8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)
January 9, 2009

Wellman, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation) 1-10033
(Commission File Number) 04-1671740
(IRS Employer Identification
No.)

3303 Port and Harbor Drive
Bay St Louis, Mississippi
(Address of principal executive offices)
39520
(Zip Code)

Registrant’s telephone number, including area code: (228) 533-4480

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 1.01. Entry into a Material Definitive Agreement.
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
Ex-10.1 Plan Sponsorship Agreement dated January 9, 2009
Ex-10.2 Exit Financing Commitment - Senior Credit Facility Commitment Letter dated January 9, 2009.

Item 1.01. Entry into a Material Definitive Agreement.

     On January 9, 2009, Wellman, Inc. (the “Company”), certain of its subsidiaries (collectively, the “Debtors”), Sola, Ltd. and BlackRock Financial Management, Inc. (collectively with Sola, Ltd., the “Plan Sponsors”) entered into a Plan Sponsorship Agreement, in which the Plan Sponsors will invest $35 million dollars in Wellman Holdings, Inc. (“Reorganized Wellman”), a newly formed Delaware corporation that will hold 100% of the equity of the Company upon consummation of the Debtors’ Third Amended Joint Plan of Reorganization (as modified, the “Plan”) under Chapter 11 of the Bankruptcy Code. In exchange for such investment, the Plan Sponsors will receive common stock and $40 million in principal amount of second-lien secured convertible notes of Reorganized Wellman (the “Convertible Notes”), which represents on an as-converted basis 50% of the total common stock of Reorganized Wellman. This description of the Plan Sponsorship Agreement is qualified in its entirety by the copy thereof attached as Exhibit 10.1 hereto and which is incorporated by reference herein.

     On January 9, 2009, CIT Group/Business Credit, Inc., CIT Bank and CIT Capital Securities LLC (collectively, “CIT”), and the Company entered into a Senior Credit Facility Commitment Letter (the “Commitment Letter”), in which CIT committed to providing the Company with a $35 million revolving credit facility upon emergence from bankruptcy assuming that certain conditions are satisfied. This description of the Commitment Letter is qualified in its entirety by the copy thereof attached as Exhibit 10.2 hereto and which is incorporated by reference herein.

     Proceeds from the Plan Sponsors and senior credit facility will be used to repay amounts borrowed under the Debtor in Possession Credit Agreement and pay certain deferred financing fees, administrative expenses, priority claims, cure payments and professional fees associated with the consummation of the Company’s Plan (as defined below).

     On January 13, 2009, the Plan was confirmed by the U.S. Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). Consummation of the Plan is subject to numerous conditions, including those set forth in the Plan Sponsorship Agreement and the Commitment Letter.

Item 9.01. Financial Statements and Exhibits.

     (a) Not applicable.

     (b) Not applicable.

     (c) Exhibits

     10.1 Plan Sponsorship Agreement dated January 9, 2009.

     10.2 Exit Financing Commitment — Senior Credit Facility Commitment Letter dated January 9, 2009.

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 hereunto duly authorized.

	Wellman, Inc.
January 15, 2009	/s/ Keith R. Phillips
	Keith R. Phillips
	Vice President, Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number	Description
10.1	Plan Sponsorship Agreement dated January 9, 2009.
10.2	Exit Financing Commitment — Senior Credit Facility Commitment Letter dated January 9, 2009.

EX-10.1

Exhibit 10.1

January 9, 2009

Wellman, Inc.
3303 Port and Harbor Drive
Port Bienville Industrial Park
Bay St. Louis, MS 39520
Attn: Mark Ruday

          Re: Plan Sponsorship Agreement

Gentlemen:

          Wellman, Inc. (as debtor-in-possession and as reorganized upon consummation of the Reorganization (as defined below) and the Closing (as defined below), “Wellman”) and the subsidiaries of Wellman that are signatories hereto (collectively, the “Wellman Subsidiaries”) intend to reorganize (the “Reorganization”) pursuant to a plan of reorganization under chapter 11 of title 11, of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”). Wellman, the Wellman Subsidiaries and the Issuer (as defined below) are collectively referred to herein as the “Wellman Parties” and each, individually, a “Wellman Party”. Reference is made to the proposed plan of reorganization (as amended or modified, the “Plan”), attached hereto as Exhibit A. Terms used in this Plan Sponsorship Agreement (this “Agreement”) with initial capital letters that are not otherwise defined shall have the meanings ascribed to such terms in the Plan. This Plan Sponsorship Agreement supersedes and replaces the backstop commitment agreements dated June 25, 2008 and September 16, 2008, respectively, in their entireties and such agreements are no longer of any force or effect.

          Among other sources, the Plan is predicated upon an infusion of an aggregate of $35 million in cash from the Plan Sponsors (as defined below). In exchange for such infusion, the Plan provides for the Plan Sponsors to receive (i) their Applicable Percentage of $40 million in principal amount of 10% second-lien secured convertible notes (the “Convertible Notes”) of Wellman Holdings, Inc. (the “Issuer”), a newly formed Delaware corporation that will hold 100% of the equity of Wellman, Inc. upon consummation of the Reorganization and the Closing on the Effective Date (as defined below) and (ii) their Applicable Percentage of 60,000 shares of New Common Stock of the Issuer (the “Plan Sponsor Shares” and, together with the Convertible Notes, the “Plan Sponsor Consideration”)(it being understood that 60,000 shares of New Common Stock of the Issuer shall also be issued at the Closing to the holders of the Permitted Third Lien Indebtedness (as defined below), and that the aggregate number of shares of New Common Stock

of the Issuer outstanding immediately following the Closing shall not exceed 120,000).¹ The Convertible Notes shall be convertible into New Common Stock of the Issuer on an initial basis of 4.6153 shares of New Common Stock per $1000 of principal amount of Convertible Notes, subject to customary anti-dilution adjustments (the Permitted Third Lien Indebtedness to be convertible into New Common Stock of the Issuer on an initial basis of 3.0769 shares of New Common Stock per $1000 of principal amount of Permitted Third Lien Indebtedness, subject to customary anti-dilution adjustments and to an increase in the conversion price to reflect, and neutralize the effect of, any “paid-in-kind” interest paid thereon, to the effect that “paid-in-kind” interest paid shall not result in an increased number of shares being receivable by the holders of Permitted Third Lien Indebtedness on conversion from the number of shares they would have received had no “paid-in-kind” interest been paid, it being understood that the initial aggregate principal amount of Convertible Notes and the initial aggregate principal amount of Permitted Third Lien Indebtedness would each be convertible into the same aggregate number of shares of New Common Stock, each representing approximately 50% of the pro forma New Common Stock (excluding the 60,000 shares issued at the Closing to each of the two groups comprised of holders of the Permitted Third Lien Indebtedness and holders of the Convertible Notes).

          The Convertible Notes shall (i) be issued pursuant to an indenture (the “Convertible Notes Indenture”) bear interest at a rate per annum equal to 10 %, plus default interest during the continuance of an event of default of 2% per annum over the rate otherwise payable, (ii) mature on the first payment date in 2019, and have mandatory purchase offer provisions in the event of an Asset Sale (to be defined), the proceeds of which have not been used to permanently reduce Permitted First Lien Indebtedness to the extent required thereby or to reinvest in long term assets, (iii) be senior indebtedness of the Issuer, (iv) be guaranteed on a senior basis by each other Wellman Party, (v) be secured by a second priority lien (which lien shall be second priority only to the lien securing up to an aggregate of $50 million (subject to annual adjustments for inflation at the rate set for in the United States Consumer Price Index published by The Bureau of Labor Statistics) in principal amount of first lien indebtedness (“Permitted First Lien Indebtedness”) (which maximum aggregate amount of Permitted First Lien Indebtedness may be increased with the consent of (A) holders of at least 60% of the then outstanding principal amount of the Convertible Notes and (B) holders of at least 60% of the then outstanding principal amount of the Permitted Third Lien Indebtedness) and shall be senior to the lien securing all other indebtedness issued pursuant to the Plan in satisfaction of the First Lien Term Loan and Second Lien Term Loan pre-petition indebtedness of Wellman, which shall be in an aggregate principal amount not to exceed $60 million plus the amount of any “paid-in-kind” interest paid in accordance with the terms of the indenture relating thereto either evidenced by new notes or by accretion in the principal amount of the existing notes (“Permitted Third Lien Indebtedness”)) on all of the assets of each Wellman Party, (vi) shall permit certain other indebtedness, including, without limitation, purchase money debt and capital lease obligations in an aggregate amount taken together not to exceed $5 million and other general indebtedness in an aggregate amount not to exceed $2 million, in each case, subject to annual adjustments for inflation at the rate set for in the United States Consumer Price Index published by The Bureau of Labor Statistics and (vii) shall be subject to,

¹ The Plan Sponsor Consideration includes a fee consisting of $5 million principal amount of additional Convertible Notes (the “Plan Sponsor Fee”). The Plan Sponsor Fee shall be delivered in the same manner as that set forth in clause 2(b)(ii) below and at the same time as the Plan Sponsor Consideration.

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and have the benefits of, one or more Intercreditor Agreements (collectively, the “Intercreditor Agreement”) between the holders of (or the duly authorized representative of the holders of) the Permitted First Lien Indebtedness, the Permitted Third Lien Indebtedness and the Convertible Notes. The Convertible Notes shall be mandatorily convertible in connection with a proposed sale of all or substantially all of the assets of the Wellman Parties, or a merger or similar transaction involving the Issuer or Wellman and its subsidiaries, which has been approved by the Supermajority Equity Holders; provided however that each holder of Convertible Notes that voted in opposition of such transaction will have the option of being redeemed at 100% of the then outstanding principal of such holders’ Convertible Notes plus accrued and unpaid interest. “Supermajority Equity Holders” mean holders of 70% of the New Common Shares (giving pro forma effect to conversion by the holders of the Convertible Notes and the Permitted Third Lien Indebtedness) determined on an “as converted” fully diluted basis assuming conversion of all outstanding Convertible Notes and Permitted Third Lien Indebtedness. If the Issuer has received a proposal for a sale of all or substantially all of the assets of the Wellman Parties, or a merger or similar transaction involving the Issuer or Wellman and its subsidiaries, or the Issuer has a good-faith belief that an initial public offering of the Issuer will be made, or that a sale of all or substantially all of the assets of the Wellman Parties, or a merger or similar transaction involving the Issuer or Wellman and its subsidiaries will be consummated, then the Issuer will have the ability to institute up to a 60 day moratorium on the ability of each holder of Convertible Notes to convert such holder’s Convertible Notes into New Common Stock. Such 60 day moratorium shall be extendible by the board of directors by up to an additional 60 day period, after which the right to convert must be honored for at least 30 days before the Issuer may impose any new moratorium.

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          The Permitted Third Lien Indebtedness shall be both payment subordinated and lien subordinated to the Convertible Notes and the Permitted First Lien Indebtedness in a manner and pursuant to documentation that is no less favorable to the holders of the Convertible Notes than are the terms of such documentation between the holders of the Permitted First Lien Indebtedness and the holders of the Convertible Notes to the holders of the Permitted First Lien Indebtedness and otherwise in form and substance satisfactory to the Plan Sponsors, with no cross default to the Convertible Notes or the Permitted First Lien Indebtedness, a standstill and cash payment blockage upon default under the Convertible Notes and other customary payment subordination provisions, provided that so long as Available Cash (to be mutually agreed) exists to pay cash interest on the Permitted Third Lien Indebtedness and no default exists under the Permitted First Lien Indebtedness or the Convertible Notes, the payment subordination terms shall not prohibit cash payment of interest on the Permitted Third Lien Indebtedness. The Permitted Third Lien Indebtedness shall be mandatorily convertible in connection with a proposed sale of all or substantially all of the assets of the Wellman Parties, or a merger or similar transaction involving the Issuer or Wellman and its subsidiaries, which has been approved by the Supermajority Equity Holders; provided however that each holder of Permitted Third Lien Indebtedness that voted in opposition of such transaction will have the option of being redeemed at 100% of the then outstanding principal amount of such holders’ Permitted Third Lien Indebtedness plus accrued and unpaid interest (including “paid-in-kind” interest). If the Issuer has received a proposal for a sale of all or substantially all of the assets of the Wellman Parties, or a merger or similar transaction involving the Issuer or Wellman and its subsidiaries, or the Issuer has a good-faith belief that an initial public offering of the Issuer will be made, or that a sale of all or substantially all of the assets of the Wellman Parties, or a merger or similar transaction involving the Issuer or Wellman and its subsidiaries will be consummated, then the Issuer will have the ability to institute up to a 60 day moratorium on the ability of each holder of Permitted Third Lien Indebtedness to convert such holder’s Permitted Third Lien Indebtedness into New Common Stock. Such 60 day moratorium shall be extendible by the board of directors by up to an additional 60 day period, after which the right to convert must be honored for at least 30 days before the Issuer may impose any new moratorium.

          The Convertible Notes, the Convertible Notes Indenture, the guarantees, mortgages and other security and support and other related documents evidencing or relating to the foregoing (including the Intercreditor Agreement) are collectively referred to herein as the “Second Lien Documents”. The notes and the financing agreements evidencing the Permitted First Lien Indebtedness, and the guarantees, mortgages and other security and support and other related documents evidencing or relating to the foregoing, are collectively referred to herein as the “First Lien Documents”. The notes and the indenture evidencing the Permitted Third Lien Indebtedness, and the guarantees, mortgages and other security and support and other related documents evidencing or relating to the foregoing, are collectively referred to herein as the “Third Lien Documents”.

