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): October 1, 2002
Commission file number: 333-39373
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SOVEREIGN SPECIALTY CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-4176637
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 W. Washington St. - Ste. 2200, Chicago, IL 60606
(Address of principal executive offices) (Zip Code)
(312) 419-7100
(Registrant's telephone number, including area code)
Item 5. OTHER EVENTS
Employment Agreements
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In October 2002, we entered into an employment agreement, dated as of
October 1, 2002, with Norman E. Wells, Jr. regarding his employment as
Chief Executive Officer for a term expiring on December 31, 2004. Mr. Wells
continues to serve as a Managing Director of AEA Investors Inc.
(Approximately 75% of our capital stock is owned by an investor group led
by AEA Investors Inc.) Under the terms of his employment agreement, Mr.
Wells has agreed to devote substantially all of his business time and skill
to his duties under his employment agreement, except for customary matters
and the performance of his duties as a Managing Director of AEA Investors
Inc. that are expected to be part time and that do not interfere with the
performance of his duties to us and our subsidiaries. In October 2002, we
also entered into a nonqualified stock option agreement, dated October 1,
2002, which granted Mr. Wells the option to purchase 60,000 shares of our
common stock at the exercise price of $115.00 per share. Under the terms of
our stock option plan governing this agreement, Mr. Wells is required to
execute and become a party to our Amended and Restated Shareholders
Agreement dated as of May 12, 2000. Copies of Mr. Wells' employment and
option agreements are attached hereto as Exhibit 10.23 and 10.24,
respectively.
In connection with Mr. Wells' employment as our Chief Executive
Officer, AEA Investors Inc. permitted Mr. Wells to subscribe for 10,000
units of partnership interests in SSCI Investors LP at a price per unit of
$0.05 pursuant to a subscription agreement dated as of October 1, 2002.
SSCI Investors LP is the holding entity through which the investor group
led by AEA Investors Inc. holds our capital stock. Pursuant to the related
vesting agreement between AEA Investors Inc. and Mr. Wells, also dated as
of October 1, 2002, Mr. Wells' rights to such units vest immediately as to
20% thereof, with an additional 20% vesting on each of the subsequent four
anniversaries of the date of issuance, subject to termination of vesting
and repurchase of vested and/or unvested units by AEA Investors Inc. under
various circumstances, including the termination of Mr. Wells' employment
as our Chief Executive Officer.
On October 31, 2002, we entered into an employment agreement, dated as
of October 31, 2002, with Terry D. Smith providing for his employment as
Chief Financial Officer for a term expiring on December 31, 2005. Mr. Smith
is working with John Mellett our outgoing Chief Financial Officer, as he
transitions into his new position. A copy of the agreement is attached
hereto as Exhibit 10.25.
Credit Agreement
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The terms of the financial covenants under our senior credit
facilities increase in strictness as of March 31, 2003. Because of this
increase and the possibility that we may find these new levels to be too
restrictive, we have initiated discussions with lenders under our senior
credit facilities regarding the modification of those increasing terms.
Among the matters we are discussing are amendments that would decrease the
restrictiveness of the financial covenants and allow for the refinancing of
a portion of our currently scheduled payments of our term loan advances.
There can be no assurance that we and our lenders will agree on these
proposed amendments. In the event that we are unable to agree on these
amendments, we may need to consider alternative arrangements to meet our
liquidity needs.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) Exhibits
Exhibit 10.23 Employment Agreement, dated as of
October 1, 2002, between Sovereign
Specialty Chemicals, Inc. and Norman
E. Wells, Jr.
Exhibit 10.24 Nonqualified Stock Option Agreement,
dated as of October 1, 2002, between
Sovereign Specialty Chemicals, Inc.
and Norman E. Wells, Jr.
Exhibit 10.25 Employment Agreement, dated as of
October 31, 2002, between Sovereign
Specialty Chemicals, Inc. and
Terry D. Smith.
Item 9. REGULATION FD DISCLOSURE
Today, we are filing with the Securities and Exchange Commission an
amendment to our Quarterly Report on Form 10-Q for the period ended
September 30, 2002, which amendment adds an exhibit to that filing.
Accompanying such amendment were certifications pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. The text of each of these certifications follows:
[SOVEREIGN SPECIALTY CHEMICALS LETTERHEAD]
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the December 3, 2002 amendment to the Quarterly
Report of Sovereign Specialty Chemicals, Inc. (the "Company") on Form 10-Q
for the quarterly period ended September 30, 2002, as filed with the
Securities and Exchange Commission on the date hereof (as amended, the
"Report"), I, Norman E. Wells, Jr., Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Norman E. Wells, Jr.
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Norman E. Wells, Jr.
Chief Executive Officer
December 3, 2002
[SOVEREIGN SPECIALTY CHEMICALS LETTERHEAD]
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the December 3, 2002 amendment to the Quarterly
Report of Sovereign Specialty Chemicals, Inc. (the "Company") on Form 10-Q
for the quarterly period ended September 30, 2002, as filed with the
Securities and Exchange Commission on the date hereof (as amended, the
"Report"), I, John R. Mellett, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ John R. Mellett
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John R. Mellett
Chief Financial Officer
December 3, 2002
[SOVEREIGN SPECIALTY CHEMICALS LETTERHEAD]
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the December 3, 2002 amendment to the Quarterly
Report of Sovereign Specialty Chemicals, Inc. (the "Company") on Form 10-Q
for the quarterly period ended September 30, 2002, as filed with the
Securities and Exchange Commission on the date hereof (as amended, the
"Report"), I, Terry D. Smith, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Terry D. Smith
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Terry D. Smith
Chief Financial Officer
December 3, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOVEREIGN SPECIALTY CHEMICALS, INC.
Dated: December 3, 2002 By: /s/ John R. Mellett
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John R. Mellett
Vice President and
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------------
10.23 Employment Agreement, dated as of October 1, 2002, between
Sovereign Specialty Chemicals, Inc. and Norman E. Wells, Jr.
10.24 Nonqualified Stock Option Agreement, dated as of
October 1, 2002, between Sovereign Specialty Chemicals, Inc.
and Norman E. Wells, Jr.
10.25 Employment Agreement, dated as of October 31, 2002, between
Sovereign Specialty Chemicals, Inc. and Terry D. Smith.