<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 26, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CYTEC INDUSTRIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 2890 22-3268660
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
FIVE GARRET MOUNTAIN PLAZA
WEST PATERSON, NEW JERSEY 07424
(973) 357-3100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
EDWARD F. JACKMAN, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CYTEC INDUSTRIES INC.
FIVE GARRET MOUNTAIN PLAZA
WEST PATERSON, NEW JERSEY 07424
(973) 357-3100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
JOHN T. GAFFNEY, ESQ. DAVID BROADWIN, ESQ.
CRAVATH, SWAINE & MOORE FOLEY, HOAG & ELIOT LLP
WORLDWIDE PLAZA, 825 EIGHTH AVENUE ONE POST OFFICE SQUARE
NEW YORK, NY 10019 BOSTON, MASSACHUSETTS 02109
(212) 474-1000 (617) 832-1000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the registration statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED(1) PER SHARE(1) OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01
per share.................... Not applicable Not applicable $34,292,238(2) $10,116.21(3)
- ---------------------------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) Pursuant to Rule 457(o) under the Securities Act, only the title of the
class of securities to be registered, the proposed maximum aggregate
offering price for such class of securities and the amount of the
registration fee appear in the "Calculation of Registration Fee" table.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 457 thereunder on the basis of the maximum
aggregate consideration payable to stockholders of The American Materials &
Technologies Corporation pursuant to the Merger Agreement described herein,
based on the product of (a) the number of shares of AMT common stock, par
value $0.01 per share, outstanding on August 25, 1998, assuming the exercise
of all AMT stock options and warrants (whether or not currently exercisable)
and excluding treasury shares and shares of AMT common stock owned by Cytec
which will be cancelled in the Merger and (b) $6.00.
(3) Of such amount, $7,092.96 was paid on August 7, 1998 in connection with the
filing of preliminary proxy materials on Schedule 14A by The American
Materials & Technologies Corporation, and the registration fee being paid
herewith has been reduced by such amount pursuant to Rule 457(b) under the
Securities Act.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT THEREAFTER SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[LETTERHEAD OF AMT]
September 8, 1998
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders
(the "Special Meeting") of The American Materials & Technologies Corporation
("AMT"), which will be held on October 9, 1998 at 10:00 a.m., local time, at the
offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019.
At the Special Meeting, holders of Common Stock, par value $.01 per share,
of AMT ("AMT Common Stock"), will be asked to consider and vote upon a proposal
to adopt an Agreement and Plan of Merger among Cytec Industries Inc. ("Cytec"),
a subsidiary of Cytec (the "Merger Sub") and AMT (as amended, the "Merger
Agreement"), with respect to the merger of the Merger Sub with and into AMT as
provided for in the Merger Agreement (the "Merger"). In the Merger, each
outstanding share of AMT Common Stock (except for treasury stock and stock held
by Cytec and the Merger Sub) will be converted into the right to receive that
number of shares of Common Stock, par value $.01 per share, of Cytec ("Cytec
Common Stock") determined by dividing $6.00 by the average closing price of
Cytec Common Stock as reported on the New York Stock Exchange Composite
Transaction Tape for the twenty trading days immediately preceding the closing
date of the Merger (the "Closing Date"). AMT stockholders will receive cash in
lieu of any fractional shares which would otherwise be issued in the Merger.
Wm Sword & Co. Incorporated ("Wm Sword & Co."), AMT's financial advisor,
has rendered its opinion that, as of the date of such opinion, the consideration
to be received by the holders of AMT Common Stock (other than Cytec and its
affiliates) pursuant to the Merger Agreement is fair from a financial point of
view to such holders. A copy of this opinion, which sets forth the assumptions
made, procedures followed, matters considered and limitations on the review
undertaken by Wm Sword & Co., appears as Annex 3 to the Proxy
Statement/Prospectus.
You should read carefully the accompanying Notice of Special Meeting of
Stockholders and the Proxy Statement/Prospectus for details of the Merger and
additional related information.
THE BOARD OF DIRECTORS OF AMT HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF AMT AND ITS
STOCKHOLDERS AND RECOMMENDS THAT THE STOCKHOLDERS OF AMT VOTE FOR THE ADOPTION
OF THE MERGER AGREEMENT.
The affirmative vote of holders of a majority of the outstanding shares of
AMT Common Stock is necessary to adopt the Merger Agreement.
I look forward to meeting with those stockholders who are able to be
present at the Special Meeting; however, whether or not you plan to attend the
Special Meeting, please complete, sign and date the enclosed proxy card and
return it promptly in the enclosed postage-paid envelope. If you attend the
Special Meeting, you may vote in person if you wish, even though you previously
have returned your proxy card. Your prompt cooperation will be greatly
appreciated.
Please do not send your stock certificates with your proxy card. If the
Merger Agreement is adopted by the AMT stockholders and the Merger is
consummated, you will receive a transmittal form and instructions for the
surrender and exchange of your shares.
Thank you for your cooperation.
Sincerely,
Paul W. Pendorf
President
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
<PAGE> 3
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 9, 1998
TO THE STOCKHOLDERS OF THE AMERICAN MATERIALS & TECHNOLOGIES
CORPORATION:
A special meeting of the stockholders (the "Special Meeting") of The
American Materials & Technologies Corporation, a Delaware corporation ("AMT"),
will be held on October 9, 1998 at 10:00 a.m., local time, at the offices of
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019, for the
following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and
Plan of Merger dated as of July 8, 1998, as amended (the "Merger
Agreement"), among Cytec Industries Inc., a Delaware corporation ("Cytec"),
CAM Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of Cytec (the "Merger Sub"), and AMT with respect to the merger of the
Merger Sub with and into AMT upon the terms and subject to the conditions
thereof (the "Merger"). Pursuant to the Merger Agreement, AMT will become a
wholly owned subsidiary of Cytec, and each share of Common Stock, par value
$.01 per share, of AMT ("AMT Common Stock"), issued and outstanding at the
effective time of the Merger (except for treasury stock and stock held by
Cytec and the Merger Sub) will be converted into the right to receive that
number of shares of Common Stock, par value $.01 per share, of Cytec
("Cytec Common Stock") determined by dividing $6.00 by the average closing
price of Cytec Common Stock on the New York Stock Exchange ("NYSE")
Composite Transaction Tape for the twenty trading days immediately
preceding the closing date of the Merger (the "Closing Date") and rounding
to the nearest ten-thousandth of a share (the "Merger Consideration"). THE
MERGER IS MORE COMPLETELY DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS, AND A COPY OF THE MERGER AGREEMENT IS ATTACHED AS
ANNEX 1 THERETO.
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
Only holders of record of shares of AMT Common Stock at the close of
business on August 31, 1998, the record date for the Special Meeting (the
"Record Date"), are entitled to notice of, and to vote at, the Special Meeting
and any adjournments or postponements thereof.
The affirmative vote of the holders of a majority of the outstanding shares
of AMT Common Stock is necessary to adopt the Merger Agreement.
Holders of AMT Common Stock will not be entitled to appraisal rights under
Delaware law as a result of the merger. Appraisal rights will not be available
under Delaware law because AMT Common Stock was, on the Record Date, designated
and quoted for trading on both the Nasdaq SmallCap Market and the Pacific Stock
Exchange and will be converted into shares of Cytec Common Stock, which at the
effective time of the Merger will be listed on the NYSE.
Certain directors and executive officers of AMT (collectively, the "Selling
Stockholders") who hold AMT Common Stock, representing approximately 16.2% of
the outstanding shares of AMT Common Stock, have entered into a Stockholders
Agreement dated as of July 8, 1998, with Cytec, the Merger Sub and AMT, pursuant
to which the Selling Stockholders have agreed to vote their shares of AMT Common
Stock in favor of the Merger, the Merger Agreement and each of the transactions
contemplated by the Merger Agreement at the Special Meeting and against any
business combination with a party other than Cytec and the Merger Sub. The
Stockholders Agreement provides that if the Merger Agreement is terminated under
certain circumstances, then if certain transactions occur within two years of
such termination whereby the Selling Stockholders receive consideration for
their AMT Common Stock that is of greater value than the Merger Consideration,
each Selling Stockholder shall pay to Cytec the difference between such
consideration and the Merger Consideration.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. PLEASE DO NOT SEND ANY
<PAGE> 4
STOCK CERTIFICATES AT THIS TIME. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT
IS VOTED BY SIGNING AND RETURNING A LATER DATED PROXY WITH RESPECT TO THE SAME
SHARES, BY FILING WITH THE SECRETARY OF AMT A WRITTEN REVOCATION BEARING A LATER
DATE OR BY ATTENDING AND VOTING AT THE SPECIAL MEETING.
By Order of the Board of Directors
James L. Russell
Secretary
Los Angeles, California
September 8, 1998
<PAGE> 5
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
PROXY STATEMENT
------------------------
CYTEC INDUSTRIES INC.
PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the stockholders of
The American Materials & Technologies Corporation, a Delaware corporation
("AMT"), in connection with the solicitation of proxies by the Board of
Directors of AMT (the "AMT Board") for use at the special meeting of
stockholders of AMT to be held on October 9, 1998, at 10:00 A.M., local time, at
the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019,
including any adjournments or postponements thereof (the "Special Meeting").
At the Special Meeting, the holders of shares of the Common Stock, par
value $.01 per share, of AMT ("AMT Common Stock"), will consider and vote
whether to adopt the Agreement and Plan of Merger dated as of July 8, 1998, as
amended (the "Merger Agreement"), among Cytec Industries Inc. ("Cytec"), CAM
Acquisition Corp., a wholly owned subsidiary of Cytec (the "Merger Sub"), and
AMT, with respect to the merger of the Merger Sub with and into AMT, upon the
terms and subject to the conditions thereof (the "Merger"). Pursuant to the
Merger Agreement, each share of AMT Common Stock issued and outstanding
immediately prior to the effective time of the Merger (except for treasury stock
and stock held by Cytec and the Merger Sub) will be converted into the right to
receive that number of shares of Common Stock, par value $.01 per share, of
Cytec ("Cytec Common Stock") determined by dividing $6.00 by the average closing
price of Cytec Common Stock on the New York Stock Exchange Composite Transaction
Tape for the twenty trading days immediately preceding the closing date of the
Merger (the "Closing Date") and rounding to the nearest ten-thousandth of a
share.
The AMT Board recommends that the stockholders of AMT vote to adopt the
Merger Agreement, pursuant to which AMT would become a wholly owned subsidiary
of Cytec and stockholders of AMT would become stockholders of Cytec.
This Proxy Statement/Prospectus also serves as a Prospectus of Cytec under
the Securities Act of 1933 (the "Securities Act") relating to the shares of
Cytec Common Stock issuable in connection with the Merger or upon subsequent
exercise of any currently outstanding warrants or options on AMT Common Stock to
buy AMT Common Stock.
This Proxy Statement/Prospectus and the accompanying form of proxy are
first being mailed to stockholders of AMT on or about September 10, 1998.
------------------------
THE SECURITIES TO BE ISSUED IN THE MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS SEPTEMBER 8, 1998.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information....................................... 1
Incorporation of Certain Documents by Reference............. 2
Summary..................................................... 3
Special Meeting........................................... 3
Votes Required............................................ 3
The Merger................................................ 4
Market Price Data......................................... 7
Cytec Summary Financial Data.............................. 8
AMT Summary Financial Data................................ 10
The Special Meeting......................................... 11
Special Meeting........................................... 11
Record Date; Shares Entitled to Vote; Votes Required...... 11
Proxies; Proxy Solicitation............................... 12
The Stockholders Agreement................................ 12
Cytec....................................................... 13
AMT......................................................... 14
Description of AMT's Business............................. 14
Selected Financial Data................................... 18
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 19
Recent Developments......................................... 22
The Merger.................................................. 23
Background of the Merger.................................. 23
Recommendation of the AMT Board and Reasons for the
Merger................................................. 23
Opinion of Financial Advisor.............................. 24
Effective Time............................................ 29
Merger Consideration...................................... 29
Exchange Agent; Exchange Procedures; Distributions with
Respect to Unexchanged Shares; No Further Ownership
Rights in AMT Common Stock; No Fractional Shares;
Adjustments............................................ 29
Stock Exchange Listing.................................... 31
Certain Federal Income Tax Consequences................... 31
Accounting Treatment...................................... 32
Effect on Employee Benefit and Stock Plans................ 32
Interests of Certain Persons in the Merger................ 33
Resale of Cytec Common Stock.............................. 34
Acquisition Proposals..................................... 34
Right of the AMT Board to Withdraw Recommendation......... 35
Fees and Expenses......................................... 35
The Merger Agreement........................................ 36
The Merger................................................ 36
Representations and Warranties............................ 37
Conduct of Business Pending the Merger.................... 38
Certain Additional Agreements............................. 39
Conditions to the Consummation of the Merger.............. 40
Termination, Amendment and Waiver......................... 40
Officers and Directors After the Merger..................... 42
Comparative Stock Prices and Dividends...................... 42
</TABLE>
i
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Comparison of Rights of Common Stockholders of Cytec and
AMT....................................................... 43
Other Matters............................................... 45
Regulatory Approvals Required............................. 45
Certain Litigation........................................ 45
Absence of Appraisal Rights................................. 45
Security Ownership of Directors, Executive Officers and
Principal Stockholders of AMT............................. 46
Description of Cytec Capital Stock.......................... 47
Authorized Capital Stock.................................. 47
Common Stock.............................................. 47
No Preemptive Rights...................................... 47
Transfer Agent and Registrar.............................. 47
Preferred Stock........................................... 47
Experts..................................................... 49
Legal Matters............................................... 50
Index to Financial Statements............................... F-1
</TABLE>
ANNEXES
Annex A Agreement and Plan of Merger, and Amendment to the Agreement and Plan
of Merger
Annex B Stockholders Agreement
Annex C Opinion of Wm Sword & Co. Incorporated
ii
<PAGE> 8
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS,
IN CONNECTION WITH THE SOLICITATION AND THE OFFERING MADE BY THIS PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY OR AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES IN ANY
JURISDICTION IN WHICH SUCH SOLICITATION OR OFFERING MAY NOT LAWFULLY BE MADE.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN (INCLUDING THE ANNEXES HERETO) OR IN
THE AFFAIRS OF CYTEC OR AMT SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROXY STATEMENT/PROSPECTUS (INCLUDING THE INFORMATION INCORPORATED
HEREIN BY REFERENCE) INCLUDES CERTAIN "FORWARD-LOOKING STATEMENTS" FOR PURPOSES
OF THE SECURITIES ACT AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"). SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS OF
AMT, CYTEC AND THE SURVIVING CORPORATION (AS DEFINED HEREIN) TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE A
DIFFERENCE ARE: CHANGES IN THE GENERAL ECONOMY; CHANGES IN DEMAND FOR THE
PRODUCTS OF AMT OR CYTEC OR IN THE COSTS AND AVAILABILITY OF THE RAW MATERIALS
EACH REQUIRES; THE ACTIONS OF COMPETITORS OF AMT AND CYTEC; THE SUCCESS OF
CUSTOMERS INCLUDING BUT NOT LIMITED TO THE BUILD RATES IN THE COMMERCIAL AND
MILITARY AEROSPACE INDUSTRIES; TECHNOLOGICAL CHANGE; CHANGES IN EMPLOYEE
RELATIONS, INCLUDING POSSIBLE STRIKES; GOVERNMENT REGULATIONS; LITIGATION,
INCLUDING ITS INHERENT UNCERTAINTY; DIFFICULTIES IN PLANT OPERATIONS AND
MATERIALS TRANSPORTATION; ENVIRONMENTAL MATTERS; DIFFICULTIES IN COMPLETING
REMEDIATION OF YEAR 2000 ISSUES BY CYTEC, AMT AND THEIR SUPPLIERS AND CUSTOMERS;
AND OTHER UNFORESEEN CIRCUMSTANCES.
WHEN USED IN THIS PROXY STATEMENT/PROSPECTUS, THE WORDS "BELIEVE",
"ESTIMATE", "PROJECT", "INTEND", "EXPECT" AND SIMILAR EXPRESSIONS, WHEN USED IN
CONNECTION WITH AMT, CYTEC, OR THE MERGER SUB, ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. PROJECTIONS AND FORECASTS OF FUTURE FINANCIAL
PERFORMANCE AND EARNINGS ESTIMATES DESCRIBED HEREIN SHOULD BE CONSIDERED
FORWARD-LOOKING STATEMENTS. NEITHER AMT NOR CYTEC ASSUMES ANY OBLIGATION TO
UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN
ASSUMPTIONS OR CHANGES IN OTHER FACTORS AFFECTING SUCH FORWARD-LOOKING
STATEMENTS. READERS ARE CAUTIONED NOT TO RELY ON THE FORWARD-LOOKING STATEMENTS,
WHICH SPEAK ONLY AS OF THE DATE OF THIS PROXY STATEMENT/PROSPECTUS, OR IN THE
CASE OF ANY ANNEX HERETO, THE DATE OF SUCH ANNEX. ALL WRITTEN OR ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO AMT OR CYTEC ARE EXPRESSLY QUALIFIED
IN THEIR ENTIRETY BY THE FOREGOING CAUTIONARY STATEMENT.
AVAILABLE INFORMATION
Cytec and AMT are subject to the informational requirements of the Exchange
Act. In accordance with the Exchange Act, Cytec and AMT file proxy statements,
reports and other information with the Securities
1
<PAGE> 9
and Exchange Commission (the "SEC"). This filed material can be inspected and
copied at the public reference facilities maintained by the SEC at Room 1024,
450 Fifth Street, N.W., Washington, DC 20549, and at the following Regional
Offices of the SEC: Chicago Regional Office (Suite 1400, Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661) and New York Regional Office
(Seven World Trade Center, 13th Floor, New York, New York 10048). Copies of such
material can be obtained by mail from the Public Reference Section of the SEC,
450 Fifth Street, N.W., Washington, DC 20549, at prescribed rates. In addition,
such material can be inspected at the offices of the New York Stock Exchange,
Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005 for Cytec, and the
National Association of Securities Dealers, Inc. (the "NASD"), 1735 K Street,
N.W., Washington, DC 20006 or the Pacific Exchange (the "PE"), 301 Pine Street,
San Francisco, California 94104 for AMT. The SEC maintains a Web site that
contains reports, proxy statements and other information filed electronically by
Cytec and AMT with the SEC which can be accessed over the Internet at
http:/www.sec.gov.
Cytec has filed a registration statement on Form S-4 (the "Registration
Statement") with the SEC under the Securities Act with respect to the Cytec
Common Stock to be issued upon consummation of the Merger or upon subsequent
exercise of outstanding warrants to buy AMT Common Stock. This Proxy Statement/
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits thereto, certain portions of which have been omitted
as permitted by the rules and regulations of the SEC. Copies of the Registration
Statement (including such omitted portions) are available from the SEC upon
payment at prescribed rates. For further information, reference is made to the
Registration Statement and the exhibits filed therewith. Statements contained in
this Proxy Statement/Prospectus or in any document incorporated by reference in
this Proxy Statement/Prospectus relating to the contents of any contract or
other document referred to herein or therein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following Cytec documents are incorporated by reference in this Proxy
Statement/Prospectus: (i) Cytec's Annual Report on Form 10-K for the year ended
December 31, 1997, (ii) Cytec's Form 10-K/A for the year ended December 31,
1997, (iii) Cytec's Quarterly Reports on Forms 10-Q for the quarterly periods
ended March 31, 1998 and June 30, 1998, (iv) Cytec's Current Report on Form
8-K/A dated September 30, 1997, (v) Cytec's Current Reports on Form 8-K dated
March 18, 1998, April 16, 1998 and May 6, 1998, and (vi) the description of
Cytec's securities set forth in Cytec's Registration Statements filed pursuant
to Section 12 of the Exchange Act, and any amendment or report filed for the
purpose of updating any such description.
A copy of the Cytec documents incorporated herein by reference (excluding
exhibits unless such exhibits are specifically incorporated by reference into
the information incorporated herein) that are not presented herein or delivered
herewith will be provided by first-class mail without charge to each person,
including any beneficial owner, to whom a Proxy Statement/Prospectus is
delivered, upon oral or written request of any such person. Requests should be
directed to Investor Relations, Five Garret Mountain Plaza, West Paterson, New
Jersey 07424 (telephone (973) 357-3100). In order to ensure timely delivery of
the documents in advance of the meeting to which this Proxy Statement/Prospectus
relates, any such request should be made by October 1, 1998.
All reports and definitive proxy or information statements filed by Cytec
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent
to the date of this Proxy Statement/Prospectus and prior to the date of the
Special Meeting, shall be deemed to be incorporated by reference into this Proxy
Statement/Prospectus from the dates of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated in this Proxy
Statement/Prospectus shall be deemed to be modified or superseded for purposes
of this Proxy Statement/Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed to
be incorporated by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement/Prospectus.
All information contained in this Proxy Statement/Prospectus relating to
Cytec or the Merger Sub has been supplied by Cytec, and all information relating
to AMT has been supplied by AMT.
2
<PAGE> 10
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/ Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained elsewhere
in this Proxy Statement/Prospectus, in the attached Annexes and in the documents
incorporated herein by reference. Stockholders are urged to read carefully this
Proxy Statement/ Prospectus and the attached Annexes in their entirety.
SPECIAL MEETING
The Special Meeting will be held at 10:00 a.m., local time, on October 9,
1998, at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY
10019. Only holders of record of AMT Common Stock at the close of business on
August 31, 1998 (the "Record Date"), will be entitled to notice of, and to vote
at, the Special Meeting. At the Special Meeting, holders of AMT Common Stock
will be asked to consider and vote to adopt the Merger Agreement, a copy of
which is attached as Annex 1 to this Proxy Statement/ Prospectus, pursuant to
which the Merger Sub will be merged with and into AMT. AMT will be the surviving
corporation in the Merger (the "Surviving Corporation") and will become a
wholly-owned subsidiary of Cytec. Holders of AMT Common Stock will also transact
such other business as may properly come before the Special Meeting.
Certain directors and executive officers of AMT who hold AMT Common Stock
(the "Selling Stockholders") have entered into a Stockholders Agreement dated as
of July 8, 1998, with Cytec, the Merger Sub and AMT, pursuant to which each has
agreed: (i) to vote his shares of AMT Common Stock in favor of the Merger, the
Merger Agreement and each of the transactions contemplated by the Merger
Agreement at the Special Meeting; (ii) to vote his shares of AMT Common Stock
against any business combination with a party other than Cytec and the Merger
Sub; and (iii) in order to secure the performance of the duties of the Selling
Stockholders under the Stockholders Agreement, to grant an irrevocable proxy to
certain officers of Cytec to vote such Selling Stockholder's shares of AMT
Common Stock at the Special Meeting. As of the date of this Proxy
Statement/Prospectus, the Selling Stockholders hold 717,360 shares, representing
approximately 16.2% of the outstanding shares of AMT Common Stock. Also, the
Selling Stockholders have agreed that if the Merger Agreement is terminated
under circumstances where Cytec is entitled to receive the Parent Termination
Fee (as defined herein), each Selling Stockholder shall pay to Cytec on demand
an amount equal to the Net Profit (as defined herein) of such Selling
Stockholder from the consummation of any Transaction Proposal (as defined
herein) that is consummated within two years of such termination. See "THE
SPECIAL MEETING -- The Stockholders Agreement", "THE MERGER -- Interests of
Certain Persons in the Merger" and "THE MERGER -- Fees and Expenses".
VOTES REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares
of AMT Common Stock is required for the adoption of the Merger Agreement. As of
the Record Date, there were 4,490,121 shares of AMT Common Stock outstanding, of
which 737,135 shares, representing approximately 16.4% of the outstanding shares
of AMT Common Stock, were beneficially owned by directors and executive officers
of AMT and their affiliates. See "SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE
OFFICERS". All such directors and executive officers of AMT and their affiliates
have indicated to AMT that they intend to vote all such shares in favor of the
adoption of the Merger Agreement.
As a stockholder of AMT, Cytec will be entitled to and intends to vote its
shares in favor of the adoption of the Merger at the Special Meeting. At August
25, 1998, Cytec held 192,500 shares (approximately 4.3%) of AMT Common Stock.
Cytec may from time to time acquire additional shares of AMT in the open market
or in privately negotiated purchases.
No action by the stockholders of Cytec is required to effect the Merger.
3
<PAGE> 11
THE MERGER
THE PARTIES. Cytec is a vertically integrated industrial chemicals company
which focuses on value-added specialty products. Cytec's products serve a broad
group of end users, including the aerospace, plastics, coatings, mining, paper,
water treatment and automotive industries. Cytec's primary strategic focus is on
value-added specialty chemicals and specialty materials, a significant portion
of which utilize building block chemicals manufactured by Cytec.
Cytec develops, manufactures and markets products in three general product
categories: specialty chemicals, specialty materials and building block
chemicals. Specialty chemicals include principally water treating, paper and
mining chemicals, coatings and resin products and polymer additives. Specialty
materials include principally aerospace materials. Building block chemicals
include principally acrylonitrile, acrylamide, melamine and methanol. Cytec has
manufacturing facilities in eight countries and sells its products worldwide.
The principal executive offices of Cytec are located at Five Garret
Mountain Plaza, West Paterson, New Jersey 07424. Its telephone number is (973)
357-3100.
The Merger Sub, a Delaware corporation, is a wholly owned subsidiary of
Cytec formed solely for the purpose of effecting the Merger.
AMT, a Delaware corporation, is a manufacturer and seller of advanced
composites and products made from these materials, providing raw materials to
parts manufacturers and also manufacturing finished products.
The principal executive offices of AMT are located at 5915 Rodeo Road, Los
Angeles, California 90016. Its telephone number is (310) 841-5200.
MERGER CONSIDERATION. At the effective time of the Merger (the "Effective
Time"), each outstanding share of AMT Common Stock (except for treasury stock
and stock held by Cytec and the Merger Sub) will be converted into the right to
receive that number (the "Conversion Number") of validly issued, fully paid and
nonassessable shares of Cytec Common Stock equal to the amount obtained by
dividing $6.00 by the Average Cytec Price (as defined herein) and rounding to
the nearest ten-thousandth of a share. The "Average Cytec Price" will be an
amount equal to the average per share closing price of Cytec Common Stock, as
reported on the New York Stock Exchange ("NYSE") Composite Transaction Tape for
the 20 trading days immediately preceding the Closing Date. No fractional shares
of Cytec Common Stock will be issued in the Merger and holders of shares of AMT
Common Stock will be entitled to a cash payment in lieu of any such fractional
shares which would otherwise be issued in the Merger. In connection with signing
the Merger Agreement, Cytec has paid AMT a $500,000 initial fee (the "Initial
Payment"), which under the Merger Agreement AMT shall refund to Cytec in certain
circumstances.
RECOMMENDATION OF THE AMT BOARD AND REASONS FOR THE MERGER. THE AMT BOARD
OF DIRECTORS (THE "AMT BOARD") HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT,
DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF AMT AND ITS STOCKHOLDERS
AND RECOMMENDS THAT THE STOCKHOLDERS OF AMT VOTE FOR THE ADOPTION OF THE MERGER
AGREEMENT. In reaching this decision to approve the Merger Agreement and
recommend the Merger, the AMT Board considered a number of factors. See "THE
MERGER -- Background of the Merger" and "-- Recommendation of the AMT Board and
Reasons for the Merger".
OPINION OF FINANCIAL ADVISOR. Wm Sword & Co. Incorporated ("Wm Sword &
Co.") has delivered its written opinion dated July 8, 1998, to the AMT Board
that, as of such date, the consideration to be received by the holders of AMT
Common Stock pursuant to the Merger Agreement is fair from a financial point of
view to such holders. The full text of the opinion of Wm Sword & Co., which sets
forth the assumptions made, procedures followed, matters considered and
limitations on the review undertaken by Wm Sword & Co., is included as Annex 3
to this Proxy Statement/Prospectus. AMT stockholders are urged to read such
opinion in its entirety. See "THE MERGER -- Opinion of Financial Advisor".
INTERESTS OF CERTAIN PERSONS IN THE MERGER. As of the date of this Proxy
Statement/Prospectus, directors and executive officers of AMT owned (i) 737,135
shares of AMT Common Stock (for which they will receive the same consideration
as other AMT stockholders) and (ii) options to acquire 460,080 shares of AMT
4
<PAGE> 12
Common Stock, which will be treated in the Merger as described below under "THE
MERGER -- Effect on Employee Benefit and Stock Plans". The Merger Agreement
provides that certain employees of AMT and its subsidiaries will continue in
their current capacities for specified minimum periods and that AMT's President
and Chief Executive Officer and a Vice President of AMT will be offered
positions with Cytec Fiberite Inc., a wholly owned subsidiary of Cytec. See "THE
MERGER -- Interests of Certain Persons in the Merger".
REGULATORY APPROVALS REQUIRED. The consummation of the Merger is subject
to the expiration or termination of the relevant waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). On August 21, 1998, the relevant waiting period terminated. See "OTHER
MATTERS -- Regulatory Approvals Required".
CONDITIONS TO THE MERGER. The obligations of Cytec, the Merger Sub and AMT
to consummate the Merger are subject to the satisfaction or waiver of various
conditions, including, without limitation, obtaining AMT stockholder approval,
authorization for listing (upon official notice of issuance) on the NYSE of the
additional shares of Cytec Common Stock to be issued in connection with the
Merger and expiration or termination of the HSR Act waiting period applicable to
the Merger. See "THE MERGER AGREEMENT -- Conditions to the Consummation of the
Merger".
ACQUISITION PROPOSALS. The Merger Agreement provides that neither AMT nor
any of its subsidiaries shall solicit, initiate or take any action knowingly to
facilitate or encourage the submission of any Transaction Proposal (as defined
herein), or agree to or endorse any Transaction Proposal. Under the terms of the
Merger Agreement, AMT also may not enter into or participate in any discussions,
negotiations or agreements regarding any Transaction Proposal, or furnish to any
other person any information with respect to its business, properties or assets
or any of the foregoing, or otherwise cooperate in any way with, or knowingly
assist or participate in, facilitate or encourage, any effort or attempt by any
other person (other than the Merger Sub or Cytec) to do or seek any of the
foregoing, except in certain limited circumstances. See "THE MERGER --
Acquisition Proposals".
RIGHT OF THE AMT BOARD TO WITHDRAW RECOMMENDATION. The Merger Agreement
provides that, neither the AMT Board nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Cytec, the approval or recommendation by the AMT Board or such
committee of the Merger, the Merger Agreement or the Stockholders Agreement,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Transaction Proposal, or (iii) cause AMT to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "Company Acquisition Agreement") related to any Transaction Proposal. However,
if at any time prior to the Special Meeting the AMT Board determines in good
faith, after consultation with its outside counsel, that it is necessary to do
so in order to comply with its fiduciary duties to AMT's stockholders under
applicable law, the AMT Board may, subject to the payment of the Parent
Termination Fee (as defined herein), terminate the Merger Agreement and enter
into any Company Acquisition Agreement with respect to any Superior Proposal (as
defined herein), but only at a time prior to the Special Meeting and after the
later of (x) the third business day following notice to Cytec that the AMT Board
is prepared to accept a Superior Proposal and (y) in the event of any amendment
to the price or any material terms of a Superior Proposal, one business day
following notice to Cytec of the material terms of such amendment. See "THE
MERGER -- Right of the AMT Board to Withdraw Recommendation".
FEES AND EXPENSES. If the Merger is not consummated, all costs and
expenses incurred in connection with the Merger Agreement and the transactions
it contemplates shall be paid by the party incurring such cost or expense,
provided that the aggregate cost of printing and mailing the Proxy Statement and
filing the Proxy Statement and the Registration Statement with the Commission
shall be borne one-half by AMT and one-half by Cytec. However, AMT shall pay to
Cytec a $2,000,000 termination fee (the "Parent Termination Fee") plus all
Expenses (as defined herein) upon any of the following events: (i) termination
of the Merger Agreement by Cytec as provided for in the Merger Agreement if (x)
the AMT Board or any committee thereof shall have withdrawn, modified or changed
in any manner adverse to Cytec or the Merger Sub (as determined by Cytec in its
reasonable judgment) its approval or recommendation of the Merger Agreement, the
Stockholders Agreement or the Merger or shall have approved or recommended a
Superior Proposal or
5
<PAGE> 13
shall have resolved to do any of the foregoing or (y) AMT shall have entered
into an agreement with respect to a Superior Proposal; (ii) termination of the
Merger Agreement by AMT as provided for in the Merger Agreement if AMT enters
into a definitive agreement in respect of a Superior Proposal; (iii) termination
of the Merger Agreement by either Cytec or AMT as provided for in the Merger
Agreement if approval of the Merger and adoption of the Merger Agreement by
AMT's stockholders shall not have been obtained by reason of the failure to
obtain the required vote at the Special Meeting, and prior to such termination a
bona fide Transaction Proposal shall have been made; (iv) termination of the
Merger Agreement by either Cytec or AMT as provided for in the Merger Agreement
if the Effective Time shall not have occurred on or before November 15, 1998
(unless (I) the absence of such occurrence shall be due to the failure of the
party seeking to terminate the Merger Agreement to perform, in all material
respects, each of its obligations under the Merger Agreement at or prior to the
Effective Time or (II) the parties are then unable to close because the
applicable waiting period under the HSR Act has not then expired or the
Registration Statement is not then effective), and (x) prior to such termination
a bona fide Transaction Proposal shall have been made and (y) within 18 months
of such termination an agreement relating to a Transaction Proposal is entered
into by AMT with any person making such Transaction Proposal; or (v) such
payments are otherwise required by the section of the Merger Agreement dealing
with the right of the AMT Board to withdraw its recommendation. See "THE
MERGER -- Acquisition Proposals", "THE MERGER -- Fees and Expenses", "THE
MERGER -- Right of the AMT Board to Withdraw Recommendation" and "THE MERGER
AGREEMENT -- Termination, Amendment and Waiver".
TERMINATION, AMENDMENT AND WAIVER. The Merger Agreement may be terminated
prior to the Effective Time, whether before or after any required approval by
the stockholders of AMT: (i) by mutual written consent of Cytec and AMT; (ii) by
either Cytec or AMT, (x) if the Effective Time shall not have occurred on or
before the Termination Date (as defined herein) or (y) if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree or ruling
or action shall have become final and non-appealable; (iii) by Cytec if the AMT
Board or any committee thereof shall have withdrawn, modified or changed in any
manner adverse to Cytec or the Merger Sub (as determined by Cytec in its
reasonable judgment) its approval or recommendation of the Merger Agreement, the
Stockholders Agreement or the Merger or shall have approved or recommended a
Superior Proposal, as described above under "Right of the AMT Board to Withdraw
Recommendation"; (iv) by Cytec if AMT fails to perform in any material respect
any of its material obligations under the Merger Agreement and such breach shall
have a material adverse effect on AMT and its subsidiaries taken as a whole; (v)
by AMT if either Cytec or the Merger Sub fails to perform in any material
respect any of its material obligations under the Merger Agreement and such
breach shall have a material adverse effect on Cytec and its subsidiaries taken
as a whole; (vi) by AMT if AMT enters into a definitive agreement in respect of
a Superior Proposal as described above under "Right of the AMT Board to Withdraw
Recommendation" and AMT simultaneously with terminating pays Cytec all Expenses
and the Parent Termination Fee in cash and refunds the Initial Payment; or (vii)
by Cytec or AMT if the required approval of the stockholders of AMT is not
obtained. See "THE MERGER -- Termination, Amendment and Waiver".
ABSENCE OF APPRAISAL RIGHTS. In accordance with Section 262 of the
Delaware General Corporation Law (the "DGCL"), holders of AMT Common Stock are
not entitled to appraisal rights in connection with the Merger. See "ABSENCE OF
APPRAISAL RIGHTS".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The Merger Agreement provides
that Foley, Hoag & Eliot LLP, counsel to AMT, will deliver to AMT its opinion to
the effect that for Federal income tax purposes the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"). Accordingly, (i) no income, gain or loss will
be recognized by Cytec, the Merger Sub, or AMT in the Merger, and (ii) no
income, gain or loss will be recognized by the stockholders of AMT upon receipt
of Cytec Common Stock in exchange for their AMT Common Stock, except that a
holder of AMT Common Stock who receives cash in lieu of a fractional share of
Cytec Common Stock will recognize gain or loss equal to the difference between
the amount of such cash and the tax basis allocated to such
6
<PAGE> 14
stockholder's fractional share of Cytec Common Stock. See "THE MERGER -- Certain
Federal Income Tax Consequences".
ACCOUNTING TREATMENT. The Merger will be accounted for under the
"purchase" method of accounting, in accordance with generally accepted
accounting principles ("GAAP"). See "THE MERGER -- Accounting Treatment".
MARKET PRICE DATA
Cytec Common Stock is listed for trading on the NYSE (symbol: CYT) and AMT
Common Stock is quoted on both the Nasdaq SmallCap Market (symbol: AMTK) and the
Pacific Exchange (Symbol: MTK).
The following table sets forth the high and low sales prices per share of
Cytec Common Stock on the NYSE Composite Transaction Tape and of AMT Common
Stock on the Nasdaq SmallCap Market on July 8, 1998, the last trading day before
announcement of the Merger Agreement, and on August 25, 1998, the last trading
day before the filing of this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
CYTEC AMT
COMMON STOCK COMMON STOCK
------------ ------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
July 8, 1998................................... 43 7/8 43 9/16 3 1/16 2 3/4
August 25, 1998................................ 28 7/8 27 31/32 5 1/16 5
</TABLE>
See "COMPARATIVE STOCK PRICES AND DIVIDENDS".
7
<PAGE> 15
CYTEC SUMMARY FINANCIAL DATA
The following table presents summary historical consolidated financial data
for Cytec. The summary historical consolidated financial data are derived from
Cytec's historical consolidated financial statements. The information set forth
below should be read in conjunction with such historical consolidated financial
statements and the notes thereto. The historical consolidated financial
statements of Cytec have been audited for each of the five years in the period
ended December 31, 1997. The historical consolidated financial statements of
Cytec for the six months ended June 30, 1997 and June 30, 1998 are unaudited.
However, in Cytec's opinion, such statements reflect all adjustments, consisting
of normal recurring adjustments, necessary for a fair presentation of Cytec's
financial position and results of operations for such period. The results of
operations for Cytec for the six months ended June 30, 1998 may not be
indicative of results of operations to be expected for a full year.
CYTEC INDUSTRIES INC. AND SUBSIDIARIES(1)
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- -------------------
1997 1996 1995 1994 1993 1998 1997
-------- -------- -------- ------- ----------- ------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA, RATIOS AND PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:(2)
Net sales.................. $1,290.6 $1,259.6 $1,260.1 1,101.3 1,008.1 734.0 622.0
Gross profit............... 359.7(3) 361.5 347.9 283.4 48.2 225.0 167.9(4)
Selling and technical
services, administrative
and general expenses and
amortization of
acquisition
intangibles.............. 195.8(5) 186.1 181.6 176.0 177.5 106.2 91.6
Research and process
development expenses..... 44.7(6) 40.2 44.2 40.0 42.7 22.3 21.0
Earnings (loss) from
operations............... 119.2 135.2 122.1 67.4 (172.0)(7) 96.5 55.3
Equity in earnings of
associated companies..... 12.3 24.8 24.6 16.4 23.8 11.2 8.5
Earnings (loss) before
cumulative effect of
accounting changes....... 113.6(8) 100.1 282.2(9) 56.1 (285.7)(10) 65.7 54.7(11)
Cumulative effect of
accounting change........ -- -- -- -- (219.8)(12) -- --
Net earnings (loss)........ 113.6 100.1 282.2 56.1 (505.5) 65.7 54.7
Dividends on preferred
stock.................... -- -- 10.7 14.6 0.6 -- --
Excess of repurchase price
over related book value
of Series A Preferred
Stock and Series B
Preferred Stock.......... -- -- 195.2(13) -- -- -- --
Net earnings (loss)
available to common
stockholders............. 113.6 100.1 76.3 41.5 (506.1) 65.7 54.7
Net earnings per common
share
Basic.................... $ 2.50 $ 2.13 $ 1.98 1.12 -- 1.45 1.20
Diluted.................. 2.39 2.03 1.50 .88 -- 1.38 1.15
Share base for earnings per
share
Basic.................... 45.5 47.0 38.5 36.8 -- 45.5 45.5
Diluted.................. 47.6 49.3 54.5 54.4 -- 47.5 47.6
</TABLE>
8
<PAGE> 16
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- -------------------
1997 1996 1995 1994 1993 1998 1997
-------- -------- -------- ------- ----------- ------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA, RATIOS AND PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT
PERIOD END):
Cash and cash
equivalents.............. $ 6.4 $ 20.4 $ 12.0 97.7 43.5 24.4 22.7
Total assets............... 1,614.1 1,261.1 1,293.8 1,199.4 1,082.1 1,703.1 1,183.6
Long-term debt............. 324.0 89.0 66.0 -- -- 359.4 26.0
Total stockholders'
equity................... 387.4 314.4 342.9 83.3 31.4 429.5 319.8
</TABLE>
- ---------------
(1) With respect to periods prior to December 17, 1993, the effective date of
the transfer of substantially all the assets and liabilities of the
chemicals business of American Cyanamid Company ("Cyanamid") to Cytec, the
term "Cytec" refers to the chemicals business of Cyanamid.
(2) Cytec has not declared cash dividends on common stock in any of the periods
presented.
(3) Includes restructuring and other charges of $34.6 relating primarily to
manufacturing sites located in Fortier, Louisiana; Willow Island, West
Virginia; Botlek, The Netherlands; and Linden, New Jersey.
(4) Includes restructuring and other charges of $18.6 relating primarily to
manufacturing sites located in Botlek, The Netherlands and Linden, New
Jersey.
(5) Includes restructuring and other charges of $5.8 relating to sales force,
customer service and corporate headquarters restructuring, costs related to
the integration of Fiberite and costs for reorganizing the legal entity
structure in Europe.
(6) Includes restructuring and other charges of $2.0 related to the reduction
of corporate research and development overhead and the write-off of
in-process research and development acquired from Fiberite.
(7) Includes provisions for environmental remediation of 162.3.
(8) Includes, in addition to the charges referred in notes 3, 5 and 6 above, a
pre-tax gain of $22.3 relating primarily to the divestiture of the acrylic
fibers product line in the first quarter of 1997, pre-tax charges of $9.0
for reducing the carrying amount of Conap to net realizable value and
expected losses on certain other assets being held for sale and a pre-tax
charge of $1.0 for upfront costs to fund the Fiberite Acquisition. Also
includes a gain of $24.4 resulting from the reversal of the remaining
previously established tax valuation allowance.
(9) Includes $193.0 resulting from the reversal of a previously established tax
valuation allowance.
(10) In addition to the charges discussed in Note 7 above, a valuation allowance
of $193.5 was recorded as part of the 1993 income tax provision relating to
certain deferred tax assets existing as of December 31, 1993. An additional
allowance of $12.7 was also established relating to certain liabilities
transferred to the Company by Cyanamid at the time of the spin-off. This
additional allowance did not affect the income tax provision. Subsequent
adjustments in 1994 and 1995 to the tax basis of certain assets and
liabilities assumed from Cyanamid at the time of the spin-off increased the
valuation allowance by $11.2 but did not affect the income tax provision in
either year.
(11) In addition to the charges discussed in Note 4 above, includes a pre-tax
gain of $22.3 relating primarily to the divestiture of the acrylic fibers
product line.
(12) Includes a charge of $230.4 related to the adoption of SFAS No. 106,
"Accounting for Postretirement Benefits Other Than Pensions" and a benefit
of $10.6 related to the adoption of SFAS No. 109, "Accounting for Income
Taxes".
(13) Represents a charge to retained earnings in the fourth quarter of 1995 for
the excess of repurchase price over the related book value upon repurchase
of the Series A Preferred Stock and Series B Preferred Stock.
9
<PAGE> 17
AMT SUMMARY FINANCIAL DATA
The following table presents summary historical consolidated financial data
for AMT. The summary historical consolidated financial data are derived from the
historical consolidated financial statements of AMT. The information set forth
below should be read in conjunction with such historical financial statements
and the notes thereto. The historical consolidated financial statements of AMT
have been audited for each of the two years in the period ended December 31,
1997 and for the period from March 29, 1995 (inception) to December 31, 1995.
The historical consolidated financial statements for the six months ended June
30, 1998 and for the six months ended June 30, 1997 are unaudited. However, in
AMT's opinion, such statements reflect all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of AMT's financial
position and results of operations for such periods. The results of operations
for the six months ended June 30, 1998 may not be indicative of results of
operations to be expected for a full year.
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION AND SUBSIDIARIES
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------- ------------------
1997 1996 1995(1) 1998 1997
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS(2):
Net sales................................ $30,386 $22,411 $ 616 $23,171 $16,548
Income (loss) from operations(3)......... (5,616) 1,505 (259) 1,258 741
Income (loss) before income taxes........ (6,124) 1,202 (277) 910 826
Income tax expense (benefit)............. (230) 239 -- -- 119
Income (loss) before extraordinary
item................................... (5,894) 963 (277) 910 707
Net income (loss)........................ (5,894) 934 (277) 910 707
Basic income (loss) per share:
Income (loss) before extraordinary
item................................ (1.35) 0.35 0.18 0.21 0.16
Net income (loss)...................... (1.35) 0.34 0.18 0.21 0.16
Diluted income (loss) per share:
Income (loss) before extraordinary
item................................ (1.35) 0.33 0.18 0.19 0.16
Net income (loss)...................... (1.35) 0.32 0.18 0.19 0.16
Weighted average number of shares:
Basic.................................. 4,352 2,729 1,517 4,400 4,338
Diluted................................ 4,352 2,956 1,517 4,730 4,506
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents................ $ 92 $ 4,655 $ 174 $ 103 $ 0
Working capital.......................... (1,096) 6,774 (2,449) 866 3,360
Total assets............................. 23,059 15,695 9,429 22,431 24,620
Long-term debt........................... 4,205 336 2,164 4,467 5,325
Total stockholders' equity (deficit)..... 6,630 11,608 (65) 7,997 13,121
</TABLE>
- ---------------
(1) Period from March 29, 1995 (inception) to December 31, 1995.