1. The Commitments.

          (a) Subject to the terms and conditions hereof, including the accuracy of the representations and warranties of the Issuer as of the date hereof and, other than those representations and warranties that speak only as of an earlier specified date, as of the Effective Date, compliance by the Issuer with its covenants and other agreements to be performed or

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observed by it hereunder, including those required to have been performed or observed prior to and on the Effective Date, the occurrence of the Effective Date on or prior to January 31, 2009, and satisfaction of all conditions set forth herein on or prior to January 31, 2009 (collectively, the “Plan Sponsor Conditions”), each of SOLA, Ltd. and/or certain affiliates, funds, or managed accounts designated by SOLA, Ltd. (collectively, the “SOLA Parties”), and BlackRock Financial Management, Inc. and/or certain affiliates, funds, or managed accounts designated by BlackRock Financial Management, Inc. (collectively, the “BlackRock Parties” and together with the SOLA Parties, collectively, the “Plan Sponsors” and each a “Plan Sponsor”), severally agree to fund, in the case of the SOLA Parties, $17.5 million in cash, and in the case of the BlackRock Parties, $17.5 million in cash (such respective amounts, as to each Plan Sponsor, its “Applicable Portion”, and the percentage of the aggregate Plan Infusion to be provided as aforesaid by each Plan Sponsor, respectively, its “Applicable Percentage”), aggregating $35 million in cash (the “Plan Infusion”) in exchange for the Plan Sponsor Consideration (the agreement of each Plan Sponsor described in this Section 1(a) shall be referred to herein as its “Plan Sponsor Commitment”). Each Plan Sponsor shall fulfill its Plan Sponsor Commitment, on the terms and conditions described herein and subject to the Plan Sponsor Conditions, by paying, or causing one or more of its affiliates to pay, the Plan Infusion.

          (b) The Plan Sponsor agrees that, if Plan Sponsor Conditions shall have been timely satisfied, it will not change its vote for each Second Lien Term Loan Claim held by it or any of its controlled affiliates in favor of the Plan.

2. The Closing.

          (a) The delivery of the Plan Sponsor Consideration and payment of the Plan Infusion shall take place at the offices of Kirkland & Ellis LLP, Citigroup Center, 153 East 53rd Street, New York, New York 10022 on the Effective Date (but subject to satisfaction of the Plan Sponsor Conditions) (the “Closing”).

     (b) Upon Closing on the Effective Date:

     (i) Each Plan Sponsor, in satisfaction of its Plan Sponsor Commitment, shall pay by wire transfer, pursuant to the instructions provided by the Issuer, its Applicable Portion of the Plan Infusion;

     (ii) The Issuer shall deliver to each Plan Sponsor (or its designees) its Applicable Percentage of the Plan Sponsor Consideration. If the Convertible Notes are in global form, The Depositary Trust Company (“DTC”) shall credit the account of each Plan Sponsor in DTC’s system designated by such Plan Sponsor with portions of the global certificate representing such Plan Sponsor’s Applicable Percentage of the Convertible Notes (which global certificate shall be issued to DTC or its nominee) purchased by each Plan Sponsor pursuant to its Plan Sponsor Commitment;

     (iii) The Issuer shall deliver all certificates, instruments, and other documents required to satisfy the conditions set forth in this Plan Sponsorship Agreement; and

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     (iv) Wellman shall pay the reasonable out-of-pocket fees, costs, and expenses incurred in connection with this Plan Sponsorship Agreement by the Plan Sponsors, including, without limitation, all reasonable fees and expenses of Gibson, Dunn & Crutcher, as special counsel the Plan Sponsors (all of the fees, costs, and expenses set forth in this Section 2(b)(iv), collectively “Expenses”).

3. Representations and Warranties.

          (a) Each of the Wellman Parties hereby jointly and severally represents and warrants as of the date of this Plan Sponsorship Agreement, and as of the Effective Date and the Closing (both before and after giving effect to the transactions contemplated to occur at the Closing on the Effective Date), to the Plan Sponsors that:

     (i) Each Wellman Party is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization and has all requisite corporate or other power and authority to own, lease, and operate its properties and assets and to conduct its business as now being conducted, subject, except in the case of the Issuer, to the restrictions that may result solely from its status as a debtor-in-possession under the Bankruptcy Code. Such Wellman Party is duly qualified to transact business in each other jurisdiction in which the nature of property owned or leased by it or the conduct of its business requires it to be so qualified, except where the failure to be duly qualified to transact business, would not reasonably be expected to have a Material Adverse Effect;

     (ii) All of the outstanding shares of capital stock of Wellman are duly authorized, validly issued, fully paid, and nonassessable, and all such shares are and will be owned as of the Effective Date and consummation of the Closing by the Issuer free and clear of all liens, preemptive rights, rights of first refusal, subscription, and similar rights that would not be cancelled and extinguished under the Plan on the Effective Date. All of the outstanding shares of capital stock of each of Wellman’s subsidiaries are duly authorized, validly issued, fully paid, and nonassessable, and all such shares are owned by Wellman or another wholly owned subsidiary of Wellman free and clear of all liens, preemptive rights, rights of first refusal, subscription, and similar rights that would not be cancelled and extinguished under the Plan on the Effective Date;

     (iii) Such Wellman Party has the requisite corporate or other power and authority to execute and deliver, as applicable, this Plan Sponsorship Agreement, the Plan, the Disclosure Statement, and, subject to the approval of the Bankruptcy Court, the definitive documents necessary or appropriate to consummate the transactions contemplated hereby and thereby, and, as applicable, to file such documents with the Bankruptcy Court and, subject to the approval of the Bankruptcy Court, consummate the transactions contemplated hereby and thereby. The formulation, preparation, and, as applicable, filing of this Plan Sponsorship Agreement, the Plan, the Disclosure Statement, and such definitive documents have been, or shall have been on the filing date thereof, as applicable, (A) duly and validly authorized by all necessary corporate or other action on the part of such Wellman Party and (B) duly and validly executed and delivered by such Wellman Party. Upon the entry of an order by the Bankruptcy Court confirming the Plan (the “Confirmation Order”), this Plan Sponsorship Agreement (in the case of each Wellman Party) and the Plan (in the case of each Wellman Party other than the Issuer) shall constitute a valid and binding obligation of each Wellman Party enforceable against it in accordance with its terms;

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     (iv) Subject to entry of the Confirmation Order, (A) the execution and delivery of this Plan Sponsorship Agreement, the Plan, and each of the definitive documents necessary to effect the Reorganization by such Wellman Party, as applicable, do not and shall not (1) violate any provision of the articles of incorporation or by-laws or other organizational documents of such Wellman Party or (2) conflict with, violate, constitute a breach of, or result in the creation of a lien or any other encumbrance against, such Wellman Party or its properties pursuant to any contract, agreement, or instrument by which such Wellman Party or any of its subsidiaries is bound or any judgment, order, decree, law, statute, rule, regulation, or other judicial or governmental restriction to which such Wellman Party or any of its subsidiaries is subject; and (B) the performance of this Plan Sponsorship Agreement, the Plan, and each of the definitive documents necessary to effect the Reorganization by such Wellman Party, as applicable, and the consummation by such Wellman Party of the transactions contemplated hereby and thereby in accordance with the terms hereof and thereof shall not (1) violate any provision of the articles of incorporation or by-laws or other organizational documents of such Wellman Party as such documents are proposed to be amended pursuant to the Plan or (2) conflict with, violate, constitute a breach of, or result in the creation of a lien or any other encumbrance against, such Wellman Party or its properties pursuant to any contract, agreement, or instrument by which such Wellman Party or any of its subsidiaries shall be bound or any judgment, order, decree, law, statute, rule, regulation, or other judicial or governmental restriction to which such Wellman Party or any of its subsidiaries shall be subject in each case immediately after the effective date of the Plan (the “Effective Date”);

     (v) Subject to the filing of the certificate of incorporation for Wellman Holdings, Inc. (in form and substance satisfactory to each Plan Sponsor), (A) all of the outstanding shares of capital stock of the Issuer constituting Plan Sponsor Shares will be, from and after the Effective Date, duly authorized, validly issued, fully paid, and nonassessable, and all such shares are and will be owned as of the Effective Date and consummation of the Closing by the Plan Sponsors, in their respective Applicable Percentages thereof, free and clear of all liens, preemptive rights, rights of first refusal, subscription, and similar rights, and (B) the shares of New Common Stock of Wellman Holdings Inc. issuable upon conversion of the Convertible Notes, have been, or as of the Effective Date shall be, duly authorized and reserved for issuance, and when issued against payment therefor upon conversion of the Convertible Notes, shall be validly issued, fully paid, non-assessable, and free of all liens, preemptive rights, rights of first refusal, subscription, and similar rights;

     (vi) Wellman has heretofore delivered to the Plan Sponsor (i) an unaudited consolidated balance sheet as of September 30, 2008 (the “Third Quarter 2008 Balance Sheet”) and (ii) a stand-alone business plan (the “Business Plan”) dated December 26, 2008 (the “Business Plan Date”). The Third Quarter 2008 Balance Sheet was prepared in conformity with GAAP, is complete and correct in all material respects and fairly presents in all material respects the assets and liabilities of Wellman and its subsidiaries as of September 30, 2008 (the “Balance Sheet Date”). Neither Wellman nor any of its

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subsidiaries has any contingent obligation, contingent liability, or liability for taxes, long term lease, or unusual forward or long term commitment or other material liability, liquidated or unliquidated, that could reasonably be expected to have a Material Adverse Effect (defined below) and is not reflected on the Third Quarter 2008 Balance Sheet or in the Business Plan;

     (vii) Since the Balance Sheet Date, no Material Adverse Effect has occurred with respect to Wellman individually or the Wellman Parties taken as a whole;

     (viii) Each Wellman Party owns or has long term leases for all of its material real and personal properties, subject to existing liens, and on the Effective Date all such assets shall be free and clear of all liens except as shall be permitted under the Plan or as shall be described in the Disclosure Statement;

     (ix) There is no litigation, proceeding, or governmental investigation (collectively, “Litigation”) to which such Wellman Party is a party which is pending, or to the knowledge of such Wellman Party, threatened, against such Wellman Party or any properties or rights of such Wellman Party which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Such Wellman Party is not in violation of any term of any judgment, writ, decree, injunction, or order entered by any court or governmental authority and outstanding against it or any of its properties or rights, subject, where applicable, to the restrictions that may result solely from its status as a debtor-in-possession under the Bankruptcy Code;

     (x) No Wellman Party is in conflict with, or in default or violation of, any law, order, or agreement applicable to it or by which any property or asset of such Wellman Party is bound or affected;

     (xi) Assuming the representations of the Plan Sponsors set forth in Section 3(b)(v) through (viii) are true and correct, the offering and issuance of the Plan Sponsor Shares and of the Convertible Notes to the Plan Sponsors hereunder, together with the New Common Stock issuable upon conversion of the Convertible Notes, shall be exempt from registration under the Securities Act pursuant to Section 4(2) thereof; and

     (xii) Notwithstanding anything herein to the contrary, each Wellman Party acknowledges, represents, warrants and agrees that (a) the transactions contemplated hereby are arm’s length commercial transactions between the Issuer, on the one hand, and the Plan Sponsors, on the other, (b) in connection therewith and with the processes leading to such transactions, each Plan Sponsor is acting solely as a principal and not the agent or fiduciary of any Wellman Party or, as applicable, its debtor estate, (c) the Plan Sponsor has not assumed an advisory or fiduciary responsibility in favor of any of the Wellman Parties or, as applicable, their debtor estates with respect to any legal, tax, investment, accounting, regulatory, or other matters involving the transactions contemplated herein or the processes leading thereto (irrespective of whether any Plan Sponsor has advised or is currently advising any such Wellman Party on other matters), and (d) the Issuer and the Wellman Parties have consulted their own legal and financial advisors to the extent they deemed appropriate. The Issuer and the Wellman Parties represent, warrant and agree that

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they will not claim that the Plan Sponsor has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to any of the Wellman Parties or their shareholders or estates, in connection with the transactions contemplated herein or the processes leading thereto.

     The representations, warranties and agreements set forth in this Section 3(a) (collectively, the “Surviving Representations”) shall survive as if made on, and shall be deemed assumed and made by, the Issuer and Reorganized Wellman and the Surviving Entities (defined below).

