PREM14A
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Rule 14a-101)

 

 

Filed by the Registrant  x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

x Preliminary Proxy Statement

 

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

¨ Definitive Proxy Statement

 

¨ Definitive Additional Materials

 

¨ Soliciting Material Pursuant to §240.14a-12

Cytec Industries Inc.

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

¨ No fee required.

 

x Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  (1) Title of each class of securities to which transaction applies:

Common Stock, $0.01 par value

 

 

  (2) Aggregate number of securities to which transaction applies:

(A) 71,545,572 shares of common stock (including 58,382 restricted shares), (B) 3,039,039 shares of common stock underlying options with an exercise price below the merger consideration of $75.25, (C) 368,066 shares of common stock underlying stock appreciation rights with a reference price below the merger consideration of $75.25, (D) 209,586 shares of common stock underlying restricted stock units and (E) 657,877.111 shares of common stock underlying deferred stock rights.

 

 

  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

Solely for purposes of calculating the filing fee, the underlying value of the transaction was calculated as the sum of (A) 71,545,572 shares of common stock (including 58,382 restricted shares) multiplied by $75.25, (B) 3,039,039 shares of common stock underlying options with an exercise price below the merger consideration of $75.25, multiplied by $43.266 (which is the difference between $75.25 and the weighted average exercise price of $31.984 for such options), (C) 368,066 shares of common stock underlying stock appreciation rights with a reference price below the merger consideration of $75.25, multiplied by $50.505 (which is the difference between $75.25 and the weighted average reference price of $24.745 for such stock appreciation rights), (D) 209,586 shares of common stock underlying restricted stock units multiplied by $75.25, and (E) 657,877.111 share of common stock underlying deferred stock rights multiplied by $75.25.

 

 

  (4) Proposed maximum aggregate value of transaction:

$5,599,157,126.81

 

 

  (5) Total fee paid:

$650,622.06, determined, in accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, by multiplying .0001162 by the proposed maximum aggregate value of the transaction of $5,599,157,126.81

 

 

¨ Fee paid previously with preliminary materials.

 

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

 

  (1) Amount Previously Paid:

      

 

 

  (2) Form, Schedule or Registration Statement No.:

      

 

 

  (3) Filing Party:

      

 

 

  (4) Date Filed:

      

 

 

 

 


Table of Contents

PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION

 

LOGO

Cytec Industries Inc.

5 Garret Mountain Plaza

Woodland Park, New Jersey 07424

[●], 2015

Dear Cytec Stockholder,

We cordially invite you to attend a special meeting of common stockholders of Cytec Industries Inc., a Delaware corporation, to be held at [●] on [●], 2015 at [●] a.m., local time.

On July 28, 2015, the Company entered into a merger agreement with Solvay SA, a public limited company organized under the laws of Belgium, which we refer to as Solvay, and Tulip Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of Solvay that we refer to as Merger Subsidiary. The merger agreement provides for the acquisition by Solvay of the Company through the merger of Merger Subsidiary with and into the Company, with the Company as the surviving corporation.

If the merger is completed, you will be entitled to receive $75.25 in cash, without interest, less any applicable withholding taxes, for each share of our common stock owned by you (unless you have properly exercised, and not lost, your appraisal rights with respect to such shares), which represents a premium of approximately 28.9% to the closing price of our common stock on July 28, 2015, the last trading day prior to the public announcement of the execution of the merger agreement and a premium of approximately 46.2% to the volume weighted average price of a share of our common stock over the one-year period prior to July 27, 2015.

The Board of Directors has unanimously determined that the merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, the Company and the stockholders of the Company and approved and declared advisable the merger agreement and the merger and the other transactions contemplated by the merger agreement. The Board of Directors made its determination after consultation with its legal and financial advisors and consideration of a number of factors.

Approval of the proposal to adopt the merger agreement requires the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote on the proposal. The Board of Directors recommends that you vote “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

Your vote is very important, regardless of the number of shares of our common stock you own. Because stockholders cannot take any action at the meeting unless a majority of the outstanding shares of common stock is represented, it is important that you attend the meeting in person or are represented by proxy at the meeting. The merger cannot be completed unless the merger agreement is adopted by the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote thereon. Whether or not you plan to attend the special meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying postage-paid reply envelope, or submit your proxy by telephone or the Internet. If you attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. If your shares of our common stock are held in “street name” by your bank, brokerage firm or other nominee, your bank, brokerage firm or other nominee will be unable to vote your


Table of Contents

shares of our common stock without instructions from you. You should instruct your bank, brokerage firm or other nominee to vote your shares of our common stock in accordance with the procedures provided by your bank, brokerage firm or other nominee. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement.

If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan, shares of our common stock equivalent to the value of the common stock interest credited to your account under the respective plan will be voted automatically by the trustee in accordance with your proxy, if the proxy is received by [●], 2015. If you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

The accompanying proxy statement provides you with detailed information about the special meeting, the merger agreement, and the merger. A copy of the merger agreement is attached as Annex A to the proxy statement. We encourage you to read the entire proxy statement and its annexes, including the merger agreement, carefully. You may also obtain additional information about the Company from documents we have filed with the Securities and Exchange Commission, which we refer to as the SEC.

If you have any questions or need assistance voting your shares of our common stock, please contact Okapi Partners LLC, our proxy solicitor, by calling toll-free at 1-855-305-0855.

The Board of Directors has unanimously approved and declared advisable the merger agreement and recommends that you vote “FOR” the adoption of the merger agreement.

Thank you in advance for your cooperation and continued support.

Sincerely,

Shane D. Fleming

Chairman, President and Chief Executive

Officer

The proxy statement is dated [●], 2015, and is first being mailed to our common stockholders on or about [●], 2015.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE PROPOSED MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THE ACCOMPANYING PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


Table of Contents

LOGO

Cytec Industries Inc.

5 Garret Mountain Plaza

Woodland Park, New Jersey 07424

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held on [], 2015

To Our Stockholders:

Notice is hereby given that a special meeting of the common stockholders of Cytec Industries Inc., a Delaware corporation, will be held at [●] on [●], 2015 at [●] a.m., local time, for the following purposes:

 

  1. To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of July 28, 2015, as it may be amended from time to time, among Cytec Industries Inc., a Delaware corporation, Solvay SA, a public limited company organized under the laws of Belgium, and Tulip Acquisition Inc., a Delaware corporation and wholly owned subsidiary of Solvay SA. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement.

 

  2. To consider and vote on a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger.

 

  3. To consider and vote on a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

The merger agreement, the merger and the other transactions contemplated by the merger agreement are described more fully in the attached proxy statement, and we urge you to read it carefully and in its entirety.

The Board of Directors has unanimously determined that the merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, the Company and the stockholders of the Company and approved and declared advisable the merger agreement and the merger and the other transactions contemplated by the merger agreement. The Board of Directors made its determination after consultation with its legal and financial advisors and consideration of a number of factors.

Approval of the proposal to adopt the merger agreement requires the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote thereon. The Board of Directors recommends that you vote “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

Your vote is very important, regardless of the number of shares of our common stock you own. Because stockholders cannot take any action at the meeting unless a majority of the outstanding shares of our common stock is represented, it is important that you attend the meeting in person or are represented by proxy at the meeting. The merger cannot be completed unless the merger agreement is adopted by the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote thereon. Whether or not you plan to attend the special meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying postage-paid reply envelope, or submit your proxy by telephone or the Internet. If you attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. If your shares of our common stock are held in “street name” by your bank, brokerage firm or other nominee, your bank, brokerage firm or other nominee will be unable to vote your


Table of Contents

shares of our common stock without instructions from you. You should instruct your bank, brokerage firm or other nominee to vote your shares of our common stock in accordance with the procedures provided by your bank, brokerage firm or other nominee. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan, shares of our common stock equivalent to the value of the common stock interest credited to your account under the respective plan will be voted automatically by the trustee in accordance with your proxy, if the proxy is received by [●], 2015. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement.

If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan, shares of our common stock equivalent to the value of the common stock interest credited to your account under the respective plan will be voted automatically by the trustee in accordance with your proxy, if the proxy is received by [●], 2015. If you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

The Board of Directors has fixed the close of business on [●], 2015 as the record date for determination of stockholders entitled to receive notice of, and to vote at, the special meeting and any adjournments or postponements thereof. Only stockholders of record at the close of business on the record date are entitled to receive notice of, and to vote at (in person or by proxy), the special meeting and at any adjournment or postponement thereof. You will be entitled to one vote for each share of our common stock that you owned on the record date. A complete list of our stockholders of record entitled to vote at the special meeting will be available for inspection at our principal executive offices at least ten days prior to the date of the special meeting and continuing through the special meeting for any purpose germane to the meeting. The list will also be available at the meeting for inspection by any stockholder present at the meeting.

Only stockholders of record (including “street name” stockholders who can show that they beneficially owned our common stock on the record date), their duly appointed proxy holders and our guests may attend the special meeting. To gain admittance, please bring the admission ticket with you to the meeting. If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, please send a written request for an admission ticket to our Secretary at 5 Garret Mountain Plaza, Woodland Park, New Jersey 07424. Please include the following information with your request: (i) a signed cover letter stating your name and complete mailing address, including daytime and evening telephone numbers; that you are requesting an admission ticket; the number of shares that you own in “street name”; and the name, address and telephone number of your bank, brokerage firm or other nominee that is the stockholder of record for your shares of our common stock, and (ii) an original signed “legal proxy” from your bank, brokerage firm or other nominee giving you the right to vote the shares at the special meeting. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting.


Table of Contents

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. IF YOU WILL ATTEND THE SPECIAL MEETING AND VOTE IN PERSON, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

By Order of the Board of Directors,

Roy Smith

Vice President, General Counsel and

Secretary

Woodland Park, New Jersey

Dated: [●], 2015.


Table of Contents

TABLE OF CONTENTS

 

SUMMARY

     1   

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

     15   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     24   

PARTIES TO THE MERGER

     25   

The Company

     25   

Solvay

     25   

Merger Subsidiary

     25   

THE SPECIAL MEETING

     26   

Date, Time and Place of the Special Meeting

     26   

Purpose of the Special Meeting

     26   

Record Date and Quorum

     26   

Attendance

     27   

Vote Required

     27   

Proxies and Revocation

     30   

Adjournments

     31   

Anticipated Date of Completion of the Merger

     31   

Rights of Stockholders Who Seek Appraisal

     31   

Solicitation of Proxies; Payment of Solicitation Expenses

     32   

Questions and Additional Information

     32   

THE MERGER

     33   

Merger Consideration

     33   

Background of the Merger

     33   

Reasons for the Merger; Recommendation of the Board of Directors

     41   

Opinion of the Company’s Financial Advisor

     44   

Certain Company Forecasts

     50   

Financing of the Merger

     53   

Closing and Effective Time of Merger

     53   

Payment of Merger Consideration and Surrender of Stock Certificates

     53   

Interests of Certain Persons in the Merger

     54   

Material U.S. Federal Income Tax Consequences of the Merger

     60   

Regulatory Approvals

     61   

THE MERGER AGREEMENT

     64   

Explanatory Note Regarding the Merger Agreement

     64   

Effects of the Merger; Directors and Officers; Certificate of Incorporation; By-laws

     64   

Closing and Effective Time of the Merger

     65   

Treatment of Common Stock and Stock-Based Awards

     65   

Surrender and Payment Procedures

     67   

Representations and Warranties

     69   

Conduct of Our Business Pending the Merger

     72   

Stockholders Meeting

     75   

No Solicitation; Other Offers

     75   

Filings; Other Actions; Notification

     78   

Other Efforts

     79   

Financing

     80   

Employee Benefits Matters

     82   

Conditions to the Merger

     84   

Termination

     85   

 

-i-


Table of Contents

Termination Fee

     86   

Expenses

     87   

Remedies

     87   

Indemnification; Directors’ and Officers’ Insurance

     88   

Amendments and Waivers

     88   

ADVISORY VOTE ON MERGER-RELATED COMPENSATION FOR THE COMPANY’S NAMED EXECUTIVE OFFICERS

     89   

Merger-Related Compensation Proposal

     91   

Vote Required and the Company Board Recommendation

     92   

MARKET PRICE OF COMMON STOCK

     93   

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     94   

APPRAISAL RIGHTS

     97   

DELISTING AND DEREGISTRATION OF COMMON STOCK

     102   

OTHER MATTERS

     102   

HOUSEHOLDING OF PROXY MATERIALS

     102   

SUBMISSION OF STOCKHOLDER PROPOSALS

     102   

WHERE YOU CAN FIND MORE INFORMATION

     103   
Annex A    Agreement and Plan of Merger, dated as of July 28, 2015, among Cytec Industries Inc., Solvay SA and Tulip Acquisition Inc.
Annex B    Section 262 of the General Corporation Law of the State of Delaware
Annex C    Opinion of J.P. Morgan Securities LLC, dated as of July 28, 2015

 

-ii-


Table of Contents

This proxy statement and a proxy card are first being mailed on or about [●], 2015 to stockholders who owned shares of our common stock as of the close of business on [●], 2015.

SUMMARY

The following summary highlights selected information in this proxy statement and may not contain all the information that may be important to you. Accordingly, we encourage you to read carefully this entire proxy statement, its annexes and the documents referred to in this proxy statement. Each item in this summary includes a page reference directing you to a more complete description of that topic. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under “Where You Can Find More Information” beginning on page 103.

Parties to the Merger (Page 25)

Cytec Industries Inc., a Delaware corporation, which we refer to as the Company in this proxy statement, is a global specialty materials and chemicals company that serves the aerospace, agriculture/agrochemical, automotive, defense, electrical/electronics and mining industries, and operates in four segments: (i) aerospace materials, which principally includes advanced composites, carbon fiber, and structural film adhesives, (ii) industrial materials, which includes structural composite materials (high performance automotive, motorsports, recreation, tooling, and other structural materials markets) and process materials (aerospace, wind energy, and other process materials markets), (iii) in process separation, which includes mining chemicals and phosphines and (iv) additive technologies, which includes polymer additives, specialty additives, and formulated resins. The Company was incorporated as an independent public company in December 1993.

Solvay SA, a public limited company organized under the laws of Belgium, which we refer to as Solvay in this proxy statement, is an international chemical group headquartered in Brussels, Belgium. It serves many markets, including energy and the environment, automotive and aeronautics, and electrical and electronics. Solvay is listed on Euronext in Brussels and Paris. Solvay was founded in 1863.

Tulip Acquisition Inc., a Delaware corporation, was formed by Solvay for the purpose of entering into the merger agreement and completing the merger and the other transactions contemplated by the merger agreement, which we refer to as Merger Subsidiary in this proxy statement. Merger Subsidiary is a wholly owned subsidiary of Solvay and has not engaged in any business except for activities incidental to its formation and as contemplated by the merger agreement. Upon the completion of the merger, Merger Subsidiary will cease to exist and the Company will continue as the surviving corporation.

The Special Meeting (Page 26)

Date, Time and Place of the Special Meeting; Purpose of the Special Meeting (Page 26)

The special meeting will be held at [●] on [●], 2015 at [●] a.m., local time.

At the special meeting, holders of our common stock, par value $0.01 per share, which we refer to as our common stock, will be asked to approve the proposal to adopt the merger agreement, to approve the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and to approve the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

 



 

-1-


Table of Contents

Record Date and Quorum (Page 26)

The Board of Directors of the Company, which we refer to as the Board of Directors, has fixed the close of business on [●], 2015 as the record date for determination of stockholders entitled to receive notice of, and to vote at, the special meeting and any adjournments or postponements thereof. Only holders of record of our common stock as of the close of business on the record date are entitled to receive notice of, and to vote at (in person or by proxy), the special meeting and at any adjournment or postponement thereof. As of the close of business on the record date, there were [●] shares of our common stock outstanding and entitled to vote at the special meeting, held by [●] holders of record. Each holder of our common stock is entitled to cast one vote on each matter properly brought before the special meeting for each share of our common stock that such holder owned as of the record date.

The presence at the special meeting, in person or represented by proxy, of the holders of a majority of the shares of our common stock outstanding on the record date constitutes a quorum for the transaction of business at the special meeting. Shares of our common stock represented at the special meeting but not voted, including shares of our common stock for which proxies have been received but for which stockholders have abstained, will be treated as present at the special meeting for purposes of determining the presence or absence of a quorum for the transaction of all business. If you hold your shares through a bank, brokerage firm or other nominee, and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determine whether a quorum is present at the special meeting. Because stockholders cannot take any action at the meeting unless a majority of the outstanding shares of common stock is represented, it is important that you attend the meeting in person or are represented by proxy at the meeting. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement.

If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan, shares of our common stock equivalent to the value of the common stock interest credited to your account under the respective plan will be voted automatically by the trustee in accordance with your proxy, if the proxy is received by [●], 2015. If you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

Vote Required (Page 27)

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote thereon. Abstentions will not be counted as votes cast in favor of the proposal to adopt the merger agreement, but will count for the purpose of determining whether a quorum is present. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents

 



 

-2-


Table of Contents

for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

The proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger, as described under “Advisory Vote on Merger-Related Compensation for the Company’s Named Executive Officers” beginning on page 89, requires the affirmative vote of holders of a majority of the shares of our common stock present, in person or represented by proxy, at the special meeting and entitled to vote on the proposal to approve such merger-related compensation. The Company is providing stockholders with the opportunity to approve, on a non-binding, advisory basis, such merger-related executive compensation in accordance with Section 14A of the Securities Exchange Act of 1934 (as amended), which we refer to as the Exchange Act. Abstentions will have the same effect as a vote “AGAINST” approval of this proposal. If you fail to submit a proxy or vote in person at the special meeting or if your shares of our common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, but this will not have an effect on the proposal to approve the merger-related executive compensation.

The proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting requires the affirmative vote of the holders of a majority of the shares of our common stock present, in person or represented by proxy, and entitled to vote on the proposal to approve such adjournment. Abstentions will have the same effect as a vote “AGAINST” approval of this proposal. If you fail to submit a proxy or to vote in person at the special meeting or if your shares of our common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, but this will not have an effect on the proposal to adjourn the special meeting.

As of [●], 2015, the record date, the directors and executive officers of the Company beneficially owned and were entitled to vote, in the aggregate, [●] shares of our common stock (not including any shares of our common stock deliverable upon exercise or conversion of any options, stock appreciation rights, restricted shares or phantom awards), representing approximately [●] percent of the outstanding shares of our common stock. The directors and officers have informed the Company that they currently intend to vote all such shares of our common stock “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

Proxies and Revocation (Page 30)

Any stockholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet or by returning the enclosed proxy card in the accompanying postage-paid reply envelope, or may vote in person by appearing at the special meeting. If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of our common stock using the instructions provided by your bank, brokerage firm or other nominee. If you are a beneficial owner and wish to vote in person at the special meeting, you must provide a “legal proxy” from the bank, brokerage firm or other nominee that is the stockholder of record for your shares of our common stock giving you the right to vote the shares at the meeting. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares

 



 

-3-


Table of Contents

are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement. If you fail to vote in person at the special meeting or fail to return your proxy card or fail to submit your proxy by phone or the Internet, your shares of our common stock will not have an effect on the proposal to approve the merger-related executive compensation or on the proposal to adjourn the special meeting. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by filing a notice of revocation with our Secretary by the time the special meeting begins, by filing a duly executed proxy card or voting instruction form bearing a later date, by submitting a later dated proxy or providing new voting instructions over the Internet or by telephone, or by attending the special meeting and voting in person. Written notice of revocation should be mailed to: Cytec Industries Inc., Attention: Secretary, 5 Garret Mountain Plaza, Woodland Park, New Jersey 07424. If you hold shares in “street name” through a bank, brokerage firm or other nominee, you should contact the bank, brokerage firm or other nominee that holds your shares for instructions on how to change your vote.

The Merger (Page 33)

The merger agreement provides that Merger Subsidiary will merge with and into the Company. The Company will survive the completion of the merger, and will continue to do business as the Company following the consummation of the merger. We refer to the Company in this context as the surviving corporation. As a result of the merger, the Company will cease to be a publicly traded company and will become a wholly owned direct or indirect subsidiary of Solvay. If the merger is completed, you will not own any shares of the capital stock of the surviving corporation.

Merger Consideration (Page 33)

In the merger, each issued and outstanding share of our common stock (other than shares held by a holder who has not voted in favor of the merger or consented thereto in writing and who has demanded appraisal for such shares in accordance with Section 262 of the General Corporation Law of the State of Delaware (which we refer to as the DGCL), which shares we refer to as dissenting shares, and shares of our common stock held by the Company, Solvay or either of their respective subsidiaries, which, together with dissenting shares, we refer to as excluded shares) will be converted into the right to receive the merger consideration in cash in an amount equal to $75.25 per share, without interest and less any applicable withholding taxes.

Reasons for the Merger; Recommendation of the Board of Directors (Page 41)

After careful consideration of various factors described in the section entitled “The Merger—Reasons for the Merger; Recommendation of the Board of Directors” beginning on page 41, the Board of Directors, has unanimously determined that the merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, the Company and the stockholders of the Company and approved and declared advisable the merger agreement and the merger, the other transactions contemplated by the merger agreement. The Board of Directors also unanimously resolved that the merger agreement be submitted for consideration by the stockholders of the Company at a special meeting of its stockholders and recommended that the stockholders of the Company vote to adopt the merger agreement.

 



 

-4-


Table of Contents

In considering the recommendation of the Board of Directors with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, yours. The Board of Directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company. See the section entitled “The Merger—Interests of Certain Persons in the Merger” beginning on page 54.

The Board of Directors recommends that you vote “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

Opinion of the Company’s Financial Advisor (Page 44)

On July 28, 2015, at the meeting of the Board of Directors at which the proposed merger was approved, J.P. Morgan Securities LLC, which we refer to as J.P. Morgan, rendered to the Board of Directors its oral opinion, confirmed by delivery of a written opinion, dated July 28, 2015, to the effect that, as of such date and based upon and subject to the various factors, assumptions, qualifications and limitations set forth in its written opinion, the merger consideration to be paid to the Company’s common stockholders in the proposed merger of $75.25 per share in cash was fair, from a financial point of view, to such stockholders.

The full text of the written opinion of J.P. Morgan dated July 28, 2015, which sets forth, among other things, the assumptions made, matters considered, and qualifications and any limitations on the opinion and the review undertaken by J.P. Morgan in connection with rendering its opinion, is attached as Annex C to this proxy statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion, and the Company’s stockholders are urged to read the opinion carefully and in its entirety. J.P. Morgan’s written opinion was addressed to the Board of Directors (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the fairness, from a financial point of view, of the merger consideration to be paid to the Company’s common stockholders and did not address any other aspect of the merger. J.P. Morgan has expressed no opinion as to the fairness of any consideration paid in connection with the merger to the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote at the special meeting with respect to the proposed merger or any other matter.

For a description of the opinion that the Board of Directors received from J.P. Morgan, see “The Merger—Opinion of the Company’s Financial Advisor” beginning on page 44.

Financing of the Merger (Page 53)

Solvay’s obligation to complete the merger is not conditioned on Solvay’s receipt of any financing. Solvay expects to fund amounts needed to acquire the Company under the merger agreement through the use of existing cash resources and the proceeds of new indebtedness. Solvay has obtained binding bridge financing commitments (in a definitive credit agreement) for the transactions contemplated by the merger agreement. It plans to refinance and/or replace the bridge financing with a EUR 1.5 billion rights issue, EUR 1 billion of additional hybrid instruments and an issuance of senior debt.

 



 

-5-


Table of Contents

Interests of Certain Persons in the Merger (Page 54)

In considering the recommendation of the Board of Directors with respect to the proposed merger, you should be aware that executive officers and directors of the Company may have certain interests in the merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Board of Directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company. These interests include, but are not limited to, the following:

 

    accelerated vesting and cash-out of certain Company stock-based awards based on the per share merger consideration and double-trigger vesting protection for other unvested Company stock-based awards that will convert into the right to receive a cash payment based on the per share merger consideration, in each case, pursuant to the terms of the merger agreement;

 

    the receipt of severance payments and benefits under the Company Executive Income Continuity Plan upon certain qualifying terminations of employment after the effective time of the merger;

 

    payment of amounts under the Company’s Supplemental Savings Plan upon the effective time of the merger, and for one executive officer, vesting of amounts under such plan upon the effective time of the merger;

 

    pension benefit enhancements upon the effective time of the merger for two executive officers pursuant to the terms of the Company’s Executive Supplemental Employees’ Retirement Plan;

 

    satisfaction of performance conditions at maximum levels under outstanding performance cash awards upon the effective time of the merger, with satisfaction of requisite service conditions upon subsequent qualifying terminations of employment prior to the applicable payment dates of such awards;

 

    payment of annual bonuses in respect of the 2015 calendar year and payment of pro-rated bonuses in respect of the 2016 calendar year in the event of certain terminations of employment occurring after June 30, 2016;

 

    a right to reimbursement for excise taxes imposed under Section 4999 of the Code for certain executive officers pursuant to the terms of the Company’s Compensation Taxation Equalization Plan

 

    the entitlement to indemnification benefits in favor of directors and officers of the Company.

For further information with respect to the arrangements between the Company and its directors and executive officers, see the information included under “The Merger—Interests of Certain Persons in the Merger” beginning on page 54 and “Advisory Vote on Merger-Related Compensation for the Company’s Named Executive Officers—Golden Parachute Compensation” beginning on page 89.

Material U.S. Federal Income Tax Consequences of the Merger (Page 60)

The exchange of shares of our common stock for cash pursuant to the merger generally will be a taxable transaction to U.S. holders (as defined in “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” on page 60) for U.S. federal income tax purposes. Stockholders who are U.S. holders and who exchange their shares of our common stock in the merger for cash will generally recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received with respect to such shares and their adjusted tax basis in their shares of our common stock. Backup withholding may also apply to the cash payments paid to a non-corporate U.S. holder pursuant to the merger unless the U.S. holder or other payee provides a taxpayer identification number, certifies that such number is correct and otherwise complies with the backup withholding rules. You should read “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 60 for a more detailed discussion of the U.S. federal income tax consequences of the merger.

 



 

-6-


Table of Contents

You should also consult your tax advisor for a complete analysis of the effect of the merger on your federal, state and local and/or foreign taxes.

Regulatory Approvals (Page 61)

HSR Act and Competition Law Approvals

To complete the merger, the parties must make filings with and obtain authorizations, approvals or consents from certain antitrust and competition law authorities. The merger cannot be completed until (i) any waiting periods applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the HSR Act, have expired or been terminated and (ii) any applicable waiting period has expired or been terminated, or, if applicable, approval obtained, under any similar foreign antitrust or competition law in the following jurisdictions: Brazil, the European Union, Israel, Japan, Mexico, South Korea, Turkey, and Ukraine.

On August 25, 2015, Solvay and the Company filed notification of the proposed merger with the Federal Trade Commission (which we refer to as the FTC) and U.S. Department of Justice (which we refer to as DOJ) under the HSR Act.

The Company currently expects that applicable filings in Brazil, the European Union, Israel, Japan, Mexico, South Korea, Turkey, and Ukraine will be made in due course.

The consummation of the merger is not conditioned on any antitrust or competition law regulatory filings in the United States or in any other jurisdiction, other than those described above.

United States National Security Regulations and Approvals

The merger agreement provides for the parties to file a joint voluntary notice under Section 721 of Title VII of the Defense Production Act of 1950 (50 U.S.C. App. 2170), as added by the Exon-Florio Amendment of 1988 and as amended by the Foreign Investment and National Security Act of 2007, which we refer to as Exon-Florio. Exon-Florio provides for national security reviews and, where appropriate, investigations by the Committee on Foreign Investment in the United States (which we refer to as CFIUS) when a foreign company acquires or seeks to acquire control of a U.S. company. CFIUS conducts an initial 30-day review of transactions of which it is notified. For transactions involving entities controlled by a foreign government (within the meaning of “control” under the Exon-Florio regulations) and/or certain sensitive assets or that otherwise present particular national security concerns, CFIUS typically conducts an additional investigation that must be completed within 45 days. The Company and Solvay expect to submit a joint voluntary notice to CFIUS of the planned merger in due course.

The merger cannot be completed unless (i) the Company and Solvay receive written notice that any review, investigation or other proceeding under Exon-Florio with respect to the merger has concluded without action or recommendation for suspension or prohibition or (ii) the President of the United States of America has not, within fifteen calendar days of a CFIUS report to him, announced a decision to take any action to block, suspend or otherwise prevent the consummation of the merger or any of the other transactions contemplated by the merger agreement.

In addition, under the National Industrial Security Program Operating Manual (which we refer to as NISPOM), for which the Department of Defense has primary implementing authority, a U.S. company that is subject to foreign ownership, control or influence (which we refer to as FOCI) may not perform classified contracts unless steps are taken to mitigate the FOCI. The Company currently performs certain classified

 



 

-7-


Table of Contents

contracts, and it is expected that the Department of Defense through the Defense Security Service (which we refer to as DSS) will carefully examine the parties’ proposed FOCI-mitigation measures concurrently with the CFIUS review of the transaction, although DSS has no statutory deadlines for the completion of its review. DSS is expected to require that, prior to completion of the merger, the parties submit an acceptable FOCI-mitigation plan and agree to interim measures that address any FOCI issues pending execution of a formal FOCI-mitigation agreement with the Department of Defense. The parties will outline their proposed FOCI-mitigation plan in their notice to CFIUS, and expect to submit their detailed FOCI-mitigation plan to DSS concurrently or soon thereafter. It is a closing condition to the merger that Solvay or Merger Subsidiary receive the written approval of DSS to operate the business of the Company pursuant to a FOCI mitigation arrangement in accordance with the NISPOM.

Finally, the Company is registered with the Directorate of Defense Trade Controls (which we refer to as DDTC) of the U.S. Department of State as a manufacturer and exporter of “defense articles” as that term is defined under the International Traffic in Arms Regulations (22 C.F.R. Parts 120-130) (which we refer to as ITAR). The ITAR require that a registrant notify DDTC at least 60 days prior to the consummation of any transaction that would result in “the sale or transfer to a foreign person of ownership or control” of a registrant.

The Company expects to notify DDTC of the transaction in due course, and the notice period will expire 60 days after such notice has been given, absent a waiver of that period by DDTC. The merger cannot be completed if DDTC sends written notice to the surviving corporation or to Solvay that DDTC has made the final determination that DDTC will neither approve (i) the registration of the surviving corporation as a manufacturer or exporter of defense articles under ITAR nor (ii) the transfer from the surviving corporation to Solvay of the surviving corporation’s registration as a manufacturer or exporter of defense articles under ITAR.

The Merger Agreement (Page 64)

Treatment of Common Stock and Common Stock-Based Awards (Page 65)

 

    Common Stock. Each share of our common stock outstanding immediately prior to the effective time of the merger (other than excluded shares) will be converted into the right to receive from Solvay $75.25 in cash, without interest, less any applicable withholding taxes. Each share of our common stock owned immediately prior to the effective time of the merger by us, Solvay or either of our respective subsidiaries, will be cancelled without payment and will cease to exist. Dissenting shares will not be converted into the right to receive the merger consideration. Instead, holders of dissenting shares will be entitled to the appraisal rights provided under the DGCL. Shares of our common stock held by the rabbi trust pursuant to the Company’s Supplemental Savings Plan, like all other outstanding shares of our common stock, shall be converted into the right to receive from Solvay $75.25 in cash, without interest, less any applicable withholding taxes.

 

    Company Stock Options. At the effective time of the merger, each option to purchase shares of our common stock granted under the Company 1993 Stock Award and Incentive Plan (which we refer to as a Company Stock Option and the Company Stock Plan, respectively), whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time of the merger will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive, as soon as practicable after the effective time (but in no event later than five business days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the Company Stock Option, by (y) the excess, if any, of the amount of the merger consideration over the applicable exercise price per share of the Company Stock Option (with the aggregate payment rounded down to the nearest cent), less applicable tax withholding. Each Company Stock Option with an exercise price that is equal to or greater than the merger consideration will be canceled without any consideration to the holder thereof.

 



 

-8-


Table of Contents
    Company Stock Appreciation Rights. At the effective time of the merger, each stock appreciation right in respect of shares of our common stock granted under the Company Stock Plan (which we refer to as a Company SAR), whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time of the merger will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive, as soon as practicable after the effective time of the merger (but in no event later than five business days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the Company SAR, by (y) the excess, if any, of the amount of the merger consideration over the applicable exercise price per share of the Company SAR (with the aggregate payment rounded down to the nearest cent), less applicable tax withholding. Each Company SAR with an exercise price that is equal to or greater than the merger consideration will be canceled without any consideration to the holder thereof.

 

    Vested Company Restricted Stock Units. At the effective time of the merger, each vested restricted stock unit in respect of shares of our common stock granted under the Company Stock Plan (which we refer to as a Company RSU), including any Company RSUs that will vest as of the effective time of the merger, that is outstanding immediately prior to the effective time of the merger will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive, as soon as practicable after the effective time of the merger (but in no event later than five business days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the vested Company RSUs, by (y) the amount of the merger consideration, less applicable tax withholding. However, if any vested Company RSUs constitute nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (which we refer to as the Code), and are not permitted to be paid at the effective time of the merger without triggering taxes or penalties under Section 409A of the Code, such payments will be made at the earliest time permitted under the Company Stock Plan and applicable award agreement that does not trigger such taxes or penalties.

 

    Unvested Company Restricted Stock Units. At the effective time of the merger, each unvested Company RSU that is outstanding immediately prior to, and will not vest as of, the effective time of the merger will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive an amount in cash (which we refer to as a Deferred RSU Payment), without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the unvested Company RSU, by (y) the amount of the merger consideration. Each Deferred RSU Payment (or applicable portion thereof) will be paid (less applicable tax withholding) on the applicable vesting dates specified under the Company Stock Plan and the agreements evidencing the related unvested Company RSU, and will be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had such unvested Company RSUs remained outstanding in accordance with their terms.

 

   

Company Deferred Stock Rights. At the effective time of the merger, each right to receive shares of our common stock on a deferred basis under the Company Stock Plan (which we refer to as Company Deferred Stock Rights), will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive, as soon as practicable after the effective time of the merger (but in no event later than five business days thereafter), an amount in cash (which we refer to as the Company Deferred Stock Right Payment), without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the Company Deferred Stock Right, by (y) the amount of the merger consideration (less applicable tax withholding). However, Company Deferred Stock Right Payments made with respect to any Company Deferred Stock Rights that constitute nonqualified deferred compensation subject to Section 409A of the Code, and that are not permitted to be paid at the effective time of the merger without triggering taxes or

 



 

-9-


Table of Contents
 

penalties under Section 409A of the Code will be paid at the earliest time permitted under the Company Stock Plan and applicable deferral election form that does not trigger such taxes or penalties. Company Deferred Stock Right Payments will be deemed invested, at the holder’s direction, in one or more of the hypothetical investment options as specified on Appendix A of the Company’s Supplemental Savings Plan, and such payment will be credited or debited, as applicable, to reflect amounts of hypothetical income and appreciation and depreciation pursuant to such hypothetical investment as of the hypothetical investment date and through the date such amount is paid in accordance with the merger agreement.

 

    Vested Company Restricted Stock. At the effective time of the merger, all restrictions imposed on each vested share of our common stock granted under the Company Stock Plan and subject to forfeiture restrictions thereunder (which we refer to as Company Restricted Stock) (including any shares of Company Restricted Stock that will vest as of the effective time of the merger) that is outstanding immediately prior to the effective time of the merger will lapse. At the effective time of the merger, each vested share of Company Restricted Stock will be treated in the same manner as a share of our common stock.

 

    Unvested Company Restricted Stock. At the effective time of the merger, each unvested share of Company Restricted Stock that is outstanding immediately prior to, and that will not vest as of, the effective time of the merger will be cancelled and converted into a right to receive an amount in cash (which we refer to as the Deferred Restricted Stock Payment), without interest, equal to the product obtained by multiplying (x) the number of shares of unvested Company Restricted Stock by (y) the amount of the merger consideration. Each Deferred Restricted Stock Payment (or applicable portion thereof) will be made (less applicable tax withholdings) on the applicable vesting dates specified under the Company Stock Plan and the agreements evidencing the related unvested shares of Company Restricted Stock, and will be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had the unvested shares of Company Restricted Stock remained outstanding in accordance with their terms.

No Solicitation; Other Offers (Page 75)

During the period from the date of the merger agreement until the earlier of the termination of the merger agreement and the effective time of the merger, the merger agreement provides that we are not permitted to, directly (or indirectly through third parties), solicit, initiate or take any action to knowingly facilitate the submission of any acquisition proposal (as defined in “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75), or, subject to certain exceptions, (i) enter into or participate in any discussions or negotiations with, furnish any information relating to the Company or any of its subsidiaries or afford access to the business, properties, assets, books or records of the Company or any of its subsidiaries to, otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any third party that is seeking to make, or has made, an acquisition proposal, (ii) make an adverse recommendation change (as defined in “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75) or (iii) enter into an alternative acquisition agreement (as defined in “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75).

Notwithstanding these restrictions, under certain circumstances, we may, prior to the time the merger agreement is adopted by our stockholders, make available information regarding the Company and its subsidiaries, or engage in discussions or negotiations with a person with respect to certain unsolicited written acquisition proposals. In addition, at any time before the merger agreement is adopted by our stockholders, to the extent that the Board of Directors determines in good faith after consultation with outside legal counsel that failure to take such action would be inconsistent with its fiduciary duties under applicable law, we may terminate the merger agreement to enter into an alternative acquisition agreement with respect to a superior proposal, or

 



 

-10-


Table of Contents

make an adverse recommendation change in respect of a superior proposal or an intervening event (in each case, as defined in “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75), so long as we have first complied with certain terms of the merger agreement, including (i) notifying Solvay four business days prior to taking any such action and Solvay does not make a binding written proposal that obviates the need for such action, subject to additional three business day extensions if the terms of the superior proposal materially change during such period and (ii) if applicable, paying a termination fee to Solvay. See “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75.

Conditions to the Merger (Page 84)

The respective obligations of the Company, Solvay and Merger Subsidiary to consummate the merger are subject to the satisfaction or waiver of certain customary conditions, including the adoption of the merger agreement by our stockholders, receipt of certain regulatory approvals, the absence of any legal prohibitions, the accuracy of the representations and warranties of the parties and compliance by the parties with their respective obligations under the merger agreement. See “The Merger Agreement—Conditions to the Merger” beginning on page 84.

Termination (Page 85)

We and Solvay may, by mutual written consent, terminate the merger agreement and abandon the merger at any time prior to the effective time of the merger, whether before or after the adoption of the merger agreement by our stockholders.

The merger agreement may also be terminated and the merger abandoned at any time prior to the effective time of the merger as follows:

 

  by either Solvay or the Company, if, subject to certain exceptions, the merger has not been consummated on or before the six month anniversary of the merger agreement (which deadline may be extended for an additional three months under certain circumstances as described in “The Merger Agreement—Termination” beginning on page 85);

 

  by either Solvay or the Company, if any applicable law restrains, enjoins or otherwise prohibits the Company or Solvay from consummating the merger and such injunction becomes final and nonappealable;

 

  by either Solvay or the Company, if at the special meeting, including any adjournment or postponement thereof, the stockholders of the Company do not approve the merger agreement;

 

  by Solvay, if the Board of Directors makes an adverse recommendation change, or at any time after receipt or public announcement of an acquisition proposal, the Board of Directors fails to reaffirm its recommendation as promptly as practicable (and in any event within five business days) after receipt of any written request from Solvay to do so;

 

  by Solvay, if there is a breach of any of the representations or warranties made by the Company, or of any of its covenants, in the merger agreement that would cause the condition to the closing that is related to the accuracy of the Company’s representations and warranties and the performance, in all material respects, of its obligations in the merger agreement to not be satisfied and be incapable of being satisfied by the six-month anniversary (or, if extended as described in “The Merger Agreement—Termination” beginning on page 85, the nine-month anniversary) of the merger agreement;

 

  by Solvay, if the Company intentionally and materially breaches its obligations not to solicit acquisition proposals or to hold a special meeting of the Company’s stockholders to vote on the proposal to adopt the merger agreement;

 



 

-11-


Table of Contents
  by the Company, if prior to the special meeting of the Company’s stockholders to vote on the proposal to adopt the merger agreement, the Board of Directors makes an adverse recommendation change in compliance with the terms of the merger agreement in order to enter into an alternative acquisition agreement in connection with a superior proposal subject to payment of the termination fee; or

 

  by the Company, if there is a breach of any of the representations or warranties made by Solvay or Merger Subsidiary, or any of their respective covenants, in the merger agreement that would cause the condition to closing that is related to the accuracy of Solvay’s and Merger Subsidiary’s representations and warranties and the performance, in all material respects, of their respective obligations in the merger agreement, to not be satisfied, and be incapable of being satisfied by the six-month anniversary (or, if extended as described in “The Merger Agreement—Termination” beginning on page 85, the nine-month anniversary) of the merger agreement.

Termination Fee (Page 86)

In certain circumstances, we may be required to pay Solvay a termination fee if the merger agreement is terminated. The termination fee would be payable in the following circumstances:

 

    if Solvay terminates the merger agreement because the Board of Directors makes an adverse recommendation change, or at any time after receipt or public announcement of an acquisition proposal the Board of Directors fails to reaffirm its recommendation as promptly as practicable (and in any event within five business days) after receipt of a written request from Solvay to do so;

 

    if Solvay terminates the merger agreement because the Company intentionally and materially breaches its obligations not to solicit acquisition proposals or to hold a special meeting for its stockholders to vote on the proposal to adopt the merger agreement;

 

    if the Company terminates the merger agreement prior to the special meeting of the Company’s stockholders to vote on the proposal to adopt the merger agreement because the Board of Directors makes an adverse recommendation change in compliance with the terms of the merger agreement in order to enter into an alternative acquisition agreement in connection with a superior proposal; or

 

    if either Solvay or the Company terminates the merger agreement because the Company stockholders do not approve the merger agreement at the special meeting, including any adjournment or postponement thereof, and (i) prior to such termination, an acquisition proposal has been publicly announced or otherwise been communicated to the Board of Directors or its stockholders, and (ii) within 12 months following the date of such termination, the Company enters into a definitive agreement with respect to or recommends to its stockholders an acquisition proposal, or an acquisition proposal is consummated.

In the case of the first and second bullets above, we must pay Solvay the termination fee within one business day after such termination.

In the case of the third bullet above, we must pay Solvay the termination fee immediately before and as a condition to such termination.

In the case of the fourth bullet above, we must pay Solvay the termination fee within five business days after the earlier of entry into a definitive agreement with respect to, recommendation to the Company’s stockholders of or consummation of, such acquisition proposal.

The termination fee is a cash amount equal to $140,000,000.

 



 

-12-


Table of Contents

Remedies (Page 87)

If the merger agreement is terminated as a result of a knowing and intentional breach of the merger agreement, the breaching party will be fully liable for any and all liabilities and damages incurred or suffered by the other party as a result. The measure of the Company’s damages in the event of a knowing and intentional breach of the merger agreement or in the event of fraud will be determined by reference to the total amount that would have been recoverable by the Company’s stockholders if the Company’s stockholders were third party beneficiaries of the Agreement (the Company’ stockholders are not third party beneficiaries of the Agreement).

However, in the event that the merger agreement is terminated under circumstances in which the termination fee becomes payable and the termination fee is paid by the Company, the termination fee (and any additional interest due on the termination fee amount as a result of the Company failing to promptly pay when due the termination fee) will be Solvay’s and Merger Subsidiary’s sole and exclusive remedy for monetary damages under the merger agreement.

The parties are also entitled to an injunction or injunctions to prevent a breach of the merger agreement, and to enforce specifically the performance of the terms and provisions of the merger agreement.