(2) AMT has not declared cash dividends in any of the periods presented.
(3) Includes unusual item expense of $3,845 in 1997.
10
<PAGE> 18
THE SPECIAL MEETING
SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to AMT stockholders in
connection with the solicitation by the AMT Board of proxies for use at the
Special Meeting to be held on October 9, 1998 at 10:00 a.m. local time, at the
offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019.
At the Special Meeting, holders of AMT Common Stock will consider and vote
upon a proposal to adopt the Merger Agreement. The Merger Agreement provides
that, upon the terms and subject to the conditions thereof, the Merger Sub will
be merged with and into AMT and AMT will become a wholly owned subsidiary of
Cytec. Each share of AMT Common Stock issued and outstanding immediately prior
to the Merger will be converted into the right to receive that number of validly
issued, fully paid and nonassessable shares of Cytec Common Stock equal to the
Conversion Number.
No fractional shares of Cytec Common Stock will be issued in the Merger. In
lieu of any such fractional shares, each holder of AMT Common Stock who
otherwise would be entitled to receive a fractional share of Cytec Common Stock
pursuant to the Merger Agreement will be paid an amount in cash, without
interest, equal to such holder's fractional part of a share of Cytec Common
Stock, if any, multiplied by the Average Cytec Price. Cytec will make available
to the Exchange Agent from time to time, as needed, cash sufficient to pay cash
in lieu of fractional shares.
THE AMT BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, DETERMINED
THAT THE MERGER IS IN THE BEST INTERESTS OF AMT AND ITS STOCKHOLDERS, AND
RECOMMENDS THAT THE STOCKHOLDERS OF AMT VOTE FOR THE ADOPTION OF THE MERGER
AGREEMENT. SEE "THE MERGER -- BACKGROUND OF THE MERGER" AND "THE
MERGER -- RECOMMENDATION OF THE AMT BOARD AND REASONS FOR THE MERGER".
For a discussion of (i) the interests that certain directors and executive
officers of AMT have with respect to the Merger that are different from, or in
addition to, the interests of stockholders of AMT generally and (ii) information
regarding the treatment of options and warrants to purchase AMT Common Stock and
other rights of certain directors and executive officers of AMT (See "-- The
Stockholders Agreement", "THE MERGER -- Interests of Certain Persons in the
Merger" and "THE MERGER -- Effect on Employee Benefit and Stock Plans"). Such
interests, together with other relevant factors, were considered by the AMT
Board in making its recommendation and approving the Merger Agreement.
The Board of Directors of Cytec (the "Cytec Board") has approved the Merger
Agreement and the issuance of Cytec Common Stock in the Merger, and the Board of
Directors of the Merger Sub, and Cytec, as the sole stockholder of the Merger
Sub, have respectively approved and adopted the Merger Agreement. No action by
Cytec's stockholders is required to effect the Merger.
RECORD DATE; SHARES ENTITLED TO VOTE; VOTES REQUIRED
August 31, 1998 has been fixed as the Record Date for determining the
holders of AMT Common Stock who are entitled to notice of and to vote at the
Special Meeting. As of the close of business on the Record Date, there were
4,490,121 shares of AMT Common Stock outstanding and entitled to vote. The
holders of record on the Record Date of AMT Common Stock are entitled to one
vote per share of AMT Common Stock on each matter submitted to a vote at the
Special Meeting. The presence in person or by proxy of the holders of a majority
of AMT Common Stock entitled to vote is necessary to constitute a quorum for the
transaction of business at the Special Meeting. Under the DGCL, the affirmative
vote of at least a majority of the outstanding shares of AMT Common Stock is
required for adoption of the Merger Agreement. Abstention from voting will have
the practical effect of voting against the adoption of the Merger Agreement
since a vote to abstain represents one less vote for such adoption.
As of the Record Date, 737,135 (approximately 16.4%) of the outstanding
shares of AMT Common Stock were beneficially owned by directors and executive
officers of AMT and their affiliates. All such directors and executive officers
have indicated to AMT that they intend to vote all such shares in favor of the
adoption of the Merger Agreement. See "-- The Stockholders Agreement". As of
August 25, 1998, Cytec
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<PAGE> 19
held 192,500 shares (approximately 4.3%) of AMT common stock and is entitled to
and intends to vote its shares in favor of the adoption of the Merger Agreement.
Cytec may from time to time acquire additional shares of AMT in the open market
or in privately negotiated purchases.
PROXIES; PROXY SOLICITATION
Shares of AMT Common Stock represented by properly executed, unrevoked
proxies received at or prior to the Special Meeting will be voted at the Special
Meeting in accordance with the instructions contained therein. Shares of AMT
Common Stock represented by properly executed, unrevoked proxies for which no
instruction is given will be voted FOR adoption of the Merger Agreement. AMT
stockholders are requested to complete, sign, date and return promptly the
enclosed proxy card in the postage-paid envelope provided for this purpose to
ensure that their shares are voted. An AMT stockholder may revoke a proxy by
submitting a later dated proxy with respect to the same shares at any time prior
to the vote on the adoption of the Merger Agreement, by delivering written
notice of revocation to the Secretary of AMT at any time prior to such vote or
by attending the Special Meeting and voting in person. Mere attendance at the
Special Meeting will not in and of itself revoke a proxy.
If the Special Meeting is postponed or adjourned for any reason, when the
Special Meeting is convened or reconvened, all proxies will be voted in the same
manner as such proxies would have been voted at the original convening of the
meeting (except for any proxies which have theretofore effectively been revoked
or withdrawn), notwithstanding the possibility that they may have been
effectively voted on the same or any other matter at a previous meeting.
In addition to solicitation by mail, directors, officers and employees of
AMT may solicit proxies by telephone, telegram or otherwise. Such directors,
officers and employees of AMT will not be additionally compensated for such
solicitation but may be reimbursed for out-of-pocket expense incurred in
connection therewith. Brokerage firms, fiduciaries and other custodians who
forward soliciting material to the beneficial owners of shares of AMT Common
Stock held of record by them will be reimbursed for their reasonable expenses
incurred in forwarding such material.
THE STOCKHOLDERS AGREEMENT
The description of the Stockholders Agreement contained in this Proxy
Statement/Prospectus does not purport to be complete and is qualified in its
entirety by reference to the Stockholders Agreement, a copy of which is attached
hereto as Annex B and incorporated herein by reference.
On July 8, 1998, Cytec entered into the Stockholders Agreement with Mr.
Georgiev, Mr. Glaser, Mr. Glosson, each a member of the Board of Directors of
AMT, and Mr. Pendorf, the President and Chief Executive Officer and a director
of AMT (collectively, the "Selling Stockholders"). As of the date of this Proxy
Statement/Prospectus, the Selling Stockholders hold 717,360 shares or
approximately 16.0% of the outstanding shares of AMT Common Stock, meaning they
alone are unable to control the vote on any matter submitted to a vote of AMT's
stockholders, including the adoption of the Merger Agreement and transactions
contemplated thereby.
Pursuant to the Stockholders Agreement, each Selling Stockholder has agreed
that at any meeting of stockholders of AMT called to vote upon the Merger, the
Merger Agreement or the other transactions contemplated by the Merger Agreement,
such Selling Stockholder shall vote (or cause to be voted) his shares, including
shares received upon the exercise of options, in favor of the Merger, the
execution and delivery by AMT of the Merger Agreement and the approval of the
terms thereof and each of the other transactions contemplated by the Merger
Agreement.
Further, each Selling Stockholder has agreed in the Stockholders Agreement
that at any meeting of the stockholders of AMT, such Selling Stockholder shall
vote (or cause to be voted) his shares against (i) any Transaction Proposal
other than the Merger Agreement; (ii) any merger agreement or merger (other than
the Merger Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution, liquidation
or winding up of or by AMT; or (iii) any amendment of AMT's
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<PAGE> 20
Certificate of Incorporation or By-laws or other proposal or transaction
involving AMT or any of its subsidiaries which amendment or other proposal or
transaction would in any manner partially or wholly impede, frustrate, prevent,
delay or nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement (each of the foregoing, a
"Competing Transaction").
Also, each Selling Stockholder agreed that if the Merger Agreement is
terminated under circumstances where Cytec is entitled to receive the Parent
Termination Fee , each Selling Stockholder shall pay to Cytec on demand an
amount equal to the Net Profit of such Stockholder from the consummation of any
Transaction Proposal that is consummated within two years of such termination.
The term "Net Profit" means an amount in cash equal to such Selling
Stockholder's Gross Profit (as defined herein) minus the amount paid by such
Selling Stockholder in taxes as a result of the consummation of the Transaction
Proposal. The term "Gross Profit" means an amount in cash equal to the product
of (x) the number of such Selling Stockholder's shares and (y) the excess of the
per-share cash consideration plus the per-share fair market value of any
non-cash consideration, as the case may be, received by the Selling Stockholder
pursuant to such Transaction Proposal, over $6.00.
The Stockholders Agreement, except for the provisions providing for the
payment of Net Profit to Cytec, will terminate upon the first to occur of (i)
the Effective Time or (ii) the date upon which the Merger Agreement is
terminated in accordance with its terms, unless an Extension Event (as defined
herein) shall have theretofore occurred, in which case certain provisions
thereof, including as to voting, will continue in effect for a period of 18
months. As used herein, an "Extension Event" shall mean any of the following
events: (A) the Special Meeting shall not have been held or the required
approval of the AMT stockholders shall not have been obtained at such meeting,
(B) the AMT Board shall have withdrawn or modified its recommendation with
respect to the Merger or the Merger Agreement or (C) any person (other than
Cytec or any subsidiary of Cytec) shall have made, or disclosed an intention to
make, a Transaction Proposal or proposal for a Competing Transaction.
CYTEC
Cytec is a vertically integrated industrial chemicals company which focuses
on value-added specialty products. Cytec's products serve a broad group of end
users, including the aerospace, plastics, coatings, mining, paper, water
treatment and automotive industries. Cytec's primary strategic focus is on
value-added specialty chemicals and specialty materials, a significant portion
of which utilize building block chemicals manufactured by Cytec.
Cytec develops, manufactures and markets products in three general product
categories: specialty chemicals, specialty materials and building block
chemicals. Specialty chemicals include principally water treating, paper and
mining chemicals, coatings and resin products and polymer additives. Specialty
materials include principally aerospace materials. Building block chemicals
include principally acrylonitrile, acrylamide, melamine and methanol. Cytec has
manufacturing facilities in eight countries and sells its products worldwide.
For a description of Cytec's business, see Cytec's filings with the
Securities and Exchange Commission which are incorporated by reference into this
Prospectus/Proxy Statement.
The principal executive offices of Cytec are located at Five Garret
Mountain Plaza, West Paterson, New Jersey 07424. Its telephone number is (973)
357-3100.
The Merger Sub, a Delaware corporation, is a wholly owned subsidiary of
Cytec formed solely for the purpose of effecting the Merger.
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AMT
DESCRIPTION OF AMT'S BUSINESS
The following is a general discussion of the business of AMT as a separate
company and does not specifically contemplate the effect of the Merger.
The Company
AMT was incorporated in Delaware in March 1995. AMT had no operations until
December 19, 1995, when it acquired Structural Polymer Systems, Inc. (renamed
Culver City Composites Corporation ("CCCC")), a manufacturer of advanced
composites. In November 1996, AMT acquired 63% of the outstanding shares of
Carbon Design Partnership Limited ("Carbon Design"), a design and fabrication
business located in Totnes, Devon, UK which has subsequently been placed in
voluntary liquidation. On February 27, 1997, AMT purchased all of the assets of
Grafalloy L.P. ("Grafalloy"), a manufacturer of graphite golf club shafts.
Through its subsidiaries, AMT manufactures and sells advanced composites
and products made from these materials. Advanced composites are a combination of
high performance reinforcement fabrics or fibers (such as fiberglass, carbon, or
aramid) and a polymer (such as epoxy, phenolic, or polyimide). The combination
of high performance reinforcement fabrics or fibers with polymers forms an
advanced composite with exceptional structural and/or performance properties.
AMT provides raw materials to parts manufacturers and also manufactures finished
parts.
The principal executive offices of AMT are located at 5915 Rodeo Road, Los
Angeles, California 90016. Its telephone number is (310) 841-5200.
Business
PREPREG BUSINESS. Through its subsidiary, CCCC, AMT coats or impregnates a
variety of fabrics or fibers with polymers to produce "prepreg," an advanced
composite which is molded into parts for use in a variety of aerospace, defense,
industrial and recreational products. AMT's prepreg business competes in three
major product lines and in a variety of specialized products. These lines
include aircraft interiors, high temperature resin systems used in aircraft
engines and ablative products used in missiles. AMT believes that CCCC is the
leader in sales of advanced composites containing the high temperature resin
system PMR-15 for jet engine applications, as well as being a leading supplier
of advanced composites used in aircraft interiors. Prepreg sales represented 69%
of AMT's total revenues in 1997.
AMT estimates that the total worldwide market for advanced composites was
approximately $900 million in 1997, with more than half of those sales in North
America. The market growth rate for advanced composites of the type produced by
AMT's prepreg business has, in the past, been closely correlated to the overall
build rate of commercial and military aircraft because these customers
constitute by far the largest source of demand. AMT believes this will continue
to be the case for the next several years, as the advantages of lower weight and
resulting fuel economy will cause aircraft manufacturers to use increasing
amounts of advanced composite materials, particularly in newer models and
development programs. For example, recently developed military aircraft such as
the stealth fighter, F-22, and B-2 bomber and commercial aircraft such as the
Boeing 777 and the Airbus 321, 330 and 340 models contain a higher percentage by
weight of advanced composites than the older aircraft they replace.
Orders for commercial aerospace materials generally lag behind the award of
contracts for new aircraft by a considerable period. Thus, the cycle of new
aircraft procurement normally does not have an impact on aerospace orders
received by AMT for about one to three years.
In the defense aerospace markets, manufacturers of advanced composites
generally are selected to supply a particular advanced composite material as
much as one to four years ahead of its actual use in production by the customer.
Typically, a lengthy development and testing process is required before the
advanced composite is deemed "qualified" as meeting the customer's
specifications. In aircraft production, this process can require
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<PAGE> 22
approval of finished parts by the Federal Aviation Administration. AMT has
qualified its advanced composites to meet over 200 specifications for use in the
defense, aerospace, and communications markets.
AMT sells its prepreg products to the aerospace, communications, defense,
and recreation markets. Major customers include: The Boeing Company, General
Electric Company, Lockheed Martin Corporation, the Aerojet division of GenCorp
Inc., and Airbus Industrie.
Important materials produced by AMT include:
S-2(R) AND E-TYPE FIBERGLASS PREPREGS. These materials are low-cost and
lightweight, exhibit high strength, and are used in overhead bins, seats,
lavatories, and other items in aircraft and train interiors.
CARBON FIBER-BASED PREPREGS. These materials exhibit superior
strength-to-weight ratios compared to glass materials and are used in similar
interior applications, as well as in floor panels which require greater strength
characteristics, aircraft engine components where both strength and heat
resistance are key attributes, and in primary and secondary structure
applications.
ARAMID, QUARTZ, CERAMIC PREPREGS. Aramid fiber is exceptionally resistant
to impact and is used in aircraft and various armor protection applications.
Quartz and ceramic fibers are resistant to extremely high temperatures and are
used in various aerospace and general industrial applications including engine
and missile components.
Approximately 30% of AMT's prepreg sales in 1997 and 1996 were derived from
contracts where AMT is the sole source supplier. Sales to AMT's two largest
prepreg customers, Boeing and General Electric, accounted for 19% and 31% of
consolidated sales in 1997 and 1996, respectively. AMT believes that the loss of
any of its principal prepreg customers would have a materially adverse effect on
AMT.
AMT advertises in trade magazines, provides press releases and publicity
for trade newsletters, solicits business through both domestic and foreign
employee sales personnel and independent domestic and foreign sales
representatives, and attends and exhibits at major international trade shows as
a means of developing existing and new business. In cases where two or more
companies are qualified on a given product, business is generally obtained
through competitive bidding.
AMT has agreements with two other companies to develop and commercialize
new resin systems for prepreg applications. SuperImide 800 is designed to
exhibit superior high temperature resistance in aerospace and military
applications. Siloxirane is designed to exhibit superior chemical, abrasion and
high temperature resistance for use in aerospace, military and industrial
applications. These polymers are currently in the development stage and have not
been introduced commercially to the market. PETI-5, under license from NASA, is
under laboratory development for applications such as the proposed High Speed
Civil Transport airplane.
In October 1997, AMT entered into a joint venture agreement with Schappe
Techniques Sarl of France to produce and market Modlite Select(TM) (trademark
pending), a family of high-performance, low-cost carbon fiber yarns and fabrics
currently under development. Strategic marketing of these products began in
January 1998.
GRAPHITE GOLF SHAFT BUSINESS. On February 27, 1997, AMT, through its
wholly owned subsidiary Grafalloy Corporation, acquired all of the assets and
assumed certain liabilities of Grafalloy. Grafalloy develops, manufactures and
sells high performance, high quality graphite golf shafts. Grafalloy specializes
in the development of innovative shafts and manufactures a wide variety of
graphite shaft models that range in weight, torque, and stiffness designed to
meet the needs of players of various ages and skill levels. Sales of graphite
golf shafts accounted for 28% of AMT's total sales in 1997.
On July 30, 1998, AMT announced that it had signed a non-binding letter of
intent with Cornerstone Equity Investors, LLC for the sale of Grafalloy
Corporation. The letter of intent contains a purchase price of approximately
$7.5 million. The sale of Grafalloy Corporation is scheduled to occur after the
Effective Time of the Merger but is not, under the letter of intent, conditioned
on the consummation of the Merger. AMT anticipates that it will incur a loss of
approximately $1.5 million in connection with this sale. No assurance can
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be given that this transaction will be consummated, or that it will be
consummated on the terms set forth in the letter of intent. See "Recent
Developments".
DESIGN & FABRICATION BUSINESS. AMT, through its majority-owned joint
venture, Carbon Design, performed design engineering and custom manufacture of
advanced composite parts using a variety of proprietary manufacturing processes
and technologies. Carbon Design produced a variety of custom designed parts for
industrial, sporting and recreational uses. This design and fabrication business
accounted for less than 3% of AMT's revenues in 1997. In March 1998 AMT decided
to discontinue financial support of the joint venture. The business was placed
in voluntary liquidation and is being dissolved pursuant to English law.
COMPETITION. AMT encounters significant competition in domestic markets
from a number of well-established manufacturers in each of its product lines,
and from foreign sources for some products. In most product markets AMT faces
competition from other manufacturers that have larger market shares or other
competitive advantages.
To AMT's knowledge, in the global aerospace and defense markets, it is the
fourth-largest manufacturer of advanced composite prepregs. Depending upon the
material and markets, relevant competitive factors in the prepreg business
include price, delivery, service, quality, and product performance. AMT's
ability to compete effectively in the prepreg business depends on, among other
things, its products' functional features and upon the ability of AMT to attract
and retain qualified personnel, to maintain and expand the capabilities of its
technologies, to sell existing products to new customers, to develop new
products for existing customers, to service its products, and to expand its
sales force or enter into satisfactory arrangements for the marketing of its
products.
Sources of Supply
Worldwide aircraft production has increased substantially over the past two
years and is expected to remain at these higher levels for several years.
Increased production is expected to increase the demand for glass, carbon and
other fibers. There are a limited number of worldwide suppliers of aerospace
grade and other advanced composite fibers, including Owens Corning Fiberglass
Corporation and PPG Industries, Inc. for fiberglass; Hexcel Corporation, Amoco
Performance Products, Inc., Toho Carbon Fibers, Inc., Toray International, Inc.
and certain licensees of these companies for carbon; and E. I. Dupont de Nemours
& Co. and Akzo Nobel for aramid fibers. All of these companies supply fibers
which go into AMT's products. Due to increased aircraft manufacture and an
increasing use of advanced composite materials in other industrial and
recreational products, there can be no assurance that future supplies of these
fibers will be adequate to meet overall industry demand or that prices will
remain stable. Supply has been adversely impacted at times by strong demand in
the electronics and other markets. Carbon fiber is currently in a worldwide
shortage and is being allocated to certain markets by suppliers. However,
significant increases in capacity have been announced which are expected to
begin to come on stream in 1998.
AMT purchases woven fabric for its prepreg business from a number of
manufacturers, including BGF Industries, Inc., Clark Schwebel, Inc., Hexcel
Corporation, and JPS Glass Fabrics, Inc. One supplier accounted for over 70% of
total fabric supply for the prepreg business in the years ended December 31,
1997 and 1996. AMT believes it has a satisfactory relationship with that
supplier, and that if that supplier were unable to supply AMT, it would be able
to obtain fabric from other suppliers. However, there is no assurance that such
other suppliers would offer fabric on terms as favorable as those currently
available.
AMT's polymers include epoxy, phenolic, polyester, and polyimide resins.
Most resins have been developed internally and others, such as PMR-15, are
licensed from other organizations. In many cases, there are multiple qualified
sources of woven and raw fiber, packaging and other product constituents. AMT
has several sole source suppliers, including suppliers of various resins, which
AMT believes to be stable sources of supply or capable of replacement at limited
additional cost.
Although AMT believes that it has adequate supplies of important materials
to supply existing products and customers, the possibility exists that the
limited number of suppliers, including AMT's sole source suppliers, could
experience a disruption in manufacturing or supply capability which would
adversely affect
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AMT's ability to supply products to its customers. Substitutes for certain
materials might not be readily available and an inability to obtain essential
materials, if prolonged, could materially adversely affect AMT's business.
Research and Development
AMT's research and development activities include: qualification support;
the demonstration of product capabilities to new and existing customers;
research and development of new resins, substrates and combinations thereof;
process support for the production group; engineering of customers' parts; and
the design of innovative golf shafts. In the years ended December 31, 1997 and
1996, research and development expenditures were $1,639,000 and $535,000,
respectively (5.4% and 2.4% of net sales).
Patents, Trademarks and Technology
Most of AMT's prepreg resin systems are based on proprietary formulations
and represent the cumulative effects of over 50 years of formulation technology
and qualifications in this industry. AMT licenses the formulation for the PMR-15
resin from the National Aeronautics and Space Administration and licenses other
technologies from other companies. Most manufacturing processes and design
capabilities developed and currently held by AMT are also proprietary in nature.
AMT intends to protect its proprietary technology through applications for
patents when and where appropriate. AMT currently holds no patents, although
five patent applications are pending.
AMT's trademarks include AMT, CULVER CITY COMPOSITES, GRAFALLOY, GRAFALLOY
LADY CLASSIC, LADY CLASSIC, SENIOR CLASSIC, CLASSIC LITE, ATTACKLITE, PRO M29
ATTACK, GRAFALLOY SOLITE and others. AMT holds licenses for the marks POWERCOIL,
PROLITE, and NITROFLEX.
Environmental Matters
Environmental control regulations have not had a significant adverse effect
on the overall operations of AMT and its subsidiaries. AMT believes that it is
in compliance in all material respects with all applicable environmental laws
and regulations.
An environmental site assessment in October 1995 authorized by Montecatini
U.S.A., Inc., a subsidiary of Montedison S.p.A. and the former owner of CCCC,
determined that there had been a leak of acetone into the ground at AMT's Culver
City, California manufacturing facility. Acetone is not on the federal hazardous
substances list, nor is it on California's hazardous substances list. AMT
removed the source of the leak and is currently monitoring the biodegradation of
the acetone.
Employees
AMT and its subsidiaries had 169 full-time, permanent employees and 76
temporary production employees at December 31, 1997. Of these employees, 186
were in manufacturing, 15 were in sales and marketing, 18 were in research and
development, and the remainder were in administrative functions. The Stove,
Furnace, and Allied Appliance Workers Division, International Brotherhood of
Boilermaker, Iron Ship Builders, Blacksmiths, Forgers and Helpers represents 47
of the employees of AMT and its subsidiaries under a contract that extends to
April 30, 2000. AMT management believes its labor relations are generally good.
Description of Property
AMT leases the following properties: (i) a 40,000-square foot corporate
headquarters, research and development and manufacturing facility in Los
Angeles, California; (ii) a 37,000-square foot manufacturing facility, located
nearby in Culver City, California, which houses the main manufacturing plant of
CCCC; and (iii) a 21,000-square foot manufacturing and administrative facility
in El Cajon, California.
The leases are for terms of one to ten years, and contain varying option
clauses ranging from three to ten years. The lease for Grafalloy's manufacturing
and administrative facility expires in the fourth quarter of 1998.
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SELECTED FINANCIAL DATA
The following table presents selected historical consolidated financial
data for AMT. The selected historical financial data are derived from the
historical consolidated financial statements of AMT. The information set forth
below should be read in conjunction with such historical financial statements
and the notes thereto. The historical consolidated financial statements of AMT
have been audited for each of the two years in the period ended December 31,
1997 and for the period from March 29, 1995 (inception) to December 31, 1995.
The historical consolidated financial statements for the six months ended June
30, 1998 and for the six months ended June 30, 1997 are unaudited. However, in
AMT's opinion, such statements reflect all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of AMT's financial
position and results of operations for such period. The results of operations
for the six months ended June 30, 1998 may not be indicative of results of
operations to be expected for a full year.
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------- ------------------
1997 1996 1995(1) 1998 1997
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:(2)
Net sales................................ $30,386 $22,411 $ 616 $23,171 $16,548
Income (loss) from operations(3)......... (5,616) 1,505 (259) 1,258 741
Income (loss) before income taxes........ (6,124) 1,202 (277) 910 826
Income tax expense (benefit)............. (230) 239 -- -- 119
Income (loss) before extraordinary
item................................... (5,894) 963 (277) 910 707
Net income (loss)........................ (5,894) 934 (277) 910 707
Basic income (loss) per share:
Income (loss) before extraordinary
item................................ $ (1.35) $ 0.35 $ 0.18 $ 0.21 $ 0.16
Net income (loss)...................... (1.35) 0.34 0.18 0.21 0.16
Diluted income (loss) per share:
Income (loss) before extraordinary
item................................ (1.35) 0.33 0.18 0.19 0.16
Net income (loss)...................... (1.35) 0.32 0.18 0.19 0.16
Weighted average number of shares:
Basic.................................. 4,352 2,729 1,517 4,400 4,338
Diluted................................ 4,352 2,956 1,517 4,730 4,506
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents................ $ 92 $ 4,655 $ 174 $ 103 $ 0
Working capital.......................... (1,096) 6,774 (2,449) 866 3,360
Total assets............................. 23,059 15,695 9,429 22,431 24,620
Long-term debt........................... 4,205 336 2,164 4,467 5,325
Total stockholders' equity (deficit)..... 6,630 11,608 (65) 7,997 13,121
</TABLE>
- ---------------
(1) Period from March 29, 1995 (inception) to December 31, 1995.
(2) AMT has not declared cash dividends in any of the periods presented.
(3) Includes unusual item expense of $3,845 in 1997.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
AMT was incorporated in March 1995 to acquire and manage businesses in the
advanced materials and technologies industries. AMT acquired CCCC, a supplier of
prepreg materials to the aerospace industry, on December 19, 1995, and
Grafalloy, a manufacturer of graphite golf club shafts, on February 27, 1997.
The results of operations of the acquired companies are included in AMT's
financial statements from the respective dates of acquisition.
AMT's operations, particularly those of Grafalloy, are subject to seasonal
fluctuations. Sales are strongest in the first two quarters of the year and
weakest in the fourth quarter.
Results of Operations
Six months ended June 30, 1998 compared to six months ended June 30, 1997
Sales for the six months ended June 30, 1998 were $23,171,000, an increase
of 40% over sales of $16,548,000 in the corresponding period of 1997. The pro
forma sales growth, assuming Grafalloy had been acquired on January 1, 1997, was
27%. Unit sales increased at CCCC, while at Grafalloy most of the sales growth
came from higher average selling prices.
Gross profit for the first six months of 1998 was $6,745,000, or 29.1% of
sales, compared to $4,994,000 (30.2% of sales) in the first six months of 1997.
The lower gross margin percentage is the result of higher material costs -- 50%
vs. 44% -- due to a change in product mix and higher raw material costs at CCCC.
This was partly offset by lower manufacturing costs. These costs were 21% of
sales in the first half of 1998 compared to 26% of sales in the first half of
1997, because of efficiencies from higher production volumes and changes in
product mix.
Research and development expenses rose to $1,010,000 in the six months
ended June 30, 1998, an increase of 52% over R&D expenses of $666,000 in the
corresponding prior year period. As noted above, AMT has expanded its activities
to develop new products and to qualify its products with additional customers.
The increase also reflects the inclusion of Grafalloy for six months in 1998
compared to four months in the 1997 period.
Selling, general and administrative expenses were $4,477,000 for the first
six months of 1998, an increase of $890,000, or 25% compared to expenses of
$3,587,000 in the comparable period of 1997. The percentage increase was
substantially less than the 40% increase in sales, reflecting a renewed emphasis
on cost controls.
Interest expense was $375,000 for the first six months of 1998 compared to
$244,000 in the comparable 1997 period. AMT's borrowings increased in February
1997 with the acquisition of Grafalloy. Average interest rates were largely
unchanged. AMT recorded royalties and interest income of $329,000 in the first
half of 1997, representing an advance on royalties under a five-year license
renewal to a foreign company and interest income on invested cash prior to the
Grafalloy purchase.
No income taxes were provided in the first half of 1998, while taxes were
accrued at an effective rate of 14% in the first half of 1997, both rates
reflecting the availability of net operating loss carryforwards.
AMT had net income of $910,000 for the first six months of 1998, with
diluted earnings per share of $0.19. In the comparable period of 1997, net
income was $657,000, while diluted earnings per share were $0.16. Net income
increased 29%, and diluted per share earnings rose 23%.
Years ended December 31, 1997 and 1996
AMT's net sales were $30,386,000 in 1997 compared to $22,411,000 in 1996,
an increase of $7,975,000 or 36%. The addition of Grafalloy accounted for all of
the increase. Sales at CCCC were adversely affected by reduced sales to a major
customer because of a product model transition, lower than anticipated shipments
to Boeing in the fourth quarter of the year because of delays in commercial
aircraft production, and the loss of a contract from another customer. Boeing
and GE remained the largest customers for CCCC, together accounting for
approximately 27% of its sales compared to 31% in 1996.
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AMT's cost of sales was $22,146,000 in 1997, with gross profit (net sales
less costs of materials and manufacturing) of $8,240,000 or 27.1% of sales. In
1996, cost of sales was $16,750,000, while gross profit was $5,661,000 or 25.3%
of sales. The higher gross profit percentage in 1997 resulted from the addition
of the higher margin golf shaft business, which has lower materials cost but
higher sales and marketing expenses than the prepreg business. CCCC's gross
profit was consistent at approximately 25% in each year, as lower materials cost
in 1997 offset higher fixed manufacturing costs.
Marketing, selling, and administrative expenses were $8,372,000 in 1997
compared to $3,621,000 in 1996, an increase of $4,751,000 or 131% as AMT added
additional staff in sales, sales support, investor relations, and
administration, and increased marketing efforts and customer contacts. At CCCC,
staff levels were increased in the first half of 1997 in anticipation of higher
sales. However, a significant slowdown in orders occurred in the September to
December period following production delays at a major aerospace customer. This
resulted in a cost structure that was not supported by AMT's revenue base.
Reductions in staff and overhead were instituted early in the fourth quarter to
achieve an annualized reduction of approximately $1,000,000.
Research and development expenses were $1,639,000 in 1997, an increase of
$1,104,000 or 206% over expenses of $535,000 in 1996. As a percentage of sales,
R&D expenses increased to 5.4% from 2.4%, reflecting expanded activities for new
product development (including PETI-5/X resin systems and Modlite Select) and
increased efforts to qualify products for additional aerospace and commercial
uses. Research and development activities are expected to continue to grow, but
are expected to decline as a percentage of sales in future years.
Unusual item expenses of $3,845,000 were recorded in 1997. During the
second and third quarters of 1997 AMT engaged in extensive efforts, including
financing activities, negotiations and due diligence, for the acquisition of a
much larger company. AMT was not successful. Negotiations related to several
smaller acquisitions were also terminated during the third quarter. As a result,
expenses of approximately $760,000 related to AMT's acquisition activities were
recognized in the third quarter. AMT also recorded charges of $1,085,000 in the
third and fourth quarters related to its investment in Carbon Design, primarily
consisting of a writedown of goodwill and a reserve for loss on sale following a
decision to dispose of that business. Finally, goodwill related to the purchase
of Grafalloy was reduced by $2,000,000 in the fourth quarter.
Interest expense was $603,000 in 1997 compared to $434,000 in 1996, an
increase of $169,000, as a result of borrowings incurred in the purchase of
Grafalloy. Interest and other income decreased in 1997 because of lower cash
balances in interest-earning accounts.
An extraordinary loss of $29,000 was incurred in 1996 upon the early
retirement of a loan made by an affiliate of AMT.
As a result of the factors described above, AMT incurred a net loss of
$5,894,000 in 1997 or $1.35 per share (diluted), after reporting net income of
$934,000 or $0.32 per share (diluted) in 1996.
Liquidity and Capital Resources
Cash provided by operations in the first six months of 1998 was $580,000,
compared to cash used in operations of $1,931,000 in the first half of 1997,
reflecting higher earnings and improved working capital management. Working
capital increased to $916,000 at June 30, 1998, compared to a deficit of
$1,096,000 at December 31, 1997.
For the year ended December 31, 1997, cash used in operations was $157,000.
The impact of the net loss was largely offset by non-cash charges ($3,638,000),
by reductions in inventories ($1,205,000), and by increases in accounts payable
and accrued liabilities ($3,078,000). Capital expenditures increased to
$1,382,000 in 1997 compared to only $365,000 in 1996. These expenditures
included new liquid bulk storage tanks, modifications to resin mixing
facilities, and additional testing equipment. In 1996, cash used in operations
was $379,000, which included an increase in accounts receivable of $1,138,000.
To pay for the acquisition of Grafalloy in February 1997, AMT used
available cash plus borrowings of approximately $2,300,000 under its revolving
line of credit. Subsequently, AMT renegotiated its bank credit facilities to
reduce the interest rate (by 50 basis points) and to increase the total facility
to $10,167,000,
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consisting of $7,467,000 revolving credit based upon inventory and receivables,
a $1,000,000 five-year term loan, and a $1,700,000 standby term loan to finance
capital expenditures. The credit agreements extend to January 1999 and April
2000, respectively. At June 30, 1998, a total of $3,944,000 was borrowed under
AMT's revolving credit lines, and approximately $1,800,000 was available based
on eligible collateral. Because of seasonal factors in its business, AMT expects
to incur an operating loss for the second half of 1998. However, credit line
availability is expected to be sufficient to meet cash operating requirements,
including capital expenditures.
At December 31, 1997, AMT had a net operating loss carryforward for federal
income tax purposes of $3,900,000 available to offset taxable income of AMT
through 2012. Additional carryforwards of approximately $32,165,000 are
available as a result of the acquisition of CCCC in December 1995. The
change-in-ownership provisions of Section 382 of the Internal Revenue Code limit
the amount available to offset future taxable income to approximately $500,000
per year through 2010.
AMT has reviewed its enterprise resource planning systems and determined
that the systems are Year 2000 compliant. AMT is currently reviewing its
non-information technology systems to determine whether any equipment or parts
will require upgrade or replacement. AMT is developing a plan to contact all
major suppliers and customers to confirm their Year 2000 compliance. The results
of this survey, expected to be completed by the end of 1998, will be used to
prepare contingency plans, if necessary. AMT has not yet determined an estimate
of the total costs of its Year 2000 compliance efforts.
New Accounting Standards
Effective January 1, 1998, AMT adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income". This statement requires
that all items recognized under accounting standards as components of
comprehensive earnings be reported in an annual financial statement. It also
requires that an entity classify items of other comprehensive earnings (e.g.,
foreign currency translation adjustments and unrealized gains and losses on
certain marketable securities) by their nature in an annual financial statement.
AMT's total comprehensive earnings for the three-month and six-month periods
ended June 30, 1998 and 1997 were the same as reported net income for those
periods.
AMT has also adopted Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information". This
statement does not require interim period information in the year of adoption.
Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits", is effective for
the year beginning January 1, 1998. The statement requires additional
information about changes in the benefit obligation and fair value of plan
assets. AMT will include such disclosures in its annual financial statements.
Future Operating Results
The matters discussed in this Proxy Statement/Prospectus other than
historical material are forward-looking statements under the federal securities
laws. AMT advises readers not to place undue reliance on such statements in
light of the risks and uncertainties to which they are subject. Actual events or
results may differ materially as a result of risks and uncertainties facing AMT,
including:
RISKS RELATED TO COMPETITION. AMT encounters significant competition in
domestic markets from a number of well-established manufacturers in each of its
product lines, and from foreign sources for some products. In most product
markets AMT faces competition from other manufacturers that have larger market
shares or other competitive advantages.
RISKS RELATED TO THE PENDING ACQUISITION. The Merger is subject to various
regulatory reviews and the approval of AMT's stockholders. A failure to complete
the transaction would likely have a material adverse effect on the market price
of AMT Common Stock.
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RISKS RELATED TO THE MERGER CONSIDERATION. The Merger Consideration as set
forth in the Merger Agreement is determined by reference to the closing price of
Cytec Common Stock of the twenty trading days immediately preceding the Closing
Date as reported on the New York Stock Exchange Composite Transaction Tape (the
"Average Cytec Price"). Therefore, in the event that Cytec Common Stock
experiences a significant decline in the days after the twentieth trading day
immediately preceding the Closing Date, then the effect of such decline will not
be fully reflected in the Merger Consideration received by AMT stockholders.
PRICING PRESSURES. The aerospace and defense industries have seen
increased concentration in recent years as a result of a number of business
combinations. These larger companies are in a position to negotiate favorable
pricing terms from their suppliers, including AMT. AMT's ability to maintain its
profit margins will depend on, among other things, the technical and functional
features of its products and the development of new products.
DEPENDENCE ON MAJOR CUSTOMERS. Approximately 29% of AMT's sales in 1997
were made to three customers. The loss of a significant amount of business from
any of these customers would have a material adverse effect on the sales and
operating results of AMT.
CYCLICAL NATURE OF THE AEROSPACE INDUSTRY. The aerospace industry,
including transportation and communications, accounted for approximately 60% of
AMT's sales in 1997. This industry historically has been subject to cyclical
downturns. For example, after increasing each year from 1985 to 1991, annual
revenues in the aerospace industry dropped significantly in 1992 and remained
depressed through late 1995.
RAW MATERIAL COSTS. In the past few years, prices paid by AMT for certain
raw materials, such as fabric and resins, have fluctuated. When prices have
increased, AMT has not always been able to pass along the full effect of such
increases to its customers in order to maintain or enhance its market position.
NEW PRODUCTS. AMT's ability to enhance existing products and introduce new
products on a timely and cost-effective basis that meet evolving customer
requirements will be important to its future operating results. Delays in
introduction or a disappointing market acceptance could have an adverse effect
on AMT's business.
GOVERNMENT REGULATION. AMT must comply with a number of federal and state
environmental regulations. Although these regulations have not had a significant
adverse effect on the overall operations of AMT, the costs of compliance could
increase in future years.
INTERNATIONAL OPERATIONS. A small but increasing portion of AMT's sales in
recent years has been derived from its international operations. AMT's operating
results could be significantly affected by such factors as foreign exchange
fluctuations, difficulties in staffing and managing foreign operations, and
other risks associated with international activities.
RECENT DEVELOPMENTS
On July 9, 1998, J.R. Huber left his employment as President and Chief
Operating Officer of CCCC.
On July 30, 1998, AMT announced that it had signed a letter of intent with
Cornerstone Equity Investors, LLC for the sale of Grafalloy Corporation. The
purchase price is approximately $7.5 million. The sale of Grafalloy Corporation
is scheduled to occur after the Effective Time of the Merger but is not, under
the letter of intent, conditioned on the consummation of the Merger. AMT
anticipates that it will incur a loss of approximately $1.5 million in
connection with this sale. The sale of Grafalloy Corporation is subject to the
execution of a definitive agreement. No assurance can be given that this
transaction will be consummated, or that it will be consummated on the terms set
forth in the letter of intent.
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THE MERGER
BACKGROUND OF THE MERGER
1997 PROPOSED TRANSACTION. Discussions between Cytec and AMT regarding a
possible business combination began in mid-1997 and on June 15, 1997, a
confidentiality agreement was executed and AMT began to provide certain
information with respect to AMT to Cytec.
During the period from June 18, 1997 through October 7, 1997,
representatives of Cytec met with representatives of AMT on numerous occasions
to discuss certain financial and other operating information of AMT, to conduct
other due diligence, and to engage in negotiations regarding the financial terms
of an acquisition of AMT by Cytec and the terms of a merger agreement.
At a meeting on October 7, 1997, Cytec advised AMT that it was not
interested in continuing to pursue an acquisition of AMT because of the parties'
inability to agree on a valuation for AMT, and the parties terminated their
negotiations and had no further discussion on the same.
The October 7, 1997 meeting was the final discussion between Cytec and AMT
with regard to their 1997 proposed acquisition negotiations.
1998 TRANSACTION. On April 30, 1998, a representative of Cytec met with a
representative of AMT to discuss certain litigation between the two companies.
During that meeting, the representatives explored the possibility of Cytec
acquiring AMT. The representative of AMT indicated that AMT would entertain a
reasonable offer.
On May 28, 1998, a representative of Cytec called a representative of AMT
and offered to acquire AMT on an expedited basis. On June 10, 1998,
representatives of Cytec and AMT and their respective counsel met to discuss the
possible terms of a merger agreement. During the period from June 10, 1998,
until July 8, 1998, representatives of Cytec and AMT and their respective
counsel engaged in negotiations regarding the financial terms of an acquisition
of AMT and the terms of a merger agreement. AMT retained Wm Sword & Co. to act
as financial advisor to AMT in connection with its further consideration of an
acquisition.
On June 24, 1998, a special meeting of the AMT Board was held, at which AMT
management reported on the status of discussions with Cytec and presentations
were made by AMT's outside counsel as to applicable legal issues and by Wm Sword
& Co. regarding the valuation process. At this meeting Wm Sword & Co. advised
the AMT Board that, assuming no material developments in the circumstances
surrounding the Merger, it would furnish to the AMT Board a written opinion,
dated as of the date of the Merger Agreement. At this meeting, AMT management
also made a presentation concerning alternatives to a transaction with Cytec.
On July 8, 1998, the AMT Board held a meeting to consider the terms of the
Merger Agreement. Following a report by management, presentations by AMT's
outside counsel and by Wm Sword & Co., and delivery of an oral fairness opinion
by Wm Sword & Co., which was later confirmed in writing, and a review of the
terms of the Merger by the AMT Board, the AMT Board unanimously approved the
terms of and authorized AMT management to execute the Merger Agreement and
approved the transactions contemplated thereby.
RECOMMENDATION OF THE AMT BOARD AND REASONS FOR THE MERGER
At the July 8, 1998 meeting, the AMT Board determined that the terms of the
Merger are fair to and in the best interests of AMT and its stockholders,
unanimously approved the Merger Agreement and authorized and directed the
appropriate officers of AMT to execute the Merger Agreement on behalf of AMT.
THE AMT BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, DETERMINED
THAT THE MERGER IS IN THE BEST INTERESTS OF AMT AND ITS STOCKHOLDERS, AND
RECOMMENDS THAT THE STOCKHOLDERS OF AMT VOTE FOR THE APPROVAL OF THE MERGER
AGREEMENT.
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In the course of its deliberations with respect to the Merger, the AMT
Board reviewed with AMT management and considered a number of factors relevant
to the Merger and to the Board's commitment to maximizing the value of the
shares of AMT Common Stock held by AMT stockholders, including the following:
(i) historical information concerning Cytec's and AMT's respective businesses,
prospects, financial performance and condition, operations, technology,
management and competitive position, including public reports concerning results
of operations during the most recent fiscal year and fiscal quarter for each
company filed with the SEC; (ii) AMT management's view as to the financial
condition, results of operations and businesses of Cytec and AMT before and
after giving effect to the Merger based on management due diligence and publicly
available financial information; (iii) current financial market conditions and
historical market prices, volatility and trading information with respect to
Cytec Common Stock and AMT Common Stock; (iv) the consideration to be received
by AMT stockholders in the Merger and the relationship between the market value
of the Cytec Common Stock to be issued in exchange for each share of AMT Common
Stock and comparison of comparable merger transactions; (v) the impact of the
Merger on AMT's operations and employees; and (vi) reports from management as to
the results of their due diligence investigation of Cytec. The AMT Board also
considered its ability under the Merger Agreement to terminate the Merger
Agreement and accept a Superior Proposal if it determines that it must do so in
order to discharge its fiduciary obligations, as well as the possible effects of
the provisions regarding the Parent Termination Fee and Expenses. The AMT Board
considered the oral opinion of Wm Sword & Co. delivered at the July 8, 1998
meeting of the AMT Board of Directors, subsequently confirmed in writing, which
concluded that the Merger Consideration, as defined in Wm Sword & Co.'s written
opinion, was fair to AMT stockholders from a financial point of view on such
date. A copy of the Wm Sword & Co., opinion is included as Annex 3, and
stockholders are urged to review this opinion carefully. See "-- Opinion of
Financial Advisor."
