NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
October 9, 2018
Dear
Shareholder:
You
are cordially invited to attend a special meeting of KMG shareholders. The special meeting will be held on November 13, 2018, at 10:00 a.m. (Central Time), at The
Worthington Renaissance Fort Worth Hotel, 200 Main Street, Fort Worth, Texas 76102, to consider and vote upon the following matters:
-
1.
-
a
proposal to approve and adopt the Agreement and Plan of Merger, dated as of August 14, 2018, as it may be amended from time to time, by and among KMG
Chemicals, Inc., a Texas corporation, Cabot Microelectronics Corporation, a Delaware corporation, and Cobalt Merger Sub Corporation, a Texas corporation and a wholly owned subsidiary of Cabot
Microelectronics. A copy of the merger agreement is attached as
Annex A
to the accompanying proxy statement/prospectus;
-
2.
-
the
adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the proposal to approve
and adopt the merger agreement at the time of the special meeting or any adjournment or postponement thereof; and
-
3.
-
a
proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger contemplated
by the merger agreement.
The
record date for the special meeting is October 4, 2018. Only shareholders of record as of the close of business on October 4, 2018 are entitled to notice of, and to
vote at, the special meeting. All shareholders of record as of that date are cordially invited to attend the special meeting in person.
Your vote is very important, regardless of the number of shares of KMG common stock that you own.
The merger cannot be completed unless
the proposal to approve and adopt the merger agreement is approved by the affirmative vote of the holders of at least a majority of the shares of KMG common stock outstanding on the record date. Even
if you plan to attend the special meeting in person, KMG requests that you complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope
or submit your proxy by telephone or the Internet prior to
the special meeting to ensure that your shares of KMG common stock will be represented at the special meeting if you are unable to attend. If you hold your shares in "street name" through a bank,
brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee to vote your shares. If you fail to submit a proxy or to attend the special
meeting in person or do not provide your bank, brokerage firm or other nominee with instructions as to how to vote your shares, as applicable, your shares of KMG common stock will not be counted for
purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote "AGAINST" the proposal to approve and adopt the merger agreement.
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Your
proxy is being solicited by the board of directors of KMG. After careful consideration, our board of directors has unanimously determined that the terms of the merger agreement and
the transactions contemplated thereby, including the merger, are in the best interests of KMG and its shareholders.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT AND "FOR" THE OTHER PROPOSALS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. THE BOARD OF DIRECTORS MADE ITS DETERMINATION AFTER
CONSULTATION WITH ITS LEGAL AND FINANCIAL ADVISORS AND AFTER CONSIDERING A NUMBER OF FACTORS. IN CONSIDERING THE RECOMMENDATION OF THE BOARD OF DIRECTORS OF KMG, YOU SHOULD BE AWARE THAT CERTAIN
DIRECTORS AND EXECUTIVE OFFICERS OF KMG MAY HAVE INTERESTS IN THE MERGER THAT MAY BE DIFFERENT FROM, OR IN ADDITION TO, THE INTERESTS OF KMG SHAREHOLDERS GENERALLY. SEE THE SECTION ENTITLED "THE
MERGERINTERESTS OF KMG'S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER" BEGINNING ON PAGE 68 OF THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.
Only
KMG shareholders of record as of the close of business on the record date, their duly authorized proxy holders, beneficial owners with proof of ownership and KMG's guests may attend
the special meeting. To gain admittance, please bring valid photo identification, such as a driver's license or passport. If your shares of KMG common stock are held through a bank, brokerage firm or
other nominee, please bring proof of your beneficial ownership of such shares to the special meeting. Acceptable proof could include an account statement showing that you owned shares of KMG common
stock on the record date. If you are the representative of a corporate or institutional shareholder, you must present valid photo identification along with proof that you are the representative of
such shareholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting.
KMG
shareholders who do not vote in favor of the proposal to approve and adopt the merger agreement, and who object in writing to the merger prior to the special meeting and comply with
all the requirements of the laws of the State of Texas, which are summarized in the accompanying proxy statement/prospectus and reproduced in their entirety in
Annex D
to the accompanying proxy
statement/prospectus, will be entitled to dissenters' rights of appraisal to obtain the fair value of their shares of KMG common stock.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. IF YOU ATTEND THE SPECIAL MEETING AND VOTE IN PERSON, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY
SUBMITTED.
If
you have any questions about the special meeting, the merger, the other proposals or the accompanying proxy statement/prospectus, would like additional copies of the proxy
statement/prospectus, need to obtain proxy cards or other information related to this proxy solicitation or need help submitting a proxy or voting your shares of KMG common stock, please contact KMG's
proxy solicitor:
Banks and Brokerage Firms, Please Call: (212) 297-0720
Shareholders and All Others Call Toll-Free: (855) 305-0856
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By order of the Board of Directors
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Christopher T. Fraser
Chairman of the Board, President and
Chief Executive Officer
October 9, 2018
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ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and financial information about Cabot Microelectronics Corporation ("Cabot
Microelectronics") and KMG Chemicals, Inc. ("KMG") from other documents that Cabot Microelectronics and KMG have filed with the U.S. Securities and Exchange Commission (the "SEC") and that are
contained in or incorporated by reference into this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section titled
"Where You Can Find More Information" beginning on page 146. This information is available for you to review at the SEC's public reference room located at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549, and through the SEC's website at www.sec.gov.
You can obtain copies of this proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus free of charge by
requesting them in writing or by telephone at the following addresses and telephone numbers:
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For Information Regarding Cabot Microelectronics:
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For Information Regarding KMG:
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Cabot Microelectronics Corporation
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KMG Chemicals, Inc.
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870 North Commons Drive
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300 Throckmorton Street
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Aurora, Illinois 60504
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Fort Worth, Texas 76102
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(630) 499-2600
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(817) 761-6006
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Attention: Investor Relations
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Attention: Investor Relations
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In
addition, if you have questions about the special meeting, the merger, the proposals or this proxy statement/prospectus, would like additional copies of the proxy
statement/prospectus, need to obtain proxy cards or other information related to the proxy solicitation or need help submitting a proxy or voting your shares of KMG common stock, you may contact Okapi
Partners LLC, KMG's proxy solicitor, at the address and telephone number listed below. You will not be charged for any of these documents that you request.
Okapi Partners LLC
1212 Avenue of the Americas, 24th Floor
New York, New York 10036
Banks and Brokerage Firms, Please Call: (212) 297-0720
Shareholders and All Others Call Toll-Free: (855) 305-0856
Email: info@okapipartners.com
If you would like to request any documents, please do so by November 5, 2018, which is the date that is five business days prior to
the date of the special meeting, in order to receive them before the special meeting.
Table of Contents
ABOUT THIS PROXY STATEMENT/PROSPECTUS
This proxy statement/prospectus, which forms part of a registration statement on Form S-4 (Registration No. 333-227301) filed with
the SEC by Cabot Microelectronics, constitutes a prospectus of Cabot Microelectronics under the Securities Act of 1933, as amended (referred to in this proxy statement/prospectus as the Securities
Act), with respect to the Cabot Microelectronics common stock to be issued to KMG shareholders pursuant to the merger. This proxy statement/prospectus also constitutes a proxy statement for KMG under
the Securities Exchange Act of 1934, as amended (referred to in this proxy statement/prospectus as the Exchange Act), and a notice of meeting with respect to the special meeting of KMG shareholders.
You
should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is
different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated October 9, 2018, and you should assume that the
information contained in this proxy statement/prospectus is accurate only as of such date. You should also assume that the information incorporated by reference into this proxy statement/prospectus is
accurate only as of the date of such information.
This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy in any
jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this proxy statement/prospectus regarding Cabot
Microelectronics has been provided by Cabot Microelectronics, and information contained in this proxy statement/prospectus regarding KMG has been provided by KMG.
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TABLE OF CONTENTS
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QUESTIONS AND ANSWERS
The following questions and answers are intended to briefly address some commonly asked questions regarding the merger,
the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a KMG shareholder. Please refer to the section titled "Summary"
beginning on page 1 and the more detailed information contained elsewhere in this proxy statement/prospectus, the annexes to this proxy statement/prospectus and the documents referred to in
this proxy statement/prospectus, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by
following the instructions under the section titled "Where You Can Find More Information" beginning on page 146.
Q: Why am I receiving this proxy statement/prospectus?
-
A:
-
KMG
Chemicals, Inc. ("KMG") is sending these materials to KMG shareholders to help them decide how to vote their shares of KMG common stock with respect to the
adoption of the Agreement and Plan of Merger, dated August 14, 2018 (as it may be amended from time to time, the "merger agreement"), by and among Cabot Microelectronics Corporation ("Cabot
Microelectronics"), KMG and Cobalt Merger Sub Corporation, a wholly owned subsidiary of Cabot Microelectronics ("Merger Sub"), which agreement provides for the acquisition of KMG by Cabot
Microelectronics.
This
document constitutes both a proxy statement of KMG and a prospectus of Cabot Microelectronics. It is a proxy statement because KMG is soliciting proxies from its shareholders. It is a prospectus
because Cabot Microelectronics will issue shares of its common stock in exchange for shares of KMG common stock in the merger if the merger is completed.
Q: When and where is the special meeting of the KMG shareholders?
-
A:
-
A
special meeting of KMG shareholders (the "special meeting") will be held to approve the merger on November 13, 2018, at 10:00 a.m. (Central Time), at
The Worthington Renaissance Fort Worth Hotel, 200 Main Street, Fort Worth, Texas 76102.
Q: What is the merger?
-
A:
-
KMG
has agreed to be acquired by Cabot Microelectronics under the terms of the merger agreement, which is further described in this proxy statement/prospectus. If the
merger agreement is approved and adopted by KMG shareholders and the other conditions to closing under the merger agreement are satisfied or waived, Merger Sub will merge with and into KMG (the
"merger"), with KMG surviving the merger as a wholly owned subsidiary of Cabot Microelectronics. KMG is sometimes referred to in this proxy statement/prospectus as the surviving company.
The
merger cannot be completed unless the merger proposal is approved by the affirmative vote of the holders of at least a majority of the shares of KMG common stock outstanding on the record date.
Your failing to submit a proxy or vote in person at the special meeting, or your abstaining from voting or your failing to provide your bank, brokerage firm or other nominee with instructions on how
to vote your shares, as applicable, will have the same effect as a vote against the merger proposal. The KMG board of directors unanimously recommends that shareholders vote
"
FOR
" the merger proposal. This proxy statement/prospectus includes important information about the merger and the merger agreement, a copy of which is
attached as
Annex A
to this proxy statement/prospectus. KMG shareholders should read this information carefully and in its entirety.
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Q: Are there any risks that I should consider in deciding whether to vote for the approval of the merger proposal?
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A:
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Yes.
You should read and carefully consider the risk factors set forth in the section titled "Risk Factors" beginning on page 22. You also should read and
carefully consider the risk factors of Cabot Microelectronics and KMG contained in the documents that are incorporated by reference into this proxy statement/prospectus.
Q: What will KMG shareholders receive for their shares if the merger is completed?
-
A:
-
If
the merger is completed, you will be entitled to receive, for each share of KMG common stock that you hold, merger consideration equal to $55.65 in cash, plus
0.2000 shares of Cabot Microelectronics common stock (the "merger consideration"), in each case, without interest and less any applicable withholding taxes. You will receive cash in lieu of any
fractional shares of Cabot Microelectronics common stock that you would otherwise be entitled to receive.
Based
on the closing price of Cabot Microelectronics common stock on August 14, 2018, the last full trading day before the public announcement of the merger, the per share value of KMG common
stock implied by the per share merger consideration is $79.93. Based on the closing price of Cabot Microelectronics common stock on October 4, the most recent practicable date prior to the date
of this proxy statement/prospectus, the per share value of KMG common stock implied by the per share merger consideration is $76.06. The implied value of the per share merger consideration will
fluctuate as the market price of Cabot Microelectronics common stock fluctuates because a portion of the per share merger consideration is payable in a fixed number of shares of Cabot Microelectronics
common stock. As a result, the value of the per share merger consideration that KMG shareholders will receive upon completion of the merger could be greater than, less than or the same as the value of
the merger consideration on the date of this proxy statement/prospectus or at the time of the KMG special meeting. Accordingly, you should obtain current stock price quotations for Cabot
Microelectronics common stock and KMG common stock before deciding how to vote with respect to approval of the merger proposal. Cabot Microelectronics common stock trades on The Nasdaq Global Select
Market (the "Nasdaq") under the symbol "CCMP," and KMG common stock trades on the New York Stock Exchange (the "NYSE") under the symbol "KMG."
For
additional information regarding the consideration to be received in the merger, see the section titled "The MergerPer Share Merger Consideration" beginning on page 45.
Q: What happens if I am eligible to receive a fraction of a share of Cabot Microelectronics common stock as part of the per share merger consideration?
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A:
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If
the aggregate number of shares of Cabot Microelectronics common stock that you are entitled to receive as part of the per share merger consideration otherwise
would include a fraction of a share of Cabot Microelectronics common stock, you will receive cash in lieu of that fractional share. See the section titled "The MergerExchange of Shares"
beginning on page 77.
Q: What will holders of KMG equity awards receive in the merger?
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A:
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Immediately
prior to the effective time of the merger (the "effective time"), each restricted stock unit award relating to shares of KMG common stock that was granted
prior to August 14, 2018 and that is outstanding as of immediately prior to the effective time will fully vest (with any applicable performance metrics deemed satisfied based on the level of
achievement specified in the applicable award agreement) and be cancelled and converted in exchange for the right to receive the merger consideration in respect of each share of KMG common stock
underlying the applicable restricted stock unit award.
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Immediately
prior to the effective time, each restricted unit award relating to shares of KMG common stock that was granted on or following August 14, 2018 and that is outstanding as of
immediately prior to the effective time will be assumed by Cabot Microelectronics and converted into a restricted stock unit award (an "assumed restricted stock unit award") relating to a number of
shares of Cabot Microelectronics common stock (rounded to the nearest whole share) equal to (i) the number of shares of KMG common stock subject to such KMG restricted stock unit award
immediately prior to the effective time, multiplied by (ii) the "equity award exchange ratio" (defined below). The assumed restricted stock unit awards will be subject to the same terms and
conditions as were applicable to the corresponding KMG equity award immediately prior to the effective time (including vesting terms). The "equity award exchange ratio" means the sum of
(a) 0.2000 and (b) the quotient (rounded to four decimal places) obtained by dividing (x) $55.65 by (y) the volume weighted average price per share (calculated to the
nearest one-hundredth of one cent) of Cabot Microelectronics common stock on the Nasdaq for the consecutive period of five trading days beginning on the seventh trading day immediately preceding the
effective time and concluding at the close of trading on the third trading day immediately preceding the effective time.
See
"The Merger AgreementTreatment of KMG Equity Awards" beginning on page 79.
Q: How will I receive the merger consideration to which I am entitled?
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A:
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After
receiving the proper documentation from you, following completion of the merger, the exchange agent for the merger will forward to you the Cabot
Microelectronics common stock and cash to which you are entitled. More information on the documentation you are required to deliver to the exchange agent may be found in the section titled "The Merger
AgreementExchange and Payment Procedures" beginning on page 82.
Q: What will happen to KMG as a result of the merger?
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A:
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If
the merger is completed, Merger Sub will be merged with and into KMG, with KMG continuing as the surviving company and a wholly owned subsidiary of Cabot
Microelectronics. As a result of the merger, KMG will no longer be a publicly held company. Following the merger, KMG common stock will be delisted from the NYSE and deregistered under the Exchange
Act.