Market Price of Common Stock (Page 93)

The closing price of our common stock on the New York Stock Exchange, which we refer to as the NYSE, on July 28, 2015, the last trading day prior to the public announcement of the execution of the merger agreement, was $58.39 per share of common stock. If the merger is completed, you will be entitled to receive $75.25 in cash, without interest, less any applicable withholding taxes, for each share of our common stock owned by you (unless you have properly exercised, and not lost, your appraisal rights with respect to such shares), which represents a premium of approximately 28.9% to the closing price of our common stock on July 28, 2015, the last trading day prior to the public announcement of the execution of the merger agreement, and a premium of approximately 46.2% to the volume weighted average price of our common stock over the one-year period prior to July 27, 2015.

On [●], 2015, the most recent practicable date before this proxy statement was mailed to our stockholders, the closing price for our common stock on the NYSE was $[●] per share of common stock. You are encouraged to obtain current market quotations for our common stock in connection with voting your shares of our common stock.

Appraisal Rights (Page 97)

If the merger is completed, the Company’s stockholders will be entitled to appraisal rights under Section 262 of the DGCL. This means that you are entitled to have the fair value of your shares of our common stock determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the merger consideration if you follow exactly the procedures set forth in Section 262 of the DGCL. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the merger agreement.

To exercise your appraisal rights, you must submit a written demand for appraisal to the Company before the vote is taken on the proposal to adopt the merger agreement and you must not vote (either in person or by proxy) in favor of the proposal to adopt the merger agreement. If you fail to follow exactly the procedures set forth in Section 262 of the DGCL, you may lose your appraisal rights. See “Appraisal Rights” beginning on page 97 and the text of the DGCL appraisal rights statute reproduced in its entirety as Annex B to this proxy statement. If you hold your shares of our common stock through a bank, brokerage firm or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm or other nominee

 



 

-13-


Table of Contents

to determine the appropriate procedures for the making of a demand for appraisal by your bank, brokerage firm or other nominee. In view of the complexity of the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors promptly.

Delisting and Deregistration of Common Stock (Page 102)

If the merger is completed, our common stock will be delisted from the NYSE and deregistered under the Exchange Act and we will no longer file periodic reports with the SEC on account of our common stock.

 



 

-14-


Table of Contents

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the “Summary” beginning on page 1 and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement, which you should read carefully and in their entirety. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under “Where You Can Find More Information” beginning on page 103.

 

Q. What is the proposed merger transaction and what effects will it have on the Company?

 

A. The proposed merger transaction is the acquisition of the Company by Solvay pursuant to the merger agreement. If the proposal to adopt the merger agreement is approved by our stockholders and the other closing conditions under the merger agreement have been satisfied or waived, Merger Subsidiary will merge with and into the Company, with the Company being the surviving corporation. As a result of the merger, the Company will become a wholly owned direct or indirect subsidiary of Solvay and will no longer be a publicly held corporation, and you, as a holder of our common stock, will no longer have any interest in our future earnings or growth. In addition, following the merger, our common stock will be delisted from the NYSE and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of our common stock.

 

Q. What will I receive if the merger is completed?

 

A. Upon completion of the merger, you will be entitled to receive the merger consideration of $75.25 in cash, without interest, less any applicable withholding taxes, for each share of our common stock that you own, unless you have properly exercised, and not withdrawn or otherwise lost, your appraisal rights under the DGCL with respect to such shares. For example, if you own 100 shares of our common stock, you will receive $7,525.00 in cash in exchange for your shares of our common stock, less any applicable withholding taxes. You will not own any shares of the capital stock in the surviving corporation. Please do NOT return your stock certificate(s) with your proxy.

 

Q. How does the merger consideration compare to the market price of our common stock prior to announcement of the merger?

 

A. The merger consideration of $75.25 represents a premium of approximately 28.9% to the closing price of our common stock on July 28, 2015, the last trading day prior to the public announcement of the execution of the merger agreement and a premium of approximately 46.2% to the volume weighted average price of our common stock over the one-year period prior to July 27, 2015.

 

Q. How does the Board of Directors recommend that I vote?

 

A. The Board of Directors recommends that you vote (i) “FOR” approval of the proposal to adopt the merger agreement, (ii) “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and (iii) “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

 

-15-


Table of Contents
Q. When do you expect the merger to be completed?

 

A. We are working towards completing the merger as soon as possible. Assuming timely receipt of required regulatory approvals and satisfaction of other closing conditions, including approval by our stockholders of the proposal to adopt the merger agreement, we anticipate that the merger will be completed in the fourth quarter of 2015.

 

Q. What happens if the merger is not completed?

 

A. If the proposal to adopt the merger agreement is not approved by the stockholders of the Company or if the merger is not completed for any other reason, the stockholders of the Company will not receive any payment for their shares of our common stock in connection with the merger. Instead, the Company will remain an independent public company and our common stock will continue to be listed and traded on the NYSE. Under specified circumstances, the Company may be required to pay to Solvay a termination fee with respect to the termination of the merger agreement, as described under “The Merger Agreement—Termination Fee” beginning on page 86.

 

Q. What conditions must be satisfied to complete the merger?

 

A. The Company, Solvay and Merger Subsidiary are not required to complete the merger unless a number of conditions are satisfied or waived. These conditions include, among others: (i) the approval of the proposal to adopt the merger agreement by the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote on the proposal, (ii) the absence of any law or order prohibiting the consummation of the merger, (iii) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and receipt of certain other antitrust or competition law approvals, and (iv) the favorable conclusion of a review, investigation or other proceeding by CFIUS pursuant to Exon-Florio. In addition to customary conditions in favor of both parties regarding the accuracy of the other party’s representations and warranties (subject to customary materiality qualifiers) and the other party’s compliance with its covenants and agreements contained in the merger agreement (subject to customary materiality qualifiers), Solvay’s obligations to complete the merger are also subject to the conditions that there be no event or occurrence that has had or would reasonably be expected to have a material adverse effect on the Company, the receipt of approval from DSS for the parties’ proposed FOCI-mitigation plan and the absence of written objection from DDTC. For a more complete summary of the conditions that must be satisfied or waived prior to the completion of the merger, see “The Merger Agreement—Conditions to the Merger” beginning on page 84.

 

Q. Is the merger expected to be taxable to me?

 

A. Yes. The exchange of shares of our common stock for the merger consideration of $75.25 in cash pursuant to the merger will generally be a taxable transaction to U.S. holders (as defined in “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” on page 60) for U.S. federal income tax purposes. If you are a U.S. holder and you exchange your shares of our common stock in the merger for cash, you will generally recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received with respect to such shares and your adjusted tax basis in such shares of our common stock. Backup withholding may also apply to the cash payments paid to a non-corporate U.S. holder pursuant to the merger unless the U.S. holder or other payee provides a taxpayer identification number, certifies that such number is correct and otherwise complies with the backup withholding rules. We encourage you to read “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 60 for a more detailed discussion of the U.S. federal income tax consequences of the merger. You should also consult your tax advisor for a complete analysis of the effect of the merger on your federal, state and local and/or foreign taxes.

 

-16-


Table of Contents
Q. Why am I receiving this proxy statement and proxy card or voting instruction form?

 

A. You are receiving this proxy statement and proxy card or voting instruction form because you own shares of our common stock. This proxy statement describes matters on which we urge you to vote and is intended to assist you in deciding how to vote your shares of our common stock with respect to such matters.

 

Q. When and where is the special meeting?

 

A. The special meeting of stockholders of the Company will be held at [●] on [●], 2015 at [●] a.m., local time.

 

Q. What am I being asked to vote on at the special meeting?

 

A. At the special meeting, stockholders will vote on a proposal (i) to approve the proposal to adopt the merger agreement, which provides for the acquisition of the Company by Solvay, (ii) to approve a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and (iii) to approve a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

 

Q. Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger?

 

A. Under SEC rules, we are required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger, or “golden parachute” compensation.

 

Q. What will happen if the Company’s stockholders do not approve the golden parachute compensation?

 

A. Approval of the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the merger is not a condition to completion of the merger. The vote is an advisory vote and will not be binding on the Company or the surviving corporation in the merger. Because the merger-related compensation to be paid to the named executive officers in connection with the merger is based on contractual arrangements with the named executive officers, such compensation may be payable, regardless of the outcome of this advisory vote, if the merger agreement is adopted (subject only to the contractual obligations applicable thereto).

 

Q. What vote is required for the Company’s stockholders to approve the proposal to adopt the merger agreement?

 

A. The adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote on the proposal to adopt the merger agreement.

Because the affirmative vote required to approve the proposal to adopt the merger agreement is based upon the total number of outstanding shares of our common stock entitled to vote on the proposal, if you fail to submit a proxy or vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

 

-17-


Table of Contents
Q. What vote of our stockholders is required to approve the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger?

 

A. Approving the merger-related executive compensation requires the affirmative vote of holders of a majority of the shares of our common stock present, in person or represented by proxy, at the special meeting and entitled to vote on the proposal to approve such merger-related executive compensation.

Accordingly, abstentions will have the same effect as a vote “AGAINST” the proposal to approve the merger-related executive compensation. If you fail to submit a proxy or to vote in person at the special meeting or if your shares of our common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, but this will not have an effect on the proposal to approve the merger-related executive compensation. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

 

Q. What vote of our stockholders is required to approve the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting?

 

A. Approval of the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies (if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting) requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock present, in person or represented by proxy, at the special meeting and entitled to vote on the proposal to approve such adjournment.

Abstaining will have the same effect as a vote “AGAINST” approval of the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies. If you fail to submit a proxy or to vote in person at the special meeting or if your shares of our common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, but this will not have an effect on the proposal to adjourn the special meeting. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

 

Q. Do any of the Company’s directors or officers have interests in the merger that may differ from or be in addition to my interests as a stockholder?

 

A. In considering the recommendation of the Board of Directors with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of our stockholders generally. The Board of Directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company. See “The Merger—Interests of Certain Persons in the Merger” beginning on page 54 and “Advisory Vote on Merger-Related Compensation for the Company’s Named Executive Officers” beginning on page 89.

 

-18-


Table of Contents
Q. What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A. If your shares are registered directly in your name with our transfer agent, Computershare, you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to vote, to grant your voting rights directly to the Company or to a third-party or to vote in person at the meeting.

If your shares are held in “street name” by a bank, brokerage firm or other nominee, you are considered the beneficial owner of those shares, and your bank, brokerage firm or other nominee, or their intermediary, is considered the stockholder of record with respect to those shares. Your bank, brokerage firm or other nominee should send you, as the beneficial owner, a package with instructions and describing the procedure for voting your shares (see also the next Q&A below). You are invited to attend the special meeting; however, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from the bank, brokerage firm or other nominee that is the stockholder of record for your shares of our common stock giving you the right to vote the shares at the meeting.

 

Q. If my shares of common stock are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee vote my shares of common stock for me?

 

A. Your bank, brokerage firm or other nominee will only be permitted to vote your shares of our common stock if you instruct your bank, brokerage firm or other nominee how to vote. You should follow the procedures provided by your bank, brokerage firm or other nominee regarding the voting of your shares of our common stock. Banks, brokerage firms or other nominees who hold shares in “street name” for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the proposal to adopt the merger agreement, and, as a result, absent specific instructions from the beneficial owner of such shares of our common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of our common stock on non-routine matters. If you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, which we refer to as broker non-votes, and will not be counted for purposes of determining whether a quorum is present at the special meeting. The effect will be the same as a vote “AGAINST” approval of the proposal to adopt the merger agreement, and your shares of our common stock will not have an effect on the proposal to approve the merger-related executive compensation or on the proposal to adjourn the special meeting.

 

Q. Who can vote at the special meeting?

 

A. Only holders of record of our common stock as of the close of business on [●], 2015, the record date for the special meeting, or their duly appointed proxies, are entitled to receive notice of, and to vote at, the special meeting and any adjournments or postponements thereof. Please note that if you hold shares in “street name” through a bank, brokerage firm or other nominee, you will need to provide a “legal proxy” from the bank, brokerage firm or other nominee that is the stockholder of record for your shares of our common stock giving you the right to vote the shares at the meeting.

 

Q. How many votes do I have?

 

A. Each holder of our common stock is entitled to cast one vote on each matter properly brought before the special meeting for each share of our common stock that such holder owned as of the record date of [●], 2015. As of close of business on the record date, there were [●] shares of our common stock outstanding and entitled to vote, held by [●] holders of record.

 

-19-


Table of Contents
Q. What is a quorum?

 

A. The presence at the special meeting, in person or represented by proxy, of the holders of a majority of the shares of our common stock outstanding on the record date constitutes a quorum for the transaction of business at the special meeting. Proxies received, but marked as abstentions, will be included in the calculation of the number of shares considered to be present at the meeting for purposes of determining the presence or absence of a quorum.

Because stockholders cannot take any action at the meeting unless a majority of the outstanding shares of common stock is represented, it is important that you attend the meeting in person or are represented by proxy at the meeting. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present at the special meeting.

 

Q. How do I vote?

 

A. Stockholder of Record. If you are a stockholder of record, you may have your shares of our common stock voted on matters presented at the special meeting in any of the following ways:

In Person. You may attend the special meeting and cast your vote there. Even if you plan to attend the meeting, it is desirable that you vote in advance of the meeting.

Via Our Internet Voting Site at http://www.proxyvote.com. If you received printed proxy materials, follow the instructions for Internet voting printed on your proxy card.

By Telephone. Call toll-free 1-800-690-6903. You also can vote by telephone by following the instructions provided on the Internet voting site or, if you received printed proxy materials, by following the instructions provided on your proxy card.

In Writing. You can vote by completing, signing, dating and returning the proxy card in the enclosed postage-paid envelope.

The Internet and telephone voting facilities for stockholders of record will close at 11:59 p.m., Eastern Time on [●], 2015.

Beneficial Owner. If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. To attend the meeting in person (regardless of whether you intend to vote your shares in person at the meeting), you must obtain an admission ticket in advance of the meeting by following the instructions under “The Special Meeting—Attendance” beginning on page 27 of this proxy statement. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a “legal proxy” from the bank, brokerage firm or other nominee that is the stockholder of record for your shares of our common stock giving you the right to vote the shares at the meeting.

Company Savings Plans. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan, please refer to “How do I vote my Savings Plan shares” below on page 21 for instructions on how to vote your shares of our common stock subject to such savings plan.

 

-20-


Table of Contents
Q. How can I change or revoke my vote?

 

A. If you own shares in your own name, you may revoke any prior proxy or voting instructions, regardless of how your proxy or voting instructions were originally submitted, by:

 

    filing a notice of revocation to our Secretary, which must be received by us before the meeting;

 

    filing a duly executed proxy card or voting instruction form bearing a later date;

 

    submitting a later dated proxy or providing new voting instructions via the Internet or by telephone; or

 

    attending the meeting in person and voting your shares.

If you hold shares in “street name” through a bank, brokerage firm or other nominee, you should contact the bank, brokerage firm or other nominee that holds your shares for instructions on how to change your vote.

 

Q. How do I vote my Savings Plan shares?

 

A. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan, shares of our common stock equivalent to the value of the common stock interest credited to your account under the respective plan will be voted automatically by the trustee in accordance with your proxy, if the proxy is received by [●], 2015. Otherwise, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan.

 

Q. What is a proxy?

 

A. A proxy is your legal designation of another person, referred to as a “proxy”, to vote your shares of our common stock. The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement”. The document used to designate a proxy to vote your shares of our common stock is called a “proxy card”.

 

Q. If a stockholder gives a proxy, how are the shares of common stock voted?

 

A. Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of our common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of our common stock should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

If you own shares that are registered in your own name and return a signed proxy card or grant a proxy via the Internet or by telephone, but do not indicate how you wish your shares to be voted, the shares represented by your properly signed proxy will be voted “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

 

Q. How are votes counted?

 

A. For the proposal to adopt the merger agreement, you may vote “FOR”, “AGAINST” or “ABSTAIN”. Abstentions and broker non-votes will have the same effect as votes “AGAINST” approval of the proposal to adopt the merger agreement.

For the proposal to approve the merger-related executive compensation, you may vote “FOR”, “AGAINST” or “ABSTAIN”. Abstentions will have the same effect as if you voted “AGAINST” approval of the proposal, but broker non-votes will not have an effect on the proposal.

 

-21-


Table of Contents

For the proposal to adjourn the special meeting, if necessary or appropriate, to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting, you may vote “FOR”, “AGAINST” or “ABSTAIN”. Abstentions will have the same effect as if you voted “AGAINST” approval of the proposal, but broker non-votes will not have an effect on the proposal.

 

Q. What do I do if I receive more than one proxy or set of voting instructions?

 

A. If you received more than one proxy card, your shares are likely registered in different names or with different addresses or are in more than one account. You must separately vote the shares shown on each proxy card that you receive in order for all of your shares to be voted at the meeting.

 

Q. What happens if I sell my shares of our common stock before the special meeting?

 

A. The record date for stockholders entitled to vote at the special meeting is earlier than both the date of the special meeting and the consummation of the merger. If you transfer your shares of our common stock after the record date but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you transfer your shares and each of you notifies the Company in writing of such special arrangements, you will retain your right to vote such shares at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares.

 

Q. What happens if I sell my shares of common stock after the special meeting but before the effective time of the merger?

 

A. If you transfer your shares after the special meeting but before the effective time of the merger, you will have transferred the right to receive the merger consideration to the person to whom you transfer your shares. In order to receive the merger consideration, you must hold your shares of common stock through the completion of the merger.

 

Q. Who will solicit and pay the cost of soliciting proxies?

 

A. The Company has engaged Okapi Partners LLC to assist in the solicitation of proxies for the special meeting. The Company estimates that it will pay Okapi Partners LLC a fee of $20,600 and telephone charges. The Company has agreed to reimburse Okapi Partners LLC for certain fees and expenses and will also indemnify Okapi Partners LLC and its members, officers, directors, employees, agents and affiliates against certain claims, costs, damages, liabilities, judgments and expenses. The Company may also reimburse banks, brokers or their agents for their expenses in forwarding proxy materials to beneficial owners of our common stock. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q. What do I need to do now?

 

A. Even if you plan to attend the special meeting, after carefully reading and considering the information contained in this proxy statement, please vote promptly to ensure that your shares are represented at the special meeting. If you hold your shares of our common stock in your own name as the stockholder of record, you may submit a proxy to have your shares of our common stock voted at the special meeting in one of three ways: (i) using the Internet in accordance with the instructions set forth on the enclosed proxy card, (ii) calling toll-free at 1-800-690-6903 or (iii) completing, signing, dating and returning the enclosed proxy card in the accompanying postage-paid reply envelope. If you decide to attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you.

 

-22-


Table of Contents
Q. Should I send in my stock certificates now?

 

A. No. If the proposal to adopt the merger agreement is approved, after the completion of the merger, you will be sent a letter of transmittal promptly, and in any event within five business days, describing how you may exchange your shares of our common stock for the merger consideration. If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, you should contact your bank, brokerage firm or other nominee for instructions as to how to effect the surrender of your “street name” shares of our common stock in exchange for the merger consideration. Please do NOT return your stock certificate(s) with your proxy.

 

Q. Am I entitled to exercise appraisal rights under the DGCL instead of receiving the merger consideration for my shares of our common stock?

 

A. Yes. As a holder of our common stock, you are entitled to exercise appraisal rights under Section 262 the DGCL in connection with the merger if you take certain actions and meet certain conditions, including that you do not vote (in person or by proxy) in favor of adoption of the merger agreement. See “Appraisal Rights” beginning on page 97.

 

Q. Who can help answer any other questions I might have?

 

A. If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of our common stock, or need additional copies of the proxy statement or the enclosed proxy card, please contact Okapi Partners LLC, our proxy solicitor, by calling toll-free at 1-855-305-0855.

 

-23-


Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement and the other documents referenced therein contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (which we refer to as the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, results of operations and business of the Company and certain plans and objectives of the Board of Directors, and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995.

All statements other than statements of historical or current facts included in this proxy statement are forward-looking statements. Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “will”, “may”, “should”, “would”, “could” or other words or terms of similar meaning. Such statements are based upon our current beliefs and expectations and are subject to significant risks and uncertainties. Actual results may vary materially from those set forth in the forward-looking statements.

Although the Company believes the expectations contained in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove correct. Such risks and uncertainties include: risks and uncertainties related to the proposed transaction with Solvay and Merger Subsidiary including, but not limited to: the expected timing and likelihood of completion of the pending merger, including the timing, receipt and terms and conditions of any required governmental approvals of the pending merger that could cause the parties to abandon the transaction, the state of the credit markets generally and the availability of financing, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the possibility the Company’s stockholders may not approve the merger, the risk that the parties may not be able to satisfy the conditions to the proposed merger in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the proposed merger, the risk that any announcements relating to the proposed merger could have adverse effects on the market price of the Company’s common stock, and the risk that the proposed transaction and its announcement could have an adverse effect on the ability of the Company to retain and hire key personnel and maintain relationships with its suppliers and customers, and on its operating results and businesses generally. The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements are also qualified by, and should be read together with the “Forward-Looking Statements”, the “Risk Factors” and the other statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and subsequent Quarterly Reports on Form 10-Q, in each case as filed with the SEC and available at www.sec.gov, and investors should refer to such risk factors and other statements in evaluating the forward-looking statements contained in this proxy statement (see “Where You Can Find More Information” beginning on page 103). Unless indicated otherwise, the terms “Company,” “we,” “us,” and “our” each refer collectively to Cytec Industries Inc. and its subsidiaries.

Any forward-looking statements speak only as of the date of this proxy statement, and the Company does not undertake any obligation to correct or update any forward-looking statements to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of unanticipated events except as otherwise required by law. New factors may emerge from time to time, and it is not possible for the Company to predict all such factors. Furthermore, it may not be possible for the Company to assess the impact of any such factor on its business (viewed independently or together) or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. The foregoing factors should not be construed as exhaustive.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement or, in the case of documents referred to or incorporated by reference, the dates of those documents.

 

-24-


Table of Contents

PARTIES TO THE MERGER

The Company

Cytec Industries Inc.

5 Garret Mountain Plaza

Woodland Park, NJ 07424

Telephone: (973) 357-3100

The Company, a Delaware corporation, is a global specialty materials and chemicals company that serves the aerospace, agriculture/agrochemical, automotive, defense, electrical/electronics and mining industries, and operates in four segments: (i) aerospace materials, which principally includes advanced composites, carbon fiber, and structural film adhesives, (ii) industrial materials, which includes structural composite materials (high performance automotive, motorsports, recreation, tooling, and other structural materials markets) and process materials (aerospace, wind energy, and other process materials markets), (iii) in process separation, which includes mining chemicals and phosphines and (iv) additive technologies, which includes polymer additives, specialty additives, and formulated resins. The Company was incorporated as an independent public company in December 1993.

Solvay

Solvay SA

Rue de Ransbeek 310

1120 Brussels, Belgium

Telephone: +32 2 264 19 84

Solvay, a public limited company organized under the laws of Belgium, is an international chemical group headquartered in Brussels, Belgium. It serves many markets, including energy and the environment, automotive and aeronautics, and electrical and electronics. Solvay is listed on Euronext in Brussels and Paris. Solvay was founded in 1863.

Merger Subsidiary

Tulip Acquisition Inc.

Rue de Ransbeek 310

1120 Brussels, Belgium

Telephone: +32 2 264 19 84

Merger Subsidiary, a Delaware corporation, was formed by Solvay for the purpose of entering into the merger agreement and completing the merger and the other transactions contemplated by the merger agreement. Merger Subsidiary is a wholly owned subsidiary of Solvay and has not engaged in any business except for activities incidental to its formation and as contemplated by the merger agreement. Upon the completion of the merger, Merger Subsidiary will cease to exist and the Company will continue as the surviving corporation.

 

-25-


Table of Contents

THE SPECIAL MEETING

Date, Time and Place of the Special Meeting

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the Board of Directors for use at the special meeting to be held at [●] on [●], 2015 at [●] a.m., local time.

Purpose of the Special Meeting

At the special meeting, holders of our common stock will be asked to:

 

    consider and vote on a proposal to adopt the merger agreement (Proposal 1 on your proxy card);

 

    consider and vote on a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger (Proposal 2 on your proxy card); and

 

    consider and vote on a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting (Proposal 3 on your proxy card).

The Board of Directors recommends that you vote “FOR” each of the above proposals.

Our stockholders must approve the proposal to adopt the merger agreement in order for the merger to occur. If our stockholders fail to approve the proposal to adopt the merger agreement, the merger will not occur. A copy of the merger agreement is attached as Annex A to this proxy statement, which we encourage you to read carefully and in its entirety.

Record Date and Quorum

The Board of Directors has fixed the close of business on [●], 2015 as the record date for determination of stockholders entitled to receive notice of, and to vote at, the special meeting and any adjournments or postponements thereof. Only holders of record of our common stock as of the close of business on the record date are entitled to receive notice of, and to vote at (in person or by proxy), the special meeting and at any adjournment or postponement thereof. As of the close of business on the record date, there were [●] shares of our common stock outstanding and entitled to vote, held by [●] holders of record. Each holder of our common stock is entitled to cast one vote on each matter properly brought before the special meeting for each share of our common stock that such holder owned as of the record date.

The presence at the special meeting, in person or represented by proxy, of the holders of a majority of the shares of our common stock outstanding on the record date constitutes a quorum for the transaction of business at the special meeting. Shares of our common stock represented at the special meeting but not voted, including shares of our common stock for which proxies have been received but for which stockholders have abstained, will be treated as present at the special meeting for purposes of determining the presence or absence of a quorum for the transaction of all business. Because stockholders cannot take any action at the meeting unless a majority of the outstanding shares of common stock is represented, it is important that you attend the meeting in person or are represented by proxy at the meeting. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return your proxy, the share equivalents

 

-26-


Table of Contents

credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

In the event that a quorum is not present at the special meeting, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies. Pursuant to the Company’s by-laws, approval of the proposal to adjourn the special meeting in a situation in which a quorum is not present or represented at the special meeting requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock present, in person or represented by proxy, and entitled to vote at the special meeting, whether or not a quorum is present. Approval of the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock present, in person or represented by proxy, and entitled to vote on the matter at the special meeting.

Attendance

Only stockholders of record, their duly appointed proxy holders and our guests may attend the special meeting. To gain admittance, please bring the admission ticket with you to the meeting. If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, please send a written request for an admission ticket to our Secretary at 5 Garret Mountain Plaza, Woodland Park, New Jersey 07424. Please include the following information with your request: (i) a signed cover letter stating your name and complete mailing address, including daytime and evening telephone numbers; that you are requesting an admission ticket; the number of shares that you own in “street name”; and the name, address and telephone number of your bank, brokerage firm or other nominee that is the stockholder of record for your shares of our common stock, and (ii) an original signed “legal proxy” from your bank, brokerage firm or other nominee giving you the right to vote the shares at the special meeting. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting.

Vote Required

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote on the proposal to adopt the merger agreement. For the proposal to adopt the merger agreement, you may vote “FOR”, “AGAINST” or “ABSTAIN”. Abstentions will not be counted as votes cast in favor of the proposal to adopt the merger agreement, but will count for the purpose of determining whether a quorum is present. Your vote is very important, regardless of the number of shares of our common stock you own. Because stockholders cannot take any action at the meeting unless a majority of the outstanding shares of our common stock is represented, it is important that you attend the meeting in person or are represented by proxy at the meeting. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

 

-27-


Table of Contents

If your shares of our common stock are registered directly in your name with our transfer agent, Computershare, you are considered, with respect to those shares of our common stock, the stockholder of record. This proxy statement and proxy card have been sent directly to you by the Company. As the stockholder of record, you have the right to vote, to grant your voting rights directly to the Company or to a third-party or to vote in person at the meeting.

If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, you are considered the beneficial owner of those shares. In that case, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of our common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting. Your bank, brokerage firm or other nominee should send you, as the beneficial owner, a package describing the procedure for voting your shares.

Banks, brokerage firms or other nominees who hold shares in “street name” for customers generally have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the proposal to adopt the merger agreement and, as a result, absent specific instructions from the beneficial owner of such shares of our common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of our common stock on non-routine matters. For the purposes of this proposal, if you attend the special meeting and abstain on this proposal, or if you have given a proxy and have abstained on this proposal, this will have the same effect as if you voted “AGAINST” approval of the proposal. If you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, and as broker non-votes, the effect will be the same as a vote “AGAINST” approval of the proposal to adopt the merger agreement.

The proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger requires the affirmative vote of the holders of a majority of the shares of our common stock present, in person or represented by proxy, and entitled to vote on the proposal to approve such merger-related compensation. For the proposal to approve the merger-related executive compensation, you may vote “FOR”, “AGAINST” or “ABSTAIN”. For purposes of this proposal, if you attend the special meeting and abstain on this proposal, or if you have given a proxy and abstained on this proposal, this will have the same effect as if you voted “AGAINST” approval of the proposal. If you fail to submit a proxy or vote in person the special meeting or if your shares of our common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, but this will not have an effect on the proposal to approve the merger-related executive compensation.

The proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock present, in person or represented by proxy, and entitled to vote on the proposal to approve such adjournment. For the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting, you may vote “FOR”, “AGAINST” or “ABSTAIN”. For purposes of this proposal, if you attend the special meeting and abstain on this proposal, or if you have given a proxy and abstained on this proposal, this will have the same effect as if you voted “AGAINST” approval of the proposal. If you fail to submit a proxy or to vote in person at the special meeting or if your shares of our common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, but this will not have an effect on the proposal to adjourn the special meeting.

 

-28-


Table of Contents

If you are a stockholder of record, you may have your shares of our common stock voted on matters presented at the special meeting in any of the following ways:

 

    In Person. You may attend the special meeting and cast your vote there. Even if you plan to attend the meeting, it is desirable that you vote in advance of the meeting;

 

    By Proxy. Stockholders of record have a choice of voting by proxy by telephone or over the Internet, by accessing the telephone number or website specified on the enclosed proxy card. The control number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Please be aware that if you vote over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible; or

 

    In Writing. You can vote by completing, signing, dating and returning the enclosed proxy card in the accompanying postage-paid reply envelope.

The Internet and telephone voting facilities for stockholders of record will close at 11:59 p.m., Eastern Time on [●], 2015.

If you are a beneficial owner, you should receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of our common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a “legal proxy” from your bank, brokerage firm or other nominee that is the stockholder of record for your shares of our common stock giving you the right to vote the shares at the special meeting.

If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan, you may vote by proxy using any of the methods described above, except that your vote must be received by 11:59 p.m., Eastern Time on [●], 2015. If your proxy is not received by such time, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present. Please note that while you may attend the special meeting as described above, you will not be able to vote the share equivalents credited to your account in person at the special meeting; the only way for you to vote the share equivalents credited to your account is to vote by proxy before 11:59 p.m., Eastern Time on [●], 2015.

Please refer to the instructions on your proxy or voting instruction card to determine the deadlines for voting over the Internet or by telephone. If you choose to submit a proxy by mailing a proxy card, your proxy card should be mailed in the accompanying postage-paid reply envelope, and your proxy card must be filed with our Secretary by the time the special meeting begins. Please do NOT send in your stock certificate(s) with your proxy card. After the completion of the merger, a separate letter of transmittal will be mailed to you promptly, and in any event within five business days, that will enable you to receive the merger consideration in exchange for your stock certificate(s). If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, you should contact your bank, brokerage firm or other nominee for instructions as to how to effect the surrender of your “street name” shares of our common stock in exchange for the merger consideration.

If you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, will vote your shares of our common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of our common stock should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares of our common stock should be voted on a matter, the shares of our common stock represented by your properly signed proxy

 

-29-


Table of Contents

will be voted “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

If you have any questions or need assistance voting your shares, please contact Okapi Partners LLC, our proxy solicitor, by calling toll-free at 1-855-305-0855.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF OUR COMMON STOCK YOU OWN. BECAUSE STOCKHOLDERS CANNOT TAKE ANY ACTION AT THE MEETING UNLESS A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK IS REPRESENTED, IT IS IMPORTANT THAT YOU ATTEND THE MEETING IN PERSON OR ARE REPRESENTED BY PROXY AT THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. IF YOU WILL ATTEND THE SPECIAL MEETING AND VOTE IN PERSON, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

As of [●], 2015, the record date, the directors and executive officers of the Company beneficially owned and were entitled to vote, in the aggregate, [●] shares of our common stock (not including any shares of our common stock deliverable upon exercise or conversion of any options, stock appreciation rights, restricted stock units or company deferred stock rights), representing approximately [●] percent of the outstanding shares of our common stock. The directors and officers have informed the Company that they currently intend to vote all such shares of our common stock “FOR” approval of the proposal to adopt the merger agreement, “FOR” approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting.

Proxies and Revocation

Any stockholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet or by returning the enclosed proxy card in the accompanying postage-paid reply envelope, or may vote in person by appearing at the special meeting. If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of our common stock using the instructions provided by your bank, brokerage firm or other nominee. If you are a beneficial owner and wish to vote in person at the special meeting, you must provide a “legal proxy” from the bank, brokerage firm or other nominee that is the stockholder of record for your shares of our common stock giving you the right to vote the shares at the meeting. If you fail to return your proxy card, submit your proxy by phone or the Internet or vote in person, or if your shares are held in “street name” by your bank, brokerage firm or other nominee and you fail to instruct your bank, brokerage firm or other nominee to vote your shares of common stock, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” approval of the proposal to adopt the merger agreement. If you fail to vote in person at the special meeting or fail to return your proxy card or fail to submit your proxy by phone or the Internet, your shares of our common stock will not have an effect on the proposal to approve the merger-related executive compensation or on the proposal to adjourn the special meeting. If you participate in the Company’s Employees’ Savings Plan or Employee Stock Purchase Plan and you fail to return

 

-30-


Table of Contents

your proxy, the share equivalents credited to your account will be voted by the trustee in the same proportion that it votes share equivalents for which it receives timely instructions from other participants in the respective plan, and will be counted for purposes of determining whether a quorum is present.

You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by filing a notice of revocation to our Secretary, which must be filed with the Secretary by the time the special meeting begins, by filing a duly executed proxy card or voting instruction form bearing a later date, by submitting a later dated proxy or providing new voting instructions over the Internet or by telephone, or by attending the special meeting and voting in person. Written notice of revocation should be mailed to: Cytec Industries Inc., Attention: Secretary, 5 Garret Mountain Plaza, Woodland Park, New Jersey 07424. If you hold shares in “street name” through a bank, brokerage firm or other nominee, you should contact the bank, brokerage firm or other nominee that holds your shares for instructions on how to change your vote.

Adjournments

Although it is not currently expected, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting. Pursuant to the Company’s by-laws, approval of the adjournment of the special meeting in a situation in which a quorum is not present or represented at the special meeting requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock present, in person or represented by proxy, and entitled to vote at the special meeting, whether or not a quorum is present. Approval of the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting, requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock present, in person or represented by proxy, and entitled to vote on such proposal at the special meeting. Any adjournment of the special meeting for the purpose of soliciting additional proxies will allow the Company’s stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned.

Anticipated Date of Completion of the Merger

We are working towards completing the merger as soon as possible. Assuming timely receipt of required regulatory approvals and satisfaction of other closing conditions, including the approval by our stockholders of the proposal to adopt the merger agreement, we anticipate that the merger will be completed in the fourth quarter of 2015. If our stockholders vote to approve the proposal to adopt the merger agreement, the merger will become effective as promptly as practicable following the satisfaction or waiver of a number of conditions to the merger, subject to the terms of the merger agreement. See “The Merger Agreement—Closing and Effective Time of the Merger” beginning on page 65.

Rights of Stockholders Who Seek Appraisal

If the merger is completed, the Company’s stockholders will be entitled to appraisal rights under Section 262 of the DGCL in connection with the merger. This means that you are entitled to have the fair value of your shares of our common stock determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the merger consideration if you follow exactly the procedures set forth in Section 262 of the DGCL. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the merger agreement.

To exercise your appraisal rights, you must submit a written demand for appraisal to the Company before the vote is taken on the proposal to adopt the merger agreement and you must not vote (either in person or by proxy) in favor of the proposal to adopt the merger agreement. If you fail to follow exactly the procedures set

 

-31-


Table of Contents

forth in Section 262 of the DGCL, you may lose your appraisal rights. See “Appraisal Rights” beginning on page 97 and the text of the DGCL appraisal rights statute reproduced in its entirety as Annex B to this proxy statement. If you hold your shares of our common stock through a bank, brokerage firm or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by your bank, brokerage firm or other nominee. In view of the complexity of the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors promptly.

Solicitation of Proxies; Payment of Solicitation Expenses

The Company has engaged Okapi Partners LLC to assist in the solicitation of proxies for the special meeting. The Company estimates that it will pay Okapi Partners LLC a fee of $20,600 and telephone charges. The Company has agreed to reimburse Okapi Partners LLC for certain fees and expenses and will also indemnify Okapi Partners LLC and its members, officers, directors, employees, agents and affiliates against certain claims, costs, damages, liabilities, judgments and expenses. The Company may also reimburse banks, brokers or their agents for their expenses in forwarding proxy materials to beneficial owners of our common stock. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Questions and Additional Information

If you have questions about the merger, need assistance in submitting your proxy or voting your shares of our common stock, or need additional copies of the proxy statement or the enclosed proxy card, please contact Okapi Partners LLC, our proxy solicitor, by calling toll-free at 1-855-305-0855.

 

-32-


Table of Contents

THE MERGER

This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this proxy statement as Annex A. You should read the entire merger agreement carefully and in its entirety as it is the legal document that governs the merger.

The merger agreement provides that Merger Subsidiary will merge with and into the Company. The Company will be the surviving corporation in the merger. As a result of the merger, the Company will cease to be a publicly traded company and will become a wholly owned direct or indirect subsidiary of Solvay. You will not own any shares of the capital stock of the surviving corporation.

Merger Consideration

In the merger, each outstanding share of our common stock (other than excluded shares) will automatically be converted into the right to receive an amount in cash equal to $75.25, without interest and less any applicable withholding taxes.

Background of the Merger

From time to time in the past two years, the Board of Directors and senior management of the Company have reviewed and evaluated the Company’s strategic alternatives with the goal of enhancing stockholder value, including the possibilities of maintaining the status quo as an independent public entity, potential strategic transactions or a business combination with a strategic partner, a potential acquisition of the Company by a strategic or a financial sponsor and a levered recapitalization, as well as a wide range of internal growth strategies, including the expansion of existing commercial relationships. The Company’s reviews of strategic alternatives have, among other things, led senior management of the Company to have informal discussions with third parties and customers from time to time concerning the possibility of commercial collaborations that could both be profitable for the Company and beneficial in developing new or improved products, or reducing prices, for customers. Except as otherwise described below, none of these discussions in the last two years has progressed beyond the initial stages to a specific proposal for a potential merger with, or acquisition of, the Company.

On several occasions commencing in July 2014, one of the Company’s largest customers expressed to the Company’s management its support for a potential collaboration between, or combination of, the Company and a third party, Party A. The customer informed the Company’s management that the customer believed a collaboration between, or combination of, the Company and Party A would result in a more effective supplier for the customer.

Commencing with a phone call from Mr. S.D. Fleming to a representative of Party A on August 10, 2014, and over the course of the subsequent eleven months, representatives of the Company and Party A discussed on numerous occasions the possibility of a business combination or a strategic collaboration between the Company and Party A. On January 15, 2015, a representative of the Company provided a form of non-disclosure and confidentiality agreement to a representative of Party A, and, after negotiations, Party A executed the non-disclosure and confidentiality agreement (which did not include a standstill covenant) as of January 29, 2015.

From October 2014 through June 2015, Party A made four proposals to acquire the Company. The first proposal was made orally on October 23, 2014 and contemplated an acquisition of the Company by Party A at a price of $50.38 per share payable entirely in Party A common stock. The second proposal was dated March 7, 2015 and contemplated an acquisition of the Company by Party A for $62.00 per share in a combination of cash and Party A common stock. The third proposal, dated April 7, 2015, contemplated an acquisition of the Company by Party A at a price of $66.00 per share payable in a combination of cash and Party A common stock. The fourth proposal was made orally on June 4, 2015 and contemplated an acquisition of the Company by Party A at

 

-33-


Table of Contents

a price of $68.00 per share payable in a combination of cash and Party A common stock. The Company’s Board of Directors was promptly advised of each of these proposals.

On December 19, 2014, the Board of Directors formed a committee composed of three directors, Messrs. A.G. Fernandes, L.L. Hoynes, Jr., and W.P. Powell, which we refer to as the Transaction Committee, to assist the Board of Directors in efficiently reviewing and supervising, on a more day-to-day basis, the discussions with Party A as well as to review and supervise the Company’s consideration of other potential strategic alternatives. The Company retained J.P. Morgan and Sullivan & Cromwell LLP, which we refer to as Sullivan & Cromwell, both of which had worked extensively with the Company in connection with the Company’s historical consideration and implementation of strategic alternatives, to assist it in considering the potential transaction with Party A as well as to assist the Transaction Committee and the Board of Directors in evaluating the Company’s strategic alternatives more generally. The Company also retained Arnold & Porter LLP, which we refer to as Arnold & Porter, to assist it in considering competition and certain other regulatory issues in connection with the potential transaction with Party A and others.

During the period from October 2014 through July 2015, the Transaction Committee and the Board of Directors met numerous times to receive updates regarding the status of Company management’s discussions with Party A and to provide direction, after consultation with Company management and representatives of J.P. Morgan, Sullivan & Cromwell and Arnold & Porter, to Company management regarding the discussions with Party A and responses to the offers made by Party A. Additionally, the Chair of the Transaction Committee frequently updated and collected feedback from the directors not on the Transaction Committee about the activities of the Transaction Committee. Also during this period, representatives of J.P. Morgan discussed with the Board of Directors, among other things, a preliminary valuation of the Company and certain strategic alternatives, including pursuing the Company’s strategic plan as a standalone company, a business combination with Party A, conducting a broader sales process or engaging in a levered recapitalization. The Transaction Committee and the Board of Directors considered advice from Arnold & Porter as to the likelihood of whether a combination with Party A would receive regulatory approval and the possibility that divestitures might be required to obtain regulatory approval and assessed the effect of any possible divestitures on the value of the consideration paid in shares of Company A stock and the time required to obtain regulatory approval. At the direction of the Transaction Committee and the Board of Directors, Mr. Fleming consistently advised a representative of Party A during this period that the Board of Directors considered the per share price offered by Party A to be inadequate, and that the Company was unwilling to consider a combination with Party A unless it was structured so as to provide the Company’s shareholders with appropriate certainty of closing, particularly in light of certain competitive overlaps between the Company and Party A.

On June 15, 2015, Mr. Fleming communicated to a representative of Party A that Party A would not be given access to management presentations and operational due diligence unless Party A would agree to undertake any remedial actions necessary to obtain regulatory approval as long as the remedial actions (i) would not cause a material adverse effect on the Company or Party A and (ii) did not require the divestiture of a plant site, and that, if the parties proceeded to due diligence on that basis, the Company would expect that Party A would increase its offer price following diligence. On June 16, 2015, a representative of Party A sent Mr. Fleming a letter stating that Party A was unwilling to agree to undertake all of the remedial actions requested by the Company. The Company and Party A then agreed to end further discussions regarding a combination of the two entities and agreed to continue discussions regarding potential collaboration opportunities.

