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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period for to
Commission file number 0-15899
WELLMAN, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-1761740
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1040 Broad Street, Suite 302
Shrewsbury, New Jersey 07702
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (908) 542-7300
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, New York Stock
$.001 par value Exchange
Securities registered pursuant to Section 12(g) of the Act: None
<PAGE>
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 X No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Rule 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendments to this Form 10-K. []
Aggregate market value of the voting stock held by nonaffiliates of the
registrant, computed on the basis of $21.875 per share (the closing price of
such stock on March 15, 1994 on the New York Stock Exchange): $709,095,734.
The number of shares of the registrant's Common Stock, $.001 par value,
and Class B Common Stock, $.001 par value, outstanding as of March 15, 1994
was 32,882,642 and -0-, respectively.
DOCUMENTS INCORPORATED BY REFERENCE
1. Proxy Statement for the 1994 Annual Meeting of Stockholders (to be
filed with the Securities and Exchange Commission on or before April 30,
1994) is incorporated by reference in Part III hereof.
<PAGE>
PART I
Item 1. Business
Recent Developments
In March 1993, the Company sold its 44% ownership interest
in Wellstar Holding B.V. ("Wellstar"), a Netherlands-based
manufacturer of PET beverage bottles, for a total consideration
of approximately $33 million. The transaction resulted in a
net gain, before applicable income taxes, of $12.4 million.
The sale of Wellstar increased 1993 net earnings by
approximately $7.3 million or $.22 per share. See Note 2 of
the Notes to the Consolidated Financial Statements.
General
The principal business of Wellman, Inc. (which, together
with its subsidiaries, is herein referred to as the "Company")
is the manufacture and sale of polyester and nylon fibers and
resins.
The Company's Fibers Group manufactures and markets
polyester and nylon staple fibers and partially-oriented yarn
("POY"). Polyester staple and POY production is sold under the
Fortrel/ brand to major domestic yarn processors and integrated
fabric mills for use in apparel, home furnishings and
industrial applications. The Fibers Group also manufactures
polyester and nylon staple fibers from waste raw materials,
including fiber producer wastes, postconsumer PET soft drink
bottles and film producer wastes, for use in the fiberfill,
furniture, home furnishings, carpet, and industrial markets in
the United States and Europe. The Company believes it is the
largest recycler in the United States of post-consumer plastics
and the largest producer of polyester staple fiber made from
recycled feedstocks.
The Company's Manufactured Products Group ("MPG")
manufactures and markets PET resins, a portion of which is used
in the Company's POY production, for use in polyester fibers
and PET packaging. Prior to 1993, sales of PET resin were
reported by the Company under the Fibers Division (which
consists of the domestic operations of the Fibers Group). MPG
also processes raw wool to produce wool top for worsted fabric
manufacturing; anhydrous lanolin is a by-product of this
production. MPG also manufactures nylon engineering resins,
primarily from producer waste raw materials, for automotive,
consumer and industrial uses. MPG converts polyester fiber
into high-loft nonwoven battings which are used as filling
primarily for the home furnishings industry, and manufactures
needle-punched fabrics primarily for geotextile applications.
In addition, MPG processes postconsumer plastics and certain
producer wastes into suitable raw materials for the Company.
It also markets recycled high density polyethylene ("HDPE")
resins produced from the basecups of soft drink bottles. The
Company manufactures and markets PET and other plastic
thermoformed packaging products and PET sheet.
New England CR Inc. ("CRInc") designs, equips, constructs
and operates materials recovery facilities ("MRFs"). MRFs
separate and process commingled recyclables reclaimed from
households and commercial establishments through curbside
recycling programs. CRInc holds the exclusive North American
rights to distribute the patented Bezner automated materials
sorting process, a German MRF sortation technology. CRInc also
sells the recyclables from its MRFs and brokers recyclables for
other parties. CRInc also operates glass beneficiation
facilities in California and a polystyrene recycling facility
in New Jersey.
Raw Materials
Fibers Group. The major raw materials used by the Company
in the manufacture of polyester staple fiber and POY are
purified terephthalic acid ("PTA") and monoethylene glycol
("MEG"), two petrochemicals, and various waste raw materials.
The Company believes it is the largest producer of polyester
staple fiber made from recycled feedstocks.
The Company purchases PTA under an exclusive supply
contract which expires December 31, 1995 with Amoco Chemical
Corporation ("Amoco"). The Company purchases MEG under an
exclusive supply contract with Oxy Chem Inc. which expires
December 31, 1997. The prices of PTA and MEG have fluctuated
in the past and may continue to do so in the future.
Three categories of wastes are also utilized in the
production of staple fibers: fiber producer waste, PET bottle
waste and PET film waste. A material portion of fiber producer
waste is purchased from fiber manufacturers that compete with
the Company in the sale of fiber. The Company believes it is
the largest U.S. recycler of postconsumer PET bottles, which
are obtained from deposit return and curbside recycling
programs. PET film waste is obtained from various audio,
video, photographic, packaging and X-ray film producers. Fiber
producer and film wastes represent off-quality production, trim
and other wastes. The Company also uses virgin PET resin in
polyester fiber production. The Company's Recycling Division
is responsible for the procurement and processing of the waste
raw materials.
<PAGE>
The availability of its petrochemical and waste raw
materials is essential to the Company's fiber operations.
While historically suppliers have provided adequate quantities
of raw materials, the unavailability, scarcity or significantly
increased cost of certain raw materials could have a material
adverse effect on the Company.
Manufactured Products Group. MPG utilizes PTA and MEG to
manufacture PET resins and utilizes recycled PET bottles and
producer waste feedstocks to produce nylon engineering and
recycled HDPE resins. MPG utilizes raw wool and wool grease
for the production of wool top and anhydrous lanolin,
respectively. MPG also uses polyester fiber, supplied by the
Company's Fibers Group and other polyester fiber producers, to
manufacture nonwoven products. MPG utilizes virgin and
recycled PET in the production of PET thermoformed packaging
products and sheet.
Products and Markets
The following table presents the combined net sales (in
millions) and percentage of net sales by business of the
Company for the periods indicated. For purposes of this data,
intercompany transactions have been eliminated and with respect
to its Irish fiber subsidiary, Wellman International Limited
("WIL"), historical exchange rates have been applied to the
data for the periods indicated.
1993 1992 1991
Net % of Net % of Net % of
Sales Total Sales Total Sales Total
Fibers Grp(1) $655.2 77.8% $674.5 81.5% $651.2 80.8%
MPG(1)(2) $163.1 19.4 134.3 16.2 124.3 15.4
CRInc 23.8 2.8 19.4 2.3 30.2 3.8
TOTAL $842.1 100.0% $828.2 100.0% $805.7 100.0%
(1) 1991 and 1992 sales were restated to include
sales of PET resins, which were previously
reported under the Fibers Division, in MPG.
(2) Includes sales of Creative Forming, Inc. ("CFI")
from November 18, 1992, the date of its
acquisition by the Company.
<PAGE>
Fibers Group.
Fibers Division. The Fibers Division produces polyester
and nylon staple fibers and POY.
Staple, the primary product produced, is multi-strand fiber
cut into short lengths to simulate certain properties found in
natural fibers such as cotton and wool and/or to meet the end
product needs of the Company's customers. In 1993,
approximately 35% of the Company's domestic polyester staple
sales were to the apparel industry, approximately 22% to the
home furnishings industry, 19% as fiberfill, 12% to the carpet
industry, and the balance to nonwovens and industrial markets.
The Company's domestic nylon staple production was utilized
primarily by the carpet industry, with the balance used in
specialty applications. The Fiber Division's staple products
are manufactured at facilities in Darlington (Palmetto),
Johnsonville and Marion, SC.
Polyester textile staple, the Division's largest staple
product, is produced at Palmetto from PTA and MEG and is sold
primarily to textile mills and spinners for processing into
fabric for a variety of applications, including apparel, home
furnishings and industrial uses. The stated annual fiber
production capacity of the Palmetto plant is approximately 450
million pounds. All other domestic polyester staple production
occurs at the Johnsonville and Marion facilities. The primary
end market for the production from these facilities is the
fiberfill market, followed by the carpet and industrial
markets. The Johnsonville plant, site of all domestic nylon
staple fiber production, has approximately 255 million pounds
of annual fiber production capacity, based on a product mix of
80% polyester and 20% nylon staple. The Marion facility has
approximately 32 million pounds of annual polyester staple
fiber production capacity.
POY, a continuous polyester filament product, is sold by
the Company to integrated textile mills and texturizers for
further processing for use primarily in apparel, home
furnishings and industrial applications. POY is produced at
the Company's Fayetteville, NC plant from PET resin
manufactured by the Company at its Palmetto plant. The
Company's Fayetteville plant increased its stated annual POY
production capacity to approximately 130 million pounds, or by
30%, in the first quarter of 1994.
The Company's polyester textile staple and POY production
is sold under the Fortrel/ brand.
<PAGE>
Wellman International Limited. The fiber production
process of WIL, a wholly-owned subsidiary based in Mullagh,
Republic of Ireland, is similar to that of the Company's
Johnsonville plant. WIL also uses recycled raw materials,
including producer fiber and film wastes and, to a lesser
extent, postconsumer PET soft drink bottles, to produce
polyester and nylon staple fibers. The majority of WIL's raw
materials are producer wastes, some of which are obtained from
suppliers who compete with it in the fibers business in
Europe. Postconsumer PET bottles procured by WIL are processed
at the Company's European PET bottle recycling facility,
located in Spijk, the Netherlands.
The maximum annual fiber production capacity of WIL is
approximately 154 million pounds, based on a product mix of
approximately 90% polyester and 10% nylon staple. WIL's
polyester fibers are used primarily in fiberfill, nonwovens and
industrial applications, while its nylon fibers are used mainly
by the carpet industry. WIL exports, primarily to the United
Kingdom and Europe, virtually all of its fiber production.
Manufactured Products Group.
Polymer Products Division. Located at the Palmetto plant,
this Division utilizes PTA and MEG to produce approximately 220
million pounds of PET resin, the commodity bulk form in which
pure polyester is transported and utilized. In 1993,
approximately 47% of the Division's resin was used by the
Fayetteville plant to produce POY. The remainder was sold to
Hoechst Celanese Corp. ("HCC"), pursuant to the terms of a take
or pay supply arrangement which expired in the second half of
1993, and to other customers.
In the first quarter of 1994, the Company commenced
operation of new solid stating equipment at Palmetto which will
enable it to upgrade approximately 80 million pounds per year
of its current PET resin production to higher-value PET bottle
resin, which is used to manufacture PET packaging such as soft
drink bottles. In addition, the new solid stating unit has
capacity to upgrade an additional 80 million pounds per year of
PET resin when the monomer and polymerization capacity at the
Palmetto plant increases as described below.
Monomer is the PET feedstock derived from PTA and MEG from
which polyester textile staple fiber and PET resin is
produced. The Company plans to expand monomer capacity by 400
million pounds, or over 55%, in late 1994. The Company also
plans to add 160 million pounds of PET resin capacity in the
second quarter of 1995.
<PAGE>
Wool Division. At the Wool Division's facility in
Johnsonville, SC, raw wool is processed through sorting and
blending operations, scoured, carded, combed, and packaged as
wool top primarily for use in worsted fabric applications for
apparel. The Wool Division's plant has the flexibility to
process and blend various wool grades and to simultaneously run
several different wool blends.
As a by-product of the wool scouring process, wool grease
is recovered which, in combination with wool grease purchased
in the open market, is processed to produce anhydrous lanolin.
The Company believes that it is the largest U.S. producer of
anhydrous lanolin, which it sells to the pharmaceutical,
cosmetics and industrial markets.
Engineering Resins Division. The Engineering Resins
Division, located in Johnsonville, SC, manufactures and markets
nylon engineering resins to the injection molding industry.
These resins, chiefly Nylon 6 and 66 and co-polymers of these
types, are produced primarily from producer wastes and
compounded and combined with various additives (glass,
minerals, fire retardant, etc.) to impart desired performance
characteristics. The Company serves a variety of markets with
these compounded engineering resins, with the largest being
automotive, followed by consumer products, industrial and other.
Nonwovens Business. The Nonwovens business, located in
Charlotte, NC, and Commerce, CA, utilizes polyester fiber to
produce high-loft battings, primarily for the home furnishings
industry, and needle-punched fabrics primarily for geotextile
applications. High-loft battings are used for their cushioning
and insulating properties in bedspreads, comforters, quilts and
other similar products and are sometimes sold under the
Fortrel/ brand. The largest customers of this product are
vertically-integrated textile mills and independent bedspread
and comforter manufacturers. Geotextile fabrics are used for
soil reinforcement and filtration in various civil engineering
applications, including landfill and pond linings and railroad
and road stabilization. The Nonwovens business utilizes
polyester staple fiber produced by the Fibers Group, as well as
other fiber manufacturers, as raw material.
Recycling Division. The Recycling Division processes
postconsumer PET soft drink bottles and producer fiber and film
wastes into usable raw materials for the Fibers and Engineering
Resins Divisions and CFI. It also markets recycled HDPE
resins, primarily to manufacturers of basecups for soft drink
bottles.
<PAGE>
The Division consists of PET bottle and producer waste
recycling operations in Johnsonville, SC and PET bottle
recycling operations in Bridgeport, NJ, which was acquired in
May 1993.
In the third quarter of 1993, the Recycling Division
expanded its annual capacity to recycle PET bottles at its
Johnsonville location by over 70%, from 110 million pounds to
190 million pounds. Annual PET bottle recycling capacity in
Bridgeport is approximately 50 million pounds.
Creative Forming, Inc. Utilizing PET as well as other
materials, Creative Forming, Inc. custom designs, manufactures
and markets thermoformed plastic packaging products for the
consumer products industry. It also produces PET sheet,
utilizing both virgin and recycled raw materials, for use in
its own thermoforming operations and for sale in the open
market. CFI, which is based in Ripon, WI, expanded its
capacity to produce sheet by 33% and installed coextrusion
equipment in early 1994.
New England CR Inc. CRInc designs, equips, constructs and
operates materials recovery facilities ("MRFs"). MRFs separate
and process commingled recyclables reclaimed from households
and commercial establishments through curbside recycling
programs. CRInc holds exclusive North American, United Kingdom
and Irish rights to distribute the patented Bezner automated
materials sorting process, a German MRF sortation technology.
CRInc commenced operation of three MRFs in 1993 so that at
year-end 1993, CRInc had 13 full-service MRFs operational.
CRInc also sells the recyclables from its MRFs and brokers
recyclables for other parties. CRInc also operates glass
beneficiation facilities in California and a polystyrene
recycling facility in New Jersey.
Capital Investment Program
Pursuant to its on-going long-term capital investment
program, the Company's 1993 capital expenditures totaled
approximately $105 million. The capital projects included in
the 1993 expenditures were the installation of solid-stating
equipment, expansion of PET bottle recycling and POY production
capacity and equipment modernization at the Company's domestic
fiber operations.
The Company's 1994 capital expenditures are expected to
total approximately $90 million, which will include the
expansion of monomer and PET resin production capacity and
continued equipment upgrades at the domestic fiber operations.
<PAGE>
Marketing
The Company markets the majority of its products through a
direct sales force consisting of approximately 50 sales
personnel. For certain sales outside the United States, the
Company utilizes representatives or agents.
The Company also markets its polyester fibers through
various activities, such as advertising, sales promotion,
market analysis, product development and fashion forcasting
directed to its customers and organizations downstream from its
customers. As part of this effort, the Company's marketing
personnel encourage downstream purchasers of apparel, home
furnishings and other products to specify to their suppliers
the use of Fortrel/ brand polyester in their products.
Competitors
Each of the Company's major fiber markets is highly
competitive. The Company competes primarily on the basis of
quality, service, brand identity and price. Several
competitors are substantially larger than the Company and have
substantially greater economic resources. The Company's
primary competitors are E.I. DuPont de Nemours & Co.and the
Hoechst Celanese division of Hoechst A.G. The Company believes
it is currently the third-largest producer of polyester staple
and POY in the United States, representing approximately 26%
and 13%, respectively, of U.S. production capacity for these
products. The Company also competes with Nan Ya Plastics
Corp., which completed construction of a facility in 1993 to
sell polyester staple and POY.
The polyester staple fiber and POY markets have
historically displayed price and volume cyclicality. The
domestic polyester textile fiber markets are subject to changes
in, among other factors, polyester fiber and/or textile product
imports and consumer preferences, spending and retail sales
patterns, which are driven by general economic conditions.
Consequently, a downturn in either the domestic or global
economy or an increase in imports of textile or polyester fiber
products could adversely affect the Company's business.
Research and Development
The Company has approximately 75 U.S. employees devoted to
research and development activities. The Company has entered
into technology sharing arrangements from time to time with
various parties.
<PAGE>
Foreign Activities
Primarily through WIL, its Irish fiber subsidiary, the
Company operates in international markets, primarily the United
Kingdom and Western Europe. Since substantially all of WIL's
sales are for export, changes in exchange rates may affect
WIL's profit margins and sales levels. In addition,
fluctuations between the United States dollar and Irish pound
may also affect reported results.
The Company's foreign business is subject to certain risks
customarily attendant upon foreign operations and investments
in foreign countries, including restrictive action by local
governments, limitations on repatriating funds and changes in
currency exchange rates. See Note 11 of the Notes to the
Consolidated Financial Statements for additional information
relating to the Company's foreign activities.
Employees
As of December 31, 1993, the Company employed approximately
3,600 persons in the United States and Europe. At December 31,
1993, approximately 790 U.S. employees were members of The
Amalgamated Clothing and Textile Workers Union ("ACTWU"). The
Company's contract with the ACTWU expires in July, 1996. In
addition, approximately 351 of its Irish employees were
represented by four unions. The wage agreements with these
unions each expire on April 30, 1994.
The Company believes that its relations with its employees
are satisfactory.
Environmental Matters
The Company has determined that groundwater contamination
exists at certain of its facilities. In 1986 contamination
involving chlorinated solvents and hydrocarbon derivatives was
found at its Johnsonville, SC facility, principally associated
with a former drum storage site and an underground storage
tank. In 1987, the Company entered into a consent order with
the South Carolina Department of Health and Environmental
Control ("SCDHEC") for remediation of the Johnsonville site.
In September 1989, nitrate contamination of groundwater at the
Johnsonville facility, primarily resulting from a wool dust
stockpile, was also confirmed.
Varying levels of groundwater contamination at the Palmetto
plant, believed to have been the result of a leak in the
chemical sewers and emergency ponds, were reported to SCDHEC by
HCC prior to the acquisition of the plant by Fiber Industries,
Inc. ("FI") in January 1988. Although no formal action to
require remediation or penalties has been taken by the SCDHEC,
the underground sewer lines have been replaced with a pumped
above-ground system. HCC and Celanese Fibers Inc. ("Celanese")
have completed at their expense the sewer line replacement and
the replacement of two emergency waste ponds and a storm water
pond at the Palmetto plant in order to prevent further
groundwater contamination. Extraction systems for removal of
groundwater contamination by the sewer lines and old emergency
ponds and new emergency holding facilities have been installed
at the expense of HCC and are presently in operation.
In April 1991, the Company entered into a consent order
with the SCDHEC over nitrate contamination of groundwater at
the Company's Palmetto plant. Additional groundwater
contamination, resulting from the leakage of 1,4 dioxane, a
process by-product, was discovered at Palmetto in 1992. The
Company has requested that SCDHEC defer action on the nitrate
consent order based on the limited extent of the nitrate
contamination. In September 1993, the Company entered into a
second consent order with the SCDHEC over 1,4 dioxane
contamination discovered at Palmetto in 1992. All requirements
of this consent order (continued monitoring of the nitrate
contamination, definition of the 1,4 dioxane plume, assessment
of risk from the dioxane plume and development of a plan for
groundwater remediation) have been met to date. The Company is
also evaluating whether to repair or replace its wastewater
treatment plant.
In January 1994 the Company determined that its Palmetto
plant was in violation of its wastewater permit with respect to
biological oxygen demand parameters and toxicity. The Company
has notified the SCDHEC of such violation and is undertaking
remediation action. The cost of such remediation is not
expected to be material.
The Fayetteville plant was notified in 1987 of an "event of
noncompliance" by the North Carolina Department of Environment,
Health and Natural Resources ("NCDEHNR"), formerly the
Department of Natural Resources and Community Development, due
to an increase in total organic carbon levels in two of its six
groundwater monitoring wells. On October 25, 1991 the Company
received a Notice of Violation from the NCDEHNR with regard to
groundwater monitoring results shared with them, showing
chlorinated hydrocarbon contamination. One on-site source, a
chemical wastewater sump, was identified and removed.
Additional off-site sources are suspected.
In August 1992, SCDHEC requested that the Palmetto plant
submit a plan for compliance with the National Ambient Air
Quality Standards ("NAAQS") for sulphur dioxide. The Company
plans to install a new tall stack and related equipment at
Palmetto in late 1994 or early 1995.
Assessment of and remedial plans at the Company's sites are
on-going. While it is often difficult to reasonably quantify
future environmental-related expenditures, the Company
currently estimates its non-capital expenditures related to
environmental matters to range between $13.0 million and $25.0
million. Such expenditures are expected to occur over a
significant number of future years. In connection with these
expenditures, the Company has accrued $15.5 million at December
31, 1993, representing management's best estimate of probable
non-capital environmental expenditures. In addition, capital
expenditures aggregating approximately $10.0 million to $15.0
million may be required over the next several years related to
currently existing environmental matters. See Notes 1 and 8 of
the Company's Notes to Consolidated Financial Statements.
The Company's plants are subject to numerous existing and
proposed laws and regulations designed to protect the
environment from wastes, emissions and hazardous substances.
Except as discussed in the preceding paragraphs, the Company
believes it is either in material compliance with all currently
applicable regulations or is operating in accordance with the
appropriate variances and compliance schedules or similar
arrangements. The Company believes that compliance with
current laws and regulations will not require significant
capital expenditures other than as identified above or have a
material adverse effect on its operations.
Executive Officers of the Registrant
The current executive officers of the Company are as
follows:
Name and Age Position
Thomas M. Duff, 46 President, Chief Executive Officer
and Director
Clifford J. Christenson, 44 Executive Vice President
Keith R. Phillips, 39 Vice President, Chief Financial
Officer and Treasurer
C.W. Beckwith, 62 Vice President and Director;
Chief Executive Officer of WIL
James P. Casey, 53 Vice President; President, Fibers
Division
<PAGE>
Paul D. Apostol, 48 Vice President, Manufactured
Products Group, Strategic Planning
and Business Development
Richard J. Kattar, 61 Vice President; President, New
England CR Inc.
Mark J. Rosenblum, 40 Vice President, Controller
Ernest G. Taylor, 43 Vice President, Administration
Officers are elected annually by the Board of Directors.
Set forth below is certain information with respect to the
Company's executive officers.
Thomas M. Duff. Mr. Duff has been President of the Company
since its inception in 1985.
Clifford J. Christenson. Mr. Christenson has been
Executive Vice President since October 4, 1993. Prior to that
time he was Chief Financial Officer and Treasurer since he
joined the Company in 1985 and Vice President since 1986.
Keith R. Phillips. Mr. Phillips has been Vice President,
Chief Financial Officer and Treasurer since October 4, 1993.
Prior to joining the Company on October 1, 1993 he was a
partner in Ernst & Young.
C.W. Beckwith. Mr. Beckwith has been Vice President of
Wellman and Chief Executive Officer of WIL since the
acquisition of WIL in 1987. Prior to such time, he was
managing director of WIL since 1972.
James P. Casey. Mr. Casey has been President of the Fibers
Division since October 4, 1993; prior to such time he was Vice
President, Marketing since March 25, 1991. Prior to that time,
he was Vice President of Marketing of FI and its predecessor
companies.
Paul D. Apostol. Mr. Apostol has been Vice President,
Manufactured Products Group and Strategic Planning and Business
Development since March 15, 1991. Prior to such time, Mr.
Apostol was Vice President of Marketing of FI and its
predecessor companies.
Richard J. Kattar. Mr. Kattar has been Vice President
since May 21, 1991. He has been President of CRInc since its
inception in 1982.
<PAGE>
Mark J. Rosenblum. Mr. Rosenblum has been Vice President,
Controller since September 1, 1989 and Controller since he
joined the Company in 1985. Mr. Rosenblum is a certified
public accountant.
Ernest G. Taylor. Mr. Taylor has been Vice President in
charge of Administration since January 1991. From November
1989 until 1991 he was Manager of Administration. Prior to
such time, he was a manager of information systems for FI and
its predecessor companies.
Section 16 Compliance. Section 16(a) of the Securities
Exchange Act of 1934 requires the Company's officers and
directors, and persons who own more than 10% of a registered
class of the Company's equity securities ("insiders"), to file
reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Insiders are
required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on review
of the copies of such forms furnished to the Company, the
Company believes that during 1993 all Section 16(a) filing
requirements applicable to its insiders were complied with,
except that a trust for which Mr. Apostol serves as trustee
inadvertently failed to timely file an initial report of its
holdings as required by Section 16.
Item 2. Properties
The location and general description of the principal
properties owned or leased by the Company are set forth in the
table below:
Principal Square
Location Function Footage Ownership
Shrewsbury, NJ Corporate 7,600 Leased
Johnsonville, SC Manufacturing 2,291,000 Owned
and Warehouse
Darlington, SC Manufacturing 1,015,000 Owned
(Palmetto) and Warehouse
Mullagh, Ireland (1) Manufacturing 340,633 Owned
and Warehouse
Fayetteville, NC Manufacturing 295,048 Owned
and Warehouse
Commerce, CA Fiber Converting 90,000 Leased
Facility
<PAGE>
Marion, SC Manufacturing 247,500 Owned
and Warehouse
Charlotte, NC Fiber Converting 75,000 Owned
Facility
Administrative 55,020 Leased
and Research
Chelmsford, MA Sales and 13,750 Leased
Administrative
Ripon, WI Manufacturing and 106,000 Owned
Warehouse
Bridgeport, NJ Plastic Bottle Re- 80,000 Leased
cycling Facility
Spijk, The Neth- Plastic Bottle Re- 55,812 Leased
erlands cycling Facility
(1) WIL's lenders currently have a lien on this
facility.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Company's Common Stock is listed on the New York Stock
Exchange under the symbol WLM. The following table shows the
high and low sales prices on the New York Stock Exchange as
reported on its Composite Tape and the cash dividends paid on
its Common Stock for the last two fiscal years.
Year High Low Dividend
1993
First Quarter $23-3/4 $19-3/4 $0.03
Second Quarter $24-7/8 $18-1/8 $0.05
Third Quarter $22 $17-3/8 $0.05
Fourth Quarter $19-3/8 $16-1/4 $0.05
1992
First Quarter $31-1/2 $22-1/8 $0.03
Second Quarter $30-7/8 $20 $0.03
Third Quarter $24-5/8 $20 $0.03
Fourth Quarter $22-3/8 $16-1/2 $0.03
The Company had approximately 1,657 stockholders of record
of Common Stock as of March 16, 1994.