Q: Will the Cabot Microelectronics common stock received at the time of completion of the merger be traded on an exchange?
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A:
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It
is a condition to the consummation of the merger that the shares of Cabot Microelectronics common stock to be issued to KMG shareholders in the merger be approved
for listing on The Nasdaq Global Select Market, subject to official notice of issuance.
Q: When is the merger expected to be completed?
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A:
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Cabot
Microelectronics and KMG currently expect the merger to be completed near the end of calendar year 2018, subject to receipt of required approval from KMG
shareholders and subject to the satisfaction or waiver of the other conditions contained in the merger agreement. However, Cabot Microelectronics and KMG cannot predict the actual date on which the
merger will be completed because completion is subject to conditions beyond their control and it is possible that such conditions could result in the merger being completed earlier, later or not at
all. See the section titled "The Merger AgreementConditions to Completion of the Merger" beginning on page 96.
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Q: What am I being asked to vote on?
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A:
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KMG
shareholders are being asked to vote upon the following proposals:
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1.
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Proposal 1The Merger Proposal
: the proposal to approve and adopt the merger agreement, which is further
described in the sections titled "The Merger" beginning on page 45 and "The Merger Agreement" beginning on page 80 and a copy of which is attached to this proxy statement/prospectus as
Annex A
;
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2.
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Proposal 2The Adjournment Proposal
: the proposal to approve the adjournment of the special meeting, if
necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the merger proposal; and
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3.
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Proposal 3
The Compensation Proposal
: the proposal to
approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger.
Q: How does the KMG board of directors recommend that I vote at the special meeting?
-
A:
-
The
KMG board of directors unanimously recommends that KMG shareholders vote "
FOR
" the merger proposal,
"
FOR
" the adjournment proposal and "
FOR
" the compensation proposal.
Q: What do I need to do now?
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A:
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After
carefully reading and considering the information contained in this proxy statement/prospectus, please submit your proxy as soon as possible so that your shares
of KMG common stock will be represented and voted at the special meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by the record holder if
your shares are held in "street name" by your bank, brokerage firm or other nominee.
Q: Should I send in my KMG stock certificates now?
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A:
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No.
Please DO NOT send your KMG stock certificates with your proxy card. If the merger is completed, you will receive shortly after the time the merger is completed
written instructions for exchanging your stock certificates for merger consideration.
Q: Who can vote at the special meeting?
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A:
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Only
KMG shareholders who held shares of record as of the close of business on October 4, the record date for the special meeting, are entitled to receive
notice of and to vote at the special meeting. KMG's official stock ownership records will conclusively determine whether a shareholder is a "holder of record" as of the record date.
Q: How many votes do I have?
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A:
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Each
KMG shareholder is entitled to one vote on each matter properly brought before the special meeting for each share of KMG common stock held of record as of the
close of business on the record date. As of the close of business on the record date, there were 15,553,484 shares of KMG common stock outstanding and owned by shareholders
(
i.e.
, excluding shares of KMG common stock held in treasury by KMG), held by 359 holders of record.
Q: What constitutes a quorum for the special meeting?
-
A:
-
A
majority of the shares of KMG common stock outstanding as of the close of business on the record date and entitled to vote, present in person or represented by
proxy, at the special meeting
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constitutes
a quorum for the purposes of the special meeting. Shares of KMG common stock represented at the special meeting but not voted, including shares of KMG common stock for which a shareholder
directs an "abstention" from voting, will be counted for purposes of determining a quorum.
A quorum is necessary to transact business at the special meeting. Once a share of KMG common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at
the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will have to be determined.
Q: What vote is required to approve each proposal to be considered at the KMG special meeting?
-
A:
-
The
votes required for each proposal are as follows:
-
1.
-
Proposal 1The Merger Proposal
: The approval of the proposal to approve and adopt the merger agreement
requires the affirmative vote of the holders of at least a majority of the shares of KMG common stock outstanding on the record date.
-
2.
-
Proposal 2The Adjournment Proposal
: The adjournment of the special meeting, if necessary or appropriate,
to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement
requires the affirmative vote of the holders of a majority of the shares of KMG common stock entitled to vote thereon and present in person or represented by proxy, whether or not a quorum is present.
-
3.
-
Proposal 3The Compensation Proposal
: The proposal to approve, by non-binding, advisory vote, certain
compensation arrangements for KMG's named executive officers in connection with the merger requires the affirmative vote of the holders of a majority of the shares of KMG common stock entitled to vote
on the matter at the special meeting and present in person or represented by proxy.
As
of the record date, KMG directors and executive officers, as a group, owned and were entitled to vote 1,088,049 shares of KMG common stock, or approximately 7.0% of the outstanding shares of KMG
common stock. Christopher T. Fraser, the Chairman of the Board, President and Chief Executive Officer of KMG, and Fred C. Leonard III, a member of KMG's board of directors, have entered into separate
voting agreements with Cabot Microelectronics, pursuant to which Mr. Fraser and Mr. Leonard have agreed to, among other matters, vote the shares of KMG common stock held by each of them,
representing approximately 4.9% of the shares of KMG common stock outstanding as of the close of business on the record date and entitled to vote at the special meeting, in favor of the merger.
Q: How are proxies counted and what results from a failure to vote, abstention or broker non-vote?
-
A:
-
Proposal 1The Merger Proposal
: Votes to abstain will not be counted as votes cast in favor of the
proposal to approve and adopt the merger agreement, but will count for the purpose of determining whether a quorum is present. If you fail to submit a proxy or to vote in person at the special
meeting, or if you vote to abstain, it will have the same effect as a vote "
AGAINST
" the proposal to approve and adopt the merger agreement.
Proposal 2The Adjournment Proposal
: If your shares of KMG common stock are present in person at the special meeting, but are not voted on,
or if you have given a proxy and abstained on, the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of
the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement, this will have the same effect as if you voted
"
AGAINST
" the adjournment of the special meeting, if necessary
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or
appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the
merger agreement. If you fail to submit a proxy or vote in person at the special meeting, or there are broker non-votes on the proposal, as applicable, the shares of KMG common stock that are not
voted will not be counted in respect of, and will not have an effect on, the vote on the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement.
Proposal 3The Compensation Proposal
: If your shares of KMG common stock are present in person at the special meeting, but are not voted on
this proposal, or if you have given a proxy and
abstained on this proposal, this will have the same effect as if you voted "
AGAINST
" the approval of the proposal. If you fail to submit a proxy or to
vote in person at the special meeting, or there are broker non-votes on the proposal, as applicable, the shares of KMG common stock held by you or your bank, brokerage firm or other nominee will not
be counted in respect of, and will not have an effect on, the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection
with the merger.
Q: How do I vote or have my shares voted?
-
A:
-
KMG
shareholders of record may vote their shares of KMG common stock or submit a proxy to have their shares of KMG common stock voted at the special meeting in one of
the following ways:
-
-
by telephone or over the Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control
number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Please be aware that if you vote by telephone or over the Internet, you may incur costs
such as telephone and Internet access charges for which you will be responsible;
-
-
by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or
-
-
in person, by attending the special meeting and casting your vote there.
If
you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of KMG common stock voted. Those
instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the special
meeting,
you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting.
Q: How will my proxy be voted?
-
A:
-
If
you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of
substitution, will vote your shares of KMG common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of KMG
common stock should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.
If
you properly sign your proxy card but do not mark the boxes showing how your shares of KMG common stock should be voted on a matter, the shares of KMG common stock represented by your properly
signed proxy will be voted "
FOR
" the proposal to approve and adopt the merger agreement, "
FOR
" the
adjournment of the special meeting, if necessary or appropriate, to solicit
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additional
proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement, and
"
FOR
" the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with
the merger.
Q: What must I bring to attend the special meeting?
-
A:
-
Only
KMG shareholders of record as of the close of business on the record date, their duly authorized proxy holders, beneficial owners with proof of ownership and
guests of KMG may attend the special meeting. If your shares of KMG common stock are held through a bank, brokerage firm or other nominee, please bring proof of your beneficial ownership of such
shares to the special meeting. Acceptable proof could include an account statement showing that you owned shares of KMG common stock on the record date. If you are the representative of a corporate or
institutional shareholder, you must present valid photo identification along with proof that you are the representative of such shareholder. Please note that cameras, recording devices and other
electronic devices will not be permitted at the special meeting.
Q: What is the difference between holding shares as a shareholder of record and in "street name"?
-
A:
-
If
your shares of KMG common stock are registered directly in your name with the transfer agent of KMG, Broadridge Corporate Issuer Solutions, you are considered,
with respect to those shares of KMG common stock, the shareholder of record. If you are a shareholder of record, this proxy statement/prospectus and the enclosed proxy card have been sent directly to
you by KMG.
If
your shares of KMG common stock are held through a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares of KMG common stock held in "street name." In that case,
this proxy statement/prospectus has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of KMG common stock, the shareholder of record.
As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting.
Q: If my shares are held in "street name" by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee vote my shares for me?
-
A:
-
Under
the rules of the NYSE, banks, brokerage firms or other nominees who hold shares in "street name" for customers have the authority to vote on "routine" proposals
when they have not received instructions from beneficial owners. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving
non-routine matters such as the approval of the proposal to approve and adopt the merger agreement, the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies
if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement, and the proposal to approve,
by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger. As a result, absent specific instructions from the beneficial owner
of such shares of KMG common stock, banks, brokerage firms and other nominees are not empowered to vote those shares of KMG common stock on non-routine matters. These broker non-votes will have the
same effect as a vote "
AGAINST
" the proposal to approve and adopt the merger agreement, but will not be counted in respect of, and will not have an
effect on, the vote on the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any
adjournment or postponement) to approve the proposal to approve and adopt the merger agreement, or the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the
named executive officers of KMG in connection with the merger.
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Q: What should I do if I receive more than one set of voting materials for the special meeting?
-
A:
-
You
may receive more than one set of voting materials for the special meeting, including multiple copies of this proxy statement/prospectus and multiple proxy cards
or voting instruction cards. For example, if you hold your KMG common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which
you hold shares. If you are a shareholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please submit each separate proxy or voting
instruction card that you receive by following the instructions set forth in each separate proxy or voting instruction card.
Q: What do I do if I am a KMG shareholder and I want to revoke my proxy?
-
A:
-
You
have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later
date through any of the methods available to you, by attending the special meeting and voting in person, or by giving written notice of revocation to KMG prior to the time the special meeting begins.
Written notice of revocation should be mailed to: KMG Chemicals, Inc., Attention: Corporate Secretary, 300 Throckmorton Street, Fort Worth, Texas 76102.
Q: What happens if I sell my shares of KMG common stock before the special meeting?
-
A:
-
The
record date is earlier than both the date of the special meeting and the closing of the merger. If you transfer your shares of KMG common stock after the record
date but before the special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the special meeting but will transfer the right to receive the per share
merger consideration to the person to whom you transfer your shares. In order to receive the merger consideration, you must hold your shares upon completion of the merger.
Q: Do KMG shareholders have dissenters' rights?
-
A:
-
Yes.
KMG shareholders are entitled to dissenters' rights under Chapter 10, Subchapter H of the Texas Business Organizations Code (the "TBOC"), provided
they (i) do not vote in favor of the proposal to approve and adopt the merger agreement, (ii) object in writing to the merger prior to the special meeting and (iii) follow the
procedures and satisfy the conditions set forth in Chapter 10, Subchapter H of the TBOC. For more information regarding dissenters' rights, see the section titled "Dissenters' Rights of
KMG Shareholders" beginning on page 136. In addition, a copy of Chapter 10, Subchapter H of the TBOC is attached as
Annex D
to this proxy statement/prospectus. Failure to strictly comply with Chapter 10, Subchapter H of the TBOC may result in your waiver of, or inability to, exercise dissenters' rights.
Q: Who will solicit and pay the cost of soliciting proxies?
-
A:
-
KMG
has engaged Okapi Partners LLC to assist in the solicitation of proxies for the special meeting. KMG estimates that it will pay Okapi Partners LLC a
fee of $30,000 plus an additional fee of $5.00 per incoming and outgoing telephone contact and telephonic votes received. KMG has agreed to reimburse Okapi Partners LLC for certain
out-of-pocket fees and expenses and also will indemnify Okapi Partners LLC against certain claims, costs, damages, liabilities, judgments and expenses. KMG also may reimburse banks, brokerage
firms, other nominees or their respective agents for their expenses in forwarding proxy materials to beneficial owners of KMG common stock. KMG's directors, officers and employees also may solicit
proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
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Q: How can I find more information about Cabot Microelectronics and KMG?
-
A:
-
You
can find more information about Cabot Microelectronics and KMG from various sources described in the section titled "Where You Can Find More Information"
beginning on page 146.
Q: Who can answer any questions I may have about the special meeting or the proxy materials?
-
A:
-
If
you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of KMG common stock or need additional copies of
this proxy statement/prospectus or the enclosed proxy card, please contact:
Okapi Partners LLC
1212 Avenue of the Americas, 24th Floor
New York, New York 10036
Banks and Brokerage Firms, Please Call: (212) 297-0720
Shareholders and All Others Call Toll-Free: (855) 305-0856
Email: info@okapipartners.com
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SUMMARY
The following summary highlights selected information described in more detail elsewhere in this proxy
statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus and may not contain all the information that may be important to you. To understand the merger and
the matters being voted on by KMG shareholders at the special meeting more fully, and to
obtain a more complete description of the legal terms of the merger agreement, you should carefully read this entire proxy statement/prospectus, including the annexes, and the documents to which Cabot
Microelectronics and KMG refer you. Each item in this summary includes a page reference directing you to a more complete description of that topic. See "Where You Can Find More Information" beginning
on page 146.
The Parties
(see pages 32 and 33)
KMG Chemicals, Inc.
KMG Chemicals, Inc., a Texas corporation, is headquartered in Fort Worth, Texas. From its facilities in North America, Europe and Asia,
KMG produces and distributes specialty chemicals and performance materials for the semiconductor, industrial wood preservation and pipeline and energy markets. KMG common stock trades on the NYSE
under the symbol "KMG." The principal executive offices of KMG are located at 300 Throckmorton Street, Fort Worth, Texas 76102, and its telephone number is (817) 761-6100.
Cabot Microelectronics Corporation
Cabot Microelectronics Corporation, a Delaware corporation, is the leading supplier of high-performance polishing slurries and second largest
supplier of polishing pads used in the manufacture of advanced integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP). CMP is a
polishing process used by IC device manufacturers to planarize or flatten many of the multiple layers of material that are deposited upon silicon wafers in the production of advanced ICs. Cabot
Microelectronics' products play a critical role in the production of advanced semiconductor devices, helping to enable its customers to produce smaller, faster and more complex IC devices with fewer
defects. Cabot Microelectronics' mission is to create value by delivering high-performing and innovative solutions that solve its customers' challenges. Cabot Microelectronics common stock trades on
the Nasdaq under the symbol "CCMP." The principal executive offices of Cabot Microelectronics are located at 870 North Commons Drive, Aurora, Illinois 60504, and its telephone number is
(630) 375-6631.
Cobalt Merger Sub Corporation
Cobalt Merger Sub Corporation, a Texas corporation and referred to in this proxy statement/prospectus as Merger Sub, is a wholly owned
subsidiary of Cabot Microelectronics. Merger Sub was formed by Cabot Microelectronics solely in contemplation of the merger, has not conducted any business and has no assets, liabilities or
obligations of any nature other than as set forth in the merger agreement. The principal executive offices of Merger Sub are located at c/o Cabot Microelectronics Corporation, 870 North
Commons Drive, Aurora, Illinois 60504, and its telephone number is (630) 375-6631.