From time to time in the ordinary course of business, representatives of Company management have met with representatives of Solvay management at industry conferences and scheduled meetings to discuss the state of the industry generally, various possibilities for business between the two parties and both commercial and manufacturing collaboration opportunities. In early June 2015, Mr. Emmanuel Butstraen, President of Solvay Novecare, suggested to Mr. Fleming that he meet with the CEO of Solvay, Jean-Pierre Clamadieu to discuss areas of mutual interest. Mr. Fleming then arranged to meet with Mr. Clamadieu while Mr. Fleming was attending the Paris Air Show on June 16, 2015. During that meeting, Mr. Clamadieu stated that Solvay proposed

 

-34-


Table of Contents

to acquire the Company for $72.00 per share in cash and provided Mr. Fleming with a letter confirming that offer and requesting access to due diligence and committing to work expeditiously. Mr. Fleming informed Mr. Clamadieu that he would discuss Solvay’s offer with the Board of Directors. Solvay’s $72.00 per share offer represented a premium of 16.98% over the closing price of Company stock as of June 16, 2015.

On June 17, 2015, at a meeting of the Transaction Committee with representatives of Company management and J.P. Morgan in attendance, Mr. Fleming updated the Transaction Committee regarding Solvay’s offer. The Transaction Committee considered the price proposed by Solvay to be attractive in light of its previous discussions with Party A and consideration of strategic alternatives, but noted that the Company had not actively solicited indications of interest in acquiring the Company from potential acquirers. The Transaction Committee discussed with representatives of Company management and J.P. Morgan various parties that might be interested in acquiring the Company and that would have the financial and operational resources to act quickly in view of the potential risks to the Company of a protracted sales process, including the risk of leaks and resulting impact on customer relationships and the ability to retain and attract employees. After discussion and consultation with J.P. Morgan, the Transaction Committee determined not to contact any financial sponsors because the Transaction Committee concluded there was a low likelihood that a financial sponsor would be able to make an offer with a significant or competitive premium due to the absence of meaningful synergies in a transaction with a financial sponsor and the historical returns sought by such sponsors. The Transaction Committee instructed Company management and J.P. Morgan to identify and reach out on a confidential basis to representatives of a small group of companies that, in the judgment of Company management after consultation with J.P. Morgan and the Transaction Committee, were most likely to be interested in acquiring the Company and to have the resources and financial wherewithal to do so expeditiously at a price that would be competitive with Solvay’s $72.00 per share price. The Transaction Committee considered approximately ten companies that might be interested and capable of acquiring the Company and after consideration, preliminarily suggested that J.P. Morgan should contact Party B, Party C and Party D, but indicated that management should continue to work with J.P. Morgan to assess whether these companies met the Transaction Committee’s criteria and whether any other companies should be included in the Company’s outreach effort. The Transaction Committee also directed Mr. Fleming to contact Mr. Clamadieu to confirm that Mr. Fleming would discuss Solvay’s offer with the Board of Directors.

Thereafter, also on June 17, 2015, Mr. Fleming confirmed to Mr. Clamadieu that he would discuss Solvay’s $72.00 per share offer with the Board of Directors.

Also around this time, following further discussion with the Transaction Committee and Company management, J.P. Morgan contacted representatives of Party B and Party D to gauge their interest in exploring a potential transaction with the Company. A representative of Party B, which had previously requested that the Company contact Party B if the Company explored the possibility of a sale of the Company, informed J.P. Morgan that Party B would not be willing to make a proposal to acquire the Company given that the Company shares were trading close to their all-time high and Party B believed it would not be able to offer a competitive price. Party D previously had expressed interest in acquiring the Company but a representative of Party D indicated to J.P. Morgan that Party D would not be in a position to provide an initial indication of interest and would not commit to perform material due diligence on the Company unless the Company offered assurances to Party D that the process would remain open for three or four months.

The Board of Directors met on June 22, 2015, with representatives of Company management and of J.P. Morgan in attendance. Mr. Fleming provided an update regarding various strategic alternatives, including the status of the Company’s discussions with Party A, and reported on his June 16th meeting with Mr. Clamadieu. Although the Company had achieved excellent results in the four immediately preceding years as it first announced and then completed a major restructuring of the Company’s portfolio, and the Company projections showed strong growth into the future, the Board of Directors considered the Solvay offer as an opportune time to consider a sale of the Company for two reasons. First, both the Company’s stock and the overall stock market were trading at or close to their all-time high prices. Second, the Company projections were based in part on assumptions regarding the continued successful capture of new markets for the Company and achievement of the

 

-35-


Table of Contents

projections would require significant capital investments in both advanced composites for serial automotive and aerospace primary structures, the outcome of which would be subject to unpredictable execution risk, and the Board of Directors considered that this combination of circumstances created more than normal uncertainty as to the likelihood of the Company achieving the Company projections. Mr. Fleming also reported on the status of J.P. Morgan’s contacts with potential alternative bidders. At the direction of Company management, J.P. Morgan had contacted Party B and Party D, but not Party C, because Company management considered, after consultation with J.P. Morgan, the risk of a leak from contacting Party C to be too great. The Board of Directors discussed whether the Company should contact additional potential bidders. After assessing the likelihood of receiving a competitive offer from additional potential bidders and the increased risk of a leak, the Board of Directors concluded that the Company should not contact other potential bidders at that time. At the conclusion of the meeting, the Board of Directors authorized Mr. Fleming to call Mr. Clamadieu to indicate that although the price offered by Solvay was not sufficient to complete a transaction, it was sufficient to permit Solvay to proceed in its evaluation of a potential transaction, including participation in management presentations and due diligence. The Board of Directors also directed J.P. Morgan to contact representatives of Party D to invite Party D to participate in management presentations with a view to attempting to accelerate Party D’s ability to provide the Company with an indication of interest to acquire the Company.

Following the Board of Directors’ meeting on June 22, 2015, representatives of J.P. Morgan contacted representatives of Party D to invite Party D to participate in management presentations. Party D declined to participate in management presentations or to otherwise move forward in the process given that the Company would not commit that the process would remain open for three to four months.

On June 25, 2015, a representative of the Company provided a form of non-disclosure and confidentiality agreement to representatives of Solvay, and, after negotiations, Solvay executed the non-disclosure and confidentiality agreement on June 26, 2015. On June 30, 2015, representatives of Solvay participated in management presentations delivered by Company management.

The Transaction Committee had previously determined not to contact Party E because the Transaction Committee believed that Party E was focused on another corporate transaction. On June 26, 2015, J.P. Morgan reported to the Company that Party E might be interested in pursuing an acquisition of the Company and might be willing to commit time and resources to explore an acquisition of the Company. Representatives of Company management directed representatives of J.P. Morgan to contact Party E. Mr. Fleming informed the Chairman of the Transaction Committee who concurred with this direction. Representatives of J.P. Morgan contacted representatives of Party E who expressed interest in exploring a possible acquisition of the Company. The representatives of J.P Morgan explained that Party E might have to move quickly if they were to be successful in this possible opportunity, and stated that the Company could provide Party E with management presentations early the following week if that would assist Party E in quickly developing a firm view on the Company.

On June 29, 2015, a representative of the Company provided a form of non-disclosure and confidentiality agreement to representatives of Party E, and, after negotiations, Party E executed the non-disclosure and confidentiality agreement on July 1, 2015. The non-disclosure and confidentiality agreement contained a customary standstill covenant, which generally prohibited Party E from acquiring the Company’s securities or otherwise seeking to acquire control of the Company, and which by its terms would terminate upon the Company entering into a definitive agreement with a third party providing for a change of control of the Company. On July 1, 2015, representatives of Party E participated in management presentations delivered by Company management.

During the management presentations to the respective firms Party E was requested to provide the Company with an indication of interest by July 13, 2015, and Solvay was requested to complete its preliminary due diligence and confirm its offer price by July 13, 2015. Solvay had indicated its willingness to confirm its offer price more quickly but a later date was requested to allow Party E more time to provide its indication of interest.

 

-36-


Table of Contents

Throughout July of 2015, the Transaction Committee and the Board of Directors met numerous times to consider the status of the Company’s discussions with Party A, Party D and Party E and to give Company management and J.P. Morgan instructions concerning next steps in the process.

On July 1, 2015, representatives of Solvay advised representatives of J.P. Morgan that Solvay was prepared to send the Company a draft merger agreement. The Company directed a representative of Sullivan & Cromwell to inform Solvay’s outside counsel, Davis Polk & Wardwell LLP, that prior to Solvay providing the Company with a draft merger agreement, the Company would provide Solvay with a list of key terms that the Company expected would be included in any draft merger agreement, including a “go shop” provision. A representative of Davis Polk informed a representative of Sullivan & Cromwell that Solvay would not be receptive to any request to include a “go shop” provision in the merger agreement.

On June 30, 2015 and July 1, 2015, during Solvay and Party E’s respective management presentations, Mr. Fleming advised representatives of Solvay and of Party E, respectively, that the Company’s second quarter results, scheduled to be announced in mid-July, would likely be below Wall Street analysts’ estimates, partly due to a weaker than expected quarter for the Company’s industrial materials business.

Starting on July 2, 2015, representatives of the Company provided representatives of Solvay and Party E with access to an electronic data room and from July 2, 2015 until July 13, 2015, the Company provided Solvay with access to representatives of Company management for additional specialized diligence sessions and the Company responded to Solvay’s numerous due diligence requests. Representatives of Company management observed that Solvay and its advisors commenced a substantial due diligence effort promptly while representatives of Party E appeared to devote much less time to, and involved fewer personnel in, reviewing the information in the electronic data room. The Company elected to postpone providing Party E with access to additional specialized diligence sessions until Party E had submitted an indication of interest so that the Company could assess whether Party E was reasonably likely to be willing to move forward with a transaction at a price that would be competitive with Solvay’s $72.00 per share offer before undertaking the management distraction and heightened risk of leak associated with scheduling additional management sessions for Party E.

On July 8, 2015, representatives of Sullivan & Cromwell sent representatives of Davis Polk a list of key terms that the Company expected would be included in a draft merger agreement between the Company and Solvay. Among the key terms was a 60-day “go shop” provision.

On July 10, 2015, representatives of Sullivan & Cromwell received a draft merger agreement from representatives of Davis Polk. The draft merger agreement did not include a “go shop” provision.

On July 13, 2015, Mr. Clamadieu contacted Mr. Fleming to communicate an upwardly revised offer of $72.75 per share in cash, subsequently confirmed in writing. Solvay’s $72.75 per share offer represented a premium of 18.27% over the closing price of Company stock as of July 13, 2015. Mr. Clamadieu indicated that Solvay was unable to increase its offer further because, among other things, the Company’s projected capital expenditures in the 2016-2019 time period were $200 million higher than Solvay had anticipated.

Also on July 13, 2015, Party E submitted a preliminary, non-binding indication of interest for $76.00 per share in cash, stating that it was prepared, if given access to necessary due diligence, to reach a definitive agreement within 30 days.

Following the submission of Party E’s preliminary, non-binding indication of interest, representatives of Company management observed that Party E’s indication of interest was premised on an incorrect calculation of the Company’s outstanding equity interests, and adjusting for the actual number of outstanding equity interests, Party E’s indication of interest actually had an implied value of approximately $75.25. Shortly thereafter, representatives of J.P. Morgan informed representatives of Party E of the error, and Party E did not clarify its indicative price. Absent clarification, representatives of J.P. Morgan informed Party E that the Company would treat Party E as if its indication of interest were $76.00 per share.

 

-37-


Table of Contents

On July 17, 2015, Mr. Fleming contacted Mr. Clamadieu and informed him that the Company’s Board of Directors was not yet in a position to respond to Solvay’s offer, and while Mr. Clamadieu should assume that $72.75 per share was still inadequate, the Company had instructed Sullivan & Cromwell to respond to Davis Polk with a merger agreement markup during the week of July 20, 2015. Mr. Fleming also contacted a representative of Party E and informed him that Party E’s request for 30 days to complete diligence was too long as the Company was expecting to sign or make significant progress towards a definitive merger agreement within approximately ten days.

During the weeks of July 13 and July 20, 2015, Company management continued to monitor the respective levels of Solvay’s and Party E’s activity in the Company’s electronic data room and observed that Party E did not yet appear to be deeply engaged in due diligence of the Company relative to Solvay. During the week of July 13, 2015, Company management held additional due diligence sessions with representatives of Party E, and a representative of the Company provided a representative of Party E with an initial draft of a merger agreement on July 16, 2015. During the week of July 20, 2015, representatives of J.P. Morgan contacted representatives of Party E multiple times to reaffirm the need for Party E to move quickly to confirm Party E’s indication of interest, commitment to the transaction and ability to obtain internal approvals on a timely basis, including confirmation that the diverse nature of the Company’s businesses would not pose a barrier to the acquisition of the Company. During these conversations, representatives of Party E stated that Party E understood it had to buy all of the Company, that Party E’s indication of interest at $76.00 per share had not been based on Party E management-approved financial analysis, and that Party E was working with its financial advisors to complete its model but had identified a number of factors, including concerns regarding the Company’s near term value in light of its June 16, 2015 earnings announcement, that could make it challenging for Party E to maintain its $76.00 per share indicative price.

After discussions regarding the proposed draft merger agreement with Company management, on July 21, 2015, representatives of Sullivan & Cromwell sent representatives of Davis Polk a revised draft that did not include a “go shop” provision, but did include a two-tier termination fee and reflected positions on other important terms favorable to the Company, including the level of commitment from Solvay regarding regulatory risk, closing certainty and post-closing employee benefits.

On July 23, 2015, Mr. Fleming learned that Party E had appointed a new executive to lead the Party E team that was reviewing the possibility of a transaction with the Company. Mr. Fleming discussed the timeline for the project with the new Party E team leader, who advised Mr. Fleming that Party E would provide a mark-up of a merger agreement to the Company in the next few days. Mr. Fleming agreed to schedule a make-up due diligence management session for the new Party E executive and additional specialized diligence sessions with representatives of Company management as needed to facilitate Party E’s efforts to confirm its preliminary non-binding indicative price.

That afternoon on July 23, 2015, there was a meeting of the Board of Directors with representatives of Company management, J.P. Morgan and Sullivan & Cromwell in attendance. Mr. Fleming updated the Board of Directors on the work of the Transaction Committee and outside advisors regarding the process with Solvay and Party E, and the Board of Directors discussed the advantages and disadvantages of various approaches to obtaining the best possible offers from each of Solvay and Party E. The Board of Directors, in consultation with representatives of Company management, J.P. Morgan and Sullivan & Cromwell, discussed the pros and cons of various proposed responses to Solvay and Party E, and concluded that management should notify Solvay about the Company’s discussions with a viable alternative bidder.

Later in the afternoon on July 23, 2015, Mr. Fleming spoke with Mr. Clamadieu and explained that the Company was engaging with another party that also had expressed interest in an acquisition of the Company, and that the Company would need Solvay’s best and final offer by July 30, 2015.

 

-38-


Table of Contents

That evening, a representative of Sullivan & Cromwell left a voicemail message for a representative of the outside counsel representing Party E to request an update regarding Party E’s timing to provide a merger agreement mark-up to the Company, but the call was never returned. Also that same evening, representatives of Sullivan & Cromwell received a revised draft merger agreement from representatives of Davis, Polk & Wardwell.

On the morning of July 24, 2015, Mr. Fleming spoke with the representative of Party E and communicated that the Company would need a best and final offer as well as a markup of the draft merger agreement that had been provided on July 16, 2015, no later than July 30, 2015. The representative of Party E stated that a markup of the merger agreement would be forthcoming by the close of business that day.

During that same day, representatives of Company management participated in a diligence meeting with representatives of Party E to address Party E’s high priority diligence questions. During this meeting, a representative of Party E communicated that a markup of the merger agreement would not be available until July 28, 2015.

Also during the morning of July 24, 2015, Mr. Clamadieu spoke with Mr. Fleming and indicated that Solvay would be providing a revised, firm offer that same evening. Thereafter, in the evening of July 24, 2015, Mr. Fleming received a revised letter from Solvay with a revised offer of $75.00 per share. The letter stated that Solvay’s revised offer would expire at 5:00 pm. EST on July 27, 2015 and that any transaction would need to be announced by the morning of July 28, 2015. Mr. Clamadieu orally communicated to Mr. Fleming that Solvay was unwilling to delay announcement any further, and that should the Company fail to meet Solvay’s deadline for an announcement on July 28, 2015, then Solvay would discontinue its negotiations with the Company. Solvay’s $75.00 per share offer represented a premium of 28.47% over the closing price of Company stock as of July 24, 2015.

From July 24 until mid-day on July 26, Party E continued to conduct due diligence, with the Company continuing to provide information via the electronic data room and to respond to diligence questions. Also during this period, representatives of Davis Polk and of Sullivan & Cromwell continued to negotiate the merger agreement, including, the scope of the “no shop”, the size of the termination fee and the appropriate allocation of risk relating to antitrust and competition law and other regulatory approvals. In addition, on July 25, 2015, representatives of Davis Polk provided representatives of Sullivan & Cromwell with redacted drafts of Solvay’s proposed debt financing arrangements.

On July 26, 2015, the Transaction Committee met with representatives of Company management, J.P. Morgan and Sullivan & Cromwell in attendance, to receive an update regarding Company management’s recent discussions with Solvay and Party E and to provide direction to Company management regarding the best strategy to address Solvay’s improved offer and Party E’s failure to make material progress towards confirming its indication of interest or negotiating a merger agreement. After discussion, it was agreed that Mr. Fleming should contact Solvay to ask Solvay to increase its offer price and Party E to notify Party E that the Company would require Party E to demonstrate it was making substantial progress toward completing due diligence and marking-up the merger agreement on an expedited basis in order for Party E to remain viable.

On July 26, 2015, as directed by the Transaction Committee, Mr. Fleming contacted Mr. Clamadieu and stated that Mr. Fleming would recommend Solvay’s offer to the Board of Directors if Solvay increased its price to $75.25 per share and accepted the Company’s position on two open points in the merger agreement: the level of antitrust and competition law and other regulatory approval risk Solvay would accept in the transaction, and Solvay’s commitment to provide benefits to the Company’s employees at a substantially comparable level to the level of benefits provided to those employees by the Company prior to the transaction. Mr. Fleming also informed Mr. Clamadieu that the Company was not prepared to meet Solvay’s deadline of a Tuesday morning announcement because the Company would require additional time to prepare a communications roll-out plan for its employees, customers and other stakeholders, but that, assuming Solvay met the Company’s conditions, the

 

-39-


Table of Contents

Company would agree to negotiate exclusively with Solvay from the evening of July 27, 2015 through the signing of a merger agreement on the evening of July 28, 2015. Later that day, Mr. Clamadieu informed Mr. Fleming that he would support an increase in Solvay’s offer price to $75.25 per share and was receptive to the Company’s position on the two remaining merger agreement points.

Also on July 26, 2015, as directed by the Transaction Committee, Mr. Fleming spoke with a representative of Party E to advise Party E that, in light of the exploding offer it had received from another bidder, Party E would need to confirm its offer price by July 27, 2015. The representative of Party E expressed concern about Party E’s ability to meet the deadline. Later on July 26, 2015, the representative of Party E communicated to the Company through Party E’s financial advisors that Party E had been struggling to confirm value, would not be able to meet the deadline and was withdrawing from the process.

On July 27, 2015, at a meeting of the Board of Directors with representatives of Company management, representatives of J.P. Morgan and a representative of Sullivan & Cromwell in attendance, Mr. Fleming reviewed the status of discussions and negotiations with Solvay and Party E. A representative of J.P. Morgan then reviewed with the Board of Directors J.P. Morgan’s financial analyses of the $75.25 per share to be received by the holders of the Company’s shares in the merger, referring throughout the discussion to materials that had been provided to the Board of Directors in advance of the meeting. A representative of Sullivan & Cromwell reviewed the key terms of the merger agreement that had been provided to the Board of Directors earlier that day and the Board of Directors’ fiduciary obligations under Delaware law. The Board of Directors discussed its view that the deal-protection provisions of the merger agreement were customary and would not deter a third party with the strategic interest and financial capability to make a superior proposal from doing so.

During this period, representatives of Sullivan & Cromwell and Davis Polk continued to negotiate the merger agreement.

On July 28, 2015, having been provided with the execution version of the merger agreement in advance of the meeting, the Board of Directors met with representatives of Company management, J.P. Morgan and Sullivan & Cromwell in attendance. A representative of Company management reviewed the changes to the merger agreement since the draft the Board of Directors had reviewed and discussed in connection with the previous day’s board meeting. J.P. Morgan, having provided the Board of Directors with a copy of its financial analyses updated for market information as of July 27, 2015 (such financial analyses being substantially identical to the analyses reviewed with the Board of Directors on July 27, 2015), delivered its oral opinion to the Board of Directors (which was subsequently confirmed by delivery of a written opinion dated July 28, 2015), to the effect that, as of the date of the opinion and based upon and subject to the various factors, assumptions, qualifications and limitations set forth in its written opinion, the merger consideration of $75.25 per share, was fair, from a financial point of view, to the holders of shares of common stock of the Company (other than excluded shares). Following further discussion, the Board of Directors thereafter unanimously determined that the merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, the Company and the stockholders of the Company and approved and declared advisable the merger agreement and the merger and the other transactions contemplated by the merger agreement. The Board of Directors also unanimously resolved that the merger agreement be submitted for consideration by the stockholders of the Company at a special meeting of stockholders and recommended that the stockholders of the Company vote to adopt the merger agreement.

Later that same day, Solvay, Merger Subsidiary and the Company executed the merger agreement. The following morning, the Company and Solvay issued separate press releases announcing the execution of the merger agreement.

 

-40-


Table of Contents

Reasons for the Merger; Recommendation of the Board of Directors

The Board of Directors recommends that you vote “FOR” the merger proposal.

The Board of Directors, at a meeting held on July 28, 2015, unanimously determined that the merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, the Company and the stockholders of the Company and approved and declared advisable the merger agreement and the merger and the other transactions contemplated by the merger agreement. The Board of Directors also unanimously resolved that the merger agreement be submitted for consideration by the stockholders of the Company at a special meeting of stockholders and recommended that the stockholders of the Company vote to adopt the merger agreement. The Board of Directors consulted with the Company’s outside financial and legal advisors and senior management at various times and considered a number of factors, including the following principal factors (not in any relative order of importance) that the Board of Directors believes support its decision:

 

    the merger consideration of $75.25 per share represents a premium of approximately 46.2% to the volume weighted average price of our common stock over the one year prior to July 27, 2015, a premium of approximately 31.7% to the closing price of our common stock on July 27, 2015, and a premium of approximately 27.0% to the volume weighted average price of our common stock over the three months prior to July 27, 2015, as well as a premium of approximately 28.9% to the closing price of our common stock on July 28, 2015, the last trading day prior to the announcement of the merger;

 

    the merger consideration of $75.25 per share in relation to the Board of Directors’ estimate of the present value of the Company as an independent entity, assuming the full realization of the Company projections, as well as the risks and challenges associated with the attainment of such projections;

 

    the oral and written opinion of J.P. Morgan to the Board of Directors dated July 28, 2015, and related financial analysis by J.P. Morgan presented to the Board of Directors on such date, to the effect that, as of the date of such written opinion and based on and subject to the various factors, assumptions, qualifications and limitations described therein, the merger consideration of $75.25 per share to be received by holders of our common stock (other than excluded shares) pursuant to the merger agreement was fair, from a financial point of view, to such holders. A copy of such written opinion is included as Annex C to this proxy statement and described under “The Merger—Opinion of the Company’s Financial Advisor” beginning on page 44;

 

    the belief of the Board of Directors, after negotiations with Solvay and soliciting interest in a transaction from the universe of possible bidders believed to be potentially willing to and capable of completing an acquisition of the Company within a reasonable period of time without exposing the Company to a material risk of a leak or to a protracted sales process that was not considered likely to result in an better offer, that the merger consideration of $75.25 per share provided for in the merger agreement represented the highest per share consideration reasonably attainable at the time;

 

    the improvement in the merger consideration offered by Solvay from $72.00 per share at the time of its initial proposal to $75.25 per share, which is $0.25 per share higher than what Solvay had indicated was its best and final offer, and the absence of a superior and actionable alternative proposal;

 

    the Board of Directors’ analyses that the merger is more favorable to the Company’s stockholders than the possible alternatives to the merger, including the execution of the Company management’s stand-alone plan (taking into account the risks and uncertainties associated with the execution of the stand-alone plan), other potential strategic mergers or acquisitions transactions with strategic counterparties, a potential sale of the Company to a financial sponsor and a leveraged recapitalization transaction;

 

    the Board of Directors’ consideration of the current state of the economy, the stock market and financial markets and its assessment of the stage of the chemicals and materials industry cycle, the competitive landscape, customer relationships, organic and non-organic growth opportunities, the capital expenditures that would be required to maintain or enhance the Company’s competitive position, the need to meet customer demands and the uncertainty surrounding forecasted economic conditions, both in the near term and the long term as well as generally and within the Company’s industry in particular;

 

-41-


Table of Contents
    the likelihood that the merger would be completed based on, among other things (not in any relative order of importance):

 

    Solvay’s agreement to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the merger and the other transactions contemplated by the merger agreement, subject to certain exceptions set forth in the merger agreement, except that Solvay and Merger Subsidiary are not obligated to agree to any divestiture or other action if agreeing to such divestiture or other action would, individually or in the aggregate, have a material adverse effect on Solvay and its subsidiaries or on the Company and its subsidiaries, in each case, as measured against the Company and its subsidiaries, taken as a whole, as described under “The Merger Agreement—Filings; Other Actions; Notification” beginning on page 78;

 

    the fact that the January 28, 2016 merger agreement end date allows for sufficient time to complete the merger, and may be extended until April 28, 2016 if certain regulatory approvals have not been obtained;

 

    more generally, the fact that the conditions to the closing of the merger are specific and limited in scope and that the definition of “material adverse effect” in the merger agreement contains broad carve-outs that make it less likely that adverse changes in the Company’s business between announcement and closing of the merger will provide a basis for Solvay to refuse to consummate the merger, as described under “The Merger Agreement—Conditions to the Merger” beginning on page 84;

 

    the business reputation and capabilities of Solvay, and the Board of Directors’ perception that Solvay is willing to devote the resources necessary to complete the merger in an expeditious manner;

 

    the fact that there is no financing condition to the completion of the merger in the merger agreement;

 

    Solvay’s financial condition and creditworthiness and Solvay’s representation that Solvay has, through a combination of cash on hand and committed financing, all funds necessary for the payment of the aggregate merger consideration and to satisfy all of Solvay’s other obligations under the merger agreement;

 

    the receipt of a mandate letter and a substantially final form of the bridge loan facility agreement, the terms thereof and the reputation of the financial institutions named therein, which increase the likelihood of the debt financing being available (see “The Merger Agreement—Financing of the Merger” beginning on page 53);

 

    the fact that pursuant to the merger agreement, the Company is permitted until the closing of the merger to declare and pay regular quarterly cash dividends on our common stock of up to $0.125 per share;

 

    the ability of the Board of Directors to withhold, withdraw or modify its recommendation to stockholders concerning the transactions contemplated by the merger agreement in connection with a superior proposal or if any event or circumstance becomes known to the Board of Directors that is material to the Company and its subsidiaries, taken as a whole, that was not known or reasonably foreseeable (or the impact of which was not known or reasonably foreseeable) to the Board of Directors or the Company’s named executive officers as of July 28, 2015, if the board determines in good faith, after consultation with outside legal counsel, that the failure to so withhold, withdraw or modify its recommendation would be reasonably likely to be inconsistent with its fiduciary duties (subject to Solvay’s ability to terminate the merger agreement and collect the termination fee), as described under “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75;

 

-42-


Table of Contents
    the ability of the Board of Directors to terminate the merger agreement to enter into a superior proposal, subject to certain conditions (including certain rights of Solvay to match the superior proposal and payment by the Company of the termination fee), as described under “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75 and “The Merger Agreement—Termination Fees” beginning on page 86;

 

    the rights of Company stockholders to demand appraisal of their shares and receive payment of the “fair value” of such shares pursuant to Section 262 of the DGCL if they comply in all respects with Section 262 of the DGCL and the absence of any closing conditions in the merger agreement related to the exercise of appraisal rights by Company stockholders; and

 

    the fact that the merger and the merger agreement are subject to approval by the Company’s stockholders.

The Board of Directors also considered a variety of potentially negative factors in its deliberations concerning the merger agreement and the merger, including the following (not in any relative order of importance):

 

    the merger would preclude the Company’s stockholders from having the opportunity to participate in the future performance of the Company’s assets and any potential future appreciation of the value of our common stock;

 

    the merger agreement imposes restrictions on soliciting competing acquisition proposals from third parties;

 

    the termination fee to be paid to Solvay under the circumstances specified in the merger agreement, which, while as a percentage of the equity value of the Company is within a customary range for similar transactions, may discourage other parties that might otherwise have an interest in a business combination with, or an acquisition of, the Company, or may reduce the price offered by such other parties in a competing bid (see “The Merger Agreement—Termination Fees” beginning on page 86);

 

    the right afforded to Solvay under the merger agreement to match acquisition proposals that the Board of Directors determines in good faith are superior proposals and the requirement that the Company pay a termination fee to enter into any such superior proposal may discourage other parties that might otherwise have an interest in a business combination with, or an acquisition of, the Company, as described under “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75;

 

    the restrictions on the conduct of the Company’s business prior to the completion of the merger, which, subject to specific exceptions, could delay or prevent the Company from undertaking capital expenditures and business opportunities it would otherwise undertake absent the pending completion of the merger, as described under “The Merger Agreement—Conduct of Our Business Pending the Merger” beginning on page 72;

 

    the fact that significant costs are involved in connection with entering into and completing the merger and substantial time and effort of management is required to complete the merger, potentially resulting in disruptions to the operation of the Company’s business;

 

    the fact that the announcement and pendency of the merger, or failure to complete the merger, may cause substantial harm to relationships with the Company’s employees, suppliers and customers;

 

    the fact that, while the Company expects that the merger will be consummated, there can be no assurance that all conditions to the parties’ obligations to complete the merger agreement will be satisfied, and, as a result, the merger may not be consummated;

 

    the effects that a failure to consummate the merger could have on the price of the Company’s common stock and on the market’s perceptions of the Company’s prospects; and

 

    the fact that an all-cash transaction generally would be taxable to the Company’s stockholders that are U.S. holders for U.S. federal income tax purposes.

 

-43-


Table of Contents

The foregoing discussion of the information and factors considered by the Board of Directors is not intended to be exhaustive, but includes the material factors considered by the Board of Directors. In view of the variety of factors considered in connection with its evaluation of the merger, the Board of Directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Board of Directors did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Board of Directors based its recommendation on the totality of the information presented.

In considering the recommendation of the Board of Directors with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, yours. The Board of Directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company. See the section entitled “The Merger—Interests of Certain Persons in the Merger” beginning on page 54.

Portions of this explanation of the reasons for the merger and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Opinion of the Company’s Financial Advisor

Opinion of J.P. Morgan

Pursuant to an engagement letter dated December 22, 2014 (effective as of October 15, 2014), as supplemented by an engagement letter dated July 26, 2015 (effective as of March 1, 2015), the Company retained J.P. Morgan as its financial advisor in connection with a possible transaction of the type including the proposed merger.

At the meeting of the Board of Directors of the Company held on July 28, 2015 at which the proposed merger was approved, J.P. Morgan rendered to the Board of Directors of the Company its oral opinion, confirmed by delivery of a written opinion, dated July 28, 2015, to the effect that, as of such date and based upon and subject to the various factors, assumptions, qualifications and limitations set forth in its written opinion, the merger consideration to be paid to the Company’s common stockholders in the proposed merger of $75.25 per share in cash was fair, from a financial point of view, to such stockholders. No limitations were imposed by the Board of Directors of the Company upon J.P. Morgan with respect to the investigations made or procedures followed by it in rendering its opinions.

The full text of the written opinion of J.P. Morgan dated July 28, 2015, which sets forth, among other things, the assumptions made, matters considered, and qualifications and any limitations on the opinion and the review undertaken by J.P. Morgan in connection with rendering its opinion, is attached as Annex C to this Proxy statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this Proxy statement is qualified in its entirety by reference to the full text of such opinion, and the Company’s stockholders are urged to read the opinion carefully and in its entirety. J.P. Morgan’s written opinion was addressed to the Board of Directors of the Company (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the fairness, from a financial point of view, of the merger consideration to be paid to the Company’s common stockholders and did not address any other aspect of the merger. J.P. Morgan has expressed no opinion as to the fairness of any consideration paid in connection with the merger to the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote at the special meeting with respect to the proposed merger or any other matter.

 

-44-


Table of Contents

In arriving at its opinion, J.P. Morgan, among other things:

 

  reviewed a draft of the merger agreement dated July 28, 2015;

 

  reviewed certain publicly available business and financial information concerning the Company and the industries in which it operates;

 

  compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration paid for such companies;

 

  compared the financial and operating performance of the Company with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of the Company’s common stock and certain publicly traded securities of such other companies;

 

  reviewed certain internal financial analyses and forecasts prepared by or at the direction of the management of the Company relating to its business; and

 

  performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

J.P. Morgan also held discussions with certain members of the management of the Company and Solvay with respect to certain aspects of the merger, the past and current business operations of the Company, the financial condition and future prospects and operations of the Company and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

J.P. Morgan, in giving its opinion, relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by the Company and Solvay or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan did not independently verify (nor did J.P. Morgan assume responsibility or liability for independently verifying) any such information or its accuracy or completeness. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of the Company or Solvay under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to it or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of the Company to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the merger and the other transactions contemplated by the merger agreement will be consummated as described in the merger agreement and that the definitive merger agreement would not differ in any material respect from the most recent draft thereof provided to J.P. Morgan before it rendered its oral opinion. J.P. Morgan also assumed that the representations and warranties made by the Company and Solvay in the merger agreement and the related agreements were and will be true and correct in all respects material to J.P. Morgan’s analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by the advisors to the Company with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on the Company or on the contemplated benefits of the merger.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. Subsequent developments may affect J.P. Morgan’s opinion, and J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the merger consideration to be paid to the Company’s common stockholders in the proposed merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration paid in connection with the merger to the holders of any other class of securities, creditors or other constituencies of the Company or as to the underlying decision by

 

-45-


Table of Contents

the Company to engage in the merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed merger, or any class of such persons relative to the merger consideration to be paid to the Company’s common stockholders in the proposed merger or with respect to the fairness of any such compensation.

The terms of the merger agreement, including the merger consideration, were determined through arm’s length negotiations between the Company and Solvay, and the decision to enter into the merger agreement was solely that of the Board of Directors of the Company and the Board of Directors of Solvay. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Board of Directors of the Company in its evaluation of the proposed merger and should not be viewed as determinative of the views of the Board of Directors or management of the Company with respect to the proposed merger or the merger consideration.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methods in rendering its opinion. The following is a summary of the material financial analyses utilized by J.P. Morgan in rendering its opinion to the Board of Directors of the Company on July 28, 2015 and contained in the presentation delivered to the Board of Directors of the Company on such date in connection with the rendering of such opinion, and does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone and, in order to fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth in the tables without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s financial analyses.

52 Week Historical Trading Range

For reference purposes only and not as a component of its fairness analysis, J.P. Morgan reviewed the trading range of the Company’s common stock for the 52-week period ended July 27, 2015, which was $42.17 per share to $62.71 per share, and compared that to (a) the closing price of the Company’s common stock of $57.15 on July 27, 2015, and (b) the proposed merger consideration of $75.25 per share.

Equity Analyst Price Target

For reference purposes only and not as a component of its fairness analysis, J.P. Morgan also reviewed the price targets of nine public analysts for the Company providing such price targets and noted that the price targets ranged from $57.00 to $73.00 per share, as compared to (1) the closing price of the Company’s common stock of $57.15 on July 27, 2015, and (2) the proposed merger consideration of $75.25 per share.

Public Trading Multiples

Using publicly available information, J.P. Morgan compared selected financial data of the Company with similar data for selected publicly traded specialty chemicals and composites companies that have operations, products and end markets similar to the Company, as well as companies who primarily supply the aerospace industry, given a significant portion of the Company’s revenues are derived from the aerospace industry. The companies selected by J.P. Morgan were as follows:

 

Specialty Chemicals/Composites

  

Aerospace Suppliers

Celanese Corporation

   Spirit AeroSystems Holdings, Inc.

Albemarle Corporation

   B/E Aerospace, Inc.

W.R. Grace & Co.

   Triumph Group, Inc.

FMC Corporation

   Esterline Technologies Corporation

Hexcel Corporation

   KLX Inc.

Victrex plc

  

 

-46-


Table of Contents

None of the selected companies reviewed is identical to the Company and certain of these companies may have characteristics that are materially different from those of Company. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of the Company. Of the selected companies, J.P. Morgan noted the data points of the Hexcel Corporation and the Company to be the most relevant. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect their comparability to the Company.

In all instances, multiples were based on closing stock prices on July 27, 2015. For each of the following analyses performed by J.P. Morgan, estimated financial data for the selected companies were based on the selected companies’ filings with the Securities and Exchange Commission and information J.P. Morgan obtained from FactSet Research Systems and equity research and publicly available research analysts’ median estimates.

J.P. Morgan calculated and analyzed the ratios of each selected company’s implied firm value (which is referred to as FV) to median equity research analysts’ estimates for the periods ending December 31, 2015 and 2016 for earnings before interest, taxes, depreciation and amortization (“EBITDA”), which are referred to as “FV/2015E EBITDA” and “FV/2016E EBITDA,” respectively. For purposes of these analyses, the FV of each company was obtained by adding its debt and non-controlling interest (if any) to, and subtracting its most recent publicly disclosed cash and cash equivalents balance from, the fully-diluted market value of its common equity as of July 27, 2015. The following table presents the results of this analysis:

 

     High      Low      Median      Mean  

Specialty Chemicals/Composites

           

FV / 2015E EBITDA

     13.0x         7.8x         11.1x         10.8x   

FV / 2016E EBITDA

     11.8x         7.5x         10.0x         9.9x   

Aerospace Suppliers

           

FV / 2015E EBITDA

     11.6x         7.1x         8.3x         9.1x   

FV / 2016E EBITDA

     11.1x         6.5x         7.1x         8.0x   

Based on the above analysis, J.P. Morgan then derived a FV/2015E EBITDA reference range of 10.5x to 12.5x and a FV/2016E EBITDA reference range of 9.5x to 11.5x and applied such multiple reference ranges to EBITDA estimates for the Company for fiscal year 2015 and fiscal year 2016 per the non-public, internal financial forecasts prepared by the Company’s management included in “The Merger—Certain Company Forecasts” beginning on page 50 under the heading “Company projections”. As a result of such analysis, J.P. Morgan obtained the following ranges of implied per share equity values for the Company (resulting per unit values were in all cases rounded to the nearest $0.25 per unit), in each case as compared to the proposed merger consideration of $75.25 per share.

 

Valuation Basis

   Low      High  

FV/2015E EBITDA

   $ 54.50       $ 66.00   

FV/2016E EBITDA

   $ 55.00       $ 68.25   

 

-47-


Table of Contents

Selected Transaction Analysis

Using publicly available information, J.P. Morgan examined selected transactions involving businesses which J.P. Morgan judged to be sufficiently relevant to the Company’s business or aspects thereof, focusing on transactions involving specialty chemicals and composites companies (for reference purposes only and not as a component of its fairness analysis, J.P. Morgan also reviewed certain transactions involving aerospace suppliers). For each of the selected transactions, J.P. Morgan calculated, to the extent information was publicly available, the FV divided by the EBITDA of the target or the target business for the latest publicly available twelve-month period immediately preceding the announcement of the respective transaction, without synergies (the “FV/LTM EBITDA”). The specialty chemicals and composites transactions considered and the month and year each transaction was announced are as follows:

 

Transaction

   Announcement
Date
 

Gilde Buy Out Partners/Parcom Capital/ABN Amro Participatie consortium’s acquisition of Koninklijke Ten Cate N.V.

     July 2015   

A. Schulman Inc.’s acquisition of Citadel Plastics Holdings, Inc.

     March 2015   

Alcoa Inc.’s acquisition of RTI International Metals, Inc.

     March 2015   

Albemarle Corporation’s acquisition of Rockwood Holdings, Inc.

     July 2014   

Minerals Technologies Inc.’s acquisition of AMCOL International Corporation

     March 2014   

Entegris Inc.’s acquisition of ATMI, Inc.

     February 2014   

Merck & Co., Inc.’s acquisition of AZ Electronic Materials SA

     December 2013   

Platform Specialty Products Corporation’s acquisition of MacDermid Incorporated

     October 2013   

Toray Industries, Inc.’s acquisition of Zoltek Companies, Inc.

     September 2013   

ALTANA Group’s acquisition of Rockwood Holdings, Inc. (Clay additives)

     July 2013   

Cinven Ltd.’s acquisition of Rockwood Holdings, Inc. (CeramTec)

     June 2013   

Precision Castparts Corp.’s acquisition of Titanium Metals Corporation

     November 2012   

Cytec Industries Inc.’s acquisition of Umeco plc

     May 2012   

Of the selected transactions, the FV/LTM EBITDA multiple had a high of 19.6x, a low of 9.8x, a mean of 12.2x and a median of 11.3x. J.P. Morgan noted that the data points of the Albemarle Corporations’ acquisition of Rockwood Holdings, Inc. (14.7x) and the Company’s acquisition of Umeco plc (10.8x) were the most relevant. Based on the above analysis, J.P. Morgan then derived a FV/LTM EBITDA multiple reference range of 11.0x to 14.5x and applied such multiple reference range to EBITDA estimates for the Company for the twelve months ending June 30, 2015 based on the Company’s publicly disclosed financial information (“LTM EBITDA”). The analysis resulted in the following range of implied per share equity values for the Company (resulting per unit values were in all cases rounded to the nearest $0.25 per unit), as compared to the proposed merger consideration of $75.25 per share:

 

Valuation Basis

   Low      High  

FV/LTM EBITDA

   $ 48.25       $ 65.75   

Discounted Cash Flow Analysis

J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied fully diluted equity value per share for the Company’s common stock. A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” The “unlevered free cash flows” refers to a calculation of the future cash flows of an asset without including in such calculation any debt servicing costs. J.P. Morgan treated stock-based compensation as a cash expense in the unlevered free cash flow calculation for purposes of its discounted cash flow analysis, as stock-based compensation was viewed as a true economic expense of the business. “Present value” refers to the current value of one or more future cash payments from the asset, which is referred to as that asset’s cash flows, and is

 

-48-


Table of Contents

obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other appropriate factors. “Terminal value” refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period.

“Unlevered free cash flows” for the Company from the beginning of the third quarter of fiscal year 2015 through the end of fiscal year 2025 were calculated, based on the Company forecasts (as defined in “The Merger—Certain Company Forecasts” beginning on page 50), as earnings before interest and taxes, minus taxes, plus depreciation and amortization, minus capital expenditures, minus any increase in net working capital and plus or minus other cash flow items, as applicable.

J.P. Morgan also calculated a range of terminal values for the Company at December 31, 2025 by applying perpetual growth rates ranging from 2.50% to 3.0%. The unlevered free cash flows and range of terminal values for the Company were then discounted to present values using a discount rate range of 7.75% to 9.0%, which range was chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of the Company. The present value of the Company calculation was adjusted for net debt as of the end of the second quarter of 2015 to derive a range of implied fully diluted per share equity value for the Company as follows (resulting per unit values were in all cases rounded to the nearest $0.25 per unit), as compared to the proposed merger consideration of $75.25 per share:

 

     Implied Equity
Value Per Share
 

The Company

   $ 60.25 - $84.25   

Miscellaneous

The foregoing summary of certain financial analyses does not purport to be a complete description of the analyses or data presented to the Board of Directors of the Company by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole and the narrative description of the analyses, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of the Company. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. None of the selected companies reviewed as described in the above summary is identical to the Company, and none of the selected transactions reviewed was identical to the merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of the Company. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analysis, may be considered similar to the merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the comparability of the companies compared to the Company and the transactions compared to the merger.

 

-49-


Table of Contents

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. J.P. Morgan was selected to advise the Company with respect to the merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with the Company and the industries in which it operates.