          (b) Each Plan Sponsor hereby severally represents and warrants to Wellman and the Issuer that:

     (i) It is a limited liability company, limited partnership, corporation, or other entity, as the case may be, duly organized, validly existing, and in good standing under the laws of its state of organization and has all requisite power and authority to execute, deliver, and perform its obligations hereunder and to consummate the transactions contemplated hereby;

     (ii) The execution, delivery, and performance of this Plan Sponsorship Agreement by such Plan Sponsor and the consummation by such Plan Sponsor of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of such Plan Sponsor;

     (iii) This Plan Sponsorship Agreement has been duly executed and delivered by such Plan Sponsor and constitutes the legal, valid, and binding obligation of such Plan Sponsor, enforceable against such Plan Sponsor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights in general and by general principles of equity;

     (iv) the execution, delivery, and performance of this Plan Sponsorship Agreement by it and the consummation by such Plan Sponsor of the transactions contemplated hereby do not and shall not (A) violate any provision of the articles of incorporation or by-laws or other organizational documents of such Plan Sponsor or (B) conflict with, violate, constitute a breach of, or result in the creation of a lien or any other encumbrance against, such Plan Sponsor or its properties pursuant to any material contract, agreement, or instrument by which such Plan Sponsor is bound or any judgment, order, decree, law, statute, rule, regulation, or other judicial or governmental restriction to which such Plan Sponsor is subject;

     (v) It is (A) an “accredited investor” within the meaning of Regulation D of the Securities Act, and (B) a “qualified institutional buyer” as such term is defined under Rule 144A of the Securities Act;

     (vi) It acknowledges that it has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby and understands and is able to bear any economic risk associated with such investment;

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     (vii) The Plan Sponsor Shares and the Convertible Notes to be received by such Plan Sponsor hereunder at the Closing, and the New Common Stock receivable upon conversion of such Convertible Notes, will be acquired for such Plan Sponsor’s own account or on behalf of managed accounts and not with a view to the resale or distribution of any part thereof in violation of the Securities Act, and such Plan Sponsor has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the Securities Act. Notwithstanding anything in this Section 3(b)(vii) to the contrary, by making the representations herein, such Plan Sponsor does not agree to hold the Plan Sponsor Shares, Convertible Notes or New Common Stock of the Issuer for any minimum or other specific term and reserves the right to dispose of such Plan Sponsor Shares, Convertible Notes or New Common Stock at any time in accordance with or pursuant to a registration statement or an exemption from the registration requirements under the Securities Act and any applicable state securities laws; and

     (viii) It has been afforded the opportunity to ask questions and receive answers concerning Wellman and to obtain additional information.

4. Certain Conditions.

          (a) The obligations of each Plan Sponsor to consummate the transactions contemplated herein shall be subject to the satisfaction (or waiver by the Plan Sponsors) of each of the following conditions:

     (i) (x) the Confirmation Order, in a form satisfactory to the Plan Sponsor, shall have been entered by the Bankruptcy Court, which order shall provide for, among other things, the approval, and the execution and delivery by the Wellman Parties where applicable, of this Plan Sponsorship Agreement, the Plan, and each of the other definitive documents necessary to effect the Reorganization by each Wellman Party, as applicable, including the First Lien Documents, the Second Lien Documents and the Third Lien Documents, (y) no order staying, reversing, modifying, or amending the Confirmation Order shall be in effect, and (z) none of the Wellman Parties shall have made a public announcement, entered into an agreement, or filed any pleading, evidencing its intention to support or that otherwise supports any transaction with respect to the reorganization or sale of any of the Wellman Parties or otherwise shall have taken any action that is materially inconsistent with the transactions contemplated by the Plan or this Plan Sponsorship Agreement or the First Lien Documents, the Second Lien Documents or the Third Lien Documents;

     (ii) any plan of reorganization of Wellman shall be consummated only on terms consistent with the Plan and the First Lien Documents, the Second Lien Documents and the Third Lien Documents, and all of the conditions precedent to the confirmation and effectiveness of the Plan and to the execution and delivery by all parties intended to be signatory thereto of the First Lien Documents, the Second Lien Documents and the Third Lien Documents and to the closing of the financings, and consummation of the other transactions contemplated by the foregoing shall have been satisfied, in all material respects, in a manner satisfactory to the Plan Sponsors;

10

     (iii) any and all documentation relating to the Plan and the First Lien Documents, the Second Lien Documents and the Third Lien Documents, (including, without limitation, the Plan, any intercreditor agreement between the holders of the Permitted First Lien Indebtedness and the holders of the Convertible Notes, any intercreditor agreement between the holders of the Permitted First Lien Indebtedness and the holders of the Permitted Third Lien Indebtedness, any intercreditor agreement between the holders of the Convertible Notes and the holders of the Permitted Third Lien Indebtedness and the First Lien Documents, the Second Lien Documents and the Third Lien Documents themselves), and the transactions contemplated hereby and thereby and by the Plan, including, without limitation, each of the definitive documents necessary to effect the Reorganization, shall be in form and substance satisfactory to the Plan Sponsors and shall be consistent with the Plan and the exhibits attached thereto, and any and all amendments or modifications to the Plan on or after the initial filing date thereof, or to the proposed forms of the First Lien Documents, the Second Lien Documents and the Third Lien Documents approved by the Plan Sponsors, shall be in form and substance satisfactory to the Plan Sponsors;

     (iv) the cash payment obligations under (a) the Wellman Industries, Inc. Hourly Employees Pension Plan and (b) the Fiber Industries, Inc. Retirement Income Plan shall be in an amount acceptable to the Plan Sponsors;

     (v) the total amount of cash to be distributed on the Effective Date to the holders of Allowed General Administrative Claims (as defined in the Plan) (including cure and section 503(b)(9) claims) shall be no more than $12 million;

     (vi) each Plan Sponsor shall have received its Applicable Percentage of the Plan Sponsor Fee or such fee shall be paid contemporaneously with the issuance of the Plan Sponsor Shares and the Convertible Notes to the Plan Sponsors as contemplated in Section 2(b)(ii);

     (vii)  the representations and warranties of each of the Wellman Parties contained in this Plan Sponsorship Agreement and of each of the parties thereto (other than the Plan Sponsors) contained in any of the First Lien Documents, the Second Lien Documents or the Third Lien Documents that are qualified as to materiality, material adverse effect, Material Adverse Effect, or similar qualifiers, and the representation and warranty contained in Section 3(a)(xi) and (xii), shall be true and correct in all respects, on and as of the date hereof and, with respect to the Wellman Parties that are to continue in existence immediately following the Effective Date, or the successors of Wellman or new entities created pursuant to the Plan, including the Issuer (the “Surviving Entities”), and any other parties thereto (other than the Plan Sponsors), as of and after giving effect to the Closing and the Effective Date and the execution and delivery of, and consummation of the transactions contemplated by, the Plan and the First Lien Documents, the Second Lien Documents and the Third Lien Documents, with the same force and effect as though made on and as of such date, and (x) the representations and warranties of each of the Wellman Parties contained in this Plan Sponsorship Agreement and of each of the parties thereto

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(other than the Plan Sponsors) contained in any of the First Lien Documents, the Second Lien Documents or the Third Lien Documents that are not so qualified shall be true and correct in all material respects on and as of the date hereof and, with respect to the Surviving Entities, and any other parties thereto (other than the Plan Sponsors), as of and after giving effect to the Closing and the Effective Date and the execution and delivery of, and consummation of the transactions contemplated by, the Plan and the First Lien Documents, the Second Lien Documents and the Third Lien Documents, with the same force and effect as though made on and as of such date, (y) each of the other parties to the First Lien Documents, the Second Lien Documents and the Third Lien Documents shall have performed or complied with, in all material respects, its covenants and other agreements required to be performed or complied with under the First Lien Documents, the Second Lien Documents or the Third Lien Documents, as applicable, on or prior to the Effective Date, and (z) Wellman shall have performed or complied with, in all material respects, its covenants and other agreements required to be performed or complied with under this Plan Sponsorship Agreement and the First Lien Documents, the Second Lien Documents and the Third Lien Documents on or prior to the Effective Date and shall not be in breach of any thereof (and Wellman or Reorganized Wellman shall have delivered to each Plan Sponsor a certificate of its Chief Executive Officer or Chief Financial Officer to the effect that each of the conditions specified in this Section 4(a)(vii) is satisfied in all respects);

     (viii) The First Lien Documents, the Second Lien Documents and the Third Lien Documents shall have been duly executed and delivered by, or shall by court order have become effective and binding upon, and shall be enforceable against, each party thereto and each person or entity purported to be bound thereby. The indebtedness and other obligations of the Wellman Parties under the Second Lien Documents shall be secured by valid and perfected liens on all of the assets of the Wellman Parties pursuant to and in accordance with the Second Lien Documents, having the priority contemplated in the preamble to this Plan Sponsorship Agreement.;

     (ix)  the organizational documents of the Wellman Parties shall be satisfactory in form and substance to the Sponsors, and shall provide for an initial board of directors comprised of 7 members, including four designated by holders of the Convertible Notes, one designated by the holders of First Lien Term Loan pre-petition indebtedness of Wellman, one designated by the holders of the Second Lien Term Loan pre-petition indebtedness of Wellman, and the seventh to be the CEO of the Issuer, and that thereafter, (1) five members of the board of directors shall be elected by the vote of the holders of a majority of the voting power of the outstanding shares of New Common Stock and holders of the outstanding Convertible Notes and Permitted Third Lien Indebtedness (with holders of the Convertible Notes and the Permitted Third Lien Indebtedness voting on a “as converted” fully diluted basis), (2) for so long as at least $10,000,000 in aggregate principal amount of Permitted Third Lien Indebtedness remains outstanding, or the aggregate principal amount of the Permitted Third Lien Indebtedness is not less than 50% of the aggregate of the principal amount of the Convertible Notes and the Permitted Third Lien Indebtedness, one member of the board of directors shall be elected by the vote of holders of Permitted Third Lien Indebtedness representing at least a majority of the aggregate principal amount of the outstanding Permitted Third Lien Indebtedness and (3)

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one member of the board of the directors shall be the then-CEO of the Issuer (except as otherwise provided in the Amended and Restated Certificate of Incorporation of the Issuer); (x) the holders of New Common Stock, Convertible Notes and Permitted Third Lien Indebtedness shall enter into a registration rights agreement which shall provide that following an initial public offering by the Issuer, any such parties holding Common Stock, Convertible Notes and Permitted Third Lien Indebtedness representing in the aggregate at least 10% in voting power of the Common Stock, Convertible Notes and Permitted Third Lien Indebtedness, voting together as a single class on an as-converted basis, shall have demand and piggyback registration rights with respect to shares of New Common Stock of the Issuer owned by such holder; (y) the Convertible Notes to be purchased by the Plan Sponsors pursuant to its Plan Sponsor Commitment shall be issued and distributed in accordance with the Plan and this Plan Sponsorship Agreement pursuant to an exemption from registration under the Securities Act and any state or local law requiring registration for the offer or sale of a security, and (z) other than the Plan Sponsors and any entity that is an underwriter as defined in subsection (b) of Section 1145 of the Bankruptcy Code, subject to the approval of the Bankruptcy Court in the Confirmation Order, the issuance of the Convertible Notes shall qualify for an exemption from registration under the Securities Act and any state or local law requiring registration for the offer or sale of a security;

     (x) no provision of any applicable law or regulation and no judgment, injunction, decree, or other legal restraint shall prohibit the consummation of the Plan or the transactions contemplated thereby, or the entry into by the parties thereto of this Plan Sponsorship Agreement, the First Lien Documents, the Second Lien Documents and the Third Lien Documents and the consummation of the transactions contemplated thereby; and

     (xi) In the case of each Plan Sponsor, the other Plan Sponsor shall not have defaulted in payment of its Applicable Portion of the Plan Infusion.

          (b) The obligations of each of the Wellman Parties to consummate the transactions contemplated herein shall be subject to the satisfaction (or waiver by Wellman) of each of the following conditions:

     (i)  the Confirmation Order shall have been entered by the Bankruptcy Court and (y) the conditions precedent to the effectiveness of the Plan shall have been satisfied or waived in accordance with the Plan;

     (ii)  the representations and warranties of the Plan Sponsors contained in this Plan Sponsorship Agreement that are qualified as to materiality, material adverse effect, or similar qualifiers, and the representations and warranties of the Plan Sponsors contained in Section 3(b)(v), (vi), and (vii), shall be true and correct in all respects, on and as of the date hereof and the Effective Date, with the same force and effect as though made on and as of such date (except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall be true and correct as of such specified date), and (y) the representations and warranties of the Plan

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Sponsor contained in this Plan Sponsorship Agreement that are not so qualified shall be true and correct in all material respects on and as of the date hereof and the Effective Date, with the same force and effect as though made on and as of such date (except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall be true and correct in all material respects as of such specified date), and (z) the Plan Sponsors shall have performed or complied with, in all material respects, their covenants required to be performed or complied with under this Plan Sponsorship Agreement on or prior to the Effective Date (and the Plan Sponsors shall each have delivered to Wellman a certificate to the effect that each of the conditions specified in this Section 4(b)(ii) is satisfied in all respects with respect to such Plan Sponsor); and

     (iii) no provision of any applicable law or regulation and no judgment, injunction, decree, or other legal restraint shall prohibit the consummation of the Plan or the transactions contemplated thereby, or the entry into by the parties thereto of this Plan Sponsorship Agreement, the First Lien Documents, the Second Lien Documents and the Third Lien Documents and the consummation of the transactions contemplated thereby.