<PAGE>
##
##
<TABLE>
Item 6. Selected Financial Data
<CAPTION>
Years Ended December 31,
(In thousands, except per share data) 1989(2) 1990 1991 1992 1993(3)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales . . . . . . . . . . . . . . . . . . . $437,777 $827,764 $805,664 $828,200 $842,064
Cost of sales . . . . . . . . . . . . . . . . . 312,137 618,519 623,546 639,664 679,182
Gross profit. . . . . . . . . . . . . . . . . . 125,640 209,245 182,118 188,536 162,882
Selling, general and administrative expenses. . 36,046 65,268 73,194 77,439 86,511
Interest expense. . . . . . . . . . . . . . . . 10,977 42,712 29,387 23,012 15,736
Gain on sale of Wellstar. . . . . . . . . . . . -- -- -- -- 12,386
Earnings before income taxes and cumulative
effect of changes in accounting principles. . 78,617 101,265 79,537 88,085 73,021
Provision for income taxes. . . . . . . . . . . 25,564 39,141 32,954 35,801 32,567
Net earnings before cumulative effect of
changes in accounting principles. . . . . . . 53,053 62,124 46,583 52,284 40,454
Cumulative effect of changes in accounting
principles, net of income taxes . . . . . . . -- -- -- -- (9,010)
Net earnings. . . . . . . . . . . . . . . . . . $53,053 $62,124 $46,583 $52,284 $31,444
<CAPTION>
Earnings (loss) per common share:
<S> <C> <C> <C> <C> <C>
Before cumulative effect of changes in
accounting principles. . . . . . . . . . . . $1.79 $1.92 $1.43 $1.60 $1.23
Cumulative effect of changes in accounting
principles, net of income taxes. . . . . . . -- -- -- -- (0.27)
Net earnings. . . . . . . . . . . . . . . . . $1.79 $1.92 $1.43 $1.60 $0.96
Average common shares . . . . . . . . . . . . . 29,605 32,358 32,632 32,728 32,857
Dividends (1) . . . . . . . . . . . . . . . . . $ 3,389 $ 3,849 $ 3,887 $ 3,895 $ 5,885
Pro forma amounts assuming the effects of
the changes in accounting principles are
applied retroactively:
Net earnings. . . . . . . . . . . . . . . . $53,053 $62,124 $46,583 $43,759 $40,454
Net earnings per share. . . . . . . . . . . $1.79 $1.92 $1.43 $1.34 $1.23
<CAPTION>
December 31,
1989(2) 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets. . . . . . . . . . . . . . . . . . $912,155 $944,974 $925,289 $996,583 $1,015,247
Notes payable and current maturities of
long-term debt . . . . . . . . . . . . . . . $ 42,815 $ 33,375 $ 34,291 $ 24,688 $ 18,594
Long-term debt exclusive of current maturities. $395,529 $342,066 $269,590 $299,860 $294,173
Stockholders' equity. . . . . . . . . . . . . . $320,179 $393,609 $438,440 $483,268 $506,506
<FN>
(1) The Company paid quarterly cash dividends of $0.025 beginning in the first quarter of 1989.
In May 1989, the quarterly dividend was increased to $0.03 per share. In the second quarter
of 1993, the quarterly dividend was increased to $0.05 per share.
(2) Reflects the acquisition of Fiber Industries, Inc. on November 1, 1989.
(3) 1993 net earnings reflect $15.9 million ($0.48 per share) of accounting changes and unusual
and nonrecurring items. See also Management's Discussion and Analysis of Financial Condition
and Results of Operations and Notes 1, 2 and 3 of the Notes to the Consolidated Financial
Statement.
</TABLE>
<PAGE>
##
##
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
ACCOUNTING CHANGES
During 1993, the Company adopted the provisions of the
Financial Accounting Standards Board's Emerging Issues Task
Force (EITF) Abstract No. 93-5. EITF 93-5 provides that an
environmental liability should be evaluated independently from
any potential claim for recovery and that the loss arising from
the recognition of an environmental liability should be reduced
only when a claim for recovery is probable of realization.
Current accounting standards provide a general presumption that
disputed claims for recovery are not probable of realization.
Under practice prior to the issuance of EITF 93-5, some
companies, including the Company, offset reasonably possible
recoveries against probable losses. As a result of the
issuance of EITF 93-5, this accounting treatment is no longer
permitted.
The Company is obligated to remediate environmental
problems which existed at some of its manufacturing facilities
prior to their acquisition by the Company. The Company has
escrow funds and indemnification agreements with the prior
owners of these facilities, which may result in reimbursement
of a significant portion of the environmental liabilities.
However, as discussed above, the new accounting standards
generally permit companies to record only uncontested claims
for reimbursement of environmental liabilities. The change in
accounting for environmental liabilities resulted in an
after-tax cumulative effect charge of $6.8 million ($0.20 per
share), net of the related income tax effect of $4.2 million.
See Note 1 to the Consolidated Financial Statements.
During 1993, the Company changed its method of applying the
lower of cost or market rule to certain slow-moving and
discontinued waste raw material inventory which is valued using
the last in-first out (LIFO) dollar value method. In prior
years, the Company used the aggregate method in applying the
lower of cost or market rule to such inventories and in 1993
changed to the item-by-item method. The Company believes the
new method of accounting is preferable because it provides a
better matching of costs and revenue and results in a more
conservative valuation of slow-moving and discontinued waste
raw material inventory. This change in accounting for certain
slow-moving and discontinued inventory resulted in an after-tax
cumulative effect charge of $2.2 million ($0.07 per share), net
of the related income tax effect of $1.3 million. In addition,
this change decreased operating income in 1993 by approximately
$4.0 million. See Note 1 to the Consolidated Financial
Statements.
<PAGE>
RESULTS OF OPERATIONS -- 1993 COMPARED TO 1992
Net sales increased from $828.2 million in 1992 to $842.1
million in 1993. Increased sales at the Manufactured Products
Group (MPG) more than offset lower sales of the Company's fiber
businesses. The increase in sales at the MPG was primarily the
result of the contribution of Creative Forming, Inc. (CFI),
acquired in November 1992, and, to a lesser extent, higher
sales at the Wool and Engineering Resins Divisions. Domestic
fiber sales decreased due to lower polyester fiber selling
prices, which more than offset higher domestic sales volumes.
At Wellman International Limited (WIL), the Company's Irish
fiber subsidiary, sales in U.S. dollars decreased due to the
unfavorable impact of the decrease in value of the Irish punt
against the U.S. dollar, which more than offset modest
improvements in selling prices expressed in terms of local
currency and sales volumes. At New England CRInc. (CRInc.),
revenues increased primarily due to an increase in the number
of operating material recovery facilities.
Gross profit amounted to $162.9 million in 1993 compared to
$188.5 million in 1992. Gross profit at the Company's fiber
businesses decreased primarily due to lower domestic polyester
fiber selling prices, and, to a lesser extent, higher costs of
the Company's waste-based fiber business. At the MPG, gross
profit increased primarily due to the contribution of CFI and
an increase in gross profit at the Polymer Products Division.
As a result of the foregoing, the Company's gross margin was
approximately 19% in 1993 compared to 23% in 1992.
In addition to the effect on 1993 earnings of the change in
accounting for certain slow-moving and discontinued inventory
mentioned earlier, gross profit was also adversely affected by
unusual items, primarily related to inventory, development of a
prototype materials recovery facility and expenses associated
with the Company's on-going capital investment program,
aggregating $11.6 million.
Selling, general and administrative expenses were $86.5
million, or approximately 10% of sales, in 1993 compared to
$77.4 million, or approximately 9% of sales in 1992. The
increase was primarily due to the inclusion of CFI, including
the amortization of intangible assets arising from the
acquisition, and a decline in earnings from unconsolidated
subsidiaries due to the sale of the Company's equity interest
in Wellstar Holding, B.V. (Wellstar) in the first quarter of
1993. In addition, certain unusual charges aggregating $2.9
million were included in selling, general and administrative
expenses in 1993.
<PAGE>
As a result of the foregoing, operating income was $76.4
million in 1993 compared to $111.1 million in 1992.
Net interest expense for 1993 was $15.7 million compared to
$23.0 million in 1992. This decrease was primarily the result
of the decline in the Company's average interest rates on
outstanding borrowings and, to a lesser extent, an increase in
the amount of interest capitalized to property, plant and
equipment commensurate with the Company's on-going capital
investment program.
In the first quarter of 1993, the Company sold its
ownership interest in Wellstar for $33.0 million, resulting in
a pre-tax gain of $12.4 million. The transaction resulted in
an increase in 1993 net earnings of $7.3 million, or
approximately $0.22 per share.
In the third quarter of 1993, the Revenue Reconciliation
Act of 1993 (the Act) was enacted, which included an increase
in the maximum corporate tax rate from 34% to 35%. The
provisions of Statement of Financial Accounting Standards No.
109 require that the impact of changes in tax legislation,
including changes in tax rates, be recognized in the period of
the change. Accordingly, the provision for income taxes
reflects an increase in income tax expense of $2.7 million,
representing a negative effect on net earnings of approximately
$0.08 per share.
As discussed above, 1993 net earnings were adversely
effected by $15.9 million, or $0.48 per share, due to the net
effect of changes in accounting principles and unusual and
nonrecurring events. As a result of the foregoing, net
earnings in 1993 were $31.4 million, or $0.96 per share,
compared to $52.3 million, or $1.60 per share in 1992.
OUTLOOK
Demand for the Company's domestic polyester fiber products
remained relatively stable in 1993. The previously announced
expansion at the Company's Fayetteville plant should result in
increased shipments of POY in 1994 as compared to 1993. Demand
for the Company's other polyester fiber products is expected to
remain stable in 1994. Domestic fiber selling prices declined,
primarily in the last half of 1993, due to price competition
from Far Eastern and domestic fiber producers and the start-up
of a new Taiwanese-owned U.S. polyester fiber plant and the
resultant pricing strategies of the Company's domestic
competitors. Selling prices in the first quarter of 1994
appear to have stabilized at approximately year-end 1993 levels.
<PAGE>
RESULTS OF OPERATIONS -- 1992 COMPARED TO 1991
Net sales increased 3% from $805.7 million in 1991 to
$828.2 million in 1992. This increase was primarily the result
of higher domestic sales at the Fibers Division due to an
increase in sales volumes for the Company's polyester fibers.
At WIL, sales increased due to increased sales volumes and the
favorable impact of an increase in the value of the Irish punt
against the U.S. dollar, which more than offset lower selling
prices in terms of local Irish currency. Sales at the MPG
increased primarily due to the increase in direct wool sales
activities at the Wool Division. The increases in sales
discussed above were partially offset by lower revenues at
CRInc. due to reduced construction activities.
Gross profit amounted to $188.5 million in 1992 compared to
$182.1 million in 1991. Gross profit increased for the
Company's fiber businesses due to the increase in sales of
polyester fiber discussed above, which more than offset higher
costs. The increase in costs reflects the Company's on-going
expansion and modernization of its Recycling Division, which
processes waste raw materials for two of the Company's domestic
fiber plants. Gross profit at the MPG was essentially
unchanged in 1992 compared to 1991. The increase in gross
profit at CRInc. was due to the increase in the number of
operating material recovery facilities which resulted in higher
margins. The Company's gross margin was approximately 23% in
both 1992 and 1991.
Selling, general and administrative expenses were $77.4
million in 1992 compared to $73.2 million in 1991, or
approximately 9% of sales in each of the two years. The 6%
increase in 1992 resulted primarily from increased costs
associated with recycling activities, increased general and
administrative expenses and increased expenses at CRInc., all
of which more than offset the favorable impact of the sale of
Wellman Machinery of Michigan in December 1992 and the increase
in earnings from the Company's joint venture, Wellstar.
As a result of the foregoing, operating income was $111.1
million in 1992 compared to $108.9 million in 1991.
Net interest expense for 1992 was $23.0 million compared to
$29.4 million in 1991. This decrease was the result of the
decline in the Company's average amount of outstanding
borrowings and lower weighted average interest rates on
outstanding borrowings.
As a result of the forgoing, net earnings in 1992 were
$52.3 million, or $1.60 per share, compared to $46.6 million,
or $1.43 per share, in 1991.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operations of $95.3 million
in 1993 compared to $95.9 million in 1992.
Net cash used in investing activities amounted to $62.2
million in 1993 compared to $102.5 million in 1992. Capital
spending amounted to $105.7 million in 1993, indicative of the
Company's on-going capital investment program. In 1993,
investing activities included proceeds of $33.0 million from
the sale of Wellstar.
Net cash used in financing activities amounted to $15.7
million for 1993 compared to $8.2 million of cash provided by
financing activities in 1992.
The Company's financing agreements contain normal financial
and restrictive covenants, including restrictions on the
payment of dividends and requirements with respect to working
capital, net worth and debt to capitalization.
The Company's capital investment program includes
approximately $90.0 million in planned expenditures in 1994.
The exact amount and timing of the capital spending is
difficult to predict, however, as certain projects may extend
into 1995 or beyond depending upon equipment delivery and
construction schedules. The 1994 capital plan includes
expansion of monomer and PET resin capacity at the Palmetto
plant, and equipment upgrades at the Company's domestic fiber
operations. See "Item 1. Business - Products and Markets" and
"- Capital Investment Program".
The Company believes that the financial resources available
to it, including approximately $58.2 million available at
December 31, 1993 under its $176.8 million bank credit
facility, approximately $12.4 million of restricted cash
resulting from the issuance of economic development revenue
bonds (included in "Other assets, net" in the Company's balance
sheet and earmarked to recycling-related capital expenditures)
and internally generated funds, will be sufficient to meet its
foreseeable working capital, capital expenditure and dividend
payment requirements.
ENVIRONMENTAL MATTERS
The Company's operations are subject to extensive and
changing federal and state environmental regulations governing
air emissions, waste water discharges and solid and hazardous
waste management activities. As discussed in Note 1 to the
Company's Consolidated Financial Statements, the <PAGE>
Company's policy is to accrue environmental and clean-up
related costs of a non-capital nature when it is both probable
that a liability has been incurred and the amount can be
reasonably estimated. While it is often difficult to
reasonably quantify future environmental related expenditures,
the Company currently estimates its non-capital expenditures
related to environmental matters will range between $13.0
million and $25.0 million. Such expenditures are expected to
occur over a significant number of future years. In connection
with these expenditures, the Company has accrued $15.5 million
at December 31, 1993 ($2.5 million at December 31, 1992),
representing management's best estimate of probable non-capital
environmental expenditures. In addition, capital expenditures
aggregating approximately $10.0 million to $15.0 million may be
required over the next several years related to currently
existing environmental matters. During 1993, costs associated
with environmental remediation and on-going assessment were not
significant.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In November 1992, the Financial Accounting Standards Board
issued new rules that require accrual accounting over the
employees' service period for post-employment benefits that
accumulate, such as severance benefits, instead of recognizing
an expense for those benefits when the termination decision is
made. The Company does not provide these types of benefits and
accordingly, will not be affected by these new rules.
<PAGE>
Item 8. Financial Statements and Supplementary Data
WELLMAN, INC.
Index to Financial Statements
and Financial Statement Schedules
Page
Consolidated Statements of Income for the years 24
ended December 31, 1991, 1992 and 1993
Consolidated Balance Sheets at December 31, 1992 and 25
1993
Consolidated Statements of Stockholders' Equity 26
for the years ended December 31, 1991, 1992, and 1993
Consolidated Statements of Cash Flows for the years 27
ended December 31, 1991, 1992 and 1993
Notes to Consolidated Financial Statements 28
Consolidated schedules for the years ended December 31,
1991, 1992 and 1993:
V -- Property, plant and equipment 45
VI -- Accumulated depreciation of plant and equipment 46
VIII -- Valuation and qualifying accounts 47
X -- Supplementary income statement information 48
All other schedules are omitted since the required information
is not present or is not present in amounts sufficient to
require submission of the schedules, or because the information
required is included in the consolidated financial statements
and notes thereto.
<PAGE>
##
##
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
(In thousands, except per share data) 1991 1992 1993
Net sales. . . . . . . . . . . . . . . . . . . $805,664 $828,200 $842,064
Cost of sales. . . . . . . . . . . . . . . . . 623,546 639,664 679,182
Gross profit . . . . . . . . . . . . . . . . 182,118 188,536 162,882
Selling, general and administrative expenses . 73,194 77,439 86,511
Operating income . . . . . . . . . . . . . . . 108,924 111,097 76,371
Interest expense . . . . . . . . . . . . . . . 29,387 23,012 15,736
Gain on sale of Wellstar . . . . . . . . . . . -- -- 12,386
Earnings before income taxes and cumulative
effect of changes in accounting principles . 79,537 88,085 73,021
Provision for income taxes (Note 3):
Current. . . . . . . . . . . . . . . . . . . 20,979 25,805 35,655
Deferred . . . . . . . . . . . . . . . . . . 11,975 9,996 (3,088)
32,954 35,801 32,567
Earnings before cumulative effect of changes
in accounting principles . . . . . . . . . . 46,583 52,284 40,454
Cumulative effect of changes
in accounting principles, net of income
taxes (Note 1) . . . . . . . . . . . . . . . -- -- (9,010)
Net earnings . . . . . . . . . . . . . . . . . $46,583 $52,284 $31,444
Earnings (loss) per common share:
Before cumulative effect of changes
in accounting principles . . . . . . . . . $1.43 $1.60 $1.23
Cumulative effect of changes
in accounting principles (Note 1). . . . . -- -- (0.27)
Net earnings . . . . . . . . . . . . . . . . $1.43 $1.60 $0.96
Average common shares. . . . . . . . . . . . . 32,632 32,728 32,857
Pro forma amounts assuming the effect of the
changes in accounting principles are applied
retroactively:
Net earnings . . . . . . . . . . . . . . . $46,583 $43,759 $40,454
Net earnings per share . . . . . . . . . . $1.43 $1.34 $1.23
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
December 31,
(Dollar amounts in thousands) 1992 1993
Assets
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . $1,749 $18,751
Accounts receivable, less allowance of $4,443
in 1992 and $4,232 in 1993.. . . . . . . . . . . . . . 89,798 96,599
Inventories (Note 5) . . . . . . . . . . . . . . . . . . 152,152 133,391
Prepaid expenses and other current assets. . . . . . . . 7,579 4,995
Total current assets. . . . . . . . . . . . . . . . . 251,278 253,736
Investment in unconsolidated partially-owned
companies (Note 2). . . . 17,584 --
Property, plant and equipment, at cost:
Land, buildings and improvements . . . . . . . . . . . . 79,581 94,652
Machinery and equipment. . . . . . . . . . . . . . . . . 405,439 489,516
485,020 584,168
Less accumulated depreciation. . . . . . . . . . . . . . 129,010 163,627
Net property, plant and equipment . . . . . . . . . . 356,010 420,541
Cost in excess of net assets acquired. . . . . . . . . . . 318,258 309,395
Other assets, net. . . . . . . . . . . . . . . . . . . . . 53,453 31,575
$996,583 $1,015,247
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . $55,218 $51,882
Accrued liabilities (Note 6) . . . . . . . . . . . . . . 25,756 27,019
Deferred taxes on income (Note 3). . . . . . . . . . . . 3,470 482
Current portion of long-term debt (Note 7) . . . . . . . 24,688 18,594
Total current liabilities . . . . . . . . . . . . . . 109,132 97,977
Long-term debt (Note 7). . . . . . . . . . . . . . . . . . 299,860 294,173
Deferred taxes on income and other liabilities (Note 3). . 104,323 116,591
Total liabilities . . . . . . . . . . . . . . . . . . 513,315 508,741
Commitments and contingencies (Note 8)
Stockholders' equity (Notes 4, 7, and 10):
Common stock, $0.001 par value; 55,000,000 shares
authorized, 32,523,650 shares issued and outstanding
in 1992, 32,780,018 in 1993. . . . . . . . . . . . . . . 33 33
Class B common stock, $0.001 par value; 5,500,000
shares authorized; no shares issued . . . . . . . . . . -- --
Paid-in capital. . . . . . . . . . . . . . . . . . . . . 210,180 215,179
Foreign currency translation adjustments . . . . . . . . 7,416 96
Retained earnings. . . . . . . . . . . . . . . . . . . . 265,639 291,198
Total stockholders' equity. . . . . . . . . . . . . . 483,268 506,506
$996,583 $1,015,247
See notes to consolidated financial statements.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollar amounts in thousands)
<CAPTION>
Currency
Common Stock Paid-in Translation Retained
Shares Amount Capital Adjustments Earnings Total
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990 . . . . . . 32,355,059 $ 32 $207,110 $11,913 $ 174,554 $ 393,609
Exercise of stock options. . . . . . . . 35,456 136 136
Issuance of restricted stock . . . . . . 2,668 61 61
Tax effect of exercise of stock options. 254 254
Currency translation adjustments . . . . 1,684 1,684
Net earnings . . . . . . . . . . . . . . 46,583 46,583
Cash dividends . . . . . . . . . . . . . (3,887) (3,887)
Balance at December 31, 1991 . . . . . . 32,393,183 32 207,561 13,597 217,250 438,440
Exercise of stock options. . . . . . . . 54,138 665 665
Contribution of common stock to
employee stock ownership and benefit
plans. . . . . . . . . . . . . . . . . 74,995 1 1,646 1,647
Issuance of restricted stock . . . . . . 1,334 30 30
Tax effect of exercise of stock options. 278 278
Currency translation adjustments . . . . (6,181) (6,181)
Net earnings . . . . . . . . . . . . . . 52,284 52,284
Cash dividends . . . . . . . . . . . . . (3,895) (3,895)
Balance at December 31, 1992 . . . . . . 32,523,650 33 210,180 7,416 265,639 483,268
Exercise of stock options. . . . . . . . 54,748 674 674
Contribution of common stock to
employee stock ownership and benefit
plans. . . . . . . . . . . . . . . . . 200,286 4,065 4,065
Issuance of restricted stock . . . . . . 1,334 26 26
Tax effect of exercise of stock options. 234 234
Currency translation adjustments . . . . (7,320) (7,320)
Net earnings . . . . . . . . . . . . . . 31,444 31,444
Cash dividends . . . . . . . . . . . . . (5,885) (5,885)
Balance at December 31, 1993 . . . . . . 32,780,018 $ 33 $215,179 $ 96 $ 291,198 $ 506,506
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Years Ended December 31,
(In thousands) 1991 1992 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . $46,583 $52,284 $31,444
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Cumulative effect of changes in accounting principles . . . -- -- 9,010
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . 35,301 38,913 41,609
Amortization. . . . . . . . . . . . . . . . . . . . . . . . 11,967 12,764 16,313
Deferred taxes on income. . . . . . . . . . . . . . . . . . 11,975 9,996 (3,088)
Gain on sale of Wellstar. . . . . . . . . . . . . . . . . . -- -- (12,386)
Changes in assets and liabilities, net of effects from
businesses acquired and cumulative effect of changes
in accounting principles:
Accounts receivable. . . . . . . . . . . . . . . . . . . (10,413) 5,156 (9,815)
Inventories. . . . . . . . . . . . . . . . . . . . . . . (1,759) (19,764) 14,760
Prepaid expenses and other current assets. . . . . . . . 491 (3,250) 2,582
Accounts payable and accrued liabilities . . . . . . . . (82) 2,747 (925)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . (3,449) (2,922) 5,788
Net cash provided by operating activities. . . . . . . . . . . 90,614 95,924 95,292
Cash flows from investing activities:
Businesses acquired. . . . . . . . . . . . . . . . . . . . . . -- (33,686) (8,780)
Additions to property, plant and equipment . . . . . . . . . . (25,867) (39,705) (105,689)
Proceeds from sale of Wellstar . . . . . . . . . . . . . . . . -- -- 33,000
Decrease (increase) in restricted cash . . . . . . . . . . . . 5,392 (29,149) 19,242
Net cash used in investing activities. . . . . . . . . . . . . (20,475) (102,540) (62,227)
Cash flows from financing activities:
Borrowings under long-term debt. . . . . . . . . . . . . . . . 105,000 62,700 17,454
Repayments of long-term debt . . . . . . . . . . . . . . . . . (176,062) (50,607) (27,314)
Dividends paid on common stock . . . . . . . . . . . . . . . . (3,887) (3,895) (5,885)
Net cash provided by (used in) financing activities. . . . . . (74,949) 8,198 (15,745)
Effect of exchange rate changes on cash and cash equivalents . . 116 (554) (318)
Increase (decrease) in cash and cash equivalents . . . . . . . . (4,694) 1,028 17,002
Cash and cash equivalents at beginning of year . . . . . . . . . 5,415 721 1,749
Cash and cash equivalents at end of year . . . . . . . . . . . $ 721 $1,749 $18,751
Supplemental cash flow data:
Cash paid during the year for:
Interest expense . . . . . . . . . . . . . . . . . . . . $29,688 $24,016 $19,103
Income taxes . . . . . . . . . . . . . . . . . . . . . . $22,658 $ 24,144 $33,874
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
##
##
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts
of Wellman, Inc. and all wholly and majority-owned subsidiaries
(the Company). All material intercompany transactions have
been eliminated. Investments in unconsolidated partially-owned
companies are accounted for using the equity method.
Certain 1992 amounts have been reclassified to conform to
the 1993 presentation.
Revenue Recognition
Sales to customers are recorded when goods are shipped.
Inventories
Inventories are stated at the lower of cost or market.
Cost is determined using the last-in, first-out (LIFO) method
for approximately $101,000,000 and $79,000,000 of inventory at
December 31, 1992 and 1993, respectively, and the first-in,
first-out (FIFO) and average cost methods for the remainder.
Property, Plant and Equipment
Property, plant and equipment is carried at cost.
Depreciation is provided based on the estimated useful lives of
the related assets and is computed on the straight-line method.
Cost in Excess of Net Assets Acquired
Cost in excess of net assets acquired is amortized on the
straight-line method over 40 years. Accumulated amortization
amounted to approximately $29,803,000 and $38,505,000 at
December 31, 1992 and 1993, respectively.
The carrying value of goodwill is reviewed if the facts and
circumstances suggest that it may be impaired. If this review
indicates that goodwill will not be recoverable, as determined
based on the undiscounted cash flows of the entity acquired
over the remaining amortization period, the Company's carrying
value of the goodwill will be reduced by the estimated
shortfall of cash flows.
<PAGE>
Other Assets
Other assets are comprised primarily of organization costs,
deferred charges related to the Company's debt agreements and
other intangible assets that are amortized over periods ranging
from one to twenty years. Additionally, other assets include
cash restricted for use obtained from borrowings under economic
development revenue bonds in the amount of approximately
$31,600,000 and $12,400,000 at December 31, 1992 and 1993,
respectively. See Note 7.
Environmental Expenditures
Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or
future revenue generation, are expensed. Liabilities are
recorded when environmental assessments and/or remedial efforts
are probable and the costs can be reasonably estimated.
Income Taxes
Income taxes have been provided using the liability method
in accordance with the Financial Accounting Standards Board's
Statement No. 109, "Accounting for Income Taxes." Under this
method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases
of assets and liabilities. Deferred income taxes resulting
from such differences are recorded based on the enacted tax
rates that are currently expected to be in effect when the
differences are expected to reverse.
Cash and Cash Equivalents
The carrying amounts reported in the balance sheets for
cash and cash equivalents approximate their fair value. The
Company considers all short term investments purchased with a
maturity of three months or less to be cash equivalents for
purposes of the consolidated statements of cash flows.
Foreign Currency Translation
The financial statements of foreign entities have been
translated into U.S. dollar equivalents in accordance with
Statement of Financial Accounting Standards No. 52.
Adjustments resulting from the translation of the financial
statements of foreign entities are excluded from the <PAGE>
determination of income and accumulated in a separate component
of stockholders' equity.
Earnings Per Common Share
Earnings per common share is based on the weighted average
number of common and common equivalent shares outstanding.
Accounting Changes
Environmental Liabilities
During 1993, the Financial Accounting Standards Board's
Emerging Issues Task Force (EITF) issued EITF Abstract No.
93-5, "Accounting For Environmental Liabilities" (EITF 93-5).
The Company adopted the provisions of EITF 93-5 in its 1993
Consolidated Financial Statements effective January 1, 1993.
EITF 93-5 provides that an environmental liability should
be evaluated independently from any potential claim for
recovery (a two-event approach) and that the loss arising from
the recognition of an environmental liability should be reduced
only when a claim for recovery is probable of realization.
Current accounting standards provide a general presumption that
disputed claims for recovery are not probable of realization.
Under practice prior to the issuance of EITF 93-5, some
companies, including the Company, offset reasonably possible
recoveries against probable losses. As a result of the
issuance of EITF 93-5, this accounting treatment is no longer
permitted.
The cumulative effect as of January 1, 1993 of adopting the
provisions of EITF 93-5 was a charge to net income of
$6,820,000 ($0.20 per share), net of the income tax effect of
$4,180,000. Excluding the cumulative effect, the impact of
this change on 1993 net earnings and earnings per share was not
material. The pro forma effect of applying this change
retroactively would be a decrease in 1992 net earnings of
approximately $6,300,000 ($0.19 per share). This change in
accounting did not impact 1991 net earnings or earnings per
share.
Inventory Valuation
During 1993, the Company changed its method of applying the
lower of cost or market rule to certain slow-moving and
discontinued waste raw material inventory which is valued using
the LIFO dollar value method. In prior years, the Company used
the aggregate method in applying the lower of cost or market
rule to such inventories and in 1993 changed to the
item-by-item method.
The Company believes the new method of accounting is
preferable because it provides a better matching of costs and <PAGE>
revenue and results in a more conservative valuation of
slow-moving and discontinued waste raw material inventory.
The cumulative effect as of January 1, 1993 of this change
in accounting is a charge to net earnings of $2,190,000 ($0.07
per share), net of the related income tax effect of $1,342,000.
