FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 0-15899
WELLMAN, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-1671740
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1040 Broad Street, Shrewsbury, NJ 07702
(Address of principal executive offices)
(908) 542-7300
(Registrant's telephone number, including area code)
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 _
As of August 5, 1994, there were 32,948,054 shares of the registrant's
common stock, $.001 par value, issued and outstanding.
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WELLMAN, INC.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Statements of Income -
For the three and six months ended June 30, 1994 and 1993 . . . . 2
Condensed Consolidated Balance Sheets -
June 30, 1994 and December 31, 1993 . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Cash Flows -
For the six months ended June 30, 1994 and 1993 . . . . . . . . . 4
Consolidated Statements of Stockholders' Equity. . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . . . . . . . . 6 - 8
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . .9 - 12
PART II - OTHER INFORMATION
ITEM 4 - Submission of Matters to a Vote of Security Holders. . . . . . . .13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 15 - 17
<PAGE>
<TABLE>
<CAPTION>
WELLMAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $229,805 $214,005 $452,382 $421,973
Cost of sales 176,615 167,959 355,309 326,344
-------- -------- -------- --------
Gross profit 53,190 46,046 97,073 95,629
Selling, general and administrative
expenses 21,838 20,425 42,551 40,538
-------- -------- -------- --------
Operating income 31,352 25,621 54,522 55,091
Interest expense, net 3,607 3,955 7,311 8,855
Gain on sale of Wellstar (Note 6) -- -- -- 12,386
-------- -------- -------- --------
Earnings before income taxes 27,745 21,666 47,211 58,622
Provision for income taxes (Note 2) 11,653 8,883 19,829 24,035
-------- -------- -------- --------
Net earnings before cumulative effect
of changes in accounting principles 16,092 12,783 27,382 34,587
Cumulative effect of changes in
accounting principles, net of income
taxes (Note 2) -- -- -- (9,010)
-------- -------- -------- --------
Net earnings $ 16,092 $ 12,783 $ 27,382 $ 25,577
======== ======== ======== ========
Earnings per common share:
Before cumulative effect of changes
in accounting principles $ .48 $ .39 $ .83 $ 1.05
Cumulative effect of changes in
accounting principles -- -- -- (.27)
-------- -------- -------- --------
Net earnings per common share $ .48 $ .39 $ .83 $ .78
======== ======== ======== ========
Weighted average common
shares (Note 3) 33,310 32,923 33,178 32,874
======== ======== ======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
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<TABLE>
<CAPTION>
WELLMAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
JUNE 30, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 15,039 $ 18,751
Accounts receivable, less allowance
of $4,124 in 1994 and $4,232 in 1993 108,990 96,599
Inventories (Note 4) 116,422 133,391
Prepaid expenses and other current assets 10,109 4,995
------------ ------------
Total current assets 250,560 253,736
Property, plant and equipment, at cost:
Land, buildings and improvements 97,755 94,652
Machinery and equipment 522,950 489,516
------------ ------------
620,705 584,168
Less accumulated depreciation 186,043 163,627
------------ ------------
Net property, plant and equipment 434,662 420,541
Cost in excess of net assets acquired, net 305,044 309,395
Other assets, net 25,488 31,575
------------ ------------
$ 1,015,754 $ 1,015,247
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 48,844 $ 51,882
Accrued liabilities 27,002 27,019
Taxes on income - 874 --
Deferred taxes on income 482 482
Current portion of long-term debt 23,015 18,594
------------ ------------
Total current liabilities 100,217 97,977
Long-term debt 261,429 294,173
Deferred taxes on income 81,417 82,067
Other liabilities 35,435 34,524
------------ ------------
Total liabilities 478,498 508,741
Stockholders' equity:
Common stock, $.001 par value; 55,000,000
shares authorized, 32,928,773 shares
issued and outstanding in 1994 and
32,780,018 in 1993 33 33
Paid-in capital 218,030 215,179
Foreign currency translation adjustments 4,226 96
Retained earnings 314,967 291,198
------------ ------------
Total stockholders' equity 537,256 506,506
------------ ------------
$ 1,015,754 $ 1,015,247
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
3
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<TABLE>
<CAPTION>
WELLMAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(In thousands)
1994 1993
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 27,382 $ 25,577
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Cumulative effect of changes in accounting
principles (Note 2) -- 9,010
Depreciation 21,748 20,320
Amortization 6,869 7,435
Deferred taxes on income (768) 3,624
Gain on sale of Wellstar -- (12,386)
Changes in assets and liabilities 5,514 ( 23,890)
--------- ---------
Net cash provided from operating activities 60,745 29,690
Cash flows from investing activities:
Businesses acquired -- (8,780)
Additions to property, plant, and equipment (35,902) (43,746)
Sale of investment in Wellstar (Note 6) -- 33,000
Decrease in restricted cash 3,639 6,028
--------- ---------
Net cash used in investing activities (32,263) (13,498)
Cash flows from financing activities:
Repayments of long-term debt (28,709) (3,092)
Dividends paid on common stock (3,613) (2,612)
--------- ---------
Net cash used in financing activities (32,322) (5,704)
Effect of exchange rate changes on cash
and cash equivalents 128 (465)
--------- ---------
Increase (decrease) in cash and cash equivalents (3,712) 10,023
Cash and cash equivalents at beginning of period 18,751 1,749
--------- ---------
Cash and cash equivalents at end of period $ 15,039 $ 11,772
========= =========
Supplemental cash flow data:
Cash paid during the period for:
Interest expense $ 8,865 $ 9,749
Income taxes $ 20,120 $ 21,019
</TABLE>
See notes to condensed consolidated financial statements.