The AMT Board also identified and considered a number of risks and
potentially negative factors in its deliberations concerning the Merger,
including, but not limited to: (i) the risk that the potential benefits sought
in the Merger might not be fully realized; (ii) the possibility that the Merger
would not be consummated and the effect of the public announcement of the Merger
on (a) AMT's sales and operating results, (b) AMT's ability to attract and
retain key management, marketing and technical personnel and (c) progress of
certain development projects; (iii) the possibility that, due to the formula
used for determining the value of Cytec Common Stock, the market value of the
Merger Consideration could be less than $6.00 on the Closing Date and could be
significantly less if the price of Cytec Common Stock were to decline materially
during the 20 trading days prior to the Closing Date; (iv) the possibility that,
as a practical matter, the Stockholders Agreements entered into by the Selling
Stockholders could affect the ability of AMT to enter into a more attractive
transaction; and (v) the possibility that, under the Merger Agreement, AMT could
become obligated to pay to Cytec the Parent Termination Fee of $2,000,000 upon
the termination of the Merger Agreement before the Effective Time under certain
circumstances. The AMT Board believed that these risks were outweighed by the
potential benefits of the Merger.
From July 8, 1998 to August 25, 1998, the closing price per share of Cytec
Common Stock has declined from $43 11/16 to $28 9/16 per share and the consensus
earnings estimate for 1999 for Cytec as reported by First Call Corporation has
declined by approximately 10%. Over the same period of time, the closing value
of the S&P Chemicals Index declined from 539.38 to 441.86.
OPINION OF FINANCIAL ADVISOR
In a June 24, 1998 meeting, Wm Sword & Co. advised the AMT Board that,
assuming no material developments in the circumstances surrounding the Merger,
it would furnish to the AMT Board a written opinion, dated as of the date of the
Merger Agreement. Wm Sword & Co. subsequently rendered its oral opinion on July
8, 1998, the date of the Merger Agreement (which opinion was subsequently
confirmed by delivery of a written opinion dated July 8, 1998) (the "Wm Sword &
Co. Opinion"), that, as of the date of such opinion and based upon and subject
to the factors and assumptions set forth in such opinion, the Merger
Consideration to be received by the stockholders of AMT (other than Cytec or any
of its wholly owned subsidiaries) pursuant to the Merger Agreement with Cytec is
fair from a financial point of view.
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THE FULL TEXT OF THE WM SWORD & CO. OPINION TO THE AMT BOARD DATED AS OF
JULY 8, 1998, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS OF THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED
HERETO AS ANNEX C AND IS INCORPORATED HEREIN BY REFERENCE. AMT STOCKHOLDERS ARE
URGED TO, AND SHOULD, READ THE OPINION CAREFULLY AND IN ITS ENTIRETY IN
CONJUNCTION WITH THIS PROXY STATEMENT/PROSPECTUS. THE WM SWORD & CO. OPINION
WAS FURNISHED TO THE AMT BOARD FOR THE PURPOSES OF ADDRESSING ONLY THE FAIRNESS
OF THE MERGER CONSIDERATION TO BE RECEIVED BY THE STOCKHOLDERS OF AMT PURSUANT
TO THE MERGER AGREEMENT FROM A FINANCIAL POINT OF VIEW, DOES NOT EXPRESS ANY
OPINION AS TO THE PRICE AT WHICH CYTEC SHARES MAY TRADE AT CLOSING AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF AMT AS TO HOW SUCH
STOCKHOLDERS SHOULD VOTE WITH RESPECT TO THE MERGER. THE SUMMARY OF THE WM SWORD
& CO. OPINION SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED AS ANNEX 3 TO
THIS PROXY STATEMENT/PROSPECTUS.
In connection with rendering its opinion, Wm Sword & Co., among other
things, reviewed the draft of the Merger Agreement dated July 2, 1998; Annual
Reports to Stockholders and Annual Reports on Form 10-K of AMT and Cytec;
certain other communications from AMT and Cytec to their respective
stockholders; certain interim reports to stockholders and Quarterly Reports on
Form 10-Q for AMT and Cytec; and certain internal financial analyses and
forecasts for AMT prepared by AMT's management. Wm Sword & Co. also held
discussions with members of the senior managements of AMT and Cytec regarding
the strategic rationale for, and potential benefits of, the Merger and the past
and current business operations, financial condition and future prospects of
their respective companies. Wm Sword & Co. also analyzed financial and other
information relating to the prospects for AMT provided by AMT's management. Wm
Sword & Co. did not have access to and did not analyze non-public financial and
other information relating to the prospects of Cytec, including projections.
Cytec management advised Wm Sword & Co. that consensus earnings estimates for
1998 and 1999 as reported by First Call Corporation as of July 5, 1998 were not
unreasonable. In addition, Wm Sword & Co. reviewed the reported price and
trading activity for the shares of AMT's common stock and Cytec's common stock,
compared certain financial and stock market information for AMT and Cytec with
similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the advanced composites industry specifically and in other
industries generally and performed such other studies and analyses as Wm Sword &
Co. considered appropriate.
Wm Sword & Co. relied, without independent verification, upon the accuracy
and completeness of all of the financial and other information reviewed by it
for purposes of its opinion. With respect to the financial forecasts and the
assumptions and bases therefore provided by the management of AMT, Wm Sword &
Co. assumed, with AMT's consent, that such financial forecasts were reasonably
prepared on a basis reflecting the best currently available judgment and
estimates of AMT's management as to the future financial and other performance
of AMT. Wm Sword & Co. also assumed, with AMT's consent, that the consensus
earnings estimates as reported by First Call Corporation as of July 5, 1998 for
Cytec, which Cytec's management indicated were not unreasonable, reflected the
best currently available judgment and estimate as to the future financial and
other performance of Cytec. Wm Sword & Co. also assumed, at AMT's instruction,
that obtaining any necessary regulatory or third-party approvals for the Merger
will not have an adverse impact on AMT and the stockholders of AMT or Cytec, as
applicable. Wm Sword & Co. has not made an independent valuation or appraisal of
the assets and liabilities of AMT or Cytec or any of their respective
subsidiaries or divisions and Wm Sword & Co. was not furnished with any such
evaluation or appraisal. Wm Sword & Co. also assumed, with AMT's consent, that
the transaction contemplated by the Merger Agreement will be treated as tax-free
to both AMT and stockholders of AMT (other than with respect to any cash
received in lieu of fractional Cytec shares). Wm Sword & Co. did not express any
opinion as to the prices at which Cytec shares may trade at closing and Wm Sword
& Co. did not express any recommendation as to how the holders of AMT common
shares should vote at the Special Meeting to be held in connection with the
Merger.
The Wm Sword & Co. Opinion was necessarily based on economic, market,
financial and other conditions as they existed on July 8, 1998, the date of the
Wm Sword & Co. Opinion, and on the information made available to Wm Sword & Co.
as of such date. Although subsequent developments may affect its opinion, Wm
Sword & Co. does not have any obligation to update, revise or reaffirm the Wm
Sword & Co.
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opinion. The following is a brief summary of material factors considered and
principal financial analyses performed by Wm Sword & Co. and reviewed with the
AMT Board during the June 24, 1998 meeting and the July 8, 1998 meeting in
connection with the rendering by Wm Sword & Co. of its opinion.
SUMMARIES OF VALUATION ANALYSES: In connection with its opinion and the
presentation of its opinions to the AMT Board, Wm Sword & Co. performed certain
valuation analyses, including (i) a comparison of Cytec with comparable publicly
traded companies; (ii) a comparison of AMT with comparable publicly traded
companies; (iii) an analysis of certain comparable transactions; and (iv) a
premium analysis. Such analyses are summarized below.
COMPARISON OF CYTEC WITH CERTAIN COMPARABLE PUBLICLY TRADED COMPANIES: Wm
Sword & Co. reviewed and compared certain financial information relating to
Cytec to corresponding financial information, ratios and public market multiples
for ten publicly traded companies in the specialty chemicals industry. These
selected ten companies include BetzDearborn, Inc., Ciba Specialty Chemicals
Corp., Clariant Ltd., Engelhard Corp., W.R. Grace & Co., Great Lakes Chemical
Corp., Hercules Inc., Morton International, Inc., Rohm and Haas Company and
Witco Corp. (the "Certain Cytec Comparable Companies"). Wm Sword & Co. selected
these companies because they are publicly traded companies which Wm Sword & Co.
deemed most comparable to Cytec's operations and financial condition. Although
Wm Sword & Co. compared the trading multiples of the Certain Cytec Comparable
Companies at the date of Wm Sword & Co.'s opinion to the trading multiples of
Cytec, none of the selected companies is identical to Cytec. Historical
financial information used in connection with the ratios provided below with
respect to the comparison of Cytec with the Certain Cytec Comparable Companies
is as of the most recent financial statements publicly available for each such
company and all market price information used in calculating the ratios provided
below is as of July 7, 1998.
Among the market trading information considered in the Wm Sword & Co.
analysis was the price to earnings ratio ("P/E Ratio") for the latest
twelve-month period and as projected for 1998 and 1999. EPS estimates for 1998
and 1999 were obtained from First Call Corporation. Wm Sword & Co. also reviewed
certain market trading statistics in terms of "Unlevered Market Capitalization,"
defined as the market equity value plus book value of total debt and book value
of preferred stock less cash and equivalents as a multiple of revenue, earnings
before interest, taxes, depreciation and amortization ("EBITDA") and operating
income ("EBIT"). Wm Sword & Co.'s analysis indicated (i) various P/E Ratios for
the latest twelve-month period for the Certain Cytec Comparable Companies, with
a median multiple of 16.4x, as compared to a multiple of 17.2x for Cytec; (ii)
various P/E Ratios for 1998 for the Certain Cytec Comparable Companies, with a
median multiple of 16.1x, as compared to a multiple of 14.9x for Cytec; (iii)
various P/E Ratios for 1999 for the Certain Cytec Comparable Companies, with a
median multiple of 14.2x, as compared to a multiple of 12.2x for Cytec; (iv)
various multiples of Unlevered Market Capitalization to revenue for the Certain
Cytec Comparable Companies for the latest twelve-month period, with a median
multiple of 1.7x, as compared to a multiple of 1.8x for Cytec; (v) various
multiples of Unlevered Market Capitalization to EBITDA for the latest
twelve-month period for the Certain Cytec Comparable Companies, with a median
multiple of 9.4x, as compared to a multiple of 9.5x for Cytec; and (vi) various
multiples of Unlevered Market Capitalization for the latest twelve-month period
to EBIT for the Certain Cytec Comparable Companies, with a median multiple of
12.3x, as compared with a multiple of 13.9x for Cytec.
No company utilized in the comparison of Cytec with the Certain Cytec
Comparable Companies is identical to Cytec. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
Cytec and other factors that could affect the public trading value of the
companies to which it is being compared. Mathematical analysis (such as
determining the average or the median) is not itself a meaningful method of
using comparable transaction data.
COMPARISON OF AMT WITH CERTAIN COMPARABLE PUBLICLY TRADED COMPANIES: Wm
Sword & Co. reviewed and compared certain financial information relating to AMT
to corresponding financial information, ratios and public market multiples for
ten publicly traded companies in the advanced composites industry. These
selected companies include Advanced Technical Products, Inc., Aldila, Inc.,
Brunswick Technologies,
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Inc., Cade Industries, Inc., Cytec, Hexcel Corp., Park Electrochemical Corp.,
Rogers Corp., Simula, Inc. and Zoltek Companies, Inc. (the "Certain AMT
Comparable Companies"). Wm Sword & Co. selected these companies because they are
publicly traded companies which Wm Sword & Co. deemed most comparable to AMT's
operations and financial condition. Although Wm Sword & Co. compared the trading
multiples of the selected companies at the date of Wm Sword & Co.'s opinion to
the implied purchase multiples of AMT, none of the selected companies is
identical to AMT. Historical financial information used in connection with the
ratios provided below with respect to the comparison of AMT, as implied by the
terms of the Merger Agreement, with the Certain AMT Comparable Companies is as
of the most recent financial statements publicly available for each such company
and all market price information used in calculating the ratios provided below
is as of July 7, 1998.
Among the market trading information considered in Wm Sword & Co.'s
analysis was the P/E Ratio for the latest twelve month period and as projected
for 1998 and 1999. EPS estimates for 1998 and 1999 were obtained from First Call
Corporation. Wm Sword & Co. also reviewed certain market trading statistics in
terms of Unlevered Market Capitalization. Wm Sword & Co.'s analysis indicated
(i) various P/E Ratios for the latest twelve month period for the Certain AMT
Comparable Companies, with a median multiple of 17.2x, as compared to a
non-meaningful multiple for AMT which reported a loss for the latest twelve
month period; (ii) various P/E Ratios for 1998 for the Certain AMT Comparable
Companies, with a median multiple of 21.2x, as compared to an implied multiple
of 35.3x for AMT; (iii) various P/E Ratios for 1999 for the Certain AMT
Comparable Companies, with a median multiple of 14.9x, as compared to an implied
multiple of 15.0x for AMT; (iv) various multiples of Unlevered Market
Capitalization to revenue for the Certain AMT Comparable Companies for the
latest twelve-month period, with a median multiple of 1.6x, as compared to an
implied multiple of 1.1x for AMT; (v) various multiples of Unlevered Market
Capitalization to EBITDA for the Certain AMT Comparable Companies for the latest
twelve-month period, with a median multiple of 9.4x, as compared to a
non-meaningful multiple for AMT which reported a negative EBITDA for the latest
twelve-month period; and (vi) various multiples of Unlevered Market
Capitalization to EBIT for the Certain AMT Comparable Companies for the latest
twelve-month period, with a median multiple of 12.8x, as compared with a
non-meaningful multiple for AMT which reported a negative EBIT for the latest
twelve month period.
No company utilized in the comparison of AMT with the Certain AMT
Comparable Companies as a comparison is identical to AMT. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of AMT and other factors that could affect the public trading
value of the companies to which it is being compared. Mathematical analysis
(such as determining the average or the median) is not itself a meaningful
method of using comparable transaction data.
ANALYSIS OF CERTAIN COMPARABLE TRANSACTIONS. Wm Sword & Co. performed an
analysis of selected recent merger or acquisition transactions in the advanced
composites industry. The selected transactions were chosen based on Wm Sword &
Co.'s judgment that they were generally comparable, in whole or in part, to the
proposed transaction. In total Wm Sword & Co. examined nine transactions that
were completed between April 1995 and July 1998 involving certain advanced
composites companies. The transactions included TPG Holdings, Inc. and Brunswick
Technical Group; AMT and Structural Polymer Systems, Inc., a subsidiary of
Montedison S.p.A.; Hexcel Corporation and Ciba Composites Division of Ciba-Geigy
Limited; Vestar Equity Partners LP and Clark-Schwebel Inc.; Hexcel Corporation
and Composite Products Division of Hercules Inc.; Brunswick Technologies Inc.
and Advanced Textiles, Inc., a subsidiary of Burlington Industries, Inc.; AMT
and Grafalloy L.P.; Cytec and Fiberite Holdings, Inc. (exclusive of Space
Satellite business); and Brunswick Technologies Inc. and Tech Textiles
International Limited, a division of T&N plc (the "Certain Comparable
Transactions"). The Certain Comparable Transactions were not intended to be
representative of the entire range of possible transactions in the advanced
composites industry. Although Wm Sword & Co. compared the transaction multiples
of these companies to the implied purchase multiples of AMT, none of the
selected companies is identical to AMT.
Wm Sword & Co. reviewed the consideration paid in such transactions in
terms of the "Transaction Value" of such transactions as a multiple of revenue,
EBITDA and EBIT for the latest twelve-month period prior to the announcement of
such transactions. Wm Sword & Co. compared the multiples of revenue,
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EBITDA and EBIT for the latest twelve-month period implied by the terms of the
Merger Consideration with the median of the corresponding multiples of the
Certain Comparable Transactions.
Such analysis of the Certain Comparable Transactions resulted in a median
multiple of 0.9x for Transaction Value to revenue for the latest twelve-month
period, 6.9x for Transaction Value to EBITDA for the latest twelve-month period
and 8.4x for Transaction Value to EBIT for the latest twelve-month period. In
contrast, the implied purchase multiple for AMT was 1.1x for Transaction Value
to revenues for the latest twelve-month period, while the Transaction Value
multiple to EBITDA for the latest twelve-month period and EBIT for the latest
twelve-month period were not meaningful as AMT reported negative EBITDA and EBIT
for the latest twelve-month period.
No transaction utilized in the analysis of Certain Comparable Transactions
is identical to the Merger. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of AMT and other factors
that could affect the acquisition value of the companies to which they are being
compared. Mathematical analysis (such as determining the average or the median)
is not itself a meaningful method of using comparable transaction data.
PREMIUM ANALYSIS. In addition to evaluating multiples paid in transactions
in the advanced composites industry, Wm Sword & Co. considered average premiums
paid over each company's stock price prior to the announcement of the
transaction for all publicly held companies with a minimum transaction value of
$5 million for the latest twelve-month period ended March 1998 as provided by
Securities Data Corporation (the "Premium Analysis"). The average premium paid
in those transactions was 37%, 32% and 25%, respectively over each company's
stock price one month, one week and one day prior to each respective
announcement. In contrast, the premium paid over the price of AMT shares on June
8, 1998, June 30, 1998 and July 7, 1998, or one month, one week and one day
respectively prior to the date of Wm Sword & Co.'s opinion was 113%, 88% and
109%, respectively. Wm Sword & Co. also evaluated the premium associated with
the Merger Consideration paid over the July 5, 1996 initial public offering
price of $5.50 which equals 9%.
No transaction utilized in the Premium Analysis is identical to the Merger.
Accordingly, an analysis of the results of the foregoing necessarily involves
complex considerations and judgments concerning differences in financial and
operating characteristics of AMT and other factors that could affect the public
trading value of the companies to which it is being compared. Mathematical
analysis (such as determining the average or the median) is not itself a
meaningful method of using comparable transaction data.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying the Wm Sword & Co. Opinion. In arriving at its fairness
determination, Wm Sword & Co. considered the results of all such analyses,
together with the underlying strategic rationale, taken as a whole. Furthermore,
in arriving at its fairness opinion, Wm Sword & Co. did not attribute any
particular weight to any analysis or factor considered by it. No company used in
the above analyses as a comparison is identical to AMT or Cytec. The analyses
were prepared solely for purposes of Wm Sword & Co. in providing its opinion to
the AMT Board as to the fairness of the Merger Consideration, taken as a whole,
to be received by the holders of AMT Common Stock in the Merger and do not
purport to be appraisals or necessarily reflect the prices at which businesses
or securities actually may be sold or valued in the marketplace. Analyses based
upon forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties or
their respective advisors, none of AMT, Cytec, Wm Sword & Co. or any other
person assumes responsibility if future results are materially different from
those discussed.
As described above, Wm Sword & Co.'s presentation to the AMT Board was one
of many factors taken into consideration by AMT in making its determination to
approve the Merger Agreement and the Merger. Although Wm Sword & Co. evaluated
the fairness of the Merger Consideration, taken as a whole, to be received by
the holders of AMT Common Stock in the Merger, the specific consideration was
determined by
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AMT and Cytec through arm's-length negotiation. The foregoing summary does not
purport to be a complete description of the analyses performed by Wm Sword & Co.
and is qualified by reference to the written opinion of Wm Sword & Co. set forth
in Annex C to this Proxy Statement/Prospectus.
Wm Sword & Co. is an investment banking firm established in 1976 primarily
engaged in acquisitions, divestitures, equity and debt private placements and
financial advisory services. As part of its investment banking services, Wm
Sword & Co. is regularly engaged in the valuation of businesses and securities
in connection with mergers, acquisitions, divestitures and private equity
placements and valuations for corporate, estate and other purposes. Wm Sword &
Co. is acting as financial advisor to the Board of Directors of AMT in
connection with the Merger and has received a fee from AMT for its services. Wm
Sword & Co. is familiar with AMT having provided investment banking services to
AMT from time to time, including acting as financial advisor regarding
financings and acquisitions and has received fees for rendering those services
including shares of AMT. As of July 8, 1998, Wm Sword & Co. owned 47,985 shares
of AMT.
Pursuant to a letter agreement dated July 6, 1998 (the "Engagement
Letter"), AMT engaged Wm Sword & Co. to act as its financial advisor and to
render a formal written opinion for the Board of Directors of AMT in connection
with the possible merger with Cytec. AMT has paid Wm Sword & Co. a fee of
$125,000 for acting as financial advisor and providing its opinion and
reimbursed Wm Sword & Co. for its reasonable expenses, including travel costs,
document production and other similar expenses of this type and also including
the fees of outside counsel and other professional advisors engaged with AMT's
consent. AMT has also agreed to indemnify Wm Sword & Co. and certain related
persons against certain liabilities, including certain liabilities under federal
securities laws.
EFFECTIVE TIME
The Merger will become effective at such time as a Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware, or at such
other time as is specified in such certificate. The Merger Agreement provides
that AMT will execute the Certificate of Merger and cause it to be filed and
recorded in accordance with the DGCL. See "THE MERGER AGREEMENT -- Conditions to
the Consummation of the Merger".
MERGER CONSIDERATION
At the Effective Time, each share of AMT Common Stock issued and
outstanding immediately prior to the Effective Time, except for treasury stock
and stock held by Cytec and Merger Sub, will be converted into the right to
receive that number of validly issued, fully paid and nonassessable shares of
Cytec Common Stock equal to the Conversion Number (the "Merger Consideration").
As of the Effective Time, all shares of AMT Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of AMT
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Conversion Number of fully paid and nonassessable shares of
Cytec and any cash in lieu of fractional shares of Cytec Common Stock to be
issued or paid in consideration therefor upon surrender of such certificate,
without interest. In connection with signing the Merger Agreement, Cytec has
paid AMT the Initial Payment of $500,000, which AMT shall refund to Cytec in
certain circumstances.
EXCHANGE AGENT; EXCHANGE PROCEDURES; DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES; NO FURTHER OWNERSHIP RIGHTS IN AMT COMMON STOCK; NO FRACTIONAL SHARES;
ADJUSTMENTS
EXCHANGE AGENT. The Merger Agreement requires Cytec to select a bank or
trust company (the "Exchange Agent") to conduct the exchange of AMT Common Stock
for Cytec Common Stock contemplated by the Merger Agreement.
EXCHANGE PROCEDURES. After the Effective Time, the Exchange Agent shall
effect the exchange for the Merger Consideration of certificates which, at the
Effective Time, represent shares of AMT Common Stock. Upon the issuance and
delivery by the Exchange Agent of the Merger Consideration in exchange therefor,
the certificates which prior to the Effective Time represent outstanding shares
of AMT Common Stock shall
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forthwith be canceled. Subsequent to the Effective Time, unless and until such
an outstanding certificate is so surrendered, no dividends or distributions of
any kind payable to the holders of record of shares of Cytec Common Stock after
the Effective Time shall be paid by Cytec to the holder of such an outstanding
certificate representing shares of AMT Common Stock nor shall such holder have a
right to receive such dividends and distributions or be entitled to vote on any
matter. Upon the surrender and exchange of such an outstanding certificate, the
holder shall be paid, without interest thereon, the amount of any dividends or
distributions with a record date after the Effective Time which theretofore
became payable with respect to the shares of Cytec Common Stock evidenced by
such certificate. If any certificates representing shares of Cytec Common Stock
are to be issued in a name other than that in which the certificate representing
shares of AMT Common Stock surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the certificate so surrendered shall
be properly endorsed (including signature guarantees) or otherwise in proper
form for transfer and that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
such certificate in a name other than the registered holder of the certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. Except as provided in the preceding
sentence, the Exchange Agent shall exchange certificates representing shares of
AMT Common Stock for certificates representing shares of Cytec Common Stock
without charge. Notwithstanding the foregoing, neither the Exchange Agent nor
any other party hereto shall be liable to a holder of shares of AMT Common Stock
for any shares of Cytec Common Stock or dividends or distributions made with
respect thereto delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
AMT STOCKHOLDERS SHOULD NOT FORWARD AMT STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS. AMT STOCKHOLDERS SHOULD NOT
RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
NO FRACTIONAL SHARES. No fractional shares of Cytec Common Stock shall be
issued upon the surrender for exchange of certificates. Each stockholder who
otherwise would be entitled to a fractional share interest in a share of Cytec
Common Stock shall be entitled to receive an amount in cash (without interest)
determined by multiplying the fractional share interest to which such holder
otherwise would be entitled by the Average Closing Price. Unless and until
certificates theretofore representing shares of AMT Common Stock shall have been
surrendered, the holders of any such certificate representing a fraction of a
share of Cytec Common Stock shall not be entitled to receive the cash payment
described above.
ADJUSTMENTS. If, between the date of the Merger Agreement and the
Effective Time, the outstanding shares of Cytec Common Stock shall have been
changed into a different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or a non-cash dividend or other distribution thereon, or a cash
dividend shall be declared with a record date within said period (each of the
foregoing events being a "Recapitalization"), then the Conversion Number shall
be correspondingly adjusted, and if the Recapitalization involves the issuance,
with respect to Cytec Common Stock, of any other security or property (whether
issued by Cytec or any related entity), each stockholder of AMT shall receive in
the Merger, in addition to the Merger Consideration to which he is entitled,
additional shares of Cytec Common Stock having an aggregate value equal to the
value of the pro rata share of the security, other property or cash distributed
as a result of the Recapitalization that such holder would have received if he
had been the record holder, as of the record date for such distribution, of
Cytec Common Stock into which his AMT Common Stock will be converted in the
Merger.
NO FURTHER OWNERSHIP RIGHTS IN AMT COMMON STOCK. All shares of Cytec
Common Stock issued upon the surrender for exchange of certificates representing
outstanding shares of AMT Common Stock and any cash paid shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to the shares
of AMT Common Stock theretofore represented by such certificates, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of AMT Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates for shares of AMT Common Stock are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be canceled and
exchanged.
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TERMINATION OF EXCHANGE AGENT. Any shares of Cytec Common Stock and cash
in lieu of fractional shares of AMT Common Stock which remains undistributed by
the Exchange Agent to the holders of the certificates for shares of AMT Common
Stock for six months after the Effective Time shall be delivered to Cytec by the
Exchange Agent, upon demand, and any holders of such certificates who have not
theretofore exchanged such certificates shall thereafter look only to Cytec for
issuance or payment thereto of their claims for shares of Cytec Common Stock,
any cash in lieu of fractional shares of Cytec Common Stock and any dividends or
distributions with respect to shares of Cytec Common Stock.
STOCK EXCHANGE LISTING
It is a condition to each party's obligation to effect the Merger that the
shares of Cytec Common Stock issuable to stockholders of AMT pursuant to the
Merger Agreement and such other shares required to be reserved for issuance in
connection with the Merger shall have been authorized for listing on the NYSE
upon official notice of issuance.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the anticipated material United States
federal income tax consequences of the Merger that are generally applicable to
Cytec, AMT, Merger Sub and the stockholders of AMT under the Code. This
discussion does not deal with all federal income tax considerations that may be
relevant to particular stockholders of AMT in light of their particular
circumstances, such as stockholders owning, directly or indirectly, five percent
of more of either the total voting power or the total value of Cytec Common
Stock following the Merger; stockholders who are dealers in securities;
stockholders who are subject to the alternative minimum tax provisions of the
Code; and stockholders who are foreign persons, who acquired their shares in
connection with stock option or stock purchase plans or in other compensatory
transactions, or who otherwise hold convertible securities, warrants or options.
In addition, the following discussion does not address the tax consequences of
transactions effectuated before or after the Merger (whether or not such
transactions are or were undertaken in connection with the Merger), including
transactions in which shares of AMT Common Stock were or are acquired or
transactions in which shares of Cytec Common Stock are disposed of. Furthermore,
no foreign, state or local tax considerations are addressed in this discussion.
STOCKHOLDERS OF AMT ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSIDERATIONS OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE MERGER.
The following discussion is based on the Code, applicable United States
Treasury regulations, judicial authority, and administrative rulings and
practice, all as of the date of this Proxy Statement. The Internal Revenue
Service (the "IRS") is not precluded from adopting a contrary position. In
addition, there can be no assurance that future legislative, judicial or
administrative changes or interpretations will not adversely affect the accuracy
of the statements and conclusions set forth in this discussion. Any such changes
or interpretations could be applied retroactively and could affect the tax
consequences of the Merger to AMT, Cytec and the stockholders of AMT. At the
Closing, as a condition to the obligations of AMT to consummate the Merger, AMT
will receive an opinion from its legal counsel, Foley, Hoag & Eliot LLP to the
effect that for Federal income tax purposes, the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code. Accordingly,
the following will be the Federal income tax consequences of the Merger:
(i) no gain or loss will be recognized by the stockholders of AMT upon
receipt of Cytec Common Stock in exchange for their AMT Common Stock,
except that a holder of AMT Common Stock who receives cash in lieu of a
fractional share of Cytec Common Stock will recognize gain or loss equal to
the difference between the amount of such cash and the tax basis allocated
to such stockholder's fractional share of Cytec Common Stock. Such gain or
loss will constitute long-term capital gain or loss if, at the
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Effective Time, such stockholder's AMT Common Stock is held as a capital
asset and has been held for more than one year;
(ii) the tax basis of Cytec Common Stock received by the stockholders
of AMT will be the same as the tax basis of such stockholders' AMT Common
Stock exchanged therefor reduced by any amount allocable to a fractional
share interest for which cash is received;
(iii) the holding period of Cytec Common Stock in the hands of the AMT
stockholders will include the holding period of such stockholders' AMT
Common Stock exchanged therefor, provided that such Stock is held as a
capital asset at the Effective Time; and
(iv) no gain or loss will be recognized by Cytec, Merger Sub or AMT as
a result of the Merger.
The parties have not requested and will not request a ruling from the IRS
in connection with the Merger. The opinion of legal counsel referred to in this
discussion neither binds the IRS nor precludes the IRS from adopting a contrary
position. The opinion is subject to certain assumptions and qualifications and
the accuracy of certain representations made by AMT, Cytec, Merger Sub and the
stockholders of AMT, including representations in certificates to be delivered
to counsel by the respective managements of AMT, Cytec and Merger Sub and by
stockholders of AMT.
ACCOUNTING TREATMENT
The Merger will be accounted for under the "purchase" method of accounting,
in accordance with GAAP. After the Merger, the balance sheets, and results of
operations of AMT will be included in the consolidated financial statements of
Cytec. On the date that the Merger becomes effective, the cost of the AMT
acquisition to Cytec, as determined by (i) the number of the shares of Cytec
Common Stock issued as Merger Consideration, valued based on the market price of
such shares during the period from a few days before to a few days after the
Closing Date plus any cash issued in lieu of fractional shares, (ii) Cytec's
basis in shares of AMT it owns on the Closing Date, (iii) the fair value of
options issued by Cytec in exchange for outstanding options of AMT, and (iv) the
costs incurred by Cytec related to the Merger, will be allocated to the net
assets of AMT based upon their respective estimated fair market values and any
unallocated costs will be attributed to goodwill.
EFFECT ON EMPLOYEE BENEFIT AND STOCK PLANS
BENEFIT MATTERS. During the period from the Effective Time of the Merger
until the first anniversary of the Effective Time of the Merger, Cytec shall, or
shall cause the Surviving Corporation to, maintain employee benefit plans (as
defined in Section 3(3) of ERISA) for the benefit of employees of AMT or its
subsidiaries, which are no less favorable in the aggregate to those benefits
provided under the Plans in effect on the date of the Merger Agreement. Cytec
shall, or shall cause the Surviving Corporation to, (i) treat employment by AMT
as employment by Cytec or any of its subsidiaries, if applicable, for the
purpose of determining limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the employees of AMT under any Cytec welfare plan that such
employees may be eligible to participate in after the Effective Time of the
Merger and (ii) provide each employee of AMT with credit for any co-payments and
deductibles paid in the year in which the Merger occurs prior to the Effective
Time of the Merger in satisfying any applicable deductible or out-of-pocket
requirements under any Cytec welfare plans that such employees are eligible to
participate in after the Effective Time of the Merger.
AMT STOCK OPTIONS AND WARRANTS. The AMT Board (or, if appropriate, any
committee administering AMT Stock Plans, as defined below) has agreed to adopt
such resolutions and take such other actions as may be required to effect the
following: (i) adjust the terms of all outstanding options and warrants to
purchase AMT Common Stock (the "AMT Options") granted under any plan, agreement
or other arrangement providing for the grant of options or warrants to purchase
AMT Common Stock ("the AMT Stock Plans"), whether vested or unvested, as
necessary to provide that, at the Effective Time, each AMT Option outstanding
immediately prior to the Effective Time shall be deemed to constitute an option
to acquire, on the same terms
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and conditions as were applicable under such AMT Option, the number of shares of
Cytec Common Stock (rounded down to the nearest whole share) the holder of such
AMT Option would have received had such holder exercised such AMT Option in full
immediately prior to the Effective Time, at a price per share of Cytec Common
Stock equal to (x) the aggregate exercise price for the shares of AMT Common
Stock otherwise purchasable pursuant to such AMT Option divided by (y) the
aggregate number of shares of Cytec Common Stock deemed purchasable pursuant to
such AMT Option (each, as so adjusted, an "Adjusted Option"); provided that such
exercise price shall be rounded up to the nearest whole cent; and (ii) make such
other changes to AMT Stock Plans as Cytec and AMT may agree are appropriate to
give effect to the Merger.
At the Effective Time, by virtue of the Merger and without the need of any
further corporate action, Cytec shall assume the AMT Stock Plans, with the
result that all obligations of AMT under the AMT Stock Plans, including with
respect to AMT Options outstanding at the Effective Time, shall be obligations
of Cytec following the Effective Time. AMT shall obtain such consents and effect
such amendments and modifications as are reasonably required to ensure that
following the Effective Time, (i) no holder of an AMT Option shall have any
right thereunder to acquire any capital stock of AMT or any of its subsidiaries
and (ii) any such AMT Option is on the terms set forth in the preceding
paragraph.
Cytec has agreed to prepare and file with the Commission a registration
statement on Form S-8 (or another appropriate form) registering a number of
shares of Cytec Common Stock equal to the number of shares subject to the
Adjusted Options that are held by employees or directors of AMT and eligible for
registration on Form S-8. Such registration statement shall be kept effective
(and the current status of the prospectus or prospectuses required thereby shall
be maintained) at least for so long as any Adjusted Options may remain
outstanding.
As soon as practicable after the Effective Time, Cytec shall deliver to the
holders of AMT Options appropriate notices setting forth such holders' rights
pursuant to the respective AMT Stock Plans and the agreements evidencing the
grants of such AMT Options and that such AMT Options and agreements shall be
assumed by Cytec and shall continue in effect on the same terms and conditions.
A holder of an Adjusted Option may exercise such Adjusted Option in whole or in
part in accordance with its terms by delivering a properly executed notice of
exercise to Cytec, together with the consideration therefor and the federal
withholding tax information, if any, required in accordance with the related AMT
Stock Plan.
Options held by AMT Board members S. Georgiev, B. Glosson and R.V. Glaser
vest incrementally as a result of the price of AMT Common Stock achieving a
trading price of $3, $4 and $5. As a result of this vesting mechanism, certain
of these options have become exercisable. The AMT Stock Plans allow the AMT
Board to accelerate the vesting of outstanding options upon the occurrence of
certain events. The Merger Agreement provides that these options will become
exercisable in full immediately before the Effective Time of the Merger. Cytec
has agreed to continue each of these options in effect until the fifth
anniversary of the grant of such option. Certain options held by Mr. Pendorf,
L.J. Cohen, an AMT Vice President and J.L. Russell, AMT's Chief Financial
Officer, are also subject to vesting determined by the price of AMT Common Stock
as described above. The Merger Agreement provides that the options held by these
individuals will vest in full upon such individual's termination of employment
with Cytec, the Merger Sub or AMT. Cytec has agreed to continue each of these
options in effect until the fifth anniversary of the grant of the option.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the AMT Board with respect to the
Merger Agreement, stockholders should be aware that the members of the AMT Board
and certain members of management of AMT and its subsidiaries at the time of the
approval of the Merger Agreement had, and currently have, certain interests
which may present them with potential conflicts of interest in connection with
their recommendation of the approval of the Merger Agreement to AMT's
stockholders.
EMPLOYMENT AGREEMENTS. The Merger Agreement provides that, contingent on
the satisfactory closing of the Merger, P.W. Pendorf, and L.J. Cohen, an AMT
Vice President, will be employed for a minimum of
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two years as a Vice President and as a Manager of Business Development,
respectively, for Cytec Fiberite Inc., a wholly owned subsidiary of Cytec.
STOCKHOLDERS AGREEMENT. S. Georgiev, R.V. Glaser, B. Glosson and P.W.
Pendorf have entered into the Stockholders Agreement, pursuant to which they
have agreed, among other things, to vote their shares of AMT Common Stock,
including shares received upon the exercise of options, in favor of the Merger,
the Merger Agreement and each of the transactions contemplated by the Merger
Agreement at the Special Meeting. See "THE SPECIAL MEETING -- The Stockholders
Agreement".
STOCK OPTIONS. The unvested options held by S. Georgiev, B. Glosson and
R.V. Glaser will vest in full immediately prior to the Effective Time of the
Merger and continue in effect until the fifth anniversary of the grant of such
option, and unvested options held by P.W. Pendorf, L.J. Cohen and J.L. Russell
will vest in full upon such person's termination of employment with Cytec, the
Merger Sub, or AMT, as the case may be, and will continue in effect until the
fifth anniversary of the grant of such option.
INDEMNIFICATION OF DIRECTORS AND OFFICERS PURSUANT TO THE MERGER
AGREEMENT. Cytec has agreed that all rights to indemnification now existing in
favor of the employees, agents, directors or officers of AMT and its
subsidiaries as provided in their respective charters or bylaws shall survive
the Merger and shall continue in full force and effect, to the fullest extent
permitted by applicable law, for a period not less than five years from the
Effective Time with respect to matters occurring prior to the Effective Time.
The Surviving Corporation shall maintain in effect for not less than five years
from the Effective Time the effectiveness of current policies of directors' and
officers' liability insurance maintained by AMT and its subsidiaries with
respect to matters occurring prior to the Effective Time.
RESALE OF CYTEC COMMON STOCK
The Cytec Common Stock to be issued pursuant to the Merger will be freely
transferable under the Securities Act except for shares issued to any AMT
stockholder who may be deemed to be an affiliate of AMT (an "Affiliate") for
purposes of Rule 145 under the Securities Act. Prior to the Closing Date, AMT
shall deliver to Cytec a letter identifying all persons who are, at the time the
Merger Agreement is submitted for approval to the stockholders of AMT,
Affiliates of AMT. AMT shall cause each such person to deliver to Cytec on or
prior to the Closing Date a written agreement stating that such person will not
sell, assign or transfer any Cytec Common Stock in exchange for shares of AMT
Common Stock pursuant to the Merger except (i) pursuant to an effective
registration statement under the Securities Act or (ii) in a transaction that,
in the opinion of independent counsel reasonably satisfactory to Cytec or as
described in a "no-action" or interpretive letter from the Staff of the
Commission, is not required to be registered under the Securities Act.
ACQUISITION PROPOSALS
The Merger Agreement provides that neither AMT nor any of its subsidiaries
shall (whether directly or indirectly through advisors, agents or other
intermediaries), nor shall AMT or any of its subsidiaries authorize or permit
any of its or their officers, directors, employees, agents, representatives,
advisors or subsidiaries to (a) solicit, initiate or take any action knowingly
to facilitate or encourage the submission of inquiries, proposals or offers from
any person (other than the Merger Sub or Cytec) relating to (i) any acquisition
or purchase of 15% or more of the consolidated assets of AMT and its
subsidiaries or of over 15% of any class of equity securities of AMT or any of
its subsidiaries, (ii) any tender offer (including a self tender offer) or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of AMT or any of its
subsidiaries, (iii) any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving AMT or any of its subsidiaries whose assets, individually
or in the aggregate, constitute more than 15% of the consolidated assets of AMT
other than the transactions contemplated by the Merger Agreement, or (iv) any
other transaction the consummation of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay the Merger
(each, a "Transaction Proposal" and collectively, "Transaction Proposals"), or
agree to or endorse any Transaction Proposal or, (b) discussions, negotiations
or agreements regarding any Transaction Proposal, or furnish to any other person
any information with respect to its business,
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properties or assets or any of the foregoing, or otherwise cooperate in any way
with, or knowingly assist or participate in, facilitate or encourage, any effort
or attempt by any other person (other than the Merger Sub or Cytec) to do or
seek any of the foregoing.
However, AMT shall not be prohibited (either directly or indirectly through
advisors, agents or other intermediaries) from, prior to the Special Meeting (i)
furnishing information pursuant to an appropriate confidentiality letter (which
letter shall not be less favorable to AMT in any material respect than the
Confidentiality Agreement, dated as of June 15, 1997 between AMT and Cytec)
concerning AMT and its businesses, properties or assets to a third party who has
made a bona fide Transaction Proposal, (ii) engaging in discussions or
negotiations with such a third party who has made a bona fide Transaction
Proposal, (iii) following receipt of a bona fide Transaction Proposal, taking
and disclosing to its stockholders a position contemplated by Rule 14d-9 or Rule
14e-2(a) under the Exchange Act or otherwise making disclosure to its
stockholders, or (iv) taking any action required to be taken by AMT pursuant to
a non-appealable, final order by any court of competent jurisdiction, but in
each case referred to in the foregoing clauses (i) through (iv) only to the
extent that a majority of the disinterested members of the AMT Board shall have
concluded in good faith on the basis of written advice (or advice confirmed in
writing) from outside counsel that the failure to take such action would be
contrary to the fiduciary duties of the AMT Board to the stockholders of AMT
under applicable law, provided that, to the extent that it may do so without
acting in a manner contrary to its fiduciary duties under applicable law, the
AMT Board shall not take any of the actions referred to in the foregoing clauses
(i) through (iii) until after reasonable notice to Cytec with respect to such
action and further provided that the AMT Board shall continue to advise Cytec
after taking such proposal and the identity of the person making it.
RIGHT OF THE AMT BOARD TO WITHDRAW RECOMMENDATION
Under the Merger Agreement, neither the AMT Board nor any committee thereof
shall (i) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Cytec, the approval or recommendation by the AMT Board or such
committee of the Merger, the Merger Agreement or the Stockholders Agreement,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Transaction Proposal, or (iii) cause AMT to enter into any Company Acquisition
Agreement related to any Transaction Proposal. However, in the event that at any
time prior to the Special Meeting the AMT Board determines in good faith, after
consultation with its outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the stockholders of AMT under applicable
law, the AMT Board may, subject to the Parent Termination Fee, terminate the
Merger Agreement and enter into any Company Acquisition Agreement with respect
to any Superior Proposal (as defined herein), but only at a date prior to the
Special Meeting and after the later of (x) the third business day following
notice to Cytec that the AMT Board is prepared to accept a Superior Proposal and
(y) in the event of any amendment to the price or any material terms of a
Superior Proposal, one business day following Cytec's receipt of written notice
containing the material terms of such amendment. As used in the Merger
Agreement, a "Superior Proposal" means any proposal made by a third party (i) to
acquire, directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting of
cash and/or securities, more than 50% of the combined voting power of the shares
of AMT Common Stock then outstanding or all or substantially all the assets of
AMT, (ii) that is otherwise on terms which the AMT Board determines in its good
faith judgment (based on the advice of a reputable financial advisor) to be more
favorable to AMT's stockholders than the Merger, and (iii) for which financing,
to the extent required, is then committed or which, in the good faith judgment
of the AMT Board, is reasonably capable of being obtained by such third party.
FEES AND EXPENSES
If the Merger is not consummated, all costs and expenses incurred in
connection with the Merger Agreement and the transactions it contemplates shall
be paid by the party incurring such cost or expense, provided that the aggregate
cost of printing and mailing the Proxy Statement and filing the Proxy Statement
and the Registration Statement with the Commission shall be borne one-half by
AMT and one-half by Cytec.
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However, AMT shall pay to Cytec the Parent Termination Fee plus all Expenses (as
defined herein) upon any of the following events: (i) termination of the Merger
Agreement by Cytec as provided for in the Merger Agreement if (x) the AMT Board
or any committee thereof shall have withdrawn, modified or changed in any manner
adverse to Cytec or the Merger Sub (as determined by Cytec in its reasonable
judgment) its approval or recommendation of the Merger Agreement, the
Stockholders Agreement or the Merger or shall have approved or recommended a
Superior Proposal or shall have resolved to do any of the foregoing or (y) AMT
shall have entered into an agreement with respect to a Superior Proposal; (ii)
termination of the Merger Agreement by AMT as provided for in the Merger
Agreement if AMT enters into a definitive agreement in respect of a Superior
Proposal; (iii) termination of the Merger Agreement by either Cytec or AMT as
provided for in the Merger Agreement if approval of the Merger and adoption of
the Merger Agreement by AMT's stockholders shall not have been obtained by
reason of the failure to obtain the required vote at the Special Meeting, and
prior to such termination a bona fide Transaction Proposal shall have been made;
(iv) termination of the Merger Agreement by either Cytec or AMT as provided for
in the Merger Agreement if the Effective Time shall not have occurred on or
before November 15, 1998 (unless (I) the absence of such occurrence shall be due
to the failure of the party seeking to terminate the Merger Agreement to
perform, in all material respects, each of its obligations under the Merger
Agreement at or prior to the Effective Time or (II) the parties are then unable
to close because the applicable waiting period under the HSR Act has not then
expired or the Registration Statement is not then effective), and (x) prior to
such termination a bona fide Transaction Proposal shall have been made and (y)
within 18 months of such termination an agreement relating to a Transaction
Proposal is entered into by AMT with any person making such Transaction
Proposal; or (v) such payments are otherwise required by the section of the
Merger Agreement dealing with the right of the AMT Board to withdraw its
recommendation. See "THE MERGER -- Acquisition Proposals", "THE MERGER -- Right
of the AMT Board to Withdraw Recommendation" and "THE MERGER
AGREEMENT -- Termination, Amendment and Waiver". As used herein, "Expenses"
means all commercially reasonable out-of-pocket fees and expenses incurred or
paid by or on behalf of Cytec or any of its affiliates in connection with the
Merger or the consummation of any of the transactions contemplated by the Merger
Agreement, including all fees and expenses of counsel, investment banking firms,
accountants, experts and consultants to Cytec or any or its affiliates and all
fees and expenses of banks, investment banking firms and other financial
institutions and their respective counsel, accountants and agents in connection
with arranging or providing financing; provided that such fees and expenses have
been incurred prior to termination of the Merger Agreement.