Excluding the cumulative effect, this change decreased net
earnings for 1993 by approximately $2,500,000 ($0.08 per
share). The pro forma effect of applying this change
retroactively to 1992 would be a decrease in net earnings of
approximately $2,225,000 ($0.07 per share). The pro forma
effect on 1991 net earnings and earnings per share is not
material.
2. INVESTMENT IN UNCONSOLIDATED PARTIALLY-OWNED COMPANIES
In 1992 the investment in unconsolidated partially-owned
companies consisted of the Company's 43.7% equity interest in
Wellstar Holding, B.V. (Wellstar). Wellstar's subsidiary
companies in The Netherlands, France and the United Kingdom are
engaged in manufacturing plastic beverage bottles and other
plastic containers. In March 1993, the Company sold its
ownership interest in Wellstar for a total consideration of
$33,000,000. The transaction resulted in a gain, before
applicable income taxes, of approximately $12,386,000. The
sale of Wellstar increased 1993 net earnings by approximately
$7,300,000 or $0.22 per share.
3. INCOME TAXES
For financial reporting purposes, earnings before income
taxes and the cumulative effect of changes in accounting
principles are as follows (in thousands):
Years Ended December 31,
1991 1992 1993
United States. . . . . . . . . . . . $75,784 $82,647 $54,535
Foreign. . . . . . . . . . . . . . . 3,753 5,438 18,486
$79,537 $88,085 $73,021
Significant components of the provision for income taxes before
the cumulative effect of the changes in accounting principles
are as follows (in thousands):
<PAGE>
Years Ended December 31,
1991 1992 1993
Current:
Federal. . . . . . . . . . . . . $15,985 $20,828 $30,310
State. . . . . . . . . . . . . . 4,070 4,057 4,357
Foreign. . . . . . . . . . . . . 924 920 988
$20,979 $25,805 $35,655
Deferred:
Federal. . . . . . . . . . . . . $11,799 $9,700 $(2,566)
State. . . . . . . . . . . . . . 314 296 (522)
Foreign. . . . . . . . . . . . . (138) -- --
11,975 9,996 (3,088)
Total . . . . . . . . . . . . . . . . $32,954 $35,801 $32,567
As discussed in Note 1, deferred income tax benefits
relating to the cumulative effect of changes in accounting
principles in 1993 amounted to $5,522,000.
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes. The tax effects of these
differences are as follows (in thousands):
Years Ended
December 31,
1992 1993
Inventory . . . . . . . . . . . . . . . . . . $4,116 $ 2,618
Depreciation. . . . . . . . . . . . . . . . . 82,925 81,310
Basis in foreign subsidiaries . . . . . . . . 2,167 3,248
Other . . . . . . . . . . . . . . . . . . . . 5,677 4,232
Total deferred tax liabilities. . . . . . . . 94,885 91,408
Pension . . . . . . . . . . . . . . . . . . . 4,285 4,601
State taxes . . . . . . . . . . . . . . . . . 4,212 3,743
Long-term liabilities . . . . . . . . . . . . 1,535 6,771
Other . . . . . . . . . . . . . . . . . . . . 4,089 4,139
Total deferred tax assets . . . . . . . . . . 14,121 19,254
Net deferred tax liabilities. . . . . . . . . $80,764 $72,154
Deferred income taxes have not been provided for
approximately $56,118,000 of undistributed earnings of foreign
entities which are considered to be permanently reinvested.
Upon repatriation of those earnings in the form of dividends or
otherwise, the Company would be subject to both U.S. income
taxes (subject to an adjustment for foreign tax credits) and
foreign withholding taxes. Determination of the amount of
unrecognized deferred U. S. income tax liability is not <PAGE>
practicable because of the complexities associated with its
hypothetical calculation.
The difference between the provision for income taxes
before the cumulative effect of changes in accounting
principles and income taxes computed at the statutory U. S.
federal income tax rate is explained as follows:
Years Ended December 31,
1991 1992 1993
Computed at statutory rate. . . 34.0% 34.0% 35.0%
State taxes, net of federal
benefit . . . . . . . . . . . 3.6 3.3 3.4
Differences in income tax rates
between the United States and
foreign countries . . . . . . (0.2) (0.4) (1.8)
Amortization of cost in excess
of net assets acquired. . . . 3.6 3.2 4.1
Effect of tax rate change on
net deferred tax liabilities. -- -- 2.6
Other, net. . . . . . . . . . . 0.4 0.5 1.3
Effective tax rate. . . . . 41.4% 40.6% 44.6%
4. STOCKHOLDERS' EQUITY
In 1991, 1992 and the first quarter of 1993, the Company
paid quarterly cash dividends of $0.03 per share. In the
second quarter of 1993, the quarterly dividend was increased to
$0.05 per share.
Approximately 375,000 and 3,588,000 common shares have been
reserved for issuance in connection with certain of the
Company's employee benefit plans and the Company's stock option
plans, respectively. Of the 3,588,000 common shares reserved
for issue in connection with stock option plans, 1,500,000 are
subject to approval at the Company's Annual Meeting to be held
in May 1994. See Notes 9 and 10.
On August 6, 1991, the Board of Directors declared a
dividend of one common stock purchase right (a Right) for each
outstanding share of common stock. Each Right, when
exercisable, will entitle the registered holder to purchase
from the Company one share of common stock at an exercise price
of $90 per share (the Purchase Price), subject to certain
adjustments. The Rights are not represented by separate
certificates and are only exercisable when a person or group of
affiliated or associated persons acquires or obtains the right
to acquire 15% or more of the Company's outstanding common
shares (an Acquiring Person) or announces a tender or exchange <PAGE>
offer that would result in any person or group beneficially
owning 15% or more of the Company's outstanding common shares.
In the event any person becomes an Acquiring Person, the Rights
would give holders the right to buy, for the Purchase Price,
common stock with a market value of twice the Purchase Price.
The Rights expire on August 5, 2001, unless extended by the
Board of Directors or redeemed earlier by the Company at a
redemption price of $0.01 per Right.
Although the Rights should not interfere with a business
combination approved by the Board of Directors, they may cause
substantial dilution to a person or group that attempts to
acquire the Company on terms not approved by the Board, except
pursuant to an offer conditioned on a substantial number of
Rights being acquired.
5. INVENTORIES
Inventories consist of the following (in thousands):
December 31,
1992 1993
Finished and semi-finished goods. . $ 52,933 $ 53,083
Raw materials . . . . . . . . . . . 86,289 72,723
Supplies. . . . . . . . . . . . . . 12,930 12,467
152,152 138,273
Less adjustments of certain
inventories to a LIFO basis . . . -- 4,882
Total . . . . . . . . . . . . . . . $152,152 $133,391
The replacement cost of the Company's inventories amounted to
approximately $152,000,000 and $138,000,000 at December 31,
1992 and 1993, respectively.
6. ACCRUED LIABILITIES
Accrued liabilities consist of the following (in thousands):
December 31,
1992 1993
Payroll and other compensation. . . $ 4,776 $ 3,800
Benefit plans . . . . . . . . . . . 9,442 9,931
Property and other taxes. . . . . . 2,885 2,733
Insurance . . . . . . . . . . . . . 2,297 1,112
Interest. . . . . . . . . . . . . . 2,303 2,347
Other . . . . . . . . . . . . . . . 4,053 7,096
Total . . . . . . . . . . . . . . . $25,756 $27,019
<PAGE>
7. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
December 31,
1992 1993
Reducing revolving credit and
term loan facilities and loan
note participations . . . . . . . $115,932 $118,559
Serialized senior unsecured notes . 100,000 100,000
Economic development revenue
bonds . . . . . . . . . . . . . . 54,500 54,500
8.41% senior note payable,
due on July 31, 2000. . . . . . . 30,000 30,000
14.5% senior promissory notes
due through July 1, 1994. . . . . 8,700 2,900
Wellman International Limited
debt. . . . . . . . . . . . . . . 14,706 6,099
Other . . . . . . . . . . . . . . . 710 709
324,548 312,767
Less amount due within one year . 24,688 18,594
Total . . . . . . . . . . . . . . . $299,860 $294,173
The reducing revolving credit and term loan facilities
originally consisted of a $222,000,000 Reducing Revolving
Credit Loan and a $178,000,000 Term Loan (collectively, the
Facilities). The reducing revolving credit and term loan
facilities mature on December 31, 1996 and June 30, 1995,
respectively. As of December 31, 1993, the Company reduced the
aggregate commitment on the Facilities from $400,000,000 to
$176,759,000.
Borrowings under each of the Facilities bear interest, at
the Company's option, at the prime rate, the LIBOR or CD rate
plus margins ranging from 0.50% to 0.75% on LIBOR loans and
0.625% to 0.875% on CD rate loans, determined on the basis of
the Company's leverage ratio, as defined in the Facilities.
The terms of the Reducing Revolving Credit Loan provide the
Company the ability to borrow under competitive bid loans.
Such borrowings, as well as borrowings under loan note
participations (LNPs), reduce the availability under the
Reducing Revolving Credit Loan and bear interest at the
offering bank's prevailing interest rate. At December 31,
1993, the average interest rate on borrowings under the
Facilities and LNPs was approximately 3.70%.
The $100,000,000 of Serialized Senior Unsecured Notes bear
interest at rates ranging between 9.02% and 9.26% (averaging
9.18%) and mature between May 1997 and May 1999.
<PAGE>
The WIL debt consists primarily of funds borrowed under
multi-currency term loan facilities, of which approximately
$750,000 is due in 1994 and the remainder in 2000. The
interest rate floats based upon the banks' cost of funds and
the currencies borrowed. At December 31, 1993, the average
rate on WIL borrowings approximated 6.00%. The WIL debt is
secured by assets of WIL.
The economic development revenue bonds (the Bonds) bear
interest at variable rates which cannot exceed 12.00% for
certain issues and 15.00% for one issue. The Bonds mature as
follows: $8,000,000 on December 1, 2010; $32,000,000 on
December 1, 2012; $5,000,000 on April 1, 2017; and $9,500,000
on June 1, 2022. The Bonds are tenderable by the holders and
are secured by letters of credit aggregating approximately
$55,800,000 at December 31, 1993. The weighted average
interest rate on the Bonds at December 31, 1993 was
approximately 2.50%.
The Bonds and certain borrowings under the Facilities and
LNPs are classified as long term in accordance with the
Company's intention and ability to refinance such obligations
on a long term basis.
The Company's financing agreements contain normal financial
and restrictive covenants, including restrictions on the
payment of dividends and requirements with respect to working
capital, net worth and debt to capitalization. Under the most
restrictive covenant, approximately $131,300,000 of retained
earnings at December 31, 1993 is not restricted as to the
payment of dividends.
The carrying amounts of the Company's borrowings under its
variable rate credit agreements approximate their fair value.
The fair values of the Company's fixed rate credit agreements
are estimated using discounted cash flow analyses based on the
Company's current incremental borrowing rates for similar types
of borrowing arrangements. The fair value of the Company's
fixed rate debt exceeded its carrying value by approximately
$15,000,000 at December 31, 1993. Prepayment of the fixed rate
debt would result in significant penalties.
The approximate annual maturities of long term debt,
including the current portion, during each of the next five
years and thereafter are as follows: 1994 -- $18,594,000;
1995 -- $46,410,000; 1996 -- $112,137,000; 1997 -- $20,148,000;
1998 -- $40,183,000; and thereafter -- $75,295,000. Although
maturities of the Bonds range from 2010 to 2022, they have been
included as maturities in 1995 and 1996 as they are tenderable
by the holders, and the Company's present long term facilities
mature during those years.
<PAGE>
During 1991, 1992 and 1993, the Company capitalized
interest of $809,000, $304,000 and $2,375,000, respectively, as
part of the cost of capital projects under construction.
8. COMMITMENTS AND CONTINGENCIES
The Company's operations are subject to extensive and
rapidly changing federal and state environmental regulations
governing air emissions, waste water discharges and solid and
hazardous waste management activities. As discussed in Note 1,
the Company's policy is to accrue environmental and
clean-up-related costs of a non-capital nature when it is both
probable that a liability has been incurred and the amount can
be reasonably estimated. While it is often difficult to
reasonably quantify future environmental related expenditures,
the Company currently estimates its non-capital expenditures
related to environmental matters will range between $13,000,000
and $25,000,000. Such expenditures are expected to occur over
a significant number of future years. In connection with these
expenditures, the Company has accrued $15,500,000 at
December 31, 1993 ($2,500,000 at December 31, 1992)
representing management's best estimate of probable non-capital
environmental expenditures. In addition, capital expenditures
aggregating approximately $10,000,000 to $15,000,000 may be
required over the next several years related to currently
existing environmental matters.
The Company believes that it is entitled to recover a
portion of these expenditures under indemnification and escrow
agreements.
In connection with the 1992 acquisition of Creative
Forming, Inc. (CFI), the Company may be required to make an
additional payment in 1997 based primarily on CFI's 1995 and
1996 average earnings, as defined. The contingent payment, if
any, will increase cost in excess of net assets acquired.
At December 31, 1993, the Company had approximately
$63,127,000 of outstanding letters of credit of which
approximately $55,800,000 were outstanding as security for the
Bonds, as discussed in Note 7.
Approximate minimum rental commitments under non-cancelable
leases (principally for buildings and equipment) during each of
the next five years and thereafter are as follows: 1994 --
$4,235,000; 1995 -- $3,759,000; 1996 -- $2,976,000; 1997 --
$2,788,000; 1998 -- $2,773,000; and thereafter -- $5,832,000.
<PAGE>
Rent expense for cancelable and non-cancelable operating
leases was $5,049,000, $4,797,000, and $6,295,000 for the
years ended December 31, 1991, 1992 and 1993, respectively.
9. RETIREMENT PLANS
The Company has defined benefit and defined contribution
pension plans and an employee stock ownership plan (the ESOP)
covering substantially all employees.
Payments upon retirement or termination of employment under
the defined contribution plans are based on vested amounts
credited to individual accounts. The plans provide for Company
contributions based on the earnings of eligible employees.
Such contributions, excluding amounts contributed to the ESOP,
amounted to approximately $3,556,000, $6,442,000 and $7,553,000
for the years ended December 31, 1991, 1992 and 1993,
respectively. Company contributions to the ESOP amounted to
approximately $1,847,000 and $2,249,000 for the years ended
December 31, 1992 and 1993, respectively. The increase in
total contributions in 1992 and 1993 compared to prior years is
primarily due to the formation of the Wellman, Inc. Retirement
Plan (WIRP) and the ESOP. The WIRP effectively consolidates
retirement benefits for certain domestic employees.
Accordingly, amendments to certain provisions of a domestic
defined benefit plan were made effective on January 1, 1992.
Benefits under the WIL defined benefit plan are based on
employees' compensation and length of service, while benefits
under defined benefit plans covering domestic employees are
based on employees' compensation and length of service or at
stated amounts based on length of service. The Company's
policy is to fund amounts which are actuarially determined to
provide the plans with sufficient assets to meet future benefit
payment requirements. Assets of the plans are invested
primarily in equity securities and commingled trust funds. The
pension costs of the defined benefit plans consist of the
following (in thousands):
Years Ended December 31,
1991 1992 1993
Service cost. . . . . . . . . . $3,391 $ (706) $ (370)
Interest cost on projected
benefit obligations . . . . . 3,908 4,113 4,336
Less actual return on assets. . 3,236 (1,697) 7,512
Net amortization and deferral . 345 (5,009) 4,621
Total $4,408 $ 95 $1,075
The following table sets forth the funded status and
amounts included in the Company's Consolidated Balance Sheets <PAGE>
at December 31, 1992 and 1993 for its defined benefit pension
plans (in thousands):
December 31,
1992 1993
Actuarial present value of benefit
obligations:
Vested benefit obligations. . . . $ 27,600 $ 33,502
Accumulated benefit obligations . $ 27,907 $ 33,952
Projected benefit obligations . . $ 51,585 $ 52,913
Plan assets at fair market value. . 38,564 45,063
Funded status . . . . . . . . . . . (13,021) (7,850)
Unrecognized net (gain) loss. . . . 1,990 (1,875)
Unrecognized net asset
at transition . . . . . . . . . . (50) (5)
Unrecognized prior service cost . . (1,083) (1,395)
Accrued pension costs . . . . . . . $(12,164) $(11,125)
The unrecognized prior service cost relates primarily to
amendments to the early retirement provisions of a domestic
plan. Such amendments became effective January 1, 1992.
At December 31, 1992 and 1993, assumed discount rates of 8%
and 7.25%, respectively, and rates of increase in future
compensation levels of 6% and 4.5%, respectively, were used in
determining the actuarial present value of benefit obligations
for the domestic plans. The assumed long-term rates of return
on domestic plan assets were 8%.
The assumptions used in calculating the actuarial present
value of benefit obligations for WIL were discount rates of 9%
and 7% and rates of increases in future compensation levels of
6.5% and 5% at December 31, 1992 and 1993, respectively. The
assumed long-term rates of return on plan assets for WIL were
9%, 9% and 7% at December 31, 1991, 1992 and 1993, respectively.
10. STOCK OPTION PLANS
The Company has stock option plans (the Plans) which
authorize the grant of non-qualified stock options (NQSOs).
The maximum number of common shares authorized for grant under
the Plans is 3,588,000. Of the 3,588,000 common shares,
1,500,000 are subject to shareholder approval at the Company's
Annual Meeting to be held in May 1994.
For substantially all options granted in connection with
the Plans, the option period extends for either ten years and
one day from the date of grant, or 11 years from the date of <PAGE>
grant, and the shares vest at 20% per year over the first five
years. The option price at which options are granted under the
Plans must be at least equal to the fair market value at the
date of grant.
Information regarding the NQSOs is as follows:
1991 1992 1993
Options outstanding at January 1 943,169 1,185,073 1,481,735
Options granted at prices of
$19.875 in 1991, $20.625 in
1992 and $17.375 in 1993. . . . . 346,500 366,300 223,714*
Options exercised at average
prices of $3.83 in 1991, $12.28
in 1992 and $12.32 in 1993. . . . (35,456) (54,138) (54,748)
Options canceled at average
prices of $24.99 in 1991, $22.36
in 1992 and $20.42 in 1993 . . . (69,140) (15,500) (5,590)
Options outstanding at December
31 at average prices of $19.38
in 1991, $19.92 in 1992 and
$19.63 in 1993. . . . . . . . . . 1,185,073 1,481,735 1,645,111*
Options exercisable at
December 31 . . . . . . . . . . . 390,458 558,380 768,960
Options available for grant
at December 31. . . . . . . . . . 568,924 218,124 -0-*
*The options granted in 1993 and options outstanding at December 31, 1993
exclude options relating to 136,286 common shares. These options were
granted by the Board of Directors pending shareholder authorization of
additional common shares to the Plans.
11. BUSINESS SEGMENT AND GEOGRAPHIC AREAS
The Company operates in one business segment: principally
the manufacture and sale of polyester and nylon fibers and
resins primarily for use in the apparel, home furnishings and
other consumer products markets.
Revenues and operating income for the years ended
December 31, 1991, 1992 and 1993 and identifiable assets at the
end of each year, classified by the major geographic areas in
which the Company operates, are as follows (in thousands):
<PAGE>
Years Ended December 31,
1991 1992 1993
Net sales
U.S. . . . . . . . . . . . . $711,862 $728,733 $ 754,882
Western Europe . . . . . . . 93,802 99,467 87,182
Total net sales. . . . . . $805,664 $828,200 $ 842,064
Operating income
U.S. . . . . . . . . . . . . $103,733 $105,943 $ 69,305
Western Europe . . . . . . . 5,191 5,154 7,066
Total operating
income. . . . . . . . . . 108,924 111,097 76,371
Interest expense . . . . . . . 29,387 23,012 15,736
Gain on sale of Wellstar . . . -- -- 12,386
Earnings before
income taxes . . . . . . . . $ 79,537 $ 88,085 $ 73,021
Identifiable assets
U.S. . . . . . . . . . . . . $834,020 $913,384 $ 927,330
Western Europe . . . . . . . 91,269 83,199 87,917
Total. . . . . . . . . . . $925,289 $996,583 $1,015,247
<PAGE>
UNAUDITED QUARTERLY FINANCIAL DATA
Quarterly financial information for the years ended
December 31, 1992 and 1993 is summarized as follows:
<TABLE>
(In thousands, except per share data):
<CAPTION>
March 31, June 30, September 30, December 31, Total
Quarter ended 1993(1) 1993 1993(1) 1993(1) 1993(1)
<S> <C> <C> <C> <C> <C>
Net sales $207,968 $214,005 $210,151 $209,940 $842,064
Gross profit $49,583 $46,046 $41,594 $25,659 $162,882
Earnings (loss) before cumulative effect
of changes in accounting principles $21,804 $12,783 $7,056 $(1,189) $40,454
Net earnings (loss) $12,794 $12,783 $7,056 $(1,189) $31,444
Earnings (loss) per common share before
cumulative effect of changes
in accounting principles $0.66 $0.39 $0.21 ($0.04) $1.23
Net earnings (loss) per common share $0.39 $0.39 $0.21 ($0.04) $0.96
<CAPTION>
March 31, June 30, September 30, December 31, Total
Quarter ended 1992 1992 1992 1992 1992
<S> <C> <C> <C> <C> <C>
Net sales $207,529 $ 205,355 $212,382 $202,934 $828,200
Gross profit $47,295 $49,414 $46,962 $44,865 $188,536
Net earnings $12,453 $14,448 $12,763 $12,620 $52,284
Net earnings per common share $0.38 $0.44 $0.39 $0.39 $1.60
<FN>
(1) 1993 Net earnings reflect $15.9 million ($0.48 per share) of accounting changes and unusual and nonrecurring
items. In March 1993, the Company sold its ownership interest in Wellstar Holding, B.V. for $33.0 million.
The resulting gain before applicable taxes, was approximately $12.4 million. As a result of the sale, 1993
net earnings increased by approximately $7.3 million ($0.22 per share). Net earnings for the quarter ended
March 31, 1993 have been restated from amounts previously reported (net earnings $21.8 million; net earnings
per share $0.66) to reflect the cumulative effect of changes in accounting principles for environmental
liabilities and certain inventories ($9.0 million, net of the related tax effect). In the third quarter of
1993 the Revenue Reconciliation Act of 1993 was enacted which raised the maximum corporate tax rate from 34%
to 35%. This resulted in $2.7 million ($0.08 per share) in additional taxes. In the fourth quarter of 1993,
the Company incurred unusual charges aggregating $11.5 million ($0.35 per share) primarily related to
inventory, development of a prototype materials recovery facility and expenses associated with the Company's
on-going capital investment program. See also Management's Discussion and Analysis of Financial Condition and
Results of Operations and Notes 1, 2 and 3 of the Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Wellman, Inc.
We have audited the accompanying consolidated balance
sheets of Wellman, Inc. as of December 31, 1993 and 1992, and
the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period
ended December 31, 1993. Our audits also included the
financial statement schedules listed in the Index at Item 8.
These financial statements and schedules are the responsibility
of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on
our audits. We did not audit the financial statements and
schedules of a wholly-owned subsidiary of the Company, which
statements reflect total assets constituting 6% in 1993 and 8%
in 1992 and total revenues constituting 10% in 1993 and 11% in
1992 and 1991 of the related consolidated totals. Those
statements and schedules were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it
relates to data included for the Company's wholly-owned
subsidiary, is based solely on the report of other auditors.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management as well as evaluating the overall financial
statement presentation. We believe that our audits and the
report of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of other
auditors, the consolidated financial statements referred to
above present fairly, in all material respects, the
consolidated financial position of Wellman, Inc. at December
31, 1993 and 1992, and the consolidated results of its
operations and its cash flows for each of the three years in
the period ended December 31, 1993, in conformity with
generally accepted accounting principles. Also, in our
opinion, based on our audits and the report of other auditors,
the related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set
forth therein.
<PAGE>
As discussed in Note 1 to the financial statements, in 1993
the Company changed its method of accounting for recoveries
related to environmental liabilities and its method of valuing
certain inventories.
ERNST & YOUNG
Charlotte, North Carolina
February 15, 1994
<PAGE>
<TABLE>
SCHEDULE V
WELLMAN, INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
Years ended December 31, 1991, 1992, and 1993
(In thousands)
<CAPTION>
Year ended December 31, 1991
===============================================================================================================
Balance at Balance at
Beginning End of
Classification of Year Additions(a) Retirements Other(b) Year
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land, Buildings and improvements $ 69,968 $ 6,899 $2,408 $(1,846) $ 72,613
Machinery and equipment 350,130 18,968 1,573 221 367,746
------- ------- ------ ------ --------
$420,098 $25,867 $3,981 $(1,625) $440,359
======== ======= ======= ======= =======
<CAPTION>
Year ended December 31, 1992
===============================================================================================================
Balance at Balance at
Beginning End of
Classification of Year Additions(a) Retirements Other(b) Year
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land, buildings and improvements $ 72,613 $ 9,673 $ 2,169 $ ( 536) $ 79,581
Machinery and equipment 367,746 52,652 11,795 (3,164) 405,439
-------- ------- ------ ------ --------
$440,359 $62,325 $13,964 $(3,700) $485,020
======= ======= ====== ====== =======
<CAPTION>
Year ended December 31, 1993
===============================================================================================================
Balance at Balance at
Beginning End of
Classification of Year Additions(a) Retirements Other(b) Year
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land, buildings and improvements $ 79,581 $ 16,202 $ 95 $(1,036) $ 94,652
Machinery and equipment 405,439 94,437 5,001 (5,359) 489,516
-------- -------- ------ ------ --------
$485,020 $110,639 $5,096 $(6,395) $584,168
======== ======== ====== --==== ========
<FN>
(a) Includes the effects of businesses acquired.
(b) Primarily foreign currency translation adjustments.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VI
WELLMAN, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PLANT AND EQUIPMENT
Years Ended December 31, 1991, 1992, and 1993
(In thousands)
<CAPTION>
Year ended December 31, 1991
==================================================================================================
Balance at Balance at
Beginning End of
Classification of Year Additions Retirements Other(a) Year
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land, buildings and improvements $ 9,476 $ 3,217 $ 909 $( 113) $ 11,671
Machinery and equipment 59,566 32,084 908 ( 499) 90,243
------- ------- ------- ------- -------
$69,042 $35,301 $1,817 $( 612) $101,914
======= ======= ======= ======= =======
<CAPTION>
Year ended December 31, 1992
==================================================================================================
Balance at Balance at
Beginning End of
Classification of Year Additions Retirements Other(a) Year
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land, buildings and improvements $11,671 $ 3,617 $ 1,866 $ (263) $ 13,159
Machinery and equipment 90,243 35,296 8,198 (1,490) 115,851
------- ------- ------- ------ -------
$101,914 $38,913 $10,064 $(1,753) $129,010
======= ======= ======= ====-= =======
<CAPTION>
Year ended December 31, 1993
==================================================================================================
Balance at Balance at
Beginning End of
Classification of Year Additions Retirements Other(a) Year
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land, buildings and improvements $ 13,159 $ 4,743 $ 51 $ 160 $ 18,011
Machinery and equipment 115,851 36,866 3,910 (3,191) 145,616
------- ------- ------ ------ -------
$129,010 $41,609 $3,961 $(3,031) $163,627
======= ======= ====== ====== =======
<FN>
(a) Primarily foreign currency translation adjustments.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VIII
WELLMAN, INC.
VALUATION AND QUALIFYING ACCOUNTS
For The Years Ended December 31, 1991, 1992, and 1993
(In thousands)
<CAPTION>
Balance at Charged to Balance
Beginning Costs and at End
Description of Year Expenses Other Deductions of Year
Allowance for doubtful accounts receivable:
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1991 $4,184 $ 51 $ 1,315(a) $ 205(b) $ 5,345
====== ====== ======= ====== =======
Year ended December 31, 1992 $5,345 $ 646 $ (39)(a) $1,509(b) $ 4,443
====== ====== ======= ======= =======
Year ended December 31, 1993 $4,443 $ 702 $ (60)(a) $ 853(b) $ 4,232
====== ====== ========= ======= =======
<FN>
(a) Primarily foreign currency translation adjustments.
(b) Accounts written off.
</TABLE>
<PAGE>
SCHEDULE X
WELLMAN, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
For The Years Ended December 31, 1991, 1992, and 1993
(In thousands)
=================================================================
1991 1992 1993
- -----------------------------------------------------------------
Maintenance and repairs $33,479 $36,721 $37,959
======= ======= =======
Amortization of
intangible assets $11,967 $12,764 $16,313
======= ======= =======
Other amounts are less than 1 percent of sales.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
"Election of Directors" in the Company's Proxy Statement
for the 1994 Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission on or before April 30,
1994 is hereby incorporated by reference herein.