4
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<TABLE>
<CAPTION>
WELLMAN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollar amounts in thousands)
COMMON STOCK CURRENCY
------------------ PAID-IN TRANSLATION RETAINED
SHARES AMOUNT CAPITAL ADJUSTMENTS EARNINGS TOTAL
---------- ------ --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
Exercise of stock options 19,760 309 309
Contribution of common stock to
employee stock ownership and
benefit plans 128,995 2,542 2,542
Currency translation adjustments 4,130 4,130
Net earnings 27,382 27,382
Cash dividends (3,613) (3,613)
---------- ------ --------- ----------- --------- ---------
Balance at June 30, 1994 32,928,773 $ 33 $ 218,030 $ 4,226 $ 314,967 $ 537,256
========== ====== ========= =========== ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
WELLMAN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information for the three and six months ended
June 30, 1994 and 1993 is unaudited)
1. BASIS OF PRESENTATION
The financial statements are subject to year-end audit and do not
purport to be a complete presentation inasmuch as all note disclosures
required under generally accepted accounting principles are not included.
Reference is made to the Company's Form 10-K for the year ended December 31,
1993 filed with the Securities and Exchange Commission on March 24, 1994.
The results of operations for the three and six month periods are not
necessarily indicative of those for the full year.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements are presented on a basis consistent with
the audited statements, and all adjustments, which consist only of normal
recurring adjustments necessary to present fairly the financial position and
the results of operations for the periods indicated, have been reflected.
2. 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 earnings for the six months ended June 30,
1993 of $6,820,000 ($0.20 per share), net of the related income tax effect
of $4,180,000.
6
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WELLMAN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information for the three and six months ended
June 30, 1994 and 1993 is unaudited)
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 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 for the six months ended June 30, 1993 of
$2,190,000 ($0.07 per share), net of the related income tax effect of
$1,342,000.
3. EARNINGS PER COMMON SHARE
Earnings per common share is based on the weighted average number of
common and common equivalent shares outstanding.
4. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
--------- ---------
<S> <C> <C>
Finished and semi-finished goods $ 42,965 $ 53,083
Raw materials 61,748 72,723
Supplies 13,091 12,467
--------- ---------
117,804 138,273
Less adjustments of certain
inventories to a LIFO basis 1,382 4,882
--------- ---------
$ 116,422 $ 133,391
</TABLE>
7
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WELLMAN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information for the three and six months ended
June 30, 1994 and 1993 is unaudited)
5. COMMITMENTS AND CONTINGENCIES
The Company's operations are subject to extensive and changing federal
and state environmental regulations governing air emissions, wastewater
discharges and solid and hazardous waste management activities. The
Company's policy is to accrue environmental and cleanup-related costs of a
non-capital nature when it is both probable that a liability has been
incurred and the amount can reasonably be 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
$17,200,000 at June 30, 1994, representing managements'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.
6. INVESTMENTS IN UNCONSOLIDATED PARTIALLY-OWNED COMPANIES
In March 1993, the Company sold its ownership interest in Wellstar
Holding B.V. 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 first half 1993 net earnings by
approximately $7,300,000, or $0.22 per share.
8
<PAGE>
WELLMAN, INC.
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. As of
January 1, 1993, 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 2 to the Condensed
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 the slow-moving and discontinued waste raw material
inventory. As of January 1, 1993, 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 income tax effect of
$1.3 million. See Note 2 to the Condensed Consolidated Financial Statements.
THREE MONTHS ENDED JUNE 30, 1994 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1993
Net sales for the three months ended June 30, 1994 were $229.8 million
compared to $214.0 million for the three months ended June 30, 1993. Sales at
the Company's domestic Fibers Division increased as a result of higher polyester
sales volumes, which more than offset lower polyester selling prices for certain
9
<PAGE>
products. Higher volumes were partially the result of the recently completed
expansion of polyester yarn capacity during the first quarter of 1994. At
Wellman International Limited (WIL), Wellman's Irish subsidiary, sales increased
due to an increase in sales volumes. Sales at the Manufactured Products Group
(MPG) increased in the second quarter of 1994 compared to the second quarter of
1993 due to continued strong demand for wool and engineering resins products,
which offset lower Polymer Division sales. The 1993 Polymer Division sales were
higher than the 1994 sales due to the diversion of polymer volumes from internal
to external customers. At New England CRInc (CRInc), sales decreased due to
lower construction revenues offset slightly by higher material recovery facility
(MRF) operating revenues.
Gross profit for the three months ended June 30, 1994 was $53.2 million, or
approximately 23.1% of sales, compared to $46.0 million, or approximately 21.5%
of sales for the three months ended June 30, 1993. Gross profit at the
Company's fiber businesses increased due to higher sales volumes and lower unit
costs, which more than offset lower fiber selling prices. Lower unit costs were
the result of decreased spending and lower raw material purchase costs primarily
at the Company's waste-based fiber businesses. Gross profit at the MPG
increased due to higher gross profit at the Polymer Products Division and at the
Wool Division, which was partially offset by lower gross profit at Creative
Forming, Inc. (CFI). The Polymer Products increase was due to higher selling
prices, resulting from the sale of solid-stated products, which more than offset
higher unit costs and lower sales volumes.
Selling, general and administrative expenses were $21.8 million, or
approximately 9.5% of sales for the three months ended June 30, 1994, compared
to $20.4 million, or approximately 9.5% of sales for the three months ended
June 30, 1993.
As a result of the foregoing, operating income was $31.4 million for the
three months ended June 30, 1994 compared to $25.6 million for the same period
of 1993.
Net interest expense for the three months ended June 30, 1994 was $3.6
million compared to $4.0 million for the three months ended June 30, 1993. The
decline was due to a decrease in outstanding borrowings in the United States and
in Ireland.
As a result of the foregoing, net earnings for the second quarter of 1994
were $16.1 million, or $0.48 per share, compared to $12.8 million, or $0.39 per
share for the second quarter of 1993.