THE MERGER AGREEMENT
The following is a brief summary of certain additional provisions of the
Merger Agreement, which is attached as Annex A to this Proxy
Statement/Prospectus and which is incorporated herein by reference. Such summary
is qualified in its entirety by reference to the Merger Agreement.
THE MERGER
THE MERGER. The Merger Agreement provides that at the Effective Time the
Merger Sub shall be merged with and into AMT, which shall be the Surviving
Corporation and which shall continue its corporate existence under the laws of
the State of Delaware and succeed to and assume all the rights and obligations
of the Merger Sub. The Effective Time will occur upon the filing of the
Certificate of Merger with the office of the Secretary of State of Delaware.
CERTIFICATE OF INCORPORATION AND BY-LAWS. The Certificate of Incorporation
of the Surviving Corporation shall be amended at the Effective Time to read in
the form of an exhibit to the Merger Agreement, which provides, among other
things, for the total number of shares of all classes of stock that the
Corporation shall have authority to issue to be 110,000,000 shares of Common
Stock having the par value of $.01 per share. The By-laws of the Merger Sub, as
in effect at the Effective Time, shall be the By-laws of the Surviving
Corporation until amended as therein provided.
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CONVERSION OF AMT STOCK IN THE MERGER. At the Effective Time each share of
AMT Common Stock issued and outstanding immediately prior to the Effective Time,
except for treasury stock and stock held by Cytec or the Merger Sub, will be
converted into the right to receive that number of validly issued, fully paid
and nonassessable shares of Cytec Common Stock equal to the Conversion Number.
Cash will be paid to AMT stockholders in lieu of fractional shares of Cytec
Common Stock and for any dividends or other distributions to which such holder
is entitled. See "THE MERGER -- Exchange Agent; Exchange Procedures;
Distributions with Respect to Unexchanged Shares; No Further Ownership Rights in
AMT Common Stock; No Fractional Shares".
REPRESENTATIONS AND WARRANTIES
The Merger Agreement includes various customary representations and
warranties of the parties thereto. The Merger Agreement includes representations
and warranties by AMT as to, among other things, (i) organization, standing and
corporate power of AMT and its subsidiaries, (ii) ownership of subsidiaries,
(iii) capital structure, (iv) the authorization, execution, delivery,
performance and enforceability of the Merger Agreement and related matters and
the Merger Agreement's noncontravention of any agreement, law, or charter or
bylaw provision and the absence of the need for governmental or third-party
filings, consents, approvals or actions with respect to any transaction
contemplated by the Merger Agreement (except for certain filings specified in
the Merger Agreement), (v) compliance as to form and the accuracy of information
contained in documents filed by AMT with the SEC (the "AMT SEC Documents"), (vi)
the accuracy of information supplied by AMT in connection with this Proxy
Statement/Prospectus and the Registration Statement, (vii) the absence of
certain material changes or events since the date of the most recent balance
sheets filed with the SEC (except as disclosed in the AMT SEC Documents and
except as expressly contemplated by the Merger Agreement), including the absence
of any declaration of a dividend or other distribution, any split, combination
or reclassification of capital stock, certain increases in compensation,
severance or termination pay, entry into certain employment, severance or
termination agreements and certain changes in accounting methods, principles or
practices, (viii) the absence of material litigation (except as disclosed in the
AMT SEC Documents), (ix) compliance with laws applicable to the business of AMT,
(x) the filing of tax returns and payment of taxes, (xi) the inapplicability of
certain state takeover laws to the Merger and the Merger Agreement, and (xii)
the receipt of an opinion of AMT's financial advisor.
The Merger Agreement includes representations and warranties by Cytec as
to, among other things, (i) organization, standing and corporate power of Cytec
and its subsidiaries, (ii) capital structure, (iii) the authorization,
execution, delivery, performance and enforceability of the Merger Agreement and
related matters and the Merger Agreement's noncontravention of any agreement,
law, or charter or bylaw provision and the absence of the need for governmental
or third-party filings, consents, approvals or actions with respect to any
transaction contemplated by the Merger Agreement (except for certain filings
specified in the Merger Agreement), (iv) validity of the Cytec Common Stock to
be issued in the Merger, (v) compliance as to form and the accuracy of
information contained in documents filed by Cytec with the SEC (the "Cytec SEC
Documents"), (vi) the accuracy of information supplied by Cytec in connection
with this Proxy Statement/ Prospectus and the Registration Statement, (vii) the
absence of certain material changes or events since the date of the most recent
balance sheet included in the Cytec SEC Documents, including the absence of any
declaration of a dividend or other distribution, any split, combination or
reclassification of capital stock and certain changes in accounting methods,
principles or practices, and (viii) the absence of material litigation.
The Merger Agreement also includes representations and warranties by Cytec
and the Merger Sub as to, among other things, (i) organization, standing and
corporate power of the Merger Sub, (ii) capital structure, (iii) the
authorization, execution, delivery, performance and enforceability of the Merger
Agreement and related matters and the Merger Agreement's noncontravention of any
agreement, law, or charter or by-law provision and the absence of the need for
governmental or third-party filings, consents, approvals or actions with respect
to any transaction contemplated by the Merger Agreement (except for certain
filings specified in the Merger Agreement).
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CONDUCT OF BUSINESS PENDING THE MERGER
AMT has agreed that, prior to the Effective Time, except as otherwise
consented to by Cytec: (i) the business of AMT and its subsidiaries shall be
conducted only in the ordinary and usual course consistent with past practice
and AMT and its subsidiaries shall use commercially reasonable efforts to
preserve their relationships with customers, suppliers, licensors, distributors
and other parties having business dealings with them; (ii) neither AMT nor any
of its subsidiaries shall or shall propose to: (a) amend its Certificate of
Incorporation or By-laws or other comparable organizational documents, (b)
declare, set aside or pay any dividend or other distribution or payment in
respect of shares of its capital stock owned by any person (other than to AMT or
a wholly owned subsidiary of AMT), (c) issue, grant, sell or pledge or agree to
issue, grant, sell or pledge any shares of, or rights of any kind (including
convertible or exchangeable securities and options, warrants and other rights)
to acquire any shares of, the capital stock (or other voting securities or
securities convertible into or exchangeable for any such shares, rights or
voting securities) of AMT or any of its subsidiaries other than, in the case of
AMT, shares of AMT Common Stock issuable pursuant to the terms of outstanding
stock options and warrants of AMT disclosed in the Merger Agreement and shares
of certain subsidiaries pledged to secure existing credit facilities described
in the Merger Agreement, (d) other than sales of products of AMT or any of its
subsidiaries in the ordinary course of business and other than assets encumbered
to secure existing credit facilities, dispose of, encumber or mortgage any
assets or properties individually in excess of $100,000 and collectively in
excess of $250,000, (e) purchase or otherwise acquire any outstanding shares of
its capital stock other than as contractually required to under AMT's employee
stock option plans, (f) waive, release, grant or transfer any rights of material
value or modify or change any material existing contract, license, agreement,
commitment or arrangement in a way that is adverse to AMT or its subsidiaries,
(g) make any material tax election or settle or compromise any material tax
liability of AMT or any of its subsidiaries other than such elections as are
required to be made in connection with the filing of regular tax returns in the
ordinary course of business, (h) take or agree to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code, (i) enter into or otherwise agree to
be bound by any agreement, contract, arrangement or instrument that would be
required to be filed by AMT or any of its subsidiaries as an exhibit to a Form
10-K under the Exchange Act, (j) except as contemplated by the Merger Agreement,
acquire any business or any assets other than purchases of inventory in the
ordinary course of business, (k) other than in the ordinary course of business
under existing credit facilities, incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of AMT,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past practice, or,
with certain exceptions, make any loans, advances or capital contributions to,
or investments in, any other person, other than extensions of credit to
customers and advances to employees, in each case in the ordinary course of
business consistent with past practice, (l) except for the items named in the
Merger Agreement, make any new capital expenditure or expenditures which,
individually, is in excess of $50,000, or, in the aggregate, are in excess of
$200,000, (m) discharge, settle or satisfy any claims that have a material
adverse effect on AMT and its subsidiaries, taken as a whole, or waive any
material benefits of, or agree to modify in any materially adverse respect any
confidentiality, standstill or similar agreements to which AMT is a party, (n)
except in the ordinary course of business, enter into any contracts, agreements,
binding arrangements or binding understandings relating to the distribution,
sale, license or marketing by third parties of AMT's products, other than
pursuant to any such agreements currently in place in accordance with their
terms as of the date of the Merger Agreement, (o) form any subsidiary to AMT,
(p) except as required by GAAP, make any change in accounting methods,
principles or practices, (q) cancel or permit to lapse any insurance policy in
effect on the date of the Merger Agreement, (r) fail to conduct reasonable
maintenance in the ordinary course of business consistent with past practice
with respect to all machinery and equipment, (s) take any action either to
accelerate or cash out the value of any AMT Option, or (t) approve or amend any
employee benefit plan or any other employment, deferred compensation, bonus,
incentive, severance, termination, disability, death benefit, pension, profit
sharing, hospitalization, medical, stock option restricted stock, stock
appreciation right, vacation, sick pay or other material fringe benefit plan,
program or arrangement that
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provides benefits to current or former directors, officers or employees of the
Company or its subsidiaries or with respect to which the Company or its
subsidiaries have any liability; and (iii) neither AMT nor any of its
subsidiaries will (a) increase the compensation payable to any of its directors,
officers or employees, (b) make any payment or provision or commitment with
respect to any bonus, profit sharing, thrift, employee stock ownership, pension,
retirement, deferred compensation, welfare benefit, employment or other payment
plan, agreement or arrangement for the benefit of directors, officers or
employees of AMT or any of its subsidiaries, except in the ordinary course of
the administration of the pension, retirement or welfare benefit plans,
agreements or arrangements, (c) grant any stock options, any stock appreciation
rights or any other stock-based awards, (d) enter into any employment agreement
or other contract or arrangement with respect to the performance of personal
services or (e) make any loan to, or enter into any other transaction with, any
officer or director of AMT or any of its subsidiaries or any affiliate of any
such officer or director except for fees to law firms of which directors are
members, directors' fees, officers' salaries and reimbursement of out-of-pocket
expenses.
Cytec has agreed that, prior to the Effective Time, Cytec shall not: (i)(x)
declare, set aside or pay any dividends on, or make any other distributions in
respect of, any of its capital stock, other than regular quarterly cash
dividends (in an amount determined in a manner consistent with Cytec's past
practice) with customary record and payment dates, or (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in lieu of or in substitution for shares of its capital stock,
(ii) amend Cytec's Certificate of Incorporation or by-laws in a manner that
would be materially adverse to the holders of Cytec Common Stock (it being
understood that an amendment to the Certificate of Incorporation of Cytec
increasing the number of authorized shares of Cytec Common Stock or other
capital stock of Cytec shall not be deemed to be materially adverse to the
holders of Cytec Common Stock); or (iii) authorize, or commit or agree to take,
any of the foregoing actions.
CERTAIN ADDITIONAL AGREEMENTS
The Merger Agreement contains additional covenants relating to, among other
things: (i)(a) AMT and its subsidiaries affording Cytec and Cytec's accountants,
counsel and other representatives full access prior to the Effective Time to all
of its properties, books, contracts, commitments and records and furnishing
promptly to Cytec all information concerning its business, properties and
personnel as Cytec may reasonably request, (b) Cytec keeping any confidential
information and documents obtained pursuant to the Merger Agreement in
accordance with the Confidentiality Agreement, dated June 15, 1997, between AMT
and Cytec, (c) each party holding any nonpublic information in confidence until
such time as such information becomes publicly available; (ii) each party taking
all reasonable actions necessary to file as soon as practicable all requisite
applications under the HSR Act; (iii) AMT filing with the Commission a proxy
statement with respect to the meeting of AMT's stockholders contemplated by the
Merger Agreement; (iv) Cytec filing with the Commission a Registration Statement
on Form S-4 and shall also take any action required to be taken under state blue
sky or securities laws; (v) each party taking all action necessary to consummate
and make effective the transactions contemplated by the Merger Agreement,
including obtaining all necessary waivers, consents and approvals, giving all
notices and effecting all necessary registrations and filings and defending any
lawsuits or other legal proceedings; (vi) at all times prior to the Effective
Time, AMT and Cytec each delivering to the other, not later than 45 days after
the end of any fiscal quarter, their respective unaudited consolidated
statements of financial position as of the last day of such fiscal quarter and
their consolidated statements of income and changes in financial position for
the fiscal period then ended and prepared in conformity with the requirements of
Form 10-Q or Form 10-QSB, as the case may be, under the Exchange Act; (vii) AMT
using its best efforts to cause to be delivered to Cytec a letter of Feldman
Sherb Ehrlich & Co., P.C., AMT's independent public accountants, which is
reasonably satisfactory to Cytec and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement; (viii) AMT giving
Cytec the opportunity to participate in the defense or settlement of any
stockholder litigation against AMT and its directors relating to any of the
transactions contemplated by the Merger Agreement until the Effective Time; (ix)
in consideration of AMT entering into the Merger Agreement and the Stockholder
Agreement, Cytec paying to AMT the Initial Payment, which shall be refunded to
Cytec if the stockholders of AMT shall not adopt the Merger Agreement or AMT is
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required to pay the Parent Termination Fee; and (x) AMT causing its suit against
Cytec and certain of its subsidiaries, Culver City v. Fiberite Inc., Fiberite
Holdings Inc. and Cytec Industries, Inc., to be dismissed with prejudice (See
"Other Matters -- Certain Litigation").
CONDITIONS TO THE CONSUMMATION OF THE MERGER
CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective
obligations of each party to effect the Merger are subject to the fulfillment at
or prior to the Effective Time of the following conditions: (i) the Merger
Agreement shall have been approved and adopted by the affirmative vote of the
stockholders of AMT, (ii) the waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or terminated, (iii) no statute,
rule, regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order, legal restraint or
prohibition enacted, entered, promulgated, enforced or issued by any
governmental body or authority preventing the consummation of the Merger or the
transactions contemplated hereby shall be in effect, (iv) the Registration
Statement shall have become effective and shall not be subject to any stop order
and no stop order proceeding with respect thereto shall have been initiated or
threatened by the Commission, (v) the shares of Cytec Common Stock issuable to
stockholders of AMT pursuant to the Merger Agreement shall have been authorized
for listing on the NYSE upon official notice of issuance, and (vi) all material
consents, approvals, orders or authorizations of, or registrations,
determinations or filings with any governmental entity, required or necessary in
connection with the Merger Agreement shall have been obtained and shall be in
full force and effect.
CONDITIONS TO AMT'S OBLIGATION TO EFFECT THE MERGER. AMT shall be
obligated to effect the Merger unless at or prior to the Effective Time any of
the following conditions shall exist and shall not have been waived by AMT: (i)
the representations and warranties of each of Cytec and the Merger Sub set forth
in the Merger Agreement shall not be true and correct as of the date of the
Merger Agreement and as of the Closing Date, other than for such failures to be
true and correct that, individually and in the aggregate, have not had and would
not reasonably be expected to have a material adverse effect on AMT and its
subsidiaries taken as a whole, (ii) Cytec and the Merger Sub shall not have
performed or complied in all material respects with any covenants, obligations,
conditions and agreements required by the Merger Agreement to be performed or
complied with by them on or prior to the Effective Time, or (iii) AMT shall not
have received a written opinion from its counsel, Foley, Hoag & Eliot LLP, to
the effect that the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code (or, if such counsel shall refuse to give such an
opinion, a substantially equivalent opinion from Cravath, Swaine & Moore,
counsel to Cytec).
CONDITIONS TO THE OBLIGATIONS OF CYTEC AND THE MERGER SUB TO EFFECT THE
MERGER. Cytec and the Merger Sub shall be obligated to effect the Merger unless
any of the following conditions shall exist and shall not have been waived by
Cytec or the Merger Sub: (i) the representations and warranties of AMT set forth
in the Merger Agreement shall not be true and correct as of the date of the
Merger Agreement and as of the Closing Date, other than for such failures to be
true and correct that, individually and in the aggregate, have not had and would
not reasonably be expected to have a material adverse effect on AMT and its
subsidiaries taken as a whole, (ii) AMT shall not have performed or complied in
all material respects with any covenants, obligations, conditions and agreements
required by the Merger Agreement to be performed or complied with by it on or
prior to the Effective Time, (iii) there shall be pending or threatened any
suit, action or proceeding by any governmental body or authority challenging the
consummation of the Merger, (iv) Cytec shall not have received a certificate of
AMT's Chief Executive Officer stating that, to his knowledge, the
representations contained in the "Environmental Matters" Schedule to the Merger
Agreement are true and correct in all material respects, and (v) any person who
is a director of AMT immediately prior to the Effective Time shall not have
resigned effective at the Effective Time.
TERMINATION, AMENDMENT AND WAIVER
The Merger Agreement may be terminated prior to the Effective Time, whether
before or after any required approval by the stockholders of AMT: (i) by mutual
written consent of Cytec and AMT; (ii) by either Cytec or AMT, (x) if the
Effective Time shall not have occurred on or before November 15, 1998 (the
"Termination Date") (unless the absence of such occurrence shall be due to the
failure of the party seeking to
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terminate the Merger Agreement to perform each of its obligations under the
Merger Agreement at or prior to the Effective Time or the parties are unable to
close because the applicable waiting period under the HSR Act has not then
expired or the Registration Statement is not then effective, in which case the
Termination Date shall be changed to December 15, 1998), or (y) if any court of
competent jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or action shall have become final and non-appealable; (iii) by
Cytec, if the AMT Board or any committee thereof shall have withdrawn, modified
or changed in any manner adverse to Cytec or the Merger Sub (as determined by
Cytec in its reasonable judgment) its approval or recommendation of the Merger
Agreement, the Stockholders Agreement or the Merger or shall have approved or
recommended a Superior Proposal or shall have resolved to do any of the
foregoing, or AMT shall have entered into an agreement with respect to a
Superior Proposal, as described in "THE MERGER -- Right of the AMT Board to
Withdraw Recommendation"; (iv) by Cytec, if AMT fails to perform in any material
respect any of its material obligations under the Merger Agreement or breaches
in any material respect any material provision and has failed to perform such
obligation or cure such breach, within 10 days of its receipt of written notice
thereof (if such failure to perform or breach is capable of being performed or
cured within such period by commercially reasonable means) or such longer period
as shall be commercially reasonably necessary to perform such obligation or cure
such breach (if such failure to perform or breach is not capable of being
performed or cured within such period using commercially reasonable means), and
such breach or uncured failure to perform shall have a material adverse effect
on AMT and its subsidiaries taken as a whole; (v) by AMT, if Cytec or the Merger
Sub fails to perform in any material respect any of its material obligations
under the Merger Agreement or breaches in any material respect any material
provision and has failed to perform such obligation or cure such breach, within
10 days of its receipt of written notice thereof (if such failure to perform or
breach is capable of being performed or cured within such period by commercially
reasonable means) or such longer period as shall be commercially reasonably
necessary to perform such obligation or cure such breach (if such failure to
perform or breach is not capable of being performed or cured within such period
using commercially reasonable means), and such breach or uncured failure to
perform shall have a material adverse effect on Cytec and its subsidiaries taken
as a whole; (vi) by AMT, if AMT enters into a definitive agreement in respect of
a Superior Proposal and AMT simultaneously with terminating pays Cytec all
Expenses (as defined herein) and the Parent Termination Fee in cash and refunds
the Initial Payment; and (vii) by Cytec or AMT, if approval of the Merger and
adoption of the Merger Agreement by AMT's stockholders shall not have been
obtained by reason of the failure to obtain the required vote at the Special
Meeting.
The Merger Agreement may be amended by either party at any time before or
after any required approval hereby of the stockholders of AMT, but after any
such stockholder approval, no amendment shall be made which changes the Merger
Consideration or in any way adversely affects the rights of stockholders of AMT
without the further approval of such stockholders. The Merger Agreement may not
be amended except by an instrument in writing signed by or on behalf of each
party.
At any time prior to the Effective Time, either party may: (i) extend the
time for the performance of any of the obligations or other acts of the other
party, (ii) waive any inaccuracies in the representations and warranties
contained in the Merger Agreement and (iii) waive compliance with any of the
agreements or conditions contained in the Merger Agreement.
41
<PAGE> 49
OFFICERS AND DIRECTORS AFTER THE MERGER
The officers of AMT at the Effective Time will become the officers of the
Surviving Corporation until their successors have been duly appointed and
qualified or until their earlier resignation or removal. The directors of the
Merger Sub at the Effective Time will become the directors of the Surviving
Corporation until their successors have been duly elected and qualified or until
their earlier resignation or removal.
The directors of the Merger Sub are J.P. Cronin (Chairman of the Board),
E.F. Jackman (about each of whom certain information is incorporated by
reference to Cytec's Annual Report on Form 10-K for the year ended December 31,
1997) and R. Smith. R. Smith is Senior Counsel and Assistant Secretary of Cytec.
From January 1994 to July 1997, he was an attorney at Cytec, and prior to that
time he was an attorney at Cyanamid. J.P. Cronin also serves as President and
Chief Executive Officer, E.F. Jackman also serves as Vice President and
Secretary, T.P. Wozniak (about whom certain information is incorporated by
reference to Cytec's Annual Report on Form 10-K for the year ended December 31,
1997) is a Vice President and Treasurer, and R. Smith also serves as Assistant
Secretary. None of the directors or officers receives compensation for serving
in their capacities as directors or officers of the Merger Sub.
COMPARATIVE STOCK PRICES AND DIVIDENDS
Cytec Common Stock listed for trading on the NYSE (symbol: CYT) and AMT
Common Stock is quoted on the Nasdaq SmallCap Market (symbol: AMTK) and the
Pacific Exchange (symbol: MTK). The following table sets forth, for the periods
indicated, the high and low sales prices per share of Cytec Common Stock on the
NYSE Composite Transaction Tape and of AMT Common Stock on the Nasdaq SmallCap.
<TABLE>
<CAPTION>
CYTEC AMT
COMMON STOCK COMMON STOCK
----------------- -----------------
CALENDAR PERIOD HIGH LOW HIGH LOW
--------------- ---- --- ---- ---
<S> <C> <C> <C> <C>
1996
First Quarter............................................ 29 29/64 20 3/8 -- --
Second Quarter........................................... 31 27/64 27 -- --
Third Quarter............................................ 39 1/2 25 21/64 8 4
Fourth Quarter........................................... 40 7/8 34 3/8 6 5/8 3 1/2
1997
First Quarter............................................ 42 1/4 36 7/8 6 7/8 3 5/8
Second Quarter........................................... 40 1/4 33 7/8 6 3 13/16
Third Quarter............................................ 50 3/8 37 5/16 6 5/8 4 3/8
Fourth Quarter........................................... 50 15/16 44 5 7/16 1 1/2
1998
First Quarter............................................ 55 1/4 45 3/16 3 3/16 1 11/16
Second Quarter........................................... 58 9/16 41 11/16 4 2 9/32
Third Quarter (through August 25, 1998).................. 45 3/8 24 5 3/8 2 3/4
</TABLE>
AMT has never paid cash dividends on shares of AMT Common Stock. In
addition, the Merger Agreement restricts AMT's ability to pay cash dividends
between the date of the Merger Agreement and the Effective Time. Cytec has never
paid a cash dividend on shares of Cytec Common Stock and does not expect to pay
one in the foreseeable future. The high and low prices of Cytec Common Stock
have been restated to reflect the three-for-one stock split paid in July 1996.
The following table sets forth the high and low sales prices per share of
Cytec Common Stock on the NYSE Composite Transaction Tape and of AMT Common
Stock on the Nasdaq SmallCap Market on July 8, 1998, the last trading day before
the public announcement of the Merger Agreement and August 25, 1998, the last
trading day before the date of the filing of this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
CYTEC AMT
COMMON STOCK COMMON STOCK
------------- -------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
July 8, 1998............................................... 43 7/8 43 9/16 3 1/16 2 3/4
August 25, 1998............................................ 28 7/8 27 31/32 5 1/16 5
</TABLE>
42
<PAGE> 50
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS
OF CYTEC AND AMT
The rights of the stockholders of Cytec are governed by Cytec's Certificate
of Incorporation, as amended (the "Cytec Certificate of Incorporation"), its
By-laws (the "Cytec By-laws") and the DGCL. The rights of the stockholders of
AMT are governed by its Restated Certificate of Incorporation, as amended (the
"AMT Certificate of Incorporation"), its Amended and Restated By-laws (the "AMT
By-laws") and the DGCL. After the Effective Time, the rights of stockholders of
AMT who become stockholders of Cytec will be governed by the Cytec Certificate
of Incorporation, the Cytec By-laws and the DGCL. See "ABSENCE OF APPRAISAL
RIGHTS".
The following is a summary of the material differences between the rights
of stockholders of Cytec and the rights of stockholders of AMT. This summary is
qualified in its entirety by reference to applicable provisions of the DGCL and
to the Cytec Certificate of Incorporation, Cytec By-laws, AMT Certificate of
Incorporation and AMT By-laws.
Board of Directors.
Section 141(b) of the DGCL provides that the number of directors of a
corporation shall be fixed by, or in the manner provided in, the by-laws of a
corporation, unless the certificate of incorporation of the corporation fixes
the number of directors, in which case a change in the number of directors shall
be made only by amendment of the certificate.
The Cytec Certificate of Incorporation provides that the total number of
Cytec directors shall, subject to the terms and conditions of any Cytec
Preferred Stock, be not less than five nor more than twelve as determined by the
Cytec Board from time to time; the terms of the Series C Preferred Stock can
cause the number of directors on the Cytec Board to be greater than twelve.
Cytec currently has seven directors. The Cytec Board is classified into three
classes each consisting, as nearly as possible, of one-third of the total number
of directors. One director is chosen by the Series C Preferred Stock at each
annual meeting of stockholders to serve until the next annual meeting. See
"DESCRIPTION OF CYTEC CAPITAL STOCK -- Preferred Stock". The terms of the
remaining directors, who are elected by the holders of Cytec Common Stock, are
three years each and are staggered such that at each annual meeting only two of
the six such directorships are voted upon.
The AMT Certificate of Incorporation provides that the number of AMT
directors shall, subject to the terms and conditions of any AMT Preferred Stock,
be not less than three and not more than twelve. The number of directors may be
increased or decreased at any time by an affirmative majority of the AMT Board,
except that such decrease by vote of directors shall only be made to eliminate
vacancies existing by reason of the death, resignation or removal of one or more
directors. The directors are elected at the annual meeting of stockholders, and
hold office until their successors are chosen and qualified, or until their
earlier death, resignation, disqualification or removal. The directors are
classified with respect to the time for which they shall severally hold office
into three classes, Class I, Class II and Class III, each consisting as nearly
as possible of one-third of the whole number of the board of directors and each
class serving a three-year term. AMT currently has four directors. The provision
in the AMT Certificate of Incorporation to this effect cannot be amended,
altered or repealed without the affirmative vote or consent of the holders of
75% of all shares of stock of the corporation entitled to vote at a meeting of
the stockholders held for the purposes of voting on such amendment.
Section 141(k)(l) of the DGCL provides that unless the certificate of
incorporation of the corporation otherwise provides, in the case of a
corporation whose board is classified, shareholders may effect the removal of
any director or the entire board of directors holders of a majority of the
shares then entitled to vote in election of directors only for cause. The AMT
By-laws define "cause" to mean: (1) willful and continued material failure,
refusal or inability to perform one's duties to the corporation or the willful
engaging in gross misconduct materially and demonstrably damaging to the
corporation; or (2) conviction for any crime involving moral turpitude or any
other legal acts that materially adversely reflects upon the business, affairs
or
43
<PAGE> 51
reputation of the company or on one's ability to perform one's duties to the
corporation. Cytec's By-laws do not define "cause".
Special Meeting of Stockholders; Action by Written Consent.
Under the Cytec By-laws, special meetings of stockholders may be called by
the Cytec Board, the Chairman of the Cytec Board or Cytec's President.
Under the AMT By-laws, if the annual meeting is not held on the day
provided in the AMT By-laws or if the election of directors is not held at the
annual meeting, a special meeting of the stockholders may be held in place of
such omitted meeting or election. In addition, special meetings of the
stockholders may be called for any purpose or purposes by the chairman of the
AMT Board, the chief executive officer or the chief financial officer and shall
be called at the written request of the AMT Board.
Under Section 228 of the DGCL, unless otherwise provided in a corporation's
certificate of incorporation, any action required or permitted to be taken at an
annual or special meeting of stockholders may be taken without such a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action to be taken is signed by the holders of the outstanding stock
representing the number of shares necessary to take such action at a meeting at
which the holders of all shares entitled to vote were present. The Cytec
Certificate of Incorporation provides that such action may be undertaken, in
lieu of an annual or special meeting of the corporation, by the written consent
of the holders of Cytec Common Stock provided such written consent is signed by
all holders of Cytec Common Stock. The AMT Certificate of Incorporation provides
that the holders of AMT Common Stock may not take action required or permitted
to be taken at an annual or special meeting by written consent in lieu of such a
meeting. The provision in the AMT Certificate of Incorporation to this effect
cannot be amended, altered or repealed without the affirmative vote or consent
of the holders of 75% of all shares of stock of the corporation entitled to vote
at a meeting of the stockholders held for the purposes of voting on such
amendment.
Required Vote for Authorization of Certain Actions.
The DGCL requires the affirmative vote of a majority of the board of
directors of a Delaware corporation and of at least a majority of such
corporation's outstanding shares entitled to vote thereon to authorize a merger
or consolidation, unless (i) such corporation is the surviving corporation, (ii)
such corporation's certificate of incorporation is not amended, (iii) each share
of stock of such corporation outstanding immediately prior to the effective date
of the merger is to be an identical outstanding share of such corporation after
the effective date of the merger and (iv) either no shares of common stock of
such corporation and no shares, securities or obligations convertible into such
stock are to be issued or delivered under the plan of merger, or the authorized
unissued shares or the treasury shares of common stock of such corporation to be
issued or delivered under the plan of merger plus those initially issuable upon
conversion of any other shares, securities or obligations to be issued or
delivered under such plan, do not exceed 20% of the shares of common stock of
such corporation outstanding immediately prior to the effective date of the
merger. A sale of all or substantially all of a Delaware corporation's assets or
a voluntary dissolution of a Delaware corporation requires the affirmative vote
of a majority of the board of directors and at least a majority of such
corporation's outstanding shares entitled to vote thereon.
However, Cytec may not engage in certain transactions without the
affirmative vote of the holders of at least 66 2/3% of the outstanding shares of
Series C Cumulative Preferred Stock, (the "Series C Stock"). See "DESCRIPTION OF
CYTEC CAPITAL STOCK -- Preferred Stock".
Business Combinations; Affiliated Transactions.
In general, Section 203 of the DGCL prohibits an "interested stockholder"
(defined generally as a person holding 15% or more of a corporation's
outstanding voting stock) from engaging in a "business combination" (as defined
in the DGCL) with a Delaware corporation for three years following the date such
person became an interested stockholder.
44
<PAGE> 52
The provision is not applicable when (i) prior to the date the stockholder
became an interested stockholder, the board of directors of the corporation
approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
such interested stockholder owned at least 85% of the outstanding voting stock
of the corporation, not including shares owned by directors who are also
officers and by certain employee stock plans or (iii) on or subsequent to the
date the stockholder becomes an interested stockholder, the business combination
is approved by the board of directors of the corporation and authorized at a
meeting of stockholders, and not by written consent, by the affirmative vote of
the holders of at least two-thirds of the outstanding voting stock entitled to
vote thereon, excluding shares owned by the interested stockholder.
Section 203's restrictions generally do not apply to business combinations
with an interested stockholder that are proposed subsequent to the public
announcement of, and prior to the consummation or abandonment of, certain
mergers, sales of a majority of a corporation's assets or tender offers for 50%
or more of a corporation's voting stock.
The DGCL allows corporations to elect not to be subject to the provisions
of the DGCL. Cytec in its Certificate of Incorporation expressly elected not to
be governed by Section 203. AMT did not make such an election.
OTHER MATTERS
REGULATORY APPROVALS REQUIRED
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), certain acquisition transactions may not be consummated
unless notice has been given and certain information has been furnished to the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") and the FTC and specified waiting period requirements have been
satisfied. Cytec and AMT each filed with the Antitrust Division and the FTC a
Notification and Report Form with respect to the Merger on July 22, 1998. On
August 21, 1998, the relevant waiting period terminated.
Cytec and AMT do not believe that any other material governmental approvals
or actions will be required for consummation of the Merger. See "THE MERGER
AGREEMENT -- Conditions to Consummation of the Merger".
CERTAIN LITIGATION
Pursuant to the terms of the Merger Agreement, AMT has caused its suit
against Cytec and certain of its subsidiaries, Culver City v. Fiberite Inc.,
Fiberite Holdings Inc. and Cytec Industries Inc., to be dismissed with
prejudice. AMT is from time to time involved in litigation from claims arising
from its operations in the normal course of business. AMT is not a party to any
legal proceedings the outcome of which, in the opinion of management, would have
a material adverse effect on AMT's results of operations or financial condition.
ABSENCE OF APPRAISAL RIGHTS
In accordance with Section 262 of the DGCL, holders of AMT Common Stock are
not entitled to appraisal rights in connection with the Merger.
45
<PAGE> 53
SECURITY OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS OF AMT
The following table sets forth, as of August 25, 1998, the security
ownership of the directors, executive officers and principal stockholders of
AMT. The information set forth below with respect to beneficial ownership is
based upon information filed with the SEC pursuant to Section 13(d) or 13(g) of
the Exchange Act.
On March 13, 1998, the AMT Board voted to reprice all outstanding options
to purchase AMT Common Stock issued under the 1996 and 1997 AMT Stock Plans with
exercise prices ranging from $4.30 to $6.25. As a result of this action, each
such option carries an exercise price of $2, and becomes exercisable with
respect to 1/3 of the number of shares to which it relates on each of the days
on which the market price of AMT Common Stock exceeds (i) $3 for a period of 20
consecutive trading days, (ii) $4 for a period of 20 consecutive trading days
and (iii) $5 for a period of 20 consecutive trading days.
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES PERCENTAGE
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER(1) OWNED(2)(3) OWNERSHIP(4)
- ---------------------- ------------- ------------
<S> <C> <C>
Paul W. Pendorf............................................. 734,144(5) 15.9%
Steven Georgiev............................................. 87,623(6) 1.9
Buster Glosson.............................................. 110,000(7) 2.4
Robert V. Glaser............................................ 91,364(8) 2.0
Leslie J. Cohen............................................. 68,483(9) 1.5
James L. Russell............................................ 34,000(10) *
All directors and executive officers as a group (6
persons).................................................. 1,125,614(11) 23.1
</TABLE>
- ---------------
* Less than one percent.
(1) Each person's address is in care of The American Materials & Technologies
Corporation, 5915 Rodeo Road, Los Angeles, California 90016.
(2) To AMT's knowledge, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes table. Beneficial
ownership is determined in accordance with the rule of the Securities and
Exchange Commission. Shares of Common Stock subject to options currently
exercisable or exercisable within sixty days from the date of this table
are deemed outstanding when determining the number of shares and percentage
ownership by the person holding such options.
(3) Certain options included in this table become exercisable upon the AMT
Common Stock's achieving a closing price of $5.00 or greater for twenty
consecutive trading days. These options are expected to become exercisable
within sixty days of the date of this table.
(4) Percentage ownership is based on 4,490,121 shares of AMT Common Stock
outstanding.
(5) Includes 135,771 shares of AMT Common Stock issuable pursuant to an option
exercisable or expected to become exercisable within 60 days of the date of
this table.
(6) Includes 10,000 shares of AMT Common Stock issuable pursuant to an option
exercisable or expected to become exercisable within 60 days of the date of
this table.
(7) Includes 80,000 shares of AMT Common Stock issuable pursuant to an option
exercisable or expected to become exercisable within 60 days of the date of
this table.
(8) Includes 80,000 shares of AMT Common Stock issuable pursuant to an option
exercisable or expected to become exercisable within 60 days of the date of
this table.
(9) Includes 57,708 shares of AMT Common Stock issuable pursuant to an option
exercisable or expected to become exercisable within 60 days of the date of
this table.
(10) Includes 25,000 shares of AMT Common Stock issuable pursuant to an option
exercisable or expected to become exercisable within 60 days of the date of
this table.
(11) Includes 388,479 shares of AMT Common Stock issuable pursuant to options
exercisable or expected to become exercisable within 60 days of the date of
this table.
46
<PAGE> 54
DESCRIPTION OF CYTEC CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Under Cytec's Certificate of Incorporation, the total number of shares of
all classes of stock that Cytec has authority to issue is 170 million, of which
20 million are shares of preferred stock and 150 million are shares of Common
Stock.
COMMON STOCK
The holders of Cytec Common Stock are entitled to one vote for each share
on all matters voted on by stockholders, and the holders of such shares possess
all voting power, except as otherwise required by law or provided in any
resolution adopted by the Cytec Board with respect to any series of preferred
stock. Subject to any preferential or other rights of any outstanding series of
Cytec preferred stock that may be designated by the Cytec Board, the holders of
Cytec Common Stock will be entitled to such dividends as may be declared from
time to time by the Cytec Board from funds available therefor, and upon
liquidation will be entitled to receive pro rata all assets of Cytec available
for distribution to such holders.
NO PREEMPTIVE RIGHTS
No holder of any stock of Cytec of any class has any preemptive right to
subscribe to any securities of Cytec of any kind or class.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Cytec Common Stock is ChaseMellon
Shareholder Services, L.L.C.
PREFERRED STOCK
GENERAL. The Cytec Board is authorized to provide for the issuance of
shares of preferred stock, in one or more series, and to fix for each such
series such voting powers, designations, preferences and relative,
participating, optional and other special rights, and such qualifications,
limitations or restrictions, as are stated in the resolution adapted by the
Cytec Board providing for the issuance of such series and as are permitted by
the DGCL.
SERIES C STOCK. The only outstanding preferred stock of Cytec is its
Series C Cumulative Preferred Stock (the "Series C Stock"). The Series C Stock
is perpetual and is not transferable except to a subsidiary of Cyanamid. Each
share of Series C Stock has a liquidation value per share of $25 plus cumulative
and accrued dividends, and the 4,000 issued and outstanding shares of Series C
Stock have an aggregate liquidation value of $100,000. The annual dividend rate
per share is $1.83 (7.32%).
Holders of Series C Stock are entitled to vote as a class to elect one
director to the Cytec Board. In addition, Cytec may not, without the affirmative
vote of the holders of at least 66 2/3% of the outstanding shares of Series C
Stock, voting as a single class, (i) amend, alter or repeal any provision of the
Cytec Certificate of Incorporation or the Cytec By-laws so as to (x) affect
adversely the relative rights, preferences, qualifications, limitations or
restrictions of the Series C Stock, or (y) in any way alter the procedures for
the election of directors, stockholders action or the consummation of an
extraordinary transaction; (ii) create, authorize or issue, or reclassify any
authorized stock of Cytec into, or increase the authorized amount of, (x) any
stock equal or higher in seniority to the Series C Stock or (y) other capital
stock of Cytec (other than Cytec Common Stock) which has the right to vote as a
separate class on mergers, consolidations, liquidations, dissolutions and sales
of substantially all the assets of Cytec or other extraordinary transactions;
(iii) merge, consolidate, liquidate, dissolve, sell all or substantially all of
the assets of Cytec or engage in any other extraordinary transaction; or (iv)
adopt a shareholder rights plan (or similar instrument). The holders of the
Series C Stock also have certain additional voting rights if Cytec fails to
comply with certain financial covenants. See "-- Financial Covenants."
47
<PAGE> 55
Shares of Series C Stock are redeemable in whole but not in part, at the
option of Cytec, at liquidation value plus accrued dividends on 90 days' prior
written notice at such time as each of the following are satisfied: (i) Cytec's
ratio of equity (excluding the Series C Stock and any redeemable preferred
stock) to reserves for environmental liabilities arising out of the operation of
Cyanamid's chemicals businesses determined in accordance with generally accepted
accounting principles as of the end of each of Cytec's four most recent fiscal
quarters is equal to or greater than 4:1, (ii) Cytec's Fixed Charge Coverage
Ratio (as defined in "Financial Covenants" below) for each of Cytec's four most
recent fiscal quarters is equal to or greater than 4:1, and (iii) Cytec's
reserves for certain retiree health and life insurance liabilities arising out
of the operation of Cyanamid's chemicals businesses determined in accordance
with generally accepted accounting principles are less than $50 million. Cytec
has agreed with Cyanamid that it will not redeem the Series C Stock prior to
December 16, 1999.
FINANCIAL COVENANTS. Except with the written consent of holders of the
Series C Stock, Cytec and its consolidated subsidiaries are required at all
times to maintain the following financial maintenance covenants (measured
quarterly on a historical basis): (i) a debt/equity ratio of not more than 2:1
(with the Series C Stock being treated as neither debt nor equity for purposes
of calculating the ratio); however it will not be a violation of the foregoing
covenant if the debt/equity ratio exceeds 2:1 if the only debt of Cytec and its
subsidiaries existing at such time is (x) any credit facility or facilities of
not more than $100 million, in the aggregate (a "Replacement Credit Facility")
and borrowings thereunder and (y) not more than $10 million of debt other than
the debt referred to in clause (x); (ii) equity of not less than $200 million
(with the Series C Stock being treated as neither debt nor equity); and (iii) a
Fixed Charge Coverage Ratio (as defined herein) of not less than 3:1 for the
average of the Fixed Charge Coverage Ratios for the four consecutive fiscal
quarters most recently then ended with the "Fixed Charge Coverage Ratio" being
defined as consolidated earnings of Cytec before interest, taxes, depreciation
and amortization and cash expenditures for environmental and retiree health and
life insurance liabilities to the sum of the amount of cash expenditures for
environmental and retiree health and life insurance liabilities, interest and
dividends on the Series C Stock.
The Series C Stock also prohibits Cytec, without the prior written consent
of the holders of the Series C Stock, from (i) incurring indebtedness (except
for borrowings under any Replacement Credit Facility and borrowings of not more
than $10 million of other debt), (a) if Cytec is in default of any of the
financial maintenance covenants set forth in the preceding sentence, (b) if at
the time Cytec's equity is less than $200 million (excluding the Series C Stock
and any redeemable preferred stock) and such incurrence would result in Cytec
having in excess of $150 million of debt or a debt/equity ratio (with the Series
C Stock and any redeemable preferred stock being treated as neither debt nor
equity for purposes of calculating the ratio) of more than 2:1, or (c) if at a
time when Cytec's equity is $200 million or more (excluding the Series C Stock
and any redeemable preferred stock) and such incurrence would result in Cytec
having a debt/equity ratio (with the Series C Stock and any redeemable preferred
stock being treated as neither debt nor equity for purposes of calculating the
ratio) of more than 1.5:1; provided, however, notwithstanding the foregoing, it
will not be a violation of the foregoing covenant if the debt/equity ratio
referred to in clause (b) above exceeds 2:1 if the only debt of Cytec and its
subsidiaries existing at such time is any Replacement Credit Facility and
borrowings thereunder and borrowings of not more than $10 million of other debt;
and (ii) paying dividends on, or making repurchases of, shares of Common Stock
or other equity securities other than the dividend payments on or redemptions in
accordance with the terms of the Series C Stock (collectively, "Restricted
Payments") unless all accrued and unpaid dividends on the Series C Stock have
been paid and only if, in the aggregate, such Restricted Payments from the
Spin-off do not exceed 30% of Cytec's cumulative consolidated after-tax net
income determined after subtracting (x) all dividends paid or payable on the
Series C Stock and two other series of Cytec preferred stock at one time held by
Cyanamid and since repurchased by Cytec and (y) income resulting from the
reversal of valuation allowances for deferred tax assets not currently realized,
in each case from and after the Spin-off and through the end of the quarter most
recently ended (which net income will be determined from Cytec's audited
financial statements, where available, or from Cytec's unaudited statements for
its quarter most recently ended), and 100% of the net cash proceeds received by
Cytec from the issuance of shares of Common Stock after the Spin-off.
48
<PAGE> 56
In the event that any of the covenants referred to in the preceding
paragraph are violated, then so long as Cytec is in violation, (i) Cytec must
promptly (but in any event within 90 days) prepare a capital budget for the
following 12 months, subject to Cyanamid's approval, and expenditures other than
pursuant to such budget or in excess of the newly budgeted amounts also require
the approval of Cyanamid (as the holder of Series C Stock); however Cytec will
not be prohibited from making expenditures required to comply with
environmental, occupational safety and health laws and other applicable laws
which expenditures will count toward the amount allowed to be expended under the
newly prepared budget, and (ii) Cytec must not incur any debt (except for
borrowings under any Replacement Credit Facility and borrowings of not more than
$10 million of other debt), make any significant acquisitions or divestitures,
merge, consolidate, liquidate or sell all or substantially all of its assets or
make Restricted Payments, without the consent of Cyanamid (as the holder of
Series C Stock).
In the event that any of the financial maintenance covenants referred to in
the third preceding paragraph are violated, then Cytec must within 30 days from
the date of such violation prepare and deliver to Cyanamid a plan intended to
cure such violation within 90 days from the date of the violation. During such
time as Cytec is in violation of such covenants, Cytec may not, without the
prior written consent of Cyanamid, incur any debt (except for borrowings under
any Replacement Credit Facility and borrowings of not more than $10 million of
other debt) or make any Restricted Payments. In the event that such plan is not
delivered within 30 days from the date of the violation or the violation has not
been cured within 90 days from the date of the violations, (i) Cytec must
promptly (but in any event within 90 days) prepare a capital budget for the
following 12 months which will require Cyanamid's approval and expenditures
other than pursuant to such budget or in excess of the newly budgeted amounts
will require the approval of Cyanamid (as the holder of Series C Stock),
provided that Cytec will not be prohibited from making expenditures required to
comply with environmental, occupational safety and health laws and other
applicable laws which expenditures will count toward the amount allowed to be
expended under the newly prepared budget; and (ii) Cytec may not, without the
prior written consent of Cyanamid, incur any indebtedness (except for borrowings
under any Replacement Credit Facility and borrowings of not more than $10
million of other debt), make any significant acquisitions or divestitures,
merge, consolidate, liquidate or sell all or substantially all of its assets or
make Restricted Payments.