5. Additional Condition.

          The obligations of the Plan Sponsors to consummate the transactions contemplated herein shall be subject to the satisfaction (or waiver by the Plan Sponsors) of the further condition that there shall not have occurred between the Balance Sheet Date and the Effective Date a Material Adverse Effect. For purposes of this Plan Sponsorship Agreement, a “Material Adverse Effect” shall mean any change, effect, event, occurrence, development, circumstance, or state of facts which, either alone or in combination, has had or would reasonably be expected to have a materially adverse effect on the business, properties, operations, financial condition or results of operations of Wellman and its subsidiaries taken as a whole, or which would reasonably be expected to materially impair its or their ability to perform its or their obligations under this Plan Sponsorship Agreement or the First Lien Documents, the Second Lien Documents or the Third Lien Documents or have a materially adverse effect on or prevent or materially delay the consummation of the transactions contemplated by this Plan Sponsorship Agreement or the First Lien Documents, the Second Lien Documents or the Third Lien Documents or the Plan; provided, that in no event shall any effect directly resulting from the public announcement of this Plan Sponsorship Agreement or the filing of the Plan or the transactions contemplated hereby or in the Plan, alone or in combination, be taken into account in determining whether there has been or would reasonably likely be, a Material Adverse Effect.

6. Satisfaction of the Plan Sponsor Commitment.

          Each Plan Sponsor may, in its sole discretion, satisfy its Plan Sponsor Commitment directly and/or indirectly through one or more of its affiliates, separate accounts within its control, or investment funds under its or its affiliates’ management.

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7. Certain Covenants.

          (a) Wellman shall use reasonable best efforts to cause the conditions set forth in Sections 4 and 5 to be satisfied and to consummate the transactions contemplated herein and by the Plan.

          (b) Wellman (i) shall provide 5 days advance written notice to the Plan Sponsors of any amendments or modifications to any of the documents relating to the Plan and the transactions contemplated by the Plan, including, without limitation, each of the First Lien Documents, the Second Lien Documents or the Third Lien Documents or any other definitive documents necessary to effect the Reorganization, and (ii) must obtain the prior written consent of the Plan Sponsors for any such amendments or modifications prior to their submission to the Bankruptcy Court.

          (c) Wellman shall use reasonable best efforts to obtain all approvals, waivers, consents, and other authorizations necessary in connection with the performance of the Plan and this Plan Sponsorship Agreement and the First Lien Documents, the Second Lien Documents and the Third Lien Documents.

          (d) Wellman shall use reasonable best efforts to promptly take, or cause to be taken, all actions and promptly do, or cause to be done, all things necessary, proper, or advisable in order to (i) obtain a Confirmation Order with respect to the Plan, (ii) include in the Confirmation Order the approval of the payment of the Plan Sponsor Fee and Expenses, and (iii) consummate the transactions contemplated by the Plan on terms consistent with the terms set forth in the Plan, including entry into of each of the First Lien Documents, the Second Lien Documents or the Third Lien Documents and any other definitive documents necessary to effect the Reorganization. Each of the Plan Sponsors and Wellman shall cooperate with each other to the extent reasonable in connection with the foregoing, and none of the Plan Sponsors or Wellman shall take any action for the purpose of delaying, impairing, or impeding the receipt of any approval, waiver, consent, or authorization required to be obtained pursuant to this Plan Sponsorship Agreement.

          (e) Wellman shall pay in full all Expenses incurred by the Plan Sponsors in accordance with Section 2(b)(iv) or, if this Plan Sponsorship Agreement is terminated pursuant to Section 11 or otherwise prior to the Effective Date, if any, at the time of any such termination, and whether or not the Closing or the Effective Date or the Reorganization takes place.

          (f) Wellman shall deliver to each of the Plan Sponsors, as soon as practicable but in any event at least five business days prior to the Effective Date, a written notice which shall (a) specify the date on which it believes the Effective Date will occur and (b) designate the account to which each of the Plan Sponsors shall deliver the amounts so payable, as set forth in Section 2(b)(i). Wellman shall deliver to each of the Plan Sponsors no later than the business day immediately prior to the Effective Date a written notice which shall specify the Effective Date.

8. Certain Notices; Certain Information.

          (a) Wellman hereby covenants that it shall promptly deliver to the Plan Sponsors, and each of the Plan Sponsor hereby covenants that it shall promptly deliver to Wellman, written notice of any matter, event, or development that would (i) render any representation or warranty made by it herein inaccurate or incomplete in any material respect or (ii) constitute or result in a material breach by it of, or a failure by it to comply with, any material covenant or other agreement herein.

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          (b) Wellman shall furnish the Plan Sponsors with such information regarding the Wellman Parties and provide for access by the Plan Sponsors and their advisors and representatives to all books, records, documents, properties, personnel, advisors, and representatives of Wellman as any of the Plan Sponsors may request, provided, that, each of the Plan Sponsors agrees that it shall keep such information confidential in accordance with the confidentiality agreements signed by Wellman and the Plan Sponsors. All such requests for information made to any of the Wellman Parties by any of the Plan Sponsors shall be made to the Chief Executive Officer or to the Chief Financial Officer of Wellman or their designee.

          (c) In addition to the information rights provided for in Section 8(b), for so long as any of the Convertible Notes are outstanding and are “restricted securities” within the meaning of Rule 144 under the Securities Act (unless such securities can be sold, without limitation, pursuant to Rule 144 under the Securities Act), the Company, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, will provide to each holder of Convertible Notes and to each prospective purchaser of such Convertible Notes (as designated by such holder), upon the request of such holder or prospective purchaser any information required to be provided by Rule 144A(d)(4) under the Securities Act.

9. Certain Consent Rights. Each of the Wellman Parties hereby covenants that, without the prior written consent of the Plan Sponsors, it shall not, prior to the Effective Date, enter into any agreement with respect to its securities (it being understood that no such written consent shall be required for purposes of the issuance of the securities contemplated by the Plan), or amend any existing agreement with respect to such securities in any manner inconsistent with the rights of the Plan Sponsors pursuant to, or the consummation of the transactions contemplated by, this Plan Sponsorship Agreement or any of the First Lien Documents, the Second Lien Documents or the Third Lien Documents.

10. Removal of Legends. In the event that, following the transactions contemplated by the Plan and this Plan Sponsorship Agreement, any certificates, notes, or other forms of evidence of securities (“Securities”) of Wellman Holdings, Inc. held by any Plan Sponsor bear a restrictive legend then:

          (a) if such Plan Sponsor delivers to Reorganized Wellman (i) a certificate, in a form reasonably satisfactory to Reorganized Wellman, certifying that such Securities have been transferred pursuant to a registration statement that is effective under the Securities Act or (ii) a certificate, in a form reasonably satisfactory to Reorganized Wellman, certifying that such Securities have been transferred without registration in accordance with the requirements of Rule 144 under the Securities Act, Reorganized Wellman shall, or shall instruct its transfer agent to issue, upon surrender of such Securities, one or more new Securities in respect of those so transferred, which new Securities shall not bear any such legend; and

          (b) if the Plan Sponsor delivers to Reorganized Wellman an opinion of outside counsel to the Plan Sponsor reasonably acceptable to Reorganized Wellman that, in the opinion of such counsel, such legend is not, or is no longer, required to ensure compliance with the Securities

16

Act, Reorganized Wellman shall, or shall instruct its transfer agent to, issue upon surrender of such Securities one or more new Securities in replacement thereof, which new Securities shall not bear any such legend.

11. Termination by Plan Sponsors; Survival. Either Plan Sponsor shall be entitled to terminate its obligations under this Plan Sponsorship Agreement by giving written notice thereof to Wellman (a) in the event any of the Wellman Parties (i) breaches this Plan Sponsorship Agreement or the Plan in any respect deemed material by such Plan Sponsor and, if such breach is capable of cure, and is a breach other than of the obligations of the Wellman Parties set for the in Section 8(a), fails to cure such breach within five (5) business days from the receipt of notice of such breach), (ii) fails to satisfy any of the terms or conditions of, including default in performance of any of its obligations under, this Plan Sponsorship Agreement or the Plan or any of the First Lien Documents, the Second Lien Documents or the Third Lien Documents, or the satisfaction of any such term or condition, or performance of any of such obligations, becomes impossible, (iii) cannot satisfy all of the conditions set forth in Section 4 and Section 5, or the Closing or Effective Date does not occur for any reason, by January 31, 2009, or (iv) shall have made a public announcement, entered into an agreement or filed any pleading evidencing its intention to support, or otherwise supports, any transaction with respect to the reorganization or sale of any of the Wellman Parties or their assets or takes any other action that is otherwise materially inconsistent with the transactions contemplated by this Plan Sponsorship Agreement, the Disclosure Statement, or the Plan; or (b) upon the termination of the Plan, in which event Wellman shall pay on such termination date all accrued Expenses in accordance with Section 7(e). Upon any termination of this Plan Sponsorship Agreement, the provisions of Sections 7(e), 13, 14, 15, 16, 17, 18 and 19 shall survive any such termination, and the parties to this Plan Sponsorship Agreement shall remain liable for breaches of this Plan Sponsorship Agreement prior to its termination.

12. Indemnification.

          (a) Following the Closing, the Surviving Entities, on a joint and several basis, (each, an “Indemnifying Party”) shall indemnify, defend, and hold harmless the Plan Sponsors and their respective affiliates and each of their respective officers, directors, managers, partners, stockholders, employees, advisors, agents, and other representatives and any affiliate of the foregoing, and each of its and their respective successors and permitted assigns (each, an “Indemnified Party”) from and against, and shall promptly reimburse each Indemnified Party for, all losses, damages, liabilities, costs, and expenses, including, without limitation, interest, court costs, and reasonable attorneys’ fees and expenses relating to, arising out of, resulting from or in connection with (i) any breach or inaccuracy of the Surviving Representations, (ii) any breach or violation by the Wellman Parties of their representations, warranties, covenants and other agreements set forth in this Plan Sponsorship Agreement, and (iii) any action, suit, or proceeding by a third-party arising out of or related to this Plan Sponsorship Agreement or the transactions contemplated hereby (collectively, “Indemnified Liabilities”); provided, however that Indemnified Liabilities shall exclude any portion of such losses, damages, liabilities, costs, or expenses to the extent they are found in a final, non-appealable judgment of a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

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          (b) Each Indemnified Party entitled to indemnification hereunder shall (i) give prompt written notice to the Indemnifying Party of any claim with respect to which it seeks indemnification or contribution pursuant to this Plan Sponsorship Agreement (provided that failure to give such notice shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been materially prejudiced thereby) and (ii) permit such Indemnifying Party to assume the defense of such claim with counsel selected by the Indemnified Party and reasonably satisfactory to the Indemnifying Party; provided, however, that any Indemnified Party entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (x) the Indemnifying Party has agreed in writing to pay such fees and expenses, (y) the Indemnifying Party shall have failed to assume the defense of such claim within 20 days of delivery of the written notice of the Indemnified Party with respect to such claim or failed to employ counsel selected by such Indemnifying Party and satisfactory to such Indemnified Party, or (z) in the judgment of such Indemnified Party, based upon advice of its counsel, a conflict of interest may exist between such Indemnified Party and the Indemnifying Party with respect to any of such claims (in which case, if the Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such claim on behalf of such Indemnified Party). In connection with any settlement negotiated by an Indemnifying Party, no Indemnifying Party shall, and no Indemnified Party shall be required by an Indemnifying Party to, (i) enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the Indemnified Party of a release from all liability in respect to such claim or litigation, (ii) enter into any settlement that attributes, by its terms, liability to the Indemnified Party, or (iii) consent to the entry of any judgment that does not include as a term thereof a full dismissal of the litigation or proceeding with prejudice. In addition, without the consent of the Indemnified Party, no Indemnifying Party shall be permitted to consent to entry of any judgment or enter into any settlement which provides for any action on the part of the Indemnified Party other than the payment of money damages and expenses which are to be paid in full by the Indemnifying Party. If an Indemnifying Party fails or elects not to assume the defense of a claim pursuant to clause (y) above, or is not entitled to assume or continue the defense of such claim pursuant to clause (z) above, the Indemnified Party shall have the right without prejudice to its right of indemnification hereunder to, in its discretion, exercise in good faith and upon advice of counsel its rights to contest, defend, and litigate such claim and may settle such claim, either before or after the initiation of litigation, at such time and upon such terms as the Indemnified Party deems fair and reasonable; provided, however that at least 10 days prior to any settlement, written notice of its intention to settle is given to the Indemnifying Party.

13. Notices.

          (a) All notices, requests, and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally, by facsimile transmission or electronic mail in portable document format (.pdf), by nationally recognized overnight courier or mailed (first class postage prepaid) to the parties at the following addresses or facsimile numbers.

If to any Plan Sponsor: To the address set forth beneath such Plan Sponsor’s signature to this Plan Sponsorship

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	Agreement
With a copy (which shall not constitute notice) to:	Gibson, Dunn & Crutcher 200 Park Avenue New York, NY 10166-0193 Attn: Robert L. Cunningham, Esq. Facsimile: (212) 351-5208 Email: rcunningham@gibsondunn.com and Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, NY 10036 Attn: Michael S. Stamer, Esq.          Stephen B. Kuhn, Esq. Facsimile: (212) 872-1002 Email: mstamer@akingump.com            skuhn@AkinGump.com
	— And —
If to Wellman:	Wellman, Inc. 3303 Port and Harbor Drive Port Bienville Industrial Park Bay St. Louis, MS 39520 Attn: Mark Ruday Facsimile: (803) 396-9217 Email:mark.ruday@wellmaninc.com
With a copy (which shall not constitute notice) to:	Kirkland & Ellis LLP Citicorp Center 153 East 53rd Street New York, NY 10022 Attn: Jonathan S. Henes Facsimile: (212) 446-6460 Email: jhenes@kirkland.com

          (b) All such notices, requests and other communications shall be deemed to have been received (i) in the case of personal delivery or delivery by facsimile, or by electronic mail in portable document format (.pdf), on the date of such delivery, (ii) in the case of dispatch by nationally recognized overnight courier, on the next business day following such dispatch and (iii) in the case of mailing, on the fifth business day after the posting thereof.