J.P. Morgan has acted as financial advisor to the Company and will receive a transaction fee from the Company of approximately $28.5 million, $1 million of which was payable upon the earlier of public announcement of the merger or delivery by J.P. Morgan of its opinion, and the remainder of which is payable contingent upon closing of the proposed merger. In addition, the Company has agreed to reimburse J.P. Morgan for its reasonable expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities, arising out of J.P. Morgan’s engagement.

During the two years preceding the date of its opinion, neither J.P. Morgan nor its affiliates has had any other material financial advisory or other material commercial or investment banking relationships with the Company. During the two years preceding the date of its opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Solvay, for which J.P. Morgan and such affiliates have received customary compensation. Such services during such period have included acting as Solvay’s lead arranger on its revolving credit facility in May 2014. In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under outstanding credit facilities of Solvay, for which it receives customary compensation or other financial benefits. During the preceding two year period ending on July 28, 2015, J.P. Morgan did not receive any fees from the Company and the aggregate fees received by J.P. Morgan from Solvay were approximately $1.4 million. J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of the Company and Solvay. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of the Company or Solvay for their own account or for the accounts of customers and, accordingly, J.P. Morgan may at any time hold long or short positions in such securities.

Certain Company Forecasts

The Company does not, as a matter of general practice, publicly disclose financial forecasts or internal projections as to future performance, earnings or other results, other than the Company’s publicly disclosed current year guidance and longer range guidance provided at its November 2013 investor day. However, in the ordinary course of business, the Company’s management prepares, solely for internal use, non-public, internal financial forecasts based on management’s estimate of the Company’s anticipated future operations. The non-public, internal financial forecasts for the fiscal years 2015 through 2019 included below under “Company projections”, which we refer to as the Company projections, were prepared exclusively for internal use and reviewed with the Board of Directors based solely on the information available to the Company’s management at the time of preparation in connection with the Company’s annual strategic planning process and were finalized in May 2015. In connection with its analysis of various options available to enhance stockholder value, the Company provided the Company projections to J.P. Morgan, Solvay and Party E (see “The Merger—Background of the Merger” beginning on page 33). At J.P. Morgan’s request, to assist J.P. Morgan with its financial analysis of the Company, the Company’s management also provided J.P. Morgan with (i) extrapolations of the Company projections for fiscal years 2020 through 2025 for the Company’s industrial materials business and (ii) assumptions for J.P. Morgan to use when preparing extrapolated projections for fiscal years 2020 through 2025 for the Company’s other businesses and the Company as a whole, where appropriate. J.P. Morgan used such extrapolations and assumptions to create a model that contained extrapolated projections for each of the Company’s businesses and for the Company as a whole for fiscal years 2020 through 2025, that were reviewed and approved for use by J.P. Morgan by the Company’s management (which extrapolations we refer to as the Company extrapolations and, together with the Company projections, the Company forecasts).

 

-50-


Table of Contents

The portions of the Company projections set forth below are included in this proxy statement only because this information was provided to J.P. Morgan, Solvay and Party E, in each case on a confidential basis in connection with the process resulting in the merger agreement. The portions of the Company extrapolations set forth below are included in this proxy statement only because this information was prepared as described above and reviewed and approved for use by J.P. Morgan in connection with J.P. Morgan’s financial analysis of the Company. The Company projections and Company extrapolations are not being included in this document to influence your decision whether to vote for or against the proposal to adopt the merger agreement.

The Company forecasts were not prepared with a view toward public disclosure, the published guidelines of the SEC regarding projections and the use of non-GAAP measures or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither our independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the Company forecasts contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the Company forecasts.

The inclusion of the Company forecasts below should not be regarded as an indication that the Board of Directors, its advisors or any other person considered, or now considers, the Company forecasts to be material or to be a reliable prediction of actual future results, and the Company forecasts should not be relied upon as such. Although the Company forecasts presented below are presented with numerical specificity, they are not facts and were prepared at different prior periods in time. The Company forecasts were based on numerous variables and assumptions that were deemed to be reasonable as of the respective dates when such projections were finalized. Such assumptions are inherently uncertain and may be beyond the control of the Company. Important factors that may affect actual results and cause these Company forecasts to not be achieved include, but are not limited to, risks and uncertainties relating to the Company’s business (including its ability to achieve strategic goals, objectives and targets), industry performance, the legal and regulatory environment, general business and economic conditions and other factors described or referenced under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 24.

The Company projections and the Company extrapolations, included below in “Company projections” and “Company extrapolations” respectively, and the assumptions underlying the Company projections and the Company extrapolations, have not been updated since they were finalized in May 2015. Some or all of the assumptions that have been made regarding, among other things, the timing of certain occurrences or impacts, have changed since the date the Company forecasts were made and do not reflect the Company’s current estimates (including the guidance the Company issued in connection with its announcement of its financial results for the quarter ended June 30, 2015), changes in general business or economic conditions, or any other circumstances or events occurring after the date they were prepared, including the transactions contemplated by the merger agreement. Further, the Company forecasts do not take into account the effect of any failure of the merger to occur and should not be viewed as accurate in that context. There can be no assurance that the Company forecasts will be realized or that the Company’s future financial results will not materially vary from the Company forecasts. The Company forecasts cover multiple years and such information by its nature becomes subject to greater uncertainty with each successive year, and as a result, the inclusion of the Company forecasts in this proxy statement should not be relied on as necessarily predictive of actual future events. None of the Company, Solvay or Merger Subsidiary undertakes any obligation to, and none intend to, update or otherwise revise the Company forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions on which the Company forecasts were based are shown to be in error.

The Company forecasts are forward-looking statements. For information on factors that may cause the Company’s future financial results to materially vary, see “Cautionary Statement Regarding Forward-Looking Statements” on page 24.

 

-51-


Table of Contents

Company projections

The following is a summary of the Company projections prepared by management of the Company and provided to J.P. Morgan, Solvay and Party E. All amounts in the tables below are in millions of U.S. dollars except for the tax rate.

 

     2015E     2016E     2017E     2018E     2019E  

Revenue

     2,101        2,250        2,462        2,730        2,947   

EBITDA(1)

     441        493        548        644        729   

Total depreciation and amortization

     90        102        117        129        149   

EBIT(2)

     351        391        431        515        580   

(Increase)/decrease in working capital

     (6     (20     (40     (24     (16

Total capital expenditures

     191        322        258        128        128   

Tax rate

     29.9     31.0     31.0     31.0     31.0

Notes:

(1) “EBITDA” means earnings before interest, taxes, depreciation and amortization.
(2) “EBIT” means earnings before interest and taxes.

Based on the Company projections prepared by management of the Company as shown immediately above, unlevered free cash flows for the fiscal years 2015 through 2019 were calculated as follows:

 

     2015E      2016E      2017E      2018E      2019E  

Unlevered free cash flows(1)

     88         22         115         337         406   

Notes:

(1) “Unlevered free cash flows” means earnings before interest and taxes (treating stock-based compensation as a cash expense), minus taxes, plus depreciation and amortization, minus capital expenditures, minus any increase in net working capital and plus or minus other cash flow items, as applicable.

Company extrapolations

The following is a summary of the Company extrapolations which were prepared as described above and reviewed and approved for use by J.P. Morgan for the purposes of its financial analysis by the Company’s management. All amounts in the tables below are in millions of U.S. dollars except for the tax rate.

 

     2020E     2021E     2022E     2023E     2024E     2025E  

Revenue

     3,168        3,402        3,627        3,877        4,119        4,233   

EBITDA(1)

     734        774        817        895        932        948   

Total depreciation and amortization

     150        169        187        195        203        201   

EBIT(2)

     584        604        629        699        729        747   

(Increase)/decrease in working capital

     (79     (43     (42     (46     (45     (21

Total capital expenditures

     383        368        158        166        209        205   

Tax rate

     31.0     31.0     31.0     31.0     31.0     31.0

Notes:

(1) “EBITDA” means earnings before interest, taxes, depreciation and amortization.
(2) “EBIT” means earnings before interest and taxes.

Based on the Company extrapolations as shown immediately above, unlevered free cash flows (as defined above) for the fiscal years 2020 through 2025 were calculated as follows:

 

     2020E      2021E      2022E      2023E      2024E      2025E  

Unlevered free cash flows

     92         176         422         466         452         491   

 

-52-


Table of Contents

Financing of the Merger

Solvay and Solvay Finance (America) LLC have executed a definitive credit agreement, which we refer to as the credit agreement, dated July 31, 2015, with Credit Suisse AG, London Branch and Morgan Stanley Bank International Limited (whom we refer to as the arrangers). Pursuant to and subject to the terms of the credit agreement, the arrangers have committed to arrange and underwrite a multi-currency unsecured bridge facility in an aggregate amount of up to USD 5.8 billion.

The obligation of the lenders to provide debt financing under the credit agreement is subject to a number of customary conditions, including without limitation: (a) accuracy of certain specified representations in the credit agreement and (b) absence of certain specified defaults under the credit agreement. Any unutilized commitments under the credit agreement will be automatically cancelled on July 27, 2016 if the merger has not been completed by that time, and will be cancelled earlier in certain circumstances, including: (i) if the merger occurs and the full amount of the available commitments has not been utilized in connection therewith or (ii) Solvay abandons or withdraws from the merger.

Solvay plans to refinance and/or replace the bridge financing under the credit agreement with a EUR 1.5 billion rights issue, EUR 1 billion of additional hybrid instruments and an issuance of senior debt.

The completion of the merger is not conditioned upon Solvay’s receipt of financing.

Closing and Effective Time of Merger

The merger agreement provides that the closing of the merger will take place no later than 9:00 a.m. Eastern time on the fourth business day following the date on which the last of the conditions to closing of the merger (described under “The Merger Agreement—Conditions to the Merger” beginning on page 84) has been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of those conditions on the closing date for the merger), or such other date as may be mutually agreed by the Company and Solvay. Assuming receipt of required regulatory approvals and timely satisfaction of other closing conditions, including the approval by our stockholders of the proposal to adopt the merger agreement, we currently expect the closing of the merger to occur in the fourth quarter of 2015.

The effective time of the merger will occur upon the certificate of merger having been duly filed with and accepted by the Secretary of State of the State of Delaware (or at such later date and time as the Company and Solvay may agree and specify in the certificate of merger).

Payment of Merger Consideration and Surrender of Stock Certificates

Prior to the effective time of the merger, Solvay will appoint, with the Company’s consent, an agent, which we refer to as the exchange agent, for the purpose of exchanging shares of Company common stock for the merger consideration. Promptly after the effective time of the merger, and in any event within five business days, Solvay will send (or cause the exchange agent to send) to each holder of shares of our common stock (other than excluded shares) at the effective time of the merger a letter of transmittal and instructions describing how such record holder may surrender his, her or its shares of our common stock (or affidavits of loss in lieu thereof) in exchange for the merger consideration.

You should not return your stock certificates with the enclosed proxy card, and you should not forward your stock certificates to the exchange agent without a letter of transmittal.

You will not be entitled to receive the merger consideration with respect to your shares of our common stock unless, in the case of certificated shares, you surrender to the exchange agent the certificate(s) representing your shares of our common stock, together with a properly completed letter of transmittal or, in the case of a

 

-53-


Table of Contents

book-entry transfer of uncertificated shares, the exchange agent receives an “agent’s message”, and such other documents reasonably required by the Company and the exchange agent. In exchange therefor, you will receive a cash amount by check or wire transfer of immediately available funds to an account designated by you (less any required tax withholdings) equal to the product of the number of shares of our common stock represented by such certificate (or affidavit of loss in lieu thereof) or book-entry transfer of uncertificated shares multiplied by the merger consideration, and each such certificated or uncertificated share will thereupon be cancelled. No interest will be paid or accrued on any amount payable upon such surrender or transfer. Until so surrendered or transferred, as the case may be, each such certificate or uncertificated share will represent after the effective time of the merger for all purposes only the right to receive such merger consideration.

If any portion of the merger consideration is to be paid to a person other than the person in whose name the surrendered certificate or the transferred uncertificated share is registered, it will be a condition to such payment that (i) either such certificate will be properly endorsed or will otherwise be in proper form for transfer or such uncertificated share shall have been properly transferred and (ii) the person requesting such payment will pay to the exchange agent any transfer or other taxes required as a result of such payment to a person other than the registered holder of such certificate or uncertificated share or establish to the satisfaction of the exchange agent that such tax has been paid or is not payable.

No interest will be paid or accrued on the cash payable as the merger consideration upon your surrender of your book entry shares or certificates.

Solvay, the surviving corporation and the exchange agent will be entitled to deduct and withhold from the merger consideration such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign tax law. Any sum that is withheld, provided it is remitted to the appropriate taxing authority, will be deemed to have been paid to the holder of shares with regard to whom it is withheld.

If you have lost a certificate, or if it has been stolen or destroyed, then before you will be entitled to receive the merger consideration, you will have to make an affidavit of the loss, theft or destruction, and if required by the surviving corporation, post a bond in such reasonable amount as the surviving corporation may direct, as indemnity against any claim that may be made against it with respect to such lost, stolen or destroyed certificate. These procedures will be described in the letter of transmittal and instructions that you will receive, which you should read carefully in their entirety.

Interests of Certain Persons in the Merger

In considering the recommendation of the Board of Directors with respect to the Company merger proposal, you should be aware that executive officers and directors of the Company may have certain interests in the merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The directors of the Company were aware of these interests and considered them at the time they evaluated and negotiated the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company. These interests are described below.

Treatment of Company Stock-Based Awards

Company stock-based awards held by the Company’s executive officers and directors immediately prior to the effective time of the merger will be treated in the same manner as those awards held by other employees of the Company. As described further in the section titled “The Merger Agreement—Treatment of Common Stock and Stock-Based Awards” beginning on page 65, such awards will generally be subject to the following treatment:

 

   

Company Stock Options. Each Company Stock Option that is outstanding and unexercised immediately prior to the effective time of the merger will, as of the effective time of the merger, be cancelled and

 

-54-


Table of Contents
 

converted into a right to receive, as soon as practicable after the effective time, an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the Company Stock Option, by (y) the excess, if any, of the amount of the merger consideration over the applicable exercise price per share of the Company Stock Option, less applicable tax withholding.

 

    Vested Company Restricted Stock Units. Each vested Company RSU (including any Company RSUs that will vest as of the effective time of the merger), that is outstanding immediately prior to the effective time of the merger will, as of the effective time of the merger, be cancelled and converted into a right to receive, as soon as practicable after the effective time, an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the vested Company RSUs, by (y) the amount of the merger consideration, less applicable tax withholding. If any vested Company RSUs constitute nonqualified deferred compensation subject to Section 409A of the Code and are not permitted to be paid at the effective time of the merger without triggering taxes or penalties under Section 409A of the Code, such payments will be made at the earliest time permitted under the Company Stock Plan and applicable award agreement that does not trigger such taxes or penalties.

 

    Unvested Company Restricted Stock Units. Each unvested Company RSU that is outstanding immediately prior to, and will not vest as of, the effective time of the merger will, as of the effective time of the merger, be cancelled and converted into a right to receive a Deferred RSU Payment. Each Deferred RSU Payment (or applicable portion thereof) will be paid (less applicable tax withholding) on the applicable vesting dates specified under the Company Stock Plan and the agreements evidencing the related unvested Company RSU, and will be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had such unvested Company RSUs remained outstanding in accordance with their terms.

 

    Company Deferred Stock Rights. Each Company Deferred Stock Right, will, as of the effective time of the merger, be cancelled and converted into a right to receive, as soon as practicable after the effective time, a Company Deferred Stock Right Payment. However, Company Deferred Stock Right Payments made with respect to any Company Deferred Stock Rights that constitute nonqualified deferred compensation subject to Section 409A of the Code, and that are not permitted to be paid at the effective time of the merger without triggering taxes or penalties under Section 409A of the Code will be paid at the earliest time permitted under the Company Stock Plan and applicable deferral election form that does not trigger such taxes or penalties. Company Deferred Stock Right Payments will be deemed invested, at the holder’s direction, in one or more of the hypothetical investment options as specified on Appendix A of the Company’s Supplemental Savings Plan, and such payment will be credited or debited, as applicable, to reflect amounts of hypothetical income and appreciation and depreciation pursuant to such hypothetical investment as of the hypothetical investment date and through the date such amount is paid in accordance with the merger agreement.

 

    Vested Company Restricted Stock. At the effective time of the merger, all restrictions imposed on each vested share of Company Restricted Stock (including any shares of Company Restricted Stock that will vest as of the effective time of the merger) that is outstanding immediately prior to the effective time of the merger will lapse, and each vested share of Company Restricted Stock will be treated in the same manner as a share of our common stock.

 

    Unvested Company Restricted Stock. Each unvested share of Company Restricted Stock that is outstanding immediately prior to, and that will not vest as of, the effective time of the merger will be cancelled and converted into a right to receive a Deferred Restricted Stock Payment. Each Deferred Restricted Stock Payment (or applicable portion thereof) will be made (less applicable tax withholdings) on the applicable vesting dates specified under the Company Stock Plan and the agreements evidencing the related unvested shares of Company Restricted Stock, and will be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had the unvested shares of Company Restricted Stock remained outstanding in accordance with their terms.

 

-55-


Table of Contents

Change in Control Vesting Terms under the Company Stock Plan

Under the terms of the Company Stock Plan, vesting and payment of the Deferred RSU Payments and the Deferred Restricted Stock Payments held by a single executive officer would accelerate in the event that, prior to the second anniversary of the effective time of the merger, the employee is terminated by the Company without “cause” or resigns for “good reason” (as each such term is defined in the Company Stock Plan).

The following table sets forth for (i) each individual named executive officer, (ii) the six other executive officers (as a group) and (iii) the non-employee directors (as a group), the number of unvested Company Stock Options and unvested shares of Company Restricted Stock and Company RSUs outstanding as of July 31, 2015 and the cash amounts (on a pre-tax basis) that will become payable (a) in respect of Company Stock Options and for the non-employee directors, in respect of Company Restricted Stock awards, at the effective time of the merger and (b) for the executive officers, in respect of Company Restricted Stock awards and Company RSUs, upon a termination by the Company without “cause” or for “good reason” prior to the second anniversary of the effective time of the merger (which is assumed for this purpose to be July 31, 2015). Depending on when the merger occurs, Company stock-based awards that are now unvested and included in the table below may vest pursuant to the terms of such awards based on the completion of continued service with the Company, independent of the merger. All of the Company Stock Options and Company RSUs held by each of Messrs. Fleming, Smith and Avrin are fully vested because each such executive meets the early retirement vesting requirements pursuant to the terms of the Company Stock Plan (at least age 55 and more than 10 years of Company service). Similarly, Mr. Drillock is vested in all of his Company Stock Options and Company RSUs because he satisfied the Company Stock Plan’s early retirement vesting criteria upon his retirement from the Company in October 2014.

 

    Unvested
Company
Stock Options

(#)
    Unvested
Company
Stock Options

($)
    Unvested
Company
Restricted
Stock

(#)
    Unvested
Company
Restricted
Stock

($)
    Unvested
Company
RSUs

(#)
    Unvested
Company
RSUs

($)
    Estimated
Total Cash
Consideration
for Unvested
Company
Stock
Options,
Unvested
Company
Restricted
Stock and
RSUs

($)
 

Shane D. Fleming

    —          —          —          —          —          —          —     

Daniel G. Darazsdi

    48,770        1,362,406        4,910        369,478        5,624        423,206        2,155,090   

Roy D. Smith

    —          —          —          —          —          —          —     

William N. Avrin

    —          —          —          —          —          —          —     

William G. Wood

    34,464        1,111,771        —          —          6,284        472,871        1,584,642   

David M. Drillock1

    —          —          —          —          —          —          —     

Other Executive Officers (as a group)2

    91,624        2,946,347        —          —          16,206        1,219,502        4,165,849   

Non-Employee Directors (as a group)3

    —          —          53,472        4,023,768        —          —          4,023,768   

 

1  Mr. Drillock retired from the Company on October 31, 2014.
2  Includes equity holdings of the following executive officers of the Company: Regina Charles, Richard T. Ferguson, Jeffery P. Fitzgerald, Raymond J. Heslin, Carmelo LoFaro and Michael Radossich. Messrs. Ferguson and Heslin are fully vested in all of their outstanding Company Options and Company RSUs as each such executive meets the Company Stock Plan’s early retirement vesting requirements described above.
3  Includes equity holdings of the following non-employee directors of the Company: Chris A. Davis, Anthony G. Fernandes, David P. Hess, Louis L. Hoynes, Jr., Barry C. Johnson, Carol P. Lowe, William P. Powell, Thomas W. Rabaut and Raymond P. Sharpe.

 

-56-


Table of Contents

Executive Income Continuity Plan

Each of the Company’s executive officers are members of the Executive Income Continuity Plan pursuant to which each officer will be entitled to the following termination payments and benefits in the event that, prior to the second anniversary of the effective time of the merger, he or she is terminated by the Company without “cause” or resigns for “good reason” (as each such term is defined in the Executive Income Continuity Plan):

 

    A lump sum cash severance payment equal to 300% of the sum of the executive’s annual base salary as of the date of the termination and the greater of (i) the executive’s annual target bonus and (ii) the average percentage payout of the executive’s annual target bonus during the two preceding years, multiplied by the executive’s annual target bonus, provided that, one-third of such amount is conditioned on the executive’s execution of an agreement with the Company establishing post-termination non-competition restrictions that endure for a period of one year following the executive’s termination of employment;

 

    Continued participation, for the two years following the executive’s termination, in all of the Company’s employee benefit programs (e.g., medical, dental and group life insurance, financial planning and tax preparation and counseling services, but excluding participation in any Company retirement plans or disability insurance), on the same basis as such executive participated immediately prior to his or her termination of employment; and

 

    Reimbursement of relocation expenses (if any) relating to any previously required relocation of the executive, and reimbursement of legal fees and expenses incurred by the officer in connection with his or her termination (including those incurred contesting or disputing such termination, seeking to obtain or enforce any right of benefit or in connection with any tax audit or proceeding relating to the imposition of tax under Section 4999 of the Code).

Based on the executive officers’ compensation levels as of July 31, 2015, the amounts of cash severance that would be payable upon a qualifying termination under the Executive Income Continuity Plan are as follows: Mr. Fleming, $5,971,104; Mr. Darazsdi, $2,468,928; Mr. Smith, $2,086,951; Mr. Avrin, $2,015,177; Mr. Wood, $1,784,137 and the six other executive officers (as a group), $8,708,944. We note that Mr. Drillock would not be eligible for payments or benefits under the Executive Income Continuity Plan as he voluntarily retired from the Company on October 31, 2014.

Supplemental Savings Plan

The Company offers participation in its Supplemental Savings Plan to all U.S. employees (including the executive officers) whose benefits under the Company’s qualified retirement plan are limited by IRS regulations on the salary covered and maximum annual contributions. Each participant may elect to defer up to 43% of annual salary, 50% of annual bonus payout and 50% of performance cash award payments into an account under the Supplemental Savings Plan, to which the Company will credit matching and profit sharing contributions equal to the difference between the amount of such contributions the participant would have received under the qualified retirement plan but for the IRS limitations referenced above and the amount of any contributions made on the participant’s behalf under the Company’s qualified retirement plan. Participants are permitted to allocate their respective account balances to one or more hypothetical investment options authorized by the Supplemental Savings Plan, and such accounts are credited or debited, as applicable, to reflect the hypothetical income and appreciation and depreciation in value as a result of the participant’s notional investment. Participants’ accounts under the Supplemental Savings Plan will be distributed in a single lump sum no later than 90 days following the effective time of the merger (or for accounts (or portions thereof) vested prior to December 31, 2004, no later than 90 days following approval of the merger under Proposal 1). Upon the closing of the merger, Mr. Darazsdi’s plan account under the Supplemental Savings Plan will become fully vested.

 

-57-


Table of Contents

Executive Supplemental Employees’ Retirement Plan

The Company sponsors the Executive Supplemental Employees’ Retirement Plan (which we refer to as the ESERP), which was initially established to provide equivalent benefits as were provided to officers under the Cyanamid Executive Retirement Plan (a legacy arrangement sponsored by Cytec’s prior parent company), and to encourage the transition of executive management at an earlier retirement age by providing a benefit equal to up to five years of retirement income credit under the Company’s other defined benefit pension plans. Benefits under the ESERP are only available to persons first elected as an officer of the Company prior to April 1, 2007. Upon the closing of the merger, Messrs. Fleming and Smith will become full participants in the ESERP and will be entitled to five years of additional service credit thereunder. In the event Messrs. Fleming or Smith is terminated without “cause” or resigns for “good reason” (as each such term is defined in the ESERP), each such executive would be entitled to receive retirement benefits as of the date of such termination without any actuarial reduction. Each of Messrs. Avrin and Drillock was previously elected as a full participant in the ESERP in accordance with the terms of such plan, and their benefit entitlements thereunder will not be affected by the closing of the merger. Benefits under the ESERP will commence six months after an executive officer’s termination of employment, in the form elected by the executive officer under the terms of the plan.

Performance Cash Awards

Each of the executive officers hold performance cash awards that were previously granted by the Company under the Company Stock Plan with respect to the 2015, 2016 and 2017 performance periods as a component of the executive’s long-term incentive compensation, except for Mr. Drillock who holds awards with respect to the 2015 and 2016 performance periods only. The performance cash awards are earned based on the achievement of pre-established performance measures over a three-year performance period, provided that the executive officer has remained continuously employed with the Company through the applicable payment date or experiences a qualifying termination prior to such time, including, but not limited to, as a result of being terminated by the Company without “cause” or resigning for “good reason” (as such terms are defined in the Executive Income Continuity Plan) in each case, within two years following the effective time of the merger.

Upon the closing of the merger, the performance conditions under the performance cash awards will be deemed satisfied at maximum levels, although each executive will remain subject to the service-based vesting component of such award through the applicable payment date. After giving effect to the satisfaction of the performance conditions at maximum levels, the value of the performance cash awards held by each of the executive officers will be as follows: Mr. Fleming, $9,900,000; Mr. Darazsdi, $1,830,000; Mr. Smith, $1,545,000; Mr. Avrin, $1,360,000; Mr. Wood, $1,330,000; Mr. Drillock, $743,334 and the six other executive officers (as a group), $3,834,600. As noted above, only the performance-based vesting condition will be deemed achieved at the effective time of the merger and pursuant to the terms of such awards, each executive will be required to remain continuously employed with the Company through the applicable payment date in order to receive payment of the performance cash awards, subject to certain exceptions in the event the executive experiences a qualifying termination of employment prior to such time.

2015 and 2016 Annual Bonuses

The Company will pay annual cash performance bonuses in respect of the 2015 calendar year (which we refer to as 2015 bonuses) to eligible Company employees (including the executive officers) in the ordinary course of business, consistent with past practice, but no later than the effective time of the merger. 2015 bonuses will be based on actual performance levels with respect to applicable financial metrics and on achievement of key non-financial performance metrics at the greater of actual or target performance levels under the Company’s annual incentive compensation plan and employee incentive plan, and 2015 bonuses under the Company’s sales incentive plans will be determined based on actual performance.

The surviving corporation has agreed to pay pro-rated annual cash performance bonuses in respect of the 2016 calendar year (which we refer to as 2016 bonuses) in the event an eligible employee (including an executive

 

-58-


Table of Contents

officer) is terminated after June 30, 2016 and prior to December 31, 2016 without “cause” (as such term is defined in the Company Employee Income Continuity Plan) or by such covered employee for “good reason”. In the event of a qualifying termination, such employee will, no later than 30 calendar days following his or her termination, be paid a 2016 bonus under the annual bonus plan applicable to such employee, based on target performance levels and prorated for the portion of the 2016 calendar year (based on calendar days) elapsed between January 1, 2016 and the effective date of such termination of employment. For purposes of the 2016 bonuses, “good reason” generally means either of the following occurrences, without the employee’s consent: (i) a reduction in such employee’s annual base salary or wage rate or (ii) a requirement that such employee be based at another location not within 50 miles of the location where he or she was regularly employed immediately prior to the effective time of the merger, provided that (x) the employee must notify the Company of any event purporting to constitute good reason within 60 days following the employee’s knowledge of its existence, (y) the Company will have 30 days following receipt of such notice to cure such circumstances and (z) if the Company has not cured such circumstances, the employee terminates his or her employment not later than 30 days thereafter.

Compensation Taxation Equalization Plan

Messrs. Fleming, Smith, Avrin and Wood and Ms. Charles are participants in the Company’s Compensation Taxation Equalization Plan, pursuant to which each such executive officer will be entitled to reimbursement from the Company for any tax imposed by Section 4999 of the Code on compensatory payments constituting “excess parachute payments” under Section 280G of the Code.

Transaction Committee Fees

The Board of Directors established a transaction committee in order to facilitate exploration and evaluation of strategic alternatives, and has approved the payment of compensation to the members of the transaction committee in recognition of the responsibilities assumed by such members and the commitment of time that was and will be required to discharge such responsibilities properly. The chairman of the transaction committee, William P. Powell, will receive an aggregate fee of $75,000 for his time and efforts. The other members, Anthony G. Fernandes and Louis G. Hoynes, Jr., will each receive an aggregate fee of $50,000 for their time and efforts. Each member will also be reimbursed for all reasonable expenses incurred in connection with such member’s service on the transaction committee. The compensation and reimbursement of expenses will be paid without regard to whether the merger or any other transaction is consummated.

For further information with respect to the arrangements between the Company and its named executive officers, see the information included under “Advisory Vote on Merger-Related Compensation for the Company’s Named Executive Officers—Golden Parachute Compensation” beginning on page 89.

Indemnification and Insurance

Pursuant to the terms of the merger agreement, the Company’s directors and officers will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies. See the section entitled “The Merger Agreement—Indemnification; Directors’ and Officers’ Insurance” beginning on page 88 for a description of such ongoing indemnification and coverage obligations.

 

-59-


Table of Contents

Material U.S. Federal Income Tax Consequences of the Merger

The following is a summary of the material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) whose shares of our common stock are converted into the right to receive cash in the merger. This summary does not purport to consider all aspects of U.S. federal income taxation that might be relevant to our stockholders. For purposes of this discussion, we use the term “U.S. holder” to mean a beneficial owner of shares of our common stock that is, for U.S. federal income tax purposes:

 

    an individual who is a citizen or resident of the United States;

 

    a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States or any of its political subdivisions;

 

    a trust that (i) is subject to the supervision of a court within the United States and the control of one or more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or

 

    an estate that is subject to U.S. federal income tax on its income regardless of its source.

If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds our common stock, the U.S. federal income tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. A partner of a partnership holding our common stock should consult its tax advisor regarding the U.S. federal income tax consequences of the merger.

This discussion is based on the Code, its legislative history, existing and proposed regulations under the Code, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. The discussion applies only to beneficial owners who hold shares of our common stock as capital assets, and does not apply to shares of our common stock received in connection with the exercise of employee stock options or otherwise as compensation, stockholders who hold an equity interest, actually or constructively, in Solvay or the surviving corporation after the merger, stockholders who have perfected and not withdrawn a demand for, or lost the right to, appraisal under the DGCL or to certain types of beneficial owners who may be subject to special rules (such as insurance companies, banks, tax-exempt organizations, financial institutions, broker-dealers, partnerships, S corporations or other pass-through entities, mutual funds, traders in securities who elect the mark-to-market method of accounting, stockholders subject to the alternative minimum tax, stockholders that have a functional currency other than the U.S. dollar or stockholders who hold our common stock as part of a hedge, straddle, wash sale, constructive sale or conversion transaction). This discussion also does not address the U.S. tax consequences to any stockholder who, for U.S. federal income tax purposes, is a non-resident alien individual, foreign corporation, foreign partnership or foreign estate or trust, and does not address the receipt of cash in connection with the treatment of restricted stock units, performance stock units, company awards or any other matters relating to equity compensation or benefit plans (including the plans). This discussion does not address any aspect of state, local or foreign tax laws.

Exchange of Shares of Common Stock for Cash Pursuant to the Merger Agreement

The exchange of shares of our common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder whose shares of our common stock are converted into the right to receive cash in the merger will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received with respect to such shares (determined before the deduction of any applicable withholding taxes, as described below under “Backup Withholding and Information Reporting”) and the U.S. holder’s adjusted tax basis in such shares. A U.S. holder’s adjusted tax basis will generally equal the price the U.S. holder paid for such shares. Gain or loss will be determined separately for each block of shares of our common stock (i.e., shares of common stock acquired at the same cost in a single transaction). Such capital gain or loss will be long-term capital gain or loss where the U.S. holder’s holding period for such shares of common stock is more than one year at the effective time of the merger. Long-term capital gain of a non-corporate U.S. holder is generally taxed at preferential rates. There are limitations on the

 

-60-


Table of Contents

deductibility of capital losses. In addition, a 3.8% tax is imposed on all or a portion of the “net investment income” (within the meaning of the Code) of certain individuals and on the undistributed net investment income of certain estates and trusts. The 3.8% tax generally is imposed on the lesser of (1) the U.S. holder’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000, depending on the individual’s circumstances). For these purposes, “net investment income” generally will include any gain recognized on the receipt of cash for shares pursuant to the merger.

Backup Withholding and Information Reporting

A U.S. holder may be subject to information reporting. In addition, backup withholding of tax will apply at the statutory rate to cash payments to which a non-corporate U.S. holder is entitled under the merger agreement, unless the U.S. holder or other payee provides a taxpayer identification number, certifies that such number is correct, and otherwise complies with the backup withholding rules. Each of our U.S. holders should complete and sign, under penalty of perjury, the Substitute Form W-9 to be included as part of the letter of transmittal and return it to the paying agent, in order to provide the information and certification necessary to avoid backup withholding, unless an exemption applies and is established in a manner satisfactory to the paying agent.

Backup withholding is not an additional tax. Any amounts withheld from cash payments to a U.S. holder pursuant to the merger under the backup withholding rules will generally be allowable as a refund or a credit against such U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the Internal Revenue Service. U.S. holders are urged to consult their tax advisors as to qualifications for exemption from backup withholding and the procedure for obtaining the exemption.

The U.S. federal income tax consequences described above are not intended to constitute a complete description of all tax consequences relating to the merger. Because individual circumstances may differ, each stockholder should consult the stockholder’s tax advisor regarding the applicability of the rules discussed above to the stockholder and the particular tax effects to the stockholder of the merger in light of such stockholder’s particular circumstances, the application of state, local and foreign tax laws, and, if applicable, the treatment of restricted stock units, performance stock units, company awards or any other matters relating to equity compensation or benefit plans (including the plans).

Regulatory Approvals

HSR Act and Competition Law Approvals

Under the terms of the merger agreement, the parties must make filings with and obtain authorizations, approvals or consents from certain antitrust and competition law authorities. Under the terms of the merger agreement, the merger cannot be completed until the waiting period applicable to the consummation of the merger under the HSR Act has expired or been terminated. The merger also cannot be completed unless any applicable waiting period has expired or been terminated, or, if applicable, approval obtained, under any similar foreign antitrust or competition law in the following jurisdictions: Brazil, the European Union, Israel, Japan, Mexico, South Korea, Turkey, and Ukraine.

On August 25, 2015, Solvay and the Company filed notification of the proposed merger with the FTC and DOJ under the HSR Act.

The Company currently expects that applicable filings in Brazil, the European Union, Israel, Japan, Mexico, South Korea, Turkey, and Ukraine will be made in due course.

The consummation of the merger is not conditioned on any antitrust or competition law regulatory filings in the United States or in any other jurisdiction, other than those described above.

 

-61-


Table of Contents

At any time before or after consummation of the merger, the DOJ or the FTC (notwithstanding the termination of the waiting period under the HSR Act) or a state or non-U.S. governmental entity could take such action under applicable antitrust or competition laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger and seeking divestiture of substantial assets of the Company, Solvay or Merger Subsidiary. Private parties may also seek to take legal action under antitrust or competition laws under certain circumstances.

There can be no assurance that all of the regulatory approvals described above, or any other regulatory approvals that might be required to consummate the merger, will be obtained and, if obtained, there can be no assurance as to the timing of any approvals, ability to obtain the approvals on satisfactory terms or the absence of any litigation challenging such approvals. There can also be no assurance that the DOJ, the FTC or any other governmental entity or any private party will not attempt to challenge the merger on antitrust or competition law grounds, and, if such a challenge is made, there can be no assurance as to its result. For a description of the parties’ obligations with respect to regulatory approvals related to the merger, see “The Merger Agreement—Filings; Other Actions; Notification” beginning on page 78.

United States National Security Regulations and Approvals

The merger agreement provides for the parties to file a joint voluntary notice under Exon-Florio. Exon-Florio provides for national security reviews and, where appropriate, investigations by CFIUS, when a foreign company acquires or seeks to acquire control of a U.S. company. CFIUS consists of representatives of various government agencies including, among others, the Departments of Treasury, State, Defense, Energy, Justice, Commerce and Homeland Security, the U.S. Trade Representative, and, as a non-voting member, the Director of National Intelligence. CFIUS is chaired by the Treasury Department. CFIUS conducts an initial 30-day review of transactions of which it is notified. For transactions involving entities controlled by a foreign government (within the meaning of “control” under the Exon-Florio regulations) and/or certain sensitive assets or that otherwise present particular national security concerns, CFIUS typically conducts an additional investigation that must be completed within 45 days. Also, with CFIUS’s consent, the parties may withdraw and refile a CFIUS notice, thereby re-initiating the review process and “re-starting” the clock for the review period. If CFIUS determines, after completing a 30-day review and 45-day investigation, that a transaction may threaten U.S. national security, it may send, a report to the President of the United States recommending that he exercise his authority under Exon-Florio to block or otherwise interfere with the transaction. The President then has 15 days to decide whether to block the transaction or to take other action. The Company and Solvay expect to submit a joint voluntary notice to CFIUS of the planned merger in due course.

CFIUS considers many factors in determining whether a proposed transaction threatens to impair national security, including domestic production needed for national defense requirements, the capability of domestic industries to meet national defense requirements, and the potential effects on U.S. international technological leadership in areas affecting national security. The U.S. government agencies involved take into consideration the parties’ current and anticipated compliance with various regulations relating to national security, such as the requirement to obtain export licenses for exports of controlled technical data. The agencies, and in particular the Department of Defense through DSS, also examine any classified and other defense-related contracts of the U.S. company being acquired. Under the NISPOM, for which the DSS has primary implementing authority, a U.S. company that is subject to FOCI may not perform classified contracts unless steps are taken to mitigate the FOCI. The CFIUS process therefore includes consideration of the parties’ intentions to mitigate FOCI if, as the case with the Company, the U.S. company being acquired performs classified contracts or handles or stores classified information.

It is expected that DSS, which issued the Company’s facility security clearance, will carefully examine the parties’ proposed FOCI-mitigation measures concurrently with the CFIUS review of the transaction. DSS is expected to require that, prior to completion of the merger, the parties submit an acceptable FOCI-mitigation plan and agree to interim measures that address any FOCI issues pending execution of a formal FOCI-mitigation

 

-62-


Table of Contents

agreement with the Department of Defense. The parties will outline their proposed FOCI-mitigation plan in their notice to CFIUS, and expect to submit their detailed FOCI-mitigation plan to DSS concurrently or soon thereafter. Although DSS does not itself have independent authority to block the transaction, if the parties were to close the transaction without a satisfactory plan to mitigate FOCI, DSS could suspend or revoke the Company’s facility security clearance and thus the Company’s ability to perform classified contracts.

We believe that the merger will not give rise to national security concerns that would cause the transaction to be blocked under Exon-Florio or to cause DSS to consider suspending or terminating the Company’s facility security clearance. There can be no assurance, however, that CFIUS will conclude its review, investigation or other proceeding without imposing significant conditions or that CFIUS will not recommend that the President of the United States block the merger, or that DSS will determine that the parties’ proposed FOCI-mitigation plan is acceptable.

In addition, the Company is registered with DDTC as a manufacturer and exporter of “defense articles” as that term is defined under ITAR. The ITAR require that a registrant notify DDTC at least 60 days prior to the consummation of any transaction that would result in “the sale or transfer to a foreign person of ownership or control” of a registrant. The ITAR do not provide for DDTC to grant or withhold consent for a transaction that would result in foreign ownership or control, although DDTC retains the right to invalidate a registration or revoke any approved State Department export licenses or agreements. As the U.S. Department of State is also a CFIUS member agency, it could also raise any issues or concerns about a transaction in the CFIUS process.

The Company expects to notify DDTC of the transaction in due course, and the notice period will expire 60 days after such notice has been given, absent a waiver of that period by DDTC. The parties are not aware of any circumstances that would lead DDTC to invalidate the Company’s registration, revoke its licenses or agreements issued thereunder, refuse to approve either the registration of the surviving corporation as a manufacturer or exporter of defense articles under ITAR or the transfer from the surviving corporation to Solvay of the surviving corporation’s registration as a manufacturer or exporter of defense articles under ITAR or seek redress in the CFIUS process; nevertheless, there can be no assurance that DDTC will refrain from taking any such actions.

 

-63-


Table of Contents

THE MERGER AGREEMENT

This section describes the material terms of the merger agreement. The description of the merger agreement in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Annex A and is incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We encourage you to read the merger agreement carefully and in its entirety.

Explanatory Note Regarding the Merger Agreement

The merger agreement, a copy of which is attached as Annex A, and this summary of its terms are included in this proxy statement to provide you with information regarding its terms. Factual disclosures about the Company contained in this proxy statement or in the Company’s public reports filed with the SEC may supplement, update or modify the factual disclosures about the Company contained in the merger agreement. The representations, warranties and covenants made in the merger agreement by the Company, Solvay and Merger Subsidiary were made solely to the parties to, and solely for the purposes of, the merger agreement and as of specific dates and were qualified and subject to important limitations agreed to by the Company, Solvay and Merger Subsidiary in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the merger agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the merger agreement, rather than establishing matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to stockholders and reports and documents filed with the SEC and in some cases were qualified by matters contained in the disclosure schedule that the Company delivered to Solvay and Merger Subsidiary in connection with the merger agreement (which we refer to as the disclosure schedule), which disclosures are not reflected in the merger agreement. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the merger agreement. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts of the Company, Solvay, Merger Subsidiary or any of their respective subsidiaries or affiliates.

Effects of the Merger; Directors and Officers; Certificate of Incorporation; By-laws

The merger agreement provides for the merger of Merger Subsidiary with and into the Company upon the terms, and subject to the conditions, set forth in the merger agreement. As a result of the merger, the separate corporate existence of Merger Subsidiary will cease and the Company will continue as the surviving corporation and as a direct or indirect wholly owned subsidiary of Solvay.

The directors of Merger Subsidiary and the officers of the Company at the effective time of the merger will, from and after the effective time of the merger, be the directors and officers, respectively, of the surviving corporation, in each case until their respective successors have been duly elected or appointed and qualified in accordance with applicable law.

At the effective time of the merger, the certificate of incorporation of the Company will be amended and restated to read identically to the certificate of incorporation of Merger Subsidiary in effect immediately prior to the effective time of the merger (except that the name of the surviving corporation will be “Cytec Industries Inc.”), and the bylaws of Merger Subsidiary in effect at the effective time of the merger will be the bylaws of the surviving corporation, in each case, until amended in accordance with applicable law, subject to Solvay’s obligations to maintain in effect the provisions of the certificate of incorporation and the bylaws regarding

 

-64-


Table of Contents

elimination of liability, indemnification and advancement of expenses as further described in “The Merger Agreement—Indemnification; Directors’ and Officers’ Insurance” beginning on page 88. Following the completion of the merger, our common stock will be delisted from the NYSE, deregistered under the Exchange Act and cease to be publicly traded.