Item 11. Executive Compensation
"Compensation of Directors and Officers" in the Company's
Proxy Statement for the 1994 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission on or
before April 30, 1994 is hereby incorporated by reference
herein. Such incorporation by reference shall not be deemed to
specifically incorporate by reference the information referred
to in Item 402(a)(8) of Regulation S-K.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
"Introduction" and "Election of Directors" in the Company's
Proxy Statement for the 1994 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission on or
before April 30, 1994 is hereby incorporated by reference
herein.
Item 13. Certain Relationships and Related Transactions
"Compensation of Directors and Officers" in the Company's
Proxy Statement for the 1994 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission on or
before April 30, 1994 is hereby incorporated by reference
herein.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a) 1. Financial Statements
The financial statements included in Item 8 are
filed as part of this annual report.
2. Financial Statement Schedules
The financial statement schedules included in
Item 8 are filed as part of this annual report.
3. Exhibits
Exhibit Number Description
3(a)(1) Restated Certificate of Incorporation
(Exhibit 3.1 of the Company's Registration
Statement on Form S-1, File No. 33-13458,
incorporated by reference herein)
3(a)(2) Certificate of Amendment to Restated
Certificate of Incorporation (Exhibit
3(a)(2) of the Company's Registration
Statement on Form S-4, File No. 33-31043,
incorporated by reference herein)
3(a)(3) Certificate of Amendment to Restated
Certificate of Incorporation (Exhibit 28 of
the Company's Registration Statement on Form
S-8, File No. 33-38491, incorporated by
reference herein)
3(a)(4) Certificate of Amendment to Restated
Certificate of Incorporation
3(b) By-Laws, as amended
4(a) Loan Agreement dated December 7, 1990 by and
between the Company and Fleet National Bank,
as agent, and certain other financial
institutions (Exhibit 4(a) of the Company's
Form 10-K for the year ended December 31,
1990 incorporated by reference herein)
4(b) Note and Stock Purchase Agreement dated
July 31, 1985, among the Company, the <PAGE>
Prudential Insurance Company of Amer
("Prudential") and Teachers Insurance and
Annuity Association of America ("Teachers")
(Exhibit 4.6 of the Company's Registration
Statement on Form S-1, File No. 33-23988,
incorporated by reference herein)
4(c) Letter Agreement dated June 10, 1987 between
the Company and Teachers (Exhibit 19.2 of
the Company's Form 10-Q for the Quarter
ended June 30, 1987 incorporated by
reference herein)
4(d) Letter Agreement dated October 2, 1989
between the Company and Teachers (Exhibit
4(c) of the Company's Form 8-K for the event
dated November 1, 1989 incorporated by
reference herein)
4(e) Letter Agreement dated June 10, 1987 between
the Company and Prudential (Exhibit 19.3 of
the Company's Form 10-Q for the Quarter
ended June 30, 1987 incorporated by
reference herein)
4(f) Letter Agreement dated October 2, 1989
between the Company and Prudential (Exhibit
4(d) of the Company's Form 8-K for the event
dated November 1, 1989 incorporated by
reference herein)
4(g) Letter Agreement dated March 20, 1990
between the Company and Prudential (Exhibit
4(g) of the Company's Form 10-K for the year
ended December 31, 1991 incorporated by
reference herein)
4(h) Letter Agreement dated March 20, 1990
between the Company and Teachers (Exhibit
4(h) of the Company's Form 10-K for the year
ended December 31, 1991 incorporated by
reference herein)
4(i) Letter Agreement dated December 7, 1990
between the Company and Prudential (Exhibit
4(i) of the Company's Form 10-K for the year
ended December 31, 1991 incorporated by
reference herein)
<PAGE>
4(j) Letter Agreement dated December 7, 1990
between the Company and Teachers (Exhibit
4(j) of the Company's Form 10-K for the year
ended December 31, 1991 incorporated by
reference herein)
4(k) Amendment Agreement dated February 27, 1992
between the Company and Prudential (Exhibit
4(k) of the Company's Form 10-K for the year
ended December 31, 1991 incorporated by
reference herein)
4(l) Amendment Agreement dated February 27, 1992
between the Company and Teachers (Exhibit
4(l) of the Company's Form 10-K for the year
ended December 31, 1991 incorporated by
reference herein)
4(m) Facilities dated December 19, 1991 between
WIL and Ulster Investment Bank Limited
(Exhibit 4(m) of the Company's Form 10-Q for
the quarter ended June 30, 1992 incorporated
by reference herein)
4(n) Registration Rights Agreement dated as of
August 12, 1985 by and among the Company,
Teachers, Prudential, Narragansett First
Fund, Thomas M. Duff, John L. Dings, Alex
Holder, Calvin Hughes, and Frank McGuire
(Exhibit 4.7 of the Company's Registration
Statement on Form S-1, File No. 33-13458,
incorporated by reference herein)
4(o) Loan Agreement between South Carolina Jobs -
Economic Development Authority (the
"Authority") and the Company dated as of
December 1, 1990 (Exhibit 4(n) of the
Company's Form 10-K for the year ended
December 31, 1990 incorporated by reference
herein)
4(p) First Supplemental Loan Agreement between
the Authority and the Company dated as of
April 1, 1991 (Exhibit 4(a) of the Company's
Form 10-Q for the quarter ended June 30,
1991 incorporated by reference herein)
4(q) Note Purchase Agreement dated as of June 14,
1991 between the Company and the Purchasers
named in Schedule I thereto (Exhibit 4(b) of <PAGE>
the Company's Form 10-Q for the quarter
ended June 30, 1991 incorporated by
reference herein)
4(r) Rights Agreement dated as of August 6, 1991
between the Company and First Chicago Trust
Company of New York, as Rights Agent
(Exhibit 1 to the Company's Form 8-K dated
as of August 6, 1991 incorporated by
reference herein)
4(s) Loan Agreement between the Authority and the
Company, dated as of June 1, 1992 (Exhibit
4(u) of the Company's Form 10-Q for the
quarter ended June 30, 1992 incorporated by
reference herein)
4(t) Note Purchase Agreement between the Company
and Teachers dated July 28, 1992 (Exhibit
4(v) of the Company's Form 10-Q for the
quarter ended June 30, 1992 incorporated by
reference herein)
4(u) Loan Agreement between the Authority and the
Company, dated as of December 1, 1992
(Exhibit 4(w) of the Company's Form 10-K for
the year ended December 31, 1992
incorporated by reference herein)
4(v) Promissory Note dated May 15, 1992 of the
Company to the City of Florence, SC (Exhibit
4(x) of the Company's Form 10-K for the year
ended December 31, 1992 incorporated by
reference herein)
4(w) Loan note participations with the Sumitomo
Bank, Limited, dated July 27, 1992, Buliner
Handels-und Frankfurter Bank dated June 15,
1992, Banco di Napoli dated September 14,
1992, Istituto Bancario San Paolo di Torino
S.p.A. dated January 4, 1992, Continental
Bank N.A. dated November 26, 1991 (Exhibit
4(y) of the Company's Form 10-K for the year
ended December 31, 1992 incorporated by
reference herein)
4(x) Promissory Note dated August 9, 1993 of the
Company to First Fidelity Bank, National
Bank (Exhibit 4(z) of the Company's Form
10-Q for the quarter ended September 30,
1993 incorporated by reference herein)
<PAGE>
4(y) Commercial Purpose Loan Note dated August
11, 1993 to Chemical Bank New Jersey,
National Association
4(z) Promissory Note dated June 18, 1993 of the
Company to Fleet National Bank
Executive Compensation Plans and Arrangements
10(a) Wellman, Inc. 1985 Incentive Stock Option
Plan, as amended (Exhibit 4(a) of the
Company's Registration Statement on Form
S-8/S-3, File No. 33-17196, incorporated by
reference herein)
10(b)(1) Employment Agreement dated as of January 1,
1990 between the Company and Thomas M. Duff
(Exhibit 10(e) of the Company's Form 10-K
for the year ended December 31, 1989
incorporated by reference herein)
10(b)(2) Amendment to Employment Agreement dated as
of January 1, 1993 between the Company and
Thomas M. Duff (Exhibit 19 to the Company's
Form 10-Q for the quarter ended March 31,
1993 incorporated by reference herein)
10(c)(1) Employment Agreement dated as of January 1,
1990 between the Company and Clifford J.
Christenson (Exhibit 10(f) of the Company's
Form 10-K for the year ended December 31,
1989 incorporated by reference herein)
10(c)(2) First Amendment to Employment Agreement
dated as of January 1, 1993 between the
Company and Clifford J. Christenson (Exhibit
10(c)(2) of the Company's Form 10-K for the
year ended December 31, 1992 incorporated by
reference herein)
10(d) Service Agreement dated as of June 26, 1991
between Wellman International Investments
Limited and Charles William Beckwith (Ehibit
10(g) of the Company's Form 10-K for the
year ended December 31, 1991 incorporated by
reference herein)
10(e) Employment Agreement dated as of October 1,
1991 between the Company and James P. Casey
(Ehibit 10(j) of the Company's Form 10-K for
the year ended December 31, 1991
incorporated by reference herein)
<PAGE>
10(f) Employment Agreement dated as of April 1,
1992 between the Company and Paul D. Apostol
(Exhibit 10(f) of the Company's Form 10-K
for the year ended December 31, 1992
incorporated by reference herein)
10(g) Directors Stock Option Plan dated as of
December 2, 1991 (Exhibit 4(a) of the
Company's Registration Statement on Form
S-8, File No. 33-44822 incorporated by
reference herein)
10(h) Management Incentive Compensation Plan
10(i) Summary of Executive Life Insurance Plan
(Exhibit 10.22 of the Company's Registration
Statement on Form S-1, File No. 33-13458,
incorporated by reference herein)
10(j)(1) Amended and Restated Restricted Stock
Agreement dated November 17, 1988 between
the Company and Peter H. Conze (Exhibit
10(x)(1) of the Company's Form 10-K for the
year ended December 31, 1990 incorporated by
reference herein)
10(j)(2) Amended and Restated Restricted Stock
Agreement dated December 5, 1988 between the
Company and Richard F. Heitmiller (Exhibit
10(x)(2) of the Company's Form 10-K for the
year ended December 31, 1990 incorporated by
reference herein)
10(j)(3) Restricted Stock Agreement dated March 31,
1989 between the Company and Jonathan M.
Nelson (Exhibit 10(w)(4) of the Company's
Registration Statement on Form S-4, File No.
33-31043, incorporated by reference herein)
10(j)(4) Restricted Stock Agreement dated March 31,
1989 between the Company and Roger A.
Vandenberg (Exhibit 10(w)(5) of the
Company's Registration Statement on Form
S-4, File No. 33-31043, incorporated by
reference herein)
10(j)(5) Restricted Stock Agreement dated as of
August 9, 1990 between the Company and Allan
R. Dragone (Exhibit 10(x)(5) of the
Company's Form 10-K for the year ended
December 31, 1990 incorporated by reference
herein)
<PAGE>
10(j)(6) Restricted Stock Agreement dated as of
August 9, 1990 between the Company and
Raymond C. Tower (Exhibit 10(x)(6) of the
Company's Form 10-K for the year ended
December 31, 1990 incorporated by reference
herein)
10(j)(7) Restricted Stock Agreement dated September
21, 1993 between the Company and James E.
Rogers
Other Material Agreements
10(k) Environmental Agreement dated as of
August 8, 1985, by and among the Company,
Arthur O. Wellman, Jr., and Edward R. Sacks
(Exhibit 10.12 of the Company's Registration
Statement on Form S-1, File No. 33-13458,
incorporated by reference herein)
10(l) Post-Closing Escrow Agreement dated
August 12, 1985 by and among the Company,
Arthur O. Wellman, Jr., Edward R. Sacks and
certain other parties (Exhibit 10.2 of the
Company's Registration Statement on Form
S-1, File No. 33-13458, incorporated by
reference herein)
10(m) Guarantee of indebtedness of Wellman Fibers
Limited to National Westminster Bank PLC
(Exhibit 10(r) of the Company's Form 10-K
for the year ended December 31, 1991
incorporated by reference herein)
10(n) Letter Agreement, relating to certain
environmental matters, dated August 17,
1987, by and among FI, HCC and Celanese
(Exhibit 10.3 of FI's Registration Statement
on Form S-1, File No. 33-20626, incorporated
herein by reference)
10(o) Trademark Assignment and License, dated
January 28, 1988, by and among FI, HCC and
Celanese (Exhibit 10.14 of FI's Registration
Statement on Form S-1, File No. 33-20626,
incorporated herein by reference)
18 Letter of Ernst & Young re change in
accounting principles
<PAGE>
21 Subsidiaries of the Company
23(a) Consent of Ernst & Young
23(b) Consent of KPMG Stokes Kennedy Crowley
99 Report of KPMG Stokes Kennedy Crowley
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on March 24, 1994.
WELLMAN, INC.
By /s/ Thomas M. Duff
President
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities indicated
on March 24, 1994.
Signatures Title
/s/ Thomas M. Duff President, Chief Executive Officer
Thomas M. Duff and Director (Principal Executive
Officer)
/s/ Keith R. Phillips Vice President, Chief Financial
Keith R. Phillips Officer and Treasurer (Principal
Financial Officer)
/s/ Mark J. Rosenblum Vice President, Controller
Mark J. Rosenblum (Principal Accounting Officer)
/s/ C. William Beckwith Director
C. William Beckwith
/s/ Peter H. Conze Director
Peter H. Conze
/s/ Allan R. Dragone Director
Allan R. Dragone
/s/ Richard F. Heitmiller Director
Richard F. Heitmiller
/s/ Jonathan M. Nelson Director
Jonathan M. Nelson
/s/ James E. Rogers Director
James E. Rogers
/s/ Raymond C. Tower Director
Raymond C. Tower
/s/ Roger A. Vandenberg Director
Roger A. Vandenberg
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
3(a)(1) Restated Certificate of Incorporation
(Exhibit 3.1 of the Company's
Registration Statement on Form
S-1, File No. 33-13458,
incorporated by reference herein)
3(a)(2) Certificate of Amendment to Restated
Certificate of Incorporation
(Exhibit 3(a)(2) of the
Company's Registration Statement
on Form S-4, File No. 33-31043,
incorporated by reference herein)
3(a)(3) Certificate of Amendment to Restated
Certificate of Incorporation
(Exhibit 28 of the Company's
Registration Statement on Form
S-8, File No. 33-38491,
incorporated by reference herein)
3(a)(4) Certificate of Amendment to Restated
Certificate of Incorporation
3(b) By-Laws, as amended
4(a) Loan Agreement dated December 7, 1990
by and between the Company and
Fleet National Bank, as agent,
and certain other financial
institutions (Exhibit 4(a) of
the Company's Form 10-K for the
year ended December 31, 1990
incorporated by reference herein)
4(b) Note and Stock Purchase Agreement
dated July 31, 1985, among the
Company, the Prudential
Insurance Company of America
("Prudential") and Teachers
Insurance and Annuity
Association of America
("Teachers") (Exhibit 4.6 of the
Company's Registration Statement
on Form S-1, File No. 33-23988,
incorporated by reference herein)
<PAGE>
Exhibit Number Description
4(c) Letter Agreement dated June 10, 1987
between the Company and Teachers
(Exhibit 19.2 of the Company's
Form 10-Q for the Quarter ended
June 30, 1987 incorporated by
reference herein)
4(d) Letter Agreement dated October 2,
1989 between the Company and
Teachers (Exhibit 4(c) of the
Company's Form 8-K for the event
dated November 1, 1989
incorporated by reference herein)
4(e) Letter Agreement dated June 10, 1987
between the Company and
Prudential (Exhibit 19.3 of the
Company's Form 10-Q for the
Quarter ended June 30, 1987
incorporated by reference herein)
4(f) Letter Agreement dated October 2, 1989
between the Company and
Prudential (Exhibit 4(d) of the
Company's Form 8-K for the event
dated November 1, 1989
incorporated by reference herein)
4(g) Letter Agreement dated March 20, 1990
between the Company and
Prudential (Exhibit 4(g) of the
Company's Form 10-K for the year
ended December 31, 1991
incorporated by reference herein)
4(h) Letter Agreement dated March 20, 1990
between the Company and Teachers
(Exhibit 4(h) of the Company's
Form 10-K for the year ended
December 31, 1991 incorporated
by reference herein)
4(i) Letter Agreement dated December 7, 1990
between the Company and
Prudential (Exhibit 4(i) of the
Company's Form 10-K for the year
ended December 31, 1991
incorporated by reference herein)
<PAGE>
Exhibit Number Description
4(j) Letter Agreement dated December 7, 1990
between the Company and Teachers
(Exhibit 4(j) of the Company's
Form 10-K for the year ended
December 31, 1991 incorporated
by reference herein)
4(k) Amendment Agreement dated February 27,
1992 between the Company and
Prudential (Exhibit 4(k) of the
Company's Form 10-K for the year
ended December 31, 1991
incorporated by reference herein)
4(l) Amendment Agreement dated February 27,
1992 between the Company and
Teachers (Exhibit 4(l) of the
Company's Form 10-K for the year
ended December 31, 1991
incorporated by reference herein)
4(m) Facilities dated December 19, 1991
between WIL and Ulster
Investment Bank Limited (Exhibit
4(m) of the Company's Form 10-Q
for the quarter ended June 30,
1992 incorporated by reference
herein)
4(n) Registration Rights Agreement dated
as of August 12, 1985 by and
among the Company, Teachers,
Prudential, Narragansett First
Fund, Thomas M. Duff, John L.
Dings, Alex Holder, Calvin
Hughes, and Frank McGuire
(Exhibit 4.7 of the Company's
Registration Statement on Form
S-1, File No. 33-13458,
incorporated by reference herein)
4(o) Loan Agreement between South Carolina
Jobs - Economic Development
Authority (the "Authority") and
the Company dated as of December
1, 1990 (Exhibit 4(n) of the
Company's Form 10-K for the year
ended December 31, 1990
incorporated by reference herein)
<PAGE>
Exhibit Number Description
4(p) First Supplemental Loan Agreement
between the Authority and the
Company dated as of April 1,
1991 (Exhibit 4(a) of the
Company's Form 10-Q for the
quarter ended June 30, 1991
incorporated by reference herein)
4(q) Note Purchase Agreement dated as of
June 14, 1991 between the
Company and the Purchasers named
in Schedule I thereto (Exhibit
4(b) of the Company's Form 10-Q
for the quarter ended June 30,
1991 incorporated by reference
herein)
4(r) Rights Agreement dated as of
August 6, 1991 between the
Company and First Chicago Trust
Company of New York, as Rights
Agent (Exhibit 1 to the
Company's Form 8-K dated as of
August 6, 1991 incorporated by
reference herein)
4(s) Loan Agreement between the Authority
and the Company, dated as of
June 1, 1992 (Exhibit 4(u) of
the Company's Form 10-Q for the
quarter ended June 30, 1992
incorporated by reference herein)
4(t) Note Purchase Agreement between the
Company and Teachers dated July
28, 1992 (Exhibit 4(v) of the
Company's Form 10-Q for the
quarter ended June 30, 1992
incorporated by reference herein)
4(u) Loan Agreement between the Authority
and the Company, dated as of
December 1, 1992 (Exhibit 4(w)
of the Company's Form 10-K for
the year ended December 31, 1992
incorporated by reference herein)
<PAGE>
Exhibit Number Description
4(v) Promissory Note dated May 15, 1992
of the Company to the City of
Florence, SC (Exhibit 4(x) of
the Company's Form 10-K for the
year ended December 31, 1992
incorporated by reference herein)
4(w) Loan note participations with the
Sumitomo Bank, Limited, dated
July 27, 1992, Buliner
Handels-und Frankfurter Bank
dated June 15, 1992, Banco di
Napoli dated September 14, 1992,
Istituto Bancario San Paolo di
Torino S.p.A. dated January 4,
1992, Continental Bank N.A.
dated November 26, 1991 (Exhibit
4(y) of the Company's Form 10-K
for the year ended December 31,
1992 incorporated by reference
herein)
4(x) Promissory Note dated August 9, 1993
of the Company to First Fidelity
Bank, National Bank (Exhibit
4(z) of the Company's Form 10-Q
for the quarter ended September
30, 1993 incorporated by
reference herein)
4(y) Commercial Purpose Loan Note dated
August 11, 1993 to Chemical Bank
New Jersey, National Association
4(z) Promissory Note dated June 18, 1993
of the Company to Fleet National
Bank
Executive Compensation Plans and Arrangements
10(a) Wellman, Inc. 1985 Incentive Stock
Option Plan, as amended (Exhibit
4(a) of the Company's
Registration Statement on Form
S-8/S-3, File No. 33-17196,
incorporated by reference herein)
<PAGE>
Exhibit Number Description
10(b)(1) Employment Agreement dated as of
January 1, 1990 between the
Company and Thomas M. Duff
(Exhibit 10(e) of the Company's
Form 10-K for the year ended
December 31, 1989 incorporated
by reference herein)
10(b)(2) Amendment to Employment Agreement
dated as of January 1, 1993
between the Company and Thomas
M. Duff (Exhibit 19 to the
Company's Form 10-Q for the
quarter ended March 31, 1993
incorporated by reference herein)
10(c)(1) Employment Agreement dated as of
January 1, 1990 between the
Company and Clifford J.
Christenson (Exhibit 10(f) of
the Company's Form 10-K for the
year ended December 31, 1989
incorporated by reference herein)
10(c)(2) First Amendment to Employment Agreement
dated as of January 1, 1993
between the Company and Clifford
J. Christenson (Exhibit 10(c)(2)
of the Company's Form 10-K for
the year ended December 31, 1992
incorporated by reference herein)
10(d) Service Agreement dated as of
June 26, 1991 between Wellman
International Investments
Limited and Charles William
Beckwith (Ehibit 10(g) of the
Company's Form 10-K for the year
ended December 31, 1991
incorporated by reference herein)
10(e) Employment Agreement dated as of
October 1, 1991 between the
Company and James P. Casey
(Ehibit 10(j) of the Company's
Form 10-K for the year ended
December 31, 1991 incorporated
by reference herein)
<PAGE>
Exhibit Number Description
10(f) Employment Agreement dated as of
April 1, 1992 between the
Company and Paul D. Apostol
(Exhibit 10(f) of the Company's
Form 10-K for the year ended
December 31, 1992 incorporated
by reference herein)
10(g) Directors Stock Option Plan dated
as of December 2, 1991 (Exhibit
4(a) of the Company's
Registration Statement on Form
S-8, File No. 33-44822
incorporated by reference herein)
10(h) Management Incentive Compensation Plan
10(i) Summary of Executive Life Insurance
Plan (Exhibit 10.22 of the
Company's Registration Statement
on Form S-1, File No. 33-13458,
incorporated by reference herein)
10(j)(1) Amended and Restated Restricted Stock
Agreement dated November 17,
1988 between the Company and
Peter H. Conze (Exhibit 10(x)(1)
of the Company's Form 10-K for
the year ended December 31, 1990
incorporated by reference herein)
10(j)(2) Amended and Restated Restricted Stock
Agreement dated December 5, 1988
between the Company and Richard
F. Heitmiller (Exhibit 10(x)(2)
of the Company's Form 10-K for
the year ended December 31, 1990
incorporated by reference herein)
10(j)(3) Restricted Stock Agreement dated
March 31, 1989 between the
Company and Jonathan M. Nelson
(Exhibit 10(w)(4) of the
Company's Registration Statement
on Form S-4, File No. 33-31043,
incorporated by reference herein)
<PAGE>
Exhibit Number Description
10(j)(4) Restricted Stock Agreement dated
March 31, 1989 between the
Company and Roger A. Vandenberg
(Exhibit 10(w)(5) of the
Company's Registration Statement
on Form S-4, File No. 33-31043,
incorporated by reference herein)
10(j)(5) Restricted Stock Agreement dated as
of August 9, 1990 between the
Company and Allan R. Dragone
(Exhibit 10(x)(5) of the
Company's Form 10-K for the year
ended December 31, 1990
incorporated by reference herein)
10(j)(6) Restricted Stock Agreement dated as
of August 9, 1990 between the
Company and Raymond C. Tower
(Exhibit 10(x)(6) of the
Company's Form 10-K for the year
ended December 31, 1990
incorporated by reference herein)
10(j)(7) Restricted Stock Agreement dated
September 21, 1993 between the
Company and James E. Rogers
Other Material Agreements
10(k) Environmental Agreement dated as of
August 8, 1985, by and among the
Company, Arthur O. Wellman, Jr.,
and Edward R. Sacks (Exhibit
10.12 of the Company's
Registration Statement on Form
S-1, File No. 33-13458,
incorporated by reference herein)
10(l) Post-Closing Escrow Agreement dated
August 12, 1985 by and among the
Company, Arthur O. Wellman, Jr.,
Edward R. Sacks and certain
other parties (Exhibit 10.2 of
the Company's Registration
Statement on Form S-1, File No.
33-13458, incorporated by
reference herein)
<PAGE>
Exhibit Number Description
10(m) Guarantee of indebtedness of Wellman
Fibers Limited to National
Westminster Bank PLC (Exhibit
10(r) of the Company's Form 10-K
for the year ended December 31,
1991 incorporated by reference
herein)
10(n) Letter Agreement, relating to certain
environmental matters, dated
August 17, 1987, by and among
FI, HCC and Celanese (Exhibit
10.3 of FI's Registration
Statement on Form S-1, File No.
33-20626, incorporated herein by
reference)
10(o) Trademark Assignment and License,
dated January 28, 1988, by and
among FI, HCC and Celanese
(Exhibit 10.14 of FI's
Registration Statement on Form
S-1, File No. 33-20626,
incorporated herein by reference)
18 Letter of Ernst & Young regarding
change in accounting principles
21 Subsidiaries of the Company
23(a) Consent of Ernst & Young
23(b) Consent of KPMG Stokes Kennedy Crowley
99 Report of KPMG Stokes Kennedy Crowley
Exhibit 3(a)(1)
RESTATED
CERTIFICATE OF INCORPORATION
OF
WELLMAN, INC.
(formerly named WS Subsidiary, Inc.)
Pursuant to Sections 242 and 245
of the General Corporation Law
of the State of Delaware
Wellman, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation") hereby certifies
as follows:
1. That the name of the Corporation is Wellman, Inc.
2. That the Certificate of Incorporation of the Corporation was
filed in the office of the Secretary of State of the State of
Delaware on the 11th day of July, 1985 and was amended and restated
by a Restated Certificate of Incorporation filed in the office of
the Secretary of State of Delaware on the 6th day of August, 1985,
which Restated Certificate of Incorporation was amended by an
Amendment thereto dated as of April 30, 1987 filed in the Office of
the Secretary of State of Delaware on the 11th day of May, 1987 (the
"Amendment").
3. That this Restated Certificate of Incorporation restates and
integrates and further amends the Restated Certificate of
Incorporation of this Corporation filed on August 6, 1985, as
amended by the Amendment.
4. That the amendment to the Restated Certificate of
Incorporation effected hereby is (i) to change the authorized
capital stock of the Corporation to 30,000,000 shares, consisting of <PAGE>
24,500,000 shares of Common Stock, par value $.001 per share,
5,500,000 shares of Class B Common Stock, par value $.001 per share,
and to provide for the rights, privileges, powers and preferences of
each such class or series of shares, (ii) to provide for special
voting requirements for certain business combinations and (iii) to
require the Corporation to offer to purchase the outstanding shares
of its capital stock upon the occurrence of certain events.
Upon effectuation of said amendment, and without any further act
of the Corporation or the holders of any of its capital stock, (i)
each share of the currently outstanding Common Stock, par value
$1.00 per share, Class A Participating Preferred Stock, par value
$1.00 per share, Class D Participating Preferred Stock, par value
$1.00 per share, and Class E Participating Preferred Stock, par
value $1.00 per share, shall be converted into 108 fully paid and
non-assessable shares of Common Stock, par value $.001 per share,
and (ii) each share of the currently outstanding Class B
Participating Preferred Stock, par value $1.00 per share, and Class
C Participating Preferred Stock, par value $1.00 per share, shall be
converted into 108 shares of Class B Common Stock, par value $.001
per share.