The Merger and the Merger Agreement
(see
pages 45 and 80)
The
terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as
Annex A
to this proxy statement/prospectus. KMG and Cabot Microelectronics encourage you to
read the merger agreement carefully and in its
entirety, as it is the legal document that governs the merger.
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The
merger agreement provides that, subject to the terms and conditions of the merger agreement, Merger Sub will be merged with and into KMG, with KMG surviving the merger as a wholly
owned subsidiary of Cabot Microelectronics.
The Voting Agreements
(see page 101)
In
connection with the merger agreement, Cabot Microelectronics entered into voting agreements with Christopher T. Fraser and Fred C. Leonard III, copies of which are
attached as
Annex B
to this proxy statement/prospectus. Pursuant to the voting agreements, each of Messrs. Fraser and Leonard has agreed
to vote their shares of KMG common stock in favor of the merger agreement, subject to certain exceptions. As of the record date, Messrs. Fraser and Leonard collectively owned and were entitled
to vote 754,554 shares of KMG common stock, or approximately 4.9% of the outstanding shares of KMG common stock.
Per Share Merger Consideration
(see
page 45)
Upon
completion of the merger, each issued and outstanding share of KMG common stock (other than shares (i) held in treasury by KMG or owned by Cabot
Microelectronics or Merger Sub (which will be cancelled), (ii) owned by any direct or indirect wholly owned subsidiary of KMG or Cabot Microelectronics (other than Merger Sub) (which will be
converted into shares of the surviving company), (iii) owned by shareholders that have complied with the applicable provisions of Chapter 10, Subchapter H of the TBOC, or
(iv) underlying KMG restricted stock awards granted after August 14, 2018) will be converted into the right to receive $55.65 in cash, plus 0.2000 shares of Cabot Microelectronics common
stock, in each case, without interest and less any applicable withholding taxes. Each KMG shareholder who would otherwise have been entitled to receive a fractional share of Cabot Microelectronics
common stock in the merger will instead receive a cash payment in lieu of such fractional share.
Based
on the closing price of Cabot Microelectronics common stock on August 14, 2018, the last full trading day before the public announcement of the merger, the per share value
of KMG common stock implied by the per share merger consideration is $79.93. Based on the closing price of Cabot Microelectronics common stock on October 4, the most recent practicable date
prior to the date of this proxy statement/prospectus, the per share value of KMG common stock implied by the per share merger consideration is $76.06. The implied value of the per share merger
consideration will fluctuate as the market price of Cabot Microelectronics common stock fluctuates because a portion of the per share merger consideration is payable in a fixed number of shares of
Cabot Microelectronics common stock. As a result, the value of the per share merger consideration that KMG shareholders will receive upon completion of the merger could be greater than, less than or
the same as the value of the merger
consideration on the date of this proxy statement/prospectus or at the time of the KMG special meeting. Accordingly, you should obtain current stock price quotations for Cabot Microelectronics common
stock and KMG common stock before deciding how to vote with respect to approval of the merger proposal. Cabot Microelectronics common stock trades on the Nasdaq under the symbol "CCMP," and KMG common
stock trades on the NYSE under the symbol "KMG."
KMG Special Meeting
(see page 34)
Time, Place and Purpose of the Special Meeting
The special meeting to consider and vote upon the proposal to approve and adopt the merger agreement will be held on November 13, 2018,
at 10:00 a.m. (Central Time), at The Worthington Renaissance Fort Worth Hotel, 200 Main Street, Fort Worth, Texas 76102.
At
the special meeting, KMG shareholders will be asked to consider and vote upon (i) a proposal to approve and adopt the merger agreement, (ii) the adjournment of the
special meeting, if necessary
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or
appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the
merger agreement and (iii) a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger.
Record Date and Quorum
You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of KMG common stock as of the close of business
on October 4, 2018, the record date. On the record date, there were 15,553,484 shares of KMG common stock outstanding and entitled to vote. You will have one vote on all matters properly coming
before the special meeting for each share of KMG common stock that you owned on the record date.
A
majority of the shares of KMG common stock outstanding as of the close of business on the record date and entitled to vote, present in person or represented by proxy, at the special
meeting constitutes a quorum for the purposes of the special meeting. Shares of KMG common stock represented at the special meeting but not voted, including shares of KMG common stock for which a
shareholder directs an "abstention" from voting, will be counted for purposes of determining a quorum. A quorum is necessary to transact business at the special meeting. Once a share of KMG common
stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date
is set for the adjourned special meeting, then a new quorum will have to be determined.
Required Vote
The approval of the proposal to approve and adopt the merger agreement requires the affirmative vote of the holders of at least a majority of
the shares of KMG common stock outstanding on the record date. Votes to abstain will not be counted as votes cast in favor of the proposal to approve and adopt the merger agreement, but will count for
the purpose of determining whether a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, or if you vote to abstain, it will have the same effect as a vote
"
AGAINST
" the proposal to approve and adopt the merger agreement.
Approval
of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any
adjournment or postponement) to approve the proposal to approve and adopt the merger agreement will require the affirmative vote of the holders of a majority of the shares of KMG common stock entitled
to vote thereon and present in person or represented by proxy, whether or not a quorum is present. For
purposes of the vote on the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any
adjournment or postponement) to approve the proposal to approve and adopt the merger agreement, if your shares of KMG common stock are present in person at the special meeting but are not voted on, or
if you have given a proxy and abstained on, the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the
special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement, this will have the same effect as if you voted
"
AGAINST
" the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time
of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement. If you fail to submit a proxy or vote in person at the special meeting,
or there are broker non-votes on the issue, as applicable, the shares of KMG common stock that are not voted will not be counted in respect of, and will not have an effect on, the vote on the
adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are
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insufficient
votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement.
The
approval of the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger requires the
affirmative vote of the holders of a majority of the shares of KMG common stock entitled to vote on the matter at the special meeting and present in person or represented by proxy. For purposes of the
proposal, if your shares of KMG common stock are present in person at the special meeting but are not voted on this proposal, or if you have given a proxy and abstained on this proposal, this will
have the same effect as if you voted "
AGAINST
" the approval of the proposal. If you fail to submit a proxy or to vote in person at the special meeting,
or there are broker non-votes on the issue, as applicable, the shares of KMG common stock held by you or your bank, brokerage firm or other nominee will not be counted in respect of, and will not have
an effect on, the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger.
As
of the record date, the directors and executive officers of KMG were entitled to vote, in the aggregate, 1,088,049 shares of KMG common stock, representing 7.0% of the outstanding
shares of
KMG common stock as of the close of business on the record date. The directors and executive officers of KMG have informed KMG that they currently intend to vote all such shares of KMG common stock
"
FOR
" the proposal to approve and adopt the merger agreement, "
FOR
" the adjournment of the special
meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to
approve and adopt the merger agreement and "
FOR
" the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's
named executive officers in connection with the merger.
Proxies and Revocations
Any shareholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet, by returning the enclosed
proxy card in the accompanying prepaid reply envelope or may vote in person by appearing at the special meeting. If your shares of KMG common stock are held in "street name" through a bank, brokerage
firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of KMG common stock using the instructions provided by your bank, brokerage firm or
other nominee. If you fail to submit a proxy or to vote in person at the special meeting, or do not provide your bank, brokerage firm or other nominee with instructions as to how to vote your shares,
as applicable, your shares of KMG common stock will not be voted on the approval of the proposal to approve and adopt the merger agreement, which will have the same effect as a vote
"
AGAINST
" the proposal to approve and adopt the merger agreement, and your shares of KMG common stock will not have an effect on the vote to adjourn the
special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the
proposal to approve and adopt the merger agreement or on the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with
the merger. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the
special meeting.
You
have the right to revoke a proxy, whether delivered by telephone, over the Internet or by mail, at any time before it is exercised, by voting again at a later date through any of the
methods available to you, by attending the special meeting and voting in person, or by giving written notice of revocation to KMG prior to the time the special meeting begins. Written notice of
revocation should be mailed to: KMG Chemicals, Inc., Attention: Corporate Secretary, 300 Throckmorton Street, Fort Worth, Texas 76102.
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KMG's Reasons for the Merger; Recommendation of the KMG Board of
Directors
(see page 51)
After
careful evaluation of the merger agreement and the transactions contemplated thereby, including the merger, the KMG board of directors unanimously determined that
the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of KMG and its shareholders and approved and declared advisable the merger agreement and
the other transactions contemplated thereby, including the merger.
The KMG board of directors unanimously recommends that KMG shareholders vote "FOR" the proposal to approve and adopt the merger agreement, "FOR" the adjournment
of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve
the proposal to approve and adopt the merger agreement and "FOR" the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in
connection with the merger.
In
the course of reaching its recommendation, the KMG board of directors consulted with KMG's senior management and financial advisor, KeyBanc Capital Markets Inc. ("KBCM") and
outside legal counsel and considered a number of factors. See "The MergerKMG's Reasons for the Merger; Recommendation of the KMG Board of Directors" beginning on page 51.
Opinion of KeyBanc Capital Markets Inc.
(KBCM)
(see page 59)
KBCM
was retained by the KMG board of directors to act as financial advisor in connection with the merger. On August 14, 2018, KBCM rendered its oral opinion,
which was
subsequently confirmed in a written opinion dated August 14, 2018, to the KMG board of directors to the effect that, as of such date, and based upon and subject to the assumptions made,
procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by KBCM as set forth in its written opinion, the merger consideration to be paid to the
holders of KMG common stock pursuant to the merger agreement was fair from a financial point of view to such holders of KMG common stock.
The
full text of KBMC's written opinion to the KMG board of directors, dated August 14, 2018, is attached to this proxy statement/prospectus as
Annex C
and is incorporated by reference herein. The
written opinion sets forth, among other things, the assumptions made, procedures followed,
matters considered and limitations and qualifications of the review undertaken by KBMC in rendering its opinion. You should read the written opinion carefully in its entirety. The opinion was provided
to the KMG board of directors and addresses only, as of the date of the written opinion, the fairness, from a financial point of view, of the merger consideration to be paid to the holders of the KMG
common stock pursuant to the merger agreement, and it does not address any other aspect of the proposed transaction. It does not constitute a recommendation as to how any shareholder should vote with
respect to the merger or any other matter, and does not in any manner address the price at which the KMG common stock or Cabot Microelectronics common stock will trade at any future time. The summary
of the written opinion set forth herein is qualified in its entirety by reference to the full text of the written opinion. See the section entitled "The MergerOpinion of KeyBanc Capital
Markets Inc. (KBCM)" beginning on page 59 of this proxy statement/prospectus.
Interests of KMG's Directors and Executive Officers in the
Merger
(see page 68)
The
directors and executive officers of KMG may have interests in the merger that are different from or in addition to those of KMG shareholders generally. These
interests include the continued employment of certain executive officers of KMG, the treatment in the merger of performance-based and time-based awards granted under any agreement, which we refer to
as KMG equity awards, annual bonus and retention bonus awards, employment agreements, the executive severance plan and other rights held by KMG's directors and executive officers, and the
indemnification of former KMG
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directors
and officers by Cabot Microelectronics. The KMG board was aware of and considered these interests when it declared advisable the merger agreement and the transactions contemplated thereby,
including the merger and the voting agreements, determined that the terms of the merger agreement, and the transactions contemplated by the merger agreement, including the merger, were in the best
interests of KMG and its shareholders, and recommended that KMG shareholders approve and adopt the merger agreement and the transactions contemplated thereby, including the merger. See the sections
entitled "The MergerInterests of KMG's Directors and Executive Officers in the Merger" beginning on page 68 of this proxy statement/prospectus and "Proposal 3: The
Compensation Proposal" beginning on page 41 of this proxy statement/prospectus.
Material U.S. Federal Income Tax Consequences of the
Merger
(see page 72)
The
receipt of cash and shares of Cabot Microelectronics common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. For
U.S. federal income tax purposes, a U.S. holder (as defined below in the section titled "The MergerMaterial U.S. Federal Income Tax Consequences" beginning on page 72) will
generally recognize gain or loss equal to the difference, if any, between (i) the sum of the cash and the fair market value (as of the effective time) of the Cabot Microelectronics common stock
received in the merger and (ii) the U.S. holder's adjusted tax basis in the KMG common stock surrendered in exchange therefor. Non-U.S. holders (as defined below in the section titled "The
MergerMaterial U.S. Federal Income Tax Consequences" beginning on page 72) that receive the per share merger consideration pursuant to the merger may be subject to U.S. withholding
tax with respect to any cash received.
Each
holder of KMG common stock should read the discussion under "The MergerMaterial U.S. Federal Income Tax Consequences" beginning on page 72 for a more complete
discussion of the U.S. federal income tax consequences of the merger. Tax matters can be complicated, and the tax consequences of the merger to a particular holder of KMG common stock will depend on
such holder's particular facts and circumstances. Holders of KMG common stock should consult their own tax advisors to determine the specific consequences to them of exchanging their shares of KMG
common stock for cash and shares of Cabot Microelectronics common stock pursuant to the merger.
Accounting Treatment of the Merger
(see
page 72)
Cabot
Microelectronics prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (referred to in
this proxy statement/prospectus as GAAP). The merger will be accounted for using the acquisition method of accounting. Cabot Microelectronics will be treated as the acquirer for accounting purposes.
Regulatory Approvals Required to Complete the
Merger
(see pages 76 and 97)
Under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended, the "HSR Act"), and the rules and regulations promulgated thereunder by the Federal Trade
Commission (the "FTC"), the merger cannot be consummated until notifications have been submitted and certain information has been furnished to the Antitrust Division of the U.S. Department of Justice
(the "Antitrust Division") and the FTC, and specified waiting period requirements have been satisfied. Cabot Microelectronics and KMG each filed a pre-merger notification and report form pursuant to
the HSR Act with the Antitrust Division and the FTC on August 23, 2018. On September 4, 2018, Cabot Microelectronics and KMG each received notice that the FTC granted early termination
of the applicable waiting period under the HSR Act. Accordingly, the regulatory condition relating to the expiration or termination of the waiting period (and any extension thereof) under the HSR Act
in respect of the merger has been satisfied.
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Cabot
Microelectronics and KMG have agreed to use reasonable best efforts to obtain as promptly as reasonably practicable any consents and approvals of, or the expiration of waiting
periods applicable to, any third party, including any governmental entity, necessary, proper or advisable in connection with
the merger, subject to limitations as set forth in the merger agreement. See "The Merger AgreementRegulatory Approvals" beginning on page 97 of this proxy statement/prospectus.
Litigation Relating to the Merger
(see page 77)
On
September 24, 2018, a putative shareholder class action was filed in the United States District Court for the Northern District of Texas styled
Richard Walter, individually and on behalf of all others similarly situated,
v. KMG Chemicals, Inc., et. al.,
No. 4:18-cv-00785 (the "Walter Lawsuit").
The Walter Lawsuit asserts claims for alleged violation of Section 14(a) of the Exchange Act based on allegations that this proxy statement/prospectus is materially incomplete and misleading.
On October 5, 2018, a putative shareholder class and derivative action was filed in the District Court of the State of Texas for Tarrant County styled
Jordan Rosenblatt,
individually and on behalf of all others similarly situated, v. Christopher T. Fraser et al.,
No. 342-303508-18 (the "Rosenblatt Lawsuit"). The Rosenblatt
Lawsuit purports to assert direct and derivative claims for breaches of fiduciary duties against the KMG board of directors and for aiding and abetting those breaches of fiduciary duties against Cabot
Microelectronics and Merger Sub. KMG and Cabot Microelectronics believe the allegations in the lawsuits are without merit.