Closing and Effective Time of the Merger

Unless otherwise mutually agreed in writing by the Company, Solvay and Merger Subsidiary, the closing of the merger will take place no later than the fourth business day following the day on which the last of the conditions to the closing of the merger (described under “The Merger Agreement—Conditions to the Merger” beginning on page 84) have been satisfied or waived (other than conditions that by their nature are to be satisfied at the closing of the merger, but subject to the satisfaction or, to the extent permissible, waiver of those conditions at the closing of the merger).

Assuming timely satisfaction of the necessary closing conditions, we currently expect the closing of the merger to occur in the fourth quarter of 2015. The effective time of the merger will occur at such time as the certificate of merger is duly filed with and accepted by the Delaware Secretary of State (or at such later time as the Company and Solvay may agree and specify in the certificate of merger).

Treatment of Common Stock and Stock-Based Awards

Common Stock

Each share of our common stock outstanding immediately prior to the effective time of the merger (other than excluded shares) will be converted into the right to receive from Solvay $75.25 in cash, without interest, less any applicable withholding taxes. Each share of our common stock owned immediately prior to the effective time of the merger by Solvay, or the Company, or either of their respective subsidiaries, will be cancelled without payment and will cease to exist. Dissenting shares will not be converted into the right to receive the merger consideration. Instead, holders of dissenting shares will be entitled to the appraisal rights provided under the DGCL, as described under “Appraisal Rights” beginning on page 97. Shares of our common stock held by the rabbi trust pursuant to the Company’s Supplemental Savings Plan, like all other outstanding shares of our common stock, shall be converted into the right to receive from Solvay $75.25 in cash, without interest, less any applicable withholding taxes.

Company Stock Options

At the effective time of the merger, each Company Stock Option, whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time of the merger will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive, as soon as practicable after the effective time (but in no event later than five business days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the Company Stock Option, by (y) the excess, if any, of the amount of the merger consideration over the applicable exercise price per share of the Company Stock Option (with the aggregate payment rounded down to the nearest cent), less applicable tax withholding. Each Company Stock Option with an exercise price that is equal to or greater than the merger consideration will be canceled without any consideration to the holder thereof.

Company Stock Appreciation Rights

At the effective time of the merger, each Company SAR, whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time of the merger will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive, as soon as practicable

 

-65-


Table of Contents

after the effective time of the merger (but in no event later than five business days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the Company SAR, by (y) the excess, if any, of the amount of the merger consideration over the applicable exercise price per share of the Company SAR (with the aggregate payment rounded down to the nearest cent), less applicable tax withholding. Each Company SAR with an exercise price that is equal to or greater than the merger consideration will be canceled without any consideration to the holder thereof.

Vested Company Restricted Stock Units

At the effective time of the merger, each vested Company RSU, including any Company RSUs that will vest as of the effective time of the merger, that is outstanding immediately prior to the effective time of the merger will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive, as soon as practicable after the effective time of the merger (but in no event later than five business days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the vested Company RSUs, by (y) the amount of the merger consideration, less applicable tax withholding. However, if any vested Company RSUs constitute nonqualified deferred compensation subject to Section 409A of the Code and are not permitted to be paid at the effective time of the merger without triggering taxes or penalties under Section 409A of the Code, such payments will be made at the earliest time permitted under the Company Stock Plan and applicable award agreement that does not trigger such taxes or penalties.

Unvested Company Restricted Stock Units

At the effective time of the merger, each unvested Company RSU that is outstanding immediately prior to, and will not vest as of, the effective time of the merger will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive a Deferred RSU Payment, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the unvested Company RSU, by (y) the amount of the merger consideration. Each Deferred RSU Payment (or applicable portion thereof) will be paid (less applicable tax withholding) on the applicable vesting dates specified under the Company Stock Plan and the agreements evidencing the related unvested Company RSU, and will be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had such unvested Company RSUs remained outstanding in accordance with their terms.

Company Deferred Stock Rights

At the effective time of the merger, each Company Deferred Stock Right, will, by virtue of the merger and without any action on the part of the holder thereof, be cancelled and converted into a right to receive, as soon as practicable after the effective time of the merger (but in no event later than five business days thereafter), a Company Deferred Stock Right Payment, without interest, equal to the product obtained by multiplying (x) the number of shares of our common stock subject to the Company Deferred Stock Right, by (y) the amount of the merger consideration (less applicable tax withholding). However, Company Deferred Stock Right Payments made with respect to any Company Deferred Stock Rights that constitute nonqualified deferred compensation subject to Section 409A of the Code, and that are not permitted to be paid at the effective time of the merger without triggering taxes or penalties under Section 409A of the Code will be paid at the earliest time permitted under the Company Stock Plan and applicable deferral election form that does not trigger such taxes or penalties. Company Deferred Stock Right Payments will be deemed invested, at the holder’s direction, in one or more of the hypothetical investment options as specified on Appendix A of the Company’s Supplemental Savings Plan, and such payment will be credited or debited, as applicable, to reflect amounts of hypothetical income and appreciation and depreciation pursuant to such hypothetical investment as of the hypothetical investment date and through the date such amount is paid in accordance with the merger agreement.

 

-66-


Table of Contents

Vested Company Restricted Stock

At the effective time of the merger, all restrictions imposed on each vested share of Company Restricted Stock (including any shares of Company Restricted Stock that will vest as of the effective time of the merger) that is outstanding immediately prior to the effective time of the merger will lapse. At the effective time of the merger, each vested share of Company Restricted Stock will be treated in the same manner as a share of our common stock.

Unvested Company Restricted Stock

At the effective time of the merger, each unvested share of Company Restricted Stock that is outstanding immediately prior to, and that will not vest as of, the effective time of the merger will be cancelled and converted into a right to receive a Deferred Restricted Stock Payment, without interest, equal to the product obtained by multiplying (x) the number of shares of unvested Company Restricted Stock by (y) the amount of the merger consideration. Each Deferred Restricted Stock Payment (or applicable portion thereof) will be made (less applicable tax withholdings) on the applicable vesting dates specified under the Company Stock Plan and the agreements evidencing the related unvested shares of Company Restricted Stock, and will be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had the unvested shares of Company Restricted Stock remained outstanding in accordance with their terms.

Surrender and Payment Procedures

Prior to the effective time of the merger, Solvay will appoint, with the Company’s consent, the exchange agent for the purpose of exchanging shares of our common stock for the merger consideration. Solvay will deposit, or cause to be deposited, with the exchange agent an amount in cash in immediately available funds equal to the aggregate merger consideration to be paid in respect of the certificates representing shares of our common stock and the uncertificated shares of our common stock (other than with respect to excluded shares) and thereafter will make available or cause to be made available to the exchange agent any additional amounts necessary to make payments to stockholders who withdraw or otherwise lose their demand for appraisal rights pursuant to the DGCL. With respect to the deposit of funds regarding shares of our common stock held by The Depository Trust Company, or DTC, the exchange agent will transmit to DTC an amount in cash in immediately available funds equal to the number of shares of our common stock held of record by DTC immediately prior to the effective time of the merger multiplied by the merger consideration, if the closing of the merger occurs at or prior to 11:30 a.m. (Eastern time), on the date of the closing of the merger, and if the closing of the merger occurs after 11:30 a.m.(Eastern time), on the first business day after the date of the closing of the merger.

Promptly after the effective time of the merger, and in any event within five business days, Solvay will send (or cause the exchange agent to send) to each holder of shares of our common stock at the effective time of the merger a letter of transmittal and instructions (which shall specify that the delivery will be effected, and risk of loss and title will pass, only upon proper delivery of the certificates (or affidavits of loss in lieu thereof) or surrender of the uncertificated shares to the exchange agent) for use in such exchange.

You should not return your stock certificates with the enclosed proxy card, and you should not forward your stock certificates to the exchange agent without a letter of transmittal.

You will not be entitled to receive the merger consideration with respect to your shares of our common stock unless, in the case of certificated shares, you surrender to the exchange agent the certificate(s) representing your shares of our common stock, together with a properly completed letter of transmittal or, in the case of a book-entry transfer of uncertificated shares, the exchange agent receives an “agent’s message”, and such other documents reasonably required by the Company and the exchange agent. In exchange therefor, you will receive a cash amount by check or wire transfer of immediately available funds to an account designated by you (less any required tax withholdings) equal to the product of the number of shares of our common stock represented by such

 

-67-


Table of Contents

certificate (or affidavit of loss in lieu thereof) or book-entry transfer of uncertificated shares multiplied by the merger consideration, and each such certificated or uncertificated share will thereupon be cancelled. No interest will be paid or accrued on any amount payable upon such surrender or transfer. Until so surrendered or transferred, as the case may be, each such certificate or uncertificated share will represent after the effective time of the merger for all purposes only the right to receive such merger consideration.

If any portion of the merger consideration is to be paid to a person other than the person in whose name the surrendered certificate or the transferred uncertificated share is registered, it will be a condition to such payment that (i) either such certificate will be properly endorsed or will otherwise be in proper form for transfer or such uncertificated share shall have been properly transferred and (ii) the person requesting such payment will pay to the exchange agent any transfer or other taxes required as a result of such payment to a person other than the registered holder of such certificate or uncertificated share or establish to the satisfaction of the exchange agent that such tax has been paid or is not payable.

After the effective time of the merger, there will be no further registration of transfers of shares of our common stock. If, after the effective time of the merger, certificates or uncertificated shares are presented to the surviving corporation or the exchange agent, they will be canceled and exchanged for the merger consideration provided for, and in accordance with the procedures set forth, in the merger agreement.

Solvay, the surviving corporation and the exchange agent will be entitled to deduct and withhold from the merger consideration such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign tax law. Any sum that is withheld, provided it is remitted to the appropriate taxing authority, will be deemed to have been paid to the holder of shares with regard to whom it is withheld.

If you have lost a certificate, or if it has been stolen or destroyed, then before you will be entitled to receive the merger consideration, you will have to make an affidavit of the loss, theft or destruction, and if required by the surviving corporation, post a bond in such reasonable amount as the surviving corporation may direct, as indemnity against any claim that may be made against it with respect to such lost, stolen or destroyed certificate. These procedures will be described in the letter of transmittal and instructions that you will receive, which you should read carefully in their entirety.

Any portion of the merger consideration deposited with the exchange agent that remains unclaimed by former record holders of our common stock for six months after the effective time of the merger will be delivered to the surviving corporation upon demand. Record holders of our common stock (other than the excluded shares) who have not complied with the above-described exchange and payment procedures will thereafter only look to the surviving corporation for payment of the merger consideration. None of Parent, the surviving corporation, the exchange agent or any other person shall be liable to any holder of shares of our common stock for any amounts paid to a public official pursuant to applicable abandoned property, escheat or similar laws. Any amounts remaining unclaimed by holders of shares of our common stock two years after the effective time of the merger (or such earlier date, immediately prior to such time when the amounts would otherwise escheat to or become property of any governmental authority) will become, to the extent permitted by applicable law, the property of the surviving corporation free and clear of any claims or interest of any person previously entitled thereto.

 

-68-


Table of Contents

Representations and Warranties

Representations and Warranties of the Company

We made customary representations and warranties in the merger agreement that are subject, in many cases, to exceptions and qualifications contained in the merger agreement, in the disclosure schedule or in certain reports filed with the SEC. These representations and warranties relate to, among other things:

 

    our due organization, existence and good standing and authority to carry on our businesses;

 

    our corporate power and authority related to the merger agreement, including:

 

    our power to enter into, perform our obligations under and consummate the merger and the other transactions contemplated the merger agreement and the enforceability of the merger agreement against us;

 

    the approval of the merger agreement and the merger by the Board of Directors, and the declaration of advisability and recommendation of the merger agreement and the merger by the Board of Directors;

 

    required actions by or in respect of, and filings with, governmental authorities in connection with the merger and the merger agreement;

 

    our entry into and performance under the merger agreement, and whether such entry and performance would result in violations of, or conflicts with, our governing documents or applicable law, any defaults, terminations, cancellations or accelerations under certain material agreements or the creation of liens on any of our assets;

 

    our capitalization, including:

 

    the number of authorized and outstanding shares of our common stock, shares of preferred stock and Company stock-based awards outstanding;

 

    the absence of any outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote;

 

    other than the outstanding shares of our common stock and Company stock-based awards, the absence of any capital stock, voting or other ownership interests in the Company;

 

    the absence of any securities of the Company convertible into or exchangeable for shares of capital stock or other voting securities of, or other ownership interests in, the Company;

 

    the absence of warrants, calls, options or other rights to acquire from the Company, or other obligations of the Company to issue, any shares of capital stock, or other voting securities of, or other ownership interests in, or securities convertible into or exchangeable for capital stock or other voting securities of the Company;

 

    the absence of restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights in, the Company;

 

    the absence of outstanding obligations of the Company or any of our subsidiaries to repurchase, redeem or otherwise acquire any of the Company’s securities; and

 

    the ownership of shares of our common stock and securities by any of our subsidiaries;

 

    our subsidiaries, including:

 

    their due organization, existence and good standing and authority to carry on their businesses;

 

    regarding our ownership of the equity interests of our subsidiaries;

 

-69-


Table of Contents
    their capitalization, including:

 

    the absence of securities of the Company or any of its subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities of, or other ownership interests in, any of the Company’s subsidiaries;

 

    the absence of warrants, calls, options or other rights to acquire from the Company or any of its subsidiaries, or other obligations of the Company or any of its subsidiaries to issue, any shares of capital stock, or other voting securities of, or other ownership interests in, or securities convertible into or exchangeable for capital stock or other voting securities of any of the Company’s subsidiaries;

 

    the absence of restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights in, any of the Company’s subsidiaries;

 

    our SEC filings since January 1, 2013 and the financial statements included therein, and our disclosure controls and procedures and internal controls over financial reporting;

 

    the absence of any loan or other extension of credit by us to any executive officer or director in violation of Rule 402 of the Sarbanes Oxley Act;

 

    the absence of notice from the SEC or any other governmental authority indicating that any of the Company’s accounting policies or practices are the subject of any review, inquiry, investigation or challenge;

 

    the compliance of this proxy statement with applicable requirements under the Exchange Act;

 

    the conduct of business in the ordinary course since December 31, 2014 and the absence since December 31, 2014 of any event, occurrence, development or state of circumstances or facts that has had or would be reasonably expected to have a material adverse effect (as described below);

 

    the absence of certain material undisclosed liabilities not required to be reflected or reserved against according to GAAP;

 

    compliance with applicable laws and the absence of certain types of investigations by governmental entities;

 

    the absence of certain legal proceedings against the Company or any of its subsidiaries;

 

    the Company’s good title to or a valid leasehold interest in, and absence of liens on its material owned real property and material leases of real property;

 

    intellectual property and related matters;

 

    tax matters;

 

    certain matters relating to employee benefit plans of the Company and its subsidiaries;

 

    certain labor and employment matters relating to the Company and its subsidiaries;

 

    environmental matters;

 

    the provision of certain material contracts and the absence of defaults under, and the validity and effectiveness of, certain material contracts;

 

    insurance policies;

 

    the absence of any undisclosed broker’s or finder’s fees;

 

    receipt of a fairness opinion from J.P. Morgan;

 

    the absence of any poison pill in effect and the inapplicability of any U.S. anti-takeover law to the merger; and

 

-70-


Table of Contents
    the absence of contracts or other arrangements to which the Company is a party for which the Company or its personnel use or have access to certain classified or restricted information and the Company’s ability to perform any such contracts without access to such information.

Company Material Adverse Effect

Many of our representations and warranties are qualified by, among other things, exceptions relating to the absence of a “Company material adverse effect”, which means any change, event, occurrence or effect that (i) is a material adverse effect on our or our subsidiaries’ financial condition, business, assets or results of operations, taken as a whole, or (ii) prevents, materially impedes or materially delays the consummation by the Company of the merger or the other transactions contemplated by the merger agreement, excluding, in the case of each of (i) and (ii) above:

 

    any effect to the extent resulting from the following:

 

    changes in GAAP or the interpretation, application or enforcement thereof;

 

    the execution, delivery and performance of the merger agreement (but not the consummation, except to the extent related to the exercise by any third party of any of its rights pursuant to any change in control, anti-assignment or similar provision in certain specified contracts) or the public announcement of the merger agreement, the merger and the other transactions contemplated thereby or the identity of Solvay or any of its affiliates, including, in each case, the effect thereof on the relationships, contractual or otherwise, of the Company or any of its affiliates with employees, contractors, customers, suppliers, business partners and other third parties;

 

    any litigation arising from any allegation of any breach of fiduciary duty or violation of law relating to the merger agreement, the merger or any of the other transactions contemplated thereby;

 

    any liability to the extent accrued or reserved against in the consolidated financial statements (or the notes thereto) included in certain reports filed or furnished with the SEC since January 1, 2013 and prior to July 28, 2015; or

 

    any action taken at the written request of Solvay or Merger Subsidiary.

 

    any effect to the extent resulting from the following, except in the event that any of the following changes or conditions have a materially disproportionate adverse effect on the Company and its subsidiaries, taken as a whole, relative to the adverse effect that such changes or conditions have on other companies in the advanced composite or mining chemicals business (in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has been a Company material adverse effect):

 

    changes in any regulatory or legislative conditions, financial, credit, securities or other capital markets conditions or general economic or political conditions, in each case in the United States or any foreign jurisdiction;

 

    changes (including changes of applicable law) or conditions generally affecting the industry in which the Company and our subsidiaries operate; or

 

    any geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage, terrorism or military actions or any escalation of such acts of war, sabotage, terrorism or military actions threatened or underway, or epidemics, pandemics, earthquakes, hurricanes, tornadoes or other natural disasters or calamities;

 

-71-


Table of Contents
    any effect to the extent resulting from the following, provided that any facts or occurrences giving rise or contributing to any of the following that are not otherwise excluded from the definition of Company material adverse effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Company material adverse effect:

 

    any failure, in and of itself, to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period; or

 

    any change in the market price, trading volume or credit rating of any of the Company’s securities.

Representations and Warranties of Solvay and Merger Subsidiary

The merger agreement also contains customary representations and warranties made by Solvay and Merger Subsidiary that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. The representations and warranties of Solvay and Merger Subsidiary relate to, among other things:

 

    their due organization, existence, good standing and authority to carry on their businesses;

 

    their corporate power and authority related to the merger agreement, including:

 

    their power to enter into, perform their obligations under, and consummate the merger and the other transactions contemplated by the merger agreement and the enforceability of the merger agreement against them;

 

    the approval of the merger agreement by Solvay’s Board of Directors;

 

    required actions by or in respect of, and filings with, governmental authorities in connection with the merger and the merger agreement;

 

    their entry into and performance under the merger agreement, and whether such entry and performance would result in violations of, or conflicts with, their governing documents or applicable law, any defaults, terminations, cancellations or accelerations under certain material agreements or the creation of liens on any of their assets;

 

    the accuracy of information supplied by the Solvay or Merger Subsidiary for inclusion in this proxy statement;

 

    the debt financing for the merger, the absence of any conditions precedent or other contingencies except as set forth in the debt financing agreements (as defined in “The Merger Agreement—Financing” beginning on page 88), and Solvay and Merger Subsidiary having sufficient funds to enable Solvay to pay all amounts required to be paid by Solvay or Merger Subsidiary in connection with the merger and the other transactions contemplated by the merger agreement and the debt financing; and

 

    the absence of any undisclosed broker’s or finder’s fees.

The representations and warranties in the merger agreement of each of the Company, Solvay and Merger Subsidiary will not survive the consummation of the merger or the termination of the merger agreement pursuant to its terms.

Conduct of Our Business Pending the Merger

Under the merger agreement, we have agreed that, between the date of the merger agreement and the effective time of the merger, except as expressly contemplated by the merger agreement, as required by the terms of any material contract set forth in the disclosure schedule, as required by applicable law or as set forth in the

 

-72-


Table of Contents

corresponding section of the disclosure schedule, without the prior written consent of Solvay (which consent will not be unreasonably delayed, conditioned or withheld), the Company will, and will cause each of its subsidiaries to, conduct its business in the ordinary course consistent with past practice and, to the extent consistent therewith, will use its commercially reasonable efforts to preserve intact its present business organization, maintain in effect all of its foreign, federal, state and local licenses, permits, approvals and authorizations from or by any governmental authority, keep available the services of its current officers and key employees and maintain existing relationships with customers, lenders, suppliers and others having material business relationships with it.

We have further agreed that, except as expressly contemplated by the merger agreement, as required by the terms of any material contract set forth on the disclosure schedule, as required by applicable law, as set forth in the corresponding section of the disclosure schedule or for intercompany transactions between or among the Company and any of its wholly owned subsidiaries, without the prior written consent of Solvay (which consent will not be unreasonably delayed, conditioned or withheld), the Company will not, nor will it permit any of its subsidiaries to:

 

    make changes to its organizational documents;

 

    split, combine or reclassify any shares of its capital stock;

 

    declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except for dividends by any of its wholly owned subsidiaries and ordinary course quarterly cash dividends with respect to shares of our common stock with record and payment dates consistent with past practice, provided that such quarterly cash dividends shall not exceed $0.125 per share;

 

    redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any Company securities or any securities of the Company’s subsidiaries;

 

    issue, deliver or sell, or authorize the issuance, delivery or sale of, any shares of any Company securities or any securities of the Company’s subsidiaries, other than the issuance of (i) any securities of the Company’s subsidiaries to the Company or any other subsidiary of the Company or (ii) any shares of our common stock upon the exercise of Company Stock Options or Company SARs or the settlement of Company RSUs or Company Deferred Stock Rights that, in each case, are outstanding on July 28, 2015 and as required pursuant to the terms of the Company Stock Plan governing such awards as in effect on July 28, 2015;

 

    amend any term of any security of the Company or any of its subsidiaries;

 

    make any capital expenditures in excess of (i) $176 million in the aggregate for the fiscal year ending December 31, 2015, and (ii) $19 million, $37 million, $55 million, $75 million, $94 million and $108 million on a cumulative basis through January, February, March, April, May and June 2016, respectively;

 

    commit to make or approve any new capital project budgeted to cost in excess of $15 million (other than safety, health or environmental capital projects or expenditures required in connection with any emergency);

 

    acquire or sell or otherwise transfer (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses in excess of $15 million in the aggregate, other than in the ordinary course of business consistent with past practice;

 

    sell, lease, license or otherwise transfer or dispose of, abandon or permit to lapse, or create or incur any lien on, any material intellectual property owned or purported to be owned by the Company or any of its subsidiaries other than, in each case, in the ordinary course of business consistent with past practice;

 

    other than as permitted by the merger agreement, make any loans, advances or capital contributions to, or investments in, any other person in excess of $15 million in the aggregate;

 

-73-


Table of Contents
    incur or assume any long-term indebtedness for borrowed money or guarantees thereof in excess of $15 million in the aggregate, other than in the ordinary course of business consistent with past practices;

 

    enter into, amend or modify in any material respect or terminate any material contract or lease or otherwise waive, release or assign any material rights, claims or benefits of the Company or any of its subsidiaries under any material contract or lease, except in the ordinary course of business consistent with past practice;

 

    except as required by applicable law or the terms of an employee benefit plan as in effect on the date the merger agreement was executed:

 

    grant or increase any severance, retention or termination pay to, or enter into or amend any retention, termination, employment, consulting, bonus, change in control or severance agreement with, any current or former director, officer, employee or individual independent contractor of the Company or any of its subsidiaries;

 

    increase the compensation or benefits provided to any current or former director, officer, employee or individual independent contractor of the Company or of any of its subsidiaries, except for increases in annual salary or wage rate in the ordinary course of business consistent with past practice in connection with annual compensation reviews or ordinary course promotions for employees who are not executive officers that, (i) if implemented after July 28, 2015 and through February 28, 2016, do not exceed $500,000 in the aggregate for all such employees (which we refer to as the $500,000 limit) and (ii) if implemented after March 1, 2016 and before April 30, 2016, after taking into account increases subject to the $500,000 limit, do not exceed 3.5% of the aggregate pay of all salaried U.S. employees of the Company or any of its subsidiaries or 5% of the aggregate pay of all salaried employees of the Company or any of its subsidiaries globally (in each case, other than employees whose base salary or wage rate increases are contractually required by a collective bargaining agreement);

 

    grant any equity, equity-based or other incentive awards to, or discretionarily accelerate the vesting or payment of any such awards held by, any current or former director, officer, employee or individual independent contractor of the Company or any of its subsidiaries;

 

    establish, adopt, enter into or amend any employee benefit plan or collective bargaining agreement except for amendments to employee benefit plans (or the adoption of successor employee benefit plans) that are broad-based welfare plans in connection with the Company’s annual or open enrollment procedures and that do not materially increase the expense of maintaining such plans;

 

    appoint or hire any employee of the Company or any of its subsidiaries whose annual base compensation is $200,000 or more, except for new hires (or internal promotions of employees) to replace such employees who leave the Company after the date of the merger agreement;

 

    terminate the employment of any employee of the Company or any of its subsidiaries whose annual base compensation is $200,000 or more other than for cause or for performance-related terminations;

 

    make or change any material tax election;

 

    settle any tax claim, audit or assessment for an amount materially in excess of amounts reserved;

 

    change any annual tax accounting period;

 

    adopt or change any material method of tax accounting;

 

    enter into any material closing agreement, other than any such material closing agreement that does not require payments that would materially exceed the amount of any related reserve reflected in the consolidated balance sheet of the Company as of March 31, 2015;

 

-74-


Table of Contents
    settle:

 

    any material litigation, investigation, arbitration, proceeding or other claim involving or against the Company or any of its subsidiaries, other than settlements that require payments by the Company or any of its subsidiaries not in excess of $5 million individually or $15 million in the aggregate and settlements of claims or litigations that are disclosed, reflected or reserved against in documents the Company has filed or furnished with the SEC prior to the date of the merger agreement;

 

    any stockholder litigation or dispute against the Company or any of its officers or directors that relates to the transactions contemplated by the merger agreement; or

 

    agree, resolve or commit to do any of the actions in any of the bullet points above.

Stockholders Meeting

The Company has agreed, subject to applicable law, to cause a meeting of its stockholders to be duly called and held as soon as reasonably practicable after clearance of this proxy statement by the SEC for the purpose of obtaining the approval of the merger agreement by the affirmative vote of the holders of a majority of the outstanding shares of our common stock and to comply with all legal requirements applicable to such meeting. The Company has agreed that the Board of Directors will recommend approval and adoption of the merger agreement to the Company’s stockholders and will not withhold, withdraw or modify this recommendation in a manner that is adverse to Solvay, in each case, subject to the provisions of the merger agreement discussed below under “The Merger Agreement—No Solicitation; Other Offers” beginning on page 75.

No Solicitation; Other Offers

Except as permitted by the terms of the merger agreement described below, we have agreed in the merger agreement that neither the Company nor any of its subsidiaries will, nor will the Company or any of its subsidiaries authorize any of its or their officers, directors, employees, investment bankers, attorneys, accountants, consultants or other agents or advisors (which we refer to collectively as representatives) to, directly or indirectly:

 

    solicit, initiate or take any action to knowingly facilitate the submission of any acquisition proposal (as defined below);

 

    enter into or participate in any discussions or negotiations with, furnish any information relating to the Company or any of its subsidiaries or afford access to the business, properties, assets, books or records of the Company or any of its subsidiaries to, otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any third party that is seeking to make, or has made, an acquisition proposal (provided that the Company and its representatives may ascertain facts from the person making such acquisition proposal (and such person’s subsidiaries and its and their respective representatives) for the sole purpose of the Board of Directors informing itself about such acquisition proposal and the person that made it (and such person’s subsidiaries and its and their respective representatives));

 

    withhold, withdraw or modify in a manner adverse to Solvay the recommendation of approval and adoption of the merger agreement by the holders of shares of our common stock by the Board of Directors (or recommend an acquisition proposal), which we refer to as an adverse recommendation change; or

 

    enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement or other similar instrument to effect an acquisition proposal with the person making such acquisition proposal (or any of its subsidiaries) (other than a confidentiality agreement entered into in compliance with the provisions of the merger agreement and, after such execution of a confidentiality agreement, any customary engagement, joint defense, clean team or similar agreements).

 

-75-


Table of Contents

The merger agreement also provides that any breach of the restrictions on the Company set forth in these provisions by any representative of the Company or any of its subsidiaries will be a breach of those restrictions by the Company.

The merger agreement defines the term “acquisition proposal” to mean any offer, proposal or inquiry from any third party relating to, or any third party indication of interest in, (i) any acquisition or purchase, direct or indirect, of 15% or more of the consolidated assets of the Company and its subsidiaries or 15% or more of any class of equity or voting securities of the Company or of any of its subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such third party beneficially owning 15% or more of any class of equity or voting securities of the Company or of any of its subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company or (iii) a merger, consolidation, share exchange, business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the Company or any of its subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company, in each case, other than the transactions contemplated by the merger agreement.

The merger agreement also provides that the foregoing restrictions will not prevent the Board of Directors from complying with its disclosure obligations under U.S. federal or state law, or making any disclosure to its stockholders if, in the good faith judgment of the Board of Directors, failure to do so would be inconsistent with applicable law (provided that any such action that relates to an acquisition proposal will be deemed to be an adverse recommendation change unless the Board of Directors reaffirms, within five business days of such action, the Board of Directors’ recommendation of approval and adoption of the merger agreement by the holders of shares of our common stock).

We further agreed to, and to cause our subsidiaries and our and their representatives to, cease immediately and terminate all activities, discussions or negotiations (if any) with any third party and its representatives with respect to an acquisition proposal. We also agreed to request that any third party that has executed a confidentiality agreement with respect to an acquisition proposal to promptly return or destroy all confidential information in accordance with the terms of the applicable confidentiality agreement.

No Solicitation Exceptions

The Company and Solvay also agreed that, at any time prior to the time the Company’s stockholders adopt the merger agreement, if the Board of Directors determines in good faith, after consultation with outside legal counsel, that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties under Delaware law:

 

    the Company, directly or indirectly through its representatives or other intermediaries, may (a) engage in or participate in negotiations or discussions with any third party and its representatives that, subject to the Company’s compliance with the solicitation restrictions described above, has made an acquisition proposal that the Board of Directors reasonably believes is or could reasonably be expected to lead to a superior proposal (as defined below) and (b) furnish to such third party or its representatives non-public information relating to the Company or any of its subsidiaries pursuant to a confidentiality agreement with such third party with terms no less favorable to the Company in the aggregate than those contained in the confidentiality agreement dated June 25, 2015 between the Company and Solvay (except that any such confidentiality agreement need not include a standstill or prohibit the making or amendment of any acquisition proposal), as long as all such information (to the extent that such information has not been previously provided or made available to Solvay) is provided or made available to Solvay, as the case may be, substantially concurrently with the time it is provided or made available to such third party); and

 

-76-


Table of Contents
    subject to compliance with the “last look” and matching rights provisions described below, the Board of Directors may (i) make an adverse recommendation change or take action to terminate the merger agreement to enter into an alternative acquisition agreement in connection with a superior proposal or (ii) make an adverse recommendation change in response to an event or circumstance material to the Company and its Subsidiaries, taken as a whole (other than an acquisition proposal) that was not known or reasonably foreseeable (or the impact of which was not known or reasonably foreseeable) as of the date of the merger agreement to the Board of Directors or the named executive officers listed in the Company’s Proxy Statement on Schedule 14A, dated March 6, 2015, (which we refer to as an intervening event).

The merger agreement defines the term “superior proposal” to mean a bona fide, unsolicited written acquisition proposal (with the percentages set forth in such term changed from 15% to 75%) on terms that, if consummated, the Board of Directors determines in good faith, after considering the advice of a financial advisor of nationally recognized reputation and outside legal counsel, are more favorable from a financial point of view to the Company’s stockholders than the transaction contemplated by the merger agreement (taking into account any proposal by Solvay to amend the terms of the merger agreement pursuant to its terms) and that the Board of Directors has determined, in its good faith judgment, is reasonably likely to be consummated in accordance with its terms, taking into account all legal, regulatory and financial aspects of the proposal and the person making the proposal.

The Company agreed to notify Solvay prior to taking any of the foregoing actions, and to promptly, and in any event, within 24 hours, notify Solvay of the receipt of an acquisition proposal, including the identity of the third party making the proposal and the material terms of such proposal, and to keep Solvay informed on a reasonably prompt basis of the material developments in any negotiations with a third party.

Last Look

The Company further agreed that the Board of Directors will not make an adverse recommendation change in response to an acquisition proposal (or terminate the merger agreement pursuant to its terms in order to enter into a superior proposal) or in response to an intervening event, unless:

 

    the Company notifies Solvay in writing four business days prior to taking that action, of its intention to do so, attaching (i) in the case of the Board of Directors deciding to make an adverse recommendation change or take action to terminate the merger agreement to enter into an alternative acquisition agreement, in each case, in connection with a superior proposal, the most current version of the proposed agreement under which such superior proposal is proposed to be consummated, or (ii) in the case of a decision by the Board of Directors to make an adverse recommendation change in response to an intervening event, a reasonably detailed description of the reasons for making such decision; and

 

    Solvay does not make, within four business days after its receipt of that written notification, a binding written offer that (i) in the case of a decision by the Board of Directors to make an adverse recommendation change or take action to terminate the merger agreement to enter into an alternative acquisition agreement, in each case, in connection with a superior proposal, causes the offer previously constituting a superior proposal to no longer constitute a superior proposal or (ii) in the case of a decision by the Board of Directors to make an adverse recommendation change in response to an intervening event, obviates the need for such recommendation change, in each case, in the good faith judgment of the Board of Directors.

In the event of any material amendment to the financial terms or other material terms of such superior proposal, the Company is required to deliver a new written notification and to comply with the requirements of the “last look” provision described above, except that the Company will be required to give three business days’ notice to Solvay (instead of the four business days contemplated by the “last look” provision).

 

-77-


Table of Contents

Filings; Other Actions; Notification

We and Solvay each agreed to use our reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the merger and the other transactions contemplated by the merger agreement, including:

 

    preparing and filing, or cooperating in the preparing and filing, as applicable, as promptly as practicable with any governmental authority or other third party all documentation to effect all filings, notices, petitions, statements, registrations, submissions of information, applications and other documents that are necessary, proper or advisable to consummate the merger and the other transactions contemplated by the merger agreement;

 

    obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any governmental authority or other third party that are necessary, proper or advisable to consummate the merger and the other transactions contemplated by the merger agreement, including under the HSR Act and any other applicable antitrust or competition laws, Exon-Florio, ITAR, the NISPOM and Sections 22a-134 through 22a-134e of the Connecticut General Statutes, as amended;

 

    subject to applicable law, furnishing all information required for any filings, notices, petitions, statements, registrations, submissions of information, applications and other documents to be made in connection with the consummation of the merger and the other transactions contemplated by the merger agreement, making an appropriate response, after consultation with the other parties to the merger agreement, to any request for additional information or documentary material from any governmental authority or other third party in compliance with such request and timely responding to any questions, after consultation with the other parties to the merger agreement, from any governmental authority or other third party in connection with the merger and the other transactions contemplated by the merger agreement;

 

    resolving such objections, if any, as may be asserted by any governmental authority or other third party with respect to the merger and the other transactions contemplated by the merger agreement; and

 

    executing and delivering any additional instruments necessary to consummate the merger and the other transactions contemplated by the merger agreement and to fully carry out the purposes of the merger agreement.

Notwithstanding the foregoing, neither Solvay nor Merger Subsidiary will be obligated to agree to any sale, divestiture, license, disposition, holding separate of or mitigation of, termination, prohibition, limitation, restriction or other action if doing so, individually or in the aggregate, would have a material adverse effect on Solvay and its subsidiaries or on the Company and its subsidiaries, in each case, as measured against the Company and its subsidiaries, taken as a whole. In addition, the Company and its subsidiaries are not required to proffer to, or agree to, any sale, divestiture, license, disposition, holding separate of or mitigation of, or any termination, prohibition, limitation, restriction or other action with respect to, existing relationships, contracts, assets, product lines or businesses or interests therein of the Company or any of its subsidiaries unless the effectiveness of such action is conditioned upon the occurrence of the closing.

We and Solvay also agreed to cooperate in the making of, or to make, as applicable, as promptly as practicable after the date of the merger agreement, with respect to the transactions contemplated by the merger agreement:

 

    an appropriate filing of a Notification and Report Form pursuant to the HSR Act (which shall in no event be made later than twenty business days after the date of the merger agreement);

 

    appropriate filings or notices as are required pursuant to other applicable antitrust or competition laws;

 

    a submission of a joint voluntary notice, preceded at least five business days by submission of a “pre-filing” draft of such notice, to CFIUS pursuant to Exon-Florio;

 

-78-


Table of Contents
    appropriate filings with or notices by the Company, Solvay and Merger Subsidiary to DSS regarding the parties’ plan to operate the business of the Company pursuant to a proposal to mitigate FOCI in accordance with the NISPOM;

 

    an appropriate filing with or notice to the DDTC in accordance with ITAR;

 

    appropriate filings or notices in accordance with the NISPOM to obtain assurances that favorable National Interest Determinations or similar determinations under any applicable national or industrial security regulations will permit the Company to continue to have, to the extent it currently has, access to certain classified or restricted information after the closing; and

 

    such other filings or proceedings with any governmental authorities as may be required under any applicable law.

Solvay and the Company each also agreed to use reasonable best efforts to agree upon a definitive list of jurisdictions in which any notice, filing or other instrument is necessary, proper or advisable under applicable antitrust or competition laws in connection with the transactions contemplated by the merger agreement no later than August 11, 2015. See “The Merger—Regulatory Approvals” beginning on page 61 for a description of the regulatory approvals required for the merger, including the jurisdictions in which antitrust or competition law filings or approvals are contemplated.

Each of Solvay and the Company agreed, subject to applicable law and the provisions of the merger agreement relating to access to information, to use reasonable best efforts to (i) keep the other party informed in all material respects of any material communication received by such party from, or given by such party to, any governmental authority, (ii) permit the other parties to review in advance any material notices or written communication delivered to or received from any governmental authority, and (iii) to consult with the other party in advance of any meeting or conference with, any governmental authority, and to give the other party the opportunity to attend and participate in such meetings and conferences (to the extent permitted by such governmental authority) either in person or by telephone, in each case, to the extent relating to the merger and the other transactions contemplated by the merger agreement.

Each of the Company and Solvay also agreed to promptly notify the other of any change, fact or condition at any time during the term of the merger agreement that is reasonably expected to result in a Company material adverse effect or to cause the conditions to the closing of the merger not to be satisfied. The parties further agreed that the delivery of any such notice would not limit or otherwise affect the remedies available under the merger agreement to the party receiving such notice or result in a failure to satisfy the conditions to the merger.

Other Efforts

We have agreed to use our commercially reasonable efforts to preserve intact the business organization of the Company and its subsidiaries, maintain approvals from governmental authorities, keep available services of officers and key employees and maintain material relationships with certain third parties as described in “The Merger Agreement—Conduct of Our Business Pending the Merger” beginning on page 72. Furthermore, we have agreed to use our reasonable best efforts in connection with a number of other obligations in the merger agreement, which include preparing and filing this proxy statement, cooperating with Solvay in connection with its financing for the merger as described in “The Merger Agreement—Financing” beginning on page 80 and cooperating with Solvay to enable delisting of our common stock from the NYSE and the deregistration of our common stock under the Exchange Act as promptly as practicable after the closing of the merger. We have also agreed, subject to certain conditions, to cooperate, upon Solvay’s reasonable request and at Solvay’s sole cost and expense, to obtain customary title insurance for our owned real property located in the United States (but any failure by Solvay to secure title insurance will not affect Solvay’s obligation to consummate the merger).

We have further agreed that, from the date of the merger agreement until the earlier of termination of the merger agreement and the effective time of the merger, upon reasonable prior notice and subject to applicable

 

-79-


Table of Contents

law, the Company will (i) give to Solvay, its counsel, financial advisors, auditors and other authorized representatives reasonable access during normal business hours to the offices, properties, employees, books and records of the Company and its subsidiaries and (ii) furnish to Solvay, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information as Solvay may reasonably request, in each case subject to certain conditions and exceptions.

Financing

The Company has agreed to use its reasonable best efforts, to cause its subsidiaries to use their reasonable best efforts and to use its reasonable best efforts to cause its representatives to use their respective reasonable best efforts to, provide such reasonable and customary cooperation and information as may be reasonably requested by Solvay in connection with (i) satisfying the conditions to, and complying with any obligations to assist in the syndication of, the debt financing set forth in the mandate letter and draft form of bridge loan facility agreement (which we refer to as the debt financing agreements, the related financing as the debt financing and the financial institutions named therein as the financing sources) to the extent such conditions and obligations are consistent with the terms and conditions of the merger agreement and (ii) arranging any refinancing or replacement financing, whether by way of debt or equity or hybrid instrument and including entering into definitive credit facilities, indentures or other instruments or agreements (which we refer to as the replacement financing agreements, the related financing as the replacement debt financing and any financial institutions party thereto as the replacement financing sources), the proceeds of which are to be used in whole or in part to repay or replace the debt financing and satisfying reasonable and customary conditions to the any replacement financing, to the extent such conditions are consistent with the terms and conditions of the merger agreement. For a description of the debt financing, see “The Merger—Financing of the Merger” beginning on page 53.

The Company’s assistance relating to financing activities will include, to the extent reasonably requested by Solvay, using reasonable efforts to, among other things, (i) furnish financial and other pertinent information relating to the Company and its subsidiaries and its and their businesses, (ii) participate (including via telephonic conference) in a reasonable number of meetings , presentations, roadshows, due diligence sessions, drafting sessions (including accounting due diligence sessions) and sessions with rating agencies in the United States and Europe in connection with the debt financing or the replacement financing, in each case to the extent customary, assist with the preparation of customary offering documents or memoranda, rating agency presentations and similar documents, (iii) execute and delivery customary certificates, accountants’ comfort letters (and consents or other documents and as may be reasonably requested by the Solvay as necessary and customary, (iv) facilitate the obtaining of guarantees and pledging of collateral (to be effective, no earlier than the closing), (v) cooperate reasonably with the replacement financing sources’ due diligence, to the extent customary and reasonable, (vi) obtain customary payoff letters, lien terminations and instruments of discharge to be delivered at closing to allow for the payoff, discharge and termination in full on the closing date of any debt of the Company or its subsidiaries that Solvay desires to payoff, discharge and terminate at closing or that is otherwise subject to mandatory prepayment (howsoever described) as a result of the consummation of the merger and (vii) take all corporate actions, subject to the occurrence of the closing, necessary to permit the consummation of the replacement financing including entering into one or more credit agreements, indentures or other instruments or agreements on terms reasonably satisfactory to Solvay in connection with the replacement financing to the extent direct borrowings or debt incurrence (or any guarantees thereof) by the Company or any of its subsidiaries is contemplated in the replacement financing, in each case, as further described in the merger agreement.

Under the terms of the merger agreement, neither the Company nor any of its subsidiaries will be required to (i) take any action that would subject it to actual or potential liability or conflict with or violate the Company’s or any of its subsidiaries’ organizational documents (to the extent such conflict or violation cannot be resolved by such entity using its reasonable best efforts to do so) or any applicable laws or result in the contravention of, or that would reasonably be expected to result in a violation or breach of, or a default under, any material contract existing on the date of the merger agreement to which the Company or any of its subsidiaries is a party, (ii) bear any cost, fee or expense or to pay any commitment or other similar fee or make any other payment (other than

 

-80-


Table of Contents

reasonable out-of-pocket costs) or incur any other liability or obligation or provide or agree to provide any indemnity in connection with the debt financing or the replacement financing or any of the foregoing prior to the effective time of the merger and (iii) undertake any action that would unreasonably and materially interfere with the business or operations of the Company and its subsidiaries. Solvay has agreed, promptly upon request by the Company, to reimburse the Company for all documented and reasonable out-of-pocket costs incurred by the Company or its subsidiaries in connection with the financing activities.