Furthermore, in the event that Cytec is in violation of any financial
covenant and any two of the following occurs: (i) Cytec has a negative net worth
(excluding the Series C Stock and any other redeemable preferred stock), (ii)
Cytec has experienced losses of at least $5 million per quarter for 6
consecutive quarters or losses of at least $20 million per year for the 3
consecutive fiscal years most recently then ended or 4 years out of the 5 fiscal
years most recently then ended or (iii) Cytec's Fixed Charge Coverage Ratio is
less than 1:1 for the 6 consecutive fiscal quarters most recently then ended,
then Cyanamid, as holder of Series C Stock, has the right to elect directors
representing a majority of the Cytec Board. The right of the holders of the
Series C Stock to elect a majority of the Cytec Board will continue until such
time that Cytec is in compliance with the financial covenants referred to in
this "Financial Covenants" section and at least two of (i), (ii) and (iii) in
the preceding sentence are no longer met.
EXPERTS
The consolidated financial statements and schedules of Cytec Industries
Inc. and subsidiaries as of December 31, 1997 and 1996, and for each of the
years in the three-year period ended December 31, 1997, have been incorporated
by reference herein and in this Proxy Statement/Prospectus in reliance upon the
reports of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The audited financial statements of Fiberite Holdings, Inc. as of December
31, 1996, and for the year ended December 31, 1996 appearing in Cytec's Current
Report on Form 8-K dated September 30, 1997, incorporated by reference in this
Proxy Statement/Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving such reports.
49
<PAGE> 57
The consolidated financial statements of AMT and subsidiaries as of
December 31, 1997 and 1996 and for each of the years in the two year period
ended December 31, 1997 included in this Proxy Statement/ Prospectus have been
given in reliance on the report of Feldman Sherb Ehrlich & Co., P.C., (formerly
Feldman Radin & Co., P.C.), independent accountants, given on the authority of
that firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the shares of Cytec Common Stock offered hereby will be
passed upon for Cytec by Cravath, Swaine & Moore, counsel to Cytec.
Foley, Hoag & Eliot LLP, counsel for AMT, has delivered an opinion
concerning certain Federal income tax consequences of the Merger. See "THE
MERGER -- Certain Federal Income Tax Consequences".
50
<PAGE> 58
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
1997 FINANCIAL STATEMENTS
Independent Auditors' Report.............................. F-2
Consolidated Balance Sheets at December 31, 1997 and
1996................................................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1997 and 1996............................. F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997 and 1996............................. F-5
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996 and 1997................. F-6
Notes to Consolidated Financial Statements................ F-7
UNAUDITED JUNE 30, 1998 INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets at June 30, 1998 and
1997................................................... F-16
Condensed Consolidated Statements of Operations for the
Three Months Ended June 30, 1998 and 1997 and the Six
Months Ended June 30, 1998 and 1997.................... F-17
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1998 and 1997................ F-18
Notes to Condensed Consolidated Financial Statements...... F-19
</TABLE>
F-1
<PAGE> 59
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
The American Materials & Technologies Corporation
We have audited the accompanying consolidated balance sheets of The
American Materials & Technologies Corporation and Subsidiaries as of December
31, 1997 and 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The American
Materials & Technologies Corporation and Subsidiaries as of December 31, 1997
and 1996, and the results of their operations and their cash flows for each of
the years then ended in conformity with generally accepted accounting
principles.
FELDMAN SHERB EHRLICH & CO., P.C.
Certified Public Accountants
(formerly Feldman Radin & Co., P.C.)
New York, New York
February 6, 1998
(March 23, 1998, with respect to Note 5)
F-2
<PAGE> 60
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 92 $ 4,655
Restricted cash........................................... 2,528 --
Accounts receivable, net of allowance of $369 and $123,
respectively........................................... 4,107 3,824
Inventories............................................... 3,742 1,456
Prepaid expenses and other current assets................. 659 520
------- -------
Total current assets.............................. 11,128 10,455
Property and equipment, net............................... 6,235 4,359
Goodwill, less accumulated amortization of $2,202 and $3,
respectively........................................... 5,078 518
Other assets, net......................................... 618 363
------- -------
$23,059 $15,695
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt.................... $ 4,212 $ 112
Accounts payable.......................................... 4,875 1,957
Accrued liabilities....................................... 3,137 1,394
Income taxes payable...................................... -- 218
------- -------
Total current liabilities......................... 12,224 3,681
Long-term debt, less current installments................. 4,205 336
Minority interest......................................... -- 70
Commitments and contingencies.............................
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 5,000 shares;
none issued............................................ -- --
Common stock $.01 par value. Authorized 15,000 shares;
4,394 and 14,139 shares respectively, issued and
outstanding............................................ 44 41
Additional paid-in capital................................ 12,194 10,910
Retained earnings (deficit)............................... (5,237) 657
Treasury stock, at cost (177 shares at December 31,
1997).................................................. (371) --
------- -------
Total stockholders' equity........................ 6,630 11,608
------- -------
$23,059 $15,695
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 61
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996
---------- ----------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
Net sales................................................... $30,386 $22,411
Costs and expenses:
Materials................................................. 13,695 11,175
Manufacturing............................................. 8,451 5,575
Marketing, selling and administrative..................... 8,372 3,621
Research and development.................................. 1,639 535
Unusual items (Note 4).................................... 3,845 --
------- -------
36,002 20,906
------- -------
Income (loss) from operations............................... (5,616) 1,505
Other (expense) income:
Interest expense.......................................... (603) (434)
Interest and other income................................. 25 131
Minority interest......................................... 70 --
------- -------
Income (loss) before income taxes........................... (6,124) 1,202
Income tax expense (benefit)................................ (230) 239
------- -------
Income (loss) before extraordinary item..................... (5,894) 963
Loss on early extinguishment of debt, net of tax............ -- (29)
------- -------
Net income (loss)........................................... $(5,894) $ 934
======= =======
Basic income (loss) per share:
Income (loss) before extraordinary item................... $ (1.35) $ 0.35
Extraordinary item........................................ -- (0.01)
Net income (loss)......................................... $ (1.35) 0.34
Diluted income (loss) per share:
Income (loss) before extraordinary item................... $ (1.35) $ 0.33
Extraordinary item........................................ -- (0.01)
Net income (loss)......................................... $ (1.35) $ 0.32
Weighted average number of shares:
Basic..................................................... 4,352 2,729
Diluted................................................... 4,352 2,956
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 62
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ (5,894) $ 934
Depreciation and amortization............................. 1,203 601
Other non-cash charges.................................... 2,435 78
Changes in assets and liabilities, net of effect of
acquisitions:
Accounts receivable.................................... 808 (1,138)
Inventories............................................ (1,205) 546
Prepaid expenses and other current assets.............. (39) (237)
Other assets........................................... (325) (336)
Accounts payable....................................... 1,688 (886)
Accrued liabilities.................................... 1,390 (159)
Income taxes payable................................... (218) 218
-------- --------
Net cash used in operating activities....................... (157) (379)
-------- --------
Cash flows from investing activities:
Purchase of property and equipment........................ (1,382) (365)
Acquisition of businesses, net of cash acquired........... (6,911) (535)
-------- --------
Net cash used in investing activities....................... (8,293) (900)
-------- --------
Cash flows from financing activities:
Borrowings of long-term debt.............................. 31,123 21,848
Repayments of long-term debt.............................. (27,191) (23,676)
Repayment of note payable -- affiliate.................... -- (3,150)
Proceeds from issuance of common stock.................... 300 10,365
Repurchase of common stock................................ (345) --
Proceeds from exercise of warrant......................... -- 374
-------- --------
Net cash provided by financing activities................... 3,887 5,761
-------- --------
Net increase (decrease) in cash and cash equivalents........ (4,563) 4,482
Cash and cash equivalents at beginning of year.............. 4,655 173
-------- --------
Cash and cash equivalents at end of year.................... $ 92 $ 4,655
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 63
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
------------------ ADDITIONAL RETAINED STOCK-
NUMBER PAID-IN EARNINGS TREASURY HOLDERS'
OF SHARES AMOUNT CAPITAL (DEFICIT) STOCK EQUITY
--------- ------ ---------- --------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995.............. 1,517 $15 $ 198 $ (277) $ 0 $ (64)
Issuance of common stock................ 2,332 23 10,341 -- -- 10,364
Exercise of warrant by affiliate........ 290 3 371 -- -- 374
Net income.............................. -- -- -- 934 -- 934
----- --- ------- ------- ----- -------
Balance at December 31, 1996.............. 4,139 41 10,910 657 0 11,608
Issuance of common stock................ 75 1 299 -- -- 300
Issuance of stock for acquisition....... 180 2 985 -- (26) 961
Repurchase of common stock.............. -- -- -- -- (345) (345)
Net loss................................ -- -- -- (5,894) -- (5,894)
----- --- ------- ------- ----- -------
Balance at December 31, 1997.............. 4,394 $44 $12,194 $(5,237) $(371) $ 6,630
===== === ======= ======= ===== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 64
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY The American Materials & Technologies Corporation (the
"Company") was incorporated in the State of Delaware in March 1995 to acquire
and manage businesses in the advanced materials and technologies industries.
Culver City Composites Corporation ("Culver City Composites"), a supplier of
prepreg materials to the aerospace industry, was acquired in December 1995; a
63% ownership in Carbon Design Partnership Limited ("Carbon Design"), a design
and custom manufacturing business in the U.K., was purchased in November 1996;
and Grafalloy Corporation ("Grafalloy") was formed in February 1997 to acquire
the assets of Grafalloy L.P., a manufacturer of graphite golf club shafts. The
results of operations of the acquired companies are included in the consolidated
financial statements from the respective dates of acquisition.
BASIS OF PRESENTATION The consolidated financial statements include
domestic and foreign subsidiaries. All material intercompany profits, balances
and transactions have been eliminated. Accounts denominated in foreign
currencies have been translated using year-end exchange rates for assets and
liabilities, while revenues and expense are translated at exchange rates
prevailing during the year. Adjustments for foreign currency translation
fluctuations have been insignificant.
USE OF ESTIMATES The preparation of financial statements in conformity
with generally accepted accounting principles requires management estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from management's estimates.
CASH The Company maintains its operating cash in demand deposit accounts
and commercial paper on a short term basis up to 30 days. Proceeds from an
industrial development bond have been placed in an interest-bearing escrow
account at a commercial bank.
INVENTORIES Inventories are stated at the lower of first-in, first-out
("FIFO") cost or market value.
PROPERTY AND EQUIPMENT Property and equipment are stated at cost and
depreciated using the straight-line method over estimated useful lives of three
to seven years. Leasehold improvements are amortized on a straight-line basis
over the shorter of their useful lives or the term of the related lease.
Expenditures for maintenance and repairs are expensed as incurred.
GOODWILL The excess of purchase price over the fair value of net assets of
acquired subsidiaries (goodwill) is being amortized on a straight-line basis
over 30 years, except for writedowns taken for impairment (Note 4).
LONG-LIVED ASSETS Impairment loss is recorded on long-lived assets used in
operations, such as property and equipment and intangible assets, when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the carrying amount of the assets.
This loss is measured by the difference between carrying amounts and estimated
fair values. Impairment losses of approximately $2,500 related to goodwill at
Grafalloy and Carbon Design were recorded in 1997.
DERIVATIVE FINANCIAL INSTRUMENTS The Company has not used any derivative
financial instruments to hedge foreign currency and interest rate market
exposures, nor has it used derivatives for speculative or trading purposes.
REVENUE RECOGNITION Revenues are recognized at the time of shipment.
Allowances are provided for estimated returns and adjustments.
RESEARCH AND DEVELOPMENT COSTS Expenditures related to the development of
new products and processes, including significant improvements and refinements
to existing products, are expensed as incurred.
F-7
<PAGE> 65
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK-BASED COMPENSATION Statement of Financial Accounting Standards No.
123 (SFAS 123), "Accounting for Stock-Based Compensation", encourages but does
not require companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to present required
disclosures and to continue to account for stock-based employee compensation
using the method prescribed in Accounting Principles Board Opinion No. 25 (APB
25), "Accounting for Stock Issued to Employees". Compensation cost for stock
options is measured as the excess, if any, of the quoted market price of the
Company's stock at the date of grant over the amount an employee must pay to
acquire the stock.
ENVIRONMENTAL REMEDIATION COSTS The Company accrues remediation
liabilities when it is probable that a liability exists and the costs can
reasonable be estimated. The Company's estimates of these costs are based on
existing technology, current laws and regulations, and the Company's current
legal obligations regarding remediation and site-specific costs. These
liabilities are adjusted when the effect of new facts or changes in law or
technology are determinable. Approximately $330 was accrued for environmental
remediation costs at December 31, 1997.
EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed
using the weighted average number of shares of outstanding common stock. Diluted
per share amounts also include the effect of dilutive common stock equivalents
from the assumed exercise of stock options. Earnings per share data for 1996
have been restated to conform to the requirements of Statement of Financial
Accounting Standards No. 128, "Earnings per Share". Diluted per share amounts
for 1996 include 127,000 common stock equivalents from stock options. For 1997,
stock options and warrants (Note 10) have been excluded because the effect would
be antidilutive.
FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts reported in the
balance sheet for cash, accounts receivable, accounts payable and accrued
liabilities approximated their fair value based on the short-term maturity of
these instruments.
CASH FLOW INFORMATION Cash payments for interest in 1997 and 1996 were
$510 and $434 respectively. Cash payments for income taxes were $10 in 1997 and
$21 in 1996.
RECENT ACCOUNTING PRONOUNCEMENTS SFAS No. 130, "Reporting Comprehensive
Income", establishes standards for the reporting and display of comprehensive
income and its components. SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", establishes standards for reporting
information operating segments in annual and interim financial statements. The
Company will adopt these standards in the first quarter of 1998. They will not
have any significant effect on the Company's financial position or results of
operations.
2. BALANCE SHEET ITEMS
Inventories consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Raw materials............................................... $2,271 $ 978
Work-in-progress............................................ 1,013 478
Finished goods.............................................. 458 --
------ ------
$3,742 $1,456
====== ======
</TABLE>
F-8
<PAGE> 66
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of property and equipment are as follows at December 31:
<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Machinery and equipment..................................... $ 5,200 $3,085
Leasehold improvements...................................... 1,550 1,485
Furniture and fixtures...................................... 401 184
Construction in progress.................................... 673 249
------- ------
7,824 5,003
Less accumulated depreciation and amortization.............. (1,589) (644)
------- ------
$ 6,235 $4,359
======= ======
</TABLE>
Accrued liabilities include the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Accrued compensation........................................ $1,006 $ 600
Other accrued expenses...................................... 1,981 794
------ ------
$2,987 $1,394
====== ======
</TABLE>
3. ACQUISITIONS
On December 19, 1995, the Company acquired all of the outstanding stock of
Structural Polymer Systems, Inc., a manufacturer and marketer of advanced
composite materials for the aerospace and defense industries, for approximately
$5,688, including acquisition costs. The purchase was financed with loans from
an affiliated company and a bank line of credit and term loan. The name of the
acquired company was changed to Culver City Composites Corporation.
In November 1996, the Company acquired 63% of the outstanding stock of
Carbon Design Partnership Limited, a U.K. company engaged in the design and
manufacturing of composite parts for recreational and industrial uses, for cash
of approximately $590.
On February 27, 1997, the Company acquired all of the assets and assumed
certain liabilities of Grafalloy L.P., a manufacturer of graphite golf club
shafts. The purchase price of approximately $9,200 included a cash payment of
$6,400, 179,492 shares of common stock (valued at $987), notes of $1,537 (as
subsequently adjusted based on the purchase agreement), and expenses of $280.
Each of these acquisitions was accounted for as a purchase and,
accordingly, the operating results have been included in the Company's
consolidated financial statements from the respective dates of acquisition. Pro
forma unaudited operating results for the years ended December 31, 1997 and
1996, assuming that Carbon Design and Grafalloy had been acquired on January 1,
1996, are as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Net sales................................................... $32,113 $33,841
Net income (loss)........................................... $(6,085) $ 1,385
Per share:
Basic..................................................... $ (1.39) $ 0.48
Diluted................................................... $ (1.39) $ 0.44
</TABLE>
F-9
<PAGE> 67
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. UNUSUAL ITEMS
During the first nine months of 1997 the Company engaged in extensive
efforts, including financing activities, negotiations and due diligence, for the
acquisition of a much larger business. The Company was not successful, and the
target company was acquired by a major competitor in September 1997.
Negotiations related to several smaller acquisitions were also terminated during
the third quarter. Expenses of approximately $760 related to the Company's
acquisition activities were recognized in the third quarter of 1997.
Also in the third quarter of 1997, the Company recorded charges of $720
related to its investment in Carbon Design, including the writedown of goodwill,
following a decision to pursue the sale of that business.
In the fourth quarter of 1997 the Company recorded charges of $2,000 to
reduce goodwill arising from the purchase of Grafalloy based upon a review of
projected future cash flows. In addition, reserves related to the disposition of
Carbon Design were increased by $365. These charges contributed to a net loss in
the fourth quarter of $3,883.
5. LONG-TERM DEBT
Long-term debt includes the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
------ ----
<S> <C> <C>
Borrowings under revolving credit facilities................ $3,167 $ --
Term loans, payable in monthly installments through 2000.... 863 448
Industrial development bond................................. 2,500 --
Acquisition notes due March through August 1998............. 1,069 --
Other....................................................... 818 --
------ ----
8,417 448
Less current portion........................................ 4,212 112
------ ----
$4,205 $336
====== ====
</TABLE>
Required principal payments of long-term debt are as follows:
1998 -- $4,212; 1999 -- $3,530; 2000 -- $636; 2001 -- $21; and 2002 -- $18. The
carrying value of all debt instruments approximates their fair value.
In April 1997 the Company renegotiated its bank credit facility to reduce
the interest rate margin and to increase the total facility to $10,167,
consisting of $7,467 revolving credit based upon inventory and accounts
receivable, a $1,000 five-year term loan, and a $1,700 standby term loan to
finance capital expenditures. At December 31, 1997, $3,167 was outstanding on
the revolving credit lines and $845 was available based on eligible collateral.
The effective annual interest rate on the total credit facility for the year
ended December 31, 1997 was 12.5%. Under a previous credit agreement in effect
for CCC during 1996, the effective annual interest rate was 10.2%.
One credit agreement for $6,167 extends to January 1999 and the second for
$4,000 extends to April 2000. Interest is charged at the rate of 1% above the
prime rate; a fee of 1% per annum is charged on the unused portion of the credit
facilities. The term loans bear interest at 1% over the prime rate and are
payable in equal principal amounts over sixty months. The loan agreements
require, among other things, that the Company maintain certain financial
covenants, including tangible net worth, interest coverage, and debt service
coverage; the agreements also restrict capital expenditures and the payment of
dividends. The credit facilities are secured by substantially all the assets of
the Company. As a result of losses incurred in 1997, the Company was not in
compliance with certain covenants in its loan agreements. A waiver of compliance
was granted by the lender.
F-10
<PAGE> 68
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In August 1997 the Company borrowed $2,500 pursuant to an industrial
development bond. The note bears interest at 7.1% per annum and is payable over
78 months beginning in April 1998. The proceeds of the loan were placed in an
interest-earning escrow account pending disbursement for designated capital
expenditures. The entire amount remained in escrow at December 31, 1997
(classified as restricted cash). The Company subsequently decided not to proceed
with the project and the funds were returned to the lender in March 1998. In
December 1997 the Company repurchased 172,582 shares of its common stock (issued
in the purchase of Grafalloy) for notes totaling $345. The 10% notes were due in
February 1999, but were canceled in January 1998 in connection with the exercise
of stock options.
From December 1995 to July 1996, the Company was obligated under two 10%
promissory notes, in the amounts of $3,000 and $150, respectively, to a company
in which the Company's Chairman was an officer and director. The notes were
repaid in full on July 5, 1996. In connection with the $3,000 note, the Company
issued a warrant to purchase 289,790 shares of the Company's common stock at
$1.29 per share. The warrant was exercised in September 1996. A value of $78 was
assigned to the warrant when issued; the unamortized discount at the date the
note was repaid was recognized as an extraordinary loss on early extinguishment
of debt.
6. COMMITMENTS AND CONTINGENCIES
The Company leases its principal manufacturing and office facilities under
non-cancelable leases expiring through 2006. The leases generally require the
lessee to pay taxes, maintenance, insurance and certain other operating costs of
the leased property. The leases on most of the properties contain renewal
provisions and some base rents are subject to annual increases determined by
indexing. Rent expense for the years ended December 31, 1997 and 1996 was $795
and $682, respectively. Minimum lease payments under operating lease commitments
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED AMOUNT
---------- ------
<S> <C>
1998................................................ $ 744
1999................................................ 632
2000................................................ 632
2001................................................ 632
2002................................................ 588
Thereafter.......................................... 1,826
------
$5,054
======
</TABLE>
In September 1997 the Company filed a lawsuit against a competitor seeking
damages from unfair competition and violations of the antitrust laws. The
defendant has denied any liability. The lawsuit is in the early stages of
discovery. The Company is involved in other litigation in the ordinary course of
business, the outcome of which, in the opinion of management, will not have any
material adverse effect on the Company's financial position or results of
operations.
7. BUSINESS AND CREDIT CONCENTRATIONS
The majority of the Company's business is conducted with major aerospace
and defense companies and their subcontractors. The Company estimates an
allowance for doubtful accounts based on the creditworthiness of its customers
as well as general economic conditions. One customer accounted for approximately
12% of sales in 1997 and 16% in 1996. Two separate customers represented 10% of
1997 sales and 15% of 1996 sales, respectively.
F-11
<PAGE> 69
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. INCOME TAXES
The provision (benefit) for income taxes for the years ended December 31,
1997 and 1996 consists of the following:
<TABLE>
<CAPTION>
1997 1996
----- ----
<S> <C> <C>
Current:
Federal................................................... $(203) $203
State..................................................... (27) 36
----- ----
(230) 239
----- ----
Deferred.................................................. -- --
Total..................................................... $(230) $239
===== ====
</TABLE>
A reconciliation between the federal statutory tax rate and the effective
income tax rate for the years ended December 31, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Statutory federal income tax rate........................... (35)% 34%
State income taxes, net of federal taxes.................... (6) 6
Benefit of operating loss carryforwards..................... -- (20)
Losses for which no benefit is provided..................... 37 --
--- ---
Effective income tax rate.............................. (4)% 20%
=== ===
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
deferred income tax assets and liabilities at December 31, 1997 and 1996 are
shown below:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Deferred income tax assets:
Net operating loss carryforwards.......................... $4,212 $3,360
Allowance for doubtful accounts........................... 148 49
Inventory reserves........................................ 140 141
Accrued expenses.......................................... 112 92
Deferred compensation..................................... 189 100
Other..................................................... 31 25
------ ------
4,832 3,767
------ ------
Deferred income tax liabilities:
Depreciation and amortization............................. (728) (618)
------ ------
Deferred tax valuation allowance............................ (4,104) (3,149)
------ ------
Net deferred income taxes................................... $ -- $ --
====== ======
</TABLE>
At December 31, 1997, the Company had net operating loss carryforwards of
approximately $3,900 for federal tax purposes, expiring in 2012. In addition, as
a result of the acquisition of Culver City Composites, the Company had
approximately $32,165 of net operating loss carryforwards which extend to
2002-2010. The utilization of these carryforwards is limited to approximately
$500 each year as a result of the December 1995 "change in ownership" as defined
in the Internal Revenue Code.
F-12
<PAGE> 70
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. EMPLOYEE BENEFIT PLANS
DEFINED CONTRIBUTION PLANS Substantially all U.S.-based non-bargaining
unit employees of the Company are eligible to participate in one of two defined
contribution plans. Participants can contribute up to 12% or 19% of their annual
salary and receive a matching contribution from the employer according to the
provisions of the respective plan documents. The expense of the defined
contribution plans for the years ended December 31, 1997 and 1996 was $34 and
$66, respectively.
DEFINED BENEFIT PLAN The Company maintains a defined benefit pension plan
covering all bargaining unit employees. The plan provides for monthly benefit
payments upon retirement based on a fixed monthly payment for each year of
credited service. Plan contributions are made in accordance with ERISA
regulations. The plan maintains investments in various pooled funds at a bank.
Net periodic pension cost was $25 and $23 for the years ended December 31, 1997
and 1996, respectively. The net pension asset at December 31, 1997 was $37 (net
liability of $38 at December 31, 1996).
The components of net pension costs for the years ended December 31, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Service cost for benefits earned............................ $25 $24
Interest cost on projected benefit obligation............... 71 71
Expected return on plan assets.............................. (77) (79)
Prior service cost amortization............................. 8 9
Net actuarial gain assumption............................... (10) (10)
Expenses.................................................... 8 8
--- ---
Net pension cost.......................................... $25 $23
=== ===
</TABLE>
The following table summarizes the funded status of the plan and amounts
recognized in the consolidated balance sheet at December 31, 1997 and 1996,
using a valuation date of August 1:
<TABLE>
<CAPTION>
1997 1996
------ ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation................................. $ 925 $899
Non-vested benefit obligation............................. 4 2
------ ----
Projected benefit obligation.............................. 929 901
Plan assets at fair value................................... 1,049 863
------ ----
Excess (deficiency) of plan assets over projected benefit
obligation................................................ 120 (38)
Unrecognized net (gain) loss................................ (146) 9
Unrecognized prior service cost............................. 63 71
Adjustment to recognized minimum liability.................. -- (80)
------ ----
Net pension asset (liability) recognized.................... $ 37 $(38)
====== ====
Assumptions used:
Discount rate............................................. 8% 8%
====== ====
Long-term rate of return on plan assets................... 9% 9%
====== ====
</TABLE>
10. STOCKHOLDERS' EQUITY
COMMON STOCK In July 1996 the Company completed an initial public offering
of 2,000,000 shares of its common stock at $5.50 per share. The underwriter
subsequently exercised an option to purchase an
F-13
<PAGE> 71
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
additional 296,000 shares at $5.50 per share. Net proceeds were $10,215. Also in
1996 the Company sold 11,364 shares of common stock for $50 in a private
transaction.
The Company issued 25,000 shares of common stock in 1996 and an additional
75,000 shares in 1997 in consideration for the extension of an exclusive license
granted pursuant to a joint venture agreement dated March 1996. These shares
were valued at $4.00 per share.
As partial consideration for the purchase of Grafalloy (Note 3), the
Company issued 179,492 shares of common stock valued at $987. On December 1,
1997, the Company repurchased 172,582 of these shares for promissory notes
aggregating $345 due in February 1999.
STOCK OPTION PLANS The Company's 1996 Incentive and Nonqualified Stock
Option Plan ("1996 Plan") was adopted in February 1996 and its 1997 Stock Option
Plan (A"1997 Plan") was adopted in March 1997 and approved by stockholders in
May 1997. A total of 350,000 shares of common stock are reserved for issuance
under each plan. Options may be granted to officers, directors, and employees of
the Company and to consultants who provide services to the Company. The Board of
Directors determines individuals to whom options will be granted, the option
exercise price and other terms of each award, subject to the provisions of the
plans. The plans expire in 2006 and 2007, respectively.
Under both plans, no option may extend for more than ten years from the
date of grant. The exercise price for incentive stock options (as defined in the
Internal Revenue Code of 1986) may not be less than the fair market value of the
common stock at the date of grant. As of December 31, 1997 there were 25,387
unissued shares of common stock reserved for future grants under the plans.
In addition to options granted under the two plans, the Company in 1995
issued options to purchase 133,303 shares at $0.86 per share and 9,999 shares at
$1.50 per share, and in 1997 issued options to purchase 42,000 shares at $4.88
per share (of which 20,000 subsequently were canceled). The options vest over
periods of up to four years.
Shares subject to option for the years ended December 31, 1997 and 1996 are
summarized as follows:
<TABLE>
<CAPTION>
1997 1996
------------------- -------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
------- -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding at beginning of year............ 289,902 $2.36 143,302 $0.90
Granted..................................... 625,313 5.02 151,400 3.68
Exercised................................... -- --
Cancelled................................... (77,300) 4.94 (4,800) 4.00
------- ----- ------- -----
Outstanding at end of year.................. 837,915 $4.11 289,902 $2.36
Exercisable at end of year.................. 209,218 $2.91 46,934 $0.89
Weighted average fair value of options
granted during the year................... $2.01 $1.55
</TABLE>
F-14
<PAGE> 72
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes information about stock options outstanding
at December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------- OPTIONS EXERCISABLE
WEIGHTED -----------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- --------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.78 to $1.50.............. 168,302 7.5 $0.92 100,118 $0.90
$4.31 to $6.25.............. 669,613 9.1 $4.91 109,100 $4.76
------- --- ----- ------- -----
837,915 8.7 $4.11 209,218 $2.91
</TABLE>
The Company applies APB 25 and related interpretations in accounting for
grants to employees under its stock option plans. Because the exercise price of
the options equals the market price of the underlying stock on the date of
grant, no compensation cost has been recognized in the Company's financial
statements. Pro forma disclosures assuming compensation cost had been determined
based on the fair value of stock options at the grant dates consistent with the
method of SFAS 123 are as follows:
<TABLE>
<CAPTION>
1997 1996
------- -----
<S> <C> <C> <C>
Net income (loss) As reported $(5,894) $928
Pro forma $(6,161) $886
Per share:
Basic As reported $(1.35) $0.34
Pro forma $(1.42) $0.32
Diluted As reported $(1.35) $0.32
Pro forma $(1.42) $0.30
</TABLE>
The fair value of options granted has been estimated using the
Black-Scholes option-pricing model with the following weighted-average
assumptions for grants in 1997 and 1996, respectively: expected volatility of
50% and 45% (based on the historical volatility of a sample of similar
companies); risk-free interest rates of 5.5% and 6.4%; expected lives of 5
years; and no dividend yield. For purposes of the pro forma disclosures, the
estimated fair value of the options has been amortized to expense over the
vesting period of the options.
WARRANTS In connection with its initial public offering in July 1996, the
Company issued a warrant to purchase 200,000 shares of common stock to the
representative of the underwriters. The warrant is exercisable at $8.80 per
share through June 2001. The Company has also issued five-year warrants to
consultants to purchase 95,000 shares of common stock at prices of $4.00 and
$4.88 per share.
11. SUBSEQUENT EVENTS (UNAUDITED)
On July 8, 1998, the Company entered into an agreement with Cytec
Industries Inc. ("Cytec") pursuant to which Cytec will acquire all of the
outstanding shares of the Company in exchange for Cytec common shares in a
transaction designed to qualify as a tax-free reorganization. The Company's
stockholders will receive the equivalent of $6.00 per share in Cytec shares. The
transaction is subject to approval by the Company's stockholders and by
regulatory authorities, and is expected to close in the fourth quarter of 1998.
On July 29, 1998, the Company signed a letter of intent for the sale of the
assets and assumption of certain liabilities of Grafalloy for cash of $7,500.
This transaction is expected to close after the merger with Cytec Industries
Inc., but is not subject to the completion of that merger. The Company
anticipates that it will incur a loss of approximately $1,500 in connection with
this sale.
F-15
<PAGE> 73
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 103 $ 92
Restricted cash........................................... -- 2,528
Accounts receivable, net.................................. 5,785 4,107
Inventories............................................... 4,497 3,742
Prepaid expenses and other current assets................. 448 659
------- -------
Total current assets.............................. 10,833 11,128
Property and equipment, net of accumulated depreciation of
$2,019 and $1,589, respectively........................... 5,971 6,235
Goodwill.................................................... 4,984 5,078
Other assets................................................ 643 618
------- -------
$22,431 $23,059
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt.................... $ 704 $ 4,212
Accounts payable.......................................... 7,231 4,875
Accrued liabilities....................................... 2,032 3,137
------- -------
Total current liabilities......................... 9,967 12,224
Long-term debt, less current installments................... 4,467 4,205
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 5,000 shares;
none issued............................................ -- --
Common stock, $.01 par value. Authorized 15,000 shares;
4,442 and 4,394 issued and outstanding, respectively... 44 44
Additional paid-in capital.................................. 12,296 12,194
Accumulated deficit......................................... (4,327) (5,237)
Treasury stock, at cost..................................... (16) (371)
------- -------
Total stockholders' equity........................ 7,997 6,630
------- -------
Total liabilities and stockholders' equity.................. $22,431 $23,059
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-16
<PAGE> 74
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ------------------
1998 1997 1998 1997
-------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales............................................ $11,456 $9,396 $23,171 $16,548
Costs and expenses:
Materials.......................................... 5,707 3,877 11,529 7,261
Manufacturing...................................... 2,384 2,524 4,897 4,293
Selling, general and administrative................ 2,126 2,154 4,477 3,587
Research and development........................... 510 373 1,010 666
------- ------ ------- -------
10,727 8,928 21,913 15,807
------- ------ ------- -------
Income from operations............................... 729 468 1,258 741
Other income (expense):
Interest expense................................... (168) (160) (375) (244)
Interest and other income.......................... (1) 145 27 226
Minority interest.................................. -- 33 -- 103
------- ------ ------- -------
(169) 18 (348) 85
------- ------ ------- -------
Income before income taxes........................... 560 486 910 826
Income tax expense................................... -- 53 0 119
------- ------ ------- -------
Net income........................................... $ 560 $ 433 $ 910 $ 707
======= ====== ======= =======
Net income per share:
Basic.............................................. $ 0.13 $ 0.10 $ 0.21 $ 0.16
======= ====== ======= =======
Diluted............................................ $ 0.11 $ 0.10 $ 0.19 $ 0.16
======= ====== ======= =======
Weighted average number of shares:
Basic.............................................. 4,440 4,394 4,400 4,338
======= ====== ======= =======
Diluted............................................ 4,920 4,555 4,730 4,506
======= ====== ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-17
<PAGE> 75
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
--------------------
1998 1997
-------- --------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 910 $ 707
Depreciation and amortization............................. 694 512
Other non-cash charges.................................... -- 184
Changes in assets and liabilities (excluding
acquisitions):
Accounts receivable.................................... (1,678) (2,045)
Inventories............................................ (755) (1,692)
Prepaid expenses and other assets...................... 158 (770)
Accounts payable and accrued liabilities............... 1,251 1,062
Income taxes payable................................... -- 111
-------- --------
Net cash provided by (used in) operating activities.... 580 (1,931)
-------- --------
Cash flows from investing activities:
Purchase of property and equipment........................ (280) (2,461)
Cash paid for acquisition.............................. -- (6,502)
-------- --------
Net cash used in investing activities.................. (280) (8,963)
-------- --------
Cash flows from financing activities:
Borrowings under revolving credit lines................... 20,100 26,854
Repayments of revolving credit lines...................... (19,706) (22,542)
Borrowings (repayments) of term loans..................... (161) 544
Other notes payable....................................... (979) 1,383
Issuance of common stock.................................. 457 --
-------- --------
Net cash (used in) provided by financing activities......... (289) 6,239
-------- --------
Net increase (decrease) in cash and cash equivalents........ 11 (4,655)
Cash and cash equivalents at beginning of period............ 92 4,655
-------- --------
Cash and cash equivalents at end of period.................. $ 103 $ --
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-18
<PAGE> 76
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
The information contained in the consolidated financial statements and
footnotes is condensed from that which would appear in the Company's annual
consolidated financial statements. Accordingly, these condensed consolidated
financial statements should be reviewed in conjunction with the consolidated
financial statements and related notes contained in the Annual Report on Form
10-KB for the year ended December 31, 1997, filed with the Securities and
Exchange Commission. The unaudited condensed consolidated financial statements
as of June 30, 1998 and for the three-month and six-month periods ended June 30,
1998 and 1997 include all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation. The results of
operations for interim periods are not necessarily indicative of the results
that may be expected for the entire year. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
The condensed consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Culver City Composites and Grafalloy
Corporation. All significant intercompany accounts and transactions have been
eliminated.
2. NEW ACCOUNTING STANDARDS
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". This statement
requires that all items recognized under accounting standards as components of
comprehensive earnings be reported in an annual financial statement. It also
requires that an entity classify items of other comprehensive earnings (e.g.,
foreign currency translation adjustments and unrealized gains and losses on
certain marketable securities) by their nature in an annual financial statement.
The Company's total comprehensive earnings for the three-month and six-month
periods ended June 30, 1998 and 1997 were the same as reported net income for
those periods.
The Company has also adopted Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information".
This statement does not require interim period information in the year of
adoption.
Statement of Financial Accounting Standards No. 132, "Employers Disclosures
about Pensions and Other Postretirement Benefits", is effective for the year
beginning January 1, 1998. The statement requires additional information about
changes in the benefit obligation and fair value of plan assets. The Company
will include such disclosures in its annual financial statements.
3. EARNINGS PER SHARE
Basic earnings per share amounts are computed by dividing net income by the
weighted-average number of common shares outstanding during the period. Diluted
per share data also includes the effect of stock options and warrants:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1998 1997 1998 1997
------ ------ ----- -----
<S> <C> <C> <C> <C>
Weighted average shares....................... 4,440 4,394 4,400 4,338
Effect of stock options/warrants.............. 480 161 330 168
----- ----- ----- -----
Weighted average shares, assuming dilution.... 4,920 4,555 4,730 4,506
</TABLE>
F-19
<PAGE> 77
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. LONG-TERM DEBT
Long-term debt consisted of the following at June 30, 1998 and December 31,
1997:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
<S> <C> <C>
Borrowings under revolving credit facilities................ $3,944 $3,167
Term loans, payable in monthly installments through 2000.... 702 863
Industrial development bond................................. -- 2,500
Other....................................................... 525 1,887
------ ------
5,171 8,417
Less current portion........................................ 704 4,212
------ ------
$4,467 $4,205
====== ======
</TABLE>
5. SUBSEQUENT EVENTS
On July 8, 1998, the Company entered into an agreement with Cytec
Industries Inc. ("Cytec") pursuant to which Cytec will acquire all of the
outstanding shares of the Company in exchange for Cytec common shares in a
transaction designed to qualify as a tax-free reorganization. The Company's
stockholders will receive the equivalent of $6.00 per share in Cytec shares. The
transaction is subject to approval by the Company's stockholders and by
regulatory authorities, and is expected to close in the fourth quarter of 1998.
On July 29, 1998, the Company signed a letter of intent for the sale of the
assets and assumption of certain liabilities of Grafalloy for cash of $7,500.
This transaction is expected to close after the merger with Cytec Industries
Inc., but is not subject to the completion of that merger. The Company
anticipates that it will incur a loss of approximately $1,500 in connection with
this sale.
F-20
<PAGE> 78
INDEX TO ANNEXES
<TABLE>
<CAPTION>
ANNEX
-----
<S> <C>
Agreement and Plan of Merger, and Amendment to Agreement and
Plan of Merger............................................ A
Stockholders Agreement...................................... B
Opinion of Wm Sword & Co. Incorporated...................... C
</TABLE>
<PAGE> 79
ANNEX A
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
CYTEC INDUSTRIES INC.
("PARENT")
AND
CAM ACQUISITION CORP.
("SUB")
AND
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
(THE "COMPANY")
DATED
JULY 8, 1998
<PAGE> 80
ANNEX 1
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Article I
THE MERGER......................................................................................... 1
Section 1.1 Surviving Corporation............................................................... 1
Section 1.2 Effective Time...................................................................... 1
Section 1.3 Closing............................................................................. 1
Section 1.4 Effects of the Merger............................................................... 2
Section 1.5 Certificate of Incorporation........................................................ 2
Section 1.6 By-Laws............................................................................. 2
Section 1.7 Directors and Officers.............................................................. 2
Section 1.8 Meeting of the Company's Stockholders............................................... 2
Article II
STATUS AND CONVERSION OF SECURITIES................................................................ 2
Section 2.1 Status and Conversion of Securities................................................. 2
Section 2.2 Company Stock Options and Warrants.................................................. 3
Section 2.3 Closing of the Company's Transfer Books............................................. 4
Section 2.4 Exchange of Certificates............................................................ 4
Section 2.5 No Fractional Shares................................................................ 4
Section 2.6 Adjustments......................................................................... 5
Section 2.7 No Further Ownership Rights in Company Common Stock................................. 5
Section 2.8 Termination of Exchange Agent....................................................... 5
Section 2.9 Liability........................................................................... 5
Section 2.10 Investment of Funds................................................................. 5
Article III
REPRESENTATION AND WARRANTIES OF PARENT............................................................ 6
Section 3.1 Organization and Qualification...................................................... 6
Section 3.2 Authority Relative to this Agreement................................................ 6
Section 3.3 No Violation........................................................................ 6
Section 3.4 Capitalization...................................................................... 6
Section 3.5 Parent Common Stock to be Issued in the Merger...................................... 7
Section 3.6 Approvals........................................................................... 7
Section 3.7 SEC Documents....................................................................... 7
Section 3.8 Litigation.......................................................................... 8
Section 3.9 Absence of Certain Changes.......................................................... 8
Section 3.10 Disclosure.......................................................................... 8
Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................... 8
Section 4.1 Organization and Qualification...................................................... 8
Section 4.2 Subsidiaries........................................................................ 8
Section 4.3 Authority Relative to this Agreement................................................ 9
Section 4.4 No Violation........................................................................ 10
Section 4.5 Capitalization...................................................................... 10
Section 4.6 Approvals........................................................................... 10
Section 4.7 Company SEC Documents............................................................... 11
Section 4.8 Litigation.......................................................................... 11
Section 4.9 Absence of Certain Changes.......................................................... 12
Section 4.10 Licenses, Permits, Authorizations, Etc. ............................................ 12
</TABLE>
i
<PAGE> 81
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Section 4.11 Taxes and Returns................................................................... 12
Section 4.12 ERISA, etc.......................................................................... 13
Section 4.13 Employment Agreements............................................................... 14
Section 4.14 Opinion of Financial Advisor........................................................ 14
Section 4.15 Disclosure.......................................................................... 14
Section 4.16 State Takeover Statutes............................................................. 15
Section 4.17 Compliance with Laws................................................................ 15
Section 4.18 Labor Relations..................................................................... 15
Section 4.19 Intellectual Property............................................................... 15
Section 4.20 Title to Properties................................................................. 16
Section 4.21 Contracts........................................................................... 16
Section 4.22 Environmental Matters............................................................... 16
Section 4.23 Qualifications...................................................................... 17
Section 4.24 Certain Transactions................................................................ 18
Section 4.25 Insurance........................................................................... 18
Article V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................................................... 18
Section 5.1 Organization........................................................................ 18
Section 5.2 Authority Relative to this Agreement................................................ 18
Section 5.3 No Violation........................................................................ 18
Section 5.4 Approvals........................................................................... 19
Section 5.5 Capitalization...................................................................... 19
Article VI
CONDUCT OF BUSINESS PENDING THE MERGER............................................................. 19
Section 6.1 Conduct of Business by the Company Prior to the Effective Time...................... 19
Section 6.2 Conduct of Business by Parent....................................................... 21
Article VII
ADDITIONAL AGREEMENTS.............................................................................. 21
Section 7.1 Access and Information; Confidentiality............................................. 21
Section 7.2 HSR Act............................................................................. 22
Section 7.3 Stockholder Approval; Proxy Statement............................................... 22
Section 7.4 S-4 Registration Statement.......................................................... 22
Section 7.5 Fees and Expenses................................................................... 22
Section 7.6 Additional Agreements; Other Action................................................. 23
Section 7.7 Acquisition Proposals............................................................... 23
Section 7.8 Benefit Matters..................................................................... 24
Section 7.9 Indemnification; Continuation of Insurance; Guaranty................................ 25
Section 7.10 Subsequent Financial Statement...................................................... 26
Section 7.11 Certain Notifications............................................................... 26
Section 7.12 Letter of the Company's Accountants................................................. 26
Section 7.13 Stockholder Litigation.............................................................. 26
Section 7.14 Affiliates.......................................................................... 26
Section 7.15 Stockholder Agreement Legend........................................................ 26
Section 7.16 Initial Payment..................................................................... 26
Section 7.17 Termination of Lawsuit.............................................................. 26
</TABLE>
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<TABLE>
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PAGE
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<S> <C> <C> <C>
Article VIII
CONDITIONS TO THE MERGER........................................................................... 27
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger.......................... 27
Section 8.2 Conditions to the Company's Obligation to Effect the Merger......................... 27
Section 8.3 Conditions to the Obligations of Parent and Sub to Effect the Merger................ 28
Section 8.4 Frustration of Closing Conditions................................................... 28
Article IX
TERMINATION, AMENDMENT AND WAIVER.................................................................. 29
Section 9.1 Termination......................................................................... 29
Section 9.2 Amendment........................................................................... 30
Section 9.3 Waiver.............................................................................. 30
Article X
GENERAL PROVISIONS................................................................................. 30
Section 10.1 Non-Survival of Representations, Warranties and Agreements.......................... 30
Section 10.2 Brokers............................................................................. 30
Section 10.3 Notices............................................................................. 30
Section 10.4 Interpretation...................................................................... 31
Section 10.5 Miscellaneous....................................................................... 31
Section 10.6 Publicity........................................................................... 31
Section 10.7 Assignment.......................................................................... 31
Section 10.8 Governing Law....................................................................... 32
Section 10.9 Consent to Jurisdiction............................................................. 32
Section 10.10 No Right to Set-off................................................................. 32
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 8, 1998 (this
"Agreement"), among Cytec Industries Inc., a Delaware corporation ("Parent"),
CAM Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"), and The American Materials & Technologies Corporation, a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent;
WHEREAS, in furtherance of such acquisition, the respective Boards of
Directors of Parent, Sub and the Company have approved the merger of Sub with
and into the Company in accordance with the Delaware General Corporation Law and
with the terms provided for herein;
WHEREAS, substantially concurrently herewith and as a condition and
inducement to Parent's willingness to enter into this Agreement, Parent and
certain affiliate stockholders of the Company have entered into a Stockholders
Agreement (the "Stockholders Agreement");
WHEREAS, concurrently herewith and as a condition and inducement to the
Company's willingness to enter into this Agreement, Parent is paying to the
Company $500,000 as described in Section 7.16;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with such merger, and
also desire to set forth various conditions thereto; and
WHEREAS, said merger is intended to qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Surviving Corporation. At the Effective Time (as defined in
Section 1.2) and in accordance with the provisions of this Agreement and the
Delaware General Corporation Law (the "DGCL"), Sub shall be merged with and into
the Company (the "Merger") which shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") and which shall continue its
corporate existence under the laws of the State of Delaware and succeed to and
assume all the rights and obligations of Sub in accordance with the DGCL.