5. That the capital of the Corporation shall not be reduced
under or by reason of the foregoing amendment of the Restated
Certificate of Incorporation of the Corporation.
6. That the Board of Directors of the Corporation adopted
resolutions proposing and declaring advisable and in the best
interest of the Corporation the restatement of and amendment to the
Restated Certificate of Incorporation of the Corporation, and <PAGE>
recommended the adoption of such restatement and amendment by the
stockholders of the Corporation.
7. That the restatement of and further amendment to the
Restated Certificate of Incorporation have been duly adopted by the
unanimous written consent of the stockholders of the Corporation, in
accordance with the applicable provisions of Section 228, 242, and
245 of the General Corporation Law of the State of Delaware.
8. That the text of the Restated Certificate of Incorporation
is hereby restated and amended in its entirety to read in full as
follows:
FIRST: Name. The name of the Corporation is Wellman, Inc.
SECOND: Delaware Office and Registered Agent. The registered
office of the Corporation in the State of Delaware is located at
Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle 19801. The name of the registered
agent of the Corporation as said address is The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801.
THIRD: Purposes. The purposes of the Corporation are to engage
in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of
Delaware, including, but not limited to, the acquisition of other
corporations and the manufacture, sale and distribution directly or
through one or more subsidiaries of fibers, filaments, and other
fibrous substances or materials.
<PAGE>
FOURTH: Capital Stock. The total number of shares of stock
which the Corporation is authorized to issue is 30,000,000 as
follows: 24,500,000 shares of Common Stock with a par value of $.001
per share and 5,500,000 shares of Class B Common Stock with a par
value of $.001 per share.
A. Common Stock
The powers, designations, preferences, and relative,
participating, optional and other rights of the Common Stock and the
Class B Common Stock shall be identical in all respects except as
follows:
1. Voting Rights.
(a) Election of Directors. Holders of Class B Common Stock, as
such, shall have no voting rights with respect to the election of
Directors, and shares of Class B Common Stock shall not be included
in determining the number of shares entitled to be voted on such
matter.
(b) Other Voting Rights. Holders of the Class B Common Stock,
as such, shall have no right to vote on any other matters to be
voted on by the stockholders of the Corporation, and the shares of
Class B Common Stock shall not be included in determining the number
of shares entitled to be voted on such matters; provided, however,
that (i) the holders of Class B Common Stock shall have the right to
vote as a separate class on the matters specified in Section
242(b)(2) of the Delaware General Corporation Law, and (ii) the
shares of Class B Common Stock shall be included in determining the
number of shares entitled to be voted on, and the holders thereof as <PAGE>
such, voting together with the holders of the Common Stock, an
as a separate class, shall be entitled to one vote per share on all
matters on which the holders of Voting Shares (as defined in Article
SEVENTH) are entitled to vote pursuant to Article SEVENTH hereof,
and on all matters required to be submitted to a vote of the
stockholders under the General Corporation Law of the State of
Delaware except for the election of directors.
2. Conversion Rights.
Shares of Class B Common Stock may, at the election of the
holder thereof in connection with, but only in connection with, a
sale thereof to a purchaser which is not an affiliate (as defined by
the Securities Exchange Act of 1934) of such holder, be converted
into an equal number of fully paid and non-assessable shares of
Common Stock.
Any such conversion shall be exercised by the surrender by the
holder to the Corporation at its principal office of the certificate
or certificates representing the shares being converted accompanied
by a written notice of conversion stating therein the name or names
in which it wishes the certificate or certificates for Common Stock
to be issued; provided, however, upon the conversion of the Class B
Common Stock, a certification shall be given that such conversion is
in connection with the sale of such shares to a person other than an
affiliate of such holder. In case such notices shall specify a name
or names other than that of the holder, such notice shall be
accompanied by payment of any and all transfer taxes payable upon
the issue of the Common Stock in such name or names. As soon as <PAGE>
practicable after such surrender of such certificate or
certificates, the Corporation shall issue and deliver at such office
to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled as
aforesaid. The Corporation shall at all times reserve and keep
available out of its authorized and unissued shares of Common Stock,
solely for issuance upon the conversion of shares of the Class B
Common Stock as herein provided, such number of shares of Common
Stock as shall from time to time be issuable upon all of the shares
of Class B Common Stock at the time outstanding. Upon the
conversion of any shares of Class B Common Stock into shares of
Common Stock hereunder the shares of Class B Common Stock so
converted shall thereupon become authorized but unissued shares of
such Class B Common Stock.
B. Conversion of Shares Outstanding on Effective Date of this
Article FOURTH.
Upon the effective date of this Article FOURTH, and without
further action on the part of the Board of Directors or holders of
any outstanding shares of the capital stock of the Corporation, (1)
each share of the currently outstanding Common Stock, par value
$1.00 per share, Class A Participating Preferred Stock, par value
$1.00 per share, Class D Participating Preferred Stock, par value
$1.00 per share, and Class E Participating Preferred Stock, par
value $1.00 per share, shall be converted into one hundred eight
(108) fully paid and non-assessable shares of Common Stock, par <PAGE>
value $.001 per share, and (2) each share of the currently
outstanding Class B Participating Preferred Stock, par value $1.00
per share, and Class C Participating Preferred Stock, par value
$1.00 per share, shall be converted into one hundred eight (108)
fully paid and non-assessable shares of Class B Common Stock, par
value $.001 per share.
FIFTH: Duration of Existence. The Corporation is to have
perpetual existence.
SIXTH: Board of Directors.
A. Number of Directors. The business and affairs of the
Corporation shall be managed by or under the direction of the Board
of Directors. The number of directors of the Corporation that shall
constitute the Board of Directors shall be not less than three (3)
nor more than thirteen (13) unless otherwise determined from time to
time by resolution adopted by the affirmative vote of at least 80%
of the Board of Directors.
B. Power to Amend By-Laws. In furtherance and not in
limitation of the powers conferred by statute, the Board of
Directors is expressly authorized to adopt, alter, amend or repeal
the By-laws of the Corporation. The books of the Corporation
(subject to the provisions of the laws of the State of Delaware) may
be kept outside of the State of Delaware at such places as may be
from time to time designated by the Board of Directors. Elections
of directors need not be by ballot unless the By-laws so provide.
<PAGE>
SEVENTH: A. Definitions and Related Matters as to Certain
Business Combinations and Obligation of Corporation to Offer to
Purchase Stock.
1.1 Affiliate. An "Affiliate" of, or a Person "affiliated
with", a specified Person, means a Person that directly or
indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified.
1.2 Associate. The term "Associate" used to indicate a
relationship with any Person means:
(a) Any corporation or organization (other than the
Corporation or a Subsidiary of the Corporation) of which
such Person is an officer or general partner or is,
directly or indirectly, the beneficial owner of ten percent
or more of any class of equity securities;
(b) Any trust or other estate in which such Person
has a ten percent or greater beneficial interest or as to
which such person serves as trustee or in a similar
fiduciary capacity;
(c) Any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such
Person; or
(d) Any investment company registered under the
Investment Company Act of 1940 for which such Person or any
Affiliate or Associate of such Person serves as investment
adviser.
<PAGE>
1.3 Beneficial Owner. A Person shall be considered the
"Beneficial Owner" of any shares of stock (whether or not owned of
record):
(a) With respect to which such Person or any
Affiliate or Associate of such Person directly or
indirectly has or shares (i) voting power, including the
power to vote or to direct the voting of such shares of
stock, and/or (ii) investment power, including the power to
dispose of or to direct the disposition of such shares of
stock;
(b) Which such Person or any Affiliate or Associate
of such Person has (i) the right to acquire (whether such
right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, and/or
(ii) the right to vote pursuant to any agreement,
arrangement or understanding (whether such right is
exercisable immediately or only after the passage of time);
or
(c) Which are Beneficially Owned within the meaning
of (a) or (b) of this Section 1.3 by any other Person with
which such first mentioned Person or any of its Affiliates
or Associates has any agreement, arrangement or <PAGE>
understanding, written or oral, with respect to acquiring,
holding, voting or disposing of any shares of stock of the
Corporation or any Subsidiary of the Corporation or
acquiring, holding or disposing of all or substantially
all, or any Substantial Part, of the assets or businesses
of the Corporation or a Subsidiary of the Corporation.
For the purpose only of determining whether a Person is the
Beneficial Owner of a percentage specified in this Article SEVENTH
of the outstanding Voting Shares, such shares shall be deemed to
include any Voting Shares which may be issuable pursuant to any
agreement, arrangement or understanding or upon the exercise of the
conversion rights, exchange rights, warrants, options or otherwise
and which are deemed to be beneficially owned by only such Person
pursuant to the foregoing provisions of this Section 1.3.
1.4 Business Combination. A "Business Combination" means:
(a) The sale, exchange, lease, transfer or other
disposition to or with a Related Person or any Affiliate or
Associate of such Related Person by the Corporation or any
of its Subsidiaries (in a single transaction or a series of
related transactions) of all or substantially all, or any
Substantial Part, of its or their assets (including,
without limitation, any securities issued by a Subsidiary)
other than in the ordinary course of business;
(b) The purchase, exchange, lease or other
acquisition by the Corporation or any of its Subsidiaries <PAGE>
(in a single transaction or a series of related
transactions) of all or substantially all, or any
Substantial Part, of the assets or business of a Related
Person or any Affiliate or Associate of such Related Person
other than in the ordinary course of business;
(c) Any merger or consolidation of the Corporation or
any Subsidiary thereof into or with a Related Person or any
Affiliate or Associate of such Related Person, irrespective
of which Person is the surviving entity in such merger or
consolidation;
(d) Any reclassification of securities,
recapitalization or other transaction effected by the
Corporation (other than a redemption in accordance with the
terms of the security redeemed) which has the effect,
directly or indirectly, of increasing the proportionate
amount of Voting Shares of the Corporation or any
Subsidiary thereof which are Beneficially Owned by a
Related Person, or any partial or complete liquidation,
spinoff, split-off or split up of the Corporation or any
Subsidiary thereof in which a Related Person or any
Affiliate or Associate of a Related Person receives a
Substantial Part of the assets or business of the
Corporation and its Subsidiaries; provided, however, that
this Section 1.4(d) shall not apply to a redemption of less
than 1% of the Voting Shares in any calendar year; or
<PAGE>
(e) The acquisition upon the original issuance
thereof of Beneficial Ownership by a Related Person of
Voting Shares or securities convertible into Voting Shares
or any voting securities or securities convertible into
voting securities of any Subsidiary of the Corporation, or
the acquisition upon the original issuance thereof of
Beneficial Ownership by a Related Person of any rights,
warrants or options to acquire any of the foregoing or any
combination of the foregoing Voting Shares or voting
securities of a Subsidiary of the Corporation.
As used in this definition, a "series of related transactions"
shall be deemed to include not only a series of transactions with
the same Related Person but also a series of separate transactions
with a Related Person or any Affiliate or Associate of such Related
Person.
Anything in this definition to the contrary notwithstanding,
this definition shall not be deemed to include any transaction of
the type set forth in Sections 1.4(a) through 1.4(c) above between
or among any two or more Subsidiaries of the Corporation or the
Corporation and one or more Subsidiaries of the Corporation.
1.5 Date of Determination. The term "Date of Determination"
means:
(a) the date on which a binding agreement (except for
the fulfillment of conditions precedent, including, without
limitation, votes of stockholders to approve such
transaction) is entered into by the Corporation, as <PAGE>
authorized by its Board of Directors, and another Person
providing for any Business Combination; or
(b) If such an agreement as referred to in Section
1.5(a) above is amended so as to make it less favorable to
the Corporation and its stockholders, the date on which
such amendment is approved by the Board of Directors of the
Corporation; or
(c) In cases where neither Section 1.5(a) or (b)
above shall be applicable, the record date for the
determination of stockholders of the Corporation entitled
to notice of and to vote upon the transaction in question.
A majority of the Board of Directors acting in good faith shall
have the power and duty to determine the Date of Determination as to
any transaction under this Article SEVENTH. Any such determination
shall be conclusive and binding for all purposes of this Article.
1.6 Person. The term "Person" shall mean any individual,
partnership, corporation, group or other entity (other than the
Corporation, any Subsidiary of the Corporation for itself or as a
trustee holding stock for the benefit of employees of the
Corporation or its Subsidiaries, or any one of them, pursuant to one
or more employee benefit plans or arrangements). When two or more
Persons act as a partnership, limited partnership, syndicate,
association or other group for the purpose of acquiring, holding or
disposing of shares of stock, such partnership, syndicate,
association or group shall be deemed a "Person".
<PAGE>
1.7 Related Person. "Related Person" means any Person which is
the Beneficial Owner, as of the Date of Determination or immediately
prior to the consummation of a Business Combination, or both, of
forty percent (40%) or more of the Voting Shares, or any Person who
is an Affiliate of the Corporation and at any time within eighteen
months preceding the Date of Determination was the Beneficial Owner
of forty percent (40%) or more of the then outstanding Voting Shares.
1.8 Substantial Part. The term "Substantial Part" as used with
reference to the assets of the Corporation or any Subsidiary or of
any Related Person means assets having a value of more than ten
percent of the total consolidated assets of the Corporation and its
Subsidiaries as of the end of the Corporation's most recent fiscal
year ending prior to the time the determination is being made.
1.9 Subsidiary. "Subsidiary" shall mean any corporation or
entity of which the Person in question owns not less than 50% of any
class of equity securities, directly or indirectly.
1.10 Voting Shares. "Voting Shares" shall mean shares of the
Corporation's capital stock entitled to vote generally in the
election of directors and the Class B Common Stock and any other
shares which by their terms may be converted into shares of the
Corporation's capital stock entitled to vote generally in the
election of directors.
1.11 Certain Determinations With Respect to Article SEVENTH.
(a) A majority of the Board of Directors acting in good faith shall <PAGE>
have the conclusive power and authority to determine, for the
purposes of this Article SEVENTH, on the basis of information known
to them: (i) the number of Voting Shares of which any Person is the
Beneficial Owner, (ii) whether a Person is an Affiliate or Associate
of another, (iii) whether a Person has an agreement, arrangement or
understanding with another as to the matters referred to in the
definition of "Beneficial Owner" as hereinabove defined, (iv)
whether the assets subject to any Business Combination constitute a
"Substantial Part" as hereinabove defined, (v) whether two or more
transactions constitute a "series of related transactions" as
hereinabove defined, (vi) any matters referred to in subsection
1.11(b) below, and (vii) such other matters with respect to which a
determination is required under this Article SEVENTH. Any such
determination shall be final and binding for all purposes hereunder.
(b) A Related Person shall be deemed to have acquired a
Voting Share of the Corporation at the time when such Related Person
became the Beneficial Owner thereof.
B. Approval of Certain Business Combinations.
Whether or not a vote of the stockholders is otherwise required
in connection with the transaction, neither the Corporation nor any
of its Subsidiaries shall become a party to any Business Combination
without prior compliance with the provisions of Section 1.1 and 1.2
herein below, in addition to any additional vote as may be required
by applicable law.
<PAGE>
1.1 Prior Approval by the Board of Directors. Such Business
Combination was approved by the Board of Directors of the
Corporation by the affirmative vote of a majority of the Board of
Directors of the Corporation.
1.2 Approval by Stockholders Who Are Not Related Persons. A
proxy statement complying with the requirements of the Securities
Exchange Act of 1934 shall have been mailed to all holders of Voting
Shares for the purpose of soliciting stockholder approval of such
Business Combination and such Business Combination shall be
approved, at the stockholders meeting called for such purpose, by
the affirmative vote of a majority of the Voting Shares held by
stockholders other than the Related Person and Affiliates and
Associates of such Related Person, voting as a single class.
C. Obligation of Corporation to Offer To Purchase Shares From
Minority Stockholders.
Within sixty (60) days after any Person (the "Control Person")
becomes the Beneficial Owner of seventy-five percent (75%) or more
of the Voting Shares ("75% Ownership"), the Corporation shall offer
to purchase for cash all of the following securities which are not
beneficially owned by the Control Person or Affiliates or Associates
of the Control Person (collectively the "Minority Shares") at the
highest per share price (including brokerage commissions, transfer
taxes and soliciting dealers' fees) which the Control Person or any <PAGE>
of such Control Person's Affiliates or Associates paid in acqui
any Voting Shares during the preceding eighteen (18) month period
(the "Highest Per Share Price"): (x) all of the outstanding shares
of capital stock of the Corporation, (y) all capital stock of the
Corporation issuable upon the conversion of outstanding securities
convertible into capital stock of the Corporation ("Convertible
securities"), provided the holder thereof shall convert such
Securities into capital stock of the Corporation in accordance with
the terms of such Convertible Securities simultaneously with the
holder's acceptance of the Corporation's offer to purchase the
capital stock issuable upon the conversion of such Securities, and
(z) all capital stock of the Corporation issuable upon the exercise
of outstanding options, warrants or other rights to acquire capital
stock of the Corporation (collectively "Rights"), provided the
holder thereof exercises such Rights and pays any required exercise
price or other required consideration relating to exercise of such
Rights simultaneously with the holder's acceptance of the
Corporation's offer to purchase the capital stock issuable upon the
exercise of such Rights. For purposes of determining the Highest
Per Share price, if the consideration paid in any acquisition of
Voting Shares consisted, in whole or in part, of consideration other
than cash, the board of directors of the Corporation shall take such
action, as in its judgment it deems appropriate, to establish the
cash value of such consideration, but such valuation shall not be <PAGE>
less than the cash value, if any, ascribed to such consideration
the Control Person. In making such determination the board of
directors may engage such persons, including investment banking
firms and the independent accountants who have reported on the most
recent financial statement of the Corporation, and utilize employees
and agents of the Corporation who will, in the judgment of the board
of directors, be of assistance to the board of directors. Equitable
adjustment shall be made in the Highest Per Share Price to give
effect to stock dividends, stock splits and similar transactions.
The Corporation shall give written notice to each holder of Minority
Shares (the "Notice") within 20 days after the Corporation first has
knowledge that 75% Ownership has been obtained.
1.1 Option of Holders of Minority Shares to Sell. Each of the
holders of Minority Shares (a "Minority Stockholder") shall have an
irrevocable option (an "Option") to sell to the Corporation all or
any portion of the Minority Shares held by such Minority Stockholder
at the time of the exercise of such Option (including Minority
Shares issuable upon the conversion of Convertible Securities or
exercise of Rights simultaneously with the exercise of the Option),
upon the following terms and conditions:
(a) The Option shall be exercisable at any time
during the 60 day period following the Notice, or if no
Notice is given, during the 60 day period following the
date such Minority Stockholder has actual knowledge that
75% Ownership has been obtained (the "Option Period");
<PAGE>
(b) The Option may be exercised at any time during
the Option Period by a Minority Stockholder delivering or
mailing written notice to the President or Secretary of the
Corporation (the "Sale Notice") of his election specifying
the number of Minority Shares such Minority Stockholder
will sell to the Corporation;
(c) The consideration to be paid for each Minority
Share upon the exercise of the Option shall be the Highest
Per Share Price;
(d) Subject to the provisions of paragraphs (e) and
(f) hereof, the closing of the purchase and sale of all of
the Minority Shares as to which Options are exercised shall
take place at the Corporation's principal office one
hundred twenty (120) days after the date of the Notice, or
if no Notice is given, as to each Minority Stockholder, 60
days after the date of such Minority Stockholder's Sale
Notice (or the next business day if any such day is a
Saturday, Sunday or legal holiday). At the closing, the
Minority Stockholder shall deliver such instruments and
documents as shall be necessary or appropriate to transfer
the Minority Shares being sold. At the Closing the
Corporation shall purchase the Minority Shares of the
Minority Stockholders exercising their Option and shall
deliver or cause to be delivered the purchase price to each
selling Minority Stockholder by a check of the Corporation;
<PAGE>
(e) The closing date for the purchase and sale of the
Minority Shares subject to the Option shall be subject to
deferral if additional time is necessary for the
Corporation to fulfill the requirements of any applicable
Federal or state securities laws, but the Corporation shall
have the right to defer such purchase on such basis only so
long as the Corporation shall be diligently and
continuously pursuing all steps and shall be taking all
action necessary to fulfill such requirements.
(f) Notwithstanding paragraphs (a) through (e), if
the purchase by the Corporation of all or a portion of the
Minority Shares would result in a default or violation
under any agreement or instrument evidencing Existing Debt
(as hereinafter defined) or under which Existing Debt shall
have been incurred or would violate Section 160 of the
Delaware General Corporation Law (the "Act") the obligation
of the Corporation to purchase that portion of the Minority
Shares as would cause such default or violation shall be
deferred (with interest accruing on the unpaid amount at an
annual rate equal to the fluctuating prime rate of interest
announced from time to time by Fleet National Bank,
Providence, Rhode Island) until such time as the purchase
thereof shall not result in such a default or violation.
The term "Existing Debt" means indebtedness for borrowed
money incurred under or pursuant to an agreement or <PAGE>
instrument in effect as of the date on which this Article
SEVENTH first becomes effective. The Corporation shall
give the Minority Stockholders written notice within sixty
(60) days after its receipt of the Sale Notice of the
Corporation's right to defer the purchase of the Minority
Shares; and from time to time thereafter as soon as the
Corporation shall be permitted to purchase any or all of
such Minority Shares as to which an Option is exercised
without causing a default under any of the agreements or
instruments evidencing its Existing Debt or under which
Existing Debt shall have been incurred and without
violating Section 160 of the Act, the Corporation shall
forthwith give notice to the Minority Stockholder, setting
a time, place and date (which is not more than 15 days
after the date of such notice) for the closing of the
purchase of the Minority Shares as to which the Sale Option
was exercised. In the event less than all of the Minority
Shares as to which Options have been exercised are to be
purchased, all purchases shall be made pro rata from each
Minority Stockholder exercising an Option based upon the
number of Minority Shares as to which such Option was
exercised.
D. Amendments to this Article SEVENTH.
Notwithstanding any other provisions of this Restated
Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law, this Restated Certificate of Incorporation or the
Bylaws of the Corporation), and in addition to such additional vote <PAGE>
required by applicable law, this Article SEVENTH shall not be
amended, altered, changed or repealed without the affirmative vote
as to all stock held by the holders of 80% or more of the
outstanding Voting Shares, voting as a single class.
EIGHTH: Indemnification. The Corporation shall indemnify its
officers, directors, employees and agents to the fullest extent
permitted by the General Corporation Law of Delaware and the
Corporation's By-laws.
NINTH: Meetings. Meetings of stockholders may be held within
or without the State of Delaware, as the By-laws may provide. The
books of the Corporation may be kept (subject to any provisions
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.
Special meetings of the stockholders of the Corporation may be
called only by the Board of Directors, the President of the
Corporation, the holders of a majority of the outstanding Common
Stock, or by the holders of a majority of the outstanding Common
Stock and Class B Common Stock.
TENTH. Reservation of Right to Amend Certificate. The
Corporation reserves the right at any time and from time to time to
amend, alter, change or repeal any provision contained in this
Restated Certificate of Incorporation, and other provisions <PAGE>
authorized by the laws of the State of Delaware at the time in force
may be added or inserted in this Restated Certificate of
Incorporation, in the manner (i) now or hereafter prescribed by law,
and (ii) as has otherwise been provided in this Restated Certificate
of Incorporation; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Restated
Certificate of Incorporation; and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this
Restated Certificate of Incorporation in their present form or as
hereafter amended are granted subject to the right reserved in this
Article TENTH.
Notwithstanding any other provisions of this Restated
Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law, this Restated Certificate of Incorporation or the
Bylaws of the Corporation), this Article TENTH shall not be amended,
altered, changed or repealed without the affirmative vote as to all
stock held by the holders of 80% or more of the outstanding shares
of the Corporation's capital stock entitled to vote generally in the
election of directors, voting separately as a class.
ELEVENTH. Limitation on Director's Liability. 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 <PAGE>
duty of loyalty to the Corporation or its stockholders, (ii) f
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, and (iv) for any transaction
from which the director derived an improper personal benefit.
IN WITNESS WHEREOF, said Wellman, Inc. has caused this
certificate to be signed by Thomas M. Duff, President and attested
by David K. Duffell its Secretary this 1st day of June, 1987.
Wellman, Inc.
By/s/ Thomas M. Duff
Thomas M. Duff
ATTEST BY:
/s/ David K. Duffell
David K. Duffell
Secretary
<PAGE>
Exhibit 3(a)(2)
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
WELLMAN, INC.
* * * * * *
Wellman, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Wellman,
Inc. resolutions were duly adopted setting forth a proposed
amendment to the Restated Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling a
meeting of the stockholders of said corporation for consideration
thereof; and that the Board of Directors of Wellman, Inc., by the
unanimous written consent of its members, filed with the minutes of
the board, duly adopted resolutions amending the resolutions
relating to the amendment of the corporation's Restated Certificate
of Incorporation. The amended resolution setting forth the proposed
amendment is as follows:
VOTED: That Article FOURTH of the Corporation's Restated
Certificate of Incorporation be amended to read
in its entirety as set forth in Exhibit A
attached hereto and incorporated herein; that
such amendment is hereby declared advisable; and
that such amendment be considered at the 1989
Annual Meeting of Stockholders.
<PAGE>
SECOND: That thereafter, pursuant to a resolution of its Board
of Directors, the 1989 Annual Meeting of Stockholders of Wellman,
Inc. was duly called and held, upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware
at which Annual Meeting the necessary number of shares as required
by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, said Wellman, Inc. has caused this
certificate to be signed by Clifford J. Christenson, its Vice
President, and attested by Laura N. Wilkinson, its Assistant
Secretary, this 18th day of May, 1989.
WELLMAN, INC.
By/s/ Clifford J. Christenson
Clifford J. Christenson
Vice President
ATTEST:
By/s/ Laura N. Wilkinson
Laura N. Wilkinson
Assistant Secretary
<PAGE>
EXHIBIT A
Amendment to Restated Certificate of Incorporation
FOURTH. Capital Stock. The total number of shares of stock
which the Corporation is authorized to issue is 45,500,000 as
follows: 40,000,000 shares of Common Stock with a par value of
$.001 per share and 5,500,000 shares of Class B Common Stock with a
par value of $.001 per share.
A. Common Stock
The powers, designations, preferences, and relative,
participating, optional and other rights of the Common Stock and the
Class B Common Stock shall be identical in all respects except as
follows:
1. Voting Rights
(a) Election of Directors. Holders of Class B Common Stock, as
such, shall have no voting rights with respect to the election of
Directors, and shares of Class B Common Stock shall not be included
in determining the number of shares entitled to be voted on such
matter.
(b) Other Voting Rights. Holders of the Class B Common Stock,
as such, shall have no right to vote on any other matters to be
voted on by the stockholders of the Corporation, and the shares of
Class B Common Stock shall not be included in determining the number
of shares entitled to be voted on such matters; provided, however,
that (i) the holders of Class B Common Stock shall have the right to
vote as a separate class on the matters specified in Section
242(b)(2) of the Delaware General Corporation Law, and (ii) the
shares of Class B Common Stock shall be included in determining the
number of shares entitled to be voted on, and the holders thereof,
as such, voting together with the holders of the Common Stock, and
not as a separate class, shall be entitled to one vote per share on
all matters on which the holders of Voting Shares (as defined in
Article SEVENTH) are entitled to vote pursuant to Article SEVENTH
hereof, and on all matters required to be submitted to a vote of the
stockholders under the General Corporation Law of the State of
Delaware except for the election of directors.
2. Conversion Rights.
Shares of Class B Common Stock may, at the election of the
holder thereof in connection with, but only in connection with, a
sale thereof to a purchaser which is not an affiliate (as defined by
the Securities Exchange Act of 1934) of such holder, be converted
into an equal number of fully paid and non-assessable shares of
Common Stock.
<PAGE>
Any such conversion shall be exercised by the surrender by the
holder to the Corporation at its principal office of the certificate
or certificates representing the shares being converted accompanied
by a written notice of conversion stating therein the name or names
in which it wishes the certificate or certificates for Common Stock
to be issued; provided, however, that upon the conversion of the
Class B Common Stock, a certification shall be given that such
conversion is in connection with the sale of such shares to a person
other than an affiliate of such holder. In case such notice shall
specify a name or names other than that of the holder, such notice
shall be accompanied by payment of any and all transfer taxes
payable upon the issue of the Common Stock in such name or names.