Expected Timing of Merger
Cabot Microelectronics and KMG currently expect the merger to be completed near the end of calendar year 2018, subject to receipt of required
approval from KMG shareholders and subject to the satisfaction or waiver of the other conditions contained in the merger agreement. However, Cabot Microelectronics and KMG cannot predict the actual
date on which the merger will be completed because completion is subject to conditions beyond their control and it is possible that such conditions could result in the merger being completed earlier,
later or not at all, as described in more detail in the section titled "The Merger AgreementConditions to Completion of the Merger" beginning on page 96.
Treatment of KMG Equity Awards
(see
pages 79 and 84)
Immediately
prior to the effective time, each restricted stock unit award relating to shares of KMG common stock that was granted prior to August 14, 2018 and
that is outstanding as of immediately prior to the effective time will fully vest (with any applicable performance metrics deemed satisfied based on the level of achievement specified in the
applicable award agreement) and be cancelled and converted in exchange for the right to receive the merger consideration in respect of each share of KMG common stock underlying the applicable
restricted stock unit award.
Immediately
prior to the effective time, each restricted unit award relating to shares of KMG common stock that was granted on or following August 14, 2018 and that is outstanding
as of immediately prior to the effective time will be assumed by Cabot Microelectronics and converted into a restricted stock unit award relating to a number of shares of Cabot Microelectronics common
stock (rounded to the nearest whole share) equal to (i) the number of shares of KMG common stock subject to such KMG restricted stock unit award immediately prior to the effective time,
multiplied by (ii) the "equity award exchange ratio" (defined below). The assumed restricted stock unit awards will be subject to the same terms and conditions as were applicable to the
corresponding KMG equity award immediately prior to the effective time (including vesting terms). The "equity award exchange ratio" means the sum of (a) 0.2000 and (b) the quotient
(rounded to four decimal places) obtained by dividing (x) $55.65 by (y) the volume weighted average price per share (calculated to the nearest one-hundredth of one cent) of Cabot
Microelectronics common stock on the Nasdaq for the
7
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consecutive
period of five trading days beginning on the seventh trading day immediately preceding the effective time and concluding at the close of trading on the third trading day immediately
preceding the effective time.
Financing of the Merger
(see pages 76 and
93)
Consummation
of the merger is not conditioned upon Cabot Microelectronics' ability to obtain financing. Cabot Microelectronics expects to use cash on hand and debt
financing to fund the cash component of the merger consideration.
In
connection with the execution of the merger agreement, Cabot Microelectronics entered into a commitment letter, dated as of August 14, 2018 (the "commitment letter"), with
JPMorgan Chase Bank, N.A., Bank of America, N.A., Goldman Sachs Bank USA and Merrill Lynch, Pierce, Fenner & Smith Incorporated (together, the "commitment parties"), pursuant to which the
commitment parties have committed to arrange and provide, subject to the terms and conditions set forth in the commitment letter, a senior secured revolving credit facility in an aggregate principal
amount of up to $200,000,000 (the "revolver") and a senior secured term loan facility in an aggregate principal amount of up to $1,065,000,000 (the "term loan").
Prior
to or simultaneously with the consummation of the merger, Cabot Microelectronics expects to execute definitive documentation with respect to the revolver and term loan on the terms
set forth in the commitment letter. The proceeds of the term loan and, subject to certain limitations, the revolver may be used to finance the merger, repay certain existing indebtedness of Cabot
Microelectronics and KMG, to pay fees and expenses related to the merger and for general corporate purposes.
Listing of Cabot Microelectronics Common Stock; Delisting of KMG Common
Stock
(see page 79)
It
is a condition to the consummation of the merger that the shares of Cabot Microelectronics common stock to be issued to KMG shareholders in the merger be approved
for listing on the Nasdaq, subject to official notice of issuance. As a result of the merger, shares of KMG common stock will cease to be listed on the NYSE.
Dissenters' Rights of KMG Shareholders
(see
page 136)
The
holders of KMG common stock have the right under Texas law to dissent from the merger and have the appraised fair value of their shares of KMG common stock as of
the date immediately preceding the effective date of the merger paid to them in cash. The appraised fair value of any particular number of shares of KMG common stock as of such date may be more or
less than the value of the merger consideration that a holder of that particular number of shares of KMG common stock would be issued in the merger in exchange for that particular number of shares of
KMG common stock pursuant to the merger agreement.
In
order to dissent, the holder of KMG common stock must carefully follow the requirements under Chapter 10, Subchapter H of the TBOC governing dissenters' rights,
including providing KMG, prior to the KMG special meeting, with a written objection to the merger that states that he or she will exercise his or her right to dissent with respect to his or her shares
of KMG common stock if the holders of the KMG common stock approve and adopt the merger agreement and the merger is completed. The provisions of the TBOC pertaining to dissenters' rights are attached
to this proxy statement/prospectus as
Annex D
and the summaries of those provisions in this proxy statement/prospectus should be read in
conjunction with, and are qualified in their entirety by, those provisions of the TBOC. Persons having beneficial interests in KMG common stock held of record in the name of another person, such as a
broker, bank or other nominee, must act promptly to cause the record holder to take the actions required under Texas law to exercise their dissenter's rights.
8
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If
you intend to exercise dissenters' rights as to shares of KMG common stock that you hold, you should read the provisions of the TBOC governing dissenters' rights carefully and consult
with your own legal counsel. Each holder of KMG common stock should also remember that if he or she returns a signed proxy card, but fails to provide instructions on that proxy card as to how his or
her shares of KMG common stock are to be voted against the approval of the merger agreement and the merger, such KMG shareholder's shares of KMG common stock will be considered to have voted in favor
of
the merger agreement and the merger. In that event, such KMG shareholder will not be able to assert dissenters' rights as to his or her shares of KMG common stock.
If
the KMG shareholders approve and adopt the merger agreement, a holder of KMG common stock who (i) delivers to the president and the secretary of KMG a written objection to the
merger prior to the KMG special meeting that states that such holder will exercise his or her right to dissent if the merger agreement and the merger are approved and the merger is completed and
includes an address for notice of the effectiveness of the merger, (ii) votes his or her shares of KMG common stock against approval of the merger agreement and the merger are at the KMG
special meeting, (iii) not later than the 20th day after Cabot Microelectronics sends such holder notice that the merger was completed, delivers to the president and secretary of Cabot
Microelectronics a written demand for payment of the fair value of his or her shares of KMG common stock, which demand states he or she holds shares of KMG common stock and states the number of shares
of KMG common stock such holder owns, his or her estimate of the fair value of such shares and an address to which a notice relating to the dissent and appraisal procedures may be sent, and
(iv) not later than the 20th day after he or she makes that demand for payment, submits to Cabot Microelectronics the certificates representing his or her shares of KMG common stock will
be entitled under the TBOC to receive the appraised fair value of his or her shares of KMG common stock as of the date immediately prior to the effective time of the merger.
No Solicitation of KMG Takeover Proposals
(see
page 90)
As
more fully described in this proxy statement/prospectus and in the merger agreement, and subject to the exceptions summarized below, KMG has agreed that it will not
(i) solicit, initiate or knowingly encourage or knowingly facilitate any inquiry regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to,
a KMG takeover proposal (as defined on page 90), (ii) engage in, continue or otherwise participate in any discussions or negotiations, or furnish to any other person any information in
connection with a KMG takeover proposal or (iii) approve, adopt, recommend or enter into (or propose to do any of the foregoing) any letter of intent, agreement or commitment with respect to a
KMG takeover proposal.
Notwithstanding
the foregoing restrictions, if at any time prior to obtaining the approval of the KMG shareholders of the proposal to approve and adopt the merger agreement, KMG receives
a written, bona fide, unsolicited takeover proposal that did not result from a material breach of KMG's non-solicitation obligations, KMG may (i) furnish information with respect to KMG to the
party making the KMG takeover proposal (subject to certain conditions and obligations described below) and (ii) engage in discussions or negotiations with the party making such KMG takeover
proposal, if, and only if, the KMG board of directors determines in good faith, after consultation with its independent financial advisor and outside legal counsel, that the KMG takeover proposal
constitutes or would reasonably be expected to lead to a KMG superior proposal (as defined on page 91) and that the failure to take such action would be inconsistent with the KMG board of
directors' fiduciary duties under applicable law.
KMG
agreed to promptly (and in any event within 24 hours) notify Cabot Microelectronics if the KMG board of directors makes a determination that a KMG takeover proposal
constitutes or is reasonably expected to lead to a KMG superior proposal or if KMG furnishes nonpublic information and/or enters into discussions or negotiations with a person making a KMG takeover
proposal.
9
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KMG
also agreed to promptly (and in any event within 24 hours after, to the knowledge of KMG, its receipt) notify Cabot Microelectronics of the receipt of a KMG takeover proposal
or any request for information relating to KMG or other inquiry or communication that is reasonably likely to lead to a KMG takeover proposal. Such notice must include the identity of the person or
persons making the KMG takeover proposal (or the related proposal or inquiry) and the material terms thereof. Further, after giving such a notice, KMG must keep Cabot Microelectronics reasonably
informed, on a current basis, as to the status of any KMG takeover proposal (including any material developments, discussions or negotiations related thereto) by promptly (and in any event within
24 hours after receipt) providing Cabot Microelectronics copies of any correspondence, proposals, indications of interest, and/or draft agreements relating to such KMG takeover proposal.
No Change in Recommendation or Termination for a Company Superior
Proposal
(see page 92)
The
merger agreement provides that, subject to certain exceptions, the KMG board of directors will not (i) fail to include the KMG board of directors
recommendation in this proxy statement/prospectus; (ii) change, qualify, withhold, withdraw or modify the KMG board of directors recommendation (or authorize or publicly propose to do so);
(iii) fail to recommend against any KMG takeover proposal that is a tender or exchange offer within ten business days of such tender or exchange offer; or (iv) adopt, approve or
recommend to KMG shareholders a KMG takeover proposal (or resolve or publicly propose or announce its intention to do so).
Company Superior Proposals; Intervening Events
(see page 92)
However,
at any time before approval by KMG shareholders of the proposal to approve and adopt the merger agreement is obtained, the KMG board of directors may, with
respect to a bona fide, unsolicited KMG takeover proposal that did not result from a material breach by KMG of its non-solicitation obligations under the merger agreement, make a KMG adverse
recommendation change (following compliance with the obligation to provide an opportunity to Cabot Microelectronics to make a revised proposal as described below), if, and only if, the KMG board of
directors determines in good faith, after consultation with KMG's independent financial advisors and outside legal counsel, that (i) such KMG takeover proposal constitutes a KMG superior
proposal or (ii) the failure to make a KMG adverse recommendation change would be inconsistent with the KMG board of directors' fiduciary duties under applicable law.
In
addition, at any time before approval by KMG shareholders of the proposal to approve and adopt the merger agreement is obtained, the KMG board of directors may, in response to a KMG
intervening event (as defined on page 92), make a KMG adverse recommendation change (following compliance with the obligation to provide an opportunity to Cabot Microelectronics to make a
revised proposal), if, and only if, the KMG board of directors determines in good faith, after consultation with KMG's independent financial advisors and outside legal counsel, that the failure to
make a KMG adverse recommendation change would be inconsistent with the KMG board of directors' fiduciary duties under applicable law.
Prior
to making any KMG adverse recommendation change, (i) the KMG board of directors must provide Cabot Microelectronics four business days' prior written notice of any intention
to take such action (specifying, among other things, the identity of the person making a KMG takeover proposal and copies of the related agreements, if any, or the KMG intervening event, as
applicable); (ii) during the four business days following the delivery of such written notice, KMG must consider in good faith any revisions or changes to the merger agreement or the merger
proposed by Cabot Microelectronics; and (iii) after the four business days, the KMG board of directors must conclude, after consultation with independent financial advisors and outside legal
counsel, that even if the revisions committed to in writing by Cabot Microelectronics were to be accepted by KMG, the failure to make a KMG adverse recommendation change would be inconsistent with the
fiduciary duties of the KMG board of directors
10
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and,
in the case of a KMG takeover proposal, that the proposal continues to constitute a KMG superior proposal.
Conditions to Completion of the Merger
(see
page 96)
The
obligations of each of KMG and Cabot Microelectronics to effect the merger are subject to the satisfaction or waiver of the following
conditions:
-
-
the approval and adoption of the merger agreement by the holders of at least a majority of the shares of the KMG common stock outstanding on
the record date must have been obtained;
-
-
the registration statement on Form S-4 of which this prospectus/proxy statement forms a part must have been declared effective by
the SEC under the Securities Act and no stop order suspending the effectiveness of the Form S-4 may be in effect and no proceedings for that purpose may be initiated by the SEC;
-
-
no court or other governmental entity may have entered or issued an order, writ, injunction, judgment, decree, ruling, directive or award, or
adopted or enacted a law, that prohibits, enjoins or makes illegal the consummation of the merger;
-
-
the waiting period (or extensions thereof) applicable to the merger under the HSR Act must have expired or been terminated;
-
-
shares of Cabot Microelectronics common stock that will be issued in connection with the merger must have been approved for listing on the
Nasdaq, subject to official notice of issuance;
-
-
the other party must have performed or complied in all material respects with its covenants;
-
-
subject to certain exceptions and materiality standards provided in the merger agreement, the representations and warranties of the other party
must be true and correct at and as of the closing date as though made at and as of the closing date (except if made as of an earlier date, in which case as of such date);
-
-
since the date of the merger agreement, there must not have been any fact, change, circumstance, event, occurrence, condition or development
that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect (as defined in the merger agreement) on the other party; and
-
-
the other party must have delivered to the party a certificate, dated as of the closing date and signed by its chief executive officer or
another senior officer, certifying to the effect that the preceding three conditions have been met.
Neither
Cabot Microelectronics nor KMG can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.
Termination of the Merger Agreement
(see
page 98)
Cabot
Microelectronics and KMG may mutually agree to terminate the merger agreement before completing the merger, whether before or after the receipt of KMG shareholder
approval of the merger proposal.
Either
Cabot Microelectronics or KMG may terminate the merger agreement, whether before or after the receipt of KMG shareholder approval of the merger
proposal:
-
-
if the merger has not been consummated by February 14, 2019 (which deadline may be extended, under certain circumstances, to
May 14, 2019) (such date, as it may be extended, the "end date");
11
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-
-
if a governmental entity of competent jurisdiction has entered or issued a final and nonappealable order or adopted or enacted a law that
permanently restrains, enjoins or makes illegal consummation of the merger;
-
-
if the approval of the proposal to approve and adopt the merger agreement by KMG shareholders has not been obtained upon a vote on the approval
of the merger proposal at the special meeting (including any postponement or adjournment thereof); or
-
-
if the other party has materially breached any of its representations, warranties, covenants or agreements contained in the merger agreement
and such breach (i) would result in the failure of the terminating party's conditions to closing and (ii) is not curable or is not cured by the earlier of the end date and the date that
is 30 business days following written notice describing such breach in reasonable detail.
Cabot
Microelectronics may also terminate the merger agreement, prior to receipt of approval of the merger proposal by KMG shareholders, if (i) a KMG adverse recommendation change
occurs or (ii) KMG is in material and willful breach of its non-solicitation obligations or its obligations to hold the special meeting under the merger agreement and such breach is not curable
or is not cured by the earlier of the end date and the date that is 30 business days following written notice describing such breach in reasonable detail.