Section 1.2 Effective Time. The Merger shall become effective when the
Certificate of Merger (as said Certificate is defined in Section 1.3) is filed
with the office of the Secretary of State of Delaware in accordance with the
applicable provisions of the DGCL (or at the time specified as the effective
time in the Certificate of Merger), which Certificate shall be filed as soon as
practicable after the Closing (as defined in Section 1.3). The date and time
when the Merger shall become effective are herein referred to as the "Effective
Time."
Section 1.3 Closing.
(a) Subject to the provisions of Article VIII, the closing (the "Closing")
of the transactions contemplated by this Agreement shall take place at the
offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019, as
soon as practicable after October 10, 1998 or such later date as the parties
shall agree to following the meeting of the stockholders of the Company referred
to in Section 1.8, and in no event later than the second business day after
satisfaction or waiver of the conditions set forth in Article VIII, or at such
other time and place or on such other date after October 10, 1998 as the Company
and Parent may mutually agree in writing (the date and time of such Closing
being herein referred to as the "Closing Date").
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(b) Subject to the provisions of Article VIII, at the Closing the Surviving
Corporation shall execute a certificate of merger (the "Certificate of Merger")
and cause said Certificate to be filed and recorded in accordance with the
applicable provisions of the DGCL.
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
Section 1.5 Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be amended at the Effective
Time to read in the form of Exhibit D and, as so amended, such Certificate of
Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended in accordance with law.
Section 1.6 By-Laws. The By-laws of Sub, as in effect at the Effective
Time, shall be the By-laws of the Surviving Corporation until amended as therein
provided.
Section 1.7 Directors and Officers. The persons who are directors of the
Company immediately prior to the Effective Time shall resign effective as of the
Effective Time. The persons who are directors or officers, or both, of Sub
immediately prior to the Effective Time shall, after the Effective Time, be the
directors and officers of the Surviving Corporation, without change until the
earlier of their resignation or removal or their successors have been duly
elected and qualified in accordance with the Certificate of Incorporation and
By-laws of the Surviving Corporation.
Section 1.8 Meeting of the Company's Stockholders. The Company will take
all actions necessary in accordance with the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the DGCL and the Company's Certificate of
Incorporation and By-laws to convene a meeting of its stockholders (the "Company
Stockholder Meeting") to be held as promptly as practicable after October 10,
1998, subject to Section 7.6, to consider and vote upon the adoption of this
Agreement and the authorization of the Merger. The Board of Directors of the
Company shall recommend that the stockholders of the Company vote to adopt this
Agreement and approve the Merger, except to the extent that the Board of
Directors of the Company shall have withdrawn or modified its approval or
recommendation of this Agreement or the Merger as permitted pursuant to Section
7.7. The Company shall use commercially reasonable efforts to solicit from
stockholders of the Company proxies in favor of such approval and adoption and
shall take all other action necessary or, in its opinion, helpful to secure such
favorable vote, except to the extent that the Board of Directors of the Company
shall have withdrawn or modified its approval or recommendation of their
Agreement or the Merger as permitted pursuant to Section 7.7. Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to the first sentence of this Section 1.8 shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of any Transaction Proposal (as defined in Section 7.7).
ARTICLE II
STATUS AND CONVERSION OF SECURITIES
Section 2.1 Status and Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of the holders
thereof:
(a) Each outstanding share of common stock, $.01 par value per share,
of the Company ("Company Common Stock") held by the Company as a treasury
share and each share of Company Common Stock owned by Parent or Sub, shall
be canceled and retired and no consideration shall be delivered in exchange
therefor.
(b) Each outstanding share of Company Common Stock, other than those
shares referred to in Section 2.1(a), shall be converted into a number of a
shares of common stock (the "Conversion Number"), $.01 par value per share,
of Parent ("Parent Common Stock") determined by dividing (i) $6.00 by (ii)
the average closing price of the Parent Common Stock for the twenty trading
days immediately preceding the Closing Date as reported on the New York
Stock Exchange Composite Transaction Tape (the "Average Closing Price") and
rounding to the nearest ten-thousandth of a share.
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The ratio of the number of shares of Parent Common Stock to be exchanged
for each outstanding share of Company Common Stock is hereinafter referred
to as the "Merger Consideration." As of the Effective Time, all such shares
of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such share or shares of Company
Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Conversion Number of fully paid and nonassessable
shares of Parent Common Stock and any cash in lieu of fractional shares of
Parent Common Stock to be issued or paid in consideration thereof upon
surrender of such certificate in accordance with Section 2.5, without
interest.
(c) Each outstanding share of common stock of Sub shall be converted
into one validly issued, fully paid and nonassessable share of common
stock, $.01 par value per share, of the Surviving Corporation.
Section 2.2 Company Stock Options and Warrants.
(a) As soon as practicable following the date of this Agreement, the Board
of Directors of the Company (or, if appropriate, any committee administering the
Company Stock Plans, as defined below) shall adopt such resolutions and take
such other actions as may be required to effect the following:
(i) adjust the terms of all outstanding options and warrants to
purchase Company Common Stock (the "Company Options") granted under any
plan, agreement or other arrangement providing for the grant of options or
warrants to purchase Company Common Stock ("Company Stock Plans"), whether
vested or unvested, as necessary to provide that, at the Effective Time,
each Company Option outstanding immediately prior to the Effective Time
shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under the Company Option (modified to include
provisions for accelerated vesting as set forth on Schedule 4.13), the
number of shares of Parent Common Stock (rounded down to the nearest whole
share) the holder of such Company Option would have received had such
holder exercised such Company Option in full immediately prior to the
Effective Time, at a price per share of Parent Common Stock equal to (A)
the aggregate exercise price for the shares of Company Common Stock
otherwise purchasable pursuant to such Company Option divided by (B) the
aggregate number of shares of Parent Common Stock deemed purchasable
pursuant to such Company Option (each, as so adjusted, an "Adjusted
Option"); provided that such exercise price shall be rounded up to the
nearest whole cent; and
(ii) make such other changes to the Company Stock Plans as Parent and
the Company may agree are appropriate to give effect to the Merger.
(b) The adjustments provided herein with respect to any Company Options
that are "incentive stock options" as defined in Section 422 of the Code shall
be and are intended to be effected in a manner which is consistent with Section
424(a) of the Code.
(c) At the Effective Time, by virtue of the Merger and without the need of
any further corporate action, Parent shall assume the Company Stock Plans, with
the result that all obligations of the Company under the Company Stock Plans,
including with respect to Company Options outstanding at the Effective Time
shall be obligations of Parent following the Effective Time. The Company shall
obtain such consents and effect such amendments and modifications as are
reasonably required to ensure that following the Effective Time, (i) no holder
of a Company Option shall have any right thereunder to acquire any capital stock
of the Company or any of its subsidiaries and (ii) any such Company Option is on
the terms set forth in Section 2.2(a)(i) above.
(d) No later than the Effective Time, Parent shall prepare and file with
the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-8 (or another appropriate form) registering a number of
shares of Parent Common Stock equal to the number of shares subject to the
Adjusted Options that are held by employees or directors of the Company. Such
registration statement shall be kept effective (and the current status of the
prospectus or prospectuses required thereby shall be maintained) at least for so
long as any Adjusted Options may remain outstanding.
(e) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Company Options appropriate notices setting forth such
holders' rights pursuant to the respective Company Stock Plans
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and the agreements evidencing the grants of such Company Options and that such
Company Options and agreements shall be assumed by Parent and shall continue in
effect on the same terms and conditions (subject to the adjustments required by
this Section 2.2 and Schedule 4.13 after giving effect to the Merger).
(f) A holder of an Adjusted Option may exercise such Adjusted Option in
whole or in part in accordance with its terms by delivering a properly executed
notice of exercise to Parent, together with the consideration therefor and the
federal withholding tax information, if any, required in accordance with the
related Company Stock Plan.
(g) Except as otherwise contemplated by this Section 2.2 or as set forth in
Schedule 4.13 hereto and except to the extent required under the respective
terms of the Company Options, all restrictions or limitations on transfer and
vesting with respect to Company Options awarded under the Company Stock Plans or
any other plan, program or arrangement of the Company or any of its
subsidiaries, to the extent that such restrictions or limitations shall not have
already lapsed, shall remain in full force and effect with respect to such
options after giving effect to the Merger and the assumption by Parent as set
forth above.
Section 2.3 Closing of the Company's Transfer Books. At the Effective
Time, the transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock shall thereafter be made. If, after the Effective
Time, certificates representing shares of Company Common Stock are presented to
the Surviving Corporation or the Exchange Agent (as defined in Section 2.4),
they shall be canceled and exchanged for the Merger Consideration, as provided
in Section 2.1.
Section 2.4 Exchange of Certificates. After the Effective Time, such bank
as shall be selected by Parent shall act as exchange agent (the "Exchange
Agent") in effecting the exchange for the Merger Consideration of certificates
which, at the Effective Time, represent shares of Company Common Stock. Upon the
issuance and delivery by the Exchange Agent of the Merger Consideration in
exchange therefor, the certificates which prior to the Effective Time represent
outstanding shares of Company Common Stock shall forthwith be canceled.
Subsequent to the Effective Time, unless and until such an outstanding
certificate is so surrendered, no dividends or distributions of any kind payable
to the holders of record of shares of Parent Common Stock after the Effective
Time shall be paid by Parent to the holder of such an outstanding certificate
representing shares of Company Common Stock nor shall such holder have a right
to receive such dividends and distributions or be entitled to vote on any
matter. Upon the surrender and exchange of such an outstanding certificate, the
holder shall be paid, without interest thereon, the amount of any dividends or
distributions with a record date after the Effective Time which theretofor
became payable with respect to the shares of Parent Common Stock evidenced by
such certificate. If any certificates representing shares of Parent Common Stock
are to be issued in a name other than that in which the certificate representing
shares of Company Common Stock surrendered in exchange therefor is registered,
it shall be a condition of such exchange that the certificate so surrendered
shall be properly endorsed (including signature guarantees) or otherwise in
proper form for transfer and that the person requesting such exchange shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
issuance of such certificate in a name other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Except as provided in
the preceding sentence, the Exchange Agent shall exchange certificates
representing shares of Company Common Stock for certificates representing shares
of Parent Common Stock without charge. Notwithstanding the foregoing, neither
the Exchange Agent nor any other party hereto shall be liable to a holder of
shares of Company Common Stock for any shares of Parent Common Stock or
dividends or distributions made with respect thereto delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Section 2.5 No Fractional Shares. No fractional shares of Parent Common
Stock shall be issued pursuant to Section 2.1. Each stockholder who otherwise
would be entitled to a fractional share interest in a share of Parent Common
Stock shall be entitled to receive an amount in cash (without interest)
determined by multiplying the fractional share interest to which such holder
otherwise would be entitled by the Average Closing Price. Unless and until
certificates theretofore representing shares of Company Common Stock shall have
been surrendered, the holders of any such certificate representing a fraction of
a share of Parent Common
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Stock shall not be entitled to receive the cash payment described above. Such
payment shall be remitted, without interest, after the surrender of the
certificates held by such holder as provided in Section 2.4.
Section 2.6 Adjustments. If, between the date of this Agreement and the
Effective Time, the outstanding shares of Parent Common Stock shall have been
changed into a different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or a non-cash dividend or other distribution thereon, or a cash
dividend shall be declared with a record date within said period (each of the
foregoing events being a "Recapitalization"), then (i) the Conversion Number
shall be correspondingly adjusted; and (ii) if the Recapitalization involves the
issuance, with respect to the Parent Common Stock, of any other security or
property (whether issued by Parent or any related entity), each stockholder of
the Company shall receive in the Merger, in addition to the Merger Consideration
to which he is entitled pursuant to Section 2.1(b), additional shares of Parent
Common Stock having an aggregate value equal to the value of the pro rata share
of the security, other property or cash distributed as a result of the
Recapitalization that such holder would have received if he had been the record
holder, as of the record date for such distribution, of the Parent Common Stock
into which his Company Common Stock will be converted in the Merger. For
purposes of clause (ii), the value of a share of Parent Common Stock shall be
the Average Closing Price.
Section 2.7 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
certificates representing outstanding shares of Company Common Stock in
accordance with the terms of this Article II and any cash paid pursuant to
Section 2.5 shall be deemed to have been issued and paid in full satisfaction of
all rights pertaining to the shares of Company Common Stock theretofore
represented by such certificates, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, certificates for shares of Company
Common Stock are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by law.
Section 2.8 Termination of Exchange Agent. Any portion of the
certificates for shares of Company Common Stock which remains undistributed by
the Exchange Agent to the holders of the certificates for shares of Parent
Company Stock and cash in lieu of fractional shares of Company Common Stock for
six months after the Effective Time shall be delivered to Parent by the Exchange
Agent, upon demand, and any holders of such certificates who have not
theretofore complied with this Article II shall thereafter look only to Parent
for issuance or payment thereto of their claims for shares of Parent Company
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to shares of Parent Common Stock.
Section 2.9 Liability. If any certificates shall not have been
surrendered prior to seven years after the Effective Time (or immediately prior
to such earlier date on which any shares of Parent Common Stock, any cash in
lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect to Parent Common Stock in respect of such
certificates would otherwise escheat to or become the property of any
governmental entity), any such shares, cash, dividends or distributions in
respect of such certificates shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
Section 2.10 Investment of Funds. The Exchange Agent shall invest any
cash deposited with it by Parent for the payment of cash in lieu of fractional
shares, as directed by Parent, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Parent.
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ARTICLE III
REPRESENTATION AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as follows:
Section 3.1 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as it is now being conducted. Parent is duly qualified and licensed to
do business and is in good standing in each jurisdiction in which the character
of its properties, owned or leased, or the nature of its activities makes such
qualifications and licenses necessary, except where the failure to be so
qualified or in good standing would not have a material adverse effect on Parent
and its subsidiaries taken as a whole. Each subsidiary of Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, has the requisite corporate power and
authority to carry on its business as it is now being conducted and is duly
qualified to do business and in good standing in each jurisdiction in which the
character of its properties, owned or leased, or the nature of its activities
makes such qualification necessary, except where the failure to be so organized,
existing, qualified or in good standing would not have a material adverse effect
on Parent and its subsidiaries taken as a whole.
Section 3.2 Authority Relative to this Agreement. Parent has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby has been
duly authorized by Parent's Board of Directors. This Agreement has been duly
executed by Parent and constitutes the legal, valid and binding obligation of
Parent enforceable in accordance with its terms, subject to bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally and general principles of equity. No other corporate proceedings on
the part of Parent are necessary to authorize this Agreement and the
transactions contemplated hereby.
Section 3.3 No Violation. Consummation of the transactions contemplated
by this Agreement will not result in a breach of or the acceleration of any
obligation under, give a right to termination under, or constitute a default or
event of default (or event which with notice or the passage of time, or both,
would constitute a default) under, (i) the Certificate of Incorporation or
By-laws of Parent or the comparable charter or organizational documents of any
of its subsidiaries or joint ventures, or (ii) subject to the governmental
filings and other matters referred to in Section 3.6, any provision of any
indenture, mortgage, lien, lease, agreement, contract, instrument, order,
judgment, decree, ordinance or regulation, or any restriction to which any
property of Parent or any of its subsidiaries is subject or by which Parent, any
of its subsidiaries or any joint venture is bound, the effect of which would
have a material adverse effect on Parent and its subsidiaries taken as a whole.
Subject to the governmental filings and other matters referred to in Section
3.6, none of Parent, any subsidiary of Parent or any joint venture is in
violation of any applicable law, statute, order, rule or regulation promulgated
or judgment entered by any federal, state or local, United States or foreign,
court or governmental authority relating to or affecting the operation, conduct
or ownership of the property or business of Parent or any of its subsidiaries
which violation or violations would (i) have a material adverse effect on Parent
and its subsidiaries taken as a whole, (ii) impair in any material respect the
ability of Parent to perform its obligations under this Agreement or the
Stockholders Agreement or (iii) prevent, significantly delay or impede the
consummation of any of the transactions contemplated by this Agreement or the
Stockholders Agreement. The term "material adverse effect" or "material adverse
change" means, when used in this Agreement in connection with Parent or the
Company, any change or effect (or any development that, insofar as can
reasonably be foreseen, is likely to result in any change or effect) that,
individually or in the aggregate, is materially adverse to the business,
properties, assets, condition (financial or otherwise) or results of operations
of such party and its subsidiaries taken as a whole.
Section 3.4 Capitalization. As of the date hereof, the authorized capital
stock of Parent consists of 150,000,000 shares of Parent Common Stock and
20,000,000 shares of preferred stock, $.01 par value per share. As of June 30,
1998, 44,784,265 shares of Parent Common Stock were outstanding and 4,000 shares
of preferred stock designated Series C Cumulative Preferred Stock were issued
and outstanding. All outstanding
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shares of Parent Common Stock have been duly authorized and validly issued and
are fully paid and non-assessable and not subject to preemptive rights.
Section 3.5 Parent Common Stock to be Issued in the Merger. All shares of
Parent Common Stock that may be issued in the Merger pursuant to Section 2.1
have been duly authorized and, when issued pursuant to this Agreement, will be
validly issued, fully paid and non-assessable and not subject to preemptive
rights.
Section 3.6 Approvals. Except as referred to herein and except for (i)
compliance with the provisions of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder (the "HSR
Act"), the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act"), the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act"), the
applicable securities or blue sky laws of various states, (ii) the filing of the
Certificate of 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 and (iii) such filings with and approvals of the New
York Stock Exchange (the "NYSE") to permit the shares of Parent Common Stock to
be issued pursuant to the Merger to be listed with the NYSE, no filing or
registration with, or authorization, consent or approval of, any governmental
body or authority is necessary for the consummation by Parent of the
transactions contemplated hereby, other than such which, if not made or
obtained, will not, in the aggregate, have a material adverse effect on Parent
and its subsidiaries taken as a whole or prevent or significantly delay the
consummation of any of the transactions contemplated by this Agreement.
Section 3.7 SEC Documents.
(a) Parent has made available to the Company a true and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Parent with the Securities Exchange Commission (the "Commission") in
the last two years (as such documents have since the time of their filing been
amended, the "Parent SEC Documents"), which are all the documents (other than
preliminary materials) that Parent was required to file with the Commission
during such period. As of their respective dates, the Parent SEC Documents and
any forms, reports and other documents filed by Parent after the date of this
Agreement complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such Parent SEC Documents
or such other forms, reports or other documents, and none of the Parent SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Parent and its consolidated
subsidiaries included in the Parent SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto, have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Form 10-Q of the Commission) and fairly present (subject, in the case of the
unaudited statements, to normal, recurring audit adjustments, which were not
individually or in the aggregate material) in all material respects the
financial position of Parent and its consolidated subsidiaries as at the dates
thereof and the results of its operations and cash flows for the periods then
ended.
(b) Parent will deliver to the Company as soon as they become available
true and complete copies of any reports or statements mailed by it to its
stockholders generally or filed by it with the Commission subsequent to the date
hereof and prior to the Effective Time. As of their respective dates, such
reports and statements will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Any financial statement of Parent and its consolidated
subsidiaries included in such report and statement will comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto, will be prepared
in accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the Commission) and will
fairly present (subject, in the case of the unaudited statements, to normal,
recurring
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audit adjustments, which were not individually or in the aggregate material) in
all material respects the financial position of Parent and its consolidated
subsidiaries as at the dates thereof and the results of its operations and cash
flows for the periods then ended.
Section 3.8 Litigation. Except as disclosed in the Parent SEC Documents,
there is no claim, action, proceeding or investigation of which Parent has
received written notice pending or, to the knowledge of Parent, threatened
against or relating to Parent or any of its subsidiaries before any court or
governmental or regulatory authority or body with respect to which, in the
reasonable opinion of Parent, there is a reasonable likelihood of a
determination which will have a material adverse effect on Parent and its
subsidiaries taken as a whole. Neither Parent nor any subsidiary of Parent is
subject to any outstanding order, writ, injunction or decree which is having a
material adverse effect on Parent and its subsidiaries taken as a whole.
Section 3.9 Absence of Certain Changes. Except as disclosed in the Parent
SEC Documents filed and publicly available prior to the date of this Agreement
or as expressly contemplated by this Agreement, since the date of the most
recent balance sheet included in the Parent SEC Documents, there has not been,
occurred or arisen (i) any material adverse change (as defined in Section 3.3)
in Parent and its subsidiaries taken as a whole, (ii) any material loss or
damage to any of the properties of Parent and its subsidiaries (whether or not
covered by insurance) which materially impairs the ability of Parent and its
subsidiaries taken as a whole to conduct their business, (iii) any declaration,
setting aside or payment of any dividend or other distribution with respect to
its capital stock, (iv) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities, in lieu of, or in substitution for shares of its capital stock or
(v) any change in accounting methods, principles or practices by Parent
materially affecting its assets, liabilities or business, except insofar as may
have been required by a change in generally accepted accounting principles.
Section 3.10 Disclosure. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in (i) the
S-4 Registration Statement (as defined in Section 7.4) will, at the time the S-4
Registration Statement is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or (ii) the Proxy Statement (as defined in Section 7.3) will, at
the date the Proxy Statement is first mailed to the stockholders of the Company
or at the time of the Company Stockholder Meeting 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 are made, not misleading. The S-4 Registration
Statement will comply as to form in all material respects with the requirements
of the Securities Act and the rules and regulations promulgated thereunder,
except that no representation or warranty is made by Parent or Sub with respect
to statements made or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by reference
in the S-4 Registration Statement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as it is now being conducted. The Company is duly qualified and
licensed to do business and is in good standing in each jurisdiction in which
the character of its properties, owned or leased, or the nature of its
activities makes such qualifications and licenses necessary, except where the
failure to be so qualified or in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole.
Section 4.2 Subsidiaries. Schedule 4.2 sets forth a true, correct and
complete list of each subsidiary of the Company. Attached as Exhibit A are
complete and correct copies of its Certificate of Incorporation and
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By-laws and the respective certificates of incorporation and by-laws or other
organizational documents of the subsidiaries of the Company, in each case as
amended to the date of this Agreement. Each subsidiary of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, has the requisite corporate power and
authority to carry on its business as it is now being conducted and is duly
qualified and licensed to do business and is in good standing in each
jurisdiction in which the character of its properties, owned or leased, or the
nature of its activities makes such qualifications or licenses necessary, except
where the failure to be so organized, existing, qualified or in good standing
would not have a material adverse effect on the Company and its subsidiaries
taken as a whole. All the outstanding shares of capital stock of each subsidiary
of the Company have been duly authorized and validly issued and are fully paid,
non-assessable and, except as disclosed in Annex I to Schedule 4.2, owned by the
Company or a subsidiary of the Company free and clear of all liens, claims or
encumbrances. There are no voting trusts, voting agreements or similar
understandings applicable to such shares and, except as specifically identified
and disclosed in Schedule 4.2, there are no options, warrants or other rights,
agreements or commitments obligating the Company or any of its subsidiaries to
issue, sell or transfer any shares of capital stock or other securities of any
subsidiary of the Company. Except as disclosed in Schedule 4.2 delivered to
Parent on the date hereof or disclosed in the "Company SEC Documents" (as
defined in Section 4.7), the Company does not directly or indirectly own or have
the right to acquire 5% or more of the common stock, partnership interest,
membership interest, limited liability company interest or other equity
interests in any corporation, partnership, joint venture or other business
association or entity (each such corporation, partnership, joint venture,
limited liability company or other entity, other than the subsidiaries of the
Company, being herein referred to as a "Joint Venture"). Schedule 4.2 sets forth
each agreement relating to a Joint Venture to which the Company or any
subsidiary of the Company is a party and which (i) is material to the business
or prospects of the Company, (ii) relates to any project or venture that is
material to the Company's financial projections, (iii) relates to the governance
of any Joint Venture or (iv) contains any funding obligation (contingent or
otherwise) on the part of the Company or a subsidiary thereof (collectively, the
"Joint Venture Agreements"); and Schedule 4.2 specifically identifies each such
Joint Venture Agreement that contains a "change of control" provision or
provides for funding obligations on the part of the Company or a subsidiary
thereof. Each Joint Venture is duly formed and validly existing in the
jurisdiction of its formation except where the failure to be so duly formed and
validly existing could not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole. The Company and
each subsidiary of the Company is in compliance in all material respects with
all the terms, conditions and obligations applicable to it in respect of each
Joint Venture Agreement to which it is a party, and each Joint Venture Agreement
is in full force and effect except to the extent it has expired in accordance
with its terms. The interests of the Company and its subsidiaries in each Joint
Venture are owned by the Company or the applicable subsidiary of the Company
free and clear of any liens, other than any lien created pursuant to the express
terms of any Joint Venture Agreement. Annex I to Schedule 4.2 is a correct and
complete organizational chart setting forth the ownership structure of the
Company and its subsidiaries and the Joint Ventures, indicating for each such
subsidiary and Joint Venture (A) its name, (B) its place of organization, (C)
whether it is a corporation, limited partnership, general partnership, limited
liability company or other legal entity, and (D) the direct holders of its
equity interests and the percentage thereof owned by each such holder.
Section 4.3 Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by the Company's Board of Directors. This Agreement has been
duly executed by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms, subject to
bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights
generally and general principles of equity. Except for the approval and adoption
by the Company's stockholders of the Merger and this Agreement required by the
DGCL and the Company's Certificate of Incorporation and By-laws, no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement and the transactions contemplated hereby.
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Section 4.4 No Violation. Except as disclosed on Schedule 4.4,
consummation of the transactions contemplated by this Agreement will not result
in a breach of or the acceleration of any obligation under, give a right to
termination under, or constitute a default or event of default (or event which
with notice or the passage of time, or both, would constitute a default) under,
(i) the Certificate of Incorporation or By-laws of the Company or the comparable
charter or organizational documents of any of its subsidiaries or Joint
Ventures, or (ii) subject to the governmental filings and other matters referred
to in Section 4.6, any provision of any indenture, mortgage, lien, lease,
agreement, contract, instrument, order, judgment, decree, ordinance or
regulation, or any restriction to which any property of the Company, any of its
subsidiaries or any Joint Venture is subject or by which the Company, any of its
subsidiaries or any Joint Venture is bound, except, in the case of clause (ii),
such breaches or defaults that would not have a material adverse effect on the
Company and its subsidiaries taken as a whole. Subject to the governmental
filings and other matters referred to in Section 4.6, none of the Company, any
subsidiary of the Company or any Joint Venture is in violation of any applicable
law, statute, order, rule or regulation promulgated or judgment entered by any
federal, state or local, United States or foreign, court or governmental
authority relating to or affecting the operation, conduct or ownership of the
property or business of the Company or any of its subsidiaries which violation
or violations would (i) have a material adverse effect on the Company and its
subsidiaries taken as a whole, (ii) impair in any material respect the ability
of the Company to perform its obligations under this Agreement or the
Stockholders Agreement or (iii) prevent, significantly delay or impede the
consummation of any of the transactions contemplated by this Agreement or the
Stockholders Agreement.
Section 4.5 Capitalization. The authorized capital stock of the Company
consists of 15,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, $.01 par value per share. As of the date hereof, 4,439,755
shares of Company Common Stock were issued and outstanding and 2,927 shares of
Company Common Stock were held in the Company's treasury, and no shares of
preferred stock of the Company were issued and outstanding. Since December 31,
1997, no shares of the Company's capital stock have been issued except as
disclosed on Schedule 4.5. Except for stock options and warrants to acquire not
more than 976,045 and 495,000 shares, respectively, of Company Common Stock,
there are no options, warrants or other rights, agreements or commitments
obligating the Company (now or in the future) to issue, sell or transfer any
shares of its capital stock. Schedule 4.5 sets forth a true, correct and
complete list of all options, warrants or other rights, agreements or
commitments obligating the Company (now or in the future) to issue, sell or
transfer any shares of its capital stock. All of the Company's outstanding
shares of capital stock have been duly authorized and validly issued and are
fully paid and nonassessable and are not subject to preemptive rights. Except as
disclosed in Schedule 4.5, no person or entity holds any phantom stock or other
contractual right the value of which is determined in whole or in part by
reference to the value of any capital stock of the Company or any of its
subsidiaries or the financial performance of the Company or any of its
subsidiaries ("stock equivalents"). There are no outstanding stock appreciation
rights ("SARs") granted by the Company or any of its subsidiaries. There are no
shares of preferred stock or 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 Schedule 4.5, there are no outstanding
contractual obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries. Except as disclosed on Schedule 4.5, there are no outstanding
contractual obligations of the Company to vote or to dispose of any shares of
the capital stock of any of its subsidiaries.
Section 4.6 Approvals. Except as referred to herein and except for (i)
compliance with the provisions of the HSR Act and the Securities Act, (ii) the
filing with the Commission of (x) the Proxy Statement (as defined in Section
7.3) and (y) such reports and filings under Section 13 and 16 of the Exchange
Act, as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (iii) the filing of the Certificate of 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,
and (iv) compliance with any applicable securities or blue sky laws, there is no
filing or registration with, or authorization, consent or approval of, any
governmental body or authority necessary for the consummation by the Company of
the transactions contemplated hereby, other than such which, if not made or
obtained, will not, in the aggregate,
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have a material adverse effect on the Company and its subsidiaries taken as a
whole or prevent or significantly delay the consummation of any of the
transactions contemplated by this Agreement.
Section 4.7 Company SEC Documents.
(a) The Company has made available to Parent a true and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by the Company with the Commission since its initial public offering (as
such documents have since the time of their filing been amended and including
all exhibits thereto the "Company SEC Documents"), which are all the documents
(other than preliminary material) that the Company was required to file with the
Commission since such date. Except as set forth in Schedule 4.7, as of their
respective dates, the Company SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the Commission thereunder applicable to
such Company SEC Documents or such other forms, reports or other documents, and
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
and its consolidated subsidiaries included in the Company SEC Documents comply
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the Commission with respect thereto,
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-QSB of the Commission)
and fairly present (subject, in the case of the unaudited statements, to normal,
recurring audit adjustments, which were not individually or in the aggregate
material) in all material respects the financial position of the Company and its
consolidated subsidiaries as at the dates thereof and the results of its
operations and cash flows for the periods then ended. Except as set forth in the
Company SEC Documents filed and publicly available after December 31, 1997 and
prior to the date of this Agreement, and except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
December 31, 1997, liabilities to attorneys, accountants, and investment bankers
incurred in connection with this transaction or permitted to be incurred
pursuant to Section 6.1, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes thereto.
(b) The Company will deliver to Parent as soon as they become available
true and complete copies of any reports or statements mailed by it to its
stockholders generally or filed by it with the Commission subsequent to the date
hereof and prior to the Effective Time. As of their respective dates, such
reports and statements will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Any financial statements of the Company and its
consolidated subsidiaries included in such reports and statements will comply as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the Commission with respect thereto,
will be prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-QSB of the Commission)
and will fairly present (subject, in the case of the unaudited statements, to
normal, recurring audit adjustments, which were not individually or in the
aggregate material) in all material respects the financial position of the
Company and its consolidated subsidiaries as at the dates thereof and the
results of its operations and cash flows for the periods then ended.
Section 4.8 Litigation. Except as disclosed in the Company SEC Documents,
there is no claim, action, proceeding or investigation of which the Company has
received written notice pending or, to the knowledge of the Company, threatened
against or relating to the Company or any of its subsidiaries before any court
or governmental or regulatory authority or body with respect to which, in the
opinion of the Company, there is a reasonable likelihood of a determination
which will have a material adverse effect on the Company and its subsidiaries
taken as a whole. Neither the Company nor any subsidiary of the Company is
subject to any outstanding order, writ, injunction or decree which is having a
material adverse effect on the Company and its subsidiaries taken as a whole.
Except as disclosed in the Company SEC Documents, there are no
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proceedings of which the Company has received notice pending or, to the
knowledge of the Company, threatened. Schedule 4.8 sets forth all pending or, to
the knowledge of the Company, threatened claims, actions, proceedings or
investigations which involve or would reasonably be expected to involve, claims
against the Company or any of its subsidiaries of $50,000 or more.
Section 4.9 Absence of Certain Changes. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement, as set forth in Schedule 4.9 or as expressly contemplated by this
Agreement (including actions taken after the date of this Agreement that are
expressly permitted to be taken by Section 6.1), since the date of the most
recent balance sheet included in the Company SEC Documents, the Company and its
subsidiaries have conducted their respective businesses only in the ordinary
course, and there has not been, occurred or arisen (i) any material adverse
change (as defined in Section 3.3) in the Company and its subsidiaries taken as
a whole, (ii) any material loss or damage to any of the properties of the
Company or any of its subsidiaries (whether or not covered by insurance) which
materially impairs the ability of the Company and its subsidiaries taken as a
whole to conduct their business, (iii) any declaration, setting aside or payment
of any dividend or other distribution with respect to its capital stock other
than, in the case of a wholly owned subsidiary of the Company, to its parent,
(iv) any split, combination or reclassification of any of its capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, (v)
(x) any granting by the Company or any of its subsidiaries to any director or
officer of any increase in compensation, except in the ordinary course of
business consistent with prior practice, or as required under employment
agreements in effect as of December 31, 1997, that were included as an exhibit
to a Company SEC Document filed and publicly available prior to the date of this
Agreement, (y) any granting by the Company or any of its subsidiaries to any
officer or director of the Company or any of its subsidiaries of any increase in
severance or termination pay, except as part of a standard employment package to
any such person promoted or hired during such period or as was required under
employment, severance or termination agreements in effect as of December 31,
1997 that were included as an exhibit to a Company SEC Document filed and
publicly available prior to the date of this Agreement or (z) any entry by the
Company or any of its subsidiaries into, or any modification of, any employment,
severance, termination or stock option agreement with any officer or director of
the Company or any of its subsidiaries, (vi) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
GAAP or (vii) any increase of compensation for employees that would result in
any additional material cost to the Company or its subsidiaries.
Section 4.10 Licenses, Permits, Authorizations, Etc. To the best of the
Company's knowledge, the Company and each of its subsidiaries has all approvals,
authorizations, consents, licenses, orders, franchises, rights, and
registrations and permits of all governmental agencies, whether federal, state
or local, United States or foreign ("Permits"), required to permit the operation
of its business as presently conducted, the absence of which would have a
material adverse effect on the Company and its subsidiaries taken as a whole.
There has occurred no default under, or violation of, any such Permit, except
for the lack of Permits and for defaults under, or violations of, Permits which
lack, default or violation individually or in the aggregate would not have a
material adverse effect on the Company and its subsidiaries taken as a whole.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any revocation,
cancellation, suspension or modification of any such approval, authorization,
consent, license, order, franchise, right, registration or permit.
Section 4.11 Taxes and Returns. (a) Each of the Company and its
subsidiaries has filed all United States federal, state and local and foreign
income and other tax returns and reports required to be filed by it. All such
returns were at the time of filing complete and correct in all material
respects. Each of the Company and its subsidiaries has paid or made adequate
provision for the payment of all taxes, assessments and governmental charges and
penalties which they have incurred, except such as are being contested in good
faith by appropriate proceedings. No liens for Taxes (as hereinafter defined)
exist with respect to any assets or properties of the Company or any of its
subsidiaries, except for statutory liens for Taxes not yet due.
(b) Neither the Company nor any of its subsidiaries has received any
written notice that any of its Tax returns is under audit or examination by any
taxing authority. Each material deficiency resulting from any
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audit or examination relating to Taxes by any taxing authority has been paid,
except for deficiencies being contested in good faith. No material issues
relating to Taxes were raised in writing by the relevant taxing authority during
any presently pending audit or examination, and no material issues relating to
Taxes were raised in writing by any taxing authority in any completed audit or
examination that can reasonably be expected to recur in a later taxable period.
Neither the Company nor any subsidiary of the Company has been the subject of an
audit by the Internal Revenue Service since 1995. Neither the Company (since the
date of its formation) nor any subsidiary (since the date on which it became a
subsidiary of the Company) has received any notice from the Internal Revenue
Service asserting liability of the Company or any of its subsidiaries for the
Taxes of any other person under Treas. Reg. Section 1.1502-6. To the best of the
knowledge of the Company, the Internal Revenue Service has not asserted against
any person any Tax liability for which the Company or any of its subsidiaries
would be liable under Treas. Reg. Section 1.1502-6.
(c) Neither the Company nor any of its subsidiaries has entered into any
agreement or other document extending, or having the effect of extending, the
period of assessment or collection of any Taxes and neither the Company nor any
subsidiary has executed or filed with any taxing authority a power of attorney
with respect to any Taxes. None of the Company or any of its subsidiaries is a
party to or is bound by any tax sharing agreement, tax indemnity obligation or
similar agreement, arrangement or practice relating to Taxes (including any
advance pricing agreement, closing agreement or other agreement relating to
Taxes with any taxing authority).
(d) None of the Company or any of its subsidiaries will be required to
include in a taxable period on or after the Effective Time taxable income (i)
attributable to income that economically accrued in a taxable period ending on
or before the Effective Time, including as a result of the installment method of
accounting, the completed contract method of accounting or the cash method of
accounting; or (ii) pursuant to Section 481 of the Code (or any comparable
provisions of state, local or foreign law), by reason of a change in accounting
methods or otherwise, as a result of actions taken or circumstances in existence
prior to the Effective Time.
(e) None of the Company or any of its subsidiaries has an excess loss
account, within the meaning of Treasury Regulation Section 1.1502-19, or any
material amount of deferred intercompany gain, within the meaning of Treasury
Regulation Section 1.1502-13. No such amounts will be required to be recognized
as a result of the Merger.
(f) None of the Company or any of its subsidiaries has filed any consent
under Section 341(f) of the Code. No property of the Company or any of its
subsidiaries is "tax-exempt use property" within the meaning of Section 168(h)
of the Code, and none of the Company or any of its subsidiaries is a party to
any lease made pursuant to Section 168(f)(8) of the Internal Revenue Code of
1954.
(g) For purposes of this Agreement, (i) the term "Taxes" shall include all
Federal, state, local and foreign income, franchise, property, sales, excise, ad
valorem, gross receipts, withholding and other taxes, tariffs or governmental
charges of any nature whatsoever, including any interest or penalties imposed
thereon. and (ii) the term "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time. For purposes of this Section 4.11 and Section 4.12
only, the term "subsidiary" shall mean any corporation 80% or more of the equity
value of which is directly or indirectly owned by the Company or a subsidiary of
the Company.
Section 4.12 ERISA, etc. Schedule 4.12 lists each employee benefit plan
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) and each other employment, deferred compensation,
bonus, incentive, severance, termination, disability, death benefit, pension,
profit sharing, hospitalization, medical, stock option, restricted stock, stock
appreciation right, vacation, sick pay and other material fringe benefit plan,
program or arrangement that provides benefits to current or former directors,
officers or employees of the Company or its subsidiaries or with respect to
which the Company or its subsidiaries have any liability (the "Plans"). The
Company and each Plan is in material compliance with ERISA and all other laws
applicable to the Plans and the Plans have been administered and operated in
material compliance with their terms.
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(a) Each Plan which is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service and nothing has occurred since the date of that letter that could
adversely affect such Plan's status under Section 401(a) of the Code. None of
the Plans has an "accumulated funding deficiency" (as defined in Section 412 of
the Code), whether or not waived, and no application for a waiver of the minimum
funding requirements of Section 412 of the Code has been or is expected to be
filed. Neither the Company nor any entity required to be treated as a single
employer with the Company under Section 414 of the Code has any unsatisfied
liability under Title IV of ERISA (except for insurance payments not yet due)
and the consummation of the transactions contemplated by this Agreement will not
give rise to any such liability. Except as described in Schedule 4.12, or as
reflected in the actuarial report for the year commencing August 1, 1996 for the
"Retirement Plan for Hourly-Rate Employees of Structural Polymer Systems, Inc."
effective as of August 1, 1994 (the "Retirement Plan"), which actuarial report
is attached as an Addendum to Schedule 4.12 and incorporated therein, none of
the Plans that is a "defined benefit plan" (as defined in Section 3(35) of
ERISA) has any "unfunded benefit liabilities" (as defined in Section 4001(a)(18)
of ERISA).
(b) Except as described in Schedule 4.12, each of the Plans may be amended
or terminated after the Effective Time without material liability to the Plan,
the Company, Parent or Sub.
(c) No "prohibited transaction" (as defined in Section 406 of ERISA and
Section 4975 of the Code) or "reportable event" (as defined in Section 4043 of
ERISA) (but excluding any reportable event for which the reporting requirement
has been waived) has occurred with respect to any Plan. To the knowledge of
Company, there are no facts or circumstances that would materially change the
funded status of any Plan that is a "defined benefit plan" (as defined in
Section 3(35) of ERISA) since the date of the most recent actuarial report for
such Plan. No Plan is a "multiemployer plan" within the meaning of Section 3(37)
of ERISA.
(d) Except as described in Schedule 4.12, the consummation of the
transactions contemplated by this Agreement (alone or in conjunction with any
other event) will not increase the amount, or accelerate the vesting or payment,
of benefits or compensation payable to current or former directors, officers or
employees of the Company or its subsidiaries. Except for the payments and
benefits described in Schedule 4.12, the deduction of any amount payable
pursuant to any Plan or other agreement shall not be subject to disallowance
under Section 162(m) or Section 280G of the Code. Neither the Company nor any of
its subsidiaries is obligated to pay to, or on behalf of, any current or former
employee or director any Taxes imposed under Section 4999 of the Code.
Section 4.13 Employment Agreements. Except as disclosed in Schedule 4.13,
neither the Company nor any of its subsidiaries is a party to, or bound by, any
employment agreement with any person which provides for the payment of any
consideration by the Company or any of its subsidiaries (or Parent or the
Surviving Corporation) to such person as a result both of the termination of
such person's employment with the Company (or the Surviving Corporation) or any
subsidiary thereof and the consummation of the transactions contemplated hereby.
Section 4.14 Opinion of Financial Advisor. The Company has received the
opinion of Wm. Sword & Co., Inc., dated July 8, 1998 and to the effect that, as
of such date, the financial terms of the Merger are fair to the stockholders of
the Company, from a financial point of view, copies of which opinion have been
delivered to Parent.
Section 4.15 Disclosure. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the
S-4 Registration Statement will, at the time the S-4 Registration Statement is
filed with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders or
at the time of the Company Stockholder Meeting, 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 are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder. No
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representation is made by the Company with respect to statements made or
incorporated by reference in the Proxy Statement or the S-4 Registration
Statement based on information supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Proxy Statement or the S-4
Registration Statement.
Section 4.16 State Takeover Statutes. The Board of Directors of the
Company has approved the Merger, this Agreement and the Stockholders Agreement,
and such approval is sufficient to render the provisions of Section 203 of the
DGCL inapplicable to the Merger, this Agreement, the Stockholders Agreement and
the other transactions contemplated by this Agreement and the Stockholders
Agreement. To the Company's knowledge, no other state takeover statute or
similar statute or regulation applies or purports to apply to the Merger, this
Agreement, the Stockholders Agreement or the other transactions contemplated by
this Agreement or the Stockholders Agreement, except to the extent that
provisions of the California General Corporation Law relating to dissenters'
appraisal rights may apply by operation of Section 2115 thereof.
Section 4.17 Compliance with Laws. To the best of the Company's
knowledge, the Company is in compliance with all applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees and orders of any
governmental body or authority (collectively, "Legal Provisions") applicable to
its business or operations, except for instances of possible noncompliance that,
individually or in the aggregate, would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole, or prevent or materially
delay the consummation of the Merger or the transactions contemplated by the
Stockholders Agreement. Except as set forth in the Company SEC Documents, none
of the Company or any of its subsidiaries has received any written communication
during the past two years from a governmental body or authority that alleges
that the Company or a subsidiary of the Company is not in compliance in any
material respect with any Legal Provision. This Section 4.17 does not relate to
matters with respect to Taxes, which are the subject of Section 4.11, or to
Environmental Law, which are the subject of Section 4.22, or to Labor Relations,
which are the subject of Section 4.18, or Intellectual Property, which is the
subject of Section 4.19.
Section 4.18 Labor Relations. Except as disclosed in the Company SEC
Documents or as set forth on Schedule 4.18, neither the Company nor any of its
subsidiaries is the subject of any material suit, action or proceeding which is
pending or, to the knowledge of the Company, threatened, asserting that the
Company or any of its subsidiaries has committed an unfair labor practice
(within the meaning of the National Labor Relations Act or applicable state
statutes) or seeking to compel the Company or any of its subsidiaries to bargain
with any labor organization as to wages and conditions of employment. No
material strike or other labor dispute involving the Company or any of its
subsidiaries is pending or, to the knowledge of the Company, threatened, and, to
the knowledge of the Company, there is no activity involving any employees of
the Company or any of its subsidiaries seeking to certify a collective
bargaining unit or engaging in any other organization activity. Schedule 4.18
sets forth a true and correct list of all collective bargaining agreements to
which the Company or any of its subsidiaries are subject and, except as
disclosed in such Schedule, there has not been any adoption or amendment in any
material respect by the Company or any of its subsidiaries of any such
collective bargaining agreement.