As soon as practicable after such surrender of such certificate or
certificates, the Corporation shall issue and deliver at such office
to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled as
aforesaid. The Corporation shall at all times reserve and keep
available out of its authorized and unissued shares of Common Stock,
solely for issuance upon the conversion of shares of the Class B
Common Stock as herein provided, such number of shares of Common
Stock as shall from time to time be issuable upon all of the shares
of Class B Common Stock at the time outstanding. Upon the
conversion of any shares of Class B Common Stock into shares of
Common Stock hereunder the shares of Class B Common Stock so
converted shall thereupon become authorized but unissued shares of
such Class B Common Stock.
B. Conversion of Shares Outstanding on Effective Date of this
Article FOURTH.
Upon the effective date of this Article FOURTH, and without
further action on the part of the Board of Directors or holders of
any outstanding shares of the capital stock of the Corporation, (1)
each share of the currently outstanding Common Stock, par value
$1.00 per share, Class A Participating Preferred Stock, par value
$1.00 per share, Class D Participating Preferred Stock, par value
$1.00 per share and Class E Participating Preferred Stock, par value
$1.00 per share, shall be converted into one hundred eight (108)
fully paid and non-assessable shares of Common Stock, par value
$.001 per share, and (2) each share of the currently outstanding
Class B Participating Preferred Stock, par value $1.00 per share,
shall be converted into one hundred eight (108) fully paid and
non-assessable shares of Class B Common Stock, par value $.001 per
share.
<PAGE>
Exhibit 3(a)(3)
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
WELLMAN, INC.
* * * * * *
Wellman, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Wellman,
Inc. resolutions were duly adopted setting forth a proposed
amendment to the Restated Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling a
meeting of the stockholders of said corporation for consideration
thereof; and that the Board of Directors of Wellman, Inc., by the
unanimous written consent of its members, filed with the minutes of
the board, duly adopted resolutions amending the resolutions
relating to the amendment of the corporation's Restated Certificate
of Incorporation. The amended resolution setting forth the proposed
amendment is as follows:
VOTED: That the first paragraph of Article FOURTH of the
Corporation's Restated Certificate of
Incorporation be amended to read in its entirety
as set forth in Exhibit A attached hereto and
incorporated herein; that such amendment is
hereby declared advisable; and that such
amendment be considered at the 1990 Annual
Meeting of Stockholders.
<PAGE>
SECOND: That thereafter, pursuant to a resolution of its Board
of Directors, the 1990 Annual Meeting of Stockholders of Wellman,
Inc. was duly called and held, upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware,
at which Annual Meeting the necessary number of shares as required
by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, said Wellman, Inc. has caused this
certificate to be signed by J. Russell MacDonald, its Vice
President, and attested by Laura N. Wilkinson, its Assistant
Secretary, this 30th day of May, 1990.
WELLMAN, INC.
By /s/ J. Russell MacDonald
J. Russell MacDonald
Vice President
ATTEST:
By /s/ Laura N. Wilkinson
Laura N. Wilkinson
Assistant Secretary
<PAGE>
EXHIBIT A
Amendment to Restated Certificate of Incorporation
FOURTH. Capital Stock. The total number of shares of stock
which the corporation is authorized to issue is 55,500,000 as
follows: 50,000,000 shares of Common Stock with a par value of
$.001 per share and 5,500,000 shares of Class B Common Stock with a
par value of $.001 per share.
<PAGE>
Exhibit 3(a)(4)
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
WELLMAN, INC.
* * * * * *
Wellman, Inc., a coporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Wellman,
Inc. resolutions were duly adopted setting forth a proposed
amendment to the Restated Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling a
meeting of the stockholders of said corporation for consideration
thereof; and that the Board of Directors of Wellman, Inc., by the
unanimous written consent of its members, filed with the minutes of
the board, duly adopted resolutions amending the resolutions
relating to the amendment of the corporation's Restated Certificate
of Incorporation. The amended resolution setting forth the proposed
amendment is as follows:
VOTED: That the first paragraph of Article FOURTH of the
corporation's Restated Certificate of
Incorporation be amended to read in its entirety
as set forth in Exhibit A attached hereto and
incorporated herein; that such amendment is
hereby declared advisable; and that such
amendment be considered at the 1993 Annual
Meeting of Stockholders.
<PAGE>
SECOND: That thereafter, pursuant to a resolution of its Board
of Directors, the 1993 Annual Meeting of Stockholders of Wellman,
Inc. was duly called and held, upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware,
at which Annual Meeting the necessary numer of shares as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, said Wellman, Inc. has caused this
certificate to be signed by Mark J. Rosenblum, its Vice President,
and attested by Laura N. Wilkinson, its Assistant Secretary, this
16th day of February, 1994.
WELLMAN, INC.
/s/ Mark J. Rosenblum
Mark J. Rosenblum
Vice President
ATTEST:
By/s/ Laura N. Wilkinson
Laura N. Wilkinson
Assistant Secretary
<PAGE>
EXHIBIT A
Amendment to Restated Certificate of Incorporation
FOURTH. Capital Stock. The total number of shares of stock
which the Corporation is authorized to issue is 60,500,000 as
follows: 55,000,000 shares of Common Stock with a par value of
$.001 per share and 5,500,000 shares of Class B Common Stock with a
par value of $.001 per share.
<PAGE>
Exhibit 3(b)
WELLMAN, INC.
RESTATED BY-LAWS
ARTICLE I.
OFFICES
SECTION 1.01. Registered Office. The registered office of the
Corporation in the State of Delaware shall be at Corporation Trust
Center, 1209 Orange Street in the City of Wilmington, County of New
Castle. The name of the resident agent in charge thereof shall be
The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware.
SECTION 1.02. Other Offices. The Corporation may also have an
office in Clark, New Jersey, and at such other place or places either
within or without the State of Delaware as the Board of Directors may
from time to time determine or the business of the Corporation
require.
ARTICLE 2.
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Place of Meetings. All meetings of the
stockholders of the Corporation shall be held at such place either
within or without the State of Delaware as shall be fixed by the
Board of Directors and specified in the respective notices or waivers
of notice of said meetings.
SECTION 2.02. Annual Meetings. (a) The annual meeting of the
stockholders for the election of directors and for the transaction of
such other business as may come before the meeting shall be held at
the principal office of the Corporation in the State of Delaware, or
such place as shall be fixed by the Board of Directors, at ten
o'clock in the forenoon, local time, on the third Tuesday in May in
each year, if not a legal holiday at the place where such meeting is
to be held, and if a legal holiday, then on the next succeeding
business day not a legal holiday at the same hour. (b) In respect of
the annual meeting for any particular year the Board of Directors
may, by resolution fix a different day, time or place (either within
or without the State of Delaware) for the annual meeting. (c) If the
election of directors shall not be held on the day designated herein
or the day fixed by the Board, as the case may be, for any annual
meeting, or on the day of any adjourned session thereof, the Board of
Directors shall cause the election to be held at a special meeting as <PAGE>
soon thereafter as conveniently may be. At such special meet
stockholders may elect the directors and transact other business with
the same force and effect as at an annual meeting duly called and
held.
SECTION 2.03 Special Meetings. A special meeting of the
stockholders for any purpose or purposes may be called at any time by
the President or by order of the Board of Directors and must be
called by the Secretary upon the request in writing of any
stockholder holding of record at least fifteen percent of the
outstanding shares of stock of the Corporation entitled to vote at
such meeting.
SECTION 2.04. Notice of Meetings. (a) Except as otherwise
required by statute, notice of each annual or special meeting of the
stockholders shall be given to each stockholder of record entitled to
vote at such meeting not less than ten days nor more than fifty days
before the day on which the meeting is to be held by delivering
written notice thereof to him personally or by mailing such notice,
postage prepaid, addressed to him at his post-office address last
shown in the records of the Corporation or by transmitting notice
thereof to him at such address by telegraph, cable or any other
available method. Every such notice shall state the time and place
of the meeting and, in case of a special meeting, shall state briefly
the purposes thereof. (b) Notice of any meeting of stockholders
shall not be required to be given to any stockholder who shall attend
such meeting in person or by proxy or who shall in person or by
attorney thereunto authorized, waive such notice in writing or by
telegraph, cable or any other available method either before or after
such meeting. Notice of any adjourned meeting of the stockholders
shall not be required to be given except when expressly required by
law.
SECTION 2.05. Quorum. (a) At each meeting of the stockholders,
except where otherwise provided by statute, the Certificate of
Incorporation or these By-Laws, the holders of record of a majority
of the issued and outstanding shares of a stock of the Corporation
entitled to vote at such meeting, present in person or represented by
proxy, shall constitute a quorum for the transaction of business.
(b) In the absence of a quorum a majority in interest of the
stockholders of the Corporation entitled to vote, present in person
or represented by proxy or, in the absence of all such stockholders,
any officer entitled to preside at, or act as secretary of, such
meeting, shall have the power to adjourn the meeting from time to
time, until stockholders holding the requisite amount of stock shall
be present or represented. At any such adjourned meeting at which a
quorum shall be present any business may be transacted which might
have been transacted at the meeting as originally called.
<PAGE>
SECTION 2.06. Organization. At each meeting of the stockholders
the President, any Vice President, or any other officer designated by
the Board of Directors, shall act as chairman, and the Secretary or
an Assistant Secretary of the Corporation, or in the absence of the
Secretary and all Assistant Secretaries, a person whom the chairman
of such meeting shall appoint shall act as secretary of the meeting
and keep the minutes thereof.
SECTION 2.07. Voting. (a) Except as otherwise provided by law
or by the Certificate of Incorporation or these By-Laws, at every
meeting of the stockholders each stockholder shall be entitled to one
vote, in person or by proxy, for each share of capital stock of the
Corporation registered in his name on the books of the Corporation:
(i) on the date fixed pursuant to Section 9.03 of
these By-Laws as the record date for the determination of
stockholders entitled to vote at such meeting; or
(ii) if no such record date shall have been fixed,
then the record date shall be at the close of business on
the day next preceding the day on which notice of such
meeting is given.
(b) Persons holding stock in a fiduciary capacity shall be
entitled to vote the shares so held. In the case of stock held
jointly by two or more executors, administrators, guardians,
conservators, trustees or other fiduciaries, such fiduciaries may
designate in writing one or more of their number to represent such
stock and vote the shares so held, unless there is a provision to
the contrary in the instrument, if any, defining their powers and
duties. (c) Persons whose stock is pledged shall be entitled to
vote thereon until such stock is transferred on the books of the
Corporation to the pledgee, and thereafter only the pledgee shall be
entitled to vote. (d) Any stockholder entitled to vote may do so in
person or by his proxy appointed by an instrument in writing
subscribed by such stockholder or by his attorney thereunto
authorized, or by a telegram, cable or any other available method
delivered to the secretary of the meeting; provided, however, that
no proxy shall be voted after three years from its date, unless said
proxy provides for a longer period. (e) At all meetings of the
stockholders, all matters (except where other provision is made by
law or by the Certificate of Incorporation or these By-Laws) shall
be decided by the vote of a majority in interest of the stockholders
entitled to vote thereon, present in person or by proxy, at such
meeting, a quorum being present.
<PAGE>
SECTION 2.08. Inspectors. The chairman of the meeting may at
any time appoint two or more inspectors to serve at a meeting of the
stockholders. Such inspectors shall decide upon the qualifications
of voters, accept and count the votes for and against the questions
presented, report the results of such votes, and subscribe and
deliver to the secretary of the meeting a certificate stating the
number of shares of stock issued and outstanding and entitled to
vote thereon and the number of shares voted for and against the
questions presented. The inspectors need not be stockholders of the
Corporation, and any director or officer of the Corporation may be
an inspector on any question other than a vote for or against his
election to any position with the Corporation or on any other
question in which he may be directly interested. Before acting as
herein provided each inspector shall subscribe an oath faithfully to
execute the duties of an inspector with strict impartiality and
according to the best of his ability.
SECTION 2.09. List of Stockholders. (a) It shall be the duty
of the Secretary or other officer of the Corporation who shall have
charge of its stock ledger to prepare and make, or cause to be
prepared and made, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of
each stockholder and the number of shares registered in the name of
stockholder. Such list shall be open during ordinary business hours
to the examination of any stockholder for any purpose germane to the
meeting for a period of at least ten days prior to the election,
either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting or, if
not so specified, at the place where the meeting is to be held. (b)
Such list shall be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected by any
stockholder who is present. (c) Upon the willful neglect or refusal
of the directors to produce such list at any meeting for the
election of directors they shall be ineligible for election to any
office at such meeting. (d) The stock ledger shall be conclusive
evidence as to who are the stockholders entitled to examine the
stock ledger and the list of stockholders required by this Section
2.09 on the books of the Corporation or to vote in person or by
proxy at any meeting of stockholders.
SECTION 2.10. Introduction of Business at a Meeting of
Stockholders. (a) At an annual or special meeting of stockholders,
only such business shall be conducted, and only such proposals shall
be acted upon, as shall have been properly brought before an annual
or special meeting of stockholders. To be properly brought before
an annual or special meeting of stockholders, business must be (i)
in the case of a special meeting, specified in the notice of the <PAGE>
special meeting (or any supplement thereto) given by the officer o
the Corporation calling such meeting or by or at the direction of
the Board, or (ii) in the case of an annual meeting, properly
brought before the meeting by or at the direction of the Board, or
otherwise properly brought before the annual meeting by a
stockholder. For business to be properly brought before an annual
meeting of stockholders by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered
to the Secretary of the Corporation, or mailed to and received at
the principal executive offices of the Corporation by the Secretary,
not less than 30 days prior to the date of the annual meeting;
provided, however, that if less than 40 days' notice or prior public
disclosure of the date of the annual meeting is given or made to
stockholders, notice by the stockholder to be timely must be so
delivered or received not later than the close of business on the
7th day following the earlier of (i) the day on which such notice of
the meeting was mailed, or (ii) the day on which such public
disclosure was made.
(b) A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before an annual
meeting of stockholders (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and
address, as they appear on the Corporation's books, of the
stockholder proposing such business and any other stockholders known
by such stockholder to be supporting such proposal, (iii) the class
and number of shares of the Corporation which are beneficially owned
by such stockholder on the date of such stockholder's notice and by
any other stockholders known by such stockholder to be supporting
such proposal on the date of such stockholder's notice, and (iv) any
material interest of the stockholder in such proposal.
(c) Notwithstanding anything in the By-laws to the contrary, no
business shall be conducted at a meeting of stockholders except in
accordance with the procedures set forth in this Section 2.10. The
chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that the business was not properly brought
before the meeting in accordance with the procedures prescribed by
the By-laws, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the
meeting shall not be transacted.
SECTION 2.11. Notwithstanding Section 2.07(e) of these By-laws,
at all meetings of the stockholders, any matter properly brought
before the meeting by a stockholder in accordance with Section 2.10 <PAGE>
of these By-laws shall be decided by the vote of a majority of
total quorum. For purposes of the foregoing, an abstention from
voting on such a matter or a broker non-vote shall have the same
legal effect as a vote "against" the matter.
ARTICLE 3.
BOARD OF DIRECTORS
SECTION 3.01. General Powers. The business, property and
affairs of the Corporation shall be managed by the Board of
Directors.
SECTION 3.02. Number, Qualifications and Term of Office. (a)
The number of directors of the Corporation which shall constitute
the whole Board of Directors shall be such number, not less than one
(1) nor more than nine (9) as from time to time shall be fixed by
the Board of Directors. (b) A director need not be a stockholder.
Each director shall hold office until the annual meeting of the
stockholders next following his election and until his successor
shall have been elected and shall qualify, or until his death, or
until he shall resign, or until he shall have been removed in the
manner hereinafter provided.
SECTION 3.03. Election of Directors. At each meeting of the
stockholders for the election of directors at which a quorum is
present, the persons, not exceeding the authorized number of
directors, receiving the greatest number of votes of the
stockholders entitled to vote thereon, present in person or by
proxy, shall be the directors. In the case of any increases in the
number of directors, the additional director or directors may be
elected either at the meeting of the Board of Directors or of the
stockholders which each increase is voted, or at any subsequent
annual, regular or special meeting of the Board of Directors or
stockholders.
SECTION 3.04. Quorum and Manner of Acting. (a) Except as
otherwise provided by statute or by the Certificate of
Incorporation, a majority of the directors at the time in office
shall constitute a quorum for the transaction of business at any
meeting and the affirmative action of a majority of the directors
present at any meeting at which a quorum is present shall be
required for the taking of any action by the Board of Directors.
(b) In the event one or more of the directors shall be disqualified
to vote at such meeting, then the required quorum shall be reduced
by one for each such director so disqualified; provided, however,
that in no event shall the quorum as adjusted be less than one third
of the total number of directors. (c) In the absence of a quorum at
any meeting of the Board such meeting need not be held; or a <PAGE>
majority of the directors present thereat or, if no director be
present, the Secretary may adjourn such meeting from time to time
until a quorum shall be present. Notice of any adjourned meeting
need not be given.
SECTION 3.05. Offices, Place of Meeting and Records. The Board
of Directors may hold meetings, have an office or offices and keep
the books and records of the Corporation at such place or places
within or without the State of Delaware as the Board may from time
to time determine. The place of meeting shall be specified or fixed
in the respective notices or waivers of notice thereof, except where
otherwise provided by statute, by the Certificate of Incorporation
or these By-Laws.
SECTION 3.06. Annual Meeting. The Board of Directors shall
meet for the purpose of organization, the election of officers and
the transaction of other business, as soon as practicable following
each annual election of directors. Such meeting shall be called and
held at the place and time specified in the notice or waiver of
notice thereof as in the case of a special meeting of the Board of
Directors.
SECTION 3.07. Regular Meetings. Regular meetings of the Board
of Directors shall be held at such places and at such times as the
Board shall from time to time by resolution determine. If any day
fixed for a regular meeting shall be a legal holiday at the place
where the meeting is to be held, then the meeting which would
otherwise be held on that day shall be held at said place at the
same hour on the next succeeding business day. Notice of regular
meetings need not be given.
SECTION 3.08. Special Meetings; Notice. Special meetings of
the Board of Directors shall be held whenever called by the
President or by any two (2) of the directors. Notice of each such
meeting shall be mailed to each director, addressed to him at his
residence or usual place of business, at least two days before the
day on which the meeting is to be held, or shall be sent to him at
his residence or at such place of business by telegraph, cable or
other available means, or shall be delivered personally or by
telephone, not later than one day before the day on which the
meeting is to be held. Each such notice shall state the time and
place of the meeting but need not state the purposes thereof except
as otherwise herein expressly provided. Notice of any such meeting
need not be given to any director, however if waived by him in
writing or by telegraph, cable or otherwise, whether before or after
such meeting shall be held, or if he shall be present at such
meeting.
SECTION 3.09. Organization. At each meeting of the Board of
Directors the President or, in his absence, a director chosen by a <PAGE>
majority of the directors present, shall act as chairman. The
Secretary or, in his absence an Assistant Secretary or, in the
absence of the Secretary and all Assistant Secretaries, a person
whom the chairman of such meeting shall appoint shall, act as
secretary of such meeting and keep the minutes thereof.
SECTION 3.10. Order of Business. At all meetings of the Board
of Directors business shall be transacted in the order determined by
the Board.
SECTION 3.11. Removal of Directors. Except as otherwise
provided in the Certificate of Incorporation or in these By-Laws,
any director may be removed, either with or without cause, at any
time, by the affirmative vote of the holders of record of a majority
of the issued and outstanding stock entitled to vote for the
election of directors of the Corporation given at a special meeting
of the stockholders called and held for the purpose; and the vacancy
in the Board caused by any such removal may be filled by such
stockholders at such meetings in the manner hereinafter provided or,
if the stockholders at such meeting shall fail to fill such vacancy,
as in these By-Laws provided.
SECTION 3.12. Resignation. Any director of the Corporation may
resign at any time by giving written notice of his resignation to
the Board of Directors, the President, any Vice President or the
Secretary of the Corporation. Such resignation shall take effect at
the date of receipt of such notice or at any later time specified
therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 3.13. Vacancies. Any vacancy in the Board of Directors
caused by death, resignation, removal, disqualification, an increase
in the number of directors, or any other cause may be filled by
majority action of the remaining directors then in office, though
less than a quorum, or by the stockholders of the Corporation at the
next annual meeting or any special meeting called for the purpose,
and each director so elected shall hold office until the next annual
election of directors and until his successor shall be duly elected
and qualified or until his death or until he shall resign or shall
have been removed in the manner herein provided.
SECTION 3.14. Compensation. Each director, in consideration of
his serving as such, shall be entitled to receive from the
Corporation such amount per annum or such fees for attendance at
directors' meetings, or both, as the Board of Directors shall from
time to time determine, together with reimbursement for the
reasonable expenses incurred by him in connection with the
performance of his duties; provided that nothing herein contained
shall be construed to preclude any director from serving the
Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
<PAGE>
ARTICLE 4.
COMMITTEES
SECTION 4.01. Executive Committee. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole
Board, appoint an Executive Committee to consist of not less than
two (2) nor more than five (5) members of the Board of Directors,
including the President, and shall designate one of the members as
its chairman. Notwithstanding any limitation on the size of the
Executive Committee, the Committee may invite members of the Board
to attend one at a time at its meetings. For the purpose of the
meeting he so attends, the invited director shall be entitled to
vote on matters considered at such meeting and shall receive the
Executive Committee fee for such attendance. At anytime one
additional director may be invited to an Executive Committee meeting
in addition to the rotational invitee and in such case such
additional invitee shall also be entitled to vote on matters
considered at such meeting and shall receive the Executive Committee
fee for such attendance.
Each member of the Executive Committee shall hold office, so
long as he shall remain a director, until the first meeting of the
Board of Directors held after the next annual meeting of the Board
of Directors held after the next annual election of directors and
until his successor is duly appointed and qualified. The chairman
of the Executive Committee or, in his absence, a member of the
Committee chosen by a majority of the members present shall preside
at meetings of the Executive Committee and the Secretary or an
Assistant Secretary of the Corporation, or such other person as the
Executive Committee shall from time to time determine, shall act as
secretary of the Executive Committee.
The Board of Directors, by action of the majority of the whole
Board, shall fill vacancies in the Executive Committee.
SECTION 4.02. Powers. During the intervals between the
meetings of the Board of Directors, the Executive Committee shall
have and may exercise all of the powers of the Board of Directors in
all cases in which specific directions shall not have been given by
the Board of Directors.
SECTION 4.03. Procedure; Meetings; Quorum. The Executive
Committee shall fix its own rules of procedure subject to the
approval of the Board of Directors, and shall meet at such times and
at such place or places as may be provided by such rules. At every
meeting of the Executive Committee the presence of a majority of all
the members shall be necessary to constitute a quorum and the
affirmative vote of a majority of the members present shall be
necessary for the adoption by it of any resolution. In the absence <PAGE>
of a quorum at any meeting of the Executive Committee such meet
need not be held, or a majority of the members present thereat or,
if no members be present, the secretary of the meeting may adjourn
such meeting from time to time until a quorum be present.
SECTION 4.04. Compensation. Each member of the Executive
Committee shall be entitled to receive from the Corporation such
fee, if any, as shall be fixed by the Board of Directors, together
with reimbursement for the reasonable expenses incurred by him in
connection with the performance of his duties.
SECTION 4.05. Other Board Committees. The Board of Directors
may from time to time, by resolution passed by a majority of the
whole Board, designate one or more committees in addition to the
Executive Committee, each committee to consist of two or more of the
directors of the Corporation. Any such committee, 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.
A majority of all the members of any such committee may
determine its action and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide. The Board of
Directors shall have power to change the members of any committee at
any time, to fill vacancies and to discharge any such committee,
either with or without cause, at any time.
SECTION 4.06. Alternates. The President may designate one or
more directors as alternate members of any committee who may act in
the place and stead of members who temporarily cannot attend any
such meeting.
SECTION 4.07. Additional Committees. The Board of Directors
may from time to time create such additional committees of
directors, officers, employees or other persons designated by it (or
any combination of such persons) for the purpose of advising the
Board, the Executive Committee and the officers and employees of the
Corporation in all such matters as the Board shall deem advisable
and with such functions and duties as the Board shall by resolutions
prescribe.
A majority of all the members of any such committee may
determine its action and fix the time and place of its meetings,
unless the Board of Directors shall otherwise provide. The Board of
Directors shall have the power to change the members of any
committee at any time, to fill vacancies and to discharge any such
committee, either with or without cause, at any time.
<PAGE>
ARTICLE 5.
ACTION BY CONSENT
SECTION 5.01. Consent by Directors. Any action required or
permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if prior to
such action a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and such written
consent is filed with the minutes of the proceedings of the Board or
such committee.
SECTION 5.02. Consent by Stockholders. Any action required or
permitted to be taken at any meeting of the stock holders may be
taken without a meeting upon the written consent of the holders of
shares of stock entitled to vote who hold the number of shares which
in the aggregate are at least equal to the percentage of the total
vote required by statute or the Certificate of Incorporation or
these By-Laws for the proposed corporate action.
ARTICLE 6.
OFFICERS
SECTION 6.01. Number. The principal officers of the
Corporation shall be a President, Chief Executive Officer, Chief
Financial Officer, one or more Vice Presidents (the number thereof
and variations in title to be determined by the Board of Directors),
a Treasurer and a Secretary. In addition, there may be such other
or subordinate officers, agents and employees as may be appointed in
accordance with the provisions of Section 6.03. Any two or more
officers, except those of President and Secretary, may be held by
the same person.
SECTION 6.02. Election, Qualifications and Term of Office.
Each officer of the Corporation, except such officers as may be
appointed in accordance with the provisions of Section 6.03, shall
be elected annually by the Board of Directors and shall hold office
until his successor shall have been duly elected and qualified, or
until his death, or until he shall have resigned or shall have been
removed in the manner herein provided. The Chairman of the Board
and the President shall be and remain directors.
SECTION 6.03. Other Officers. The Corporation may have such
other officers, agents, and employees as the Board of Directors may
deem necessary, including a Controller, one or more Assistant
Controllers, one or more Assistant Treasurers and one or more
Assistant Secretaries, each of whom shall hold office for such
period, have such authority, and perform such duties as the Board of
Directors or the President may from time to time determine. The <PAGE>
Board of Directors may delegate to any principal officer the power
to appoint or remove any such subordinate officers, agents, or
employees.
SECTION 6.04. Removal. Any officer may be removed, either with
or without cause, by the vote of a majority of the whole Board of
Directors or, except in case of any officer elected by the Board of
Directors, by any committee of officers upon whom the power of
removal may be conferred by the Board of Directors.
SECTION 6.05. Resignation. Any officer may resign at any time
by giving written notice to the Board of Directors or the
President. Any such resignation shall take effect at the date of
receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 6.06. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause
shall be filled for the unexpired portion of the term in the manner
prescribed in these By-Laws for regular election or appointment to
such office.
SECTION 6.07. Chief Executive Officer. The Chief Executive
Officer shall preside at all meetings of the Board of Directors.
Subject to definition by the Board of Directors, he shall have
general executive powers and such specific powers and duties as from
time to time may be conferred upon or assigned to him by the Board
of Directors.
SECTION 6.08. President. Subject to the powers of the Chief
Executive Officer, the President shall have general executive powers
and shall perform such duties as from time to time may be conferred
upon or assigned to him by the Board of Directors or the Chief
Executive Officer. In the absence of the Chief Executive Officer,
the President shall preside at meetings of the Board of Directors.
SECTION 6.09. Vice President. Each Vice President shall have
such powers and perform such duties as the Board of Directors or the
Executive Committee may from time to time prescribe or as shall be
assigned to him by the President.
SECTION 6.10. Chief Financial Officer. The Chief Financial
Officer shall have charge and custody of, and be responsible for,
all funds and securities of the Corporation, and shall deposit all
such funds to the credit of the Corporation in such banks, trust
companies or other depositories as shall be selected in accordance
with the provisions of these By-Laws; he shall disburse the funds of
the Corporation as may be ordered by the Board of Directors or the
Executive Committee, making proper vouchers for such disbursements,
and shall render to the Board of Directors or the stockholders, <PAGE>
whenever the Board may require him so to do, a statement of all his
transactions as Chief Financial Officer or the financial condition
of the Corporation; and, in general, he shall perform all the duties
as from time to time may be assigned to him by the Board of
Directors, any committee of the Board designated by it so to act or
the President.