SIX MONTHS ENDED JUNE 30, 1994 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1993
Net sales for the six months ended June 30, 1994 were $452.4 million
compared to $422.0 million for the six months ended June 30, 1993. Sales at the
Company's domestic Fibers Division increased due to higher polyester sales
volumes, which more than offset lower polyester selling prices. Higher domestic
volumes were the result of strong demand and the aforementioned expansion of
polyester yarn capacity. At WIL, sales in U.S. dollars increased primarily due
to an increase in sales volumes, which were partially offset by the unfavorable
impact of the decline in value of the Irish punt against the U.S. dollar.
10
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Sales at the MPG increased in the first six months of 1994 compared to the first
six months of 1993 due to continued strong demand for wool and engineering
resins products, partially offset by lower sales at the Polymer Products
Division. Sales at CRInc. decreased due to lower construction revenues offset
slightly by higher MRF operating revenues.
Gross profit for the six months ended June 30, 1994 was $97.1 million, or
approximately 21.5% of sales, compared to $95.6 million, or approximately 22.7%
of sales for the six months ended June 30, 1993. Gross profit at the Company's
fibers businesses increased due to the aforementioned increased sales volumes
and lower unit costs, which more than offset lower selling prices. Gross profit
at the MPG increased due to higher gross profits at the Polymer Products
Division and Wool Division, which more than offset a decline in gross profit at
CFI.
Selling, general and administrative expenses amounted to $42.6 million, or
approximately 9.4% of sales for the first six months of 1994 compared to $40.5
million, or approximately 9.6% of sales for the first six months of 1993.
As a result of the foregoing operating income was $54.5 million for the
first half of 1994, compared to $55.1 million for the first half of 1993.
Net interest expense was $7.3 million in the first six months of 1994
compared to $8.9 million in the first six months of 1993. The decrease was due
to a reduction in outstanding borrowings in Ireland and, to a lesser extent, in
the United States.
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
sale increased net earnings in the first half of 1993 by $7.3 million, or
approximately $.22 per share.
As discussed above, net earnings for the six months ended June 30, 1993
were adversely affected by after-tax charges of $9.0 million due to the
cumulative effect of changes in accounting principles. As a result of the
foregoing, net earnings in the first half of 1994 were $27.4 million, or $.83
per share, compared to $25.6 million, or $.78 per share, for the first half of
1993.
OUTLOOK
The favorable developments which emerged in the first half of 1994,
including strong polyester fiber demand, more expensive and less available
cotton, and higher foreign chemical feedstock costs put upward pressure on
domestic polyester fiber selling prices. Recent polyester fiber price increases
and those expected later in the year will reduce the impact of increases in the
Company's chemical feedstock costs in the third and fourth quarters of 1994.
In June, 1994 Wellman announced plans to increase capacity at its polyester
fiber and PET bottle resin businesses as part of a $500 million, five-year
capital investment program. The Company's program includes process improvements
and capacity expansion at certain facilities in the U.S. and in Ireland.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operations of $60.7 million for the six
months ended June 30, 1994 compared to $29.7 million for the six months ended
June 30, 1993. The increase in cash from operations was primarily the result of
a reduction of inventories and to a lesser extent, net decreases in other
working capital requirements.
Net cash used in investing activities amounted to $32.3 million in the first
six months of 1994, compared to $13.5 million in the first six months of 1993.
In 1993, investing activities included $33.0 million of proceeds from the sale
of Wellstar. Capital spending amounted to $35.9 million in 1994 compared to
$43.7 million in 1993.
Net cash used in financing activities amounted to $32.3 million for the
first six months of 1994 compared to $5.7 million for the first six months of
1993 reflecting higher net repayments of long-term debt.
The Company's financing arrangements contain normal financial and
restrictive covenants, including restrictions on the payment of dividends and
requirements with respect to working capital, net worth, and the ratio of debt
to capitalization.
The Company's capital investment program includes approximately $90.0
million in planned capital expenditures in 1994. (See "Outlook" section for
future capital expenditure plans.) 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.
Wellman completed the expansion of polyester yarn production capacity and the
start-up of a new solid-stating unit to produce PET bottle resin in the first
quarter of 1994. The 1994 capital plan includes funds for the expansion of
monomer and PET resin production capacity and continued equipment upgrades at
the Company's domestic fiber operations.
The Company believes that the financial resources available to it, including
approximately $70.0 million available at June 30, 1994 under its $145.0 million
bank credit facility, approximately $8.7 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 for recycling-related
capital expenditures) and internally generated funds will be sufficient to meet
its foreseeable working capital, capital expenditure and dividend payment
requirements.
12
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held on May 17, 1994.
(b) Not applicable.
(c) At the Annual Meeting of Stockholders, the stockholders voted on the
following matters:
1. The nominees for election as directors for the ensuing year, and
until their successors are elected and qualified, received the
following votes:
<TABLE>
<CAPTION>
Against/
Name For Withheld
---- --- --------
<S> <C> <C>
Thomas M. Duff 24,650,621 867,056
C. William Beckwith 24,644,097 873,580
Peter H. Conze 24,641,577 876,100
Allan R. Dragone 24,644,782 872,895
Richard F. Heitmiller 24,648,343 869,334
Jonathan M. Nelson 24,657,665 860,012
James E. Rogers 24,659,759 857,918
Raymond C. Tower 24,654,158 863,519
Roger A. Vandenberg 24,658,064 859,613
</TABLE>
2. The proposal to approve certain amendments to the Company's 1985
Incentive Stock Option Plan, including the increase by 1,500,000 of
the number of shares of Common Stock issuable pursuant to the Plan,
received the following votes: 20,114,006 votes cast for, 1,167,174
votes cast against, 720,528 abstentions and 3,515,969 broker
nonvotes.
3. The proposal to ratify the selection by the Board of Directors of
Ernst & Young as independent auditors to audit the Company's books
and accounts for the fiscal year ending December 31, 1994 received
the following votes: 25,354,924 votes cast for, 95,533 votes cast
against, 67,220 abstentions, and no broker nonvotes.
4. The stockholder proposal to request the Board of Directors to
redeem the shareholder rights issued on August 6, 1991 unless the
issue is approved by the majority of stockholders received the
following votes: 11,879,536 votes cast for, 10,048,722 votes cast
against, 73,450 abstentions, and 3,515,969 broker nonvotes.