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     14. Successors and Assigns; Assignment. The provisions of this Plan Sponsorship Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, and (i) any Plan Sponsor may assign, delegate, or otherwise transfer this Plan Sponsorship Agreement or any of its rights or obligations hereunder without the consent of Wellman or any of the Surviving Entities, provided, that any such assignment shall not relieve such Plan Sponsor from liability resulting from a default by any assignee of its obligations hereunder, and (ii) neither Wellman nor any of the Surviving Entities may assign, delegate, or otherwise transfer this Plan Sponsorship Agreement or any of their rights or obligations hereunder without the consent of the Plan Sponsors. Nothing in this Plan Sponsorship Agreement is intended to confer upon any person or entity not a party hereto (other than Indemnified Parties) any right, benefit, or remedy of any nature whatsoever under or by reason of this Plan Sponsorship Agreement, including, without limitation, to confer third party beneficiary rights.

     15. Entire Agreement. This Agreement contains the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, written or oral, with respect to such subject matter. The parties hereto represent and warrant that there are no other agreements or understandings, written or oral, regarding any of the subject matter hereof other than as set forth herein and covenant not to enter into any such agreements or understandings after the date hereof, except pursuant to an amendment, modification, or waiver of the provisions of this Plan Sponsorship Agreement.

     16. Amendments. This Plan Sponsorship Agreement represents the final agreement and the entire understanding among the parties hereto with respect to the subject matter hereof and may not be contradicted by evidence of prior or contemporaneous agreements and understandings of the parties. There are no unwritten oral agreements or understandings between the parties relating to the subject matter hereof. This Agreement may not be amended or modified except by a written instrument signed by each Plan Sponsor and Wellman.

     17. Extensions; Waivers. Any party may, for itself only, (a) extend the time for the performance of any of the obligations of any other party under this Plan Sponsorship Agreement, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any such extension or waiver will be valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence. Neither the failure nor any delay on the part of any party to exercise any right or remedy under this Plan Sponsorship Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy.

     18. Counterparts. This Plan Sponsorship Agreement may be executed in one or more counterparts, each of which, when so executed, shall constitute an original and all of which when taken together shall constitute one and the same instrument, and the counterparts may be delivered by facsimile transmission or by electronic mail in portable document format (.pdf).

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     19. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to such state’s choice of law provisions which would require the application of the law of any other jurisdiction. By its execution and delivery of this Plan Sponsorship Agreement, each of the parties irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter arising under or arising out of or in connection with this Plan Sponsorship Agreement, shall be brought in the United States District Court for the Southern District of New York, and by execution and delivery of this Plan Sponsorship Agreement each of the parties irrevocably accepts and submits itself to the exclusive jurisdiction of such court, generally and unconditionally, with respect to any such action, suit, or proceeding. Notwithstanding the foregoing consent, prior to the consummation of the Plan, each party agrees that the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Plan Sponsorship Agreement.

[Remainder of Page Intentionally Blank]

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          IN WITNESS WHEREOF, Wellman, the Wellman Subsidiaries, and the Plan Sponsors have executed this Plan Sponsorship Agreement as of the date first written above.

WELLMAN, INC.
By:
	Name:
	Title:

WELLMAN SUBSIDIARIES
By:
	Name:
	Title:

Address:

[                    ]
Attn: [                    ]
Tel: [                    ]
Fax: [                    ]
Email: [                    ]

[Signature Page to Plan Sponsorship Agreement]

S-1

By:
	Name:
	Title:

Address:

[                    ]
Attn: [                    ]
Tel: [                    ]
Fax: [                    ]
Email: [                    ]

[Signature Page to Plan Sponsorship Agreement]

S-2

PLAN SPONSORS SOLA, Ltd.
By:
	Name:
	Title:

Address:

SOLA, Ltd.
Attn: Joseph Lonetto, Esq.
Tel: (212) 284-4306
Fax: (212) 284-4338
Email: jlonetto@soluslp.com

[Signature Page to Plan Sponsorship Agreement]

S-3

BlackRock Financial Management, Inc.
By:
	Name:
	Title:

Address:

BlackRock Financial Management, Inc.
Attn: David Maryles, Esq.
Tel: (212) 810-5097
Fax: (212) 810-5116
Email: david.maryles@blackrock.com

[Signature Page to Plan Sponsorship Agreement]

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EXHIBIT A

1

EX-10.2

Exhibit 10.2

CIT Bank 2180 South 1300 East Suite 250 Salt Lake City, Utah 84106	The CIT Group/Business Credit, Inc. CIT Capital Securities LLC 505 Fifth Avenue New York, New York 10017
	January 9, 2009

Senior Credit Facility
Commitment Letter

CONFIDENTIAL

Wellman, Inc.
3303 Port & Harbor Drive
Bay St. Louis, MS 39520
Attention: Messrs. Mark Ruday and

 Keith R. Phillips

Ladies and Gentlemen:

Wellman, Inc., debtor and debtor-in-possession in the Chapter 11 Cases referred to below (“Parent”), Solus L.P. (“Solus”) and Blackrock Advisors (“Blackrock”, and together with Solus, individually and collectively, “Sponsor”) have advised The CIT Group/Business Credit, Inc. (“CITBC” or “Agent”), CIT Bank (“CIT Bank”) and CIT Capital Securities LLC (“CITCS” or “Arranger” and, together with CITBC and CIT Bank, the “Commitment Parties”; sometimes referred to herein as “we” or “us”) that Parent intends to consummate the Plan of Reorganization (the “Plan”) confirmed in the pending cases of Parent and its subsidiaries filed under Chapter 11 of the United States Bankruptcy Code (collectively, the “Chapter 11 Cases”) (the “Transaction”). All references to “Parent”, “Borrowers” or “Parent and its subsidiaries” for any period from and after consummation of the Transaction shall mean and refer to each such entity after giving effect to the consummation of the Plan.

1. Commitments.

The Sponsor and Parent have requested that the Commitment Parties commit to provide senior credit facilities in the aggregate amount of up to $35,000,000 (to be comprised of a revolving credit facility in an aggregate principal amount of up to $35,000,000) (the “Senior Credit Facility”). The proceeds of loans

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made under the Senior Credit Facility will be used: (i) to refinance the existing debtor-in-possession financing of the Borrowers (as defined below) in the Chapter 11 Cases, (ii) to fund payments required in order to substantially consummate the Plan, (iii) to pay for fees and expenses associated with the Transaction; and (v) for general corporate purposes.

Based upon and subject to the terms and conditions set forth in this commitment letter (the “Commitment Letter”), the Summary Terms and Conditions attached hereto as Appendix A (the “Term Sheet”) and the fee letter of even date herewith (the “Fee Letter”, and together with the Commitment Letter and the Term Sheet, the “Commitment”), (i) CITBC and CIT Bank are pleased to advise you of their commitment to provide up to $35,000,000 of the Senior Credit Facility, (ii) CITBC is pleased to advise you of its commitment to act as the administrative agent and collateral agent in respect thereof and (iii) CITCS is pleased to advise you of its agreement to act as the arranger and sole bookrunner for the Senior Credit Facility. CITBC will act as the sole administrative agent and sole collateral agent and CITCS will act as the sole lead arranger and sole bookrunner for the Senior Credit Facility. You agree that no other agents or arrangers will be appointed, and no other titles or compensation (other than as set forth in the Fee Letter) will be awarded or paid in connection with the Senior Credit Facility unless approved by the Commitment Parties.

In consideration of the commitments and agreements of the Commitment Parties hereunder, you agree to pay the nonrefundable fees described in the Term Sheet and the Fee Letter.

2. Conditions.

The Commitment does not set forth all of the terms and conditions of the proposed financing; rather, it only summarizes the major points of understanding which will be the basis of the final financing agreements and related documentation (which are collectively referred to herein as the “Loan Documentation”) which will be drafted by, and will be in form and substance satisfactory to, the Commitment Parties, Parent and their respective counsel for senior debt financing transactions of this kind. All terms used in this Commitment Letter and not otherwise defined herein shall have the meanings ascribed to them in the Term Sheet.

The Commitment is issued by the Commitment Parties based upon the financial and other information regarding Holdco (as defined below), Borrowers (as defined in the Term Sheet) and their subsidiaries and the Transaction previously provided to the Commitment Parties. Accordingly, the Commitment and the structure and terms of the Senior Credit Facility set forth in the Term Sheet are subject to the fulfillment to the satisfaction of each of the Commitment Parties of the following conditions (in addition to those set forth in the Term Sheet): (i) there shall not have occurred after November 30, 2008 any event, development or circumstance that has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Borrowers and their subsidiaries, taken as a whole (a “MAE”), provided that, the filing and pendency of the Chapter 11 Cases shall not be deemed to have resulted in such MAE for the purposes hereof; (ii) the Commitment Parties shall not become aware of any information or other matter (including new or updated financial information or projections) concerning the Borrowers and their subsidiaries or the Transaction that differs from, or is inconsistent with, the information previously provided to the Commitment Parties by or on behalf of the Borrowers and their subsidiaries to the extent that such differences and inconsistencies, taken as a whole, would result in a MAE; (iii) the Commitment Parties shall have completed and be satisfied with the results of their legal due diligence investigation of the Borrowers and their subsidiaries, and shall have completed their tax due diligence investigation of the Borrowers and their subsidiaries, as a result of which tax due diligence investigation the Commitment Parties shall be reasonably satisfied as to the Borrowers’ ability to achieve the financial results projected in any Projections provided to the Commitment Parties by or on behalf of the Borrowers; (iv) the Commitment Parties shall have determined that there are no competing issuances of debt, securities or commercial bank facilities of the Parent and its subsidiaries or any affiliate thereof, being offered, placed

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or arranged at any time prior to the consummation of the Senior Credit Facility, except with the prior written consent of the Commitment Parties; and (v) there shall not be any pending or threatened litigation or other proceedings (private or governmental) with respect to any of the transactions contemplated hereby, other than the filing and the pendency of the Chapter 11 Cases.

3. Syndication.

We reserve the right, prior to or after the execution of the Loan Documentation, to syndicate all or a portion of the Senior Credit Facility to a group of financial institutions (together with CIT Bank, the “Lenders”) identified by us in consultation with you. If at any time we choose to commence our syndication efforts, you agree to reasonably assist us in completing a satisfactory syndication.

4. Information.

You hereby represent and covenant that (i) all information, other than Projections, which has been or is hereafter made available to the Commitment Parties by or on behalf of either Sponsor, the Borrowers, Guarantors, or their representatives in connection with the transactions contemplated hereby (“Information”) is or, when furnished, will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made, and (ii) the Projections that have been or will be made available to Commitment Parties have been and will be prepared in good faith based upon assumptions that are reasonable at the time made and at the time made available to the Commitment Parties. You hereby agree to supplement the Information and the Projections from time to time and to promptly advise us of all developments materially affecting Sponsor, Borrowers, Guarantors, any of their respective subsidiaries or affiliates or the transactions contemplated hereby until the closing date of the Senior Credit Facility so that the representation and warranty in the preceding sentence is correct on the closing date of the Senior Credit Facility. In structuring and entering into the Senior Credit Facility, the Commitment Parties will be using and relying on the Information and the Projections without independent verification thereof.

5. Indemnity and Expenses.

Borrowers and their subsidiaries, jointly and severally, agree (a) to indemnify and hold harmless each Commitment Party and the Lenders and their respective affiliates and controlling persons and the respective officers, directors, employees, agents, attorneys, members and successors and assigns of each of the foregoing (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and expenses, joint or several, to which any such Indemnified Person may become subject arising out of or in connection with this Commitment Letter (including the Term Sheet), the Fee Letter, the Transaction, the Senior Credit Facility or the syndication thereof or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any such Indemnified Person is a party thereto, and to reimburse each such Indemnified Person upon demand for any reasonable legal or other expenses incurred in connection with investigating or defending any of the foregoing; provided that the foregoing indemnity will not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or related expenses to the extent they are found in a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the willful misconduct or gross negligence of such Indemnified Person or of any of its officers, directors, employees, or agents, and (b) to reimburse each Indemnified Person from time to time, upon presentation of a summary statement, for all reasonable out-of-pocket expenses (including but not limited to expenses of the Commitment Parties’ due diligence investigation, syndication expenses, travel expenses, appraisal, consulting and auditing fees, and reasonable fees, disbursements and other charges of counsel to the Commitment Parties (any and all of the foregoing being referred to herein collectively as “Expenses”)), in each case incurred in connection with the Senior Credit Facility and the preparation of this Commitment Letter, the Fee Letter, the Loan Documentation and any security arrangements in connection therewith and the

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administration, amendment, modification or waiver thereof (or any proposed amendment, modification or waiver thereof), whether or not the closing date occurs for the Senior Credit Facility or any Loan Documentation is executed and delivered or any extensions of credit are made under the Senior Credit Facility. Notwithstanding any other provision of this Commitment Letter, (i) no Indemnified Person shall be liable for (A) any damages arising from the use by others of information or other materials obtained through electronic, telecommunications or other information transmission systems, except to the extent such damages are found in a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the willful misconduct or gross negligence of such Indemnified Person or (B) any indirect, special, punitive or consequential damages in connection with its activities related to the Senior Credit Facility, and (ii) prior to the Close Date (as defined below), without the prior consent of Parent, the Commitment Parties shall not at any time incur Expenses that exceed, in the aggregate, the amount of the Good Faith Deposit (as defined in the Fee Letter) then held by the Commitment Parties; provided, that, the foregoing shall in no manner limit or waive Borrowers’ agreements with respect to the Good Faith Deposit which are set forth in the Fee Letter.