Expenses and Termination Fees Relating to the
Merger
(see page 99)
KMG
must pay Cabot Microelectronics a termination fee of $38,765,000 if the merger agreement is terminated in certain circumstances involving an adverse recommendation
change, a breach of KMG's non-solicitation obligations or obligations relating to the KMG special meeting under the merger agreement. In addition, in the event that the merger agreement is terminated
because (i) the merger is not consummated prior to the End Date, (ii) the KMG shareholder approval has not been obtained at the special meeting of KMG shareholders, or (iii) KMG
materially and willfully breaches any of its representations, warranties, covenants or agreements, and in any such case (a) a competing takeover proposal has been publicly announced or
disclosed prior to such termination and (b) within 12 months after such termination, KMG enters into a definitive agreement with respect to, or consummates, the announced or disclosed
KMG takeover proposal (in each case with references to 25% in the definition of a KMG takeover proposal being replaced by 50% for this purpose) the termination fee is also payable.
All
other expenses relating to the merger will generally be paid by the party incurring or required to incur the expense; except that KMG and Cabot Microelectronics will each pay
one-half of all filing fees required under the HSR Act and filing fees and printing and mailing costs for this proxy statement/prospectus.
Comparison of Rights of Common Stockholders of Cabot Microelectronics and
Common Shareholders of KMG
(see page 127)
KMG
shareholders receiving shares of Cabot Microelectronics common stock in the merger will have different rights once they become stockholders of Cabot
Microelectronics due to differences between the governing corporate documents and corporate state laws applicable to KMG and Cabot Microelectronics.
Risk Factors
(see page 22)
You
should consider all the information contained in or incorporated by reference into this proxy statement/prospectus in deciding how to vote for the proposals
presented in this proxy statement/prospectus.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CABOT MICROELECTRONICS
The following selected historical consolidated financial data of Cabot Microelectronics for each of the fiscal years during the three-year
period ended September 30, 2017, and the selected historical consolidated balance sheet data as of September 30, 2017 and 2016 have been derived from Cabot Microelectronics' audited
consolidated financial statements as of and for the fiscal year ended September 30, 2017 contained in Cabot Microelectronics' Annual Report on Form 10-K for the fiscal year ended
September 30, 2017, which is incorporated by reference into this proxy statement/prospectus. From this same report, the following selected historical consolidated financial data for each of the
fiscal years ended September 30, 2014 and 2013 and the selected balance sheet data as of September 30, 2015, 2014 and 2013 have been derived from Cabot Microelectronics' unaudited
selected financial summary table.
The
following unaudited selected financial data for Cabot Microelectronics as of June 30, 2018, and for the nine months ended June 30, 2018 and 2017, are derived from Cabot
Microelectronics' unaudited condensed consolidated financial statements and accompanying notes, which are contained in Cabot Microelectronics' Quarterly Report on Form 10-Q for the quarter
ended June 30, 2018, which is incorporated by reference into this proxy statement/prospectus. The following unaudited selected financial data as of June 30, 2017 is derived from Cabot
Microelectronics' unaudited condensed consolidated financial statements for the quarter ended June 30, 2017, which have previously been filed with the SEC but which are not incorporated by
reference into this proxy statement/prospectus. The unaudited financial data presented have been prepared on a basis consistent with Cabot Microelectronics' audited consolidated financial statements.
In the opinion of Cabot Microelectronics' management, such unaudited financial data reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the
results for those periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period.
The
information set forth below is only a summary and is not necessarily indicative of the results of future operations of Cabot Microelectronics, including following completion of the
merger, and you should read the following information together with Cabot Microelectronics' consolidated financial statements, the related notes and the sections titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in Cabot Microelectronics' Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and in its
Quarterly Reports on Form 10-Q for the quarters ended December 31, 2017, March 31, 2018 and June 30, 2018, which are incorporated by reference into this proxy
statement/prospectus, and in Cabot Microelectronics' other reports filed with the SEC. For more information, see the section titled "Where You Can Find More Information" beginning on page 146.
13
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CABOT MICROELECTRONICS CORPORATION AND SUBSIDIARIES
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(Dollar Amounts in Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
June 30,
|
|
Year Ended September 30,
|
|
|
|
2018
|
|
2017
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
Consolidated Statement of Income data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
433,394
|
|
$
|
370,395
|
|
$
|
507,179
|
|
$
|
430,449
|
|
$
|
414,097
|
|
$
|
424,666
|
|
$
|
433,131
|
|
Gross profit
|
|
|
229,759
|
|
|
184,079
|
|
|
254,129
|
|
|
210,202
|
|
|
212,231
|
|
|
203,093
|
|
|
212,116
|
|
Income before income taxes
|
|
|
116,688
|
|
|
76,659
|
|
|
109,372
|
|
|
70,438
|
|
|
71,197
|
|
|
68,594
|
|
|
74,220
|
|
Net income
|
|
|
61,825
|
|
|
60,450
|
|
|
86,952
|
|
|
59,849
|
|
|
56,146
|
|
|
50,751
|
|
|
52,578
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (in dollars per share)
|
|
|
2.42
|
|
|
2.42
|
|
|
3.47
|
|
|
2.47
|
|
|
2.32
|
|
|
2.12
|
|
|
2.27
|
|
Diluted earnings per share (in dollars per share)
|
|
|
2.35
|
|
|
2.37
|
|
|
3.40
|
|
|
2.43
|
|
|
2.26
|
|
|
2.04
|
|
|
2.19
|
|
Dividends per share (in dollars per share)
|
|
|
1.00
|
|
|
0.58
|
|
|
0.78
|
|
|
0.54
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
186,124
|
|
$
|
363,902
|
|
$
|
397,890
|
|
$
|
287,479
|
|
$
|
354,190
|
|
$
|
284,155
|
|
$
|
226,029
|
|
Total assets
|
|
$
|
759,482
|
|
$
|
801,274
|
|
$
|
834,100
|
|
$
|
727,230
|
|
$
|
660,474
|
|
$
|
601,167
|
|
$
|
551,592
|
|
Long-term debt
|
|
$
|
|
|
$
|
137,309
|
|
$
|
132,997
|
|
$
|
146,961
|
|
$
|
155,313
|
|
$
|
164,063
|
|
$
|
150,937
|
|
Total stockholders' equity
|
|
$
|
634,181
|
|
$
|
575,022
|
|
$
|
595,037
|
|
$
|
497,648
|
|
$
|
428,964
|
|
$
|
372,002
|
|
$
|
323,442
|
|
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF KMG
The following selected historical consolidated financial data of KMG for each of the fiscal years during the three-year period ended
July 31, 2018, and the selected historical consolidated balance sheet data as of July 31, 2018 and 2017 have been derived from KMG's audited consolidated financial statements as of and
for the fiscal year ended July 31, 2018 contained in KMG's Annual Report on Form 10-K for the fiscal year ended July 31, 2018, which is incorporated by reference into this proxy
statement/prospectus. The following selected historical consolidated financial data for each of the fiscal years ended July 31, 2015 and 2014 and the selected balance sheet data as of
July 31, 2016, 2015 and 2014 have been derived from KMG's audited consolidated financial statements as of and for such years contained in KMG's other reports filed with the SEC, which are not
incorporated by reference into this proxy statement/prospectus.
The
results of operations of Flowchem Holdings LLC ("Flowchem") have been included in KMG's results of operations for the period subsequent to the completion of the acquisition of
Flowchem by KMG on June 15, 2017.
The
information set forth below is only a summary and is not necessarily indicative of the results of future operations of KMG, including following completion of the merger, and you
should read the following information together with KMG's consolidated financial statements, the related notes and the sections titled "Management's Discussion and Analysis of Financial Condition and
Results of
Operations" contained in KMG's Annual Report on Form 10-K for the fiscal year ended July 31, 2018, which is incorporated by reference into this proxy statement/prospectus, and in KMG's
other reports filed with the SEC. For more information, see the section titled "Where You Can Find More Information" beginning on page 146.
15
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KMG CHEMICALS, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(Dollar Amounts in Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended July 31,
|
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
465,556
|
|
$
|
333,442
|
|
$
|
297,978
|
|
$
|
320,498
|
|
$
|
353,406
|
|
Gross profit
|
|
|
197,661
|
|
|
130,138
|
|
|
115,508
|
|
|
109,477
|
|
|
103,499
|
|
Income before income taxes
|
|
|
64,399
|
|
|
32,442
|
|
|
28,230
|
|
|
18,884
|
|
|
266
|
|
Net income (loss)
|
|
$
|
64,841
|
|
$
|
23,633
|
|
$
|
18,675
|
|
$
|
12,138
|
|
$
|
(988
|
)
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share (in dollars per share)
|
|
$
|
4.41
|
|
$
|
1.99
|
|
$
|
1.59
|
|
$
|
1.04
|
|
$
|
(0.09
|
)
|
Diluted earnings (loss) per share (in dollars per share)
|
|
$
|
4.29
|
|
$
|
1.92
|
|
$
|
1.57
|
|
$
|
1.03
|
|
$
|
(0.09
|
)
|
Dividends per share (in dollars per share)
|
|
$
|
0.12
|
|
$
|
0.12
|
|
$
|
0.12
|
|
$
|
0.12
|
|
$
|
0.12
|
|
Balance Sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
24,436
|
|
$
|
20,708
|
|
$
|
12,428
|
|
$
|
7,517
|
|
$
|
19,252
|
|
Total assets
|
|
$
|
818,434
|
|
$
|
792,431
|
|
$
|
237,028
|
|
$
|
242,359
|
|
$
|
250,858
|
|
Long-term debt, net
|
|
$
|
306,119
|
|
$
|
523,102
|
|
$
|
35,800
|
|
$
|
53,000
|
|
$
|
60,000
|
|
Total stockholders' equity
|
|
$
|
416,067
|
|
$
|
173,716
|
|
$
|
143,189
|
|
$
|
123,421
|
|
$
|
120,206
|
|
16
Table of Contents
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following tables present unaudited pro forma condensed combined financial information about Cabot Microelectronics' consolidated balance
sheet and statements of income after giving effect to the merger with KMG, financing activities related to the merger and KMG's 2017 acquisition of Flowchem. The information under "Unaudited Pro Forma
Condensed Combined Balance Sheet" in the table below gives effect to the merger as if it had taken place on June 30, 2018. The information under "Unaudited Pro Forma Condensed Combined
Statement of Income" in the table below gives effect to the merger as if it had taken place on October 1, 2016, and gives effect to KMG's 2017 acquisition of Flowchem as if it had taken place
on August 1, 2016. This unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting where Cabot Microelectronics is considered the
acquirer of KMG for accounting purposes. See the section titled "The MergerAccounting Treatment of the Merger" beginning on page 72.
Cabot
Microelectronics and KMG have different fiscal years. Cabot Microelectronics' fiscal year ends on September 30, whereas KMG's fiscal year ends on July 31. The
unaudited pro forma condensed combined balance sheet and statements of income have been prepared utilizing period ends that differ by less than 93 days, as permitted by Rule 11-02
Regulation S-X.
This
unaudited pro forma condensed combined financial information has been prepared for illustrative purposes only and is based on assumptions and estimates considered appropriate by
Cabot Microelectronics' management; however, it is not necessarily indicative of what Cabot Microelectronics' consolidated financial condition or results of operations actually would have been
assuming the transactions had been consummated as of the dates indicated, nor does it purport to represent Cabot Microelectronics' consolidated financial position or results of operations for future
periods. The adjustments included in this unaudited pro forma condensed combined financial information are preliminary and may be revised. This unaudited pro forma condensed combined financial
information does not consider any impacts of potential revenue enhancements, anticipated cost savings and expense efficiencies or other synergies that may be achieved in the acquisitions or any
strategies that management may consider in order to continue to efficiently manage Cabot Microelectronics' operations. Future results may vary significantly from the results reflected due to various
factors, including those discussed in the section titled "Risk Factors" beginning on page 22. The information presented below should be read in conjunction with the historical consolidated financial
statements of Cabot Microelectronics and KMG, including the related notes filed by each of them with the SEC, the historical consolidated financial statements and pre-acquisition financial information
of Flowchem as filed by KMG with the SEC and the pro forma condensed combined financial information of Cabot Microelectronics, KMG and Flowchem, including the related notes appearing elsewhere in this
proxy statement/prospectus. See the sections titled "Where You Can Find More Information" and "Unaudited Pro Forma Condensed Combined Financial Information" beginning on pages 146 and 103,
respectively.
17
Table of Contents
CABOT MICROELECTRONICS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2018
(in thousands)
|
|
|
|
|
|
|
As of June 30, 2018
|
|
Pro Forma Balance Sheet Data:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
131,519
|
|
Total assets
|
|
|
2,293,537
|
|
Long-term debt, net of current portion
|
|
|
1,034,350
|
|
Total stockholders' equity
|
|
|
923,221
|
|
CABOT MICROELECTRONICS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
June 30, 2018
for Cabot Microelectronics
and July 31, 2018
for KMG
|
|
Year Ended
September 30, 2017
for Cabot Microelectronics
and July 31, 2017
for KMG and the Period
from August 1, 2016
to June 14, 2017
for Flowchem
|
|
Pro Forma Statement of Income Data:
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
788,286
|
|
$
|
917,422
|
|
Net income
|
|
|
92,240
|
|
|
97,457
|
|
Net income per common share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.21
|
|
$
|
3.44
|
|
Diluted
|
|
|
3.12
|
|
|
3.38
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
28,718
|
|
|
28,255
|
|
Diluted
|
|
|
29,490
|
|
|
28,781
|
|
18
Table of Contents
UNAUDITED COMPARATIVE PER SHARE INFORMATION
The following tables set forth historical per share information of Cabot Microelectronics and KMG and unaudited pro forma condensed combined per
share information after giving effect to the merger, financing activities related to the merger and KMG's 2017 acquisition of Flowchem. You should not rely on this information as being indicative of
the historical results that would have been achieved had the companies always been combined or the future results that Cabot Microelectronics will experience after the merger. The preliminary
unaudited pro forma condensed combined per share data has been derived from and should be read in conjunction with the "Unaudited Pro Forma Condensed Combined Financial Information" beginning on
page 103 and the related notes included in this proxy statement/prospectus beginning on page 109. The historical per share data has been derived from the historical consolidated
financial statements of Cabot Microelectronics and KMG and unaudited pro forma condensed combined financial information about Cabot Microelectronics' combined balance sheet and statements of income
after giving effect to the merger with KMG and KMG's 2017 acquisition of Flowchem, in each case and as of and for the periods indicated, included and incorporated by reference in this proxy
statement/prospectus. The equivalent basis pro forma combined amounts are calculated by multiplying the pro forma combined data by an exchange ratio of 0.2, which is the share exchange consideration
to KMG shareholders in Cabot stock as contemplated in the merger agreement. The equivalent basis pro forma calculations exclude the $55.65 per share cash portion of the merger consideration.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical Cabot
Microelectronics
|
|
Historical
KMG
|
|
Pro Forma
Combined
|
|
Equivalent
Basis
Pro Forma
Combined
|
|
Income per basic share attributable to common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended June 30, 2018 for Cabot Microelectronics and July 31, 2018 for KMG and Flowchem
|
|
$
|
2.42
|
|
$
|
3.80
|
|
$
|
3.21
|
|
$
|
0.64
|
|
Twelve months ended September 30, 2017 for Cabot Microelectronics and July 31, 2017 for KMG and Flowchem
|
|
$
|
3.47
|
|
$
|
1.99
|
|
$
|
3.44
|
|
$
|
0.69
|
|
Income per diluted share attributable to common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended June 30, 2018 for Cabot Microelectronics and July 31, 2018 for KMG and Flowchem
|
|
$
|
2.35
|
|
$
|
3.70
|
|
$
|
3.12
|
|
$
|
0.62
|
|
Twelve months ended September 30, 2017 for Cabot Microelectronics and July 31, 2017 for KMG and Flowchem
|
|
$
|
3.40
|
|
$
|
1.92
|
|
$
|
3.38
|
|
$
|
0.68
|
|
Cash dividends per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended June 30, 2018 for Cabot Microelectronics and July 31, 2018 for KMG and Flowchem
|
|
$
|
1.00
|
|
$
|
0.09
|
|
|
N/A
|
(1)
|
|
N/A
|
(1)
|
Twelve months ended September 30, 2017 for Cabot Microelectronics and July 31, 2017 for KMG and Flowchem
|
|
$
|
0.78
|
|
$
|
0.12
|
|
|
N/A
|
(1)
|
|
N/A
|
(1)
|
Book value per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2018 for Cabot Microelectronics and July 31, 2018 for KMG and Flowchem
|
|
$
|
24.83
|
|
$
|
26.83
|
|
$
|
32.08
|
|
$
|
6.42
|
|
-
(1)
-
Pro
forma combined dividends per share is not presented, as the dividend per share for Cabot Microelectronics will be determined by the Cabot Microelectronics Board
following completion of the merger.