(d) Not applicable.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WELLMAN, INC.
Dated August 11, 1994 By /s/ Keith R. Phillips
--------------- ------------------------
Keith R. Phillips
Vice President, Chief Financial
Officer, Treasurer (Principal
Financial Officer)
Dated August 11, 1994 By /s/ Mark J. Rosenblum
--------------- ------------------------
Mark J. Rosenblum
Vice President-Controller
(Principal Accounting Officer)
14
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4 (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)
4 (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)
4 (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)
4 (b) By-Laws, as amended (Exhibit 3(b) of the Company's Form 10-K for
the year ended December 31, 1989 incorporated by reference
herein)
4 (c) 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 (d) 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)
4 (e) 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 (f) 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 (g) 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 (h) 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 (i) 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 (j) 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)
15
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
4 (k) 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)
4 (l) 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 (m) 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 (n) 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 (o) 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 (p) 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(q) 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 (r) 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 (s) 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 (t) 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 (u) 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 (v) 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)
16
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
4 (w) 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 (x) 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 (y)(1) Loan note participations with the Sumitomo Bank, Limited, dated
July 27, 1992, Burliner Handels-und Frankfurter Bank dated June
15, 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 (y)(2) Loan note participations with the Banco di Napoli dated February
17, 1994, First Fedility Bank, N.A. dated June 13, 1994,
Chemical Bank New Jersey, National Association dated June 13,
1994, Midlantic National Bank dated March 15, 1994
4 (z) Promissory Note dated June 18, 1993 of the Company to Fleet
National Bank (Exhibit 4(z) of the Company's Form 10-K for the
year ended December 31, 1993, incorporated by reference herein)
4 (aa) Promissory Note dated May 13, 1994 to Fleet National Bank
(b) Reports on Form 8-K
None
17
Exhibit 4(y)(2)
MASTER PROMISSORY NOTE
BID FIXED RATE/FIXED TERM ADVANCES
U.S.$ 15,000,000 New York, February 17, 1994
FOR VALUE RECEIVED, Wellman, Inc. located at 1040 Broad Street, Shrewsbury, New
Jersey 07702 (hereinafter referred to as the "Borrower") hereby promises to pay
to the order of Banco di Napoli, for the benefit of its New York Branch or its
Grand Cayman Branch, as the case may be, (hereinafter referred to as the
"Bank"), the principal sum of Fifteen Million U.S. Dollars (US $15,000,000) or,
if less, the aggregate unpaid principal amount of all advances (hereinafter
referred to as "Advances") made to the Borrower hereunder, plus interest on
the unpaid balance of each such Advance from the date of making each such
Advance to the date of repayment thereof (on the basis of a 360-day year) at
such rate as is agreed upon between the Borrower and the Bank at the time of
each availment and which is specified on the endorsement page attached hereto
in lawful money of the United States of America in immediately available funds
(in freely transferable U.S. Dollars) payable in full upon maturity. Each
such Advance made hereunder shall be for a maximum term of 180 days and shall
mature on the last day of the term or period for which such Advance was made.
Any amount of principal or interest hereunder which is not paid when due,
whether at the maturity of each Advance, by acceleration or otherwise shall
bear interest from the date when due, payable on demand, at the Prime Rate
quoted as such by the Bank from time to time plus one percent (1%) per annum
which interest rate hereon shall change the same day as the Bank shall change
the Bank's Prime Rate.
Each Advance hereunder, the interest rate applicable thereto, and each
repayment on account of the principal thereof, shall be endorsed by the Bank on
the spaces provided below or on a continuation page attached hereto, on the
date each such Advance is made or such repayment is received. This Note
(including attached pages for the continuation of endorsements hereon) shall be
used to record all Advances and repayments of principal made hereunder until it
is surrendered to the Borrower by the Bank and it shall continue to be so used
even though there may be periods prior to such surrender when no amount of
principal or interest is owing hereunder.
Borrower will provide to the Bank a written request for each Advance to be made
hereunder. The Bank may, however, at its option grant an Advance hereunder
pursuant to a request for borrowing made to the Bank telephonically. Borrower
will subsequently provide to the Bank a confirmation in writing for each such
Advance made hereunder pursuant to such telephone request.
<PAGE>
Each Advance shall be repaid on the last day of the term or period for which
such Advance was made. The Borrower may prepay any Advance or Advances under
this Agreement upon at least four banking days notice to the Bank, stating the
proposed date of the prepayment; and, if such notice is given, the Borrower
shall prepay the outstanding aggregate principal amount of such Advance or
Advances, together with accrued interest to the date of such prepayment;
provided, however, that the undersigned shall compensate the Bank for any
additional losses, costs or expenses which it may reasonably incur as a result
of such prepayment, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Bank to fund or
maintain such Advance or Advances.
Payment of principal and interest hereunder shall be made to the Bank, on the
date on which such payments shall become due, at its office at 277 Park Avenue,
New York, New York 10172 (unless otherwise designated by the Bank) in
immediately available funds.
In the event of the happening of any one or more of the following events: (a)
the nonpayment when due of the liability of the Borrower to the Bank hereunder;
(b) the dissolution or termination of existence of the Borrower; (c) any
petition in bankruptcy being filed by or against the Borrower or any proceeding
in bankruptcy or under any laws relating to the relief of debtors, being
commenced or any proceeding in bankruptcy or under any laws relating to the
relief of debtors having commenced for composition, extension, or otherwise, if
such petition or proceedings shall not be dismissed, stayed, or vacated within
90 days after the filing or commencement thereof; (d) the making by the
Borrower of an assignment for the benefit of its creditors or the taking
advantage by any of the same of any insolvency law; or (e) the appointment of a
receiver of any property of the Borrower -- then, or at any time after the
happening of any such event, this Note and all other obligations to the Bank of
the Borrower, whether created directly or acquired by assignment, whether
absolute or contingent, shall forthwith be due and payable, without demand upon
or notice to the Borrower.