6. Other Services.

You acknowledge that the Commitment Parties and their affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other persons in respect of which you may have conflicting interests regarding the transactions described herein and otherwise. Neither the Commitment Parties nor any of their affiliates will use confidential information obtained from you by virtue of the transactions contemplated by this Commitment Letter or their other relationships with you in connection with the performance by them of services for other persons, and neither the Commitment Parties nor any of their affiliates will furnish any such information to other persons. You also acknowledge that neither the Commitment Parties nor any of their affiliates have any obligation to use in connection with the transactions contemplated by this Commitment Letter, or to furnish to you, confidential information obtained by them from other persons.

You hereby agree that, on or after the closing of the Senior Credit Facility, the Commitment Parties or any of their affiliates may place “tombstone” advertisements (which may include any of Sponsors’ and/or Borrowers’ trade names or corporate logos and a brief description of the Senior Credit Facility and the Transaction) in publications or other media of their choice (including without limitation “e-tombstones” published or otherwise circulated in electronic form and related hyperlinks to the Sponsors’ and/or Borrowers’ corporate website) at such Commitment Party’s own expense. In addition, any Commitment Party may disclose the information about the Senior Credit Facility and the Transaction to market data collectors and similar service providers to the financing community.

7. Confidentiality.

This Commitment Letter is delivered to you on the understanding that none of this Commitment Letter, the Term Sheet or the Fee Letter nor any of their terms or substance shall be disclosed by you, directly or indirectly, to any other person except (a) to your respective officers, employees, attorneys, accountants, advisors and agents on a confidential and need-to-know basis, (b) as required by applicable law or compulsory legal process or, in the case of the Commitment Letter and the Term Sheet (but expressly excluding the Fee Letter), as may be necessary or advisable (in the Borrowers’ opinion) to comply with applicable securities law (in which case you agree to inform us promptly thereof), and (c) in a matter involving assertion by any party of a breach of this Commitment Letter, the Term Sheet or the Fee Letter by any other party; provided that, you may disclose this Commitment Letter, the Term Sheet and the contents hereof and thereof (but not the Fee Letter or the contents thereof) to (i) the Official Committee of Unsecured Creditors appointed in the Chapter 11 Cases, (ii) the existing lenders to Parent and its subsidiaries in the Chapter 11 Cases (the “DIP Lenders”), and (iii) such Committee’s and such DIP Lenders’ respective attorneys, accountants and advisors on a confidential and need-to-know basis; provided, however, that such disclosure shall be made only on the condition that such matters may not,

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except as required by law, be further disclosed and in no event shall any of such persons or entities be entitled to rely upon this Commitment Letter. None of this Commitment Letter, the Term Sheet or the Fee Letter nor any of their terms or substance shall be disclosed by the Sponsors, Parent or any of their respective subsidiaries directly or indirectly to any other potential source of financing without the prior written consent of the Commitment Parties. No person, other than the parties hereto, is entitled to rely upon this Commitment Letter or any of its contents or have any beneficial or legal right, remedy, or claim hereunder. No person shall, except as required by law, use the name of, or refer to, any Commitment Party, or any of their affiliates, in any correspondence, discussions, press release, advertisement or disclosure made in connection with the Senior Credit Facility without the prior written consent of such Commitment Party. Notwithstanding the foregoing, the Parent may file this Commitment Letter (including the Term Sheet, but expressly excluding the Fee Letter) with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), in which court the Chapter 11 Cases are pending.

8. Survival.

The compensation, reimbursement, expense, indemnification, confidentiality, governing law, forum and waiver of jury trial provisions contained herein and in the Fee Letter shall remain in full force and effect regardless of whether definitive financing documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or the commitments of the Commitment Parties.

9. Assignments; Amendments; Governing Law, Etc.

The Commitment shall not be assignable by you without the prior written consent of the Commitment Parties. The Commitment is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or to create any rights in favor of, any person other than the parties hereto (and Indemnified Persons) and you agree that it does not create a fiduciary relationship among the parties hereto. The Commitment Parties may assign their commitments hereunder to any of their affiliates or any Lender. Any such assignment to an affiliate will not relieve the Commitment Parties from any of their obligations hereunder unless and until such affiliate shall have funded the portion of the commitment so assigned. Any assignment to a Lender shall release the Commitment Parties from the portion of their commitments hereunder so assigned. Any and all obligations of, and services to be provided by, the Commitment Parties hereunder (including, without limitation, the Commitment) may be performed and any and all rights of the Commitment Parties hereunder may be exercised by or through any of their affiliates or branches. THIS COMMITMENT LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT OR THE PERFORMANCE OF SERVICES HEREUNDER.

Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and its property, to the non-exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Commitment Letter or the transactions contemplated hereby, or for recognition or enforcement of any judgment, and agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court, (b) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Commitment Letter or the transactions contemplated hereby in any New York State or in any such Federal court and (c) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

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This Commitment Letter, together with the Term Sheet and the Fee Letter, embodies the entire understanding among the parties hereto relating to the matters discussed herein and therein and supersedes all prior discussions, negotiations, proposals, agreements and understandings, whether oral or written, relating to the subject matter hereof and thereof. No course of prior conduct or dealings between the parties hereto, no usage of trade, and no parole or extrinsic evidence of any nature, shall be used or be relevant to supplement, explain or modify any term used herein. Any modification or waiver of the Commitment or the terms hereof must be in writing, must be stated to be such and must be signed by an authorized representative of each party hereto.

10. Patriot Act.

Each of the Commitment Parties hereby notifies you that, pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the “Patriot Act”), it is required to obtain, verify and record information that identifies each Sponsor, each Borrower and each Guarantor, which information includes names and addresses and other information that will allow such party to identify each Sponsor, the Borrowers and each Guarantor in accordance with the Patriot Act.

11. Acceptance of Commitment; Termination.

If you wish to accept the Commitment, please return executed counterparts of this Commitment Letter and the Fee Letter to CITBC, together with a wire transfer to CIT’s order in the amount required by the Fee Letter, on or before 5:00 p.m., New York City time, on January 10, 2009; otherwise, the offer set forth herein shall automatically terminate on such date and time and be of no further force or effect. In the event that the initial borrowing in respect of the Senior Credit Facility does not occur on or before March 15, 2009 or the closing of the Transaction without the use of the Senior Credit Facility, then this Commitment Letter and the commitment and undertakings of each Commitment Party hereunder shall automatically terminate (except for such provisions hereof which survive such termination in accordance with the terms hereof), unless the Commitment Parties shall, in their discretion, agree to an extension. Before such date, any Commitment Party may terminate its obligations under this Commitment Letter if any event occurs or information becomes available that, in its judgment, results or is likely to result in the failure to satisfy any condition precedent set forth or referred to herein or in the Term Sheet or the other exhibits hereto.

[SIGNATURE PAGE FOLLOWS]

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This Commitment Letter may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile or electronic transmission shall be effective as a delivery of a manually executed counterpart of this Commitment Letter.

Very truly yours, THE CIT GROUP/BUSINESS CREDIT, INC.
By:
	Name:
	Title:
CIT BANK
By:
	Name:
	Title:
CIT CAPITAL SECURITIES LLC
By:
	Name:
	Title:
The Foregoing Is Hereby Accepted And Agreed To In All Respects By The Undersigned: WELLMAN, INC., debtor and debtor-in-possession, for itself and its subsidiaries
By:
	Name:
	Title:

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Wellman Commitment Ltr Signature Page

APPENDIX A

SUMMARY TERMS AND CONDITIONS

WELLMAN, INC.
January 9, 2009

$35,000,000 Senior Credit Facility

The Summary Terms and Conditions outlined below is the “Term Sheet” referred to in the Commitment Letter, dated January 9, 2009, from the Commitment Parties to Wellman, Inc., debtor and debtor-in-possession (the “Commitment Letter”). Terms used in this Term Sheet without definition have the meanings assigned to such terms in the Commitment Letter.

Borrowers:	Wellman, Inc., as reorganized pursuant to the Plan (“Reorganized Wellman”), and certain of its domestic subsidiaries designated by CITBC. For purposes of this Term Sheet, Reorganized Wellman and each such domestic subsidiary are hereinafter referred to, individually as the “Borrower” and collectively, jointly and severally, as the “Borrowers”. Reorganized Wellman shall be a wholly-owned subsidiary of Wellman Holdings, Inc. (“Holdco”), a newly formed holding company to be controlled by the Sponsors. Sponsors shall own at least 51% of the capital stock of Holdco as of the Close Date. Holdco has not and will not engage in any business activities and has not had and will not have any assets or other holdings, other than the equity ownership interests of Reorganized Wellman. The ultimate structure, including, without limitation, those persons to be “Borrowers” and “Guarantors” under the Credit Facilities, will be determined upon CIT’s review of the deal structure for the Transaction.
Guarantors:	Holdco and all present and future direct or indirect domestic subsidiaries of Reorganized Wellman or Holdco that are not a Borrower (other than GuardWell Insurance Company). The Senior Credit Facility will be fully and unconditionally guaranteed on a joint and several basis by all Guarantors, subject to exceptions to be agreed to the extent such guarantees would be prohibited by applicable law or would result in materially adverse tax consequences.
Administrative, Collateral Agent:	The CIT Group/Business Credit, Inc. (“CITBC” or “Agent”; each of CITBC and CIT Bank are collectively referred to in this Summary Terms and Conditions as “CIT”).
Lenders:	A syndicate of financial institutions (including CIT Bank) to be arranged by the Arranger.
Sole Arranger, Sole Bookrunner:	CIT Capital Securities LLC (“CITCS” or “Arranger”).

Summary Terms and Conditions

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Sponsor:	Solus, LP and Blackrock Advisors (each, a “Sponsor” and collectively, the “Sponsors”).]
Senior Credit Facility:	Senior secured credit facility (the “Senior Credit Facility”) in an aggregate principal amount not to exceed $35,000,000, consisting of a $35,000,000 three (3)-year revolving credit facility (the “Revolver”), including a sub-limit of $10,000,000 for the issuance of L/C’s (as defined below).
Closing Date:	The date on which the initial funding of the Senior Credit Facility occurs (the “Close Date”).
Interest Rate:	See Schedule A hereto.
Maturity:	The third anniversary of the Close Date (the “Revolver Maturity Date”)
Availability:	Amounts under the Revolver may be borrowed, repaid and reborrowed from the Close Date until five business days before the Revolver Maturity Date. No more than $30,000,000 of advances and L/C’s shall be made and issued under the Revolver on the Close Date. After giving effect to all advances under the Revolver on the Close Date, including issuances of L/C’s, if applicable, the Borrowers’ availability under the Revolver shall not be less than $5,000,000 on the Close Date.
Borrowing Base:	All advances and L/C’s under the Revolver will be subject to a Borrowing Base formula, which will be comprised of corporate, trade accounts receivable and inventory subject to eligibility criteria. Eligibility definitions and criteria will be defined in the Loan Documentation (as defined below under the heading “Loan Documentation”). The Revolver will be available at any time for loans and L/Cs in an aggregate amount not to exceed the lesser of (i) $35,000,000 and (ii) the Borrowing Base. The Borrowing Base will be equal to: (A) 85% of eligible accounts receivable plus (B) the lesser of (1) up to 75% of NOLV (as defined below) of eligible appraised inventory and (2) up to 60% of the cost of eligible inventory minus (C) applicable reserves. CIT shall have the ability to impose additional eligibility criteria with respect to accounts receivable and inventory and/or impose additional reserves against the Borrowing Base in its commercially reasonable discretion. CIT will have its own internal auditor or an independent accounting firm perform field audit(s) of the Borrowers’ books and records, if necessary, and accounts receivable and inventory during the term of the Senior Credit Facility. Such field audits shall be performed on a quarterly basis during the first year of the Senior Credit Facility and thereafter at least annually and more frequently in CIT’s reasonable discretion.
Letter of Credit Issuing Bank:	CIT and/or certain Lenders (each, an “L/C Issuer”) shall either issue letters of credit directly or select another banking or financial institution to issue letters of credit as to which L/C Issuer shall issue letter of credit participation or support agreements (such letters of credit and letter of credit participation or support agreements are referred to herein as “L/Cs”).
	To the extent that Borrowers do not reimburse the L/C Issuer for drawings under L/Cs, the Lenders under the Revolver shall be unconditionally obligated to fund participations therein on a ratable basis.