19
Table of Contents
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus contain forward-looking
statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts but reflect Cabot Microelectronics' and
KMG's current beliefs, expectations or intentions regarding future events. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "guidance," "intend," "may,"
"plan," "possible," "potential," "predict," "project," "pursue," "will," "should," "target," and other similar words, phrases or expressions or the negative thereof are intended to identify such
forward-looking statements. These forward-looking statements include, without limitation, Cabot Microelectronics' and KMG's expectations with respect to the potential revenue enhancements, anticipated
cost savings and expense efficiencies or other synergies, costs and other anticipated financial impacts of the merger; future financial and operating results of the combined company; the combined
company's plans, objectives, expectations and intentions with respect to future operations and services; required adoption of the merger agreement by KMG shareholders; required approvals of the merger
by governmental regulatory authorities; the satisfaction of the closing conditions to the merger; and the timing of the completion of the merger.
All
forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking
statements, many of which are generally outside the control of Cabot Microelectronics and KMG and difficult to predict. These risks and uncertainties include, among others, those set forth under "Risk
Factors" beginning on page 22, as well as risks and uncertainties relating to:
-
-
the uncertainty of the value of the merger consideration that KMG shareholders will receive in the merger due to a fixed exchange ratio and a
potential fluctuation in the market price of Cabot Microelectronics common stock;
-
-
the possibility that the consummation of the merger is delayed or does not occur, including due to the failure of KMG shareholders to approve
the merger proposal;
-
-
the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement or the failure to
satisfy the closing conditions;
-
-
the taking of governmental action (including the passage of legislation) to block the merger or otherwise adversely affecting Cabot
Microelectronics and KMG;
-
-
KMG's directors and executive officers having interests in the merger that are different from, or in addition to, the interests of KMG
shareholders generally;
-
-
the effect of restrictions placed on Cabot Microelectronics', KMG's or their respective subsidiaries' business activities and the limitations
put on KMG's ability to pursue alternatives to the merger pursuant to the merger agreement;
-
-
the disruption from the merger making it more difficult for Cabot Microelectronics and KMG to maintain relationships with their respective
customers, employees or suppliers;
-
-
the possibility of actual results of operations, cash flows and financial position after the merger materially differing from the unaudited pro
forma condensed combined financial information contained in this proxy statement/prospectus;
-
-
the possibility of changes in circumstances between the date of the signing of the merger agreement and the closing of the merger that are not
reflected in the fairness opinion obtained by the KMG board of directors;
-
-
unexpected costs or unexpected liabilities that may arise from the merger, whether or not consummated;
20
Table of Contents
-
-
the outcome of any legal proceedings that have been or may be instituted against Cabot Microelectronics, KMG or others following announcement
of the merger;
-
-
the inability of Cabot Microelectronics and KMG to retain key personnel;
-
-
the ability of Cabot Microelectronics to successfully integrate the business of KMG;
-
-
the possibility that the expected cost savings and synergies from the merger will not be realized or will take longer to realize than expected;
-
-
the risk that the financing required to complete the merger is not obtained or is obtained on terms other than those currently anticipated,
including financing less favorable to Cabot Microelectronics than its current commitments;
-
-
the effect of the additional indebtedness that Cabot Microelectronics will incur in connection with the merger; and
-
-
the impact of global economic conditions, fluctuations in exchange rates, labor relations, competitive actions taken by other semiconductor
businesses or other competitors, terrorist attacks or natural disasters.
Cabot
Microelectronics and KMG caution that the foregoing list of factors is not exhaustive. Additional information concerning these and other risk factors is contained in Cabot
Microelectronics' and KMG's most recently filed Annual Reports on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other SEC
filings, as such filings may be amended from time to time. All of the forward-looking statements made by Cabot Microelectronics or KMG contained or incorporated by reference in this proxy
statement/prospectus and all subsequent written and oral forward-looking statements concerning Cabot Microelectronics, KMG, the merger or other matters attributable to Cabot Microelectronics or KMG or
any person acting on either of their behalf are expressly qualified in their entirety by the cautionary statement above.
Readers
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such statements were made. Neither Cabot Microelectronics nor KMG
undertakes any obligation to update or revise any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof, even if experience or future changes make
it clear that projected results expressed or implied in such statements will not be realized, except as may be required by applicable law. Neither Cabot Microelectronics nor KMG intends to make any
update or other revision to these forward-looking statements publicly available, except as may be required by applicable law.
21
Table of Contents
RISK FACTORS
In addition to the other information included in and incorporated by reference into this proxy statement/prospectus,
including the matters addressed in the section titled "Cautionary Statement Regarding Forward-Looking Statements" beginning on page 20, you should carefully consider the following risk factors before
deciding whether to vote for the merger proposal and the other proposals described in this proxy statement/prospectus. In addition, you should read and consider the risk factors associated with each
of the businesses of Cabot Microelectronics and KMG because these risk factors will relate to the combined company following the completion of the merger. These risk factors may be found in Cabot
Microelectronics' Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and KMG's Annual Report on Form 10-K for the fiscal year ended July 31, 2017 and,
in each case, any amendments thereto, as such risk factors may be updated or supplemented in each company's subsequently filed Quarterly Reports on Form 10-Q or Current Reports on
Form 8-K, which are incorporated by reference into this proxy statement/prospectus. You should also consider the other information in this proxy statement/prospectus and the other documents
incorporated by reference into this proxy statement/prospectus. See the section titled "Where You Can Find More Information" beginning on page 146.
Risks Relating to the Merger
Because the exchange ratio is fixed for the stock portion of the merger consideration and the market price of
Cabot Microelectronics common stock has fluctuated and will continue to fluctuate, you cannot be sure of the value of the merger consideration you will receive.
Upon completion of the merger, shares of KMG common stock will be converted into the right to receive $55.65 in cash, plus 0.2000 shares of
Cabot Microelectronics common stock, in each case, without interest and less any applicable withholding taxes. Based on the closing price of Cabot Microelectronics common stock on August 14,
2018, the last full trading day before the public announcement of the merger, the per share value of KMG common stock implied by the per share merger consideration is $79.93. Based on the closing
price of Cabot Microelectronics common stock on October 4, 2018, the most recent practicable date prior to the date of this proxy statement/prospectus, the per share value of KMG common stock
implied by the per share merger consideration is $76.06. The implied value of the per share merger consideration will fluctuate as the market price of Cabot Microelectronics common stock fluctuates
because a portion of the per share merger consideration is payable in a fixed number of shares of Cabot Microelectronics common stock. The value of the stock portion of the merger consideration has
fluctuated since the date of the announcement of the merger agreement and will continue to fluctuate from the date of this proxy statement/prospectus to the date of the special meeting and the date
the merger is completed and thereafter. Accordingly, at the time of the special meeting, KMG shareholders will not know or be able to determine the market value of the merger consideration they would
receive upon completion of the merger. Stock price changes may result from a variety of factors, including, among others, general market and economic conditions, changes in Cabot Microelectronics' and
KMG's respective businesses, operations and prospects, market assessments of the likelihood that the merger will be completed, the timing of the merger, regulatory considerations and other risk
factors set forth or incorporated by reference in this proxy statement/prospectus. Many of these factors are beyond Cabot Microelectronics' and KMG's control. You are urged to obtain current market
quotations for Cabot Microelectronics common stock before deciding whether to vote for the merger proposal.
Completion of the merger is subject to the conditions contained in the merger agreement and if these
conditions are not satisfied or waived, the merger will not be completed.
The obligations of Cabot Microelectronics and KMG to complete the merger are subject to the satisfaction or waiver of a number of conditions,
including, among others, the approval of the merger proposal by KMG shareholders. For a more complete summary of the required regulatory approvals
22
Table of Contents
and
the conditions to the closing of the merger, see the section titled "The Merger AgreementConditions to Completion of the Merger."
Many
of the conditions to the closing of the merger are not within Cabot Microelectronics' or KMG's control, and neither company can predict when or if these conditions will be
satisfied. If any of these conditions are not satisfied or waived prior to February 14, 2019, which deadline may be extended, under certain circumstances, to May 14, 2019, it is possible
that the merger agreement will be terminated. The failure to satisfy all of the required conditions could delay the completion of the merger for a significant period of time or prevent it from
occurring. Any delay in completing the merger could cause Cabot Microelectronics not to realize some or all of the benefits that Cabot Microelectronics expects to achieve if the merger is successfully
completed within its expected timeframe. There can be no assurance that the conditions to the closing of the merger will be satisfied or waived or that the merger will be completed.
KMG's directors and executive officers have interests in the merger that may be different from, or in
addition to, your interests as a shareholder of KMG generally.
When considering the recommendation of the KMG board of directors that KMG shareholders approve the merger proposal, KMG shareholders should be
aware that directors and executive officers of KMG have certain interests in the merger that may be different from, or in addition to, the interests of KMG shareholders generally. These interests
generally include, among others, rights to accelerated vesting of equity awards and certain payments (including retention bonus awards) and benefits in connection with the merger and/or a qualifying
termination of employment following the merger. See the section titled "The MergerInterests of KMG's Directors and Executive Officers in the Merger" beginning on page 68 for a more
detailed description of these interests. As a result of these interests, directors and executive officers of KMG might be more likely to
support and vote in favor of the merger proposal than if they did not have these interests. KMG's board of directors were aware of these interests and considered them, among other things, in
evaluating and negotiating the merger agreement and the merger, and in recommending that the KMG shareholders approve and adopt the merger agreement.
The merger agreement limits KMG's ability to pursue alternatives to the merger and may discourage other
companies from trying to acquire KMG.
The merger agreement contains provisions that make it more difficult for KMG to sell its business to a party other than Cabot Microelectronics.
These provisions include a general prohibition on KMG soliciting any company takeover proposal or offer for a competing transaction. Further, there are only limited exceptions to KMG's agreement that
the KMG board of directors will not withdraw or modify the recommendation of the KMG board of directors that KMG shareholders vote in favor of the merger proposal, and KMG is not permitted to
terminate the merger agreement or enter into an agreement with respect to a competing company takeover proposal if the KMG board of directors withdraws or modifies such recommendation. In addition,
upon termination of the merger agreement, KMG is required to pay Cabot Microelectronics a termination fee of $38,765,000 if the merger agreement is terminated in certain circumstances involving an
adverse recommendation change or a willful and material breach of KMG's non-solicitation obligations or certain obligations relating to the KMG special meeting under the merger agreement.
These
provisions could discourage a third party that might have an interest in acquiring all or a significant part of KMG from considering or proposing that acquisition, even if that
party were prepared to pay consideration with a higher per share value than the value proposed to be received or realized in the merger. These provisions might also result in a potential competing
acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.
23
Table of Contents
The merger agreement subjects KMG to restrictions on its business activities.
The merger agreement subjects KMG to restrictions on its business activities and obligates KMG to generally operate its businesses in all
material respects in the ordinary course. These restrictions could have an adverse effect on KMG's results of operations, cash flows and financial
position. See the section titled "The Merger AgreementConduct of Businesses of KMG and Cabot Microelectronics Prior to Completion of the Merger" beginning on page 87 for a description of
the restrictions applicable to KMG.
The business relationships of Cabot Microelectronics and KMG and their respective subsidiaries may be subject
to disruption due to uncertainty associated with the merger, which could have an adverse effect on the results of operations, cash flows and financial position of Cabot Microelectronics, KMG and,
following the completion of the merger, the combined company.
Parties with which Cabot Microelectronics and KMG, or their respective subsidiaries, do business may be uncertain as to the effects on them of
the merger and related transactions, including with respect to current or future business relationships with Cabot Microelectronics, KMG, their respective subsidiaries or the combined company. These
relationships may be subject to disruption as customers, suppliers and other persons with whom Cabot Microelectronics and KMG have a business relationship may delay or defer certain business decisions
or might decide to terminate, change or renegotiate their relationships with Cabot Microelectronics or KMG, as applicable, or consider entering into business relationships with parties other than
Cabot Microelectronics, KMG, their respective subsidiaries or the combined company. These disruptions could have an adverse effect on the results of operations, cash flows and financial position of
KMG, Cabot Microelectronics or the combined company following the completion of the merger, including an adverse effect on Cabot Microelectronics' ability to realize the expected synergies and other
benefits of the merger. The risk, and adverse effect, of any disruption could be exacerbated by a delay in completion of the merger or termination of the merger agreement.
Failure to complete the merger could negatively affect the stock price and the future business and financial
results of KMG.
If the merger is not completed for any reason, including as a result of KMG shareholders failing to approve the merger proposal, the ongoing
business of KMG may be adversely affected and, without realizing any of the benefits of having completed the merger, KMG could be subject to a number of negative consequences, including, among others,
the following:
-
-
KMG may experience negative reactions from the financial markets, including negative impacts on its stock price;
-
-
KMG may experience negative reactions from its customers and suppliers;
-
-
KMG may experience negative reactions from its employees and may not be able to retain key management personnel and other key employees;
-
-
KMG will have incurred, and will continue to incur, significant non-recurring costs in connection with the merger that it may be unable to
recover;
-
-
the merger agreement places certain restrictions on the conduct of KMG's business prior to completion of the merger, the waiver of which is
subject to the consent of Cabot Microelectronics, which may prevent KMG from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the
pendency of the merger that may be beneficial to KMG (see the section titled "The Merger AgreementConduct of Businesses of KMG and Cabot Microelectronics Prior to Completion of the
Merger" beginning on page 87 for a description of the restrictions applicable to KMG); and
24
Table of Contents
-
-
matters relating to the merger (including integration planning) will require substantial commitments of time and resources by KMG management,
which could otherwise be devoted to day-to-day operations and other opportunities that may be beneficial to KMG as an independent company.
In
addition, upon termination of the merger agreement, KMG is required to pay Cabot Microelectronics a termination fee of $38,765,000 if the merger agreement is terminated in certain
circumstances involving an adverse recommendation change, a breach of KMG's non-solicitation obligations or certain obligations relating to the special meeting under the merger agreement. Finally, KMG
could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against KMG to perform its obligations under the merger agreement. If
the merger is not completed, any of these risks may materialize and may adversely affect KMG's businesses, financial condition, financial results and stock price.