If default be made in the payment of any of the indebtedness evidenced hereby
and this Note be placed with attorneys for collection, the parties hereto agree
to pay, in addition to all unpaid principal and interest, all costs of
collection hereof, including reasonable attorney's fees. The word "parties" or
"any party hereto" shall include makers, endorsers, sureties, guarantors and
assignors.
Presentment, notice of maturity, demand for payment, protest and notice of
protest and non-payment are hereby waived by the makers, endorsers and
guarantors who consent that the time for payment may be extended, or this Note
or any portion of the indebtedness due hereon may be from time to time and for
any term or terms be extended or renewed by agreement between the holder and
any of maker, endorser and/or guarantor without notice to the others and that
after each such extension or renewal, the liabilities of each of maker,
endorser and/or guarantor shall remain as if each had consented thereto.
<PAGE>
In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, in whole or in part or
in any respect, or in the event that any one or more of the provisions of this
Note operate or would prospectively operate to invalidate this Note, then and
in either of those events, such provision or provisions only shall be deemed
null and void and shall not affect any other provision of this Note and the
remaining provisions of this Note shall remain operative and in full force and
effect and shall in no way be affected, prejudiced or disturbed thereby.
All rights, benefits and privileges arising hereunder shall be governed and
construed according to the laws of the State of New York applicable to the
agreement made and fully performed thereon, without regard to the conflicts of
law provisions thereof. Any legal action or proceeding arising out of or
relating to this Note may be instituted in the courts of the State of New York
or of the United States of America for the Southern District of New York, and
the Borrower hereby irrevocably submits to the jurisdiction of each such court
in any such action or proceeding, the foregoing shall not limit the Bank's
right to bring any legal action or proceeding in any other appropriate
jurisdiction.
The Borrower hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in every suit, action or other proceeding
arising out of or based on this Note and brought in any such court, any claim
that the Borrower is not subject personally to the jurisdiction of the above
named courts, that Borrower's property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that
this Note or the subject matter hereof may not be enforced in or by such court;
and waives any offsets or counterclaims (other than compulsory counterclaims)
in any such action, suit or proceeding.
The Borrower hereby consents to service of process by certified or registered
mail at Borrower's address as set forth above.
THE BORROWER HEREBY WAIVES TRIAL BY JURY.
Wellman, Inc.
By: /s/ Audrey Goodman
Title: Assistant Treasurer
<PAGE>
Exhibit 4(y)(2)
MONEY MARKET MASTER NOTE
------------------------
June 13, 1994
FOR VALUE RECEIVED, the undersigned promises to pay FIRST FIDELITY
BANK, NATIONAL ASSOCIATION (the "Bank") at its office at 550 Broad Street,
Newark, New Jersey in lawful money of the United States and in immediately
available funds, the principal amount up to $20,000,000 or such lesser principal
amount of unpaid and outstanding advances made by the Bank on the maturity date
with respect to each such borrowing together with interest as specified herein.
The interest rate and maturity date of each borrowing shall be determined by
oral agreement between the undersigned and the Bank and shall be confirmed
promptly in writing or by telecopy. Failure to confirm shall in no respect
alter or modify the terms as agreed to by the parties. The Bank shall note in
its standard business records, whether manually or electronically maintained the
amount, maturity date, and interest rate of each such advance. The Bank's
records of such advances shall, in the absence of manifest error, be binding
upon the parties. ln the event the Bank gives notice or renders a statement by
mailing such notice or statement to the address noted below, concerning any such
advance or the amount of principal and interest due on this note, the Obligor
(which term shall include the undersigned and any endorser, surety or guarantor
of this note) agrees that unless the Bank receives a written notification of
exceptions to this statement within fifteen (15) business days after it is
mailed, the statement shall be an account stated, correct and acceptable and
binding upon the Obligor. Interest shall be calculated on the basis of a 360
days per year. With respect to each borrowing, interest shall accrue from the
first day of such borrowing and shall be payable in like funds at maturity.
In no event shall the maturity date for a borrowing made under this
note be more than three hundred sixty-four (364) days after the date of the
agreement to lend unless agreed to in writing by both parties prior to the date
of said borrowing.
The following shall be events of default under this note: (a) a breach
by an Obligor of any term, covenant, obligation, representation or warranty
arising under (i) this note, (ii) any present or future agreements with the Bank
including the failure to make any payment of principal or interest when due or
(iii) any present or future agreements with others for borrowed money or other
financial accommodations in an aggregate amount of $2,500,000 or more if (with
respect to this clause (iii) only), (x) in the case of a payment default, the
holders of such obligations are permitted to accelerate the maturity of such
obligations and (y) in the case of all other defaults, the maturity of such
obligations is accelerated, (b) the filing of a petition seeking relief, or the
granting of relief under the Bankruptcy Code or any similar federal or state
statute by or against the Obligor, the making of a general assignment for the
benefit of creditors by any Obligor, or any action by any Obligor for the
purpose of effecting the foregoing, (c) the appointment, or the filing of a
petition seeking the appointment of a custodian, receiver, trustee or liquidator
for any Obligor or any of its property or taking of possession of any part of
the property of any Obligor at the instance of any governmental authority, (d)
any Obligor becomes insolvent, is generally not paying its debts as they become
due or suspends transaction of its usual business, (e) the filing, entry or
issuance of any judgment, execution, garnishment, attachment, distraint, or
judgment lien against any Obligor or any of its property in excess of $2,500,000
which has not been dismissed or bonded within 60 days, (f) the dissolution,
merger, consolidation or reorganization of any Obligor when the Obligor is not
the surviving party, (g) any statement made in or pursuant to this note or to
induce the Bank to accept this note, shall prove to be untrue in any material
respect.