Section 4.19 Intellectual Property. Schedule 4.19 sets forth a true and
complete list of all material patents, trademarks (registered, unregistered or
common law), trade names, service marks and registered copyrights and, in each
case, applications therefor owned, used or filed by or licensed to the Company
and its subsidiaries ("Intellectual Property Rights") and, with respect to
registered trademarks, contains a list of all jurisdictions in which such
trademarks are registered or applied for and all registration and application
numbers. Except as set forth in Schedule 4.19, each of the Company and its
subsidiaries owns or, to the knowledge of the Company, has the right to use,
without payment to any other party, the Intellectual Property Rights, and the
consummation of the transactions contemplated hereby will not alter or impair
such rights in any material respect. Except as set forth on Schedule 4.19,
neither the Company nor any of its subsidiaries has received any oral or written
notice from any other person pertaining to or challenging the right of the
Company or any of its subsidiaries to use any of the Intellectual Property
Rights. No claims are pending by any person with respect to the ownership,
validity, enforceability or use of any such Intellectual Property Rights
challenging or questioning the validity or effectiveness of any of the foregoing
which claims could reasonably be expected to have a material adverse effect on
the Company and its subsidiaries, taken as a whole. None of
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the Intellectual Property Rights, other than patent rights, and to the best of
the Company's knowledge, none of the Intellectual Property Rights which are
patent rights, and none of the products and services sold by the Company or its
subsidiaries violate or infringe upon in any material respect any rights
relating to any intellectual property or similar rights of any other person, and
none of the Company and its subsidiaries has received any notice alleging such a
violation or infringement. Neither the Company nor any of its subsidiaries has
made any claim of a violation or infringement by others of its rights to or in
connection with the Intellectual Property Rights.
Section 4.20 Title to Properties. (a) The Company and its subsidiaries
have good and marketable title to, or valid leasehold interests in, all its
material properties and assets except for such as are no longer used or useful
in the conduct of its businesses or as have been disposed of in the ordinary
course of business and except for defects in title, easements, restrictive
covenants and similar encumbrances that individually or in the aggregate would
not materially interfere with the ability of the Company to conduct its
businesses as currently conducted. Except as set forth in Schedule 4.20, all
such material assets and properties, other than assets and properties in which
the Company has a leasehold interest, are free and clear of all Liens, except
for Liens that individually or in the aggregate would not materially interfere
with the ability of the Company to conduct its businesses as currently
conducted.
(b) The Company and its subsidiaries have complied in all material respects
with the terms of all material leases to which it is a party and under which it
is in occupancy, and all such leases are in full force and effect, except for
such noncompliance or failure to be in full force and effect as would not
individually or in the aggregate have a material adverse effect on the Company
and it subsidiaries, taken as a whole. The Company and its subsidiaries enjoy
peaceful and undisturbed possession under all such material leases, except for
failures to do so that would not individually or in the aggregate have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
Section 4.21 Contracts. Except as disclosed in the Company SEC Documents
or in Schedule 4.7, as of the date hereof, there are no contracts or agreements
that are of a nature required to be filed as an exhibit under the Exchange Act
and the rules and regulations promulgated thereunder. The Company is not in
violation of nor in default under (nor does there exist any condition which upon
the passage of time or the giving of notice or both would cause such a violation
of or default under) any lease, permit, concession, franchise, license or any
other contract, agreement, arrangement or understanding to which it is a party
or by which it or any of its properties or assets is bound, except for
violations or defaults that individually or in the aggregate would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
Neither the Company nor any of its subsidiaries has entered into any contract,
agreement, arrangement or understanding with any affiliate of the Company that
is currently in effect other than agreements that are (i) disclosed in the
Company SEC Documents or (ii) not of a nature required to be disclosed in the
Company SEC Documents.
Section 4.22 Environmental Matters. Except as set forth in Schedule 4.22:
(a) the Company and its subsidiaries hold, and are in material
compliance with, all permits, registrations, licenses and authorizations
from governmental authorities required for the Company and its subsidiaries
to conduct their business operations under Environmental Laws
("Environmental Permits");
(b) the Company and its subsidiaries are in material compliance with
all Environmental Laws and have not received any communication from any
governmental body or authority or other person that alleges that the
Company or any of its subsidiaries is not in compliance with any
Environmental Laws or Environmental Permits or is otherwise liable under
Environmental Laws, including claims for personal injury, property damage
or damage to natural resources;
(c) neither the Company nor any of its subsidiaries has entered into
or agreed to any court decree or order or is subject to any judgment,
decree or order relating to compliance with any Environmental Law or to
investigation or cleanup of a Hazardous Substance, and no fine or penalty
has been assessed against the Company or any of its subsidiaries under any
Environmental Law;
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(d) no Lien has been attached, asserted, or threatened, to or against
any real or personal property of the Company or any of its subsidiaries
pursuant to any Environmental Law;
(e) there has been no treatment, storage, disposal or Release of any
Hazardous Substance (except in compliance with applicable law) on any
property currently or, to the knowledge of the Company, formerly owned,
leased or operated by the Company or any of its subsidiaries at any time in
any manner;
(f) the Company has not received an information request regarding, nor
has the Company or any of its subsidiaries been named a potentially
responsible party for, any Federal National Priorities List site (as that
term is defined under Environmental Law) or for any other site under
analogous state law;
(g) all aboveground or underground storage tanks on, under or about
property owned, operated or leased by the Company or any of its
subsidiaries, whether in existence or the subject of any currently planned
or budgeted improvement of any property owned, leased or operated by the
Company or any of its subsidiaries are permitted installations under the
terms of the Company's Environmental Permits or are exempted under
applicable Environmental Laws, and any former aboveground or underground
tanks on such property have been removed in accordance with Environmental
Law and no residual contamination remains at such property in excess of
applicable standards under Environmental Law;
(h) There are no polychlorinated biphenyls in any article, container
or equipment on, under or about property owned, operated or leased by the
Company or any of its subsidiaries;
(i) there is no friable asbestos at, on, under or within any property
owned, leased or operated by the Company or any of its subsidiaries and no
products are currently manufactured by the Company or any of its
subsidiaries using asbestos or asbestos-containing materials;
(j) no notice or other filing, consent or approval is required under
any Environmental Law in connection with or as a result of the transactions
contemplated by this Agreement;
(k) the Company has delivered or otherwise made available for
inspection to Parent or its agents true, complete and correct copies of any
reports, studies, assessments, analyses, evaluations, tests, employee
monitoring data and results of any soil or groundwater investigations, in
each case prepared since December 1995, possessed, available to or
initiated by or on behalf of the Company and pertaining to the existence or
Release of, or exposure to, Hazardous Materials in, on, beneath or adjacent
to any property currently or formerly owned, leased or operated by the
Company or any of its subsidiaries; and
(l) the Company and its Subsidiaries have correctly, timely and
appropriately reported all of the materials used in the conduct of its
business which are required to be reported to the Environmental Protection
Agency for listing in the Toxic Substance Control Act (15 U.S.C. Section
2601 et seq. ("TSCA") inventory and except as set forth on Schedule 4.22,
all products and materials manufactured, processed or otherwise used by the
Company or any of its subsidiaries are listed in the TSCA inventory or are
otherwise exempt from TSCA.
As used in this Agreement, the term "Environmental Law" means any and all
applicable treaties, laws, regulations, enforceable requirements, binding
determinations or agreements, orders, decrees, judgments or injunctions issued,
promulgated or entered into by any Governmental Entity, relating to the
environment, natural resources, or to the management, release or threatened
release of, or exposure to, Hazardous Substances.
As used in this Agreement, the term "Hazardous Substance" means all
explosive or regulated radioactive materials or substances, hazardous or toxic
materials, wastes or chemicals, petroleum and petroleum products (including
crude oil or any fraction thereof), and all other materials or chemicals
regulated pursuant to any Environmental Law.
As used in this Agreement, the term "Release" shall have the meaning set
forth in the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601(22).
Section 4.23 Qualifications. Schedule 4.23 sets forth a true and correct
list of the qualifications for the products of the Company and its subsidiaries
and identifies such qualifications by product, customer,
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application and specification number. To the knowledge of the Company, all
products sold by the Company or its subsidiaries pursuant to qualification
requirements established by the Company's customers were produced in a manner
consistent with the requirements of such qualifications, except where the
failure to do so would not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
Section 4.24 Certain Transactions. Schedule 4.24 sets forth a true and
correct list of all agreements or other arrangements between the Company or its
subsidiaries and affiliates, directors or officers of the Company or its
subsidiaries or with any other company that has one or more directors on its
board of directors or one or more officers that are also directors or officers
of the Company or any of its subsidiaries, which are not otherwise disclosed in
the Company SEC Documents.
Section 4.25 Insurance. Set forth on Schedule 4.25 is a true and correct
list of insurance policies that the Company and its subsidiaries maintain with
respect to their businesses, properties or employees. Such policies are in full
force and effect, all premiums due and payable thereon have been paid and no
notice of cancellation or termination has been received with respect to any such
policy.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the Company
as follows:
Section 5.1 Organization. Sub is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. Attached as Exhibit B
hereto are complete and correct copies of the Certificate of Incorporation and
By-Laws of Sub, in each case as amended to the date of this Agreement.
Section 5.2 Authority Relative to this Agreement. Sub has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Sub and approved by its sole stockholder, and no
other corporate proceedings on the part of Sub are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
executed by Sub and constitutes the legal, valid and binding obligation of Sub
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally and general principles of equity.
Section 5.3 No Violation. Consummation of the transactions contemplated
by this Agreement will not result in a breach of or the acceleration of any
obligation under, give a right to termination under, or constitute a default or
event of default (or event which with notice or the passage of time, or both,
would constitute a default) under, (i) the Certificate of Incorporation or
By-laws of Sub or the comparable charter or organizational documents of any of
its subsidiaries or joint ventures, or (ii) subject to the governmental filings
and other matters referred to in Section 3.6, any provision of any indenture,
mortgage, lien, lease, agreement, contract, instrument, order, judgment, decree,
ordinance or regulation, or any restriction to which any property of Sub or any
of its subsidiaries is subject or by which Sub or any of its subsidiaries or
joint ventures is bound, the effect of which would have a material adverse
effect on Parent and its subsidiaries taken as a whole. Subject to the
governmental filings and other matters referred to in Section 3.6, none of Sub,
any subsidiary of Sub or any joint venture of Sub is in violation of any
applicable law, statute, order, rule or regulation promulgated or judgment
entered by any federal, state or local, United States or foreign, court or
governmental authority relating to or affecting the operation, conduct or
ownership of the property or business of Sub or any of its subsidiaries which
violation or violations would (i) have a material adverse effect on Parent and
its subsidiaries taken as a whole, (ii) impair in any material respect the
ability of Sub to perform its obligations under this Agreement or the
Stockholders Agreement or (iii) prevent, significantly delay or impede the
consummation of any of the transactions contemplated by this Agreement or the
Stockholders Agreement.
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Section 5.4 Approvals. Except as referred to in Sections 3.6 and 4.6,
there is no legal impediment to execution and delivery of this Agreement by Sub
or to its consummation of the transactions contemplated hereby, and no filing or
registration with, or authorization, consent or approval of, any public body or
authority is necessary for the consummation by any of them of the transactions
contemplated hereby, other than such as may be required solely because the
Company is a party to the transactions contemplated hereby and other than such
which, if not made or obtained, will not, in the aggregate, have a material
adverse effect on Sub.
Section 5.5 Capitalization. All of the outstanding shares of capital
stock of Sub have been duly authorized and validly issued and are fully paid,
non-assessable and wholly-owned, directly or indirectly, by Parent free and
clear of all liens, claims or encumbrances. There are no options, warrants or
other rights, agreements or commitments obligating Parent or Sub to issue, sell
or transfer any shares of capital stock or other securities of Sub.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Prior to the Effective
Time. The Company covenants and agrees that, after the date hereof and prior to
the Effective Time, except as otherwise consented to or approved in writing by
Parent which consent will not unreasonably be withheld or delayed or
specifically provided for in this Agreement:
(a) the business of the Company and its subsidiaries shall be
conducted only in the ordinary and usual course consistent with past
practice and the Company and its subsidiaries shall use commercially
reasonable efforts to preserve their relationships with customers,
suppliers, licensors, distributors and other parties having business
dealings with them;
(b) neither the Company nor any of its subsidiaries shall or shall
propose to:
(i) amend its charter or by-laws or other comparable organizational
documents;
(ii) declare, set aside or pay any dividend or other distribution
or payment in respect of shares of its capital stock owned by any person
(other than to the Company or a wholly-owned subsidiary of the Company);
(iii) issue, grant, sell or pledge or agree to issue, grant, sell,
or pledge any shares of, or rights of any kind (including convertible or
exchangeable securities and options, warrants and other rights) to
acquire any shares of, the capital stock (or other voting securities or
securities convertible into or exchangeable for any such shares, rights
or voting securities) of the Company or any of its subsidiaries other
than, in the case of the Company, shares of Company Common Stock
issuable pursuant to the terms of outstanding stock options and warrants
of the Company disclosed on Schedule 4.5 and shares of certain
subsidiaries pledged to secure existing credit facilities as described
on Schedule 4.20;
(iv) other than sales of products of the Company or any of its
subsidiaries in the ordinary course and other than assets encumbered to
secure existing credit facilities, dispose of, encumber or mortgage any
assets or properties individually in excess of $100,000 and collectively
in excess of $250,000;
(v) purchase or otherwise acquire any outstanding shares of its
capital stock other than as contractually required under to the
Company's employee stock option plans;
(vi) waive, release, grant or transfer any rights of material value
or modify or change any material existing contract, license, agreement,
commitment or arrangement in a way that is adverse to the Company or its
subsidiaries;
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(vii) make any material Tax election or settle or compromise any
material Tax liability of the Company or any of its subsidiaries other
than such elections as are required to be made in connection with the
filing of regular tax returns in the ordinary course of business;
(viii) take or agree to take any action that would prevent the
Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code;
(ix) enter into or otherwise agree to be bound by any agreement,
contract, arrangement or instrument that would be required to be filed
by the Company or any of its subsidiaries as an exhibit to a Form 10-K
under the Exchange Act;
(x) except as contemplated in this Agreement, acquire or agree to
acquire (x) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or
other business organization or division thereof or (y) any assets other
than purchases of inventory in the ordinary course of business and
except for capital expenditures (which are covered in clause (xii)
below);
(xi) (y) other than in the ordinary course of business under
existing credit facilities, incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person (other than as set
forth on Schedule 6.1), issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with
past practice or (z) make any loans, advances or capital contributions
to, or investments in, any other person (except as set forth on Schedule
6.1), other than extensions of credit to customers and advances to
employees, in each case in the ordinary course of business consistent
with past practice;
(xii) except for the items listed on Schedule 6.1 make or agree to
make any new capital expenditure or expenditures which, individually, is
in excess of $50,000, or, in the aggregate, are in excess of $200,000;
(xiii) discharge, settle or satisfy any claims, whether or not
pending before a Governmental Entity, that have a material adverse
effect on the Company and its subsidiaries, taken as a whole, or waive
any material benefits of, or agree to modify in any materially adverse
respect any confidentiality, standstill or similar agreements to which
the Company is a party;
(xiv) except in the ordinary course of business or as set forth in
Schedule 6.1 hereto, enter into any contracts, agreements, binding
arrangements or binding understandings relating to the distribution,
sale, license or marketing by third parties of the Company's products
(provided that no agreements for distribution or licensing other than
those set forth on Schedule 6.1 will be entered into), other than
pursuant to any such agreements currently in place in accordance with
their terms as of the date hereof and subject to the provisions in
Schedule 6.1;
(xv) except as set forth in Schedule 6.1 hereto, form any
subsidiary to the Company;
(xvi) except as required by GAAP, make any change in accounting
methods, principles or practices;
(xvii) cancel or permit to lapse any insurance policy in effect on
the date of this Agreement, except in the case of replacement of any
such policy with substantially equivalent coverage;
(xviii) fail to conduct reasonable maintenance in the ordinary
course of business consistent with past practice with respect to all
machinery and equipment currently being used in the conduct of the
business of the Company and its subsidiaries;
(xix) take any action either to accelerate or cash out the value of
any Company Option;
(xx) adopt, amend or agree to adopt or amend any of the Plans
except as required by law; or
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(xxi) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing except as permitted
above; and
(c) neither the Company nor any of its subsidiaries will take or agree
to take any of the following actions: (i) increase the compensation payable
or to become payable by it to any of its directors, officers or employees,
(ii) make any payment or provision or commitment with respect to any bonus,
profit sharing, thrift, employee stock ownership, pension, retirement,
deferred compensation, welfare benefit, employment or other payment plan,
agreement or arrangement for the benefit of directors, officers or
employees of the Company or any of its subsidiaries, except in the ordinary
course of the administration of the pension, retirement or welfare benefit
plans, agreements or arrangements, (iii) grant any stock options, any stock
appreciation rights or any other stock-based awards, (iv) enter into any
employment agreement or other contract or arrangement with respect to the
performance of personal services (other than services by the Company's
accountants, investment bankers and legal counsel) which is not terminable
without liability by it on 30 days' notice (or less) and which involves an
annual rate of compensation in excess of $75,000 or (v) make any loan to,
or enter into any other transaction with, any officer or director of the
Company or any of its subsidiaries or any affiliate of any such officer or
director except for fees to law firms of which directors are members,
directors' fees, officers' salaries and reimbursement of out-of-pocket
expenses.
Section 6.2 Conduct of Business by Parent. During the period from the
date of this Agreement to the Effective Time of the Merger, Parent shall not:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than regular
quarterly cash dividends (in an amount determined in a manner consistent
with Parent's past practice) with customary record and payment dates or
(ii) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in lieu of or in
substitution for shares of its capital stock;
(b) amend Parent's certificate of incorporation or by-laws in a manner
that would be materially adverse to the holders of Parent Common Stock (it
being understood that an amendment to the certificate of incorporation of
Parent increasing the number of authorized shares of Parent Common Stock or
other capital stock of Parent shall not be deemed to be materially adverse
to the holders of Parent Common Stock); or
(c) authorize, or commit or agree to take, any of the foregoing
actions.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information; Confidentiality.
(a) The Company shall, and shall cause its subsidiaries to, afford to
Parent and to Parent's accountants, counsel and other representatives full
access during normal business hours throughout the period prior to the Effective
Time to all of its properties, books, contracts, commitments and records and,
during such period, the Company shall furnish promptly to Parent all information
concerning its business, properties and personnel as Parent may reasonably
request; provided that the Company need not provide information concerning
actual prices charged to customers for materials or copies of contracts with
customers; however, the Company will provide redacted copies of such contracts.
(b) Except as required by law, Parent will, and will cause its
subsidiaries, counsel, accountants and other representatives to, keep any
confidential information and documents heretofore or hereafter obtained pursuant
to or in connection with this Agreement and the transactions contemplated hereby
in accordance with the Confidentiality Agreement, dated June 15, 1997, between
Parent and the Company (the "Confidentiality Agreement"). Parent agrees that the
Company will be entitled to equitable relief, including injunction, in the event
of any breach of the provisions of this Section 7.1 and that Parent will not
oppose the granting of such relief.
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(c) Except as required by law or the regulations of any securities
exchange, (i) each of the Company and Parent shall hold, and shall cause its
respective officers, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information in
confidence until such time as such information becomes publicly available
(otherwise than through the wrongful act of any such person) and shall use its
best efforts to ensure that such persons do not disclose such information to
others without the prior written consent of the Company or Parent, as the case
may be; and (ii) in the event of the termination of this Agreement for any
reason, each of the Company and Parent shall promptly return, or cause to be
promptly returned, or destroy all tangible evidence of such confidential
information so obtained from the other party or any of its subsidiaries and any
copies made of such documents to such other party.
Section 7.2 HSR Act. Subject to the last sentence of Section 7.6, Parent
and the Company shall take all reasonable actions necessary to file as soon as
practicable all requisite applications under the HSR Act and to respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any state attorney
general or other governmental entity in connection with antitrust matters.
Section 7.3 Stockholder Approval; Proxy Statement. The Company shall
prepare, shall file with the Commission under the Exchange Act as promptly as
practicable, and shall use all commercially reasonable efforts to have cleared
by the Commission, a proxy statement with respect to the meeting of the
Company's stockholders referred to in Section 1.8. The term "Proxy Statement"
shall mean such proxy statement at the time it initially is mailed to the
Company's stockholders and all amendments or supplements thereto duly filed and
similarly mailed. Parent, Sub and the Company each agree to correct promptly
(but in no event later than the date of the Company Stockholder Meeting referred
to in Section 1.8) any information provided by it for use in the Proxy Statement
which shall have become false or misleading. The Proxy Statement shall be the
prospectus of Parent to be included in the "S-4 Registration Statement," as
defined in Section 7.4.
Section 7.4 S-4 Registration Statement. Parent shall prepare and shall
file with the Commission as promptly as practicable after the Company receives
comments from the Commission on the Proxy Statement a Registration Statement on
Form S-4 (such Registration Statement at the time it becomes effective and all
amendments thereto duly filed referred to herein as the "S-4 Registration
Statement") under the Securities Act and shall use all commercially reasonable
efforts to have the S-4 Registration Statement declared effective by the
Commission as promptly as practicable. Parent shall also take any action
required to be taken under state blue sky or securities laws, and the Company
shall furnish Parent with all information concerning the Company and its
stockholders and shall take such other action as Parent may reasonably request
in connection with any such actions. Parent, Sub and the Company each agree to
correct promptly (but in no event later than the date of the Company Stockholder
Meeting referred to in Section 1.8) any information provided by it for use in
the S-4 Registration Statement which shall have become false or misleading.
Section 7.5 Fees and Expenses. (a) Except as provided below, if the
Merger is not consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such cost of expense, provided that the aggregate cost of
printing and mailing the Proxy Statement and filing the Proxy Statement and the
S-4 Registration Statement with the Commission shall be borne one-half by the
Company and one-half by Parent.
(b) The Company shall pay to Parent upon demand (i) a fee of $2,000,000
(the "Parent Termination Fee"), payable in immediately available funds, plus
(ii) all Expenses (as defined below), if (A) Parent terminates this Agreement in
accordance with Section 9.1(iii), (B) the Company terminates this Agreement in
accordance with Section 9.1(vi), (C) Parent or the Company terminates this
Agreement in accordance with Section 9.1(vii) and prior to such termination a
bona fide Transaction Proposal shall have been made, (D) Parent or the Company
terminates this Agreement in accordance with Section 9.1(ii)(a) and (1) prior to
such termination a bona fide Transaction Proposal shall have been made and (2)
within 18 months of such termination an agreement relating to a Transaction
Proposal is entered into by the Company or any affiliate thereof with (or an
event occurs which event, if it were embodied in a proposal would be the subject
of a Transaction Proposal by) any person making such Transaction Proposal, or
(E) such payments are otherwise
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required by Section 7.7. "Expenses" means all commercially reasonable
out-of-pocket fees and expenses incurred or paid by or on behalf of Parent or
any of its affiliates in connection with the Merger or the consummation of any
of the transactions contemplated by this Agreement, including all fees and
expenses of counsel, investment banking firms, accountants, experts and
consultants to Parent or any or its affiliates and all fees and expenses of
banks, investment banking firms and other financial institutions and their
respective counsel, accountants and agents in connection with arranging or
providing financing; provided that such fees and expenses have been incurred
prior to termination of this Agreement.
Section 7.6 Additional Agreements; Other Action. On the terms and subject
to the conditions herein provided, and subject to Section 1.8 hereof, each of
the parties hereto agrees to use commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using commercially reasonable efforts (i) to obtain all necessary
waivers, consents and approvals, to give all notices and to effect all necessary
registrations and filings (including, without limitation, filings under the HSR
Act) and (ii) to defend any lawsuits, or other legal proceedings, whether
judicial or administrative and whether brought derivatively or on behalf of
third parties (including governmental agencies or officials), challenging this
Agreement or the consummation of the transactions contemplated hereby.
Notwithstanding the foregoing, Parent and its subsidiaries shall not be required
to take any action pursuant to the foregoing that could reasonably be expected
to (i) impact in a materially adverse manner the economic or business benefits
of the transactions contemplated by this Agreement to such party or (ii) to
result in the imposition of a condition or restriction (w) seeking to prohibit
or limit the ownership or operation by Parent, Sub, the Company, the Surviving
Corporation or any of their respective subsidiaries of any material portion of
the business or assets of the Company, Parent or any of their respective
subsidiaries or to compel the Company, Parent, Sub, the Surviving Corporation or
any of their respective subsidiaries to dispose of or hold separate any material
portion of the business or assets of the Company, Parent or any of their
respective subsidiaries, (x) seeking to impose limitations on Parent's ability
to acquire or hold, or exercise full rights of ownership of, Company Common
Stock or any shares of capital stock of the Surviving Corporation, including,
without limitation, the right to vote such capital stock on all matters properly
presented to the stockholders of the Surviving Corporation, (y) seeking to
prohibit Parent from effectively controlling in any material respect the
business or operations of the Company or any Company subsidiary or (z) which
otherwise is reasonably likely to have a material adverse effect on either the
Company and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole.
Section 7.7 Acquisition Proposals. (a) Neither the Company nor any of its
subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of its subsidiaries
authorize or permit any of its or their officers, directors, employees, agents,
representatives, advisors or subsidiaries to, (a) solicit, initiate or take any
action knowingly to facilitate or encourage the submission of inquiries,
proposals or offers from any person (other than Sub or Parent) relating to (i)
any acquisition or purchase of 15% or more of the consolidated assets of the
Company and its subsidiaries or of over 15% of any class of equity securities of
the Company or any of its subsidiaries, (ii) any tender offer (including a self
tender offer) or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of the Company
or any of its subsidiaries, (iii) any merger, consolidation, business
combination, sale of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries whose assets, individually or in the aggregate, constitute more
than 15% of the consolidated assets of the Company other than the transactions
contemplated by this Agreement, or (iv) any other transaction the consummation
of which would or could reasonably be expected to impede, interfere with,
prevent or materially delay the Merger (collectively, "Transaction Proposals"),
or agree to or endorse any Transaction Proposal, or (b) enter into or
participate in any discussions, negotiations or agreements regarding any
Transaction Proposal, or furnish to any other person any information with
respect to its business, properties or assets or any of the foregoing, or
otherwise cooperate in any way with, or knowingly assist or participate in,
facilitate or encourage, any effort or attempt by any other person (other than
Sub or Parent) to do or seek any of the foregoing; provided, however, that the
foregoing shall not prohibit the Company (either directly or indirectly through
advisors, agents or other intermediaries) from, prior to the Company Stockholder
Meeting (i) furnishing information pursuant to
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an appropriate confidentiality letter (which letter shall not be less favorable
to the Company in any material respect than the Confidentiality Agreement, dated
as of June 15, 1997 between the Company and Parent, and a copy of which shall be
provided for informational purposes only to Parent) concerning the Company and
its businesses, properties or assets to a third party who has made a bona fide
Transaction Proposal, (ii) engaging in discussions or negotiations with such a
third party who has made a bona fide Transaction Proposal, (iii) following
receipt of a bona fide Transaction Proposal, taking and disclosing to its
stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) under the
Exchange Act or otherwise making disclosure to its stockholders, or (iv) taking
any action required to be taken by the Company pursuant to a non-appealable,
final order by any court of competent jurisdiction, but in each case referred to
in the foregoing clauses (i) through (iv) or Section 7.7(b) only to the extent
that a majority of the disinterested members of the Board of Directors of the
Company shall have concluded in good faith on the basis of written advice (or
advice confirmed in writing) from outside counsel that the failure to take such
action would be contrary to the fiduciary duties of the Board of Directors of
the Company to the stockholders of the Company under applicable law; provided,
further, that, to the extent that it may do so without acting in a manner
contrary to its fiduciary duties under applicable law, the Board of Directors of
the Company shall not take any of the foregoing actions referred to in clauses
(i) through (iii) and Section 7.7(b) until after reasonable notice to Parent
with respect to such action and that such Board of Directors shall continue to
advise Parent after taking such proposal and the identity of the person making
it.
(b) Except as expressly permitted by this Section 7.7, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Merger, this Agreement or the Stockholders Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Transaction Proposal, or (iii)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, a "Company Acquisition
Agreement") related to any Transaction Proposal. Notwithstanding the foregoing,
in the event that at any time prior to the Company Stockholder Meeting the Board
of Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Board
of Directors of the Company may (subject to this and the following sentences)
terminate this Agreement (and concurrently with or after such termination, if it
so chooses, cause the Company to enter into any Company Acquisition Agreement
with respect to any Superior Proposal), but only at a time that is prior to the
Company Stockholder Meeting and is after the later of (x) the third business day
following Parent's receipt of written notice advising Parent that the Board of
Directors of the Company is prepared to accept a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and (y) in the event of any amendment to
the price or any material term of a Superior Proposal, one business day
following Parent's receipt of written notice containing the material terms of
such amendment, including any change in price (it being understood that each
further amendment to the price or any material terms of the Superior Proposal
shall require an additional one business day period prior to which the Company
can take such action). For purposes of this Agreement, a "Superior Proposal"
means any proposal made by a third party (i) to acquire, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more than
50% of the combined voting power of the shares of Company Common Stock then
outstanding or all or substantially all the assets of the Company, (ii) that is
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a reputable financial advisor) to be
more favorable to the Company's stockholders than the Merger, and (iii) for
which financing, to the extent required, is then committed or which, in the good
faith judgment of the Board of Directors of the Company, is reasonably capable
of being obtained by such third party.
Section 7.8 Benefit Matters. (a) During the period from the Effective
Time of the Merger until the first anniversary of the Effective Time of the
Merger, Parent shall, or shall cause the Surviving Corporation to, maintain
employee benefit plans (as defined in Section 3(3) of ERISA) for the benefit of
employees of the
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Company or its subsidiaries, which are no less favorable in the aggregate to
those benefits provided under the Plans in effect on the date hereof.
(b) Parent shall, or shall cause the Surviving Corporation to, (i) treat
employment by the Company as employment by Parent or any of its subsidiaries, if
applicable, for the purpose of determining limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the employees of the Company under any
Parent welfare plan that such employees may be eligible to participate in after
the Effective Time of the Merger and (ii) provide each employee of the Company
with credit for any co-payments and deductibles paid in the year in which the
Merger occurs prior to the Effective Time of the Merger in satisfying any
applicable deductible or out-of-pocket requirements under any Parent welfare
plans that such employees are eligible to participate in after the Effective
Time of the Merger.
(c) Parent shall, or shall cause the Surviving Corporation to, enter into
appropriate agreements and otherwise carry out and fulfill each of the
obligations set forth under the caption "Transition Issues" on Schedule 7.8
hereto, which obligations are hereby undertaken by Parent.
Section 7.9 Indemnification; Continuation of Insurance; Guaranty
(a) Parent agrees that all rights to indemnification now existing in favor
of the employees, agents, directors or officers of the Company and its
subsidiaries as provided in their respective charters or bylaws shall survive
the Merger and shall continue in full force and effect, to the fullest extent
permitted by applicable law, for a period not less than five years from the
Effective Time with respect to matters occurring prior to the Effective Time.
The Surviving Corporation shall maintain in effect for not less than five years
from the Effective Time the effectiveness of current policies of directors' and
officers' liability insurance maintained by the Company and its subsidiaries
(copies of which have been provided to Parent) with respect to matters occurring
prior to the Effective Time.
(b)(i) Parent hereby guarantees to the Company and each person who is an
employee, agent, director or officer of the Company or any of its subsidiaries
(the "Beneficiaries") the performance of all liabilities, agreements and other
obligations of Parent, Sub or the Surviving Corporation contemplated by Section
7.9(a) hereof, together with all costs of collection or enforcement, including,
without limitation, reasonable attorneys' fees incurred with respect to this
Guaranty, or with respect to a proceeding under the federal bankruptcy laws or
any insolvency, receivership, arrangement or reorganization law or an assignment
for the benefit of creditors concerning Parent, Sub or the Surviving
Corporation, together with interest on all such costs of collection, compromise
or enforcement from the date arising (all the foregoing, collectively, the
"Obligations"). This Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of the Obligations and
not of their collectibility only and is in no way conditioned upon any
requirement that any Beneficiary first resort to any security or other means of
obtaining their payment.
(ii) The liability of Parent hereunder shall be limited to $10,000,000.
(iii) Parent waives presentment, demand, protest, notice of acceptance,
notice of obligations incurred and all other notices of any kind, all defenses
that may be available by virtue of any stay, moratorium law or other similar law
now or hereafter in effect, any right to require the marshaling of assets of the
Surviving Corporation, and all suretyship defenses generally. Without limiting
the generality of the foregoing, Parent agrees to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Obligation and agrees that the obligations of Parent hereunder shall not be
released or discharged, in whole or in part, or otherwise affected by: (A) the
failure of any Beneficiary to assert any claim or demand or to enforce any right
or remedy against Parent; (B) any extensions or renewals of, or alterations of
the terms of, any Obligations or any portion thereof; (C) any rescissions,
waivers, amendments or modifications of any of the terms or provisions of any
agreement evidencing, securing or otherwise executed in connection with any
Obligation; (D) the substitution or release of any entity primarily or
secondarily liable for any Obligation; (E) the adequacy of any rights any
Beneficiary may have against any other means of obtaining repayment of the
Obligations; (F) any other act or omission that might in any manner or to any
extent vary the risk of
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Parent or otherwise operate as a release or discharge of Parent, all of which
may be done without notice to Parent.
(iv) This Guaranty is irrevocable and shall continue for so long as the
Obligations continue.
(v) This Guaranty shall be binding upon Parent, its successors and assigns,
and shall inure to the benefit of and be enforceable by the Beneficiaries and
their successors, transferees and assigns.
(c) The provisions of this Section 7.9 shall survive consummation of the
Merger, are intended to be for the benefit of, and shall be enforceable by, each
Beneficiary, his heirs and his representatives.
Section 7.10 Subsequent Financial Statement. At all times prior to the
Effective Time, the Company and Parent will each deliver to the other, not later
than 45 days after the end of any fiscal quarter, their respective unaudited
consolidated statements of financial position as of the last day of such fiscal
quarter and their consolidated statements of income and changes in financial
position for the fiscal period then ended and prepared in conformity with the
requirements of Form 10-Q or Form 10-QSB, as the case may be, under the Exchange
Act.
Section 7.11 Certain Notifications. At all times prior to the Effective
Time, each party shall promptly notify the other in writing of the occurrence of
any event which will or may result in failure to satisfy the conditions
specified in Sections 8.1 and 8.2 in the case of events relating to Parent and
in Sections 8.1 and 8.3 in the case of events relating to the Company.
Section 7.12 Letter of the Company's Accountants. The Company shall use
its best efforts to cause to be delivered to Parent a letter of Feldman Radin &
Co., P.C., the Company's independent public accountants (the "Company
Auditors"), dated a date within two business days before the date on which the
S-4 Registration Statement shall become effective and a letter of the Company
Auditors dated a date within two business days before the Closing Date, in each
case in form and substance reasonably satisfactory to Parent and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the S-4 Registration
Statement.
Section 7.13 Stockholder Litigation. The Company shall give Parent the
opportunity, at Parent's own expense, to participate in the defense or
settlement of any stockholder litigation against the Company and its directors
relating to any of the transactions contemplated by this Agreement until the
Effective Time.
Section 7.14 Affiliates. Prior to the Closing Date, the Company shall
deliver to Parent a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall cause each such person to deliver to Parent on or prior to the
Closing Date a written agreement substantially in the form attached as Exhibit
C.
Section 7.15 Stockholder Agreement Legend. The Company will inscribe upon
any certificate representing Shares tendered by a Stockholder (as defined in the
Stockholder Agreement) for such purpose the following legend: "THE SHARES OF
COMMON STOCK, PAR VALUE $.01 PER SHARE, OF THE CORPORATION REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A STOCKHOLDER AGREEMENT DATED AS OF JULY 8, 1998, AND
ARE SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT
THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
Section 7.16 Initial Payment. In consideration of the Company entering
into this Agreement, the Stockholder Agreement, and other good and valuable
consideration and concurrently with the execution of this Agreement, Parent
shall pay to the Company $500,000 in cash. Such $500,000 shall be refunded to
Parent if (i) the stockholders of the Company shall not approve this Agreement
at the Company Stockholder Meeting or (ii) the Company is required to pay the
Parent Termination Fee.
Section 7.17 Termination of Lawsuit. In consideration of Parent entering
into this Agreement, as soon as practicable after execution of this Agreement by
Parent and Sub, the Company will cause the litigation against Parent and certain
of its subsidiaries described in Schedule 4.8 to be dismissed with prejudice.
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ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) this Agreement and the Merger shall have been approved and adopted
by the requisite vote of the stockholders of the Company at the meeting
referred to in Section 1.8;
(b) the waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or terminated;
(c) no statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order,
legal restraint or prohibition enacted, entered, promulgated, enforced or
issued by any governmental body or authority preventing the consummation of
the Merger or the transactions contemplated hereby shall be in effect;
provided, however, that, in the case of a decree, injunction or other
order, each of the parties shall have used all commercially reasonable
efforts to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any decree, injunction or other order that
may be entered;
(d) the S-4 Registration Statement shall have become effective and
shall not be subject to any stop order and no stop order proceeding with
respect thereto shall have initiated or threatened by the Commission;
provided, however, that in the event that any such order shall be in place
or any such proceeding shall have been commenced or threatened, Parent
shall have used all commercially reasonable efforts to cause the S-4
Registration Statement to become effective;
(e) the shares of Parent Common Stock issuable to stockholders of the
Company pursuant to this Agreement and such other shares required to be
reserved for issuance in connection with the Merger shall have been
authorized for listing on the NYSE upon official notice of issuance;
provided, however, that if such shares shall not have been so authorized
for listing, Parent shall have used all commercially reasonable efforts to
cause them to be so authorized for listing; and
(f) All material consents, approvals, orders or authorizations of, or
registrations, determinations or filings with any governmental entity,
required or necessary in connection with the Merger and this Agreement and
the transactions contemplated by this Agreement shall have been obtained
and shall be in full force and effect; provided, however, that in the event
that any of the foregoing have not been obtained, each of the parties shall
have used all commercially reasonable efforts to satisfy such condition.
(g) Not more than 5% of the aggregate outstanding shares of Company
Common Stock shall constitute dissenting shares under the provisions of the
California General Corporation Law relating to dissenters' appraisal rights
(to the extent applicable to the Merger).
Section 8.2 Conditions to the Company's Obligation to Effect the
Merger. The Company shall be obligated to effect the Merger unless at or prior
to the Effective Time any of the following conditions shall exist and shall not
have been waived by the Company:
(a) The representations and warranties of each of Parent and Sub set
forth in the Agreement shall not be true and correct (without regard to any
materially or material adverse effect exceptions contained therein) in each
case as of the date of this Agreement (except to the extent such
representations speak as of an earlier date) and as of the Closing Date, as
though made on and as of the Closing Date, other than for such failures to
be true and correct that, individually and in the aggregate, have not had
and would not reasonably be expected to have a material adverse effect on
the Company and its subsidiaries taken as a whole, or the Company shall not
have received a certificate signed on behalf of the Company by the Chief
Executive Officer and President and the Chief Financial Officer of the
Company to the contrary.
(b) Agreements and Covenants. Parent and Sub shall not have performed
or complied in all material respects with any covenants, obligations,
conditions and agreements required by this Agreement
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to be performed or complied with by them on or prior to the Effective Time;
or the Company shall not have received a certificate to the contrary signed
by the President and Chief Financial Officer of Parent.
(c) the Company shall not have received a written opinion from its
counsel, Foley, Hoag & Eliot LLP, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code (or, if such counsel shall refuse to give such an opinion, a
substantially equivalent from Cravath, Swaine & Moore).
Section 8.3 Conditions to the Obligations of Parent and Sub to Effect the
Merger. Parent and Sub shall be obligated to effect, and Parent shall cause Sub
to effect, the Merger unless any of the following conditions shall exist and
shall not have been waived by Parent or Sub:
(a) The representations and warranties of the Company set forth in the
Agreement shall not be true and correct (without regard to any materially
or material adverse effect exceptions contained therein) in each case as of
the date of this Agreement (except to the extent such representations speak
as of an earlier date) and as of the Closing Date, as though made on and as
of the Closing Date, other than for such failures to be true and correct
that, individually and in the aggregate, have not had and would not
reasonably be expected to have a material adverse effect on the Company and
its subsidiaries taken as a whole, or Parent shall not have received a
certificate signed on behalf of the Company by the Chief Executive Officer
and President and the Chief Financial Officer of the Company to the
contrary.
(b) Agreements and Covenants. The Company shall not have performed or
complied in all material respects with any covenants, obligations,
conditions and agreements required by this Agreement to be performed or
complied with by it on or prior to the Effective Time; or Parent shall not
have received a certificate to the contrary signed by the President and
Chief Financial Officer of the Company.
(c) No Litigation. There shall be pending or threatened any suit,
action or proceeding by any governmental body or authority (i) challenging
or seeking to restrain or prohibit the consummation of the Merger or any of
the other transactions contemplated by this Agreement or seeking to obtain
from the Company, Parent, or any of their respective subsidiaries any
damages that are material in relation to the Company and its subsidiaries
taken as a whole as a result of the Merger or any of the transactions
contemplated by this Agreement, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Parent, or any of their respective
subsidiaries of any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries or to compel the
Company, Parent or any of their respective subsidiaries to dispose of or
hold separate any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries as a result of the
Merger or any of the other transactions contemplated by this Agreement,
(iii) seeking to impose limitations on the ability of Parent to acquire or
hold, or exercise full rights of ownership of, any shares of Company Common
Stock or shares of capital stock of the Surviving Corporation, including,
without limitation, the right to vote such capital stock on all matters
properly presented to the stockholders of the Surviving Corporation, (iv)
seeking to prohibit Parent from effectively controlling in any material
respect the business or operations of the Company or any of its
subsidiaries or (v) which otherwise is reasonably likely to have a material
adverse effect on the Company and its subsidiaries, taken as a whole, or a
material adverse effect on Parent and its subsidiaries, taken as a whole.
(d) Any affiliate of the Company shall not have executed and delivered
to Parent an affiliate letter substantially in the form of Exhibit C
hereto.
(e) Parent shall not have received a certificate of the Company's
Chief Executive Officer stating that, to his knowledge, the representations
contained in Section 4.22 hereof are true and correct in all material
respects.
(f) Any person who is a director of the Company immediately prior to
the Effective Time shall not have resigned effective at the Effective Time.
Section 8.4 Frustration of Closing Conditions. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section 8.1,
8.2, or 8.3, as the case may be, to be satisfied if such failure
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was caused by such party's failure to use all commercially reasonable efforts to
satisfy such condition and consummate the Merger and the other transactions
contemplated by this Agreement and the Stockholders Agreement, as required
therein or in Section 7.6.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated prior to the
Effective Time, whether before or after any required approval by the
stockholders of the Company:
(i) by mutual written consent of the Parent and the Company; or
(ii) by either Parent or the Company, (a) if the Effective Time shall
not have occurred on or before November 15, 1998 (the "Termination Date")
unless (x) the absence of such occurrence shall be due to the failure of
the party seeking to terminate this Agreement to perform, in all material
respects, each of its obligations under this Agreement required to be
performed by it at or prior to the Effective Time or (y) the parties are
then unable to close because the applicable waiting period under the HSR
Act has not then expired or the S-4 Registration Statement is not then
effective, in which case the Termination Date shall be changed to December
15, 1998, or (b) if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree or ruling or taken
any other action shall have become final and non-appealable;
(iii) by Parent (x) if the Company's Board of Directors or any
committee thereof shall have withdrawn, modified or changed in any manner
adverse to Parent or Sub (as determined by Parent in its reasonable
judgment) its approval or recommendation of this Agreement, the
Stockholders Agreement or the Merger or shall have approved or recommended
a Superior Proposal or shall have resolved to do any of the foregoing or
(y) the Company shall have entered into an agreement with respect to a
Superior Proposal in accordance with Section 7.7(b);
(iv) by Parent if (x) the Company fails to perform in any material
respect any of its material obligations hereunder or breaches in any
material respect any material provision hereof and the Company has failed
to perform such obligation or cure such breach, within 10 days of its
receipt of written notice thereof (if such failure to perform or breach is
capable of being performed or cured within such period by commercially
reasonable means) or such longer period as shall be commercially reasonably
necessary to perform such obligation or cure such breach (if such failure
to perform or breach is not capable of being performed or cured within such
period using commercially reasonable means) and (y) such breach or uncured
failure to perform shall have a material adverse effect on the Company and
its subsidiaries taken as a whole;
(v) by the Company if (x) either Parent or Sub fails to perform in any
material respect any of its material obligations hereunder or breaches in
any material respect any material provision hereof and Parent or Sub, as
the case may be, has failed to perform such obligation or cure such breach,
within 10 days of its receipt of written notice thereof (if such failure to
perform or breach is capable of being performed or cured within such period
by commercially reasonable means) or such longer period as shall be
commercially reasonably necessary to perform such obligation or cure such
breach (if such failure to perform or breach is not capable of being
performed or cured within such period using commercially reasonable means)
and (y) such breach or uncured failure to perform shall have a material
adverse effect on Parent and its subsidiaries taken as a whole;
(vi) by the Company if (x) the Company enters into a definitive
agreement in respect of a Superior Proposal in accordance with Section
7.7(b) and (y) the Company simultaneously with terminating pays Parent all
Expenses and the Parent Termination Fee in cash and otherwise complies with
Section 7.7, and refunds the $500,000 initial payment as provided in
Section 7.16;
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(vii) by Parent or the Company if approval of the Merger and adoption
of this Agreement by the Company's stockholders shall not have been
obtained by reason of the failure to obtain the required vote at the
Company Stockholder Meeting.