Completion of the merger will trigger change in control or other provisions in certain agreements to which
KMG is a party, which may have an adverse impact on the combined company's business and results of operations.
The completion of the merger will trigger change in control and other provisions in certain agreements to which KMG is a party. If KMG and Cabot
Microelectronics are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking
monetary damages. Even if KMG and Cabot Microelectronics are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less
favorable to KMG or the combined company. Any of the foregoing or similar developments may have an adverse impact on the combined company's business and results of operations. See section titled "The
MergerInterests of KMG's Directors and Executive Officers in the Merger."
The shares of Cabot Microelectronics common stock to be received by KMG shareholders as a result of the
merger will have rights different from the shares of KMG common stock.
Upon completion of the merger, KMG shareholders will no longer be shareholders of KMG but will instead receive cash and Cabot Microelectronics
common stock and become Cabot Microelectronics stockholders, and their rights as stockholders will be governed by the terms of the Cabot Microelectronics charter and bylaws and by the Delaware General
Corporation Law (the "DGCL"). See the section titled "Comparison of Rights of Common Stockholders of Cabot Microelectronics and Common Shareholders of KMG" beginning on page 127 for a
discussion of the different rights associated with Cabot Microelectronics common stock.
The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus
is preliminary and the actual financial condition and results of operations after the merger may differ materially from them.
The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is presented for illustrative
purposes only and is not necessarily indicative of what Cabot Microelectronics' actual financial condition or results of operations would have been had the merger been completed on the dates
indicated. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon assumptions, preliminary estimates and accounting reclassifications, to record
the KMG identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this proxy statement/prospectus is
preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of KMG as of the date of the completion of the
merger. Accordingly, the final acquisition accounting adjustments may differ
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materially
from the pro forma adjustments reflected in this proxy statement/prospectus. For more information, see "Unaudited Pro Forma Condensed Combined Financial Information" beginning on page 103.
The prospective financial information for Cabot Microelectronics and KMG is based on various assumptions that
may not prove to be correct.
The unaudited prospective financial information of Cabot Microelectronics and KMG set forth in the section entitled "The
MergerCertain Unaudited Prospective Financial Information" was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the
American Institute of Certified Public Accountants with respect to prospective financial information. In the view of KMG's management, the prospective information was prepared on a reasonable basis,
reflected the best currently available estimates and judgments of Cabot Microelectronics and KMG, as applicable, and presented, to the best of their knowledge and belief, the expected course of action
and the expected future financial performance of Cabot Microelectronics and KMG. However, the prospective information is not fact. Further, prospective financial information does not reflect any
impact of the proposed transaction and has not been updated since the date of preparation.
The
prospective financial information was prepared and provided by KMG's management, Cabot Microelectronics' management and/or KBCM as described in such section. The independent
registered public accounting firms of Cabot Microelectronics and KMG have not audited, reviewed, examined, compiled nor applied agreed upon procedures with respect to the accompanying prospective
financial information and accordingly, the independent registered public accounting firms of Cabot Microelectronics and KMG do not express an opinion or any other form of assurance with respect
thereto. The unaudited prospective financial information was prepared solely for internal use to assist in the evaluation of the business combination. Such information is inherently subjective in
nature, though considered reasonable by the management of KMG as of the date such information was prepared, and is susceptible to interpretation and, accordingly, contemplated results may not be
achieved. While presented with numerical specificity, the unaudited prospective financial information reflects numerous estimates and assumptions with respect to future industry performance under
various industry scenarios as well as assumptions for competition, general business, economic, market and financial conditions and matters specific to the businesses of Cabot Microelectronics and KMG,
all of which are difficult to predict and many of which are beyond Cabot Microelectronics' and KMG's control. Accordingly, there can be no assurance that the assumptions made in preparing any
particular information will prove accurate. There will be differences between actual and prospective results, and the differences may be material. The risk that these uncertainties and contingencies
could cause the assumptions to fail to be reflective of actual results is further increased due to the length of time over which these assumptions apply. In light of the foregoing factors and the
uncertainties inherent in the unaudited prospective financial information, KMG shareholders are cautioned not to place undue reliance on the unaudited prospective financial information, and the
inclusion of the unaudited prospective financial information in this proxy statement should not be regarded as a representation by any person that the results contained therein will be achieved.
The fairness opinion obtained by the KMG board of directors from KBCM does not reflect changes,
circumstances, developments or events that may have occurred or may occur after the date of the fairness opinion. The KMG board of directors has not obtained an updated fairness opinion as of the date
of this proxy statement/prospectus from KBCM, and the KMG board of directors does not expect to receive an updated fairness opinion prior to the closing of the merger.
At the meeting of the KMG board of directors on August 14, 2018, KBCM rendered its oral opinion, subsequently confirmed in writing, that
as of such date, and based upon and subject to the
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various
assumptions, considerations, qualifications and limitations set forth in its written opinion, the consideration of $55.65 in cash and 0.2000 shares of Cabot Microelectronics common stock, in
each case, without interest and less any applicable withholding taxes, per share of KMG common stock to be received pursuant to, and in accordance with, the terms of the merger agreement by the
holders of KMG common stock, other than (i) Cabot Microelectronics and Merger Sub and (ii) shareholders that
have complied with the applicable provisions of Chapter 10, Subchapter H of the TBOC, was fair, from a financial point of view, to such holders. KBCM's fairness opinion does not reflect
changes, circumstances, developments or events that may have occurred or may occur after the date of its opinion, including changes in the operations and prospects of KMG and Cabot Microelectronics or
their respective operating companies, regulatory or legal changes, general market and economic conditions and other factors that may be beyond the control of KMG and Cabot Microelectronics, and on
which KBCM's opinion was based, and that may alter the value of KMG or Cabot Microelectronics or the prices of shares of KMG or Cabot Microelectronics common stock by the time the merger is completed.
The value of the stock portion of the merger consideration has fluctuated since, and could be materially different from its value as of, the date of KBCM's opinion, and KBCM's opinion does not address
the prices at which shares of KMG common stock or Cabot Microelectronics common stock may have traded or trade since the date of its opinion. KBCM's opinion does not speak as of the time the merger
will be completed or as of any date other than the date of its opinion. KMG does not anticipate asking KBCM to update its opinion, and KBCM does not have any obligation or responsibility to update,
revise or reaffirm its opinion based on circumstances, developments or events that may have occurred or may occur after the date of its opinion. The fairness opinion that KMG received from its
financial advisor is attached as
Annex C
to this proxy statement/prospectus. For a description of the opinion, see "The
MergerOpinion of KeyBanc Capital Markets Inc (KBCM)." For a description of the other factors considered by KMG's board of directors in determining to approve the merger, see "The
MergerKMG's Reasons for the Merger; Recommendation of the KMG Board of Directors."
The merger may not be accretive, and may be dilutive, to Cabot Microelectronics earnings per share, which may
negatively affect the market price of Cabot Microelectronics common stock.
Because shares of Cabot Microelectronics common stock will be issued in the merger, it is possible that the merger will be dilutive to Cabot
Microelectronics earnings per share, which could negatively affect the market price of shares of Cabot Microelectronics common stock. Based on the number of outstanding shares of KMG common stock as
of October 4, 2018, Cabot Microelectronics would issue approximately 3,110,696 shares of Cabot Microelectronics common stock in the merger. The issuance of these new shares of Cabot
Microelectronics common stock could have the effect of depressing the market price of shares of Cabot Microelectronics common stock, through dilution of earnings per share or otherwise.
In
addition, future events and conditions could decrease accretion or increase dilution relative to current expectations including adverse changes in market conditions, additional
transaction and integration related costs and other factors such as the failure to realize some or all of the benefits anticipated in the merger. Any dilution of, or delay of any accretion to, Cabot
Microelectronics' earnings per share could cause the price of shares of Cabot Microelectronics common stock to decline or grow at a reduced rate.
The merger will involve substantial costs.
KMG and Cabot Microelectronics have incurred, and expect to continue to incur, a number of non-recurring costs associated with the merger and
combining the operations of the two companies. The substantial majority of non-recurring expenses will be comprised of transaction and regulatory costs related to the merger.
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Cabot
Microelectronics and the combined company also will incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems
consolidation costs and employment-related costs. Cabot Microelectronics continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the
integration of the two companies' businesses. Although Cabot Microelectronics expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the
integration of the businesses, should allow Cabot Microelectronics to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.
Lawsuits may in the future be filed against KMG, its directors, Cabot Microelectronics and Merger Sub
challenging the merger, and an adverse ruling in any such lawsuit may prevent the merger from becoming effective or from becoming effective within the expected timeframe.
Transactions like the merger are frequently the subject of litigation or other legal proceedings, including actions alleging that the board of
directors of either KMG or Cabot Microelectronics breached their respective fiduciary duties to their stockholders by entering into the merger agreement, by failing to obtain a greater value in the
transaction for their stockholders or otherwise. Both KMG and Cabot Microelectronics believe that any such litigation or proceedings would be without merit, but there can be no assurance that they
will not be brought. If litigation or other legal proceedings are in fact brought against either KMG or Cabot Microelectronics or against the board of directors of either company, they will defend
against it, but they might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on
the business, results of operation or financial position of KMG, Cabot Microelectronics or the combined company, including through the possible diversion of either company's resources or distraction
of key personnel.
Further,
one of the conditions to the completion of the merger is that no injunction by any court or other tribunal of competent jurisdiction will be in effect that temporarily or
permanently prohibits, enjoins or makes illegal the consummation of the merger. As such, if any of the plaintiffs are successful in obtaining an injunction prohibiting the consummation of the merger,
that injunction may prevent the merger from becoming effective or from becoming effective within the expected timeframe.
Uncertainties associated with the merger may cause a loss of management personnel and other key employees of
KMG or Cabot Microelectronics, which could adversely affect the future business and operations of the combined company following the merger.
KMG and Cabot Microelectronics are dependent on the experience and industry knowledge of their officers and other key employees to execute their
business plans. The combined company's success after the merger will depend in part upon its ability to retain key management personnel and other key employees of KMG and Cabot Microelectronics.
Current and prospective employees of KMG and Cabot Microelectronics may experience uncertainty about their future roles with the combined company following the merger, which may materially adversely
affect the ability of each of KMG and Cabot Microelectronics to attract and retain key personnel during the pendency of the merger. Accordingly, no assurance can be given that the combined company
will be able to retain key management personnel and other key employees of KMG and Cabot Microelectronics.
Risks Relating to the Business of the Combined Company Upon Completion of the Merger
The market price of Cabot Microelectronics common stock after the merger will continue to fluctuate and may
be affected by factors different from those affecting shares of KMG common stock currently.
Upon completion of the merger, holders of KMG common stock will receive cash and Cabot Microelectronics common stock and become holders of Cabot
Microelectronics common stock. The
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market
price of Cabot Microelectronics common stock may fluctuate significantly following completion of the merger and holders of KMG common stock could lose the value of their investment in Cabot
Microelectronics common stock. In addition, any significant price and volume fluctuations of the stock markets could have a material adverse effect on the market for, or liquidity of, the Cabot
Microelectronics common stock, regardless of Cabot Microelectronics' actual operating performance. In addition, Cabot Microelectronics' business differs in important respects from that of KMG, and
accordingly, the results of operations of the combined company and the market price of Cabot Microelectronics common stock after the completion of the merger may be affected by factors different from
those currently affecting the independent results of operations of each of Cabot Microelectronics and KMG. For a discussion of the businesses of Cabot Microelectronics and KMG and of some important
factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under "Where You Can Find More Information"
beginning on page 146.
Sales of shares of Cabot Microelectronics common stock after the completion of the merger may cause the
market price of Cabot Microelectronics common stock to fall.
Based on the number of outstanding shares of KMG common stock as of October 4, 2018, Cabot Microelectronics would issue approximately
3,110,696 shares of Cabot Microelectronics common stock in the merger. Certain KMG shareholders may decide not to hold the shares of Cabot Microelectronics common stock they will receive in the
merger. Other KMG shareholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of Cabot Microelectronics common stock
that they receive in the merger. Such sales of Cabot Microelectronics common stock could have the effect of depressing the market price for Cabot Microelectronics common stock and may take place
promptly following the merger.
Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated
benefits and cost savings of the merger may not be realized.
KMG and Cabot Microelectronics have operated and, until the completion of the merger, will continue to operate, independently. The success of
the merger, including anticipated benefits and cost savings, will depend, in part, on Cabot Microelectronics' ability to successfully combine and integrate the businesses of Cabot Microelectronics and
KMG. It is possible that the pendency of the merger and/or the integration process could result in the loss of key employees, higher than expected costs, diversion of management attention of both KMG
and Cabot Microelectronics, the disruption of either company's ongoing businesses or inconsistencies in standards, controls, procedures
and policies that adversely affect the combined company's ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits and cost savings of the merger.
As part of the integration process, Cabot Microelectronics may also attempt to divest certain assets of the combined company, which may not be possible on favorable terms, or at all, or if successful,
may change the profile of the combined company. If Cabot Microelectronics experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at
all, or may take longer to realize than expected. Cabot Microelectronics' management continues to refine its integration plan. These integration matters could have an adverse effect on each of Cabot
Microelectronics and KMG during this transition period and for an undetermined period after completion of the merger. In addition, the actual cost savings of the merger could be less than anticipated.
After the merger, KMG shareholders will have a significantly lower ownership and voting interest in Cabot
Microelectronics than they currently have in KMG and will exercise less influence over management.
Based on the number of shares of KMG common stock outstanding as of October 4, and the number of shares of Cabot Microelectronics common
stock outstanding as of October 4, it is expected
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that,
immediately after completion of the merger, former KMG shareholders will own approximately 10.9% of the outstanding shares of Cabot Microelectronics common stock. Consequently, former KMG
shareholders will have less influence over the management and policies of Cabot Microelectronics than they currently have over the management and policies of KMG.
In connection with the merger, Cabot Microelectronics will incur additional indebtedness and may also assume
certain of KMG's outstanding indebtedness, which could adversely affect Cabot Microelectronics, including by decreasing Cabot Microelectronics' business flexibility, and will increase its interest
expense.
As of June 30, 2018, Cabot Microelectronics had no consolidated indebtedness. Cabot Microelectronics' pro forma indebtedness as of
June 30, 2018, after giving effect to the merger and the anticipated incurrence and extinguishment of indebtedness in connection therewith, is expected to be approximately $1.03 billion.
Cabot Microelectronics will have increased indebtedness following completion of the merger in comparison to that of Cabot Microelectronics on a recent historical basis, which could have the effect,
among other things, of reducing Cabot Microelectronics' flexibility to
respond to changing business and economic conditions and increasing Cabot Microelectronics' interest expense. Cabot Microelectronics will also incur various costs and expenses associated with the
financing of the merger. The amount of cash required to pay interest on Cabot Microelectronics' increased indebtedness levels following completion of the merger and thus the demands on Cabot
Microelectronics' cash resources will be greater than the amount of cash flows required to service the indebtedness of Cabot Microelectronics prior to the merger. The increased levels of indebtedness
following completion of the merger could also reduce funds available for working capital, capital expenditures, acquisitions and other general corporate purposes and may create competitive
disadvantages for Cabot Microelectronics relative to other companies with lower debt levels. If Cabot Microelectronics does not achieve the expected benefits and cost savings from the merger, or if
the financial performance of the combined company does not meet current expectations, then Cabot Microelectronics' ability to service its indebtedness may be adversely impacted.