<PAGE>
Upon the occurrence of an event of default this note shall immediately
become due and payable without demand or notice, and the Bank may, in addition
to such other remedies provided by law: (a) collect interest from the date of
nonpayment on the unpaid balance of this note (including interest and principal)
at 2% above Base, which rate is the rate of interest established by the Bank as
its reference in making loans, and is not tied to any external rate of interest
or index, (b) collect an amount equal to reasonable attorneys' fees or allocated
costs of the Bank's in-house counsel, (c) set off the amount of this note
against any money due from the Bank or any deposit account maintained in the
Bank by any Obligor (such set off shall be deemed to have been made immediately
upon the occurrence of any event of default even though such set off is not
noted on the Bank's records until a later time).
The undersigned hereby agrees that any request for a borrowing
pursuant to this note shall constitute a representation that (a) there has been
no material change in the financial condition of any Obligor since the last
financial statements were provided to the Bank, (b) there has been no material
change in the management of any Obligor, (c) except as set forth in its most
recently filed report with the U.S. Securities and Exchange Commission (SEC
Reports) the undersigned is in material compliance with all applicable laws,
rules, regulations and orders concerning the environment, (d) the undersigned is
in compliance with all applicable laws, rules, regulations and orders other than
environmental, but including without limitation those concerning the employees
pension or benefit funds and the payment of taxes, assessments and other
governmental charges, and (e) except as disclosed in the undersigned's SEC
Reports, the undersigned has no knowledge of the discovery, discharge, or
release of any hazardous substance for which the undersigned is in any way
responsible under the Spill Compensation and Control Act or any similar federal
or state statute, (f) the undersigned has no knowledge of (i) the existence of
any event or condition which presents a risk of creating a material liability in
the undersigned under ERISA (Public Law 93-406 as amended), and (iii) the
occurrence or existence of any other event, condition or fact which may
materially adversely affect the financial condition of the undersigned.
All Obligors jointly and severally waive presentment for payment,
demand, notice of nonpayment, notice of protest, and protest of this note. All
Obligors consent to any and all extension of time, renewals, waivers,
modifications, or releases of any other Obligors that may be granted by the Bank
with respect to the payment or other provisions of this note. All Obligors
agree that additional makers, endorsers, guarantors, and sureties may become
parties hereto without notice to them or without affecting their liability
hereunder. The liability of each Obligor shall be absolute and unconditional
and without regard to the liability of any other party hereto.
The Bank shall not be deemed to waive any of its rights or remedies
hereunder unless such waiver is in writing and signed by the Bank and then only
to the extent specifically set forth therein. A waiver in one event shall not
be continuing or a bar to or waiver of such right or remedy on a subsequent
event.
The Bank is authorized to disclose any financial or other information
about any Obligor to any regulatory body or agency having jurisdiction over the
Bank or to any present, future or prospective participant or successor in
interest in any loan or other financial accommodation made by the Bank to the
undersigned. Advances under this note are at the sole discretion of the Bank.
To induce the Bank to accept this note and made advances hereunder, the
undersigned waives any rights that it may have arising out of any past or
present agreement or representation that would obligate the Bank to make such
advances.
<PAGE>
This note shall be governed and construed in accordance with the laws
of New Jersey. It shall be binding upon and inure to the benefit of the
undersigned and the Bank and their respective successors and assigns.
Wellman, Inc.
Address: 1040 Broad Street
Shrewsbury, N. J. 07702 BY: /s/ Audrey Goodman
----------------------
Name: Audrey Goodman
Title: Assistant Treasurer
Fiber Industries, Inc.
BY: /s/ Audrey Goodman
----------------------
Name: Audrey Goodman
Title: Assistant Treasurer
Prince, Inc.
BY: /s/ Audrey Goodman
----------------------
Name: Audrey Goodman
Title: Assistant Treasurer
New England CRINC
BY: /s/ Audrey Goodman
----------------------
Name: Audrey Goodman
Title: Assistant Treasurer
<PAGE>
Exhibit 4(y)(2)
COMMERCIAL PURPOSE LOAN NOTE
$25,000,000,00 June 13, 1994
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 Twenty-Five Million ($25,000,000.00)
Dollars to be paid as follows:
Principal payable not more than 365 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, 1995, 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 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.
<PAGE>
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 default under the Credit
Agreement dated December 7, 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 thirty (30) days;
(5) the issuing of any attachment, levy or garnishment against any property of
any Obligor not discharged or bonded within 60 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 surety agreement applicable to any of
the Liabilities to the Bank, is false or incorrect; or (10) the failure of any
Obligor to timely furnish to Bank such financial and 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.
<PAGE>
MISCELLANEOUS - Debtor agrees to timely furnish to Bank such publicly 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 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 unforceability shall not affect any
other provision hereof, but this Note shall be construed as if such invalid or
enforceable 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 Provision, if any, below, are hereby made a part hereof and are
incorporated herein.
Debtor has duly executed this Note the date and year written on the first page
hereof, and has hereunto set Debtor's hand and seal.
<PAGE>
Wellman, Inc. (co-borrower)
By: /s/ Audrey Goodman, Assistant Treasurer
Attest: /s/ Claudia Schwinn
Fiber Industries, Inc. (co-borrower)
By: /s/ Audrey Goodman, Assistant Treasurer
Attest: /s/ Claudia Schwinn
New England CRInc. (co-borrower)
By: /s/ Audrey Goodman, Assistant Treasurer
Attest: /s/ Claudia Schwinn
Prince, Inc. (co-borrower)
By: /s/ Audrey Goodman, Assistant Treasurer
Attest: /s/ Claudia Schwinn
<PAGE>
Exhibit 4(y)(2)
COMMERCIAL LOAN MASTER NOTE
Amount $10,000,000.00
Dated: March 15, 1994
FOR VALUE RECEIVED, Wellman, Inc., Fiber Industries, Inc., Prince, Inc., and New
England CRInc-, each jointly and severally if more than one person, and herein
after referred to as (the "Borrower") promises to pay MIDLANTIC NATIONAL BANK, a
National Banking Association (the "Bank"), at its offices located at 60 Neptune
Blvd., Neptune, New Jersey, or at such other place as the Bank may direct, TEN
MILLION AND 00/100 DOLLARS, or such lesser principal amount of unpaid and
outstanding borrowings, together with interest, as follows:
1) INTEREST: (a) Interest under this Note will accrue on the unpaid principal
balance of each advance at the annual rate(s) set forth in subparagraph (b)
of this section (calculated on the actual number of days elapsed over a
360-day year). At no time, however, shall the interest rate exceed the
maximum allowable by law. (b) The interest rate on individual advances under
this Note will be quoted individually and fixed to the maturity date of the
particular advance.