Summary Terms and Conditions

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Revolver Fees:	An unused line fee shall be payable on the average daily unutilized portion of the Revolver for each quarter (or part thereof) after the Close Date (the “Average Unutilized Amount”) at a rate per annum equal to, for any such quarter, (a) 1.00% if the Average Unutilized Amount for such quarter was equal to or greater than $10,000,000, and (b) 0.75% if the Average Unutilized Amount for such quarter was less than $10,000,000 . Such fee will be payable quarterly in arrears on the first day of each quarter and on the date of termination of the Revolver commitment. The undrawn amount of outstanding L/Cs shall count as utilization of the Revolver for purposes of calculating this fee.
	An L/C fee shall be payable to CIT on behalf of each Revolver Lender with respect to such Revolver Lender’s participation in the L/Cs at the applicable margin per annum used for determining interest payable in respect of LIBOR loans made under the Revolver on the average daily undrawn amount of L/Cs, payable monthly in arrears. The Borrowers shall also be responsible for paying any fees, costs or expenses (including fronting fees) due to any banking or financial institution (other than CIT) for any L/Cs issued by such other banking or financial institution in reliance on credit support furnished by CIT.
	The other fees are set forth in the Fee Letter.
Use of Proceeds:	The Revolver will be used (subject to the terms and conditions of the Loan Documentation): (i) to fund all payments required for the substantial consummation of the Plan, (ii) to refinance existing debtor-in-possession financing of the Borrowers in the Chapter 11 Cases, (iii) to fund the Borrowers’ ongoing working capital requirements, (iv) to pay for fees and expenses associated with the Senior Credit Facility and other bankruptcy related claims and expenses, and (v) for general corporate purposes s.
CERTAIN PAYMENT TERMS
Optional Prepayment:	The Borrowers may prepay principal amounts outstanding under the Revolver from time to time without premium or penalty, except that LIBOR-based loans may only be prepaid at the end of the applicable interest period, unless the Borrowers pay all breakage costs associated with such prepayment.
Mandatory Prepayment:	Borrowers will be required to make mandatory prepayments in respect of the Revolver in an amount equal to (in each case, subject to such exceptions to be mutually agreed upon):

• 100% of the net cash proceeds (to be defined) from any sale or other disposition of assets of the Borrowers or their subsidiaries (subject to certain exceptions to be determined) other than net cash proceeds of sales or other dispositions of inventory, and other assets in the ordinary course of business

Summary Terms and Conditions

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	and net cash proceeds up to an amount to be determined that are reinvested in other assets useful in the business of the Borrowers and their subsidiaries within 180 days of their receipt upon terms and conditions to be mutually agreed upon;
•	100% of the net cash proceeds from the issuance of any equity securities by Holdco, the Borrowers or any subsidiaries of the Borrowers or Holdco;
•	100% of the net cash proceeds from the incurrence of indebtedness by Holdco, the Borrowers or any of their subsidiaries (if and to the extent such indebtedness is consented to by Lenders in accordance with the Loan Documentation); and
•	100% of the net cash proceeds from insurance paid on account of any loss of any property or assets of the Borrowers or their subsidiaries in excess of an amount to be agreed (other than net cash proceeds that are reinvested, or that the Borrowers have entered into a binding contract to reinvest, in the business of the Borrowers and their subsidiaries (or used to replace damaged or destroyed assets) within 180 days) of receipt thereof.
•	100% of Extraordinary Receipts (to be defined).

COLLATERAL

The Senior Credit Facility (including any obligations under hedging arrangements provided by the Lenders) will be secured by a perfected first priority security interest in and lien or mortgage upon all assets (real, mixed and personal property), in each case, whether now owned or hereafter acquired, including, without limitation, all receivables, accounts, inventory, general intangibles (including payment intangibles), property, plant and equipment, fee owned and leased real property (including a leasehold mortgage covering certain land leased by Borrowers pursuant to a 99-year ground lease and all building and other improvements thereon owned by Borrowers, located in Hancock, Mississippi (the “Headquarters Property”)) and patents and other intellectual properties of Borrowers and Guarantors and their present and future domestic subsidiaries, in each case, whether now owned or hereafter acquired, and all proceeds and products of any of the foregoing (including insurance proceeds). The Senior Credit Facility will also be collateralized by a perfected first priority pledge of (i) 100% of the issued and outstanding capital stock or other equity interests of the Borrowers and Guarantors (excluding the equity interests of Holdco) and the Borrowers’ and Guarantors’ direct or indirect domestic subsidiaries and (ii) 662/3% of the issued and outstanding capital stock or other equity interests of the Borrowers’ and Guarantors’ direct and indirect first-tier foreign subsidiaries, in each case, whether now owned or hereafter acquired, and a pledge of all intercompany indebtedness and, in all cases, all proceeds and products thereof. Without limiting the foregoing, Borrowers shall use its commercially reasonable efforts to deliver landlord consents and waivers customary in a senior financing wherein the landlord waives any security interest in the collateral, grants CIT and its assignees reasonable access to the leased premises, and consents to the future change of control of the tenant, in the event CIT forecloses on the equity pledge, to the extent such consent is required pursuant to the terms of the lease.

Summary Terms and Conditions

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	The foregoing security shall ratably secure the Senior Credit Facility and any permitted interest rate swap or similar hedging arrangements between the Borrowers or Guarantors and a Lender or its affiliates under the Senior Credit Facility.
Capitalization:	The initial capitalization of Holdco and the Borrowers must be satisfactory to CIT Bank and Agent, and Sponsors and other investors acceptable to CIT Bank and Agent shall have contributed at least $35,000,000 in new cash equity to Holdco. Sponsors shall collectively own at least 51% of the capital stock of Holdco as of the Close Date.
CERTAIN CONDITIONS
Conditions Precedent:	Closing and the initial funding under the Senior Credit Facility will be subject to the satisfaction of all conditions precedent customarily required by CIT Bank and Agent in similar financings and any additional conditions precedent deemed necessary or appropriate by CIT Bank and Agent in good faith in the context of this transaction, including but not limited to:

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(a) CIT Bank’s and Agent’s review of and reasonable satisfaction in all respects with the final Plan and (b) the order of the Bankruptcy Court confirming the Plan (the “Confirmation Order”), in form and substance reasonably satisfactory to CIT Bank and Agent, shall have been entered, following due notice to all creditors and other parties-in-interest, confirming the Plan, (c) (i) the effective date of the Plan (the “Effective Date”) shall have occurred, (ii) the Confirmation Order shall be a valid, subsisting and continuing final order, and (iii) the satisfaction (or valid waiver) of all conditions precedent to the consummation of the Plan (other than any condition relating to the funding under the Senior Credit Facility), and all agreements and undertakings of the parties under the Plan to be performed by the Effective Date shall have been satisfied and performed; (c) the Agent’s confirmation that any retention of jurisdiction by the Bankruptcy Court shall not govern the enforcement of the Senior Credit Facility or any rights and remedies related thereto, (d) no motion, action or proceeding shall be pending or filed by any party-in-interest to Borrowers’ Chapter 11 Cases which could adversely affect the Plan, the consummation of the Plan, the business or operations of the Borrowers and Guarantors, or the Senior Credit Facility, and (e) the Confirmation Order shall not have been reversed, vacated, amended, supplemented, modified or appealed and shall not be subject to any pending motion for reconsideration or any motion for review.

No motion, action or proceeding shall be pending or, to the knowledge of the Borrowers or CIT Bank or Agent, threatened against the Borrowers or Guarantors by any creditor or other party-in-interest in the Bankruptcy Court or any other court of competent jurisdiction which may adversely affect the Plan, the Borrowers’ post-consummation business or the proposed Senior Credit Facility.

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	The definitive Loan Documentation shall provide that, after the Close Date, Borrowers and Guarantors shall be in compliance with all terms and conditions of the Plan that are applicable to Borrowers and Guarantors subsequent to the Effective Date.
2.	Execution and delivery of satisfactory Loan Documentation;
3.	CIT and Agent shall have received all financial and other due diligence information and items required by CIT and Agent, the results of which shall be satisfactory to CIT and Agent and their counsel, including but not limited to the following: (a) field examination of the books, records, assets, liabilities, cash management system, and operations of the Borrowers; (b) an appraisal of Borrowers’ inventory, in form, scope and methodology acceptable to CIT in good faith, prepared by an appraiser acceptable to CIT and upon which CIT and Lenders are expressly permitted to rely, setting forth the net orderly liquidation value (“NOLV”) of such inventory; and (c) legal diligence, including, without limitation, review of material contracts. The findings related to these due diligence items could change the terms and conditions of this Term Sheet.
4.	Sponsors and other investors acceptable to CIT Bank and Agent shall have made a minimum cash equity contribution of $35,000,000 in Holdco (which amount shall have been contributed to the Borrowers for purposes of consummating the Transaction) and the capitalization, structure and equity ownership of Holdco and the Borrowers after consummation of the Transaction, including, but not limited to, the constituent documents of Holdco, Borrowers and the other Guarantors and related investment agreements, shall be satisfactory to CIT Bank and Agent;
5.	The Borrowers, Guarantors and their subsidiaries shall have no third party debt that will survive the closing of the Senior Credit Facility other than (a) the Senior Credit Facility; (b) subordinated debt consisting of subordinated second lien convertible notes issued by Borrowers on the Close Date in an aggregate amount not to exceed $40,000,000 on terms and conditions satisfactory to CIT (the “2nd Lien Subordinated Notes”); (c) subordinated debt consisting of conversion of pre-petition first and second lien term loan debt of Borrowers, pursuant to the Plan, into subordinated third lien convertible notes issued by Borrowers on the Close Date in an aggregate amount not to exceed $60,000,000 on terms and conditions satisfactory to CIT (the “3rd Lien Subordinated Notes”); and (d) indebtedness owing by Borrowers pursuant to the settlement contract to be entered into with BP pursuant to the Plan and other debt scheduled in the Loan Documentation, which may include certain capital leases and other customary obligations, in each case existing on the Close Date and reasonably approved by CIT.

The Loan Documentation shall provide that Borrowers shall have the right to incur additional secured subordinated indebtedness (“4^th Lien

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	Debt”), in a maximum aggregate amount to be agreed upon in the Loan Documentation, provided that (a) the terms and conditions of such indebtedness shall be reasonably satisfactory to Agent and Lenders, and (b) such indebtedness shall be subject to an intercreditor and subordination agreement containing substantially the same terms and conditions as the Intercreditor Agreements (as defined below) governing the Subordinated Notes (as defined below);
6.	The terms and conditions of the 2nd Lien Subordinated Notes and the 3rd Lien Subordinated Notes (collectively, the “Subordinated Notes”) shall be satisfactory to CIT Bank and the Agent, and the Agent, on behalf of the Lenders, shall have entered into a separate intercreditor and subordination agreement with the holders of the 2nd Lien Subordinated Notes (the “2nd Lien Intercreditor”) and the holders of the 3rd Lien Subordinated Notes (the “3rd Lien Intercreditor”; and together with the 2nd Lien Intercreditor, collectively, the “Intercreditor Agreements”), respectively, containing terms and conditions satisfactory in all respects to CIT Bank and the Agent.
	The Intercreditor Agreements shall provide that the Subordinated Notes are fully subordinated to the Senior Credit Facility and the security interests and liens respectively securing same shall be “silent”, fully subordinated to the first priority security interests and liens securing the Senior Credit Facility. Without limiting the generality of the foregoing, the Intercreditor Agreements shall provide that (a) no payments whatsoever shall be permitted with respect to any Subordinated Notes, other than (i) regularly scheduled cash interest payments due under the 2nd Lien Subordinated Notes, on a non-accelerated basis, at a rate not to exceed 10% per annum, provided that, on the date of any such interest payment and after giving effect thereto, (A) no default or event of default shall have occurred and be continuing under the Loan Documentation, and (B) Borrowers shall have excess availability under the Revolver (as determined under the Loan Documentation) of not less than $5,000,000, and (ii) regularly scheduled cash and/or non-cash “PIK” interest payments due under the 3rd Lien Subordinated Notes, on a non-accelerated basis, at a rate not to exceed 5% per annum, provided that, on the date of any such cash interest payment and after giving effect thereto, (A) no default or event of default shall have occurred and be continuing under the Loan Documentation, and (B) Borrowers shall have excess availability under the Revolver (as determined under the Loan Documentation) of not less than $5,000,000; and (b) the holders of Subordinated Notes shall have no rights to commence any action to collect or otherwise enforce such Notes and shall be prohibited from taking any action with respect to any collateral securing same until the Senior Credit Facility has been terminated and all obligations and indebtedness outstanding thereunder have been indefeasibly paid in full to Agent and Lenders;
7.	The closing of the Subordinated Notes and the funding of the 2nd Lien Subordinated Notes shall have occurred on the Close Date on terms and conditions reasonably satisfactory to CIT Bank and the Agent;

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8.	CIT shall have received and be satisfied with Borrowers’ internally prepared monthly financial statements for December, 2008;
9.	CIT shall be satisfied that there has been no event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of Holdco, the Borrowers and/or their subsidiaries, taken as a whole, since the financial statements submitted to CIT for the month ended November 30, 2008 (provided that the filing and pendency of the Chapter 11 Cases shall not be deemed to have resulted in such material adverse effect for the purposes hereof);
10.	CIT and Lenders shall have received and be satisfied with the Borrowers’ insurance policies, including endorsements in favor of CIT with respect thereto;
11.	CIT’s receipt and satisfaction with the results of background checks on the Borrowers’ key management;
12.	All governmental and third party approvals necessary in connection with the Transaction shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any authority that would restrain or otherwise impose adverse conditions on the Transaction;
13.	CIT shall have received such legal opinions, officer solvency certificates and other documents and instruments as are customary for transactions of this type or as it may reasonably request.
14.	Evidence of a valid and perfected first priority security interest, liens and mortgages in and upon the Collateral in favor of Agent and Lenders, including UCC and other applicable lien search reports and lien release documents, in form and substance satisfactory to Agent with respect to all security interests and liens currently filed against Parent and its subsidiaries, except for security interests and liens permitted herein and other permitted encumbrances customary for in similar financings which shall be identified in the Loan Documentation;
15.	Receipt by CIT of all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act and OFAC.
16.	CIT and Lenders shall have received all fees, costs and expenses payable on or prior to the Close Date;
17.	CIT and Lenders shall have received and approved a breakdown of all uses of proceeds, including fees and expenses; and

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18. CIT’s receipt of, and satisfaction with, in the case of the leasehold mortgage to be granted to Agent and Lenders covering the Headquarters Property, (a) title insurance issued by a title insurance company reasonably satisfactory to CIT, (b) a survey prepared by independent licensed land surveyor reasonably satisfactory to CIT, and (c) flood searches, and if applicable, flood insurance; and the costs of all of the foregoing shall be paid by the Borrowers.

