ITEM 1.01
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ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
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Merger Agreement
On February 15, 2018, A. Schulman, Inc. (the
Company
) entered into an Agreement and Plan of Merger (the
Merger
Agreement
) with LyondellBasell Industries N.V.,
a naamloze vennootschap
(a public limited liability company) formed under the laws of The Netherlands (
Parent
), and LYB Americas Holdco Inc., a Delaware corporation
and a wholly owned subsidiary of Parent (
Merger Sub
).
Upon consummation of the transactions contemplated by the Merger
Agreement (the
Effective Time
), each share of common stock, par value $1.00 per share, of the Company (
Company Common Stock
) issued and outstanding immediately prior to the Effective Time will be canceled and
automatically converted into the right to receive (i) $42.00 in cash, without interest and subject to any applicable withholding taxes (the
Per-Share
Amount
), and (ii) one contractual
contingent value right (the
CVR
), which represents the right to receive a portion of the net proceeds, if any, resulting from certain litigation relating to the acquisition by the Company of HGGC Citadel Plastics Holdings, Inc.
and the acquisition of LPI Holding Company by The Matrixx Group, together with related government investigations (in each case subject to the terms and conditions of the CVR Agreement to be entered into, as further described below).
Pursuant to the Merger Agreement, each Company stock option, restricted stock unit, performance stock unit and restricted share, whether
vested or unvested, in each case, that is outstanding immediately prior to the Effective Time, will be canceled and converted into the right to receive an amount in cash equal to the
Per-Share
Amount (or, in
the case of Company stock options, the excess of the
Per-Share
Amount over the
per-share
exercise price for such stock options) for each share of Company Common Stock
underlying the award, plus one CVR for each share of Company Common Stock underlying the award. Each Company performance stock unit, restricted stock unit and restricted share that is subject in whole or in part to performance conditions will be
deemed to have vested at target achievement levels.
Consummation of the Merger is subject to customary conditions, including:
(a) absence of any applicable restraining order or injunction prohibiting the Merger; (b) the approval by the Companys stockholders; (c) obtaining antitrust and other regulatory approvals in the United States and certain other
jurisdictions; (d) receipt of approval from the Committee on Foreign Investment in the United States (
CFIUS
); (e) accuracy of certain representations and warranties of each party, subject to specified materiality qualifiers;
(f) performance in all material respects by each party of its covenants; (g) the delivery of an officers closing certificate by both parties; and (h) in the case of Parents obligations to complete the Merger, there not
having been any material adverse effect on the Company.
The Merger Agreement contains customary representations, warranties
and covenants, including, among others, covenants: (a) that each of the parties use its reasonable best efforts to cause the Merger to be consummated, (b) that require Parent and the Company to take actions that may be required in order to
obtain required antitrust approvals and (c) that require the Company (i) subject to certain restrictions, to operate its business in the ordinary course of business consistent with past practice during the period between the execution of
the Merger
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Agreement and the Effective Time, (ii) not to initiate, solicit or knowingly facilitate or encourage the making of any inquiries or proposals relating to alternate transactions or, subject
to certain exceptions, engage in any discussions or negotiations with respect thereto, and (iii) to convene a meeting of the Companys stockholders and to solicit proxies from its stockholders in favor of the adoption of the Merger
Agreement.
Subject to certain exceptions and limitations, either party may terminate the Merger Agreement if the Merger is not
consummated by nine (9) months after the date of the Merger Agreement (the
End Date
), subject to extension by the Company or Parent for a period of ninety (90) days after the End Date, and thereafter for an additional
period of sixty (60) days, in each case, for the purpose of obtaining regulatory clearances. Consummation of the Merger is not subject to a financing condition.
The Merger Agreement contains certain termination rights and provides that, upon termination of the Merger Agreement under specified
circumstances, including, without limitation, a change in the Company Board Recommendation or a termination of the Merger Agreement by the Company to enter into an agreement for a superior proposal, the Company will pay Parent a cash
termination fee of $50 million.
The Merger Agreement has been included to provide stockholders with information regarding its terms.
It is not intended to provide any other factual information about the Company, Parent, Merger Sub or their respective subsidiaries and affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for
purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures
made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from
those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts
or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which
subsequent information may or may not be fully reflected in the Companys public disclosures.
Contingent Value Rights Agreement
At or immediately prior to the closing date as specified in the Merger Agreement, the Company, Parent, certain CVR committee members and a
paying agent mutually acceptable to the Company and Parent will enter into a Contingent Value Rights Agreement (the
CVR Agreement
), which will govern the terms of the CVRs. Each CVR represents the right to receive contingent cash
payments from proceeds, if any, and subject to certain adjustments and deductions as described in the CVR Agreement, from certain litigation involving the Company and related governmental investigations. The CVRs will not represent an equity or
ownership interest in Parent, any constituent party to the Merger or any of their affiliates.
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In order to fund the pursuit of claims and satisfy certain customer claims, the Company will,
simultaneously with the entry into the CVR Agreement, deposit into an escrow account (the
Escrow Account
) $15 million, subject to certain adjustments resulting from expenses incurred and certain litigation and government
investigation proceeds received between the execution date of the Merger Agreement and the execution date of the CVR Agreement. Neither the Company nor Parent will have any additional funding obligations under the CVR Agreement other than making the
deposit into the Escrow Account and depositing certain litigation and government investigation proceeds received into the Escrow Account.
A CVR committee will control the management and disposition of the litigation and related governmental investigations, including with respect
to the prosecution, negotiation and settlement of claims. The CVR committee will be comprised of one member representing the CVR holders, one member representing Parent and one independent member.
Any proceeds received in respect of the litigation and related governmental investigations will be deposited into the Escrow Account. The
first $38.5 million of proceeds (less customer claims and expenses) will be paid to the CVR holders; thereafter, 85% of the remaining proceeds will be paid to the CVR holders and 15% to the Company. An interim CVR payment will only be made to
the extent an amount equal to at least $15 million remains in the Escrow Account.
The foregoing summary of the Merger Agreement, the
CVR Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement and the form of CVR Agreement, which are filed with this Current
Report on Form
8-K
as Exhibits 2.1 and 10.1, respectively, and are incorporated herein by reference.