2) TERM: Individual advances under this Note will each have a specific
maturity date. The maturity date will be specified by the Borrower at the
time of each advance. In no event, may any advance have a maturity date
later than March 31, 1995 (the "Final Maturity").
All Loans made by Bank pursuant to the Agreement, and all payments made on
account of principal hereof, may be recorded by Bank on the grid attached to
and made a part of the Note. Amounts recorded on such grid, or any amounts
recorded by Bank electronically, by computer or otherwise in accordance with
its customary practices, shall be conclusive absent manifest error, but
failure to make or error in any such recordation shall not affect Borrower's
obligation to repay the amounts due under this Note.
3) PAYMENTS: The Borrower shall pay principal and interest on this Note at
maturity. The principal amount of each advance is due and payable on the
maturity date of such advances but in no event later than Final Maturity.
All payments will be applied first to accrued interest and then to
principal.
4) DEFAULT: The Borrower shall be in default under this Note upon (a) The
failure to make any payment of interest or principal when due in accordance
with the terms of this Note; or (b) The occurrence of an Event of Default
under the Banking Group Loan Agreement dated December 7, 1990, as amended;
to which the Bank's loan represented by Master Note are cross-defaulted.
5) OTHER: The Note shall immediately become due and payable upon the
occurrence of any of the following events:
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(a) Borrower becomes insolvent of subject to bankruptcy, or insolvency, or
similar to proceeding relating to creditor's rights or a party to any
proceeding providing for an adjustment to or relief from its debts;
(b) Borrower makes or has made a false or misleading statement in applying
for or in connection with the loan evidenced by this Note or any other
transaction with the Bank or refuses, on request, to supply financial
or other information reasonably requested by the Bank;
(c) Any material event occurs which, in the Bank's reasonable discretion,
impairs the financial responsibility or condition of the Borrower.
Upon default, the entire amount of interest, principal, and any other
sums due under this Note shall become due and payable immediately.
Until such terms are received, interest shall accrue at the rate(s) of
interest equal to 1.00% per annum in excess of rates of interest which
were in effect on each advance immediately prior to the default if
default had not occurred.
6) WAIVERS: The Bank is not required to do any of the following before
enforcing its rights under this Note:
(a) Accelerate payment of amount due;
(b) Give notice that amounts due have not been paid;
(c) Obtain an official certificate of nonpayment;
(d) Provide notice to any other lender that is party to the Banking Group
Loan Agreement dated December 7, 1990, as amended, to which the Bank's
loan hereunder are cross-defaulted.
7) NOTE BINDING ON EACH BORROWER AND SUCCESSORS: All obligations under this
Note are the joint and several unconditional obligations of Borrower and all
who succeed the Borrower's rights and interests.
8) OTHER PROVISIONS: The Borrower acknowledges receipt of a copy of this Note
and its consent to the choice of terms set forth in this Note.
9) CHANGES: This Note can only be changed by an agreement in writing signed
by the Borrower and the Bank.
10) GOVERNING LAW: This Note shall be construed according to the laws of the
State of New Jersey, and the Borrower consents to the jurisdiction of the
courts of the State of New Jersey to determine any questions of fact or law
arising under this Note.
11) ACTIONS INVOLVING THIS NOTE: If this Note is referred to any attorney for
collection, the Borrower agrees to pay all reasonable costs of collection,
including court costs and attorney's fees.
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WITNESSED OR
ATTESTED BY: WELLMAN, INC,
/s/ Susan Karkoska By: /s/ Audrey Goodman
Name: Name: Audrey Goodman
Title: Title: Assistant Treasurer
FIBER INDUSTRIES, INC.
/s/ Susan Karkoska By: /s/ Audrey Goodman
Name: Name: Audrey Goodman
Title: Title: Assistant Treasurer
PRINCE, INC.
/s/ Susan Karkoska By: /s/ Audrey Goodman
Name: Name: Audrey Goodman
Title: Title: Assistant Treasurer
NEW ENGLAND CRInc.
/s/ Susan Karkoska By: /s/ Audrey Goodman
Name: Name: Audrey Goodman
Title: Title: Assistant Treasurer
Exhibit 4(aa)
PROMISSORY NOTE
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$20,000,000.00 Providence, Rhode Island
May 13, 1994
FOR VALUE RECEIVED, WELLMAN, INC., a Delaware corporation, with a principal
business address at Shrewsbury Executive Center, 1040 Broad Street, Suite 302,
Shrewsbury, New Jersey 07702 (hereinafter referred to as the "Borrower")
promises to pay to the order of Fleet National Bank, a national banking
association organized and existing under the laws of the United States of
America (the "Bank"), at the Bank's head office located at 111 Westminster
Street, Providence, Rhode Island 02903, the principal sum of Twenty Million and
00/100 Dollars ($20,000,000.00) in a single installment of principal on May 12,
1995 (the "Maturity Date").
The Borrower promises to pay to the order of the Bank interest before and
after maturity on the principal amount of this promissory note (the "Promissory
Note") outstanding from time to time from the date hereof until payment in full
of all principal, interest, fees and other sums due under this Promissory Note,
payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing on the first such Business Day after the date
hereof through and including the date of payment in full of all principal,
interest, fees and other sums due under or in connection with this Promissory
Note. Subject to the other provisions of this Promissory Note, interest shall
accrue and be due and payable under this Promissory Note on said unpaid
principal balance of this Promissory Note at a rate per annum of five and
eighty-nine one-hundredths percent (5.89%).
