to the Executive:Steven L. Ates