The merger agreement further provides that none of the Company nor any of its subsidiaries nor any of their respective representatives, officers, directors (with respect to any subsidiary of the Company) or employees will be required to execute or enter into or perform any agreement with respect to the debt financing or the replacement financing that is not contingent upon the closing or that would be effective prior to the closing and no directors of the Company will be required to execute or enter into or perform any agreement with respect to the debt financing or the replacement financing.

Solvay and Merger Subsidiary have each agreed to use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange, maintain the effectiveness of and consummate the debt financing (except to the extent replaced by replacement financing) and the replacement financing on the terms and conditions described in or contemplated by the debt financing agreements or replacement financing agreements (as applicable) (including complying with any request to exercise so-called “flex” provisions and using reasonable best efforts to satisfy on a timely basis all conditions to funding in the debt financing agreements or replacement financing agreement (as applicable)) in an amount that, when taken together with Solvay’s and Merger Subsidiary’s cash on hand, would be no less than the amount that would be required to consummate the merger and the other transactions contemplated by the merger agreement and the debt financing or replacement financing (as applicable), including the aggregate merger consideration, repayment of any outstanding indebtedness required to be repaid in order to consummate the merger and any fees and expenses.

Solvay has further agreed, to the extent reasonably requested by the Company from time to time and subject to any applicable legal or regulatory restrictions on disclosure, to keep the Company informed on a reasonably current basis of the status of its efforts to arrange and consummate the debt financing or replacement financing (as applicable). Solvay and Merger Subsidiary have also agreed not to consent or agree (without the prior written consent of the Company) to any amendment, supplement, modification or replacement of the debt financing agreements (including cancellation of commitments thereunder following the entry into any replacement financing agreement) if such amendment, supplement, modification or replacement could, in Solvay’s reasonable determination, reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by the merger agreement.

Solvay will also, promptly following any material amendment, supplement or modification of any debt financing agreement or replacement financing agreement made in compliance with the merger agreement, provide a copy thereof (redacted if necessary where appropriate and customary) to the Company. Solvay’s obligations under the merger agreement with respect to the debt financing or replacement financing (as applicable) will apply to such financing as amended, supplemented or modified. In no event, however, will Solvay or Merger Subsidiary be required to amend or waive any of the terms or conditions of the debt financing agreements or replacement financing agreements or pay any fees in excess of or not contemplated debt financing agreements or replacement financing agreements or to consummate the merger any earlier than the time set forth in the merger agreement.

The obtaining of the debt financing or the replacement financing (or any other financing) is not a condition to the closing of the merger.

 

-81-


Table of Contents

Employee Benefits Matters

During the period beginning at the effective time of the merger and ending on the first anniversary of the closing date (or such shorter period of employment, as the case may be), Solvay will, or will cause the surviving corporation to, provide to each employee who is actively employed by the Company or its subsidiaries at the effective time of the merger (each of whom we refer to as a covered employee), a base salary or base wage, target annual bonus and long-term incentive compensation opportunities, broad-based severance entitlements and pension, welfare and other employee benefits that are substantially comparable in the aggregate to the base salary or base wage, target annual bonus and long-term incentive compensation opportunities, broad-based severance entitlements and pension, welfare and other employee benefits provided by the Company or its subsidiaries to such covered employee immediately prior to the effective time of the merger. These requirements will not apply to covered employees who are covered by a collective bargaining agreement.

In the event any covered employee first becomes eligible to participate under any employee benefit plan, program, policy or arrangement of Solvay or any of its subsidiaries following the effective time of the merger, Solvay will, or will cause its subsidiaries to, use reasonable best efforts to: (i) waive any preexisting condition exclusions and waiting periods with respect to participation and coverage requirements applicable to such covered employee under any Solvay employee benefit plan providing medical, dental or vision benefits to the same extent such limitation would have been waived or satisfied under the Company employee benefit plan such covered employee participated in immediately prior thereto and (ii) provide such covered employee with credit for any copayments and deductibles paid under a Company employee benefit plan prior to such covered employee’s coverage under any Solvay employee benefit plan during the calendar year in which such amount was paid, to the same extent such credit was given under the Company employee benefit plan such covered employee participated in immediately prior thereto in satisfying any applicable deductible or out-of-pocket requirements under such Solvay employee benefit plan.

As of the effective time of the merger, Solvay will, or will cause its subsidiaries to, recognize all service of each covered employee prior to the effective time of the merger with the Company and its subsidiaries for purposes of vesting, determination of benefit level (including, without limitation, with respect to vacation and severance entitlements, but excluding benefit accrual or benefit levels under defined benefit pension plans or retiree welfare plans) and eligibility to participate in any Solvay employee benefit plan, as if such service had been performed with Solvay, except to the extent it would result in any duplication of benefits for the same period of service or to the extent such service was not recognized immediately prior to the effective time of the merger under a comparable employee benefit plan of the Company or any of its subsidiaries.

Effective as of immediately prior to the effective time of the merger, unless otherwise directed in writing by Solvay at least five business days prior to the effective time of the merger, the Company will terminate the Company’s Employees’ Savings Plan (which we refer to as the Company 401(k) Plan), pursuant to resolutions of the Company’s board of directors that are reasonably satisfactory to Solvay. In connection with the termination of the Company 401(k) Plan, Solvay will, subject to the terms of any applicable collective bargaining agreement, permit each eligible covered employee to become a participant in an eligible retirement plan of Solvay or any of its subsidiaries (which we refer to as the Solvay 401(k) Plan) and make rollover contributions of eligible rollover distributions in cash or notes (in the case of participant loans) in an amount equal to the eligible rollover distribution portion of the account balance distributed to each such covered employee from such plan to the Solvay 401(k) Plan. During the period beginning at the effective time of the merger and ending on December 31, 2017, Solvay will, or will cause the surviving corporation to, provide to each covered employee who, as of the effective time of the merger, received non-discretionary transition credits pursuant to the terms of the Company Employees’ Savings Plan and who commences participation in the Solvay 401(k) Plan, transition credits calculated in accordance with the terms of the Company Employees’ Savings Plan as in effect on the date the merger agreement was executed, but only to the extent such transition credits were reflected on the financial projections of the Company provided to Solvay prior to the date on which the merger agreement was executed. In the event the tax qualification requirements of the Code applicable to the Solvay 401(k) Plan (including, without

 

-82-


Table of Contents

limitation, non-discrimination requirements) would reduce Solvay’s ability to comply with the conditions of the foregoing sentence, and, after using reasonable best efforts, Solvay is unable to provide the non-discretionary transition credits pursuant to the Solvay 401(k) Plan as required by the merger agreement, any such transition credits that cannot be provided by the Solvay 401(k) Plan will be taken into account for purposes of the compensation and benefits comparability covenant set forth above.

The Company will be permitted to finally and conclusively determine, in good faith and in the ordinary course of business consistent with past practice, the annual bonus amounts earned in respect of the 2015 calendar year in accordance with the parameters set forth below, and pay such bonus amounts in the ordinary course of business consistent with past practice, but no later than the closing date.

 

    Annual bonus amounts under the Company Annual Incentive Compensation Plan and the Company Employee Incentive Plan will be based on funding (i) at actual performance levels with respect to applicable financial metrics and (ii) at the greater of actual or target performance levels with respect to applicable key non-financial performance metrics; and

 

    Annual bonus amounts under the Company Sales Incentive Plans will be based on funding at actual performance levels with respect to all applicable performance metrics.

In the event a covered employee’s employment is terminated after June 30, 2016 and prior to December 31, 2016 by Solvay, the surviving corporation or any of their respective affiliates without “cause” (as such term is defined in the Company Employee Income Continuity Plan) or by such covered employee for “good reason” (which generally includes (i) a reduction in annual base salary or wage rate and (ii) a relocation of the employee to a location not within 50 miles of the location where he or she was employed immediately prior to the effective time of the merger), such employee will, no later than 30 calendar days following such termination, be paid a bonus award for the 2016 calendar year under the annual bonus plan applicable to such employee, based on target performance levels and prorated for the portion of the 2016 calendar year (based on calendar days) elapsed between January 1, 2016 and the effective date of such covered employee’s termination of employment.

As of the effective time of the merger, each performance cash award granted under the Company Stock Plan will, as required by the terms of the Company Stock Plan and applicable award agreements as in effect on the date of the merger agreement, vest at maximum performance, and each holder thereof will remain subject to the service-based vesting component of such award in accordance with the terms of the Company Stock Plan and applicable award agreements as in effect at the date of the merger agreement.

The Company will be permitted to establish a retention bonus pool of $5 million in the aggregate from which it may grant employees of the Company (other than the Company’s named executive officers) cash awards. The retention bonus pool will be allocated by the Company in consultation with Solvay

Prior to the effective time of the merger, the Company will take all actions, including adopting any resolutions or amendments, that are necessary to prohibit further or increased enrollment in, or contributions under, the Company’s Employee Stock Purchase Plan from those in effect on the date the merger agreement was executed and terminate the Company’s Employee Stock Purchase Plan effective immediately prior to the effective time of the merger.

Prior to the closing date, subject to Solvay’s continuing obligations under the merger agreement and except to the extent precluded by the terms of any employee benefit plan, an applicable collective bargaining agreement or by applicable law, the Company will take all actions that may be necessary or appropriate to terminate each employee benefit plan that, not later than 30 calendar days prior to the closing date, Solvay requests that the Company terminate in accordance with the terms of such plan. All resolutions, notices, participant communications or other documents issued, adopted or executed in connection with the termination of such employee benefit plans will be subject to Solvay’s prior review and approval.

 

-83-


Table of Contents

Solvay will, and will cause the surviving corporation to, honor in accordance with their respective contractual terms all employee benefit obligations to current and former employees under certain of the Company employee benefit plans.

Conditions to the Merger

The respective obligations of the Company, Solvay and Merger Subsidiary to consummate the merger are subject to the satisfaction or waiver at or prior to the closing of the merger of the following conditions:

 

    the approval of the merger agreement by the holders of at least a majority of the outstanding shares of our common stock must have been obtained in accordance with Delaware law;

 

    no applicable law prohibits the consummation of the merger;

 

    any waiting period (and extensions thereof) applicable to the merger under the HSR Act must have expired or been terminated, and any applicable waiting period must have expired or been terminated, or, if applicable, approval obtained (which approval remains in full force and effect), under any similar foreign antitrust or competition law in Brazil, the European Union, Israel, Japan, Mexico, South Korea, Turkey and Ukraine; and

 

    the parties must have received written notice that any review, investigation or other proceeding under Exon-Florio with respect to the merger and the other transactions contemplated by the merger agreement has concluded without action or recommendation for suspension or prohibition, or the President of the United States of America must not, within fifteen calendar days of a CFIUS report to him, have announced a decision to take any action to block, suspend or otherwise prevent the consummation of the merger or any of the other transactions contemplated by the merger agreement.

The obligations of Solvay and Merger Subsidiary to effect the merger are also subject to the satisfaction or waiver by Solvay at or prior to the closing of the merger of the following additional conditions:

 

    the Company must have performed in all material respects all obligations required by the merger agreement to be performed by it at or prior to the effective time of the merger;

 

    the representations and warranties of the Company regarding certain aspects of its capitalization must be true and correct, other than by a de minimis amount;

 

    certain of the Company’s representations and warranties regarding due organization, corporate power and authority and corporate approvals, disclosure of brokers and broker’s fees, inapplicability of certain anti-takeover statutes, absence of a rights plan and receipt of a fairness opinion from J.P. Morgan must be true and correct (disregarding all qualifications relating to materiality or material adverse effect) in all material respects at and as of the effective time of the merger (other than representations and warranties that by their terms address matters only as of another specified time, which must be true in all material respects only as of such time);

 

    the Company’s other representations and warranties set forth in the merger agreement (disregarding all qualifications relating to materiality or material adverse effect) must be true at and as of the effective time of the merger (other than such representations and warranties that by their terms address matters only as of another specified time, which must be true in all material respects only as of such time), with only such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Company material adverse effect;

 

    Solvay must have received from the Company a certificate signed by an executive officer of the Company, dated as of the closing date of the merger, certifying that all of the above conditions with respect to the representations and warranties and performance of obligations of the Company have been satisfied;

 

    the non-occurrence of any event, occurrence, revelation or development of a state of circumstances which, individually or in the aggregate, has had or would reasonably be expected to have a Company material adverse effect;

 

-84-


Table of Contents
    Solvay or Merger Subsidiary must have received the written approval of DSS to operate the business of the Company pursuant to a FOCI mitigation arrangement in accordance with the NISPOM; and

 

    DDTC must not have sent a notice that DDTC has made the final determination that DDTC will neither approve (i) the registration of the surviving corporation as a manufacturer or exporter of defense articles under ITAR nor (ii) the transfer from the surviving corporation to Solvay of the surviving corporation’s registration as a manufacturer or exporter of defense articles under ITAR.

The Company’s obligation to effect the merger is also subject to the satisfaction or waiver by the Company at or prior to the closing of the merger of the following additional conditions:

 

    each of Solvay and Merger Subsidiary must have performed in all material respects all obligations required by the merger agreement to be performed by each of them at or prior to the effective time of the merger;

 

    certain of Solvay’s representations and warranties regarding corporate approvals must be true and correct in all material respects at and as of the effective time of the merger (other than representations and warranties that by their terms address matters only as of another specified time, which must be true in all material respects only as of such time);

 

    Solvay’s and Merger Subsidiary’s other representations and warranties set forth in the merger agreement (disregarding all qualifications relating to materiality or material adverse effect) must be true at and as of the effective time of the merger (other than such representations and warranties that by their terms address matters only as of another specified time, which must be true in all material respects only as of such time), with only such exceptions as have not had and would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on Solvay’s or Merger Subsidiary’s ability to perform its obligations under the merger agreement or consummate the merger or the other transactions contemplated by the merger agreement or prevent, materially impede or materially delay the consummation by Solvay or Merger Subsidiary of the merger or the other transactions contemplated by the merger agreement; and

 

    the non-occurrence of any event, occurrence, revelation or development of a state of circumstances which, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on Solvay’s or Merger Subsidiary’s ability to perform its obligations under the merger agreement or consummate the merger or the other transactions contemplated by the merger agreement or prevent, materially impede or materially delay the consummation by Solvay or Merger Subsidiary of the merger or the other transactions contemplated by the merger agreement.

Termination

The Company and Solvay may, by mutual written agreement, terminate the merger agreement and abandon the merger at any time prior to the effective time of the merger, notwithstanding any approval of the merger agreement by the Company’s stockholders.

The merger agreement may also be terminated and the merger abandoned at any time prior to the effective time of the merger, notwithstanding any approval of the merger agreement by the Company’s stockholders, as follows:

 

    by either Solvay or the Company, if:

 

   

the merger has not been consummated on or before the six month anniversary of the merger agreement, except that (a) if on such date, the conditions to closing relating to (i) the expiration of waiting periods of obtaining approvals under the HSR Act or similar antitrust or competition laws of certain foreign jurisdictions, (ii) review of the merger by CFIUS or (iii) the written approval of DSS are not satisfied but all other conditions to closing have been satisfied or waived (or, in the

 

-85-


Table of Contents
 

case of conditions that by their nature are to be satisfied at closing or on the closing date, are capable of being satisfied on such date), then the merger agreement will be extended automatically, without any action on the part of the parties, for three additional months (we refer to this six month termination date, as it may be extended for three months, as the merger agreement end date), and (b) this termination right is not available to any party whose breach of the merger agreement results in the failure of the merger to be consummated by such time;

 

    any applicable law restrains, enjoins or otherwise prohibits the Company or Solvay from consummating the merger and such injunction has become final and nonappealable; or

 

    at the special meeting, including any adjournment or postponement thereof, the stockholders of the Company do not approve the merger agreement.

 

    by Solvay, if:

 

    the Board of Directors makes an adverse recommendation change, or at any time after receipt or public announcement of an acquisition proposal (as defined above in “The Merger Agreement—No Solicitation; Other Offers”), the Board of Directors fails to reaffirm its recommendation as promptly as practicable (and in any event within five business days) after receipt of any written request from Solvay to do so;

 

    there is a breach of any of the representations or warranties made by the Company, or of any of its covenants, in the merger agreement that would cause the condition to the closing that is related to the accuracy of the Company’s representations and warranties and the performance, in all material respects, of its obligations in the merger agreement, to not be satisfied and be incapable of being satisfied by the merger agreement end date; or

 

    the Company intentionally and materially breaches its obligations not to solicit acquisition proposals except in compliance with the agreement or to hold a special meeting of the Company’s stockholders to vote on the proposal to adopt the merger agreement.

 

    by the Company, if:

 

    prior to the special meeting of the Company’s stockholders to vote on the proposal to adopt the merger agreement, the Board of Directors makes an adverse recommendation change in compliance with the terms of the merger agreement in order to enter into an alternative acquisition agreement in connection with a superior proposal (as defined above in “The Merger Agreement—No Solicitation; Other Offers”) subject to payment of the termination fee, as described below under “The Merger Agreement—Termination Fee” beginning on page 86; or

 

    there is a breach of any of the representations or warranties made by Solvay or Merger Subsidiary, or any of their respective covenants, in the merger agreement that would cause the condition to closing that is related to the accuracy of Solvay’s and Merger Subsidiary’s representations and warranties and the performance, in all material respects, of their respective obligations in the merger agreement, to not be satisfied, and be incapable of being satisfied by the merger agreement end date.

Termination Fee

In certain circumstances, we may be required to pay Solvay a termination fee if the merger agreement is terminated. The termination fee would be payable in the following circumstances:

 

    if Solvay terminates the merger agreement because the Board of Directors makes an adverse recommendation change, or at any time after receipt or public announcement of an acquisition proposal (as defined above in “The Merger Agreement—No Solicitation; Other Offers”), the Board of Directors fails to reaffirm its recommendation as promptly as practicable (and in any event within five business days) after receipt of a written request from Solvay to do so;

 

-86-


Table of Contents
    if Solvay terminates the merger agreement because the Company intentionally and materially breaches its obligations not to solicit acquisition proposals except in compliance with the merger agreement or to hold a special meeting for its stockholders to vote on the proposal to adopt the merger agreement;

 

    if the Company terminates the merger agreement prior to the special meeting of the Company’s stockholders to vote on the proposal to adopt the merger agreement because the Board of Directors makes an adverse recommendation change in compliance with the terms of the merger agreement in order to enter into an alternative acquisition agreement in connection with a superior proposal (as defined above in “The Merger Agreement—No Solicitation; Other Offers”); or

 

    either Solvay or the Company terminates the merger agreement because the Company stockholders do not approve the merger agreement at the special meeting, including any adjournment or postponement thereof, and (i) prior to such termination, an acquisition proposal has been publicly announced or otherwise been communicated to the Board of Directors or its stockholders, and (ii) within 12 months following the date of such termination, the Company enters into a definitive agreement with respect to or recommends to its stockholders an acquisition proposal, or an acquisition proposal is consummated.

In the case of the first and second bullets above, we must pay Solvay the termination fee within one business day after such termination.

In the case of the third bullet above, we must pay Solvay the termination fee immediately before and as a condition to such termination.

In the case of the fourth bullet above, we must pay Solvay the termination fee within five business days after the earlier of entry into a definitive agreement with respect to, recommendation to the Company’s stockholders of or consummation of, such acquisition proposal.

The termination fee is a cash amount equal to $140,000,000.

Expenses

Except as otherwise provided in the merger agreement, all costs and expenses incurred in connection with the merger agreement will be paid by the party incurring such cost or expense.

Remedies

If the merger agreement is terminated as a result of a knowing and intentional breach of the merger agreement, the breaching party will be fully liable for any and all liabilities and damages incurred or suffered by the other party as a result. The measure of the Company’s damages in the event of a knowing and intentional breach of the merger agreement or in the event of fraud will be determined by reference to the total amount that would have been recoverable by the Company’s stockholders if the Company’s stockholders were third party beneficiaries of the Agreement (the Company’ stockholders are not third party beneficiaries of the Agreement).

In addition, in the event that the merger agreement is terminated under circumstances in which the termination fee becomes payable and the termination fee is paid by the Company, the termination fee (and any additional interest due on the termination fee amount as a result of the Company failing to promptly pay when due the termination fee) will be Solvay’s and Merger Subsidiary’s sole and exclusive remedy for monetary damages under the merger agreement.

The parties are also entitled to an injunction or injunctions to prevent a breach of the merger agreement, and to enforce specifically the performance of the terms and provisions of the merger agreement. There is no requirement to obtain, furnish or post any bond with or as a condition to obtaining such injunction or injunctions.

 

-87-


Table of Contents

Indemnification; Directors’ and Officers’ Insurance

From and after the effective time of the merger, Solvay and the surviving corporation will indemnify and hold harmless to the fullest extent permitted by applicable law (and will, subject to repayment under certain limited circumstances, advance expenses to) the Company’s present and former directors, officers and employees, each of whom we refer to as an indemnified person, against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative, or investigative, arising out of or related to such indemnified person’s services as a director or officer of the Company, as a director, officer or member of any subsidiaries of the Company or as a trustee or fiduciary of any pension or other benefit plan of the Company or any of its subsidiaries, whether asserted or claimed prior to, at or after the effective time of the merger (including in connection with the merger and the other transactions contemplated by the merger agreement and actions to enforce such indemnification or advancement rights).

For a period of six years from the effective time of the merger, Solvay shall cause to be maintained in effect the provisions in the surviving corporation’s certificate of incorporation and bylaws (or in the organizational documents of any successor to the business of the surviving corporation) regarding elimination of liability of directors, indemnification of officers, directors and employees and advancement of expenses that are no less advantageous to the intended beneficiaries than the corresponding provisions in existence on July 28, 2015.

Solvay and the surviving corporation shall maintain in effect, for at least six years from the effective time of the merger, the current policies of directors and officers liability insurance and fiduciary liability insurance maintained by the Company and the Company’s subsidiaries for the indemnified persons and any other persons otherwise covered by such policies prior to the effective time of the merger. Alternatively, the Company may, at its option, prior to the effective time of the merger (or, if the Company is unable to do so, Solvay will cause the surviving corporation to), obtain and fully pre-pay the premium for the non-cancellable extension of the currently existing directors’ and officers’ liability insurance and fiduciary liability insurance maintained by the Company and its subsidiaries, in each case for a claims reporting or discovery period of at least six years from and after the effective time of the merger with respect to any claim related to any period at or prior to the effective time of the merger. Such policy must have terms, conditions, retentions and limits of liability that are no less favorable to the insureds than the Company’s existing policies, and must be maintained in full force in effect for its full term. This obligation is subject to an annual premium cap of 300% of the last annual premium amount paid by the Company for such insurance.

The indemnified persons, together with their respective heirs and legal representatives, have the right to enforce the provisions of the merger agreement relating to their indemnification.

Amendments and Waivers

The merger agreement may be amended or waived by the parties any time prior to the effective time of the merger, whether before or after the approval of our stockholders of the proposal to adopt the merger agreement has been obtained. Any amendment or waiver must be in writing and signed, in the case of an amendment, on behalf of each of the parties, and in the case of a waiver, by each party against whom the waiver is to be effective. After the approval of our stockholders of the proposal to adopt the merger agreement has been obtained, no amendment or waiver can be made that would require further approval by the stockholders of the Company without such further approval having first been obtained.

 

-88-


Table of Contents

ADVISORY VOTE ON MERGER-RELATED COMPENSATION FOR THE COMPANY’S NAMED EXECUTIVE OFFICERS

This section sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation for each named executive officer of the Company that is based on or otherwise relates to the merger. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section we use such term to describe the merger-related compensation payable to our named executive officers. The “golden parachute” compensation payable to these individuals is subject to a non-binding advisory vote of the Company’s stockholders, as described below in this section.

The estimated value of the payments and benefits that the Company’s named executive officers will receive in connection with the merger are quantified below in accordance with Item 402(t) of Regulation S-K. The estimated values are based on (i) per share merger consideration of $75.25, (ii) salary, target bonus levels and stock-based award holdings as of the date of this proxy statement, (iii) a merger closing assumed to occur on July 31, 2015 (the last practicable date determined in accordance with Item 402(t) of Regulation S-K) and (iv) a termination of each named executive officer by the Company without “cause” or by the executive for good reason (for purposes of this section, each a “qualifying termination” under the terms of the applicable plan), in either case, immediately following the assumed July 31, 2015 closing of the merger.

The following table, footnotes and discussion describe single and double-trigger benefits for the named executive officers. For purposes of this discussion, “single-trigger” refers to benefits that arise solely from the effective time of the merger and “double trigger” refers to benefits that require two conditions, namely the effective time of the merger and a qualifying termination of employment that occurs prior to the second anniversary thereof. Depending on when the merger occurs, certain stock-based awards that are now unvested and included in the table below may vest pursuant to the terms of the stock-based awards based on the completion of continued service with the Company or the achievement of applicable performance goals, in each case, independent of the merger. In addition, the amounts indicated below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement, and do not reflect certain compensation actions that may occur before completion of the merger. As a result, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below. All dollar amounts have been rounded to the nearest whole dollar.

Golden Parachute Compensation

 

Name

   Cash ($)(1)      Equity ($)(2)      Pension /
NQDC ($)(3)
     Tax
Reimbursement
($)(4)
     Other ($)(5)      Total ($)(6)  

Shane D. Fleming

     5,971,104         —           2,676,114         11,247,825         10,968,473         30,863,516   

Daniel G. Darazsdi

     2,468,928         2,155,090         4,027         —           2,206,994         6,835,039   

Roy D. Smith

     2,086,951         —           950,837         2,356,989         1,858,268         7,253,045   

William N. Avrin

     2,015,177         —           —           —           1,639,348         3,654,525   

William G. Wood

     1,784,137         1,584,642         —           1,460,570         1,599,124         6,428,473   

David M. Drillock

     —           —           —           —           743,334         743,334   

 

(1) The amounts in this column reflect the double-trigger cash severance payments that would become payable to each of Messrs. Fleming, Darazsdi, Smith, Avrin and Wood upon a qualifying termination of employment. Because Mr. Drillock voluntarily retired from the Company on October 31, 2014, he would not be eligible to receive such payments.

Pursuant to the terms of the Executive Income Continuity Plan, for each of Messrs. Fleming, Darazsdi, Smith, Avrin and Wood, the cash amount reflects the named executive officer’s lump sum severance entitlement in an amount equal to 300% of the sum of the named executive officer’s annual base salary as of the date of the termination and the greater of (i) the named executive officer’s annual target bonus and

 

-89-


Table of Contents

(ii) the average percentage payout of the named executive officer’s annual target bonus during the two preceding years, multiplied by the named executive officer’s annual target bonus, provided that, one-third of such amount is conditioned on the named executive officer’s execution of an agreement with the Company establishing post-termination non-competition restrictions that endure for a period of one year following the named executive officer’s termination of employment.

 

(2) The amounts in this column reflect single-trigger payments made in respect of unvested Company Stock Options and double-trigger payments of the Deferred RSU Payment and the Deferred Restricted Stock Payment made in respect of unvested Company RSUs and unvested shares of Company Restricted Stock, as set forth in more detail below. Amounts do not reflect payments made on account of vested Company Stock Options, vested Company SARs, vested Company RSUs, Company Deferred Stock Rights and vested shares of Company Restricted Stock. All of the Company Stock Options and Company RSUs held by each of Messrs. Fleming, Smith and Avrin are fully vested because each such executive meets the early retirement vesting requirements pursuant to the terms of the Company Stock Plan (at least age 55 and more than 10 years of Company service). Similarly, Mr. Drillock is vested in all of his Company Stock Options and Company RSUs because he satisfied the Company Stock Plan’s early retirement vesting criteria upon his retirement from the Company in October 2014. Please see the section entitled “The Merger Agreement—Treatment of Common Stock and Stock-Based Awards” beginning on page 65 for a description of the treatment of outstanding stock-based awards in connection with the merger.

 

     Single-Trigger Vesting      Double Trigger Vesting         

Name

   Unvested Company
Stock Options ($)
     Unvested Company
RSUs ($)
     Unvested Company
Restricted Stock ($)
     Total ($)  

Shane D. Fleming

     —           —           —           —     

Daniel G. Darazsdi

     1,362,406         423,206         369,478         2,155,090   

Roy D. Smith

     —           —           —           —     

William N. Avrin

     —           —           —           —     

William G. Wood

     1,111,771         472,871         —           1,584,642   

David M. Drillock

     —           —           —           —     

 

(3) For Messrs. Fleming and Smith the amounts in this column represent the difference in the present value of retirement benefits payable under the ESERP as a result of each such named executive officer being credited with five additional years of service and the removal of any actuarial reduction upon a termination of employment without “cause” or for “good reason” prior to age 60, a single-trigger pension enhancement that vests upon the effective time of the merger and is paid upon the applicable named executive officer’s termination of employment. For Mr. Darazsdi, the amount in this column represents the value of unvested company contributions attributed to his account under the Company’s Supplemental Savings Plan. These unvested company contributions are subject to single-trigger vesting and will become vested upon the effective time of the merger pursuant to the terms of the Company’s Supplemental Savings Plan.

 

(4) The amounts in this column represent the double-trigger amount in respect of Section 4999 of the Code payable to each of Messrs. Fleming, Smith and Wood under the Company’s Compensation Taxation Equalization Plan, without regard to any reduction for the “reasonable compensation” value attributable to each executive’s non-compete covenant or for the “reasonable compensation” value attributable to some or all of the 2015 bonus and the 2013 performance cash award, and some of the 2014 and 2015 performance cash awards. The application of any reduction for the “reasonable compensation” value attributable to the 2015 bonus and the 2013, 2014 and 2015 performance cash awards will depend on when the effective time of the merger occurs, and the actual achievement of financial and other objectives through the effective time.

 

-90-


Table of Contents
(5) The amounts in this column represent single-trigger payments made in respect of 2015 bonuses, the double-trigger amounts in which each named executive officer would vest pursuant to the terms of the performance cash awards and the double-trigger benefit continuation that each of Messrs. Fleming, Darazsdi, Smith, Avrin and Wood would be entitled pursuant to the terms of the Executive Income Continuity Plan as more specifically set forth below.

 

Name

   2013
Performance
Cash Award
($)(a)
     2014
Performance
Cash Award
($)(a)
     2015
Performance
Cash Award
($)(a)
     2015 Bonus ($)(b)      Benefits
Continuation
($)(c)
     Total($)  

Shane D. Fleming

     3,200,000         3,300,000         3,400,000         1,022,438         46,036         10,968,473   

Daniel G. Darazsdi

     450,000         680,000         700,000         337,225         39,769         2,206,994   

Roy D. Smith

     500,000         515,000         530,000         274,845         38,423         1,858,268   

William N. Avrin

     450,000         450,000         460,000         252,634         26,715         1,639,348   

William G. Wood

     430,000         440,000         460,000         223,669         45,455         1,599,124   

David M. Drillock(7)

     493,334         250,000         —           —           —           743,334   

 

  (a) Upon the effective time of the merger, the performance conditions under the performance cash awards granted in respect of 2013, 2014 and 2015 will be deemed satisfied at maximum levels, and upon a subsequent qualifying termination, each named executive officer will be deemed to have fully satisfied the service-based vesting component of each such award, which will be payable on the original payment date, pursuant to its terms.

 

  (b) The amounts in this column represent the named executive officer’s annual bonus for 2015 (assuming, for purposes of this calculation, target performance).

 

  (c) The amounts in this column represent the value of the named executive officer’s continuation, for a period of two years following the named executive officer’s termination, in all of the Company’s employee benefit programs (e.g., medical, dental and group life insurance, financial planning and tax preparation and counseling services, but excluding participation in any Company retirement plans or disability insurance), on the same basis as such named executive officer participated immediately prior to his or her termination of employment. These double-trigger benefits are provided pursuant to the terms of the Executive Income Continuity Plan.

 

(6) Messrs. Fleming, Darazsdi, Smith, Avrin and Wood are each entitled to reimbursement of relocation expenses (if any) relating to any previously required relocation of the named executive officer, and reimbursement of legal fees and expenses incurred by the named executive officer in connection with his termination (including those incurred contesting or disputing such termination, seeking to obtain or enforce any right of benefit or in connection with any tax audit or proceeding relating to the imposition of tax under Section 4999 of the Code). Because the named executive officers’ right to reimbursement (which represents a double-trigger benefit) is not subject to a cap and cannot otherwise be estimated until the underlying expenses are incurred, such amounts are not reflected in the table.

 

(7) Mr. Drillock’s employment terminated on October 31, 2014 as a result of his voluntary retirement from the Company and has been included in the above table in accordance with the requirements of Item 402(t) of Regulation S-K.

Merger-Related Compensation Proposal

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 14a-21(c) of the Exchange Act, the Company is seeking non-binding, advisory stockholder approval of the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the merger as disclosed above in this section. The proposal gives the Company’s stockholders the opportunity to express their views on the merger-related compensation of the Company’s named executive officers.

 

-91-


Table of Contents

Accordingly, the Company is requesting stockholders to adopt the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that may be paid or become payable to the Company’s named executive officers, in connection with the merger, and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “Advisory Vote on Merger-Related Compensation for the Company’s Named Executive Officers—Golden Parachute Compensation,” are hereby APPROVED.”

Vote Required and the Company Board Recommendation

The Company seeks your advisory vote on the compensation that may be paid or become payable to the Company’s named executive officers in connection with the merger. The vote on this proposal is a vote separate and apart from the vote to adopt the merger agreement. Accordingly, you may vote not to approve this proposal on merger-related named executive officer compensation and vote to adopt the merger agreement and vice versa. Because the vote is advisory in nature, it will not be binding on the Company or the surviving corporation in the merger, regardless of whether the merger agreement is adopted. Approval of the non-binding, advisory proposal with respect to the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the merger is not a condition to completion of the merger. Failure to approve this non-binding, advisory proposal will have no effect on the vote to adopt the merger agreement. Because the merger-related compensation to be paid or become payable to the named executive officers in connection with the merger is based on contractual arrangements with the named executive officers, such compensation may be payable, regardless of the outcome of this advisory vote, if the merger agreement is adopted (subject only to the contractual obligations applicable thereto).

The advisory, non-binding vote on the compensation that may be paid or become payable to the Company’s named executive officers in connection with the merger will be approved if holders of a majority of the shares of Company’s common stock present, in person or represented by proxy, at the special meeting and entitled to vote thereon vote “FOR” such proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION THAT MAY BE PAID OR BECOME PAYABLE TO THE COMPANY’S NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGER.

 

-92-


Table of Contents

MARKET PRICE OF COMMON STOCK

Our common stock is listed for trading on the NYSE under the symbol “CYT”. The table below shows the high and low sales price of our common stock, for the periods indicated, as reported on the NYSE.

 

FY 2013

   Common Stock Price      Dividend
Per Share
 
   High      Low     

First quarter

   $ 39.32       $ 35.02       $ 0.0625   

Second quarter

   $ 38.75       $ 34.25       $ 0.0625   

Third quarter

   $ 40.83       $ 36.70       $ 0.0625   

Fourth quarter

   $ 46.86       $ 40.30       $ 0.0625   

FY 2014

                    

First quarter

   $ 48.91       $ 43.78       $ 0.0625   

Second quarter

   $ 52.91       $ 46.76       $ 0.0625   

Third quarter

   $ 54.62       $ 46.90       $ 0.125   

Fourth quarter

   $ 49.90       $ 42.17       $ 0.125   

FY 2015

                    

First quarter

   $ 54.28       $ 42.50       $ 0.125   

Second quarter

   $ 62.71       $ 53.19       $ 0.125   

Third quarter (through August 26, 2015)

   $ 74.68       $ 56.22       $ 0.125   

The closing price of our common stock on the NYSE on July 28, 2015, the last trading day prior to the public announcement of the execution of the merger agreement, was $58.39 per share of common stock. If the merger is completed, you will be entitled to receive $75.25 in cash, without interest, less any applicable withholding taxes, for each share of our common stock owned by you (unless you have properly exercised, and not lost, your appraisal rights with respect to such shares), which represents a premium of approximately 28.9% to the closing price of our common stock on July 28, 2015, the last trading day prior to the public announcement of the execution of the merger agreement and a premium of approximately 46.2% to the volume weighted average price of our common stock over the one-year period prior to July 27, 2015.

On [], 2015, the most recent practicable date before this proxy statement was mailed to our stockholders, the closing price for our common stock on the NYSE was $[] per share of common stock. You are encouraged to obtain current market quotations for our common stock in connection with voting your shares of common stock.

The most recent quarterly dividend that we declared prior to the date of this proxy statement was $0.125 per share of common stock declared on July 16, 2015 and was paid on August 25, 2015 to stockholders of record as of August 10, 2015. Under the merger agreement, we are permitted to continue to pay a regular quarterly cash dividend of up to $0.125 per share on such dates as are consistent with the Company’s historical practice prior to completion of the merger. Dividends are subject to sufficient funds being legally available and to declaration by our Board of Directors.

 

-93-


Table of Contents

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial ownership of our common stock as of August 26, 2015, at which time there were 71,545,572 shares outstanding. Ownership information is included for (i) our directors and the named executive officers, (ii) all directors and executive officers as a group, and (iii) each person or entity known by us to beneficially own more than 5% of our common stock. Except as specified below, each person or entity listed below had sole voting and investment power with respect to the shares listed next to their name. Unless otherwise noted below, the business address of the persons listed is: Cytec Industries Inc., 5 Garret Mountain Plaza, Woodland Park, New Jersey 07424.

Beneficial Stock Ownership of Directors and Executive Officers

 

Name

   Record &
Street
Name
Shares(1)
     +    Savings
Plan
Shares(2)
     +    Deferred
Stock
Shares(3)
     +    Stock
Option
Shares(4)
     =    Total
Beneficial
Ownership
     Percent
of Class
 

W.N. Avrin

     30,076            15,547            11,131            201,318            258,072         0.4   

C.A. Davis

     36,288                  27,536                  63,824         (5)   

D.G. Darazsdi

     4,910            505                  7,081            12,496         (5)   

D.M. Drillock

     4,722                  27,465            8,742            40,929         (5)   

A.G. Fernandes

     14,038                  47,125                  61,163         (5)   

S.D. Fleming

     34,544            100,690            159,833            720,370            1,015,437         1.4   

D.P. Hess

     4,808                              4,808         (5)   

L.L. Hoynes, Jr

     27,790                  30,682                  58,472         (5)   

B.C. Johnson

     7,650                  25,335                  32,985         (5)   

C.P. Lowe

     7,912                  41,476                  49,388         (5)   

W.P. Powell

     18,390                  20,011                  38,401         (5)   

T.W. Rabaut

     38,112                  22,128                  60,240         (5)   

R.P. Sharpe

     13,108                  46,243                  59,351         (5)   

R.D. Smith

     30,336            63,733            47,581            207,187            348,837         0.5   

W.G. Wood

     26,102            8,572                  92,632            127,306         0.2   

All directors and officers as a group (21 persons)

     352,007            213,816            516,171            1,392,821            2,474,815         3.5   

 

(1) Includes for Mr. Fernandes, shares held in family trusts or foundations. Also includes for each of Ms. Davis and Messrs. Johnson, Powell and Sharpe, shares owned jointly with their spouses. Excludes for Mr. Smith, 2,000 shares for which he disclaims beneficial ownership. The total for all directors and officers as a group also includes an additional 1,044 shares beneficially owned by an officer’s ex-spouse.
(2) Represents the officers’ proportionate share of our Common Stock held by the Company’s Employees’ Savings Plan and the Company’s Supplemental Savings Plan at July 31, 2015. In the case of Mr. Smith and all directors and officers as a group, also includes shares held in Individual Retirement Accounts. The total for all directors and officers as a group also includes an additional 3,786 shares beneficially owned by an officer’s ex-spouse.
(3) Shares issuable under the Company Stock Plan following termination of employment or, as to the directors, retirement from the Board of Directors.
(4) Shares which may be acquired within 60 days through the exercise of stock options, regardless of whether the exercise price is below, at or above the current market price of our common stock. Includes for Mr. Avrin, 71,421 stock options beneficially owned by his ex-spouse. The total for all directors and officers as a group also includes an additional 8,630 shares beneficially owned by an officer’s ex-spouse.
(5) Less than 0.1%

None of the shares reflected in the stock ownership table have been pledged as security.

 

-94-


Table of Contents

Security Ownership of Certain Beneficial Owners

 

Title of Class

  

Name and Address
of Beneficial Owner

   Amount and
Nature of
Beneficial
Ownership
    Percent
of
Class(1)
 

Common Stock

  

T. Rowe Price Associates, Inc.

100 E. Pratt Street

Baltimore, MD 21202

    

 

8,233,482

Shares

(2) 

  

    11.5   

Common Stock

  

FMR LLC; Edward C. Johnson, 3d;

and Abigail P. Johnson

245 Summer Street

Boston, MA 02210

    

 

7,196,237

Shares

(3) 

  

    10.1   

Common Stock

  

Franklin Resources, Inc.; Charles B. Johnson;

Rupert H. Johnson, Jr.; and Franklin Advisers, Inc.

One Franklin Parkway

San Mateo, CA 94403

    

 

6,036,022

Shares

(4) 

  

    8.4   

Common Stock

  

BlackRock, Inc.

40 East 52nd Street

New York, NY 10022

    

 

5,428,350

Shares

(5) 

  

    7.6   

Common Stock

  

Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

    

 

4,888,017

Shares

(6) 

  

    6.8   

 

(1) Percent of class based on shares outstanding at August 26, 2015.
(2) Based solely on an amended Schedule 13G, filed August 10, 2015 with the SEC, which reports beneficial ownership as of July 31, 2015 as (i) sole power to vote or direct the vote as to 1,767,000 shares, (ii) sole power to dispose of 8,233,482 shares, and (ii) shared power to vote or dispose of 0 shares.
(3) The following is based solely on an amended Schedule 13G, filed July 10, 2015 with the SEC by FMR LLC; Edward C. Johnson 3d; and Abigail P. Johnson which reports beneficial ownership as of June 30, 2015 on behalf of its direct and indirect subsidiaries including FMR Co., Inc.; Pyramis Global Advisors Trust Company; Pyramis Global Advisors, LLC; and Strategic Advisers, Inc. FMR LLC has (i) sole power to vote or direct the vote as to 238,915 shares, and (ii) sole power to dispose or to direct the disposition of 7,196,237 shares; Edward C. Johnson 3rd has sole power to dispose or to direct the disposition of 7,196,237 shares; Abigail P. Johnson has sole power to dispose or to direct the disposition of 7,196,237 shares. Neither FMR LLC nor Edward C. Johnson 3d nor Abigail P Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management and Research Company (“FMR Co”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.
(4)

The following is based solely on an amended Schedule 13G, filed February 9, 2015 with the SEC by Franklin Resources, Inc.; Charles B. Johnson; Rupert H. Johnson, Jr.; and Franklin Advisers, Inc. which reports beneficial ownership as of December 31, 2014. Charles B. Johnson has (i) sole power to vote or direct the vote as to 0 shares, and (ii) sole power to dispose or direct the disposition of 0 shares. Franklin Resources, Inc. has (i) sole power to vote or direct the vote as to 0 shares, and (ii) sole power to dispose or direct the disposition of 0 shares. Rupert H. Johnson, Jr. has (i) sole power to vote or direct the vote as to 852 shares, and (ii) sole power to dispose or direct the disposition of 852 shares; Franklin Templeton Investments Australia has (i) sole power to vote or direct the vote as to 29,000 shares, and (ii) sole power to dispose or direct the disposition of 29,000 shares; Fiduciary Trust Company International has (i) sole power to vote or direct the vote as to 1,528,583 shares, and (ii) sole power to dispose or direct the disposition of 1,578,334 shares; Franklin Advisors, Inc. has (i) sole power to vote or direct the vote as to 4,018,456 shares,

 

-95-


Table of Contents
  and (ii) sole power to dispose or direct the disposition of 4,024,236 shares; Franklin Templeton Institutional has (i) sole power to vote or direct the vote as to 0 shares, and (ii) sole power to dispose or direct the disposition of 340,000 shares; and Fiduciary International, Inc. has (i) sole power to vote or direct the vote as to 63,600 shares, and (ii) sole power to dispose or direct the disposition of 63,600 shares.
(5) Based solely on an amended Schedule 13G, filed January 26, 2015 with the SEC, which reports beneficial ownership as of December 31, 2014 as (i) sole power to vote or direct the vote as to 4,931,209 shares, and (ii) sole power to dispose or direct the disposition of 5,428,350 shares.
(6) Based solely on an amended Schedule 13G, filed February 10, 2015 with the SEC, which reports beneficial ownership as of December 31, 2014 as (i) sole power to vote or direct the vote as to 47,414 shares, (ii) sole power to dispose of 4,846,153 shares, and (ii) shared power to dispose of 41,864 shares.