Notwithstanding anything contained herein to the contrary, each party
hereto agrees that, in the event of the material breach by a party of any of its
representations and warranties in Article III, IV or V hereof, as the case may
be, which material breach shall represent a material adverse change with respect
to such party and its subsidiaries taken as a whole, the other party's sole and
exclusive remedy will be to terminate this Agreement in accordance with this
Section 9.1 and that such party shall not be entitled to any damages or
reimbursement for any loss or liability resulting or arising out of the breach
of such representation or warranty, except as set forth in Section 7.5.
Section 9.2 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time before or after any required approval hereby of the stockholders of
the Company, but after any such stockholder approval, no amendment shall be made
which changes the Merger Consideration or in any way adversely affects the
rights of stockholders of the Company without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed by or on behalf of each of the parties hereto.
Section 9.3 Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken by their respective Boards of Directors, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements contained in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time or the date of earlier termination of this Agreement
in accordance with the terms hereof, and thereafter there shall be no liability
on the part of either Parent or the Company or any of their respective officers
or directors in respect thereof, except, in the case of the consummation of the
Merger, for the representations, warranties and agreements contained in Sections
2.2, 2.4, 7.6, 7.8, 7.9 and 10.2 and, in the case of any earlier termination of
this Agreement in accordance with the terms hereof, the agreements contained in
Sections 7.1(b), 7.5, 7.16 and 10.2. The parties hereto acknowledge and agree
that nothing herein will relieve any party from liability for any breach of this
Agreement which was committed prior to the termination of this Agreement.
Section 10.2 Brokers. The Company represents and warrants that, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Company. The estimated fees and expenses incurred
and to be incurred by the Company in connection with this Agreement and the
transactions contemplated by this Agreement are set forth in Schedule 10.2.
Parent and Sub represent and warrant that, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of
Parent or Sub.
Section 10.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given or
made as of the date delivered or mailed if delivered
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personally or mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
addresses for a party as shall be specified by like notice):
(a) If to Parent or Sub:
Cytec Industries Inc.
Five Garrett Mountain Plaza
West Paterson, NJ 07424
Attn: General Counsel
Copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attn: John T. Gaffney
(b) If to the Company:
The American Materials & Technologies Corporation
5915 Rodeo Road
Los Angeles, CA 90016
Attn: Mr. Paul W. Pendorf
Copy to:
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: David A. Broadwin
Section 10.4 Interpretation. When a reference is made in this Agreement
to subsidiaries of Parent or the Company, other than in Sections 4.11 and 4.12,
the word "subsidiaries" means (i) any corporation 50% or more of whose
outstanding voting securities are directly or indirectly owned by Parent or the
Company, as the case may be, and, unless the context clearly requires otherwise,
(ii) any partnership in which the Company or Parent, as the case may be,
directly or indirectly owns a 25% (or greater) equity interest or any
partnership of which the Company or Parent, as the case may be, or one of their
respective subsidiaries, is a general partner. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.5 Miscellaneous. This Agreement, the Stockholders Agreement
and the Confidentiality Agreement (i) constitute the entire agreement and
supersede all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof and
thereof, (ii) shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns and, except as expressly
provided herein, is not intended to confer upon any other person any rights or
remedies hereunder, (iii) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Delaware and (iv) may be
executed in two or more counterparts which together shall constitute a single
agreement.
Section 10.6 Publicity. So long as this Agreement is in effect, each of
Parent and the Company promptly shall advise and cooperate with the other prior
to issuing, or permitting any of its subsidiaries, directors, officers,
employees or agents to issue, any press release to the press or any third party
with respect to this Agreement or the transactions contemplated hereby.
Section 10.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except that (i)
Parent may transfer the stock of Sub to another wholly-owned direct or indirect
subsidiary or Parent and (ii) Sub may assign its rights, interests or
obligations hereunder to another wholly-owned direct or indirect subsidiary of
Parent.
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Section 10.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO ANY APPLICABLE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
Section 10.9 Consent to Jurisdiction. Each of the parties hereto (i)
consents to submit such party to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware State court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that such party will not bring any action relating to this
Agreement, the Stockholders Agreement or any of the transactions contemplated
hereby in any court other than a federal court sitting in the State of Delaware
or a Delaware state court.
Section 10.10 No Right to Set-off. With respect to all monetary or other
obligations under this Agreement (including, without limitation, obligations
under Section 7.5), neither the Company nor Parent shall have the right to
satisfy such obligations through set-off against any claims or obligations or
such party against the other party.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed as of the date first written above by their respective officers
thereunder duly authorized.
CYTEC INDUSTRIES INC.
By: /s/ J. P. CRONIN
------------------------------------
Title: Executive Vice President and
CFO
CAM ACQUISITION CORP.
By: /s/ E. F. JACKMAN
------------------------------------
Title: Vice President
THE AMERICAN MATERIALS &
TECHNOLOGIES CORPORATION
/s/ P. W. PENDORF
--------------------------------------
Title: President
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CONFORMED COPY
AMENDMENT, dated August 25, 1998 to the Agreement and Plan of Merger
dated July 8, 1998 (the "Merger Agreement"), by and among Cytec Industries
Inc. ("Parent"), a Delaware corporation, CAM Acquisition Corp. ("Sub"), a
Delaware corporation, and The American Materials & Technologies Corporation
(the "Company"), a Delaware corporation.
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company,
and Parent acting as the sole stockholder of Sub, have previously approved the
merger of the Sub with and into the Company, in accordance with the terms and
subject to the conditions set forth in the Merger Agreement;
WHEREAS, the parties to the Merger Agreement desire to amend certain terms
of the Merger Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. Amendments. The undersigned, being all the parties to the
Merger Agreement, hereby amend and restate Section 1.3(a) of the Merger
Agreement as set forth in Exhibit A hereto, and hereby amend and restate
Schedule 7.8 of the Merger Agreement as set forth in Exhibit B hereto.
SECTION 2. No Consent Granted by this Amendment. Nothing in this
Amendment shall be construed explicitly or implicitly as constituting the
consent of Parent to the sale of all or substantially all of the assets or stock
of Grafalloy by the Company or any affiliate thereof. The parties hereto
acknowledge and agree that pursuant to the Merger Agreement, the prior written
consent of Parent shall be required before any agreement in respect of such a
sale may be entered into.
SECTION 3. Representations and Warranties. Each party hereto hereby
represents as to itself to the other parties hereto that:
(a) such party has all requisite corporate power and authority to
enter into this Amendment;
(b) the execution and delivery of this Amendment by such party has
been duly authorized by all necessary corporate action on the part of such
party; and
(c) this Amendment has been duly executed and delivered by such party
and constitutes a valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
SECTION 4. Counterparts. This Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 5. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to any applicable conflicts of law principles of such state.
SECTION 6. Full Force and Effect. Except as specifically amended hereby,
the Merger Agreement shall continue in full force and effect in accordance with
the provisions thereof. As used therein, the term "hereto" and words of similar
import shall, unless the context otherwise requires, refer to the Merger
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Agreement as amended hereby. Any reference in any document to the Merger
Agreement shall be deemed to be a reference to the Merger Agreement as amended
hereby.
CYTEC INDUSTRIES INC.
by: /s/ J.P. CRONIN
------------------------------------
Name: J.P. Cronin
Title: Executive Vice President
and Chief
Financial Officer
CAM ACQUISITION CORP.
by: /s/ J.P. CRONIN
------------------------------------
Name: J.P. Cronin
Title: President and Chief Executive
Officer
THE AMERICAN MATERIALS &
TECHNOLOGIES CORPORATION
by: /s/ P.W. PENDORF
------------------------------------
Name: P.W. Pendorf
Title: President
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EXHIBIT A
(a) Subject to the provisions of Article VIII, the closing (the "Closing")
of the transactions contemplated by this Agreement shall take place at the
offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019, as
soon as practicable after October 8, 1998 or such later date as the parties
shall agree to following the meeting of the stockholders of the Company referred
to in Section 1.8, and in no event later than the second business day after
satisfaction or waiver of the conditions set forth in Article VIII, or at such
other time and place or on such other date after October 8, 1998 as the Company
and Parent may mutually agree in writing (the date and time of such Closing
being herein referred to as the "Closing Date").
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Annex B
CONFORMED COPY
STOCKHOLDERS AGREEMENT dated as of July 8, 1998 (as amended or
supplemented in accordance with the terms hereof, this "Agreement"), among
CYTEC INDUSTRIES INC., a Delaware corporation ("Parent"), CAM ACQUISITION
CORP., a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION, a Delaware
corporation (the "Company"), and the other parties signatory hereto (each a
"Stockholder").
Each Stockholder desires that the Company, Parent and Sub enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended from time to time, the "Merger Agreement"), which provides, among other
things, that Sub will merge with and into the Company upon the terms and subject
to the conditions set forth in the Merger Agreement (the "Merger"), whereby all
the outstanding shares of Common Stock, par value $.01 per share, of the Company
("Company Common Stock") will be converted into the right to receive shares of
Common Stock, par value $.01 per share, of Parent ("Parent Common Stock") in the
amount set forth in the Merger Agreement.
Each Stockholder and the Company are executing this Agreement as an
inducement to Parent and Sub to execute and deliver the Merger Agreement.
Accordingly, in consideration of the execution and delivery by Parent and
Sub of the Merger Agreement and the mutual covenants, conditions and agreements
contained therein and herein, the parties hereto agree as follows:
SECTION 1. Representations and Warranties. Each Stockholder severally
represents and warrants to Parent and Sub that, except as set forth on Schedule
1 hereto with respect to such Stockholder:
(a) Such Stockholder is the record and beneficial owner of, or is
trustee of a trust that is the record holder of, and whose beneficiaries
are the beneficial owners of, (i) the number of shares of Company Common
Stock set forth opposite such Stockholder's name in Schedule A hereto (such
shares, together with any shares of Common Stock acquired by such
Stockholder after the date hereof, including, without limitation, pursuant
to the exercise of Options and Warrants, being referred to as such
Stockholder's "Shares") and (ii) the options (the "Options") and warrants
(the "Warrants") to acquire the number of shares of Company Common Stock,
if any, set forth opposite such Stockholder's name in Schedule A hereto.
The Stockholder has the sole right to vote such Stockholder's Shares, and
none of such Stockholder's Shares is subject to any voting trust or other
agreement, arrangement or restriction with respect to the voting of such
Stockholder's Shares, except as contemplated by this Agreement. Except for
such Stockholder's Shares, such Stockholder is not the record or beneficial
owner of any shares of Company Common Stock.
(b) This Agreement has been duly authorized, executed and delivered
by, and constitutes a valid and binding agreement of, such Stockholder,
enforceable against such Stockholder in accordance with its terms. Neither
the execution and delivery of this Agreement nor the consummation by such
Stockholder of the transactions contemplated hereby will result in a
violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any
kind to which such Stockholder is a party or bound or to which such
Stockholder's Shares are subject. No trust of which such Stockholder is
trustee requires the consent of any beneficiary to the execution and
delivery of this Agreement or to the consummation of the transactions
contemplated hereby or to the performance by such Stockholder of its
obligations hereunder. If such Stockholder is married, and such
Stockholder's Shares constitute community property, this Agreement has been
duly authorized, executed and delivered by, and constitutes a valid and
binding agreement of, such Stockholder's spouse, enforceable against such
person in accordance with its terms. Consummation by such Stockholder of
the transactions contemplated hereby and performance by such Stockholder of
its obligations hereunder will not violate, or require any consent,
approval, or notice under, any provision of any judgment, order, decree,
statute, law, rule or regulation applicable to such Stockholder or such
Stockholder's Shares.
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(c) Such Stockholder's Shares, Options and Warrants and the
certificates representing such Shares are now and at all times during the
term hereof will be held by such Stockholder, or by a nominee or custodian
for the benefit of such Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder or under the existing terms of a
trust of which such Stockholder is the trustee.
(d) No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar
fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of such Stockholder.
(e) Such Stockholder is not acquiring any Parent Common Stock with a
view to, or for offer or sale in connection with, any distribution thereof
(within the meaning of the Securities Act of 1933, as amended (the
"Securities Act")) that would be in violation of the securities laws of the
United States of America or any state thereof. Such Stockholder
acknowledges that such Stockholder has such knowledge and experience in
business and financial matters and with respect to investments in
securities to enable such Stockholder to understand and evaluate the risks
of an investment in the Parent Common Stock to be acquired by such
Stockholder and form an investment decision with respect thereto and is
able to bear the risk of such investment for an indefinite period of time
and to afford a complete loss thereof.
(f) Such Stockholder understands and acknowledges that Parent and Sub
are entering into the Merger Agreement in reliance upon such Stockholder's
execution and delivery of this Agreement. Such Stockholder acknowledges
that the irrevocable proxy set forth in Section 4 is granted in
consideration of the execution and delivery of the Merger Agreement by
Parent and Sub.
SECTION 2. Voting Agreements. Each Stockholder severally agrees with, and
covenants to, Parent and Sub as follows:
(a) At any meeting of stockholders of the Company called to vote upon
the Merger, the Merger Agreement or the other transactions contemplated by
the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with respect to
the Merger, the Merger Agreement or the other transactions contemplated by
the Merger Agreement is sought, such Stockholder shall vote (or cause to be
voted) such Stockholder's Shares in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the
terms thereof and each of the other transactions contemplated by the Merger
Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, such Stockholder shall vote (or cause
to be voted) such Stockholder's Shares against (i) any Transaction Proposal
(as defined in the Merger Agreement) other than the Merger Agreement, (ii)
any merger agreement or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or (iii) any amendment of the Company's Certificate of
Incorporation or By-laws or other proposal or transaction involving the
Company or any of its subsidiaries which amendment or other proposal or
transaction would in any manner partially or wholly impede, frustrate,
prevent, delay or nullify the Merger, the Merger Agreement or any of the
other transactions contemplated by the Merger Agreement (each of the
foregoing in clause (i), (ii) or (iii) above, a "Competing Transaction").
SECTION 3. Agreement to Pay Net Profit. (a) Each Stockholder hereby
agrees that if the Merger Agreement is terminated under circumstances where
Parent is or may become entitled to receive the Parent Termination Fee under
Section 7.5(b) of the Merger Agreement, each Stockholder shall pay to Parent on
demand an amount equal to the Net Profit (as defined in Section 3(b) below) of
such Stockholder from the consummation of any Transaction Proposal that is
consummated within two years of such termination.
(b) The term "Net Profit" shall mean an amount in cash equal to (x) such
Stockholder's Gross Profit (as hereinafter defined) minus (y) such Stockholder's
Tax Payment (as hereinafter defined).
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For purposes hereof, the term "Gross Profit" shall mean an amount in cash equal
to the product of (x) the number of such Stockholder's Shares and (y) the excess
of (A) the per share cash consideration plus the per share fair market value
(determined as set forth in the next sentence) of any non-cash consideration, as
the case may be, received by the Stockholder pursuant to such Transaction
Proposal, over (B) $6.00. For purposes hereof, the fair market value of any
non-cash consideration consisting of:
(1) securities listed on a national securities exchange or traded on
the NASDAQ/NMS shall be equal to the average closing price per share of
such security as reported on such exchange or NASDAQ/NMS for the five
trading days after the date of determination; and
(2) consideration which is other than cash or securities of the form
specified in clause (A) above shall be determined by a nationally
recognized independent investment banking firm mutually agreed upon by the
parties within 10 business days of the event requiring selection of such
banking firm (provided, however, that if the parties are unable to agree
within two business days after the date of such event as to the investment
banking firm, then the parties shall each select one firm, and those firms
shall select a third investment banking firm, which third firm shall make
such determination) and the fees and expenses of such investment banking
firm (or such third investment banking firm, as applicable) shall be borne
equally by Parent, on the one hand, and the Stockholders, on the other
hand. The determination of the investment banking firm shall be binding
upon the parties.
For purposes hereof the term "Tax Payment" shall mean, (i) if the applicable
Transaction Proposal is a tax-free merger or acquisition, the amount of federal
and state taxes payable by the Stockholder as a result of the sale of any
non-cash consideration received by the Stockholder pursuant to such Transaction
Proposal required to be made in order to obtain funds for the payment to Parent
described in Section 3(a) and (ii) if the applicable Transaction Proposal is a
taxable merger or acquisition, a proportionate amount of the federal and state
taxes payable by the Stockholder as a result of such Transaction Proposal (based
on the ratio of (x) the excess of the per share consideration received by the
Stockholder pursuant to the Transaction Proposal over $6.00 to (y) the per share
consideration received by the Stockholder pursuant to the Transaction Proposal).
(c) Any payment of Net Profit under this Section 3 shall be paid by wire
transfer of same day funds to an account designated by Parent.
SECTION 4. Covenants. Each Stockholder severally agrees with, and
covenants to, Parent and Sub as follows:
(a) Such Stockholder shall not (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift,
pledge, encumbrance or other disposition), or consent to any transfer of,
any or all such Stockholder's Shares, Options or Warrants or any interest
therein, except pursuant to the Merger and the Merger Agreement, (ii) enter
into any contract, option or other agreement or understanding with respect
to any transfer of any or all such Shares, Options or Warrants or any
interest therein, (iii) grant any proxy, power-of-attorney or other
authorization in or with respect to such Shares, except under or in
accordance with this Agreement or (iv) deposit such Shares into a voting
trust or enter into a voting agreement or arrangement with respect to such
Shares; provided, however, that any such Stockholder may transfer any of
such Stockholder's Shares, Options and Warrants to any other Stockholder
who is on the date hereof, or to any family member of a Stockholder or
charitable institution that prior to the Company Stockholder Meeting and
prior to such transfer becomes, in a manner reasonably satisfactory to
Parent, a party to this Agreement and bound by all the obligations of a
"Stockholder" hereunder.
(b) As of the Effective Time, such Stockholder's Shares shall,
pursuant to the terms of the Merger Agreement, be exchanged for and
converted into the consideration provided in the Merger Agreement.
(c) Such Stockholder shall provide the undertakings contemplated by
Section 7.14 of the Merger Agreement.
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(d) Subject to Section 8 hereof, such Stockholder shall not, nor shall
it permit any director, officer, employee, investment banker, attorney or
other adviser or representative of such Stockholder to, directly or
indirectly, (i) solicit or initiate, or encourage the submission of, any
Transaction Proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to,
any Transaction Proposal.
(e) The Stockholders believe that the consummation of the Merger is in
the best interest of the Company. Accordingly, each Stockholder hereby
ratifies in advance any decision by the Board of Directors of the Company
not to proceed in accordance with, and not take any action set forth in,
(A) clauses (i), (ii), (iii) or (iv) of the first proviso to Section 7.7(a)
of the Merger Agreement or (B) clauses (i), (ii) or (iii) of Section 7.7(b)
of the Merger Agreement, and each Stockholder shall confirm in writing such
ratification upon any request of Parent or the Board of Directors of the
Company.
SECTION 5. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each
Stockholder hereby irrevocably grants to, and appoints, Parent and David Lilley,
President and Chief Operating Officer of Parent, Edward F. Jackman, Vice
President, General Counsel and Secretary of Parent, and James P. Cronin,
Executive Vice President and Chief Financial Officer of Parent, in their
respective capacities as officers of Parent, and any individual who shall
hereafter succeed to any such office of Parent, and each of them individually,
such Stockholder's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of such Stockholder, to vote such
Stockholder's Shares, or grant a consent or approval in respect of such Shares,
(i) in favor of the Merger, the execution and delivery of the Merger Agreement
and approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement and (ii) against any Competing Transaction.
(b) Such Stockholder represents and warrants to Parent and Sub that any
proxies heretofore given in respect of such Stockholder's Shares are not
irrevocable, and that any such proxies are hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy set forth in
this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. Such Stockholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212(e) of the Delaware General
Corporation Law.
SECTION 6. Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares, Options
and Warrants and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares, Options or Warrants shall pass, whether by
operation of law or otherwise, including without limitation such Stockholder's
heirs or successors. Upon any transfer of shares of Company Common Stock by a
Stockholder, such Stockholder shall provide Parent with written notice within
two days of such transfer of the name, address and relationship to such
Stockholder, if any, of such transferee, the number of shares transferred and
the terms governing such transfer. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Company Common Stock, or the
acquisition of additional shares of Company Common Stock or other voting
securities of the Company (or options or warrants in respect thereof) by any
Stockholder, the number of Shares, Options and Warrants listed in Schedule A
beside the name of such Stockholder shall be adjusted appropriately and this
Agreement and the obligations hereunder shall attach to any additional shares of
Company Common Stock or other voting securities of the Company (and to any
options or warrants in respect thereof) issued to or acquired by such
Stockholder.
SECTION 7. Stop Transfer. The Company agrees with, and covenants to,
Parent and Sub that the Company shall not register the transfer of any
certificate representing any Stockholder's Shares, unless such transfer is made
to Parent or Sub or is pursuant to a margin call in respect of the Shares
referenced on Schedule 1 or is otherwise in compliance with this Agreement. Each
Stockholder agrees that such Stockholder will tender to the Company, within 15
business days after the date hereof, any and all certificates
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representing such Stockholder's Shares (other than the Shares, Options and
Warrants specifically referenced on Schedule 1 hereto as being exempt from this
Section 7 as set forth therein) and the Company will inscribe upon such
certificates the following legend: "The shares of Common Stock, par value $.01
per share, of The American Materials & Technologies Corporation represented by
this certificate are subject to a Stockholders Agreement dated as of July 8,
1998, and may not be sold or otherwise transferred, except in accordance
therewith. Copies of such Agreement may be obtained at the principal executive
offices of The American Materials & Technologies Corporation".
SECTION 8. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director of the Company makes any
agreement or understanding herein in his or her capacity as such director. Each
Stockholder signs solely in such Stockholder's capacity as the record and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Shares, Options and Warrants and
nothing herein shall limit actions taken by a Stockholder in his capacity as a
director of the Company to the extent specifically permitted in the Merger
Agreement.
SECTION 9. Further Assurances. Each Stockholder shall, upon request of
Parent, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by Parent to be necessary or desirable to
carry out the provisions hereof and to vest the power to vote such Stockholder's
Shares as contemplated by Section 4 in Parent and the other irrevocable proxies
described therein.
SECTION 10. Termination. This Agreement (other than Section 3 hereof,
this Section 10 and Sections 12 through 21 hereof, which shall only terminate
upon the expiration of all rights and obligations under Section 3 hereof), and
all rights and obligations of the parties hereunder, other than with respect to
the liability of any party for breach hereof prior to such termination, shall
terminate upon the first to occur of (i) the Effective Time or (ii) the date
upon which the Merger Agreement is terminated in accordance with its terms;
provided, however, that if an Extension Event (as defined below) shall have
occurred as of or prior to the termination of the Merger Agreement, then, for a
period of 18 months following such termination, (i) the rights and obligations
of the parties hereto under Sections 2(b), 4(a), 4(d), and 5 through 21 hereof
shall continue in full force and effect and (ii) no Stockholder shall transfer
any or all such Stockholder's Shares, Options or Warrants in connection with any
Competing Transaction. For purposes of the foregoing, an "Extension Event" shall
mean any of the following events: (A) the stockholders meeting to approve the
Merger, Merger Agreement and the other transactions contemplated by the Merger
Agreement shall not have been held or the approval of the Merger, the Merger
Agreement and the other transactions contemplated by the Merger Agreement at
such meeting by the holders of a majority of the outstanding shares of Company
Common Stock shall not have been obtained, (B) the Board of Directors of the
Company shall have withdrawn or modified its recommendation with respect to the
Merger or the Merger Agreement or (C) any person (other than Parent or any
subsidiary of Parent) shall have made, or disclosed an intention to make, a
Transaction Proposal (as defined in the Merger Agreement) or proposal for a
Competing Transaction.
SECTION 11. Parent Covenant. Parent agrees with each Stockholder that if
the Effective Time shall occur, Parent shall comply with its obligations under
Section 13 of the Securities Exchange Act of 1934, as amended.
SECTION 12. Defined Terms. Capitalized terms used and not otherwise
defined in this Agreement shall have the respective meanings assigned to them in
the Merger Agreement.
SECTION 13. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to Parent or the
Company, to the address set forth in Section 10.3 of the Merger Agreement; and
(ii) if to a Stockholder, to the address set forth in Schedule A hereto.
SECTION 14. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 15. Counterparts; Effectiveness. This Agreement may be executed
in two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective as to
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<PAGE> 123
any Stockholder when one or more counterparts have been signed by each of
Parent, Sub, the Company and such Stockholder and delivered to Parent, Sub, the
Company and such Stockholder.
SECTION 16. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
SECTION 17. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to any applicable conflicts of law principles of such State.
SECTION 18. Successors and Assigns. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties
without the prior written consent of the other parties, except by laws of
descent or as expressly contemplated by Section 4(a); provided, however, that
Sub may assign its rights and obligations to another wholly owned subsidiary of
Parent that is the assignee of Sub's rights under the Merger Agreement. Any
assignment in violation of the foregoing shall be void.
SECTION 19. Enforcement. Each Stockholder agrees that irreparable damage
would occur and that Parent and Sub would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that Parent and Sub shall be entitled to an injunction or
injunctions to prevent breaches by any Stockholder of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware State court,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (i) consents to submit such
party to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware State court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that such
party will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (iii) agrees that such party
will not bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware State court.
SECTION 20. Severability. If any term or provision hereof, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid or unenforceable, such term or
provision shall only be invalid or unenforceable with respect to such
jurisdiction, and only to such extent, and the remainder of the terms and
provisions hereof, and the application thereof to any other circumstance, shall
remain in full force and effect, shall not in any way be affected, impaired or
invalidated, and shall be enforced to the fullest extent permitted by law, and
the parties hereto shall reasonably negotiate in good faith a substitute term or
provision that comes as close as possible to the invalidated or unenforceable
term or provision, and that puts each party in a position as nearly comparable
as possible to the position each such party would have been in but for the
finding of invalidity or unenforceability, while remaining valid and
enforceable.
SECTION 21. Amendment; Modification; Waiver. No amendment, modification
or waiver in respect of this Agreement shall be effective against any party
unless it shall be in writing and signed by such party.
B-6
<PAGE> 124
IN WITNESS WHEREOF, Parent, Sub, the Company and the Stockholders have
caused this Agreement to be duly executed and delivered as of the date first
written above.
CYTEC INDUSTRIES INC.,
by /s/ J. P. CRONIN
------------------------------------
Title: Executive Vice President and
CFO
CAM ACQUISITION CORP.,
by /s/ E. F. JACKMAN
------------------------------------
Title: Vice President
THE AMERICAN MATERIALS &
TECHNOLOGIES CORPORATION,
by /s/ P. W. PENDORF
------------------------------------
Title: President
PAUL W. PENDORF,
by /s/ P. W. PENDORF
------------------------------------
STEVEN GEORGIEV,
by /s/ STEVEN GEORGIEV
------------------------------------
ROBERT V. GLASER,
by /s/ ROBERT V. GLASER
------------------------------------
BUSTER C. GLOSSON,
by /s/ BUSTER C. GLOSSON
------------------------------------
B-7
<PAGE> 125
Annex C
[WM SWORD & CO. LETTERHEAD]
July 8, 1998
Confidential
Board of Directors
The American Materials & Technologies Corporation
5915 Rodeo Road
Los Angeles, CA 90016
Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of the outstanding shares of Common Stock, par value
$.01 per share (the "Shares") of The American Materials & Technologies
Corporation (the "Company") of the Merger Consideration (as hereinafter defined)
pursuant to the Agreement and Plan of Merger dated July 8, 1998 by and among the
Company and Cytec Industries Inc. ("Cytec") and CAM Acquisition Corp. ("Sub") a
Delaware corporation wholly-owned by Cytec (the "Merger Agreement"). The Merger
Agreement provides for the merger of Sub with and into the Company with the
Company surviving as a wholly-owned subsidiary of Cytec. As a result of the
Merger, each Share outstanding immediately prior to the effective time of the
Merger (other than Shares owned by Cytec or any of its wholly-owned
subsidiaries) will be converted into the right to receive that number of shares
of Common Stock, par value $.01 per share, of Cytec ("Cytec Common Stock")
determined by dividing (i) $6.00 by (ii) the average closing price of Cytec
Common Stock for the twenty trading days immediately preceding the Closing Date
as reported on the New York Stock Exchange Composite Transaction Tape (the
"Average Closing Price") and rounding to the nearest ten-thousandth of a share.
The ratio of the number of shares of Cytec Common Stock to be exchanged for each
outstanding Share of Company Common Stock is referred to as the Merger
Consideration.
Wm Sword & Co. Incorporated ("Wm Sword & Co.") is an investment banking
firm established in 1976 primarily engaged in acquisitions, divestitures, equity
and debt private placements and financial advisory services. As part of its
investment banking services, Wm Sword & Co. is regularly engaged in the
valuation of businesses and securities in connection with mergers, acquisitions,
divestitures and private equity placements and valuations for corporate, estate
and other purposes. We are acting as financial advisor to the Board of Directors
in connection with the Merger and will receive a fee from the Company for our
services. Wm Sword & Co. is familiar with the Company having provided investment
banking services to the Company from time to time, including acting as financial
advisor regarding financings and acquisitions and has received fees for
rendering those services including Shares of the Company. As of the date hereof,
Wm Sword & Co. owned 47,985 Shares of the Company.
In arriving at our opinion, we have reviewed the draft of the Agreement and
Plan of Merger dated July 2, 1998; Annual Reports to Stockholders and Annual
Reports on Form 10-K of the Company and Cytec; certain other communications from
the Company and Cytec to their respective stockholders; certain interim reports
to stockholders and Quarterly Reports on Form 10-Q for the Company and Cytec;
and certain internal financial analyses and forecasts for the Company prepared
by the Company's management. We have also held discussions with members of the
senior managements of the Company and Cytec regarding the strategic rationale
for, and potential benefits of, the Merger and the past and current business
operations, financial condition and future prospects of their respective
companies. We have analyzed financial and other information relating to the
prospects for the Company provided to us by the Company's management. We have
not had access to and have not analyzed non-public financial and other
information relating to the
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<PAGE> 126
July 8, 1998
[WM SWORD & CO. LETTERHEAD] Page 2
prospects of Cytec, including projections. Cytec management has advised us that
consensus earnings estimates for 1998 and 1999 as reported by First Call
Corporation as of July 5, 1998 are not unreasonable. In addition, we have
reviewed the reported price and trading activity for the Shares of the Company's
Common Stock and Cytec's Common Stock, compared certain financial and stock
market information for the Company and Cytec with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in the advanced
composites industry specifically and in other industries generally and performed
such other studies and analyses as we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
the purposes of rendering this opinion. In that regard, we have assumed, with
your consent, that the financial forecasts and the assumptions and bases
therefor provided by the management of the Company have been reasonably prepared
on a basis reflecting the best currently available judgment and estimate of the
Company's management as to the future financial and other performance of the
Company and have assumed, with your consent, that the consensus earnings
estimates as reported by First Call Corporation as of July 5, 1998 for Cytec,
which Cytec's management indicated are not unreasonable, reflect the best
currently available judgment and estimate as to the future financial and other
performance of Cytec. You have instructed us to assume, and we have assumed,
that obtaining any necessary regulatory or third-party approvals for the Merger
will not have an adverse impact on the Company or Cytec, as applicable. In
addition, we have not made an independent evaluation or appraisal of the assets
and liabilities of the Company or Cytec or any of their respective subsidiaries
or divisions, and we were not furnished with any such evaluation or appraisal.
With your consent, we have assumed that the transaction contemplated by the
Merger Agreement will be treated as tax-free to both the Company and the holders
of Shares (other than with respect to any cash received in lieu of fractional
Cytec shares). We are not expressing any opinion as to the prices at which Cytec
shares may trade at closing, and we express no recommendation as to how the
holders of the Company's Common Stock should vote at the shareholders' meeting
to be held in connection with the Merger. Our advisory services and the opinion
expressed herein are provided for the information and assistance of the Board of
Directors of the Company in connection with its consideration of the transaction
contemplated by the Merger Agreement.
Based upon and subject to the foregoing and based upon such other matters
as we considered relevant, it is our opinion that as of the date hereof the
Merger Consideration pursuant to the Merger Agreement to be received by the
holders of the Shares is fair to such holders from a financial point of view.
Very truly yours,
Wm Sword & Co. Incorporated
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<PAGE> 127
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-laws of Cytec provide that Cytec shall indemnify, to the extent
permitted by Delaware law, its directors, officers and employees against
liabilities (including expenses, judgments and settlements) incurred by them in
connection with any actual or threatened action, suit or proceeding to which
they are or may become parties and which arises out of their status as
directors, officers or employees.
Sections 145(a) and 145(b) of the General Corporation Law of Delaware
("DGCL") permit a corporation to indemnify any director, officer, employee or
agent of the corporation against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement or incurred by him in connection with any
proceeding arising out of his status as director, officer, employee or agent if
such person acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action, had no reasonable cause to believe his conduct was
unlawful. To the extent that such a person has been successful in defense of any
such action or claim, Section 145(c) provides that he shall be indemnified
against expenses incurred by him in connection therewith.
As permitted by Section 102(b)(7) of the DGCL, Article Ninth of Cytec's
Certificate of Incorporation limits the personal liability of Cytec's directors
to Cytec or its stockholders for monetary damages for breach of fiduciary duty
except for liability (i) for any breach of the director's duty of loyalty to
Cytec or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<S> <C>
2.1 Agreement and Plan of Merger dated as of July 8, 1998 by and
among Cytec, the Merger Sub, and AMT and Amendment to the
Agreement and Plan of Merger (included as Annex A to the
Proxy Statement/Prospectus).
2.2 Stockholders Agreement dated as of July 8, 1998 by and among
Cytec, the Merger Sub, AMT and the Selling Stockholders
(included as Annex B to the Proxy Statement/Prospectus).
5.1 Opinion of Cravath, Swaine & Moore regarding the legality of
Cytec Common Stock.
8.1 Opinion of Foley, Hoag & Eliot LLP regarding certain Federal
income tax consequences of the Merger.
21 Subsidiaries of Cytec (incorporated by reference to exhibit
21 to Cytec's annual report on Form 10-K for the year ended
December 31, 1997).
23.1 Consent of Wm Sword & Co.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Arthur Anderson LLP.
23.4 Consent of Feldman Sherb Ehrlich & Co., P.C.
23.5 Consent of Cravath, Swaine & Moore (included in Exhibit
5.1).
23.6 Consent of Foley, Hoag & Eliot LLP (included in Exhibit
8.1).
24.1 Power of Attorney (included on the signature page of this
registration statement).
99.1 Form of Proxy Card.
</TABLE>
(b) Financial Statement Schedules: Not applicable.
(c) The opinion of Wm Sword & Co. is included as Annex C to the Proxy
Statement/Prospectus.
II-1
<PAGE> 128
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) that, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other Items of the applicable form.
(6) that every prospectus (i) that is filed pursuant to paragraph (5)
immediately preceding, or (ii) that purports to meet the requirements of section
10(a)(3) of the Securities Act of 1933 and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(7) insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is
II-2
<PAGE> 129
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(8) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to items 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(9) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
II-3
<PAGE> 130
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WEST PATERSON, STATE OF
NEW JERSEY, ON AUGUST 26, 1998.
CYTEC INDUSTRIES INC.
By: /s/ J. P. CRONIN
------------------------------------
Name: J. P. Cronin
Title: Executive Vice President
and Chief Financial Officer
Know All Men By These Presents, that each person whose signature appears
below constitutes and appoints D. Lilley, J. P. Cronin, and E. F. Jackman,
severally, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, and
in any and all capacities, to sign any and all amendments to this Registration
Statement (including post-effective amendments) and any subsequent registration
statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act
of 1933, and to file the same with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, severally, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as each such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof, all on the dates indicated below.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ D. LILLEY
- --------------------------------------------------- Chief Executive Officer &
D. Lilley Director August 25, 1998
/s/ J. P. CRONIN Executive Vice President and
- --------------------------------------------------- Chief Financial and
J. P. Cronin Accounting Officer August 25, 1998
/s/ D. D. FRY
- ---------------------------------------------------
D. D. Fry Chairman of the Board August 24, 1998
</TABLE>
II-4
<PAGE> 131
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ F. W. ARMSTRONG
- ---------------------------------------------------
F. W. Armstrong Director August 21, 1998
/s/ G. A. BURNS
- ---------------------------------------------------
G. A. Burns Director August 21, 1998
/s/ L. L. HOYNES, JR.
- ---------------------------------------------------
L. L. Hoynes, Jr. Director August 24, 1998
/s/ WILLIAM P. POWELL
- ---------------------------------------------------
W. P. Powell Director August 25, 1998
/s/ J. R. SATRUM
- ---------------------------------------------------
J. R. Satrum Director August 25, 1998
</TABLE>
II-5
<PAGE> 132
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of July 8, 1998 by and
among Cytec, the Merger Sub, and AMT and Amendment to the
Agreement and Plan of Merger (included as Annex A to the
Proxy Statement/Prospectus).
2.2 Stockholders Agreement dated as of July 8, 1998 by and among
Cytec, the Merger Sub, AMT and the Selling Stockholders
(included as Annex B to the Proxy Statement/Prospectus).
5.1 Opinion of Cravath, Swaine & Moore regarding the legality of
Cytec Common Stock.
8.1 Opinion of Foley, Hoag & Eliot LLP regarding certain Federal
income tax consequences of the Merger.
21 Subsidiaries of Cytec (incorporated by reference to exhibit
21 to Cytec's annual report on Form 10-K for the year ended
December 31, 1997).
23.1 Consent of Wm Sword & Co.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Arthur Anderson LLP.
23.4 Consent of Feldman Sherb Ehrlich & Co., P.C.
23.5 Consent of Cravath, Swaine & Moore (included in Exhibit
5.1).
23.6 Consent of Foley, Hoag & Eliot LLP (included in Exhibit
8.1).
24.1 Power of Attorney (included on the signature page of this
registration statement).
99.1 Form of Proxy Card.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF]
CRAVATH, SWAINE & MOORE
CYTEC INDUSTRIES INC.
FORM S-4 REGISTRATION STATEMENT
August 26, 1998
Dear Sirs:
We have acted as counsel for Cytec Industries Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended, of shares of its Common Stock, par value $0.01 per share (the
"Common Stock"), which registration is to be effected pursuant to a Registration
Statement on Form S-4 (the "Registration Statement") filed the same date as the
date of this opinion.
We have examined such documents, corporate records and other instruments as
we have deemed necessary or appropriate for the purpose of this opinion. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion that the Company has the
corporate power and authority under the General Corporation Law of the State of
Delaware and under its Certificate of Incorporation and By-Laws to issue the
Common Stock, that the Common Stock will be validly authorized shares of Common
Stock, and when issued and paid for, will be legally issued, fully paid and
nonassessable.
We hereby consent to be named in the Registration Statement and in the
prospectus which constitutes a part thereof, as the attorneys who will pass upon
the validity of the shares of Common Stock offered pursuant to the Registration
Statement, and to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ CRAVATH, SWAINE & MOORE
--------------------------------------
Cravath, Swaine & Moore
Cytec Industries Inc.
Five Garret Mountain Plaza
West Paterson, NJ 07424
<PAGE> 1
[LETTERHEAD OF]
FOLEY, HOAG & ELIOT LLP
EXHIBIT 8.1
August 26, 1998
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
5915 Rodeo Road
Los Angeles, California 90016
Ladies and Gentlemen:
Reference is made to the information set forth under the heading "Certain
Federal Income Tax Consequences" contained in the Prospectus, which is included
in the Registration Statement on Form S-4 (the "Registration Statement"), filed
by Cytec Industries Inc. ("Cytec") with the Securities and Exchange Commission
(the "SEC") in connection with the merger of CAM Acquisition Corp. ("Merger
Sub"), a Delaware corporation and a wholly-owned subsidiary of Cytec, with and
into The American Materials & Technologies Corporation ("AMT"), a Delaware
corporation (the "Merger"), in accordance with the Agreement and Plan of Merger
dated as of July 8, 1998, as amended, by and among Cytec, Merger Sub and AMT.
Subject to representations, assumptions and other conditions described or
referenced therein, the description of anticipated material federal income tax
consequences of the Merger set forth under such heading accurately and fairly
sets forth our opinion.
Our opinion is based upon the provisions of the Internal Revenue Code of
1986, as amended, Treasury Department proposed temporary and final regulations,
judicial decisions, and rulings and administrative interpretations of the
Internal Revenue Service ("IRS"), as each of the foregoing exists on the date
hereof. Our opinion is not binding on the IRS or a court of law, and no
assurance can be given that legislative or administrative action or judicial
decisions that differ from our opinion will not be forthcoming. Any such
differences could be retroactive to transactions or business operations prior to
such action or decisions. We can give no assurance that, after such change, our
opinion would not be different. We undertake no responsibility to update or
supplement our opinion following the effective date of the Registration
Statement.
We hereby consent to the filing with the SEC of this opinion as an exhibit
to the Registration Statement and to the reference to our firm under the
headings "Certain Federal Income Tax Consequences" and "Legal Matters" contained
therein. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
Very truly yours,
FOLEY, HOAG & ELIOT LLP
/s/ LEONARD SCHNEIDMAN
--------------------------------------
A Partner
<PAGE> 1
EXHIBIT 23.1
CONSENT OF
WM SWORD & CO. INCORPORATED
August 25, 1998
We hereby consent to the inclusion in the Registration Statement on Form
S-4 and the related proxy statement with respect to the proposed merger of CAM
Acquisition Corp., a wholly owned subsidiary of Cytec Industries Inc. with and
into The American Materials & Technologies Corporation, of our opinion letter
appearing as Annex C to the Prospectus/Proxy Statement which is a part of such
Registration Statement, and to the references to our firm name under the
captions "SUMMARY -- The Merger-Opinion of Financial Advisor" and "THE
MERGER -- Background of the Merger", "-- Recommendation of the AMT Board and
Reasons for the Merger" and "-- Opinion of Financial Advisor".
Very truly yours,
WM SWORD & CO INCORPORATED
by /s/ALLAN M. BENTON
----------------------------------
Name: Allan M. Benton
Title: Managing Director
<PAGE> 1
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
The Board of Directors
Cytec Industries Inc.:
We consent to the use of our reports relating to the consolidated financial
statements and schedules of Cytec Industries Inc. and subsidiaries incorporated
herein by reference and to the reference to our firm under the heading "Experts"
in the Proxy Statement/Prospectus.
/s/ KPMG PEAT MARWICK LLP
--------------------------------------
KPMG Peat Marwick LLP
Short Hills, New Jersey
August 25, 1998
<PAGE> 1
EXHIBIT 23.3
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-4 of our report dated
February 19, 1997 included in Current Report on Form 8-K File No. 001-12372. It
should be noted that we have not audited any financial statements of Fiberite
Holdings, Inc. subsequent to December 31, 1996 or performed any audit procedures
subsequent to the date of our report.
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
Phoenix, Arizona
August 25, 1998
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement on Form S-4 of Cytec
Industries Inc. of our report dated February 6, 1998 (March 23, 1998, with
respect to Note 5) relating to the financial statements of The American
Materials & Technologies Corporation as of December 31, 1997 and December 31,
1996 and for each of the years in the two-year period ended December 31, 1997.
We also consent to the reference to our firm under the caption "Experts" in this
Registration Statement.
/s/ FELDMAN SHERB EHRLICH & CO.,
P.C.
--------------------------------------
Feldman Sherb Ehrlich & Co., P.C.
Certified Public Accountants
(Formerly Feldman Radin & Co., P.C.)
New York, New York
August 26, 1998
<PAGE> 1
EXHIBIT 99.1
PRELIMINARY PROXY MATERIALS
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 9, 1998.
The undersigned stockholder of The American Materials & Technologies
Corporation ("AMT"), revoking all prior proxies, hereby appoints Paul W. Pendorf
and James L. Russell, or any of them acting singly, proxies, with full power of
substitution, to vote all shares of capital stock of AMT which the undersigned
is entitled to vote at the Special Meeting of Stockholders to be held at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York 10019-7475, on October 9, 1998, beginning at 10:00 a.m., and at
any adjournments thereof, upon matters set forth in the Notice of Special
Meeting dated September 8, 1998 and the related Proxy Statement, copies of which
have been received by the undersigned, and in their discretion upon any business
that may properly come before the meeting or any adjournments thereof.
Attendance of the undersigned at the meeting or any adjourned session thereof
will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate the intention of the undersigned to vote the shares
represented hereby in person prior to the exercise of this proxy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE AMERICAN
MATERIALS & TECHNOLOGIES CORPORATION. A STOCKHOLDER WISHING TO VOTE IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS NEED ONLY SIGN AND
DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
(CONTINUED ON REVERSE SIDE)
(Please fill in the appropriate boxes on the other side)
<PAGE> 2
(Continued from other side)
PRELIMINARY PROXY MATERIALS
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
<TABLE>
<S> <C>
A. M PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. To approve and adopt the Agreement and Plan of Merger dated
July 8, 1998, as amended, among Cytec Industries Inc., CAM
Acquisition Corp. and The American Materials & Technologies
Corporation and the transactions contemplated thereby.
</TABLE>
<TABLE>
<S> <C> <C>
[ [ [
] FOR ] AGAINST ] ABSTAIN
</TABLE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO
DIRECTION IS GIVEN WITH RESPECT TO ONE OR MORE OF THE PROPOSALS SET FORTH ABOVE,
WILL BE VOTED FOR SUCH PROPOSAL OR PROPOSALS.
DATED:
--------------------------------------------------------------- ,
1998
Signature of Stockholder(s)
--------------------------------
Please promptly date and sign this proxy and mail it in the enclosed
envelope to assure representation of your shares. No postage need be affixed if
mailed in the United States. PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON THE STOCK
CERTIFICATE.
If stockholder is a corporation, please sign full corporate name by
president or other authorized officer and, if a partnership, please sign full
partnership name by an authorized partner or other person.
Mark here if you plan to attend the meeting. [ ]