SECTION 6.11. Secretary. The Secretary shall record or cause
to be recorded in books provided for the purpose the minutes of the
meetings of the stockholders, the Board of Directors, and all
committees of which a secretary shall not have been appointed; shall
see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law; shall be
custodian of all corporate records (other than financial) and of the
seal of the Corporation and see that the seal is affixed to all
documents the execution of which on behalf of the Corporation under
its seal is duly authorized in accordance with the provisions of
these By-Laws; shall keep, or cause to be kept, the list of
stockholders as required by Section 2.09, which include the
post-office addresses of the stockholders and the number of shares
held by them, respectively, and shall make or cause to be made, all
proper changes therein, shall see that the books, reports,
statements, certificates and all other documents and records
required by law are properly kept and filed; and, in general, shall
perform all duties incident to the office of Secretary and such
other duties as may from time to time be assigned to him by the
Board of Directors, the Executive Committee or the President.
SECTION 6.12. Treasurer. The Treasurer shall have such powers
and perform such duties as the Board of Directors or the Executive
Committee may from time to time prescribe or shall be assigned to
him by the President or Chief Financial Officer.
SECTION 6. 13. Salaries. The salaries of the principal
officers of the Corporation shall be fixed from time to time by the
Board of Directors or a special committee thereof, and none of such
officers shall be prevented from receiving a salary by reason of the
fact that he is a director of the Corporation.
ARTICLE 7.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) Right to Indemnification. Each person who was or is made a
party, or is threatened to be made a party to, or is involved in any
action, suit or proceeding, whether criminal, administrative or
investigative by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer of the Corporation or is or was serving at the request of <PAGE>
the Corporation as a director, officer, employee or agent of anot
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such
amendment) against all expenses, liability and loss (including
attorneys fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith; provided, however,
that the Corporation shall indemnify any such person seeking
indemnity in connection with any action, suit or proceeding (or part
thereof) initiated by such person only if such action, suit or
proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. Such right shall be a contract right
and shall include the right to be paid by the Corporation expenses
incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, the payment of such expenses
incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service
was or is rendered by such person while a director or officer.
including, without limitation, service to an employee benefit plan)
in advance of the final disposition of such proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or
on behalf of such director or officer, to repay all amounts so
advanced if it should be determined ultimately that such director or
officer is not entitled to be indemnified under this Section or
otherwise.
(b) Right of Claimant to Bring Suit. If a claim under
paragraph (a) is not paid in full by the Corporation within ninety
days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce
a claim for expenses incurred in defending any proceeding in advance
of its final disposition where the required undertaking has been
tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to <PAGE>
the commencement of such action that indemnification of the cla
is proper in the circumstances because he or she has met the
applicable standards of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant had not met such applicable
standards of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standards of
conduct.
(c) Non-Exclusivity of Rights. The rights conferred on any
person by paragraphs (a) and (b) shall not be exclusive of any other
right which such person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or
otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any such director, officer, employee
or agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
ARTICLE 8.
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 8.01. Execution of Contracts. Unless the Board of
Directors or the Executive Committee shall otherwise determine, the
President, any Vice President or the Treasurer, and the Secretary or
any Assistant Secretary, may enter into any contract or execute any
contract or other instrument, the execution of which is not
otherwise specifically provided for, in the name and on behalf of
the Corporation. The Board of Directors, or any committee
designated thereby with power so to act, except as otherwise
provided in these By-Laws, may authorize any other or additional
officer or officers or agent or agents of the Corporation, and such
authority may be general or confined to specific instances. Unless
authorized so to do by these By-Laws or by the Board of Directors or
by any such committee, no officer, agent or employee shall have any
power or authority to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
SECTION 8.02. Loans. No loan shall be contracted on behalf of
the Corporation, and no evidence of indebtedness shall be issued, <PAGE>
endorsed or accepted in its name, unless authorized by the Board
Directors or Executive Committee or other committee designated by
the Board to act. Such authority may be general or confined to
specific instances. When so authorized, the officer or officers
thereunto authorized may effect loans and advances at any time for
the Corporation from any bank, trust company or other institution,
or from any firm, corporation or individual, and for such loans and
advances may make, execute and deliver promissory notes or other
evidences of indebtedness of the Corporation, and, when authorized
as aforesaid, as security for the payment of any and all loans,
advances, indebtedness and liabilities of the Corporation, may
mortgage, pledge, hypothecate or transfer any real or personal
property at any time owned or held by the Corporation, and to that
end execute instruments of mortgage or pledge or otherwise transfer
such property.
SECTION 8.03. Checks, Drafts, etc. All checks, drafts, bills
of exchange or other orders for the payment of money, obligations,
notes, or other evidence of indebtedness, bills of lading, warehouse
receipts and insurance certificates of the Corporation, shall be
signed or endorsed by such officer or officers, agent or agents,
attorney or attorneys, employee or employees, of the Corporation as
shall from time to time be determined by resolution of the Board of
Directors or Executive Committee or other committee designated by
the Board so to act.
SECTION 8.04. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the
credit of the Corporation in such banks, trust companies or other
depositaries as the Board of Directors or Executive Committee or
other committee designated by the Board so to act may from time to
time designate, or as may be designated by any officer or officers
or agent or agents of the Corporation to whom such power may be
delegated by the Board of Directors or Executive Committee or other
committee designated by the Board so to act and, for the purpose of
such deposit and for the purposes of collection for the account of
the Corporation may be endorsed, assigned and delivered by any
officer, agent or employee of the Corporation or in such other
manner as may from time to time be designated or determined by
resolution of the Board of Directors or Executive Committee or other
committee designated by the Board so to act.
SECTION 8.05. Proxies in Respect of Securities of Other
Corporations. Unless otherwise provided by resolution adopted by
the Board of Directors or the Executive Committee or other committee
so designated to act by the Board, the President or any Vice
President may from time to time appoint an attorney or attorneys or
agent or agents of the Corporation, in the name and on behalf of the
Corporation, to cast the votes which the Corporation may be entitled
to cast as the holder of stock or other securities in any other <PAGE>
corporation, association or trust any of whose stock or other
securities may be held by the Corporation, at meetings of the
holders of the stock or other securities of such other corporation,
association or trust, or to consent in writing, in the name of the
Corporation as such holder, to any action by such other corporation,
association or trust, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such
consent, and may execute or cause to be executed in the name and on
behalf of the Corporation and under its corporate seal, or
otherwise, all such written proxies or other instruments as he may
deem necessary or proper in the premises.
ARTICLE 9.
BOOKS AND RECORDS
SECTION 9.01. Place. The books and records of the Corporation
may be kept at such places within or without the State of Delaware
as the Board of Directors may from time to time determine. The
stock record books and the blank stock certificate books shall be
kept by the Secretary or by any other officer or agent designated by
the Board of Directors.
SECTION 9.02. Addresses of Stockholders. Each stockholder
shall furnish to the Secretary of the Corporation or to the transfer
agent of the Corporation an address at which notices of meetings and
all other corporate notices may be served upon or mailed to him, and
if any stockholder shall fail to designate such address, corporate
notices may be served upon him by mail, postage prepaid, to him at
his post-office address last known to the Secretary or to the
transfer agent of the Corporation or by transmitting a notice
thereof to him at such address by telegraph, cable or other
available method.
SECTION 9.03. Record Dates. The Board of Directors may fix in
advance a date, not exceeding fifty days preceding the date of any
meeting of stockholders, or the date for the payment of any
dividend, or the date for the allotment of any rights, or the date
when any change or conversion or exchange of capital stock of the
Corporation shall go into effect, or a date in connection with
obtaining such consent, as a record date for the determination of
the stockholders entitled to notice of, and to vote at, any such
meeting or any adjournment thereof, or entitled to receive payment
of any such dividend or to any such allotment of rights, or to
exercise the rights in respect of any change, conversion or exchange
of capital stock of the Corporation, or to give such consent, and in
each such case such stockholders and only such stockholders as shall
be stockholders of record on the date so fixed shall be entitled to
notice of, or to vote at, such meeting and any adjournment thereof,
or to receive payment of such dividend, or to receive such allotment
of rights, or to exercise such rights or to give such consent, as <PAGE>
the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as
aforesaid.
SECTION 9.04. Audit of Books and Accounts. The books and
accounts of the Corporation shall be audited at least once in each
fiscal year by certified public accountants of good standing
selected by the Board of Directors.
ARTICLE 10.
SHARES AND THEIR TRANSFER
SECTION 10.01. Certificates of Stock. Every owner of stock of
the Corporation shall be entitled to have a certificate certifying
the number of shares owned by him in the Corporation and designating
the class of stock to which such shares belong, which shall
otherwise be in such form as the Board of Directors shall
prescribe. Every such certificate shall be signed by the President
or a Vice President, and the Treasurer or any Assistant Treasurer or
the Secretary or any Assistant Secretary of the Corporation;
provided, however, that where such certificate is signed or
countersigned by a transfer agent or registrar the signatures of
such officers of the Corporation and the seal of the Corporation may
be in facsimile form. In case any officer or officers who shall
have signed, or whose facsimile signature or signatures shall have
been used on, any such certificate or certificates shall cease to be
such officer or officers of the Corporation, whether because of
death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be issued and delivered
by the Corporation as though the person or persons who signed such
certificate or whose facsimile signature or signatures shall have
been used thereof had not ceased to be such officer or officers of
the Corporation.
SECTION 10.02. Record. A record shall be kept of the name of
the person, firm or corporation owning the stock represented by each
certificate for stock of the Corporation issued, the number of
shares represented by each such certificate, and the date thereof,
and, in case of cancellation, the date of cancellation. The person
in whose name shares of stock stand on the books of the Corporation
shall be deemed the owner thereof for all purposes as regards the
Corporation.
SECTION 10.03. Transfer of Stock. Transfers of shares of the
stock of the Corporation shall be made only on the books of the
Corporation by the registered holder thereof, or by his attorney
thereunto authorized, and on the surrender of the certificate or
certificates for such shares properly endorsed.
<PAGE>
SECTION 10.04. Transfer Agent and Registrar; Regulations. The
Corporation shall, if and whenever the Board of Directors or
Executive Committee shall so determine, maintain one or more
transfer offices or agencies, each in charge of a transfer agent
designated by the Board of Directors, where the shares of the
capital stock of the Corporation shall be directly transferable, and
also if and whenever the Board of Directors shall so determine,
maintain one or more by the Board of Directors, where such shares of
stock shall be registered. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent
with these By-Laws, concerning the issue, transfer and registration
of certificates for shares of the capital stock of the Corporation.
SECTION 10.05. Lost, Destroyed or Mutilated Certificates. In
case of the alleged loss or destruction or the mutilation of a
certificate representing capital stock of the Corporation, a new
certificate may be issued in place thereof, in the manner and upon
such terms as the Board of Directors may prescribe.
ARTICLE 11.
SEAL
The Board of Directors shall provide a corporate seal, which
shall be in the form of a circle and shall bear the name of the
Corporation and the words and figures "Incorporated 1985, Delaware.
ARTICLE 12.
FISCAL YEAR
The fiscal year of the Corporation shall commence on the first
day of January, except as otherwise provided from time to time by
the Board of Directors.
ARTICLE 13.
WAIVER OF NOTICE
Whenever any notice whatever is required to be given by statute,
these By-Laws or the Certificate of Incorporation, a waiver thereof
in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed
equivalent thereto.
<PAGE>
ARTICLE 14.
AMENDMENTS
These By-Laws may be altered, amended or repealed, in whole or
in part, and new By-Laws may be adopted, in whole or in part, by the
affirmative vote of a majority of the whole Board of Directors given
at any meeting. No amendment may be made unless the By-Laws, as
amended, is consistent with the requirements of law and of the
Certificate of Incorporation.
Exhibit 4(y)
COMMERCIAL PURPOSE LOAN NOTE
$15,000,000.00 August 11, 1993
FOR VALUE RECEIVED, the undersigned (each jointly and severally if
more than one person and hereinafter referred to as "Debtor")
promises to pay to the order of CHEMICAL BANK NEW JERSEY, NATIONAL
ASSOCIATION (hereinafter "Bank"), at any of its banking offices the
Principal sum of the aggregate unpaid principal amount of all
advances made hereunder up to Fifteen Million ($15,000,000.00)
Dollars to be paid as follows:
Principal payable not more than 90 days after the date of
each advance made hereunder. Interest from the date hereof
shall accrue on the unpaid Principal balance hereof at a
fixed rate of interest as quoted and shall be payable upon
maturity. This line of credit shall have a final maturity
date of June 30, 1994, at which time all then outstanding
principal, interest and any other sums which may be due and
owing shall be payable in full.
This is a Master Note. Under and subject to the terms and
provisions of this Note, Bank will consider Debtor's credit requests
from time to time, up to the maximum amount of the Note. Credit
availability, is, in addition, subject to the Bank's receipt and
continuing satisfaction with current financial and other
information, which current information will be furnished to the Bank
from time to time as it may reasonably request or require. Bank
shall make appropriate entries in its accounting records of charges
payable hereunder and all payments made by Debtor on account of such
advances and such charges; such records shall be conclusive absent
manifest error.
DISBURSEMENT OF PROCEEDS - Each Debtor hereby represents and
warrants to Bank that the principal of this Note will be used solely
for business, commercial or agricultural purposes and agrees that
any disbursement of the Principal of this Note, or any portion
thereof, to any one or more Debtors, shall be conclusively deemed to
constitute disbursement of such Principal to and for the benefit of
all Debtors.
PREPAYMENTS - Upon at least three (3) business days' prior written
notice to Bank, Debtor may prepay the Loan in whole or in part at
any time, in multiples of $100,000, accompanied by the interest <PAGE>
accrued on the amount prepaid through the date of the prepayment,
however, Debtor shall also directly reimburse Bank at the time of
any such prepayment for any loss incurred or to be incurred by Bank
in the redeployment of the funds associated with the Loan.
Prepayments may be subject to a rate indemnification fee which may
be calculated as follows: The difference between the Loan rate and
the current yield on a U.S. Treasury obligation with a maturity
approximately equal to the remaining fixed rate period, times the
total amount of principal prepaid on the Loan, times the remaining
Interest Period (360 day basis), discounted to present value.
DEFINITIONS - All amounts due under this Note, including any
renewals, extensions and/or modifications thereof, together with all
other existing and future liabilities and obligations of the Debtor
or any one of them, whether absolute or contingent, of any nature
whatsoever and out of whatever transactions arising are hereinafter
collectively referred to as the "Liabilities". "Obligor", as used
herein, shall mean Debtor, and all endorsers, sureties, and
guarantors.
EVENTS OF DEFAULT - Each of the following shall be an "Event of
Default" hereunder: (1) the nonpayment when due of any amount
payable under this Note, or of any amount when due under or on any
of the liabilities (if such payment default exceeds $2,500,000.00)
or if there is a payment default under the Credit Agreement dated
December 17, 1990, as amended, between Debtor and Fleet Bank, as
Agent, and other participating financial institutions; (2) the
failure of any Obligor to observe or perform any agreement of any
nature whatsoever with Bank; (3) if any Obligor becomes insolvent or
makes an assignment for the benefit of creditors, or if any petition
is filed by or against any Obligor under any provision of any state
or federal law or statute alleging that such Obligor is insolvent or
unable to pay debts as they mature or under any provision of the
United States Bankruptcy Code; (4) the entry of any judgment in
excess of $2,500,000 against any Obligor which remains unsatisfied
for fifteen (15) days; (5) the issuing of any attachment, levy or
garnishment against any property of any Obligor not discharged or
bonded within 30 days; (6) the occurrence of any substantial change
in the financial condition of any Obligor which, in the sole,
reasonable judgment of Bank, is materially adverse; (7) the
dissolution, merger, consolidation or reorganization of any Obligor
which is a corporation or partnership when the Obligor is not the
surviving party; (8) the death, incarceration or adjudication of
legal incompetence of any Obligor who is a natural person; (9) if
any information or signature furnished to Bank by any Obligor at any
time in connection with any of the Liabilities to the Bank, or in
connection with any guaranty or surety agreement applicable to any
of the liabilities to the Bank, is false or incorrect; or (10) the <PAGE>
failure of any Obligor to timely furnish to Bank such financial
other information as Bank may reasonably request or require.
BANK'S RIGHTS UPON DEFAULT - Notwithstanding anything to the
contrary contained herein or elsewhere, or the fact that Debtor may
be required to make Principal and/or interest payments from time to
time, in addition, upon the occurrence of any Event of Default, Bank
may:
(1) accelerate the maturity of this Note and demand immediate
payment of all outstanding Principal and accrued interest.
(2) make a late charge of not less than $10.00 nor more than 1%
of any amount due and unpaid for a period of 10 days or more.
(3) upon five (5) days written notice to Debtor, begin accruing
interest, in addition to any interest provided for above, at a rate
not to exceed one percent (1%) per annum on the unpaid Principal
balance, provided, however, that no interest shall accrue hereunder
in excess of the maximum amount of interest then allowed by law.
Debtor agrees to pay such accrued interest upon demand. The default
rate set forth herein is strictly a measure of liquidated damages to
Bank based upon Bank's excess costs involved in the redeployment of
funds and is not meant to be construed as a penalty.
MISCELLANEOUS - Debtor agrees to timely furnish to Bank such
publically available financial and other information as it may
reasonably request or require. Debtor hereby waives protest, notice
of protest, presentment, dishonor, notice of dishonor, demand, and
notice of demand. If this Note is placed in the hands of an
attorney for collection, Debtor shall reimburse Bank for any and all
reasonable attorneys fees whether or not suit be brought, together
with all actual costs and expenses of any legal proceedings.
Interest shall be calculated hereunder for the actual number of days
that the Principal is outstanding, based on a year of three hundred
sixty (360) days, unless otherwise specified. If this Note bears
interest at a rate based on the Prime Rate charged by Bank from time
to time, changes in the rate of interest hereon shall become
effective on the days on which Bank announces changes in its Prime
Rate. Bank's Prime Rate of interest shall mean that rate of
interest (which is not necessarily the lowest rate of interest
charged by the Bank) so designated and established by Bank as that
rate may change from time to time. The rights and privileges of
Bank under this Note shall inure to the benefit of its successors
and assigns. All representations, warranties and agreements of
Obligor made in connection with this Note shall bind Obligor's
personal representatives, heirs, successors and assigns. If any
provision of this Note shall for any reason be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect <PAGE>
any other provision hereof, but this Note shall be construed as
such invalid or unenforceable provision had never been contained
herein. The waiver of any Event of Default or the failure of Bank
to exercise any right or remedy to which it may be entitled shall
not be deemed a waiver of any subsequent Event of Default or of
Bank's right to exercise that or any other right or remedy to which
Bank is entitled. The undersigned hereby authorizes Bank to
disclose financial or other publicly available information about the
undersigned to any present, future or prospective participant, or
successor in interest in any loan, advance or other financial
accommodation to Borrower from Bank, or any regulatory body or
agency having jurisdiction over Bank. This Note has been delivered
to and accepted by Bank in and shall be governed by the laws of the
State of New Jersey. The parties agree to the jurisdiction of the
federal and state courts located in New Jersey in connection with
any matter arising hereunder, including the collection and
enforcement hereof. Debtor waives trial by jury. The Additional
Provisions, if any, below, are hereby made a part hereof and are
incorporated herein.
Debtor has duly executed this Note the day and year written on the
first page hereof, and has hereunto set Debtor's hand and seal.
WELLMAN, INC. (co-borrower)
By: /s/ Audrey Goodman
Assistant Treasurer
Attest: /s/ Debra L. Geyser
FIBER INDUSTRIES, INC. (co-borrower)
By: /s/ Audrey Goodman
Assistant Treasurer
Attest: /s/ Debra L. Geyser
<PAGE>
NEW ENGLAND CR INC. (co-borrower)
By: /s/ Audrey Goodman
Assistant Treasurer
Attest: /s/ Debra L. Geyser
PRINCE, INC. (co-borrower)
By: /s/ Audrey Goodman
Assistant Treasurer
Attest: /s/ Debra L. Geyser
<PAGE>
Exhibit 4(z)
PROMISSORY NOTE
(Demand Line of Credit)
$5,000,000.00 June 18, 1993
111 Westminster St.
Providence, RI
The Undersigned promise(s) to pay to the order of Fleet National
Bank, a national banking association (the "Bank"), at its office at
the above address, or at such other place as the Bank may specify in
writing to the Undersigned, principal in the amount of Five Million
Dollars ($5,000,000) or, if less, the aggregate unpaid principal
amount due hereunder as shown on records of the Bank, and interest
at the rate specified below. Until a default occurs, interest shall
be payable commencing June 30, 1993 and continuing monthly
thereafter. Interest shall be calculated on the actual basis of a
year consisting of 360 days, at the rate of Zero percent (0%) per
annum above the Bank's Prime rate and shall change with such change
in the Prime Rate. The Prime Rate is the rate of interest
designated from time to time by the Bank as being its prime rate of
interest.
If a competent judicial or governmental authority should
determine that the rate of interest under this Note exceeds a
maximum rate permitted by applicable law or regulation, each payment
of interest that exceeds such maximum rate shall be deemed a
voluntary prepayment of principal.
The Undersigned and every other party endorsing or guaranteeing
this Note (collectively, the "Obligors") agree that the Bank shall
have a right of set-off with respect to all deposits or other sums
credited by or due from the Bank to the Obligors. In the event of
any default under this Note, regardless of the adequacy of
collateral, without any demand or notice, except as required by
applicable law, the Bank may apply or set-off such deposits or other
sums and may sell or dispose of any or all of the securities or
other property held by the Bank and may exercise any and all of the
rights it may have under the Rhode Island Uniform Commercial Code,
as in effect from time to time. The rights of the Bank under this
Note are in addition to, and not exclusive of, any other rights it
may have with respect to such deposits, sums, securities or other
property under other agreements or applicable principles of law. The
Bank shall have no duty to take steps to preserve rights against
prior parties as to such securities or other property.
<PAGE>
The Obligors further agree that they shall pay on demand all
expenses of the Bank, including reasonable attorneys' fees, incurred
in the collection or enforcement of its rights under this Note or
any security for it; to the fullest extent permissible, they waive
presentment, demand for payment, protest and notice of nonpayment,
and all other demands or notices otherwise required by law in
connection with the delivery, acceptance, performance, default or
enforcement of this Note; they consent to any extension or
postponement of the time of payment or any other indulgence, any
amendment or modification of any agreement, any substitution,
exchange or release of collateral or to the additional release of
any other party or person primarily or secondarily liable hereunder;
no consent or waiver by the Bank with respect to any actions or
failure to act which, without consent, would constitute a breach of
any provision of this Note, shall be valid and binding unless in
writing and signed by the Bank; and no delay or omission of the Bank
in exercising any right or remedy hereunder shall constitute a
waiver of any such right or remedy.
This note is subject to a letter regarding fixed interest rate
elections of even date herewith.
An event of default shall have occurred under this Note if: (a)
An Event of Default under the Loan Agreement (as amended from time
to time) between Wellman, Inc. and the Bank (as agent) dated
December 7, 1990 (together with any of its successor agreements)
occurs, (b) The Loan Agreement ceases to be in effect and there is
no other credit agreement in place between the Bank and Wellman, and
(c) Interest on this note is not paid within ten days of its due
date. When an event of default occurs, this Note and all interest
accrued hereon shall become due and payable forthwith and the
payment and acceptance of any sum on account of this Note, shall not
be considered a waiver of such right of election. Notwithstanding
this, the Bank reserves the right to cancel any unused portion of
this line at any time without notice.
The Obligors agree that this Note shall be governed by the laws
of the State of Rhode Island. They consent to jurisdiction and
service of process, which may be effected by certified mail, in the
courts of the State of Rhode Island and in the courts of the United
States having jurisdiction thereof.
WELLMAN, INC.
Witness: /s/ Audrey Goodman
Assistant Treasurer
/s/ Anne Barra
<PAGE>
June 30, 1994
Wellman, Inc.
1040 Broad Street
Shrewsbury, NJ 07702
Attn: Clifford J. Christenson
Chief Financial Officer
Re: $5,000,000 Demand Line of Credit Note of even date herewith
payable to the order of Fleet National Bank (the "Note")
Gentlemen:
This letter sets forth the basis on which Fleet National Bank
(the "Bank") is willing to offer Wellman, Inc. (the "Borrower") a
fixed rate on the outstanding principal amount of the Note.
From time to time, Borrower may request (as set forth within)
the Bank to quote a fixed interest rate for a specified term on all
or the portion specified in the Borrower's request of the
outstanding principal amount under the Note. The Bank, in its sole
discretion, may quote a fixed rate to the Borrower and a term for
which the Bank is willing to make such fixed rate available to the
Borrower. The Borrower shall accept or reject such offer on the
date such offer is received from the Bank by telephonic acceptance
or rejection (followed immediately if accepted by written or
telecopied acceptance) specifying the fixed interest rate, the term
and the amount of principal to be subject to such fixed rate. Any
such accepted fixed rate is hereinafter called the "Fixed Rate" and
any such accepted fixed rate term is hereinafter called the "Fixed
Rate Term". Once a Fixed Rate becomes applicable, such Fixed Rate
shall remain in effect for the corresponding Fixed Rate Term and <PAGE>
shall apply only to the amount of principal offered by the Bank an
accepted by the Borrower. The Note bears interest at the Bank's
prime rate per annum (the "Floating Rate"). Any outstanding amount
of principal as to which a Fixed Rate is not in effect in accordance
herewith shall bear interest at the Floating Rate. The minimum
principal amount subject to a Fixed Rate election shall be $250,000;
provided however, that there shall be no more than six (6) Fixed
Rate elections in effect at any time.
On the last day of any Fixed Rate Term then in effect, the
Borrower may contact the undersigned (or such other officer of the
Bank as the undersigned may designate) by telephone, at which time
the Bank shall inform the Borrower of any Fixed Rate and Fixed Rate
Term and amount of principal as to which same may be applicable,
which the Bank is then prepared to offer to the Borrower and the
Borrower shall immediately elect whether or not to accept same as
set forth above. If, upon the expiration date of any Fixed Rate
Term, a new Fixed Rate and Fixed Rate Term are not agreed upon as to
the outstanding principal amount of the Note which was subject to
the Fixed Rate in question, and provided there is outstanding
principal, the Floating Rate shall thereupon and thereafter be
deemed the applicable interest rate payable under the Note as to
such outstanding principal amount, until such later date as a Fixed
Rate and Fixed Rate Term are agreed upon as set forth above.
Upon the Borrower making any election to accept a Fixed Rate for
a Fixed Rate Term, the Borrower shall that day mail or telecopy to
the Bank a letter verifying (i) the first day of the Fixed Rate Term
agreed upon, (ii) the Fixed Rate agreed upon, (iii) the Fixed Rate
Term agreed upon and (iv) the outstanding amount of principal to be
subject to said Fixed Rate and Fixed Rate Term. The Bank shall
incur no liability to the Borrower in acting upon any telephone
instructions which the recipient thereof believes in good faith to
have been given by any person whom the Borrower may designate to the
Bank, in writing, as being so authorized. In addition, the Bank
shall be entitled to rely upon any such verification letter signed
by Clifford J. Christenson, Audrey Goodman, or any such other
authorized person.
The Borrower shall be permitted to prepay without premium or
penalty in whole or in part any outstanding principal amount of the
Note which is subject to a Floating Rate at any time upon written
notice to the Bank.
<PAGE>
PREPAYMENT - FIXED RATE LOAN PROCEEDS
Notwithstanding anything to the contrary contained in the Note
or in any other agreement executed in connection therewith, the
Borrower shall be permitted to prepay outstanding principal under
the Note subject to a Fixed Rate only in accordance with the
following:
(a) Voluntary Prepayment. The Borrower shall be permitted
to voluntarily prepay, in whole or in part, any such
principal amount subject to a Fixed Rate at any time,
subject to giving the Bank not less than two (2) days
prior written notice thereof, and, subject to the
Borrower's payment to the Bank of a prepayment premium
in an amount computed as provided below. In the event
of any such voluntary prepayment, the date upon which
such computation of said prepayment premium shall be
based (the "Determination Date") shall be the date
upon which such prepayment is made.
(b) Involuntary Prepayment. If the maturity of the Note
shall be accelerated, by reason of its cross-default
with Wellman's existing Loan Agreement (as defined in
the Note) or the occurrence of any event of default
under the Note, then upon the Bank's demand made at
any time thereafter the Borrower shall pay to the Bank
a prepayment premium in an amount computed as provided
below. In such event the Determination Date upon
which the computation of said prepayment premium shall
be based shall be such date as may be selected by the
Bank, in its sole discretion, within the period
commencing with the date of such acceleration of the
Note and ending on the last day of the applicable
Fixed Rate Term. In the event of such acceleration of
the Note, an involuntary prepayment of all such
principal amounts subject to a Fixed Rate shall be
deemed to have occurred upon the Determination Date
selected by the Bank, regardless of whether funds are
actually received by the Bank.