 

-96-


Table of Contents

APPRAISAL RIGHTS

If the merger is completed, the Company’s stockholders will be entitled to appraisal rights under Section 262 of the DGCL, provided that they comply with the conditions set forth in that statute.

Pursuant to Section 262 of the DGCL, if you do not wish to accept the merger consideration provided for in the merger agreement, you have the right to seek appraisal of your shares of our common stock and to receive payment in cash for the fair value of your shares of our common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be fair value. The “fair value” of your shares of our common stock as determined by the Delaware Court of Chancery may be less than, equal to or more than the $75.25 per share that you are otherwise entitled to receive under the terms of the merger agreement. These rights are known as appraisal rights. The Company’s stockholders who do not vote in favor of the proposal to adopt the merger agreement and who properly demand appraisal for their shares in compliance with the provisions of Section 262 of the DGCL will be entitled to appraisal rights. Strict compliance with the statutory procedures set forth in Section 262 of the DGCL is required. Failure to follow precisely any of the statutory requirements will result in the loss of your appraisal rights.

This section is intended only as a brief summary of certain provisions of the statutory procedures that a stockholder must follow under the DGCL in order to seek and perfect appraisal rights. This summary, however, is not a complete statement of all applicable requirements and the law pertaining to appraisal rights under the DGCL, and is qualified in its entirety by reference to Section 262 of the DGCL, the full text of which appears in Annex B to this proxy statement. The following summary does not constitute any legal or other advice, nor does it constitute a recommendation that stockholders exercise their appraisal rights under Section 262 of the DGCL.

Pursuant to Section 262 of the DGCL, when a merger agreement will be submitted for adoption at a meeting of stockholders, the Company must notify the stockholders who were stockholders of record on the record date for notice of such meeting, not less than 20 days before the meeting to vote on the merger, that appraisal rights will be available. A copy of Section 262 of the DGCL must be included with the notice.

This proxy statement constitutes the Company’s notice to our stockholders that appraisal rights are available in connection with the merger and the full text of Section 262 of the DGCL is attached to this proxy statement as Annex B, in compliance with the requirements of Section 262 of the DGCL. If you wish to exercise your appraisal rights, you should carefully review the text of Section 262 of the DGCL contained in Annex B. Failure to comply timely and properly with the requirements of Section 262 of the DGCL will result in the loss of your appraisal rights. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of our common stock, the Company believes that a stockholder considering the exercise of such rights should seek the advice of legal counsel.

If you wish to demand appraisal of your shares of our common stock, you must satisfy each of the following conditions: You must deliver to the Company a written demand for appraisal of your shares of our common stock before the vote is taken to approve the merger proposal; the written demand must reasonably inform us of the identity of the holder of record of shares of our common stock who intends to demand appraisal of his, her or its shares of our common stock; and you must not vote or submit a proxy in favor of the proposal to adopt the merger agreement.

If you fail to comply with either of these conditions and the merger is completed, you will be entitled to receive payment for your shares of our common stock as provided in the merger agreement, but you will not have appraisal rights with respect to your shares of our common stock. A holder of shares of our common stock wishing to exercise appraisal rights must hold of record the shares of our common stock on the date the written demand for appraisal is made and must continue to hold the shares of our common stock of record through the effective time of the merger. A proxy that is submitted and does not contain voting instructions will, unless

 

-97-


Table of Contents

revoked, be voted “FOR” the merger proposal, and it will result in the loss of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must either submit a proxy containing instructions to vote “AGAINST” the merger proposal or abstain from voting on the merger proposal. Voting against or failing to vote for the merger proposal by itself does not constitute a demand for appraisal within the meaning of Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote on the proposal to adopt the merger agreement.

All demands for appraisal should be addressed to Cytec Industries Inc., Attention: Secretary, 5 Garret Mountain Plaza, Woodland Park, New Jersey 07424, and must be delivered to the Company before the vote is taken to approve the proposal to adopt the merger agreement at the special meeting, and must be executed by, or on behalf of, the record holder of the shares of our common stock. The demand must reasonably inform the Company of the identity of the stockholder and the intention of the stockholder to demand appraisal of the “fair value” of his, her or its shares of our common stock. A stockholder’s failure to deliver to the Company the written demand for appraisal prior to the taking of the vote on the proposal to adopt the merger agreement at the special meeting of stockholders will result in the loss of appraisal rights.

Only a holder of record of shares of our common stock is entitled to demand an appraisal of the shares registered in that holder’s name. Accordingly, to be effective, a demand for appraisal by a holder of our common stock must be made by, or on behalf of, the record stockholder. The demand should set forth, fully and correctly, the record stockholder’s name as it appears on the stockholder’s stock certificate(s) or in the transfer agent’s records, and in the case of uncertificated shares, should specify the stockholder’s mailing address and the number of shares registered in the stockholder’s name. The demand must state that the person intends thereby to demand appraisal of the stockholder’s shares in connection with the merger. The demand cannot be made by the beneficial owner if he or she does not also hold the shares of our common stock of record. The beneficial holder must, in such cases, have the registered owner, such as a bank, brokerage firm or other nominee, submit the required demand in respect of those shares of our common stock. If you hold your shares of our common stock through a bank, brokerage firm or other nominee and you wish to exercise your appraisal rights, you should consult with your bank, brokerage firm or the other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee and obtaining notice of the effective date of the merger.

If shares of our common stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for appraisal must be made in that capacity. If the shares of our common stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner or owners. A record owner, such as a bank, brokerage firm or other nominee, who holds shares of our common stock as a nominee for others, may exercise his or her right of appraisal with respect to shares of our common stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares of our common stock as to which appraisal is sought. Where no number of shares of our common stock is expressly mentioned, the demand will be presumed to cover all shares of our common stock held in the name of the record owner. If a stockholder holds shares of our common stock through a broker who in turn holds the shares through a central securities depository nominee such as Cede & Co., a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record owner.

Within 10 days after the effective time of the merger, the surviving corporation in the merger must give notice of the date that the merger became effective to each of the Company’s record stockholders who has complied with Section 262 of the DGCL and who did not vote in favor of the proposal to adopt the merger agreement. At any time within 60 days after the effective time of the merger, any stockholder who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the stockholder’s

 

-98-


Table of Contents

demand and accept the merger consideration specified by the merger agreement for that holder’s shares of our common stock by delivering to the surviving corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the effective time of the merger will require written approval of the surviving corporation. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, with such approval conditioned upon such terms as the Delaware Court of Chancery deems just. If the surviving corporation does not approve a request to withdraw a demand for appraisal when that approval is required, or, except with respect to any stockholder who withdraws such stockholder’s right to appraisal in accordance with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the stockholder will be entitled to receive only the appraised value of his, her or its shares of our common stock determined in any such appraisal proceeding, which value may be less than, equal to or more than the merger consideration offered pursuant to the merger agreement.

Within 120 days after the effective time of the merger, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 of the DGCL and is entitled to appraisal rights under Section 262 of the DGCL may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of our common stock held by all such stockholders. Upon the filing of the petition by a stockholder, service of a copy of such petition shall be made upon the surviving corporation. The surviving corporation has no obligation to file such a petition, has no present intention to file a petition and holders should not assume that the surviving corporation will file a petition. Accordingly, it is the obligation of the holders of our common stock to initiate all necessary petitions to perfect their appraisal rights in respect of shares of our common stock within the time prescribed in Section 262 of the DGCL and the failure of a stockholder to file such a petition within the period specified in Section 262 of the DGCL could nullify the stockholder’s previous written demand for appraisal. In addition, within 120 days after the effective time of the merger, any stockholder who has properly complied with the requirements of Section 262 of the DGCL and who did not vote in favor of the merger proposal will be entitled to receive from the surviving corporation, upon written request, a statement setting forth the aggregate number of shares of our common stock not voted in favor of the merger proposal and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. The statement must be mailed within 10 days after such written request has been received by the surviving corporation or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A person who is the beneficial owner of shares of our common stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition for appraisal or request from the surviving corporation such statement.

If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the surviving corporation, then the surviving corporation will be obligated, within 20 days after receiving service of a copy of the petition, to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares of our common stock and with whom agreements as to the value of their shares of our common stock have not been reached. After notice to stockholders who have demanded appraisal from the Register in Chancery, if such notice is ordered by the Delaware Court of Chancery, the Delaware Court of Chancery will conduct a hearing upon the petition and determine those stockholders who have complied with Section 262 of the DGCL and who have become entitled to the appraisal rights provided by Section 262 of the DGCL. The Delaware Court of Chancery may require stockholders who have demanded payment for their shares of our common stock to submit their stock certificates to the Register in Chancery for notation of the pendency of the appraisal proceedings; if any stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that stockholder.

After determination of the stockholders entitled to appraisal of their shares of our common stock, the Delaware Court of Chancery will appraise the shares of our common stock, determining their fair value as of the effective time of the merger after taking into account all relevant factors exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. When the fair value has been determined, the Delaware Court of

 

-99-


Table of Contents

Chancery will direct the payment of such value upon surrender by those stockholders of the certificates representing their shares of our common stock. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective time of the merger and the date of payment of the judgment.

You should be aware that an investment banking opinion as to the fairness from a financial point of view of the consideration to be received in a sale transaction, such as the merger, is not an opinion as to fair value under Section 262 of the DGCL. Although we believe that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery and stockholders should recognize that such an appraisal could result in a determination of a value that may be less than, equal to or more than the merger consideration. Moreover, we do not anticipate offering more than the merger consideration to any stockholder exercising appraisal rights and reserve the right to assert, in any appraisal proceeding, that, for purposes of Section 262 of the DGCL, the “fair value” of a share of our common stock is less than the merger consideration. In determining “fair value,” the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court has stated that in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which could be ascertained as of the date of the merger which throw any light on future prospects of the merged corporation. Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

Costs of the appraisal proceeding (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and imposed upon the surviving corporation and the stockholders participating in the appraisal proceeding by the Delaware Court of Chancery, as it deems equitable in the circumstances. Upon the application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts used in the appraisal proceeding, to be charged pro rata against the value of all shares of our common stock entitled to appraisal. Any stockholder who demanded appraisal rights will not, after the effective time of the merger, be entitled to vote shares of our common stock subject to that Company for any purpose or to receive payments of dividends or any other distribution with respect to those shares of our common stock, other than with respect to payment as of a record date prior to the effective time of the merger. If no petition for appraisal is filed within 120 days after the effective time of the merger, or if the stockholder otherwise fails to perfect, successfully withdraws or loses such holder’s right to appraisal, then the right of that stockholder to appraisal will cease and that stockholder will be deemed to have been converted at the effective time of the merger into the right to receive the $75.25 cash payment (without interest) for his, her or its shares of our common stock pursuant to the merger agreement. Inasmuch as the Company has no obligation to file such a petition, and the Company has no present intention to do so, any holder of shares of our common stock who desires such a petition to be filed is advised to file it on a timely basis. A stockholder will fail to perfect or effectively lose the right to appraisal if no petition for appraisal is filed within 120 days after the effective date of the merger. In addition, as indicated above, a stockholder may withdraw his, her or its demand for appraisal in accordance with Section 262 of the DGCL and accept the merger consideration offered pursuant to the merger agreement.

 

-100-


Table of Contents

Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL will result in the loss of a stockholder’s statutory appraisal rights.

In view of the complexity of Section 262 of the DGCL, the Company’s stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

 

-101-


Table of Contents

DELISTING AND DEREGISTRATION OF COMMON STOCK

If the merger is completed, our common stock will be delisted from the NYSE and deregistered under the Exchange Act and we will no longer file periodic reports with the SEC on account of our common stock.

OTHER MATTERS

As of the date of this proxy statement, the Board of Directors knows of no matters that will be presented for consideration at the special meeting other than as described in this proxy statement.

HOUSEHOLDING OF PROXY MATERIALS

Some banks, brokerage firms or other nominees may be participating in the practice of “householding” proxy statements. This means that only one copy of this proxy statement may have been sent to multiple Company stockholders sharing the same address. The Company will promptly deliver a separate copy of this proxy statement to you if you direct your request to Jodi Allen, Investor Relations, Cytec Industries Inc., 5 Garret Mountain Plaza, Woodland Park, NJ 07424, Telephone: (973) 357-3100, or Okapi Partners LLC, the Company’s proxy solicitor, by calling toll-free at 1-855-305-0855. If you want to receive separate copies of a Company proxy statement in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, brokerage firm or other nominee, or you may contact the Company at the above address and telephone number.

SUBMISSION OF STOCKHOLDER PROPOSALS

If the merger is consummated, we will not have public stockholders and there will be no public participation in any future meeting of stockholders. However, if the merger is not completed, we expect to hold an annual meeting of stockholders in 2016 for the fiscal year ending December 31, 2015, which we refer to as our 2016 Annual Meeting.

Some proposals pursuant to Rule 14a-8 under the Exchange Act may be eligible for inclusion in the proxy statement for our 2016 Annual Meeting. Such stockholder proposals must have satisfied all the applicable requirements of Rule 14a-8 and must be submitted, along with proof of ownership of our common stock in accordance with Rule 14a-8(b)(2), to our executive offices in Woodland Park, New Jersey, no later than 5:00 p.m. Eastern Time on November 9, 2015. We strongly encourage any stockholder interested in submitting a proposal to contact our Secretary in advance of this deadline to discuss the proposal, and stockholders may find it helpful to consult knowledgeable counsel with regard to the detailed requirements of applicable securities laws. Submitting a stockholder proposal does not guarantee that we will include it in our proxy statement.

In addition, under our by-laws, any stockholder who intends to nominate a candidate for election to the Board of Directors or to propose any business at our 2016 Annual Meeting, other than precatory (non-binding) proposals presented pursuant to Rule 14a-8, must give notice to our Secretary between December 18, 2015 and the close of business on January 18, 2016. The notice must include the representations, agreements and information specified in our by-laws, including information concerning the nominee or proposal and representations and agreements from the nominee, as the case may be, and information about the stockholder’s ownership of and agreements related to our stock. If the 2016 Annual Meeting is held more than 30 days before or more than 60 days after the anniversary date of the 2015 Annual Meeting of Common Stockholders, the stockholder must submit notice of any such nomination and of any such proposal that is not made pursuant to Rule 14a-8 not more than 120 days prior to and not later than the close of business on the 90 days prior to such 2016 Annual Meeting or the 10th day following the day on which the date of such meeting is first publicly

 

-102-


Table of Contents

announced. We will not entertain any proposals or nominations at the annual meeting that do not meet the requirements set forth in our by-laws. The by-laws are posted on our web site at www.cytec.com. To make a submission or to request a copy of our by-laws, stockholders should contact our Secretary. We strongly encourage stockholders to seek advice from knowledgeable counsel before submitting a proposal or a nomination.

Pursuant to Rule 14a-4 under the Exchange Act, we intend to retain discretionary authority to vote proxies with respect to stockholder proposals for which the proponent does not seek inclusion of the proposed matter in our proxy statement for the 2016 Annual Meeting, except in circumstances where we receive reasonable notice of the proposed matter before we send our proxy materials for the 2016 Annual Meeting, and the proponent complies with the other requirements set forth in Rule 14a-4.

WHERE YOU CAN FIND MORE INFORMATION

The Company files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information that the companies file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The Company’s public filings are also available in electronic format to the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov. You can also review the Company’s SEC filings on its web site at www.cytec.com. Information included on the Company’s website is not a part of this proxy statement.

The SEC allows the Company to “incorporate by reference” information into this proxy statement, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except for any information superseded by information contained directly in this proxy statement. This proxy statement incorporates by reference the documents described below that the Company has previously filed with the SEC, as well as the annexes to this proxy statement. These documents contain important information about the Company and its financial condition.

The following documents listed below that the Company has previously filed with the SEC are incorporated by reference:

 

    Annual Report on Form 10-K, for the fiscal year ended December 31, 2014 filed with the SEC on February 24, 2015;

 

    Quarterly Report on Form 10-Q, for the quarterly period ended March 31, 2015 filed with the SEC on April 20, 2015;

 

    Quarterly Report on Form 10-Q, for the quarterly period ended June 30, 2015 filed with the SEC on July 20, 2015;

 

    Definitive Proxy Statement on Schedule 14A for our 2015 Annual Meeting of Common Stockholders, filed on March 6, 2015; and

 

    Current Reports on Form 8-K, filed with the SEC on April 17, 2015 and July 29, 2015.

All documents that the Company files pursuant to Sections 13(a), 13(c), 14 or 15(d) under the Exchange Act from the date of this proxy statement to the date on which the special meeting is held, including any adjournments or postponements, shall also be deemed to be incorporated by reference in this proxy statement. Notwithstanding anything herein to the contrary, any information furnished under Item 2.02 or Item 7.01 of the Company’s Current Reports on Form 8-K and any other information which is furnished, but not filed with the SEC, is not incorporated herein by reference.

 

-103-


Table of Contents

You may obtain any of the documents incorporated by reference from the SEC’s public reference room or the SEC’s Internet website described above. Documents incorporated by reference in this proxy statement are also available from the Company without charge, excluding all exhibits unless specifically incorporated by reference in such documents. Stockholders may obtain documents incorporated by reference in this proxy statement by requesting them in writing or by telephone from the Company at the following address:

Cytec Industries Inc.

5 Garret Mountain Plaza Woodland Park, NJ 07424

Telephone: (973) 357-3100

Attn: Corporate Secretary

If you would like to request documents, please do so by [●], 2015 to receive them before the special meeting. If you request any incorporated documents, the Company will strive to mail them to you by first-class mail, or another equally prompt means, within one business day of receipt of your request.

You should rely only on the information contained in this proxy statement, including the annexes attached hereto or the information incorporated by reference herein, to vote your shares at the special meeting of Company stockholders. The Company has not authorized anyone to provide you with information that differs from that contained in this proxy statement. This proxy statement is dated []. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date, and the mailing of this proxy statement to stockholders shall not create any implication to the contrary.

 

-104-


Table of Contents

Annex A

   Agreement and Plan of Merger, dated as of July 28, 2015, among Cytec Industries Inc., Solvay SA and Tulip Acquisition Inc.

Annex B

   Section 262 of the General Corporation Law of the State of Delaware

Annex C

   Opinion of J.P. Morgan Securities LLC, dated as of July 28, 2015

 

-105-


Table of Contents

Annex A

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

dated as of

July 28, 2015

among

CYTEC INDUSTRIES INC.,

SOLVAY SA

and

TULIP ACQUISITION INC.

 

 

 

 

A-1


Table of Contents

TABLE OF CONTENTS

 

         PAGE  
ARTICLE 1   
DEFINITIONS   
Section 1.01  

Definitions

     A-5   
Section 1.02  

Other Definitional and Interpretative Provisions

     A-12   

ARTICLE 2

  

THE MERGER   
Section 2.01  

The Merger

     A-12   
Section 2.02  

Conversion of Shares

     A-13   
Section 2.03  

Surrender and Payment

     A-13   
Section 2.04  

Dissenting Shares

     A-15   
Section 2.05  

Employee Equity

     A-15   
Section 2.06  

Adjustments

     A-17   
Section 2.07  

Withholding Rights

     A-17   
Section 2.08  

Lost Certificates

     A-18   

ARTICLE 3

  

THE SURVIVING CORPORATION   
Section 3.01  

Certificate of Incorporation

     A-18   
Section 3.02  

Bylaws

     A-18   
Section 3.03  

Directors and Officers

     A-18   

ARTICLE 4

  

REPRESENTATIONS AND WARRANTIES OF THE COMPANY   
Section 4.01  

Corporate Existence and Power

     A-18   
Section 4.02  

Corporate Authorization

     A-19   
Section 4.03  

Governmental Authorization

     A-19   
Section 4.04  

Non-contravention

     A-19   
Section 4.05  

Capitalization

     A-19   
Section 4.06  

Subsidiaries

     A-20   
Section 4.07  

SEC Filings and the Sarbanes-Oxley Act

     A-21   
Section 4.08  

Financial Statements

     A-22   
Section 4.09  

Disclosure Documents

     A-22   
Section 4.10  

Absence of Certain Changes

     A-22   
Section 4.11  

No Undisclosed Material Liabilities

     A-22   
Section 4.12  

Compliance with Laws and Court Orders

     A-22   
Section 4.13  

Litigation

     A-23   
Section 4.14  

Properties

     A-23   
Section 4.15  

Intellectual Property

     A-24   
Section 4.16  

Taxes

     A-26   
Section 4.17  

Employees and Employee Benefit Plans

     A-26   
Section 4.18  

Environmental Matters

     A-29   
Section 4.19  

Material Contracts

     A-29   
Section 4.20  

Insurance

     A-30   
Section 4.21  

Finders’ Fees

     A-30   
Section 4.22  

Opinion of Financial Advisor

     A-31   
Section 4.23  

Antitakeover Statutes and Rights Agreement

     A-31   
Section 4.24  

Proscribed Information

     A-31   

 

A-2


Table of Contents
         PAGE  
ARTICLE 5   
REPRESENTATIONS AND WARRANTIES OF PARENT   
Section 5.01  

Corporate Existence and Power

     A-31   
Section 5.02  

Corporate Authorization

     A-31   
Section 5.03  

Governmental Authorization

     A-32   
Section 5.04  

Non-contravention

     A-32   
Section 5.05  

Disclosure Documents

     A-32   
Section 5.06  

Financing

     A-32   
Section 5.07  

Finders’ Fees

     A-33   

ARTICLE 6

  

COVENANTS OF THE COMPANY   
Section 6.01  

Conduct of the Company

     A-33   
Section 6.02  

Company Stockholder Meeting

     A-35   
Section 6.03  

No Solicitation; Other Offers

     A-36   
Section 6.04  

Title Insurance

     A-38   
Section 6.05  

Financing Cooperation

     A-38   
Section 6.06  

Access to Information

     A-41   

ARTICLE 7

  

COVENANTS OF PARENT   
Section 7.01  

Obligations of Parent and Merger Subsidiary

     A-41   
Section 7.02  

Voting of Shares

     A-41   
Section 7.03  

Director and Officer Liability

     A-41   
Section 7.04  

Employee Matters

     A-42   
Section 7.05  

Indemnification Related to Financing

     A-45   
Section 7.06  

Conduct of Business of Parent and Merger Subsidiary Pending the Merger

     A-45   
Section 7.07  

Debt Financing

     A-45   

ARTICLE 8

  

COVENANTS OF PARENT AND THE COMPANY   
Section 8.01  

Reasonable Best Efforts

     A-46   
Section 8.02  

Company Proxy Statement

     A-47   
Section 8.03  

Public Announcements

     A-48   
Section 8.04  

Notices of Certain Events

     A-48   
Section 8.05  

Confidentiality

     A-48   
Section 8.06  

Section 16 Matters

     A-48   
Section 8.07  

Stock Exchange De-listing; 1934 Act Deregistration

     A-49   

ARTICLE 9

  

CONDITIONS TO THE MERGER   
Section 9.01  

Conditions to the Obligations of Each Party

     A-49   
Section 9.02  

Conditions to the Obligations of Parent and Merger Subsidiary

     A-49   
Section 9.03  

Conditions to the Obligations of the Company

     A-50   

ARTICLE 10

  

TERMINATION   
Section 10.01  

Termination

     A-50   
Section 10.02  

Effect of Termination

     A-51   

 

A-3


Table of Contents
         PAGE  
ARTICLE 11   
MISCELLANEOUS   
Section 11.01  

Notices

     A-51   
Section 11.02  

Survival of Representations, Warranties and Agreements

     A-52   
Section 11.03  

Amendments and Waivers

     A-52   
Section 11.04  

Expenses

     A-53   
Section 11.05  

Disclosure Schedule and SEC Document References

     A-53   
Section 11.06  

Binding Effect; Benefit; Assignment

     A-54   
Section 11.07  

Governing Law

     A-55   
Section 11.08  

Jurisdiction

     A-55   
Section 11.09  

WAIVER OF JURY TRIAL

     A-55   
Section 11.10  

Counterparts; Effectiveness

     A-56   
Section 11.11  

Entire Agreement

     A-56   
Section 11.12  

Severability

     A-56   
Section 11.13  

Specific Performance

     A-56   
Section 11.14  

Obligations of Parent and of the Company

     A-57   

 

A-4


Table of Contents

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as of July 28, 2015 among Cytec Industries Inc., a Delaware corporation (the “Company”), Solvay SA, a public limited company organized under the laws of Belgium (“Parent”), and Tulip Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Subsidiary”).

W I T N E S S E T H :

WHEREAS, the respective Boards of Directors of Parent, the Company and Merger Subsidiary have approved the execution of this Agreement and the transactions contemplated hereby and deemed it advisable that the respective stockholders of the Company and Merger Subsidiary approve and adopt this Agreement pursuant to which, among other things, Parent would acquire the Company by means of a merger of Merger Subsidiary with and into the Company on the terms and subject to the conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01 Definitions. (a) As used herein, the following terms have the following meanings:

Acquisition Proposal” means, other than the transactions contemplated by this Agreement, any offer, proposal or inquiry from any Third Party relating to, or any Third Party indication of interest in, (i) any acquisition or purchase, direct or indirect, of 15% or more of the consolidated assets of the Company and its Subsidiaries or 15% or more of any class of equity or voting securities of the Company or of any of its Subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such Third Party beneficially owning 15% or more of any class of equity or voting securities of the Company or of any of its Subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company or (iii) a merger, consolidation, share exchange, business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company.

Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.

Applicable Law” means, with respect to any Person, any transnational, foreign, federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

Business Day” means a day ending at 11:59 p.m. (Eastern Time), other than Saturday, Sunday or other day on which commercial banks in New York, New York or Belgium or the Department of State of the State of Delaware are authorized or required by Applicable Law to close.

CFIUS” means the Committee on Foreign Investment in the United States.

 

A-5


Table of Contents

Closing Company Material Adverse Effect” means a Company Material Adverse Effect, but not taking into account in such determination any adverse effect from any event, occurrence, revelation or development of a state of circumstances or facts that is reasonably apparent from the Company Disclosure Schedule or from the description of the factual matters set forth in any Company SEC Document filed or furnished with the SEC before the date of this Agreement (excluding any information contained in any part of any Company SEC Document entitled “Risk Factors” or containing a description or explanation of “Forward-Looking Statements”).

Code” means the Internal Revenue Code of 1986.

Company Balance Sheet” means the consolidated balance sheet of the Company as of December 31, 2014 and the footnotes thereto set forth in the Company 10-K.

Company Balance Sheet Date” means December 31, 2014.

Company Deferred Stock Right” means a right to receive shares of Company Stock on a deferred basis under the Company Stock Plan.

Company Disclosure Schedule” means the disclosure schedule dated the date hereof regarding this Agreement that has been provided by the Company to Parent and Merger Subsidiary.

“Company Material Adverse Effect means any change, event, occurrence or effect that (i) is a material adverse effect on the financial condition, business, assets or results of operations of the Company and its Subsidiaries, taken as a whole, or (ii) prevents, materially impedes or materially delays the consummation by the Company of the Merger or the other transactions contemplated by this Agreement, excluding, in the case of each of clause (i) and clause (ii) of this definition, any effect to the extent resulting from (A) changes in any regulatory or legislative conditions, financial, credit, securities or other capital markets conditions or general economic or political conditions, in each case in the United States or any foreign jurisdiction, except in the event that such changes or conditions have a materially disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, relative to the adverse effect that such changes or conditions have on other companies in the advanced composite or mining chemicals business (in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has been a Company Material Adverse Effect), (B) changes (including changes of Applicable Law) or conditions generally affecting the industry in which the Company and its Subsidiaries operate, except in the event that such changes or conditions have a materially disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, relative to the adverse effect that such changes or conditions have on other companies in the advanced composite or mining chemicals business (in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has been a Company Material Adverse Effect), (C) changes in GAAP or the interpretation, application or enforcement thereof, (D) any geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage, terrorism or military actions or any escalation of such acts of war, sabotage, terrorism or military actions threatened or underway, or epidemics, pandemics, earthquakes, hurricanes, tornadoes or other natural disasters or calamities, except in the event that such conditions, disasters or other events have a materially disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, relative to the adverse effect that such conditions, disasters or other events have on other companies in the advanced composite or mining chemicals business (in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has been a Company Material Adverse Effect), (E) any failure, in and of itself, to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise or contributing to such failure that are not otherwise excluded from the definition of Company Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect), (F) the execution, delivery and performance of this Agreement (but not the consummation, except to the extent related to

 

A-6


Table of Contents

the exercise by any third party of any of its rights pursuant to any change in control, anti-assignment or similar provision in any Contract set forth on Section 4.04 of the Company Disclosure Schedule) or the public announcement of this Agreement, the Merger and the other transactions contemplated hereby or the identity of Parent or any of its Affiliates, including, in each case, the effect thereof on the relationships, contractual or otherwise, of the Company or any of its Affiliates with employees, contractors, customers, suppliers, business partners and other third parties, (G) any change in the market price, trading volume or credit rating of any of the Company’s securities (it being understood and agreed that the foregoing shall not preclude any other party to this Agreement from asserting that any facts or occurrences giving rise or contributing to such change that are not otherwise excluded from the definition of Company Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect), (H) any litigation arising from allegation of any breach of fiduciary duty or violation of law relating to this Agreement, the Merger or any of the other transactions contemplated hereby, (I) any liability to the extent accrued or reserved against in the consolidated financial statements included in the Company SEC Documents (or the notes thereto) filed or furnished prior to the date of this Agreement or (J) any action taken at the written request of Parent or Merger Subsidiary.

Company Restricted Stock” means shares of Company Stock subject to forfeiture restrictions granted under the Company Stock Plan.

Company RSU” means a restricted stock unit in respect of shares of Company Stock granted under the Company Stock Plan.

Company SAR” means a stock appreciation right in respect of shares of Company Stock granted under the Company Stock Plan.

Company Stock” means the common stock, $0.01 par value per share, of the Company.

Company Stock Option” means an option to purchase shares of Company Stock granted under the Company Stock Plan.

Company Stock Plan” means the Cytec Industries Inc. 1993 Stock Award and Incentive Plan, as amended.

Company 10-K” means the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2014.

Competition Laws” means statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of competition or restraint of trade.

Contract” means any oral or written contract, agreement, instrument, plan, Lease, license, understanding, undertaking, commitment, arrangement or obligation, other than an Employee Plan (except to the extent otherwise provided by Section 4.19(a)(iv) of this Agreement).

CTA” means Sections 22a-134 through 22a-134e of the Connecticut General Statutes (CGS), as amended, or the law commonly known as the Connecticut property transfer law.

DSS” means the Defense Security Service of the U.S. Department of Defense.

Delaware Law” means the General Corporation Law of the State of Delaware.

Employee Plan” means any (i) “employee benefit plan” as defined in Section 3(3) of ERISA, (ii) compensation, employment, consulting, severance, termination protection, change in control, transaction

 

A-7


Table of Contents

bonus, retention or similar plan, agreement, arrangement, program or policy or (iii) other plan, agreement, arrangement, program or policy providing for compensation, bonuses, profit-sharing, equity or equity-based compensation or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangement), medical, dental, vision, prescription or fringe benefits, life insurance, relocation or expatriate benefits, perquisites, disability or sick leave benefits, employee assistance program, supplemental unemployment benefits or post-employment or retirement benefits (including compensation, pension, health, medical or insurance benefits), in each case whether or not written (x) that is sponsored, maintained, administered, contributed to or entered into by the Company or any of its Affiliates for the current or future benefit of any current or former Service Provider or (y) for which the Company or any of its Subsidiaries has any direct or indirect liability, but, in each case, excluding any statutory plans or programs maintained by a Governmental Authority requiring the payment of social insurance taxes or similar contributions by the Company or any of its Subsidiaries.

Environmental Laws” means any Applicable Laws relating to the protection of the environment, or human health and safety as it relates to Hazardous Substance exposure, including Process Safety Requirements but excluding, for the avoidance of doubt, any Applicable Laws relating to products liability.

Environmental Permits” means all permits, licenses, franchises, certificates, approvals and other similar authorizations of Governmental Authorities relating to Environmental Laws and relating to the business or operations of the Company or any of its Subsidiaries (including the Real Property).

ERISA” means the Employee Retirement Income Security Act of 1974.

ERISA Affiliate” with respect to any entity means any other entity that, together with such first entity, would be treated as a single employer under Section 414 of the Code.

Exon-Florio” means Section 721 of Title VII of the Defense Production Act of 1950 (50 U.S.C. App. 2170).

GAAP” means generally accepted accounting principles in the United States in effect at any specified time.

Governmental Authority” means any transnational, domestic or foreign federal, state or local governmental, regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof.

Hazardous Substance” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material, or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, including any substance, waste or material regulated due to a potential for harm under any Environmental Law.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Intellectual Property” means any and all intellectual property and industrial property rights throughout the world, including (a) trademarks and service marks whether registered or unregistered, brand names, certification marks, collective marks, Internet domain name registrations, logos, slogans, symbols, trade dress and design rights, all registrations, renewals and applications for registration of the foregoing, and all goodwill associated therewith; (b) patents, patent applications, invention disclosures, and all reissuances, continuations, continuations in part, divisionals, extensions, re-examinations, renewals, and related applications; (c) trade secrets, know-how and other confidential or proprietary information, including ideas, inventions, designs, drawings, specifications, product configurations, prototypes, models, improvements, technical data and other

 

A-8


Table of Contents

data, databases, formulae, laboratory notebooks, pricing and cost information, plans, proposals, processes, procedures, schematics, manufacturing techniques, business methods, customer lists and supplier lists, and all tangible embodiments thereof (in any form or medium); (d) copyrights and rights in copyrightable subject matter in published and unpublished works of authorship, including all registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof; and (e) rights in all computer software programs (collectively, “Software”).

International Plan” means any Employee Plan that is not a US Plan.

IRS” means the Internal Revenue Service.

IT Assets” means computers, Software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines and all other information technology equipment, and all associated documentation owned or purported to be owned by, or licensed or leased to, the Company or its Subsidiaries.

Key Employee” means an employee of the Company or any of its Subsidiaries whose annual base compensation is $200,000 or more.

knowing and intentional” means, with respect to any breach of this Agreement, the taking of a deliberate act, or omission, which act or omission constitutes in and of itself a breach, even if breaching was not the conscious object of the act or omission.

knowledge” means, with respect to the Company, the actual knowledge of the named executive officers listed in the Company’s Proxy Statement on Schedule 14A, dated March 6, 2015 (other than the retired Vice President and Chief Financial Officer listed therein) and, with respect to Parent, the actual knowledge of Jean-Pierre Clamadieu, Roger Kearns, Martin de Saignes and Jean-Pierre Labroue.

Licensed Intellectual Property” means any and all Intellectual Property owned by a Third Party and licensed or sublicensed to the Company or any of its Subsidiaries, or for which the Company or any of its Subsidiaries has received a covenant not to be sued.

Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset.

NIDs” means National Interest Determinations.

NISPOM” means the National Industrial Security Program Operating Manual.

NYSE” means the New York Stock Exchange, Inc.

1933 Act” means the Securities Act of 1933.

1934 Act” means the Securities Exchange Act of 1934.

Owned Intellectual Property” means any and all Intellectual Property owned or purported to be owned by the Company or any of its Subsidiaries.

Parent Material Adverse Effect” means any change, event, occurrence or effect that (i) has a material adverse effect on Parent’s or Merger Subsidiary’s ability to perform its obligations hereunder or consummate the Merger or the other transactions contemplated by this Agreement or (ii) prevents, materially impedes or materially delays the consummation by Parent or Merger Subsidiary of the Merger or the other transactions contemplated by this Agreement.

Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

 

A-9


Table of Contents

Process Safety Requirements” means the Process Safety Management of Highly Hazardous Chemicals standard (“PSM”) enacted at 29 CFR 1910.119, et seq. and any Applicable Laws analogous to the foregoing.

Proscribed Information” means Top Secret information, Communication Security information (except classified keys used to operate secure telephone units), Restricted Data (as defined in the U.S. Atomic Energy Act of 1954), Special Access Program information, and Sensitive Compartmented Information, as defined in the NISPOM, Appendix C, at C-4.

Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within any building, structure, facility or fixture.

Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned by such Person.

SEC” means the Securities and Exchange Commission.

Service Provider” means any director, officer, employee or individual independent contractor of the Company or any of its Subsidiaries.

SSA” means a Special Security Agreement, as defined in the NISPOM or related regulations or guidance issued by DSS.

Tax” means any tax, governmental fee or other like assessment or charge of any kind whatsoever (including withholding on amounts paid to or by any Person), together with any interest, penalty, addition to tax or additional amount imposed by any Governmental Authority (a “Taxing Authority”) responsible for the imposition of any such tax (domestic or foreign).

Tax Return” means any report, return, document, declaration or other information or filing required to be supplied to any Taxing Authority with respect to Taxes, including information returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information.

Tax Sharing Agreements” means all existing agreements or arrangements (whether or not written) binding the Company or any of its Subsidiaries that provide for the allocation, apportionment, sharing or assignment of, or indemnification with respect to, any Tax liability or benefit, or the transfer or assignment of income, revenues, receipts, or gains for the purpose of determining any Person’s Tax liability (other than any such agreement or arrangement entered into in the ordinary cause of business that does not have as a principal purpose addressing Tax matters).

Third Party” means any Person, including as defined in Section 13(d) of the 1934 Act, other than Parent or any of its Affiliates.

US Plan” means any Employee Plan that covers Service Providers located primarily within the United States.

WARN” means the Worker Adjustment and Retraining Notification Act and any comparable foreign, state or local law.

 

A-10


Table of Contents

(b) Each of the following terms is defined in the Section set forth opposite such term:

 

Term

   Section

$500,000 Limit

   6.01(j)

Adverse Recommendation Change

   6.03(a)(iii)

Agreement

   Preamble

Alternative Acquisition Agreement

   6.03(a)(iv)

Applicable Date

   4.07(a)

Certificates

   2.03(a)(i)

Closing

   2.01(b)

Closing Date

   2.01(b)

Collective Bargaining Agreement

   4.17(k)

Company

   Preamble

Company 401(k) Plans

   7.04(d)

Company Board Recommendation

   4.02(b)

Company Deferred Stock Right Payment

   2.05(e)

Company Proxy Statement

   4.09

Company Registered IP

   4.15(a)

Company SEC Documents

   4.07(a)

Company Securities

   4.05(b)

Company Stockholder Approval

   4.02

Company Stockholder Meeting

   6.02

Company Subsidiary Securities

   4.06(b)(iii)

Confidentiality Agreement

   6.03(b)(i)

Covered Employee

   7.04(a)

D&O Insurance

   7.03(c)

DDTC

   8.01(b)

Debt Financing

   5.06(a)

Debt Financing Agreements

   5.06(a)

Deferred Restricted Stock Payment

   2.05(g)

Deferred RSU Payment

   2.05(d)

Dissenting Share

   2.03(a)

DTC

   2.03(e)

DTC Payment

   2.03(e)

Effective Time

   2.01(c)

e-mail

   11.01

Encumbrance

   4.14

End Date

   10.01(b)(i)

Environmental Liabilities

   4.18(v)

Exchange Agent

   2.03(a)

Exchange Fund

   2.03(a)(ii)

Financing Sources

   5.06(a)

FOCI

   8.01(b)

Indemnified Person

   7.03(a)

Insured Persons

   7.03(c)

Intervening Event

   6.03(b)(ii)

Lease

   4.14(b)

Leased Real Property

   4.14(b)

Marketing Period

   6.05(b)

Material Contract

   4.19(b)

Maximum Premium

   7.03(c)

Merger

   2.01

 

A-11


Table of Contents

Term

   Section

Merger Consideration

   2.02(a)

Merger Subsidiary

   Preamble

Owned Real Property

   4.14(a)

Parent

   Preamble

Parent 401(k) Plan

   7.04(d)

Parent Plan

   7.04(b)

Proscribed Information Contract

   4.24

PSM

   1.01(a)

Real Property

   4.14(b)

Related Party

   11.06(b)

Replacement Financing

   6.05(a)

Replacement Financing Agreements

   6.05(a)

Replacement Financing Sources

   6.05(a)

Representatives

   6.03(a)

Sanctions

   4.12(c)

Software

   1.01(a)

Superior Proposal

   6.03(e)

Surviving Corporation

   2.01(a)

Taxing Authority

   1.01(a)

Termination Fee

   11.04(b)(i)

Uncertificated Shares

   2.03(a)(ii)

Unvested Restricted Stock

   2.05(g)

Unvested RSU

   2.05(d)

Vested Restricted Stock

   2.05(f)

Vested RSU

   2.05(c)

Section 1.02 Other Definitional and Interpretative Provisions. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any agreement or contract listed on any schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate schedule. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

ARTICLE 2

THE MERGER

Section 2.01 The Merger. (a) At the Effective Time, Merger Subsidiary shall be merged (the “Merger”) with and into the Company in accordance with Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease, and the Company shall be the surviving corporation (the “Surviving Corporation”).

 

A-12


Table of Contents

(b) Subject to the provisions of this Agreement, the closing of the Merger (the “Closing”) shall take place in New York City at the offices of Davis Polk & Wardwell LLP, 450 Lexington Avenue, New York, New York, 10017 as soon as possible, but in any event no later than at 9:00 a.m. (Eastern time) on the fourth Business Day after the date the conditions set forth in Article 9 (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permissible, waiver of those conditions at the Closing) have been satisfied or, to the extent permissible, waived by the party or parties entitled to the benefit of such conditions, or at such other place, at such other time or on such other date as Parent and the Company may mutually agree. The date on which the Closing occurs is referred to herein as the “Closing Date”.

(c) At the Closing, the Company and Merger Subsidiary shall file a certificate of merger with the Delaware Secretary of State and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time (the “Effective Time”) as the certificate of merger is duly filed with the Delaware Secretary of State (or at such later time as may be specified in the certificate of merger).

(d) From and after the Effective Time, the Surviving Corporation shall possess all the rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company and Merger Subsidiary, all as provided under Delaware Law.

Section 2.02 Conversion of Shares. At the Effective Time:

(a) Except as otherwise provided in Section 2.02(b), Section 2.02(c), Section 2.04, or Section 2.05, each share of Company Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive from Parent $75.25 in cash, without interest (the “Merger Consideration”). As of the Effective Time, all such shares of Company Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and shall thereafter represent only the right to receive the Merger Consideration to be paid in accordance with Section 2.03, without interest.

(b) Each share of Company Stock held by the Company as treasury stock or owned by Parent immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto (excluding, for the avoidance of doubt, the outstanding shares of Company Stock held in the rabbi trust pursuant to the Company’s Supplemental Savings Plan, which shall be converted into the Merger Consideration pursuant to Section 2.01(a)).

(c) Each share of Company Stock held by any Subsidiary of either the Company or Parent immediately prior to the Effective Time shall be converted into such number of shares of common stock of the Surviving Corporation such that each such Subsidiary owns the same percentage of the Surviving Corporation common stock immediately following the Effective Time as such Subsidiary owned of Company Stock immediately prior to the Effective Time.