The Borrower shall be permitted to voluntarily prepay, in whole or in part,
the Indebtedness outstanding under this Promissory Note (the "Loan") at any
time, subject to the Borrower giving the Bank not less than five (5) Business
Days prior written notice thereof, subject to current market conditions, as
determined by the Bank, and, subject to the Borrower's payment to the Bank of a
prepayment premium in an amount computed pursuant to the second succeeding
paragraph below. In the event of any such voluntary prepayment the date upon
which such computation of such prepayment premium shall be based (the
"Determination Date") shall be the date upon which such prepayment is made.
If the obligations of the Borrower to the Bank evidenced by this
Promissory Note shall be accelerated, 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 pursuant to the next paragraph below. In such event the
Determination Date upon which the computation of such 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 and
ending on the Maturity Date. In the event of such acceleration, an involuntary
prepayment of the Loan shall be deemed to have occurred upon the Determination
Date selected by the Bank regardless of whether funds are actually received by
the Bank.
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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 Maturity Date shall be subtracted
from the interest rate on this Promissory Note. If the result is zero or a
negative number, there shall be no prepayment premium. If the result is a
positive number, then the resulting percentage shall be multiplied by the amount
of the principal balance being prepaid. The resulting amount will be divided by
360 and multiplied by the number of days remaining between the Determination
Date and the Maturity Date (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 on the
Maturity Date. The resulting amount shall be the prepayment premium due to the
Bank upon notice by the Bank to the Borrower of the amount thereof and shall
thereupon be paid by the Borrower to the Bank in immediately available Dollars.
Any amount of principal or interest hereof which is not paid when due,
whether at the Maturity Date, by acceleration or otherwise, shall bear interest,
payable on demand, at a floating interest rate per annum equal to one percent
(1.0%) above Effective Prime.
Principal, interest, fees and other sums are payable in immediately
available Dollars to the Bank at its address set forth above.
Each capitalized term used in this Promissory Note and not expressly
defined in this Promissory Note shall have the meaning ascribed to such term in
that certain Loan Agreement dated as of December 7, 1990 by and among the
Borrower, the Agent, the other Banks party thereto and the Bank, as amended
prior to, on and after the date hereof (the "Loan Agreement").
The Borrower shall be in default under this Promissory Note (i) upon the
occurrence of any of the Events of Default under the Loan Agreement, (ii) if the
Borrower shall fail to make due and punctual payment of any interest, principal
and/or other amounts payable under this Promissory Note within five (5) days
after the date when the same is due and payable, at the due date thereof or if
the Borrower shall fail to make any such payment of interest, principal and/or
any other amount under this Promissory Note on the date when such payment
becomes due and payable by acceleration.
Upon the occurrence of any one or more defaults under this Promissory Note,
the holder of this Promissory Note may, by notice to the Borrower, declare the
entire unpaid principal amount of this Promissory Note and all interest accrued
and unpaid hereon and any and all other Indebtedness under this Promissory Note
owing by the Borrower and/or any subsidiary to be forthwith due and payable,
whereupon this Promissory Note and all such accrued interest, principal and
other Indebtedness shall become and be forthwith due and payable without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of an Event of Default under Section 6.0l(b) or (c) of the Loan
Agreement, all of the unpaid principal amount of this Promissory Note and all
interest and other sums accrued and unpaid thereon shall thereupon be due and
payable in full without any need for the holder of this Promissory Note to make
any such declaration or take any action. The holder of this Promissory Note may
upon any such acceleration exercise any and all remedies available at law or in
equity, including, without limitation, all remedies available under or as a
result of this Promissory Note, the guaranty of this Promissory Note or any
other document, instrument or agreement now or hereafter securing this
Promissory Note.
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If this Promissory Note shall not be paid when due and shall be placed by
the holder hereof in the hands of an attorney for collection, through legal
proceedings or otherwise, the Borrower will pay reasonable attorneys' fees to
the holder hereof together with reasonable costs and expenses of collection.
All interest and fees payable under or in connection with this Promissory
Note shall be computed on the basis of the actual number of days elapsed using a
365 (366) day year using the actual number of days elapsed.
All provisions of this Promissory Note and any other agreements between the
Borrower and the Bank are expressly subject to the condition that in no event,
whether by reason of acceleration of maturity of the Indebtedness evidenced by
this Promissory Note or otherwise, shall the amount paid or agreed to be paid to
the Bank which is deemed interest under applicable law exceed the maximum
permitted rate of interest under applicable law (the "Maximum Permitted Rate"),
which shall mean the law in effect on the date of this Promissory Note, except
that if there is a change in such law which results in a higher Maximum
Permitted Rate, then this Promissory Note shall be governed by such amended law
from and after its effective date. In the event that fulfillment of any
provision of this Promissory Note or any document, instrument or agreement
providing security for this Promissory Note results in the rate of interest
charged hereunder being in excess of the Maximum Permitted Rate, the obligation
to be fulfilled shall automatically be reduced to eliminate such excess. If,
notwithstanding the foregoing, the Bank receives an amount which under
applicable law would cause the interest rate under this Promissory Note to
exceed the Maximum Permitted Rate, the portion thereof which would be excessive
shall automatically be deemed a prepayment of and be applied to the unpaid
principal balance of this Promissory Note.
The Borrower expressly waives presentment, notice of acceleration and
intent to accelerate, demand for payment and protest and notice of protest and
nonpayment.
This Promissory Note shall for all purposes be governed by and construed in
accordance with the local laws of the State of Rhode Island.
Executed as a sealed instrument as of the date first above written.
In the presence of: WELLMAN, INC.
/s/ Claudia Schwinn /s/ Audrey L. Goodman
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Audrey L. Goodman
Assistant Treasurer