Conditions to Extensions of Credit:	The making of each extension of credit (including amendments, extensions and increases of L/Cs) shall be conditioned upon (i) the accuracy in all material respects of all representations and warranties contained in the Loan Documentation (including, without limitations, the material adverse change and litigation representations) (ii) there being no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit and (iii) availability under the Borrowing Base.
CERTAIN DOCUMENTATION MATTERS
Loan Documentation:	The Senior Credit Facility will be subject to the terms and conditions set forth in a definitive credit agreement, related security agreement(s), guarantees, pledge agreements, mortgages, assignment agreements and other instruments and documents, all of which will be acceptable to CIT, the Lenders and their legal counsel (collectively, the “Loan Documentation”).
Representations and Warranties:	The Senior Credit Facility will contain such representations and warranties by the Borrowers as are usual and customary for financings of this kind, including, without limitation, corporate power and authority, due organization and authorization, execution, delivery and enforceability of the Loan Documentation, no default, financial condition and solvency, no material adverse change, title to properties, sufficiency of assets and rights, liens, litigation, payment of taxes, insurance, subsidiaries, business locations, labor matters, material contracts, investment company regulations, brokers’ fees, compliance with laws, environmental and ERISA matters, consents and approvals, compliance with anti-terrorism laws, creation and perfection of security interests, and full disclosure (subject to qualifications to be agreed). The Loan Documentation shall contain reasonable exceptions with respect to representations and warranties regarding payment of property taxes on certain non-operating assets.

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Reporting:	The Borrowers will provide CIT and Lenders with periodic financial reporting, including: audited annual financial statements; management discussion and analysis; unaudited quarterly and monthly financial statements; annual financial projections; compliance certificates; notice of material events; collateral reporting; periodic borrowing base certificates; receivables and payables against aging reports and inventory reports and such other information reasonably requested by CIT or any Lender.
Covenants:	The Senior Credit Facility will contain such affirmative covenants as are usual and customary for financings of this kind (subject to customary qualifications), and will likely include, but not be limited to: receipt of timely and accurate financial information; notification of litigation, investigations, environmental and ERISA matters and other material adverse changes; payment and performance of obligations (including, without limitation, under the Plan); maintenance of existence; maintenance of property and insurance (including hazard and business interruption coverage); maintenance of accurate records and accounts; visits and inspection of property and books and records; compliance with laws (including, without limitation, environmental laws); compliance with material contractual obligations; maintenance of licenses, permits and franchises issued or granted by any governmental authority; use of proceeds (including anti-hoarding); payment of taxes; ERISA; maintenance of security interests and further assurances (including with respect to security interests in future subsidiaries and after-acquired property); annual lenders meetings; additional grantors and guarantors; separateness of loan parties; post-closing syndication assistance (if applicable); and interest rate protection requirements.
	The Senior Credit Facility will contain such negative covenants as are usual and customary for financings of this kind (subject to customary qualifications), and will likely include, but not be limited to: restrictions and limitations against incurring additional indebtedness (except for 4th Lien Debt described above) and guarantee obligations; encumbrances, liens (other than liens securing 4th Lien Debt) and other obligations; restrictive payments (including, but not limited to, distributions and dividends, and management, acquisition, arrangement and other similar fees); loans and investments; mergers, consolidations and acquisitions; sale and leaseback transactions; asset transfers and dispositions; changes in business; hedging arrangements; transactions with affiliates; prepayments of and amendments to indebtedness (including, without limitation, prepayment of, and amendments to, any subordinated debt); restrictive agreements; ownership of subsidiaries; passive activities of Holdco; bank accounts; amendments to organizational documents; changes in fiscal year or accounting method; negative pledge clauses and clauses restricting subsidiary distributions and changes in the Plan and Confirmation Order post-closing that would adversely impact the Lenders.
Financial Covenants:	Financial covenants will likely include: minimum fixed charge coverage ratio; maximum leverage ratio; and maximum capital expenditures.
Events of Default:	Events of defaults will include those which are customarily found in financing transactions of the type contemplated hereby, including, but not limited to:

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	nonpayment of principal or reimbursement obligations when due; nonpayment of interest, fees or other amounts; inaccuracy of representations and warranties; violation of covenants (subject, in the case of certain affirmative covenants, to a grace period to be agreed upon); cross-default to material indebtedness; bankruptcy events; certain ERISA events; material judgments; actual or asserted invalidity of any guarantee or security document, an Intercreditor Agreement or other subordination provisions; change of control (which shall be defined to include, without limitation, the Sponsors’ collective ownership of less than 51% of the outstanding capital stock of Holdco or Holdco’s ownership of less than 100% of the outstanding capital stock of Parent); changes in instructions regarding pledged bank accounts; and changes in the passive holding company status of Holdco.
Cash Management:	Within ninety (90) days following the Close Date, Borrowers shall implement cash management procedures (“Post-confirmation Cash Management”) in replacement of the cash management procedures which exist in the Chapter 11 Cases (“Existing Cash Management”), reasonably satisfactory to CIT and Arranger, including lock box procedures and blocked account agreements that will provide for full cash dominion and automatic daily sweeps into a collection account controlled by CIT. As of the Close Date, Borrowers shall arrange for the Existing Cash Management to be utilized in connection with the Senior Credit Facility until implementation of Post-confirmation Cash Management, provided, that, if Borrowers propose establishing Post-confirmation Cash Management at a bank other than the bank which currently provides Existing Cash Management, then such replacement bank shall be satisfactory to CIT.
Costs and Expenses:	The Borrowers shall be responsible for the payment (whether or not the transaction contemplated hereby closes or is consummated) of all of CIT’s and the Arranger’s reasonable costs, fees and expenses of underwriting, documenting and closing the transaction contemplated hereby (including, without limitation, reasonable costs, fees and expenses of outside legal counsel, travel, lodging and similar expenses) or otherwise paid or incurred by CIT or the Arranger in connection with the Loan Documentation or the transaction contemplated hereby, including, but not limited to, those paid or incurred by CIT or the Arranger in connection with the preparation, negotiation, execution and closing of the Loan Documentation and the transaction contemplated hereby, the arrangement, syndication and administration of the Senior Credit Facility, the creation or perfection of liens and security interests in connection therewith, and any amendment, modification or waiver in respect of the Loan Documentation. The Borrowers shall also be responsible for all fees and expenses of CIT and Lenders incurred or in connection with enforcing rights, remedies and actions taken under the Senior Credit Facility.
Indemnification:	The Borrowers shall indemnify and hold harmless CIT, the Arranger and the Lenders, and their respective affiliates and, in each case, such parties’ respective directors, officers, employees, agents, representatives and controlling persons (each being an “Indemnified Party”) from and against any and all claims, damages, liabilities and expenses (including without limitation, fees and expenses of counsel) that may be incurred by or asserted against such Indemnified Party in connection with the investigation of, preparation for, or

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	defense of any pending or threatened claim or any action or proceeding (whether or not such Indemnified Party is a party thereto) or otherwise arising out of or relating to any of the transactions contemplated hereby, any commitment or similar letter issued in connection therewith, any of the Loan Documentation, any of the transactions contemplated thereby, or any action or omission of any Indemnified Party or other matter or thing under or in connection with any of the foregoing, except for (with respect to any Indemnified Party) any such claims, damages, liabilities or expenses resulting from such Indemnified Party’s own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final nonappealable order or judgment.
Participation and Assignment:	The Lenders shall be permitted to assign all or a portion of their loans and commitments with the consent, not to be unreasonably withheld, of (a) the Parent, unless (x) the assignee is a Lender, an affiliate of a Lender or an approved fund, or (y) an event of default has occurred and is continuing, (b) the Agent, and (c) the Issuing Bank. In the case of partial assignments (other than to another Lender, an affiliate of a Lender or an approved fund), the minimum assignment amount shall be $5,000,000 (unless otherwise agreed by the Borrowers and CIT). The Agent shall receive a processing fee of $3,500 in connection with all assignments. The Lenders shall also be permitted to sell participations in their loans.
Required Lenders:	Lenders holding at least 51% of the loan exposure under the Revolving Facility in the aggregate (the “Required Lenders”) (subject to certain customary matters requiring unanimous Lender consent).
Amendments and Waivers:	Subject to approval of Required Lenders party to the relevant Loan Documentation, except that all affected Lenders must consent to increases in commitment amounts, reductions in principal, interest and fees, extensions of maturities and release of substantially all of the guarantors and collateral.
Yield Protection:	The Loan Documentation shall contain customary provisions (i) protecting the Lenders against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy and other requirements of law and from the imposition of or changes in withholding and other taxes and (ii) indemnifying Lenders for “breakage costs” incurred in connection with, among other things, any prepayment or conversion of LIBOR loans on a day other than the last day of the interest period applicable thereto.
Governing Law and Jurisdiction:	State of New York.
Waiver of Jury Trial:	Such waivers as are customary for financing transactions of the type contemplated hereby.
Administrative Agent’s Counsel:	Otterbourg, Steindler, Houston & Rosen, P.C.

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Borrowers’ and Guarantors’ Counsel: Kirkland & Ellis.

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Schedule A

INTEREST RATES

Revolver:	Borrowers will be required to pay interest on advances outstanding under the Revolver at either: (i) the Prime Rate plus 7% per annum or (ii) LIBOR Rate plus 8% per annum.
Prime Rate:	The “Prime Rate” will mean, for any day, the greatest of: (i) the rate of interest per annum quoted by JPMorgan Chase Bank as its “prime rate” in effect from time to time (or if such rate is at any time not available, the prime rate so quoted by any banking institution selected by CIT), which rate is not intended to be the lowest rate charged by any such banking institution to its borrowers, (ii) the Federal Funds Effective Rate per annum plus 0.50% and (iii) the 1-Month LIBO Rate on such day plus 1%. Interest on Prime Rate loans will be computed and payable monthly in arrears on the basis of a 365 day year and based on the actual number of days elapsed.
	“1-Month LIBO Rate” will mean, for any day, the greater of (i) the rate per annum equal to the rate determined by CIT to be the offered rate that appears on the Bloomberg BBAM Screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on such day) with a term equivalent to three months, determined as of approximately 11:00 a.m. (London time) on such day (or if such day is not a Business Day, the immediately preceding Business Day) , and (ii) the LIBOR Floor. In the event that such rate is not available at such time for any reason, then the “1-Month LIBO Rate” for such day shall be determined by CIT by reference to such other comparable publicly available service for displaying the offered rate for dollar deposits in the London interbank market as may be selected by CIT and, in the absence of availability, such other method as may be selected by CIT in its sole discretion.
LIBOR Rate:	“LIBOR” will mean, for any interest period with respect to any LIBOR loan, the rate per annum equal to the rate determined by CIT to be the offered rate that appears on the Bloomberg BBAM Screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such interest period) with a term equivalent to such interest period, determined as of approximately 11:00 a.m. (London time) two (2) business days prior to the first day of such interest period. Interest periods shall not exceed one (1) month. The Borrowers may elect to use LIBOR provided (i) the Borrowers give CIT at least three business days prior notice of such election and (ii) no default is then outstanding under the Loan Documentation. Interest on LIBOR-based loans will be computed and payable at the end of the applicable LIBOR interest period in arrears on the basis of a 360 day year and based on the actual number

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	of days elapsed.
LIBOR Floor:	LIBOR shall be subject to a floor equal to two percent (2%) per annum.
Default Interest:	Upon the occurrence and during the continuance of an Event of Default (upon written notice, except in the case of any bankruptcy, insolvency, reorganization, liquidation or other similar proceeding), amounts outstanding under the Senior Credit Facility shall bear interest at 2.00% per annum above the rate otherwise applicable thereto and LIBOR-based loans and conversions to LIBOR-based loans shall no longer be available. Overdue interest, fees and other amounts shall accrue interest at 2.00% above the rate applicable to Prime Rate loans.

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