(d) Each share of common stock of Merger Subsidiary outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and, except as provided in Section 2.02(c), shall constitute the only outstanding shares of capital stock of the Surviving Corporation.

Section 2.03 Surrender and Payment. (a) Prior to the Effective Time, Parent shall appoint, with the Company’s prior approval (such approval not to be unreasonably withheld or delayed), an agent (the “Exchange Agent”) for the purpose of exchanging for the Merger Consideration (i) certificates representing shares of Company Stock (the “Certificates”) or (ii) uncertificated shares of Company Stock (the “Uncertificated Shares”). At or prior to the Closing, Parent shall deposit or cause to be deposited with the Exchange Agent an amount in cash in immediately available funds (the “Exchange Fund”) equal to the aggregate Merger

 

A-13


Table of Contents

Consideration to be paid in respect of the Certificates and the Uncertificated Shares, excluding (i) shares of Company Stock outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such shares in accordance with Delaware Law (each such share, a “Dissenting Share”) and (ii) shares held by the Company and by Parent. If a holder of Dissenting Shares fails to perfect, withdraws or otherwise loses the right to appraisal pursuant to Section 262 of the Delaware Law with respect to any Dissenting Shares, (i) such shares of Company Stock shall cease to be Dissenting Shares and (ii) Parent shall make available or cause to be made available to the Exchange Agent additional funds in an amount equal to the product of (x) the number of Dissenting Shares for which the holder thereof has failed to perfect, withdrawn or otherwise lost the right to appraisal pursuant to Section 262 of the Delaware Law and (y) the Merger Consideration. The Exchange Agent shall invest the Exchange Fund as directed by Parent; provided that such investments shall be in obligations of or guaranteed by the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Financial Services LLC, respectively, or in money market funds having a rating in the highest investment category granted by a recognized credit rating agency at the time of investment. Any interest and other income resulting from such investment shall become a part of the Exchange Fund, and any amounts in excess of the aggregate amounts payable under Section 2.02(a) shall be returned to the Surviving Corporation in accordance with Section 2.03(g). To the extent that there are any losses with respect to any such investments, or the Exchange Fund diminishes for any reason below the level required for the Exchange Agent to make prompt cash payment under Section 2.02(a), Parent shall, or shall cause the Surviving Corporation to, promptly replace or restore the cash in the Exchange Fund so as to ensure that the Exchange Fund is at all times maintained at a level sufficient for the Exchange Agent to make such payments under Section 2.02(a).

(b) Promptly after the Effective Time (and in any event within five Business Days), Parent shall send, or shall cause the Exchange Agent to send, to each holder of shares of Company Stock at the Effective Time a letter of transmittal and instructions (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates (or affidavits of loss in lieu thereof as provided in Section 2.08) or surrender of the Uncertificated Shares to the Exchange Agent, which letter of transmittal shall be in customary form and have such other provisions as Parent and the Company may reasonably agree) for use in such exchange. If any Dissenting Shares cease to be Dissenting Shares pursuant to Section 2.04, the Surviving Corporation shall cause the Exchange Agent promptly (and in any event within five Business Days) after the date on which such Dissenting Shares cease to be Dissenting Shares to mail to the record holder of such shares of Company Stock the letter of transmittal and instructions referred to in the immediately preceding sentence, with respect to such shares of Company Stock.

(c) Each holder of shares of Company Stock that have been converted into the right to receive the Merger Consideration shall be entitled to receive, upon (i) surrender to the Exchange Agent of a Certificate, together with a properly completed letter of transmittal, or (ii) receipt of an “agent’s message” by the Exchange Agent (or such other evidence, if any, of surrender as the Exchange Agent may reasonably request) in the case of a book-entry transfer of Uncertificated Shares, in exchange therefor a cash amount by check or wire transfer of immediately available funds to an account designated by such holder (less any required Tax withholdings as provided in Section 2.07) equal to the product of (x) the number of shares of Company Stock represented by such Certificate (or affidavit of loss in lieu thereof as provided in Section 2.08) or book-entry transfer of Uncertificated Shares and (y) the Merger Consideration. Upon such surrender or transfer, as the case may be, each such Certificate or Uncertificated Share shall forthwith be canceled. No interest will be paid or accrued on any amount payable upon such surrender or transfer, as the case may be. Until so surrendered or transferred, as the case may be, each such Certificate or Uncertificated Share shall represent after the Effective Time for all purposes only the right to receive such Merger Consideration.

(d) If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate or the transferred Uncertificated Share is registered, it shall be a condition to such payment that (i) either such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer or such Uncertificated Share shall be properly transferred and (ii) the Person requesting such payment

 

A-14


Table of Contents

shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a Person other than the registered holder of such Certificate or Uncertificated Share or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable.

(e) Prior to the Effective Time, Parent and the Company shall cooperate to establish procedures with the Exchange Agent and the Depository Trust Company (“DTC”) to ensure that (i) if the Closing occurs at or prior to 11:30 a.m. (Eastern time) on the Closing Date, the Exchange Agent will transmit to DTC or its nominee on the Closing Date an amount in cash in immediately available funds equal to the Merger Consideration to be paid in respect of the Certificates and Uncertificated Shares held of record by DTC or such nominee immediately prior to the Effective Time (such amount, the “DTC Payment”) and (ii) if the Closing occurs after 11:30 a.m. (Eastern time) on the Closing Date, the Exchange Agent will transmit to DTC or its nominee on the first Business Day after the Closing Date an amount in cash in immediately available funds equal to the DTC Payment.

(f) After the Effective Time, there shall be no further registration of transfers of shares of Company Stock. If, after the Effective Time, Certificates or Uncertificated Shares are presented to the Surviving Corporation or the Exchange Agent, they shall be canceled and exchanged for the Merger Consideration provided for, and in accordance with the procedures set forth, in this Article 2.

(g) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders of shares of Company Stock entitled thereto six months after the Effective Time shall be returned to the Surviving Corporation, upon demand, and any such holder who has not exchanged shares of Company Stock for the Merger Consideration in accordance with this Section 2.03 prior to that time shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration in respect of such shares without any interest thereon, upon (i) surrender to the Surviving Corporation of a Certificate, together, if requested by the Surviving Corporation, with a properly completed letter of transmittal, or (ii) receipt of an “agent’s message” by the Surviving Corporation (or such other evidence, if any, of transfer as the Surviving Corporation may reasonably request) in the case of a book-entry transfer of Uncertificated Shares. Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the Exchange Agent or any other Person shall be liable to any holder of shares of Company Stock for any amounts paid to a public official pursuant to applicable abandoned property, escheat or similar laws. Any amounts remaining unclaimed by holders of shares of Company Stock two years after the Effective Time (or such earlier date, immediately prior to such time when the amounts would otherwise escheat to or become property of any Governmental Authority) shall become, to the extent permitted by Applicable Law, the property of the Surviving Corporation free and clear of any claims or interest of any Person previously entitled thereto.

Section 2.04 Dissenting Shares. Notwithstanding Section 2.02, Dissenting Shares shall not be converted into the right to receive the Merger Consideration, and a holder thereof shall be entitled to receive only the payment provided by Section 262 of the Delaware Law with respect to such Dissenting Shares, unless such holder fails to perfect, withdraws or otherwise loses the right to appraisal. If, after the Effective Time, such holder fails to perfect, withdraws or otherwise loses the right to appraisal, such shares shall be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration. The Company shall give Parent prompt notice of any written demands received by the Company for appraisal of shares. Except with the prior written consent of Parent or as otherwise required by Applicable Law, the Company shall not make any payment with respect to, or offer to settle or settle, any such demands.

Section 2.05 Employee Equity.

(a) At the Effective Time, each Company Stock Option, whether vested or unvested, that is outstanding and unexercised immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and converted into and shall become a right to receive, as soon as practicable after the Effective Time (but in no event later than five Business Days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of Company Stock subject

 

A-15


Table of Contents

to the Company Stock Option, by (y) the excess, if any, of the amount of the Merger Consideration over the exercise price per share of the Company Stock Option (with the aggregate payment rounded down to the nearest cent), less applicable Tax withholding. For the avoidance of doubt, each Company Stock Option with an exercise price that is equal to or greater than the Merger Consideration shall be canceled without any consideration to the holder thereof.

(b) At the Effective Time, each Company SAR, whether vested or unvested, that is outstanding and unexercised immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and converted into and shall become a right to receive, as soon as practicable after the Effective Time (but in no event later than five Business Days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of Company Stock subject to the Company SAR, by (y) the excess, if any, of the amount of the Merger Consideration over the exercise price per share of the Company SAR (with the aggregate payment rounded down to the nearest cent), less applicable Tax withholding. For the avoidance of doubt, each Company SAR with an exercise price that is equal to or greater than the Merger Consideration shall be canceled without any consideration to the holder thereof.

(c) At the Effective Time, each vested Company RSU (including any Company RSUs that will vest as of the Effective Time) that is outstanding immediately prior to the Effective Time (each, a “Vested RSU”), shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and converted into and shall become a right to receive, as soon as practicable after the Effective Time (but in no event later than five Business Days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of Company Stock subject to the Vested RSU, by (y) the amount of the Merger Consideration, less applicable Tax withholding; provided, that, with respect to any Vested RSUs that constitute nonqualified deferred compensation subject to Section 409A of the Code and that are not permitted to be paid at the Effective Time without triggering a Tax or penalty under Section 409A of the Code, such payment shall be made at the earliest time permitted under the Company Stock Plan and applicable award agreement that will not trigger a Tax or penalty under Section 409A of the Code.

(d) At the Effective Time, each unvested Company RSU (each, an “Unvested RSU”) that is outstanding immediately prior to the Effective Time and will not vest as of the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and converted into and shall become a right to receive an amount in cash (each, a “Deferred RSU Payment”), without interest, equal to the product obtained by multiplying (x) the number of shares of Company Stock subject to the Unvested RSU, by (y) the amount of the Merger Consideration. Each Deferred RSU Payment (or applicable portion thereof) shall be paid (less applicable Tax withholding) on the applicable vesting dates specified under the Company Stock Plan and the agreements evidencing the related Unvested RSU, and shall be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had such Unvested RSUs remained outstanding in accordance with their terms.

(e) At the Effective Time, each Company Deferred Stock Right, shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and converted into and shall become a right to receive, as soon as practicable after the Effective Time (but in no event later than five Business Days thereafter), an amount in cash, without interest, equal to the product obtained by multiplying (x) the number of shares of Company Stock subject to the Company Deferred Stock Right, by (y) the amount of the Merger Consideration, less applicable Tax withholding (such amount, the “Company Deferred Stock Right Payment”); provided, that, the Company Deferred Stock Right Payments made with respect to any Company Deferred Stock Rights that are set forth on Section 2.05(e) of the Company Disclosure Schedule (which, for the avoidance of doubt, constitute nonqualified deferred compensation subject to Section 409A of the Code and that are not permitted to be paid at the Effective Time without triggering a Tax or penalty under Section 409A of the Code), shall be paid at the earliest time permitted under the Company Stock Plan and applicable deferral election form that will not trigger a Tax or penalty under Section 409A of the Code and; provided, further, that Company Deferred Stock Right Payments shall be deemed invested, at the holder’s direction, in one or more of the hypothetical investment

 

A-16


Table of Contents

options as specified on Appendix A of the Company’s Supplemental Savings Plan, it being understood that the Company Deferred Stock Right Payment shall be credited or debited, as applicable, to reflect amounts of hypothetical income and appreciation and depreciation pursuant to such hypothetical investment as of the hypothetical investment date and through the date such amount is paid in accordance with this Section 2.05(e).

(f) At the Effective Time, all restrictions imposed on each vested share of Company Restricted Stock (including any shares of Company Restricted Stock that will vest as of the Effective Time) that is outstanding immediately prior to the Effective Time (collectively, the “Vested Restricted Stock”) shall lapse. At the Effective Time, the Vested Restricted Stock shall be treated in the same manner as Company Stock (other than Company Restricted Stock) pursuant to Section 2.02(a) hereof.

(g) At the Effective Time, each unvested share of Company Restricted Stock (collectively, the “Unvested Restricted Stock”) that is outstanding immediately prior to the Effective Time and will not vest as of the Effective Time shall be cancelled and converted into, and shall become, a right to receive an amount in cash (each, a “Deferred Restricted Stock Payment”), without interest, equal to the product obtained by multiplying (x) the number of shares of Company Stock subject to the Unvested Restricted Stock by (y) the amount of the Merger Consideration. Each Deferred Restricted Stock Payment (or applicable portion thereof) shall be paid (less applicable Tax withholdings) on the applicable vesting dates specified under the Company Stock Plan and the agreements evidencing the related Unvested Restricted Stock, and shall be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had such Unvested Restricted Stock remained outstanding in accordance with its terms.

(h) At or prior to the Effective Time, the Company, the Board of Directors of the Company or the compensation committee of the Board of Directors of the Company, as applicable, shall adopt any resolutions and take any actions which are reasonably necessary to effectuate the provisions of this Section 2.05, including, without limitation, establishing procedures in consultation with Parent pursuant to which holders of Company Deferred Stock Rights may elect hypothetical investment options pursuant to Section 2.05(e).

(i) As soon as practicable after the Effective Time, Parent shall deliver to the holders of the former Unvested RSUs, Unvested Restricted Stock and Company Deferred Stock Rights appropriate notices setting forth such holders’ rights pursuant to the Company Stock Plan and agreements evidencing the grants thereunder, and stating that such Unvested RSUs, Company Deferred Stock Rights and Unvested Restricted Stock have been converted into the right to receive Deferred RSU Payments, Company Deferred Stock Right Payments and Deferred Restricted Stock Payments, as applicable, and that the right to such payments shall be subject to the same forfeiture, termination of employment and acceleration of vesting provisions that would have applied had the related award of Unvested RSUs, Company Deferred Stock Rights or Unvested Restricted Stock, as applicable, remained outstanding in accordance with its terms.

Section 2.06 Adjustments. If, during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of the Company shall occur, including by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon with a record date during such period, but excluding any change that results from any issuance of shares of Company Stock permitted pursuant to Section 6.01 and any exercise of Company Stock Options or Company SARs or any settlement of Company RSUs or Company Deferred Stock Rights outstanding as of the date hereof, the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately adjusted to eliminate the effect of such event on the Merger Consideration or any such other amounts payable pursuant to this Agreement.

Section 2.07 Withholding Rights. Notwithstanding any provision contained herein to the contrary, each of the Exchange Agent, the Surviving Corporation and Parent shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article 2 such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign

 

A-17


Table of Contents

tax law. If the Exchange Agent, the Surviving Corporation or Parent, as the case may be, so withholds amounts, and provided that such amounts withheld are remitted to the appropriate Taxing Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which the Exchange Agent, the Surviving Corporation or Parent, as the case may be, made such deduction and withholding.

Section 2.08 Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond, in such reasonable amount as the Surviving Corporation may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to be paid in respect of the shares of Company Stock represented by such Certificate, as contemplated by this Article 2.

ARTICLE 3

THE SURVIVING CORPORATION

Section 3.01 Certificate of Incorporation. At the Effective Time, the certificate of incorporation of the Company shall, subject to Section 7.03, be amended and restated in its entirety to read identically to the certificate of incorporation of Merger Subsidiary in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be “Cytec Industries Inc.” and, as so amended, such amended and restated certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with Applicable Law.

Section 3.02 Bylaws. The bylaws of Merger Subsidiary in effect at the Effective Time shall, subject to Section 7.03, be the bylaws of the Surviving Corporation until amended in accordance with Applicable Law.

Section 3.03 Directors and Officers. From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with Applicable Law, (i) the directors of Merger Subsidiary at the Effective Time shall be the directors of the Surviving Corporation and (ii) the officers of the Company at the Effective Time shall be the officers of the Surviving Corporation.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to Section 11.05, except (x) as disclosed in any Company SEC Document (as defined in Section 4.07) filed or furnished with the SEC before the date of this Agreement (other than with respect to the representations and warranties in Sections 4.01, 4.02, 4.05, 4.06, 4.21, 4.22 and 4.23) or (y) as set forth in the Company Disclosure Schedule, the Company represents and warrants to Parent that:

Section 4.01 Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the concept of good standing is recognized and where such qualification is necessary, except for those jurisdictions where failure to be in good standing or to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has heretofore made available to Parent true and complete copies of the certificate of incorporation and bylaws of the Company as in effect on the date of this Agreement.

 

A-18


Table of Contents

Section 4.02 Corporate Authorization. (a) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby are within the Company’s corporate powers and, except for the required approval of the Company’s stockholders in connection with the consummation of the Merger, have been duly authorized by all necessary corporate action on the part of the Company. The affirmative vote of the holders of a majority of the outstanding shares of Company Stock is the only vote of the holders of any of the Company’s capital stock necessary in connection with the consummation of the Merger (the “Company Stockholder Approval). Assuming due execution and delivery of this Agreement by Parent and Merger Subsidiary, this Agreement constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Applicable Laws affecting creditors’ rights generally and general principles of equity).

(b) At a meeting duly called and held, the Company’s Board of Directors has (i) unanimously determined that this Agreement and the transactions contemplated hereby are fair to and in the best interests of the Company’s stockholders, (ii) unanimously declared advisable this Agreement and the Merger and the other transactions contemplated hereby and (iii) unanimously resolved, subject to Section 6.03, to recommend approval and adoption of this Agreement by the holders of shares of Company Stock (such recommendation, the “Company Board Recommendation”).

Section 4.03 Governmental Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Authority other than (i) the filing of a certificate of merger with respect to the Merger with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, (ii) compliance with any applicable requirements of the HSR Act and any other applicable Competition Laws, (iii) compliance with any applicable requirements of the 1933 Act, the 1934 Act, and any other applicable state or federal securities laws, (iv) the filings, notices, petitions, statements, registrations or other applications set forth on Section 4.03(iv) of the Company Disclosure Schedule, (v) compliance with any applicable requirements of the NYSE and (vi) any actions or filings the absence of which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.04 Non-contravention. The execution, delivery and performance by the Company of this Agreement and the consummation of the Merger and the other transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the certificate of incorporation or bylaws of the Company, (ii) assuming compliance with the matters referred to in Section 4.03, contravene, conflict with or result in a violation or breach of any provision of any Applicable Law, (iii) require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default, under, or cause or permit the termination, cancellation or acceleration by the other party or parties thereto under, any provision of any Material Contract binding upon the Company or any of its Subsidiaries or (iv) result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries, with only such exceptions, in the case of each of clauses (i) through (iii), as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.05 Capitalization. (a) The authorized capital stock of the Company consists of 150,000,000 shares of Company Stock and 20,000,000 shares of preferred stock of the Company. As of July 24, 2015, there were outstanding 71,463,330 shares of Company Stock (including 58,382 shares of Company Restricted Stock), zero shares of preferred stock of the Company and (i) Company Stock Options to purchase an aggregate of 2,814,527 shares of Company Stock (of which Company Stock Options to purchase an aggregate of 1,699,123 shares of Company Stock were exercisable), (ii) Company SARs relating to an aggregate of 358,838 shares of Company Stock (of which Company SARs relating to an aggregate of 358,838 shares of Company Stock were exercisable), (iii) Company RSUs relating to an aggregate of 209,015 shares of Company Stock (of which Company RSUs relating to an aggregate of zero shares of Company Stock were vested) and (iv) Company Deferred Stock Rights

 

A-19


Table of Contents

relating to an aggregate of 656,754.074 shares of Company Stock. As of July 24, 2015, there were 3,850,353 shares of Company Stock reserved for issuance under the Company Stock Plan. All outstanding shares of Company Stock have been, and all shares that may be issued pursuant to any employee stock option or other compensation plan or arrangement will be, when issued in accordance with the respective terms thereof, duly authorized and validly issued, fully paid and nonassessable and free of preemptive rights. Section 4.05(a) of the Company Disclosure Schedule contains a true and complete list of all Company Stock Options, Company SARs, Company RSUs, Company Deferred Stock Rights and Company Restricted Stock, including with respect to each such award, as applicable, the date of grant, exercise price, vesting schedule, expiration date and number of shares of Company Stock subject thereto. Five Business Days prior to the Closing Date, the Company shall provide Parent with a revised version of Section 4.05(a) of the Company Disclosure Schedule, updated as of such date.

(b) There are no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote. Except as set forth in this Section 4.05 and for changes since July 24, 2015 resulting from (x) the exercise of Company Stock Options or Company SARs outstanding on such date, (y) the vesting and settlement of Company RSUs or Company Deferred Stock Rights outstanding on such date or (z) any action with respect to Company Securities that is permitted pursuant to Section 6.01, there are no issued, reserved for issuance or outstanding (i) shares of capital stock or other voting securities of, or other ownership interests in, the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or other voting securities of, or other ownership interests in, the Company, (iii) warrants, calls, options or other rights to acquire from the Company, or other obligations of the Company to issue, any shares of capital stock, or other voting securities of, or other ownership interests in, or securities convertible into or exchangeable for capital stock or other voting securities of the Company or (iv) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights in, the Company (the items in clauses (i) through (iv) being referred to collectively as the “Company Securities”), and there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Securities. Neither the Company nor any of its Subsidiaries is a party to any voting agreement with respect to the voting of any Company Securities.

(c) Except as set forth in this Section 4.05, none of (i) the shares of capital stock of the Company or (ii) Company Securities are owned by any Subsidiary of the Company.

Section 4.06 Subsidiaries. (a) Each Subsidiary of the Company has been duly organized, is validly existing and (where applicable) in good standing under the laws of its jurisdiction of organization, has all organizational powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Each such Subsidiary is duly qualified to do business as a foreign entity and is in good standing in each jurisdiction where the concept of good standing is recognized and where such qualification is necessary, except for those jurisdictions where failure to be in good standing or to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. All Subsidiaries of the Company and their respective jurisdictions of organization are identified in the Company 10-K.

(b) All of the outstanding capital stock of or other voting securities of, or other ownership interests in, each Subsidiary of the Company, is owned by the Company, directly or indirectly, free and clear of any Lien except for transfer restrictions imposed by Applicable Laws restricting sales and other dispositions of securities. There are no issued, reserved for issuance or outstanding (i) securities of the Company or any of its Subsidiaries convertible into, or exchangeable for, shares of capital stock or other voting securities of, or other ownership interests in, any Subsidiary of the Company, (ii) warrants, calls, options or other rights to acquire from the Company or any of its Subsidiaries, or other obligations of the Company or any of its Subsidiaries to issue, any shares of capital stock or other voting securities of, or other ownership interests in, or any securities convertible

 

A-20


Table of Contents

into, or exchangeable for, any capital stock or other voting securities of, or other ownership interests in, any Subsidiary of the Company or (iii) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights in, any Subsidiary of the Company (the items in clauses (i) through (iii) being referred to collectively as the “Company Subsidiary Securities”). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Subsidiary Securities. Except for the capital stock or other voting securities of, or other ownership interests in, its Subsidiaries, the Company does not own, directly or indirectly, any capital stock or other voting securities of, or other ownership interests in, any Person.

Section 4.07 SEC Filings and the Sarbanes-Oxley Act. (a) The Company has filed with or furnished to the SEC all reports, schedules, forms, statements, prospectuses, registration statements and other documents required by the 1933 Act or the 1934 Act to be filed or furnished by the Company since January 1, 2013 (such date, the Applicable Date and the reports, schedules, forms, statements, prospectuses, registration statements and other documents filed or furnished with the SEC since the Applicable Date, collectively, together with any amendments, exhibits and schedules thereto and other information incorporated therein, the Company SEC Documents).

(b) As of its filing date (and as of the date of any amendment), each Company SEC Document complied, and each Company SEC Document filed subsequent to the date hereof will comply, as to form in all material respects with the applicable requirements of the 1933 Act and the 1934 Act, as the case may be.

(c) As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), each Company SEC Document filed pursuant to the 1934 Act did not, and each such document filed subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(d) Each Company SEC Document that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date such registration statement or amendment became effective, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(e) The Company maintains disclosure controls and procedures (as defined in Rule 13a-15 under the 1934 Act). Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the periodic reports that it files or submits pursuant to the 1934 Act is recorded, processed, summarized and reported within the time periods specified by the 1934 Act and the SEC and to ensure that such information is communicated to the Company’s management.

(f) The Company and its Subsidiaries maintain a system of internal controls over financial reporting (as defined in Rule 13a-15 under the 1934 Act) that provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of Company financial statements for external purposes in accordance with GAAP. The Company has disclosed, based on its most recent evaluation of internal controls prior to the date of this Agreement, to the Company’s auditors and audit committee (i) any significant deficiencies and material weaknesses in the design or operation of internal controls that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in internal controls.

(g) There are no outstanding loans or other extensions of credit made by the Company or any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the 1934 Act) or director of the Company in violation of Section 402 of the Sarbanes-Oxley Act.

 

A-21


Table of Contents

(h) Since the Applicable Date, the Company has complied in all material respects with the applicable requirements of the Sarbanes-Oxley Act and applicable listing and corporate governance rules and regulations of the NYSE.

(i) Since the Applicable Date, there has been no transaction, or series of similar transactions, agreements, arrangements or understandings, that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the 1933 Act.

Section 4.08 Financial Statements. (a) The audited consolidated financial statements and unaudited consolidated interim financial statements of the Company included or incorporated by reference in the Company SEC Documents fairly present, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto or, in the case of unaudited financial statements, as permitted by Form 10-Q), the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated statements of comprehensive income, cash flows and stockholders’ equity for the periods then ended (subject to normal year-end audit adjustments in the case of any unaudited interim financial statements).

(b) Since the Applicable Date, the Company has not received written notice from the SEC or any other Governmental Authority indicating that any of its accounting policies or practices are the subject of any review, inquiry, investigation or challenge by the SEC or any other Governmental Authority.

Section 4.09 Disclosure Documents. The proxy statement of the Company to be filed with the SEC in connection with the Merger (as amended or supplemented from time to time, the “Company Proxy Statement”), when filed, will comply as to form in all material respects with the applicable requirements of the 1934 Act. At the time the Company Proxy Statement is first mailed to the stockholders of the Company and at the time of the Company Stockholder Approval, the Company Proxy Statement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 4.09 will not apply to statements or omissions included or incorporated by reference in the Company Proxy Statement based upon information supplied by Parent, Merger Subsidiary or any of their respective representatives or advisors expressly for inclusion therein.

Section 4.10 Absence of Certain Changes. Since the Company Balance Sheet Date until the date of this Agreement, the business of the Company and its Subsidiaries has been conducted in the ordinary course consistent with past practices and there has not been any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.11 No Undisclosed Material Liabilities. There are no liabilities or obligations of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, that would be required to be reflected or reserved against in a condensed consolidated statement of financial position of the Company prepared in accordance with GAAP or the notes thereto, other than: (i) liabilities or obligations disclosed and provided for in the Company Balance Sheet or in the notes thereto; (ii) liabilities or obligations incurred in the ordinary course of business consistent with past practices since the Company Balance Sheet Date; (iii) liabilities or obligations that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; and (iv) liabilities or obligations arising or incurred in connection with the Merger or any other transaction contemplated by this Agreement.

Section 4.12 Compliance with Laws and Court Orders. (a) The Company and each of its Subsidiaries, and each of the assets and properties (including the Real Property) of the Company and each of the Subsidiaries, is and since the Applicable Date has been in compliance with, and to the knowledge of the Company is not under investigation with respect to and has not been threatened in writing to be charged with or given written notice of any violation of, any Applicable Law, except for failures to comply, investigations or violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

 

A-22


Table of Contents

(b) Since the Applicable Date, neither the Company nor any of its Subsidiaries, nor any director, officer, or employee thereof, nor, to the knowledge of the Company, any agent or representative of the Company or of any of its Subsidiaries, has taken any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value directly or indirectly through an intermediary to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) in order to influence official action in violation of the Foreign Corrupt Practices Act, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and its Subsidiaries and Affiliates have conducted their businesses in compliance with all applicable anti-corruption laws, including, without limitation, the Foreign Corrupt Practices Act, and have instituted and maintain and will continue to maintain policies and procedures that are designed to provide reasonable assurance of compliance with such laws, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) Neither the Company nor any of its Subsidiaries, nor any of their directors, officers or employees, nor, to the knowledge of the Company, any agents or representatives of the Company or any of its Subsidiaries, is, or is 50% or more owned or controlled by one or more Persons that are: (A) the subject of any sanctions administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) or the U.S. Department of State, the United Nations Security Council, the European Union, or other relevant sanctions authority (collectively, “Sanctions”), or (B) located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria), except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(d) Since the Applicable Date, neither the Company nor any of its Subsidiaries has engaged in, directly or indirectly, any dealings or transactions with any Person, or in any country or territory, that, at the time of the dealing or transaction, is or was the subject of Sanctions, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(e) Since the Applicable Date, the Company and its Subsidiaries have been in compliance with, and, to the knowledge of the Company, have not been penalized for, under investigation with respect to and have not been threatened in writing to be charged with or given written notice of any violation of, any applicable Sanctions or export controls laws, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.13 Litigation. Other than any pending or threatened action, suit, investigation or proceeding with respect to which an accrual or reserve has been included in the consolidated balance sheet of the Company as of March 31, 2015 (to the extent of the accrual or reserve therefor), as of the date of this Agreement, there is no action, suit, investigation or proceeding pending against, or, to the knowledge of the Company, threatened in writing against, the Company, any of its Subsidiaries, any asset or property of the Company or any of its Subsidiaries (including the Real Property) or any present or former officer, director or employee of the Company or any of its Subsidiaries or any Person for whom the Company or any of its Subsidiaries may be liable before (or, in the case of threatened actions, suits, investigations or proceedings, would be before) or by any Governmental Authority or arbitrator, that, if determined or resolved adversely in accordance with the plaintiff’s demands, would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.14 Properties. (a) Section 4.14(a) of the Company Disclosure Schedule sets forth a complete and correct list of all real property owned by the Company or any of its Subsidiaries that is material to the Company and its Subsidiaries, taken as a whole, as of the date of this Agreement (such real property, together with all structures, facilities, improvements and fixtures presently or hereafter located thereon or attached thereto, the “Owned Real Property”). Except as would not reasonably be expected to have, individually or in the aggregate,

 

A-23


Table of Contents

a Company Material Adverse Effect, either the Company or one of its Subsidiaries has good and valid title to all of the Owned Real Property free and clear of all Encumbrances. For purposes of this Section 4.14 only, “Encumbrance” means Lien, easement, covenant, or other restriction or title matter or encumbrance of any kind in respect of such asset but specifically excludes (A) specified encumbrances described in Section 4.14(a) of the Company Disclosure Schedule, provided that documentation evidencing such encumbrances have been made available to Parent prior to the date of this Agreement; (B) encumbrances for current Taxes or other governmental charges not yet due and payable, or the validity or amount of which is being contested in good faith by appropriate proceedings or for which the Company has recorded a reserve on its financial statements; (C) mechanics’, carriers’, workmen’s, repairmen’s or other like encumbrances arising or incurred in the ordinary course of business consistent with past practice relating to obligations as to which there is no default on the part of the Company, or the validity or amount of which is being contested in good faith by appropriate proceedings; and (D) (i) other encumbrances; (ii) easements, rights of way or other similar matters or restrictions or exclusions which would be shown by a current title report or other similar report; and (iii) any condition or other matter, if any, that may be shown or disclosed by a current and accurate survey or physical inspection, in the case of each of clauses (i) through (iii) that do not, individually or in the aggregate, materially impair the continued use, operation, value or marketability of the specific parcel of Owned Real Property or Leased Real Property to which they relate or the conduct of the business of the Company and its Subsidiaries as presently conducted.

(b) Section 4.14(b) of the Company Disclosure Schedule sets forth a complete and correct list of all real property leased or subleased by the Company or any Subsidiary that is material to the Company and its Subsidiaries, taken as a whole, as of the date of this Agreement (the “Leased Real Property” and together with the Owned Real Property, collectively, the “Real Property”). The Company has made available to Parent true, correct and complete copies of all leases and subleases with respect to the Leased Real Property (together with all amendments and modifications thereto and any guarantees thereof, the “Leases”). Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company or the applicable Subsidiary has a good and valid leasehold interest in the Leased Real Property pursuant to such Lease free and clear of all Encumbrances and there are no defaults (or any conditions or events that, after notice or the lapse of time or both, would constitute a default) by the Company or any of its Subsidiaries under any Lease, nor, to the knowledge of the Company, by any other party to a Lease that is binding upon the Company or any of its Subsidiaries.

Section 4.15 Intellectual Property. (a) Section 4.15(a) of the Company Disclosure Schedule sets forth a true and complete list as of the date of this Agreement of all registrations (including patents and domain name registrations) and applications for registration for Owned Intellectual Property that is material to the business of the Company and its Subsidiaries (the “Company Registered IP”). Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) none of the Company Registered IP has lapsed, expired, been abandoned or been adjudged invalid or unenforceable, and (ii) to the knowledge of the Company, all Company Registered IP is valid, enforceable and subsisting, or to the extent such items are applications, are pending without challenge by any Third Party.

(b) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) the Company and its Subsidiaries are the sole and exclusive owners of all Owned Intellectual Property and hold all of their right, title and interest in and to all Owned Intellectual Property and the Company’s interest as licensee in all Licensed Intellectual Property free and clear of all Liens, (ii) to the knowledge of the Company, the Owned Intellectual Property and the Licensed Intellectual Property constitutes all of the Intellectual Property necessary to, or used or held for use in, the conduct of the respective businesses of the Company and its Subsidiaries as currently conducted and (iii) there exist no restrictions on the disclosure, use, license or transfer of any of the Owned Intellectual Property.

(c) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) to the knowledge of the Company, neither the Company nor any of its Subsidiaries nor the conduct of their respective businesses has infringed, misappropriated, diluted or otherwise

 

A-24


Table of Contents

violated any Intellectual Property rights of any Third Party, (ii) there is no claim, action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened in writing against or affecting the Company or any of its Subsidiaries (A) alleging that the Company or any of its Subsidiaries has infringed, misappropriated, diluted or otherwise violated any Intellectual Property of any Third Party or (B) based upon, or challenging or seeking to deny or restrict, the rights of the Company or any Subsidiary in any of the Owned Intellectual Property or, to the knowledge of the Company, Licensed Intellectual Property, and (iii) to the knowledge of the Company, no Third Party has infringed, misappropriated, diluted or otherwise violated any Owned Intellectual Property, other than, in the case of each of the foregoing clauses (i), (ii) and (iii), any pending or threatened action, suit, investigation or proceeding with respect to which an accrual or reserve has been included in the consolidated balance sheet of the Company as of March 31, 2015 (to the extent of the accrual or reserve therefor).

(d) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) the Company and its Subsidiaries have implemented reasonable policies and procedures and have taken commercially reasonable steps to maintain, protect and enforce their rights in the Owned Intellectual Property and their rights in the Licensed Intellectual Property exclusively licensed to the Company or any of its Subsidiaries and for which the Company or such Subsidiaries have the exclusive right to maintain, protect and enforce, including (A) payment of maintenance or similar fees and filing of statements of use with the applicable Governmental Authorities, and (B) commercially reasonable steps to protect and preserve the confidentiality of all trade secrets and other confidential information included in the Owned Intellectual Property, and (ii) to the knowledge of the Company, none of the trade secrets or other confidential information included in the Owned Intellectual Property have been disclosed outside of the Company and its Subsidiaries other than pursuant to written confidentiality or non-disclosure agreements or patent applications filed with Governmental Authorities.

(e) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) the Company and its Subsidiaries have provided reasonable notice of its privacy and personal data collection and use policies on its websites and other customer and public communications, and the Company and its Subsidiaries have, in all material respects, complied with such policies and all Applicable Law relating to (A) the privacy of the users of the Company’s and its Subsidiaries’ respective products, services and websites and (B) the collection, use, storage and disclosure of any personally-identifiable information collected or stored by the Company or any of its Subsidiaries, (ii) there is no claim, action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries alleging any violation of such policies or Applicable Law, and (iii) the Company and its Subsidiaries have taken commercially reasonable steps consistent with normal industry practice to protect the types of information referred to in this Section 4.15(e) against loss and unauthorized access, use, modification, disclosure or other misuse, and, to the knowledge of the Company, there has been no unauthorized access, use, modification, disclosure or other misuse of such information.

(f) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) the IT Assets operate in accordance with their specifications and related documentation and perform in a manner that permits the Company and its Subsidiaries to conduct their respective businesses as currently conducted, (ii) the Company and its Subsidiaries take commercially reasonable actions, consistent with current industry standards, to protect the confidentiality, integrity and security of the IT Assets (and all information and transactions stored or contained therein or transmitted thereby) against any unauthorized use, access, interruption, modification or corruption, including the implementation of commercially reasonable data backup, disaster avoidance and recovery procedures and business continuity procedures, and (iii) to the knowledge of the Company, since the Applicable Date, there has been no unauthorized use, access, interruption, modification or corruption of the IT Assets (or any information or transactions stored or contained therein or transmitted thereby).

 

A-25


Table of Contents

Section 4.16 Taxes. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:

(a) all Tax Returns required by Applicable Law to be filed with any Taxing Authority by, or on behalf of, the Company or any of its Subsidiaries have been filed when due in accordance with Applicable Law, and all such Tax Returns are, or shall be at the time of filing, true and complete;

(b) the Company and each of its Subsidiaries has paid (or has had paid on its behalf) or has withheld and remitted to the appropriate Taxing Authority all Taxes due and payable, except with respect to matters contested in good faith and for which adequate reserves have been established in accordance with GAAP;

(c) there is no written claim now pending or threatened in writing against or with respect to the Company or its Subsidiaries in respect of any Tax, and there is no audit, action, suit, proceeding or investigation with respect to any liability of the Company or its Subsidiaries for any Tax, other than any pending or threatened audit, action, suit, proceeding or investigation with respect to which an accrual or reserve has been included in the consolidated balance sheet of the Company as of March 31, 2015 (to the extent of the accrual or reserve therefor);

(d) neither the Company nor any of its Subsidiaries has entered into any agreement or arrangement with any Taxing Authority with regard to the Tax liability of the Company or any of its Subsidiaries affecting any Tax period for which the applicable statute of limitations, after giving effect to extensions or waivers, has not expired;

(e) there are no requests for rulings or determinations in respect of any Tax or Tax asset pending between the Company or any of its Subsidiaries and any Taxing Authority;

(f) during the two-year period ending on the date hereof, neither the Company nor any of its Subsidiaries was a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code;

(g) neither the Company nor any of its Subsidiaries has, during the ten-year period prior to the date of this Agreement, been a member of an affiliated, consolidated, combined or unitary group other than one of which the Company was the common parent;

(h) neither the Company nor any of its Subsidiaries (A) is a party to any Tax Sharing Agreement or (B) is liable for the Taxes of any other Person as a transferee or successor; and

(i) no claim has been made in writing by any Taxing Authority in a jurisdiction where the Company or any of its Subsidiaries do not file Tax Returns that the Company or any of its Subsidiaries is or may be subject to taxation by, or required to file any Tax Return in, that jurisdiction.

Section 4.17 Employees and Employee Benefit Plans. (a) Section 4.17(a) of the Company Disclosure Schedule contains a correct and complete list identifying each material US Plan. Not later than fifteen calendar days after the date hereof, the Company will provide Parent with a revised version of such schedule that contains a correct and complete list identifying each material International Plan. The Company has provided to Parent a copy of each material US Plan (or a description, if such plan is not written) and all amendments thereto and, as applicable for each such US Plan, (i) all trust agreements, insurance contracts or other funding arrangements and amendments thereto, (ii) the current prospectus or summary plan description and all summaries of material modifications, (iii) the most recent favorable determination or opinion letter from the IRS, (iv) the most recently filed annual return/report (Form 5500) and accompanying schedules and attachments thereto and (v) the most recently prepared actuarial report and financial statements. Not later than fifteen calendar days after the date hereof, the Company will provide Parent a copy of each material International Plan (or a description, if such plan is not written) and all amendments thereto and, as applicable for each such International Plan, documents that are substantially comparable (taking into account differences in Applicable Law and practices) to the documents

 

A-26


Table of Contents

required to be provided in clauses (i) through (v) in the preceding sentence. None of the documents referenced in the preceding sentence (or any liability or obligation thereunder) would, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect.

(b) Not later than fifteen calendar days after the date hereof, the Company will provide Parent with a schedule that sets forth, for each employee of the Company or any of its Subsidiaries, to the extent permitted by Applicable Law, his or her name, title, annual base salary, most recent annual bonus received and current annual bonus opportunity, employer, hire date, location, whether full or part time and whether active or on leave (and, if on leave, the nature of leave and the expected return date). Five Business Days prior to the Closing Date, the Company will provide Parent with a revised version of the schedule described in the immediately preceding sentence, updated as of ten Business Days prior to the Closing Date.

(c) With respect to any Employee Plan covered by Subtitle B, Part 4 of Title I of ERISA or Section 4975 of the Code, no non-exempt prohibited transaction has occurred that has caused or would reasonably be expected to cause the Company or any of its Subsidiaries to incur any material liability under ERISA or the Code. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries has or is expected to incur any liability under Title IV of ERISA with respect to any ongoing, frozen or terminated “single-employer plan”, within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them or any ERISA Affiliate. With respect to any “multiemployer plan” (as defined in Section 3(37) of ERISA) contributed to, or previously contributed to, by the Company or any ERISA Affiliate, neither the Company nor any ERISA Affiliate has incurred any material withdrawal liability under Title IV of ERISA that remains unsatisfied or expects to incur any such liability, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(d) Each Employee Plan, and any award thereunder, that is or forms part of a “nonqualified deferred compensation plan” within the meaning of Section 409A or 457A of the Code is in documentary compliance with, and has been operated and administered in all material respects in compliance with, Section 409A or 457A of the Code, as applicable, and the guidance issued by the IRS thereunder. Neither the Company nor any of its Subsidiaries has any obligation to gross-up, indemnify or otherwise reimburse any current or former Service Provider for any Tax incurred by such Service Provider, including under Section 409A, 457A or 4999 of the Code.

(e) Each Employee Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter, or has pending or has time remaining in which to file, an application for such determination from the IRS, and, to the knowledge of the Company, no circumstances exist that would reasonably be expected to result in any such determination letter being revoked or not being reissued or a penalty under the IRS Closing Agreement Program if discovered during an IRS audit or investigation. Each trust created under any such Employee Plan is exempt from Tax under Section 501(a) of the Code and has been so exempt since its creation. Each Employee Plan has been maintained in compliance with its terms and with the requirements of Applicable Law, including ERISA and the Code, except for failures to comply or violations that have not had and would not reasonably be expected have, individually or in the aggregate, a Company Material Adverse Effect. No events have occurred with respect to any Employee Plan that could reasonably be expected to result in payment or assessment by or against the Company of any material excise taxes under ERISA or the Code.

(f) Except as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole, all contributions, premiums and payments that are due have been made for each Employee Plan within the time periods prescribed by the terms of such plan and Applicable Law, and all contributions, premiums and payments for any period ending on or before the Closing Date that are not due are properly accrued to the extent required to be accrued under applicable accounting principles. There has been no amendment to, written interpretation of or announcement (whether or not written) by the Company or any of its

 

A-27


Table of Contents

Subsidiaries relating to, or change in employee participation or coverage under, any Employee Plan that would materially increase the expense of maintaining such plan above the level of expense incurred in respect thereof for the most recently completed fiscal year.

(g) Neither the execution of this Agreement nor the consummation of the transactions contemplated by this Agreement (either alone or together with any other event) will (i) entitle any current or former Service Provider to any payment or benefit, including any bonus, retention, severance, retirement or job security payment or benefit, (ii) enhance any benefits or accelerate the time of payment or vesting or trigger any payment of funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other obligation under, any Employee Plan or otherwise, or (iii) limit or restrict the right of the Company or any of it