(c) Prepayment Premium. The prepayment premium to be paid
by the Borrower shall be computed as follows:
The latest published rate preceding the Determination
Date for United States Treasury Notes or Bills (Bills
on a discounted basis shall be converted to a bond
equivalent) as published weekly in the Federal Reserve
Statistical Release with a maturity date closest to
the expiration date of the applicable Fixed Rate Term
shall be subtracted from the applicable Fixed Rate.
If the result is a positive number, then the resulting
percentage shall be multiplied by the amount of the <PAGE>
principal balance being prepaid. The resulting amou
will be divided by 360 and multiplied by the number of
days remaining between the Determination Date and the
expiration date of the applicable Fixed Rate Term (the
"Unexpired Term"). Said amount shall be reduced to
present value calculated by using the above referenced
United States Treasury Note or Bill rate and assuming
that said amount will be paid in equal monthly
installments over the Unexpired Term, commencing 30
days after the Determination Date. The resulting
amount shall be the prepayment premium due to the Bank.
In the event that more than one Fixed Rate or Fixed Rate Term is
applicable to outstanding principal under the Note, then separate
computations shall be made of the prepayment premium applicable to
each Fixed Rate and Fixed Rate Term and the prepayment premium
payable to the Borrower to the Bank shall be the sum of the amounts
so determined.
Interest on any loans that bear a Fixed Rate shall be due at
maturity of the applicable period, while interest on Floating Rate
loans shall be due monthly.
If the above meets with the Borrower's approval, please so
signify in the space provided below on the enclosed copy of this
letter.
Very truly yours,
FLEET NATIONAL BANK
By: /s/ William Fed
The above term and conditions are hereby accepted and agreed to.
Witness: WELLMAN, INC.
/s/Anne Barra By:/s/ Audrey Goodman
Audrey Goodman
Assistant Treasurer
##
##
## -#-
##
Exhibit 10(h)
WELLMAN, INC.
MANAGEMENT INCENTIVE COMPENSATION PLAN
EXECUTIVE GROUP
NOVEMBER, 1992
<PAGE>
TABLE OF CONTENTS
ARTICLE I NAME
ARTICLE II STATEMENT OF PURPOSE
ARTICLE III PLAN ADMINISTRATION
ARTICLE IV PARTICIPATION
ARTICLE V DEFINITIONS
ARTICLE VI DESCRIPTION OF BONUS BANK
ARTICLE VII CHANGE IN STATUS DURING THE PLAN YEAR
ARTICLE VIII GENERAL PROVISIONS
ARTICLE IX LIMITATIONS
<PAGE>
ARTICLE I
NAME
The Plan shall be known as the "Wellman, Inc. Management
Incentive Compensation Plan."
ARTICLE II
STATEMENT OF PURPOSE
2.1 The purpose of the Plan is to provide a system of incentive
compensation which will promote the maximization of shareholder
value over the long-term. In order to align management incentives
with shareholder interests, this Plan will tie incentive
compensation to Economic Value Added (EVA) and, thereby, reward
management for increasing value and penalize management for reducing
value.
2.2. EVA is the performance measure of value creation. EVA
reflects the benefits and cost of capital employed. Managers create
value when they employ capital in an endeavor that generates a
return that exceeds the cost of the capital employed. Managers
destroy value when they employ capital in an endeavor that generates
a return that is less than the cost of capital employed.
ARTICLE III
PLAN ADMINISTRATION
3.1 The Incentive Compensation Committee ("Committee") shall be
responsible for the design, selection of Participants,
administration, and interpretation of the Plan. The Committee will
consist of the President and Chief Executive Officer, the Vice
President and Chief Financial Officer, and the Vice President of
Administration.
3.2 This Plan may be amended, suspended or terminated at any
time at the sole discretion of the Board of Directors of Wellman,
Inc. ("Board") upon the recommendation of the Committee, provided,
however, that no such change in the Plan shall be effective to
eliminate or diminish the distribution of any Award that has been
allocated to the Bank of a Participant prior to the date of such
amendment, suspension or termination. Notice of any such amendment,
suspension or termination shall be given promptly to each
Participant.
ARTICLE IV
PARTICIPATION
4.1 The Executive Group is comprised of those employees who are
primarily Officers, Vice Presidents, and other senior executives
identified by the Board of Directors.
<PAGE>
4.2 The committee will nominate and the Board must approve any
new employees who are to be included in the Plan.
ARTICLE V
DEFINITIONS
5.1 "Plan Year" is the fiscal year of the Company which is the
calendar year.
5.2 "Effective Date" is January 1, 1992.
5.3 "Eligibility" means the earliest a new participant can be
included. This is the first Plan Year following his/her hire date.
5.4 "Participating Group" means a business division or group of
business divisions which are uniquely identified for the purpose of
calculating EVA and EVA based bonus awards. Some Participants'
awards may be derived from a combination of two or more different
Participating Groups. For the purpose of this plan, the initial
Participating Groups are listed as follows:
Company (Consolidated)
Fibers Division
Manufactured Products Group
Nonwovens
Bonded Fibers
Engineering Resins
Recycling
Polymer
Wool
New England CRInc.
5.5 "Capital" means the net investment employed in the
operations of each Participating Group. The components of Capital
are as follows:
Accounts Receivable (Net)
Inventory
Property, Plant, and Equipment (Net)
Goodwill and other Assets
Less: Accounts Payable*
Less: Accrued Liabilities*
Equals: Capital
*Collectively referred to as the non-interest bearing current
liabilities (NIBCL's)
<PAGE>
EVA is calculated based on average Capital employed. The annual
average Capital is the result of aggregating the ending capital at
December 31 of the prior year with the ending capital at the end of
each month in the current year and dividing the result by 13.
5.6 "Cost of Capital" means the weighted average of the before
tax cost of debt and equity for the year in question. For 1992,
1993, and 1994 it is fixed at 14.7% percent.
5.7 "Capital Charge" is the cost of employing Capital in the
business of each Participating Group. The Capital Charge equals the
following:
Average Capital
Times: Cost of Capital
Equals: Capital Charge
5.8 "Net Operating Profit" or NOP means the earnings
attributable to the capital employed in the Participating Group.
The components of NOP are as follows:
Sales/Operating Revenues
Less: Cost of Sales/Costs associated with Sales/Revenues
Less: Selling, General and Administrative Expenses
Equals: Net Operating Profit
5.9 "Economic Value Added" or EVA means the NOP that remains
after subtracting the Capital Charge, expressed as follows:
NOP
Less: Capital Charge
Equals: EVA
EVA may be positive or negative.
5.10 "Actual EVA" means the EVA as calculated for each
Participating Group for the Plan Year in question.
5.11 "Baseline EVA" means the level of EVA needed for the Group
to receive the amount of the Base Unit Value in the year of
inception. The Baseline EVA for the 1992 is set at the expected EVA
based primarily upon the Annual Operating Plan. After the first
year, the Base-Line EVA is revised according to the following
formula:
Baseline EVA = Last Year's Baseline + Last Year's Actual EVA
2
<PAGE>
5.12 "Base Unit Value" means the portion of the Total Unit
Value which is independent of performance corresponding to the
Baseline EVA
5.13 "Performance Unit Value" is the value attached to EVA
performance falling above or below the Baseline EVA (Actual EVA less
Baseline EVA).
5.14 "Total Unit Value" is the value per unit, which is
determined as the sum of two components:
Total Unit Value = Base Unit Value + Performance Unit Value
5.15 "Salary" means the participant's weighted average base
salary for the entire Plan Year.
5.16 "Target Bonus Percentage" is assigned to each Participant
by the Committee based on their relative job position.
5.17 "Number of Units" is calculated by multiplying the
Participant's salary times his/her Target Bonus Percentage.
Number of Units = Salary x Target Bonus Percentage
5.18 "Individual Award" means the bonus earned* by a
Participant in a given year and is calculated by multiplying the
Total Unit Value times the Participant's Number of Units.
Individual Award = Total Unit Value x Number of Units for that
Participant
Awards due are paid to Participants in March for the prior Plan Year.
*Note that if the Total Unit Value is greater than $1.50 for
that year, only the $1.50 gets paid that year. The excess goes to
the Bonus Bank.
5.19 The Individual Award associated with the Company
Participating Group will not be paid unless there is at least one
quarterly payment made to employees under the Wellman, Inc. Profit
Sharing Plan. The Individual Award is also reduced by the total
amount of Profit Sharing paid to the Participant for the Plan Year.
Should there be no quarterly payments under the Profit Sharing Plan,
the award associated with the Company Participating Group will be
deposited into the Bonus Bank. An Individual Award based on any
other Participating Group will be paid even if no quarterly Profit
Sharing Plan payments are paid.
<PAGE>
ARTICLE VI
DESCRIPTION OF BONUS BANK
6.1 A "Bonus Bank" concept encourages a long-term commitment by
Participants to the Company. An "Extraordinary award" shall be
credited to an "at risk" deferred account for each Participant. The
level of payout is contingent on sustained high performance and
continued employment.
6.2 "Bonus Bank" means, with respect to each Participant, a
bookkeeping record of an account to which Extraordinary Awards are
credited and negative values are debited.
6.3 "Extraordinary Award" means that portion of an annual award
in excess of $1.50 times the number of Bonus Units held by the
participant. This amount is always paid to the Bonus Bank and will
be used to reduce negative balances, if any.
6.4 "Bank Balance" means, with respect to each Participant, a
bookkeeping record of the net balance of the amounts credited to and
debited against such Participant's Bonus Bank. A Participant's Bank
Balance shall initially be equal to zero. The Bonus Bank does not
pay interest on positive balances or charge interest on negative
balances. Although a Bonus Bank may, as a result of negative EVA,
have a deficit, no Plan Participant shall be required, at any time,
to reimburse his/her Bonus Bank. Negative Bank Balances will be
offset only by positive bank deposits resulting from Extraordinary
Awards.
6.5 "Available Balance" means the Bank Balance at the beginning
of the Plan Year.
6.6 "Payout Percentage" is 33 1/3 percent.
6.7 "Payout" means amount of the Available Balance that may be
paid out in cash to the Participant. The Payout is calculated as
follows:
Available Balance
Times: Payout Percentage (33 1/3%)
Equals: Payout
The Payout is subtracted from the Bank Balance when it is paid to
the Participant in March.
<PAGE>
ARTICLE VIII
CHANGE IN STATUS DURING THE PLAN YEAR
7.1 Transfers. Participants who transfer from one
participating Group in the Company to another shall have their award
determined by the EVA performance for the specific months the
Participant is employed in each participating Group. The Bonus Bank
balance will be unaffected as a result of the transfer.
7.2 Disability. A participant shall be deemed "permanently
disabled" if, because of physical or mental condition, the
Participant is unable for a period of at least one year to perform
the principal duties of his/her occupation as determined by a
physician selected by the Committee. A Participant shall receive
full payment of his or her Bank Balance and a pro rata bonus based
on the number of full months worked for the year in which the
disability started. The former payment shall be made one year after
the start of the disability and the latter at the regular time for
making bonus payments (March).
7.3 Death. A Participant's beneficiary, as designated for the
life insurance program, shall receive full payment of his/her Bank
Balance and a pro rata bonus based on the number of full months
worked for the Plan year in which they die. The former payment will
be made within six weeks of the death and the latter payment shall
be made at the regular time for making bonus payments (March).
7.4 Retirement. A Participant who retires from the Company
upon or after reaching age 55 shall receive full payment of his or
her Bank Balance and a pro rata bonus for the year in which he/she
retires. The former payment will be made within six weeks of
retirement and the latter payment shall be made at the regular time
for making bonus payments (March).
7.5 Resignation or Termination for Cause. Separation for these
reasons results in the forfeiture of the balance in a Participant's
Bonus Bank and any award for the Plan Year in which employment ends.
"Cause" shall mean:
(i) any act or acts of the Participant constituting a
felony under the laws of the United States, any state
thereof or any foreign jurisdiction;
<PAGE>
(ii) any material breach by the Participant of any
employment agreement with the Company or the policies of
the Company or the willful and persistent (after written
notice to the Participant) failure or refusal of the
participant to comply with any lawful directives of the
Board;
(iii) a course of conduct amounting to gross neglect,
willful misconduct or dishonesty; or
(iv) any misappropriation of material property of the
Company by the Participant or any misappropriation of a
corporate or business opportunity of the Company by the
Participant.
7.6 Termination without Cause. A Participant who is terminated
for reasons other than those described above will have any positive
Bank Balance in his/her Bonus Bank paid in full at the time of
separation. A pro rata portion of that year's award shall also be
paid in full at the regular time for making bonus payments.
7.7 Breach of Agreement. Notwithstanding any other provision
of the Plan or any other agreement, in the event that a Participant
shall breach any non-competition agreement with the Company the
balance in such Participant's Bonus Bank shall be forfeited.
7.8 No Guarantee. Participation in the Plan provides no
guarantee that a bonus under the Plan will be paid. Similarly, the
payment of an Award under the plan in one Plan Year or selection as
a Participant is no guarantee that a bonus under the plan will be
paid in the subsequent Plan Year. The success of the Company as
measured by the achievement of EVA, shall determine the extent to
which Participants shall be entitled to receive bonuses hereunder.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Withholding of Taxes. The Company shall have the right to
withhold the amount of taxes, which in the determination of the
Company, are required to be withheld under law with respect to any
amount due or paid under the Plan.
8.2 Expenses. All expenses and costs in connection with the
adoption and administration of the Plan shall be borne by the
Company.
<PAGE>
8.3 No prior Right or Offer. Except and until expressly
granted pursuant to the Plan, nothing in the Plan shall be deemed to
give any employee any contractual or other right to participate in
the benefits of the Plan.
8.4 Disputed Claims for Benefits. In the event a Participant
(a "claimant") has a dispute with respect to any of the benefits
provided hereunder, the claimant shall submit evidence satisfactory
to the Committee of facts establishing his entitlement to a payment
under the Plan. Any claim with respect to any of the benefits
provided under the Plan shall be made in writing within ninety (90)
days of the event which the claimant asserts entitles him or her to
benefits. Failure by the claimant to submit his or her claim within
such ninety (90) day period shall bar the claimant from any claim
for benefits under the Plan. In reaching its decision, the
Committee shall have complete discretionary authority to determine
all questions arising in the interpretation and administration of
the Plan, to construe the terms of the Plan, including any doubtful
or disputed terms and the eligibility of a Participant for benefits.
8.5 Action Taken in Good Faith; Indemnification. The Committee
may employ attorneys, consultants, accountants or other persons and
the Company's directors and officers shall be entitled to rely upon
the advice, opinions or valuations of any such persons. All actions
taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all
employees who have received awards, the Company and all other
interested parties. No member of the Committee, nor any officer,
director, employee or representative of the Company, or any of its
affiliates acting on behalf of or in conjunction with the Committee,
shall be personally liable for any action, determination, or
interpretation, whether of commission or omission, taken or made
with respect to the Plan, except in circumstances involving actual
bad faith or willful misconduct. In addition to such other rights
of indemnification as they may have as members of the Board, as
members of the Committee or as officers or employees of the Company,
all members of the Committee and each any officer, employee or
representative of the Company or any of its subsidiaries acting on
their behalf shall be fully indemnified and protected by the Company
with respect to any such action, determination or interpretation
against the reasonable expenses, including attorneys' fees actually
and necessarily incurred, in connection with the defense of any
civil or criminal action, suit or proceeding or in connection with
any appeal therein, to which they or any of them any be a party by
reason of any action taken or failure to act under or in connection
with the Plan or an award granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement <PAGE>
is approved by independent legal counsel selected by Company)
paid by them in satisfaction of a judgment in any action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person
claiming indemnification shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding shall be paid by the Company
in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by any person claiming
indemnification to repay such amount unless it shall ultimately be
determined that such member is entitled to be indemnified as
provided in this Section.
8.6 Rights Personal to Employee. Any rights provided to an
employee under the Plan shall be personal to such employee, shall
not be transferable (except by will or pursuant to the laws of
descent or distribution), and shall be exercisable, during his or
her lifetime, only by such employee.
8.7 Plan Termination or Suspension. Upon termination of the
Plan or suspension for a period of more than 90 days, the Bank
Balance of each Participant shall be distributed as soon as
practicable but in no event later than 90 days from such event. The
Committee, in its sole discretion, may accelerate distribution of
the Bank Balance, in whole or in part, at any time without penalty.
8.8 Confidentiality. Specific details of the Plan must remain
confidential and because of the individuality of the Awards,
Participants should not share information with each other.
ARTICLE IX
LIMITATIONS
9.1 No Continued Employment. Neither the establishment of the
plan or the grant of an award hereunder shall be deemed to
constitute an express or implied contract of employment for any
period of time or in any way abridge the rights of the Company to
determine the terms and conditions of employment or to terminate the
employment of any employee with or without cause at any time.
9.2 No Vested Rights. Except as otherwise provided herein, no
employee or other person shall have any claim of right (legal,
equitable, or otherwise) to any award, allocation, or distribution
or any right, title, or vested interest in any amounts in his/her <PAGE>
Bonus Bank and no officer or employee of the Company or any
Participating Group or any other person shall have any authority to
make representations or agreements to the contrary. No interest
conferred herein to a Participant shall be assignable or subject to
claim by a Participant's creditors.
9.3 Not Part of Other Benefits. The benefits provided in this
plan shall not be deemed a part of any other benefit provided by the
Company to its employees. The Company assumes no obligation to Plan
Participants except as specified herein. This is a complete
statement, along with the Schedules and Appendices attached hereto,
of the terms and conditions of the Plan.
9.4 Other Plans. Nothing contained herein shall limit the
Company or the Committee's power to grant bonuses to employees of
the Company, whether or not Participants in this Plan.
<PAGE>
Exhibit 10(j)(7)
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT is entered into as of the 21st day of September,
1993, by and between WELLMAN, INC., a Delaware corporation (the
"Corporation"), and James E. Rogers, resident of Virginia (the
"Director").
WHEREAS, the Director currently serves as a member of the Board
of Directors of the Corporation (the "Board"); and
WHEREAS, the Corporation wishes to provide long-term incentives
to the Director to remain as a director of the Corporation and to
devote his best efforts to the interests of the Corporation's
stockholders; and
WHEREAS, in order to provide such incentive, the Corporation
wishes to grant to the Director shares of the Corporation's common
stock, $.01 par value (the "Stock"), on the terms and conditions
herein, the parties hereto agree as follows:
1. Definitions.
a. "Non-Vested Shares" shall mean all the shares of Stock
that have not become Vested Shares pursuant to the provisions of
Section 2 hereof.
b. "Vested Shares" shall mean those shares of Stock that
shall vest according to the schedule set forth in Section 2(a)
hereof.
c. "Vesting Date" shall mean the date on which Non-Vested
Shares become Vested Shares as provided in the vesting schedule set
forth in Section 2(a) hereof.
2. Incentive.
a. The Corporation shall issue to the Director 2,000
shares of Stock (the "Incentive Stock") which shall vest in
accordance with the following schedule:
Number of Shares
of Stock becoming Vested Vesting Date
667 September 21, 1994
667 September 21, 1995
666 September 21, 1996
<PAGE>
b. Notwithstanding anything else contained in this
Agreement, the Director shall not vest as to that portion of the
Incentive Stock that is scheduled to vest on a Vesting Date
specified in Section 2(a) hereof, unless the Director has served as
a director of the Corporation for the twelve month period prior to
such Vesting Date.
c. In the event of any change in the Stock by reason of
any stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares or of any
similar change affecting the Stock, then in any such event the
number and kind of shares subject to this Agreement shall be
appropriately adjusted consistent with such change in such manner as
the Corporation may deem equitable to prevent substantial dilution
or enlargement of the rights granted to the Director hereunder.
3. Issuance of Stock. The Corporation shall issue a
certificate or certificates representing the Incentive Stock to the
Director, with the legend required by Section 4 thereon, as soon as
practicable after the execution of this Agreement by the Director.
4. Securities Restrictions.
a. The Corporation shall place the following legend upon
the certificates representing the Incentive Stock:
"The shares of stock represented by this certificate have
not been registered under the Securities Act of 1933, as
amended (the "Act"). The stock may not be sold,
transferred, pledged, or hypothecated unless the stock
proposed to be transferred has been effectively registered
under the Act, or the corporation shall have received an
opinion of counsel satisfactory to it to the effect that
registration thereof for purposes of transfer is not
required under the Act."
b. The Director acknowledges that the Incentive Stock has
not been registered under the Securities Act of 1933 or any state
securities statute (collectively, the "Securities Acts"), and
therefore may not be resold unless they are registered under such
Securities Acts or unless an exemption from such registration is
available. Prior to any transfer of any shares of Incentive Stock
which are not registered under an effective registration statement
under any such Securities Act (other than a transfer pursuant to
Rule 144 or any comparable rule under such Securities Acts), the
holder thereof will give written notice to the Corporation of such
holder's intention to effect such transfer and shall describe the
manner and circumstances of the proposed transfer in sufficient <PAGE>
detail to enable counsel to render the opinion referred to in the
legend placed on the back of the certificate.
c. The Corporation will pay the reasonable fees and
disbursements of counsel in connection with all opinions rendered
pursuant to this Section 4.
d. The restrictions imposed by this Section 4 upon the
transferability of the shares of Incentive Stock shall cease and
terminate as to any particular security (i) when such securities
shall have been effectively registered under the Act and disposed of
in accordance with the registration statement covering such
securities, or (ii) when, in the opinion of independent counsel for
the holder thereof experienced in Securities Acts' matters, such
restrictions are no longer required in order to assure compliance
with the Securities Acts. Whenever such restrictions shall
terminate as to any securities, the holder thereof shall be entitled
to receive from the Corporation, without expense (other than
transfer taxes, if any), new securities of like tenor not bearing
the legend set forth in Section 4(a) hereof.
5. Miscellaneous.
a. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective administrators,
executors, legal representatives, successors, and assigns (including
remote, as well as immediate, successors to and assignees of said
parties).
b. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be
given in writing by registered, certified or regular delivery mail,
Federal Express or comparable overnight delivery service, telecopy,
telex or by personal delivery, which shall be addressed to the
Corporation and the Director, at their addresses appearing on the
signature page hereto or to such other address as may be designated
by him or it.
c. The invalidity or unenforceability of any particular
provision of this Agreement shall not effect the other provisions
hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provisions were omitted.
d. This Agreement shall not be interpreted as an Agreement
that the Director shall be nominated to the Board or elected as a
Director, except as the stockholders of the Corporation shall vote
at any meeting designated for such election, and the Director shall
not have any right to be retained on the Board of the Corporation by
virtue of this Agreement.
<PAGE>
e. Upon the (a) resignation or termination of the Director
from the Board for any reason or (b) failure of the Director to be
reelected to the Board or (c) the vesting of all of the Stock issued
hereunder, all of the Director's rights hereunder shall cease and
terminate other than rights of the Director of the Vested Shares.
Upon the occurrence of the events set forth in (a) and (b) above
prior to the vesting of all of the Incentive Stock, the Director
shall surrender his stock certificate or certificates issued
hereunder representing or including any Non-Vested Shares to the
Company and the Company shall cancel such certificate or
certificates relating to any Non-Vested Shares and shall cause the
transfer agent to issue a new stock certificate or certificates to
the Director for any Vested Shares included in such surrendered
certificate or certificates.
f. This Agreement may be altered, amended or terminated
only by written instrument signed by both parties hereto.
g. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
h. This Agreement may be executed by the parties hereto in
several counterparts, and each counterpart, when so executed, shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year set forth above.
WELLMAN, INC.
By /s/ Clifford J. Christensen
Clifford J. Christenson
Vice President & Treasurer
/s/ James E. Rogers
James E. Rogers
##
##
Exhibit 18
February 15, 1994
Mr. Keith R. Phillips
Chief Financial Officer
Wellman, Inc.
1040 Broad Street
Suite 302
Shrewsbury, NJ 07702
Dear Sir:
Note 1 of Notes to the Consolidated Financial Statements of Wellman,
Inc. included in its Annual Report on Form 10-K for the year ended
December 31, 1993 describes a change in the method of applying the
lower of cost or market rule to certain slow moving and discontinued
waste raw material inventory which is costed using the last-in,
first-out (LIFO) method. In prior years, the Company used the
aggregate by pool method in applying the lower of cost or market
rule to such inventories and in 1993 changed to the item-by-item
method. You have advised us that you believe that the change is to
a preferable method in your circumstances because it provides a
better matching of costs and revenues and results in a more
conservative valuation of the slow moving and discontinued waste raw
material inventory.
There are no authoritative criteria for determining a "preferable"
inventory valuation method based on the particular circumstances;
however, we conclude that the change in the method of applying the
lower of cost or market rule to slow moving and discontinued waste
raw material inventory which is costed using the LIFO method is to
an acceptable alternative method, which, based on your business
judgment to make this change for the reasons cited above, is
preferable in your circumstances.
Very truly yours,
ERNST & YOUNG
Exhibit 21
SUBSIDIARIES
Company Name Jurisdiction of Incorporation
Fiber Industries Delaware
Prince, Inc. Delaware
Warehouse Assoc., Inc. Delaware
Josdav Delaware
New England CR., Inc. Massachusetts
Materials Recovery, Inc. Massachusetts
Materials Recovery of California Massahcusetts
Brokering Recyclables, Inc. Massachusetts
Recycling Plastics, Inc. Massachusetts
Creative Forming, Inc. Wisconsin
Wellman, Inc. VEBA Not Incorp.
Wellman Scholarship Foundation, Inc. South Carolina
Wellman, Inc. PAC New Jersey
ALG, Inc. Delaware
Wellman International Ireland
Investments, LTD
Wellman International, LTD Ireland
Wellman Fibres, LTD United Kingdom
Middlewich, Limited Ireland
Shobara Company Ireland
Wellman International Germany
Handelagesellschaft, mbh
Crinc-Wellman Limited Great Britain
Wellman UK Holdings, Limited Great Britain
Canada Crinc, LTD Canada
Wellman Exports, V.I. U.S. Virgin Islands
Wellman Recycling Holland
Exhibit 23(a)
Consent of Independent Auditors
We consent to the incorporation by reference in Registration
Statements (Form S-8, Nos. 33-17196, 33-44822, 33-44877, 33-44876
and Form S-3, No. 33-36001) pertaining to various stock option and
employee savings plans of Wellman, Inc. of our report dated February
15, 1994, with respect to the consolidated financial statements and
financial statement schedules included in this Annual Report (Form
10-K) of Wellman, Inc.
ERNST & YOUNG
Charlotte, North Carolina
March 25, 1994
<PAGE>
Exhibit 23(b)
Consent of Independent Auditors
We consent to the incorporation by reference in Registration
Statements (Form S-8, Nos. 33-17196, 33-44822, 33-44877, 33-44876
and Form S-3, No. 33-36001) pertaining to various stock option and
employee savings plans of Wellman, Inc. of our report dated 17
February 1994, with respect to the consolidated financial statements
of Wellman International Limited and subsidiary at 31 December 1993
and 1992, and for each of the three years in the period ended 31
December 1993, included in this Annual Report (Form 10-K) of
Wellman, Inc.
KPMG Stokes Kennedy Crowley
Chartered Accountants
Registered Auditors
Dublin, Ireland
25 March, 1994
##
##
Exhibit 99
REPORT OF INDEPENDENT AUDITORS TO MEMBERS OF WELLMAN INTERNATIONAL
LIMITED
We have audited the accompanying consolidated balance sheets of
Wellman International Limited and subsidiary at 31 December 1993 and
1992, and the related consolidated profit and loss accounts,
retained earnings, and changes in financial position for each of the
three years in the period ended 31 December 1993, all expressed in
Irish pounds (not presented separately herewith). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on test basis,
evidence supporting the amounts and enclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above,
expressed in Irish pounds, present fairly, in all material respects,
the consolidated financial position of Wellman International Limited
and subsidiary at 31 December 1993 and 1992, and the consolidated
results of operations and changes in financial position for each of
the three years in the period ended 31 December 1993 in conformity
with accounting principles generally accepted in the United States
of America.
/s/KPMG Stokes Kennedy Crowley
KPMG Stokes Kennedy Crowley
Chartered Accountants
Registered Auditors
Dublin, Ireland
17 February 1994