Certain
of the indebtedness to be incurred in connection with the merger may bear interest at variable interest rates. If interest rates increase, variable rate debt will create higher
debt service requirements, which could adversely affect Cabot Microelectronics' cash flows.
In
addition, Cabot Microelectronics' credit ratings impact the cost and availability of future borrowings and, accordingly, Cabot Microelectronics' cost of capital. Cabot
Microelectronics' ratings reflect each rating organization's opinion of Cabot Microelectronics' financial strength, operating performance and ability to meet Cabot Microelectronics' debt obligations.
In connection with the debt financing, it is anticipated that Cabot Microelectronics will seek ratings of its indebtedness from Standard & Poor's and Moody's. There can be no assurance that Cabot
Microelectronics will achieve a particular rating or maintain a particular rating in the future.
Moreover,
Cabot Microelectronics may be required to raise substantial additional financing to fund working capital, capital expenditures, acquisitions or other general corporate
requirements. Cabot Microelectronics' ability to arrange additional financing will depend on, among other factors, Cabot Microelectronics' financial position and performance, as well as prevailing
market conditions and other factors beyond Cabot Microelectronics' control. Cabot Microelectronics cannot assure you that it will be able to obtain additional financing on terms acceptable to Cabot
Microelectronics or at all.
The agreements that will govern the indebtedness to be incurred in connection with the merger will contain
various covenants that impose restrictions on Cabot Microelectronics and certain of its subsidiaries that may affect their ability to operate their businesses.
The agreements that will govern the debt financing to be incurred in connection with the merger will contain various affirmative and negative
covenants that may, subject to certain significant
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exceptions,
restrict the ability of Cabot Microelectronics and certain of its subsidiaries to, among other things, incur liens, incur debt, engage in mergers, consolidations and acquisitions, transfer
assets outside the ordinary course of business, make loans or other investments, pay dividends, repurchase equity interests, make other payments with respect to equity interests, repay or repurchase
subordinated debt and engage in affiliate transactions. In addition, the agreements that will govern the debt financing will contain a financial covenant that will require Cabot Microelectronics to
maintain certain financial ratios. The ability of Cabot Microelectronics and its subsidiaries to comply with these provisions may be affected by events beyond their control. Failure to comply with
these covenants could result in an event of default, which, if not cured or waived, could accelerate Cabot Microelectronics' repayment obligations.
Other Risk Factors of Cabot Microelectronics and KMG
Cabot Microelectronics' and KMG's businesses are and will be subject to the risks described above. In addition, Cabot Microelectronics and KMG
are, and will continue to be subject to the risks described in Cabot Microelectronics' Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and KMG's Annual Report on
Form 10-K for the fiscal year ended July 31, 2017, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the
SEC and incorporated by reference into this proxy statement/prospectus. The risks described above and in those filings represent all known material risks with respect to Cabot Microelectronics' and
KMG's businesses. See "Where You Can Find More Information" beginning on page 146 for the location of information incorporated by reference into this proxy statement/prospectus.
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INFORMATION ABOUT KMG
KMG Chemicals, Inc.
KMG Chemicals, Inc. is a Texas corporation incorporated in 1992 and headquartered in Fort Worth, Texas. From its facilities in North
America, Europe and Asia, KMG produces and distributes specialty chemicals and performance materials for the semiconductor, industrial wood preservation and pipeline and energy markets.
KMG
operates three business platforms within two segments: electronic chemicals and performance materials. In its electronic chemicals segment, KMG is the leading global supplier of
high-purity process chemicals, serving semiconductor manufacturers in the United States, Europe and Asia. KMG formulates, purifies and blends acids, solvents and other wet chemicals used to etch and
clean silicon wafers in the production of semiconductors, photovoltaics (solar cells) and flat panel displays. KMG's performance materials segment includes its pipeline performance and wood treating
chemicals business platforms. In its pipeline performance platform, KMG is a leading global provider of products, services and solutions for optimizing pipeline throughput and maximizing performance
and safety. KMG's pipeline performance products include drag-reducing agents, valve lubricants, cleaners and sealants, and related equipment supporting the pipeline and oilfield energy markets. KMG
also provides routine and emergency maintenance services and training for pipeline operators worldwide. KMG's wood treating chemicals, based on pentachlorophenol, or penta, are sold to industrial
customers who use these products to extend the useful life of wood utility poles and crossarms.
KMG
common stock is listed on the NYSE under the symbol "KMG." The principal executive offices of KMG are located at 300 Throckmorton Street, Fort Worth, Texas 76102, and its
telephone number is (817) 761-6100.
For
more information about KMG, please visit the Internet website of KMG at www.kmgchemicals.com. The Internet website address of KMG is provided as an inactive textual reference only.
The information contained on the Internet website of KMG is not incorporated into, and does not form a part of, this proxy statement/prospectus or any other report or document on file with or
furnished to the SEC. Additional information about KMG is included in the documents incorporated by reference into this proxy statement/prospectus. See the section entitled "Where You Can Find More
Information" beginning on page 146 of this proxy statement/prospectus.
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INFORMATION ABOUT CABOT MICROELECTRONICS
Cabot Microelectronics Corporation
Cabot Microelectronics Corporation, a Delaware corporation, is the leading supplier of high-performance polishing slurries and second largest
supplier of polishing pads used in the manufacture of advanced integrated circuit (IC) devices within the semiconductor industry, in a process called chemical mechanical planarization (CMP). CMP is a
polishing process used by IC device manufacturers to planarize or flatten many of the multiple layers of material that are deposited upon silicon wafers in the production of advanced ICs. Cabot
Microelectronics' products play a critical role in the production of advanced semiconductor devices, helping to enable its customers to produce smaller, faster and more complex IC devices with fewer
defects. Cabot Microelectronics' mission is to create value by delivering high-performing and innovative solutions that solve its customers' challenges. Cabot Microelectronics common stock trades on
the Nasdaq under the symbol "CCMP." The principal executive offices of Cabot Microelectronics are located at 870 North Commons Drive, Aurora, Illinois 60504, and its telephone number is
(630) 375-6631.
For
more information about Cabot Microelectronics please visit the Internet website of Cabot Microelectronics at www.cabotcmp.com. The Internet website address of Cabot Microelectronics
is provided as an inactive textual reference only. The information contained on the Internet website of Cabot Microelectronics is not incorporated into, and does not form a part of, this proxy
statement/prospectus or any other report or document on file with or furnished to the SEC. Additional information about Cabot Microelectronics is included in the documents incorporated by reference
into this proxy statement/prospectus. See the section entitled "Where You Can Find More Information" beginning on page 146 of this proxy statement/prospectus.
Cobalt Merger Sub Corporation
Cobalt Merger Sub Corporation, a Texas corporation and referred to in this proxy statement/prospectus as Merger Sub, is a wholly owned
subsidiary of Cabot Microelectronics. Merger Sub was formed by Cabot Microelectronics solely in contemplation of the merger, has not conducted any business and has no assets, liabilities or
obligations of any nature other than as set forth in the merger agreement. The principal executive offices of Merger Sub are located at c/o Cabot Microelectronics Corporation, 870 North Commons Drive,
Aurora, Illinois 60504, and its telephone number is (630) 375-6631.
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INFORMATION ABOUT THE KMG SPECIAL MEETING
Time, Place and Purpose of the Special Meeting
This proxy statement/prospectus is being furnished to KMG shareholders as part of the solicitation of proxies by the KMG board for use at the
special meeting to be held on November 13, 2018, at 10:00 a.m. (Central Time), at The Worthington Renaissance Fort Worth Hotel, 200 Main Street, Fort Worth,
Texas 76102, or at any postponement or adjournment thereof.
At
the special meeting, KMG shareholders will be asked to consider and vote upon (i) a proposal to approve and adopt the merger agreement, (ii) the adjournment of the
special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the
proposal to approve and adopt the merger agreement and (iii) a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in
connection with the merger.
KMG
shareholders must approve and adopt the merger agreement in order for the merger to occur. If KMG shareholders fail to approve and adopt the merger agreement, the merger will not
occur. A copy of the merger agreement is attached as
Annex A
to this proxy statement/prospectus, and you are encouraged to read the merger
agreement carefully and in its entirety.
Record Date and Quorum
KMG has set the close of business on October 4, 2018 as the record date for the special meeting, and only holders of record of KMG common
stock on the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of KMG common stock as of the close
of business on the record date. On the record date, there were 15,553,484 shares of KMG common stock outstanding and entitled to vote. You will have one vote on all matters properly coming before the
special meeting for each share of KMG common stock that you owned on the record date.
A
majority of the shares of KMG common stock outstanding as of the close of business on the record date and entitled to vote, present in person or represented by proxy, at the special
meeting constitutes a quorum for the purposes of the special meeting. Shares of KMG common stock represented at the special meeting but not voted, including shares of KMG common stock for which a
shareholder directs an "abstention" from voting, will be counted for purposes of determining a quorum. A quorum is necessary to transact business at the special meeting. Once a share of KMG common
stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date
is set for the adjourned special meeting, then a new quorum will have to be determined.
Attendance
Only KMG shareholders of record as of the close of business on the record date, their duly authorized proxy holders, beneficial owners with
proof of ownership and guests of KMG may attend the special meeting. If your shares of KMG common stock are held through a bank, brokerage firm or other nominee, please bring proof of your beneficial
ownership of such shares to the special meeting. Acceptable proof could include an account statement showing that you owned shares of KMG common stock on the record date. If you are the representative
of a corporate or institutional shareholder, you must present valid photo identification along with proof that you are the representative of such shareholder. Please note that cameras, recording
devices and other electronic devices will not be permitted at the special meeting.
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Vote Required
The approval of the proposal to approve and adopt the merger agreement requires the affirmative vote of the holders of at least a majority of
the shares of KMG common stock outstanding on the record date. For the approval of the proposal to approve and adopt the merger agreement, you may vote
"
FOR
," "
AGAINST
" or "
ABSTAIN
." Votes to abstain will not
be counted as votes cast in favor of the proposal to approve and adopt the merger agreement, but will count for the purpose of determining whether a quorum is present.
If you
fail to submit a proxy or to vote in person at the special meeting, or if you vote to abstain, it will have the same effect as a vote "AGAINST" the proposal to approve and adopt the merger
agreement.
If
your shares of KMG common stock are registered directly in your name with the transfer agent of KMG, Broadridge Corporate Issuer Solutions, you are considered, with respect to those
shares of KMG common stock, the shareholder of record. If you are a shareholder of record, this proxy statement/prospectus and the enclosed proxy card have been sent directly to you by KMG.
If
your shares of KMG common stock are held through a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares of KMG common stock held in "street name."
In that case, this proxy statement/prospectus has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of KMG common stock, the
shareholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting.
Under
the rules of the NYSE, banks, brokerage firms or other nominees who hold shares in "street name" for customers have the authority to vote on "routine" proposals when they have not
received instructions from beneficial owners. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters
such as the approval of the proposal to approve and adopt the merger agreement, the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement, and the proposal to approve, by
non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger. As a result, absent specific instructions from the beneficial owner of
such shares of KMG common stock, banks, brokerage firms and other nominees are not empowered to vote those shares of KMG
common stock on non-routine matters.
These broker non-votes will have the same effect as a vote "AGAINST" the proposal to approve and adopt the merger agreement, but will not
be counted in respect of, and will not have an effect on, the vote on the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes
at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement or the proposal to approve, by non-binding, advisory vote,
certain compensation arrangements for the named executive officers of KMG in connection with the merger.
The
adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment
or postponement) to approve the proposal to approve and adopt the merger agreement requires the affirmative vote of the holders of a majority of the shares of KMG common stock entitled to vote thereon
and present in person or represented by proxy, whether or not a quorum is present. For purposes of the vote on the adjournment of the special meeting, if necessary or appropriate, to solicit
additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement, if your
shares of KMG common stock are present in person at the special meeting but are not voted on, or if you have given a proxy and abstained on, the adjournment of the special meeting, if necessary or
appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or
35
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postponement)
to approve the proposal to approve and adopt the merger agreement, this will have the same effect as if you voted "
AGAINST
" the
adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement)
to approve the proposal to approve and adopt the merger agreement. If you fail to submit a proxy or to vote in person at the special meeting, or there are broker non-votes on the issue, as applicable,
the shares of KMG common stock held by you or your bank, brokerage firm or other nominee will not be counted in respect of, and will not have an effect on, the vote on the adjournment of the special
meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to
approve and adopt the merger agreement.
The
proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger requires the affirmative vote
of the holders of a majority of the shares of KMG common stock entitled to vote on the matter at the special meeting and present in person or represented by proxy. For purposes of the proposal, if
your shares of KMG common stock are present in person at the special meeting but are not voted on this proposal, or if you have given a proxy and abstained on this proposal, this will have the same
effect as if you voted "
AGAINST
" the proposal. If you fail to submit a proxy or to vote in person at the special meeting, or there are broker non-votes
on the issue, as applicable, the shares of KMG common stock held by you or your bank, brokerage firm or other nominee will not be counted in respect of, and will not have an effect on, the proposal to
approve, by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger.
Proxies and Revocations
If you are a shareholder of record, you may have your shares of KMG common stock voted on matters presented at the special meeting in any of the
following ways:
-
-
by telephone or over the Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control
number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Please be aware that if you vote by telephone or over the Internet, you may incur costs
such as telephone and Internet access charges for which you will be responsible;
-
-
by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or
-
-
in person, by attending the special meeting and casting your vote there.
If
you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of KMG common stock voted.
Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the
special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting.
Please
refer to the instructions on your proxy or voting instruction card to determine the deadlines for voting by telephone or over the Internet. If you choose to submit a proxy by
mailing a proxy card, your proxy card should be mailed in the accompanying prepaid reply envelope, and your proxy card must be filed with the Corporate Secretary of KMG by the time the special meeting
begins.
Please do not send
in your share certificates with your proxy card.
When the merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the per
share merger consideration in exchange for your share certificates.
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If
you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, will vote your
shares of KMG common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of KMG common stock should be voted
for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.
If
you properly sign your proxy card but do not mark the boxes showing how your shares of KMG common stock should be voted on a matter, the shares of KMG common stock represented by your
properly signed proxy will be voted "
FOR
" the proposal to approve and adopt the merger agreement, "
FOR
"
the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or
postponement) to approve the proposal to approve and adopt the merger agreement and "
FOR
" the proposal to approve, by non-binding, advisory vote,
certain compensation arrangements for KMG's named executive officers in connection with the merger.
You
have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the
methods available to you, by attending the special meeting and voting in person, or by giving written notice of revocation to KMG prior to the time the special meeting begins. Written notice of
revocation should be mailed to: KMG Chemicals, Inc., Attention: Corporate Secretary, 300 Throckmorton Street, Fort Worth, Texas 76102.
If
you have any questions or need assistance voting your shares, please contact Okapi Partners LLC, KMG's proxy solicitor, by calling toll-free at (855) 305-0856. Banks,
brokerage firms and other nominees may call collect at (212) 297-0720.
IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF KMG COMMON STOCK PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED POSTAGE-PAID ENVELOPE, OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD TO VOTE BY TELEPHONE OR OVER THE INTERNET.
SHAREHOLDERS
WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.
As
of the record date, the directors and executive officers of KMG were entitled to vote, in the aggregate, 1,088,049 shares of KMG common stock, representing 7.0% of the outstanding
shares of KMG common stock. The directors and executive officers of KMG have informed KMG that they currently intend to vote all such shares of KMG common stock
"
FOR
" the proposal to approve and adopt the merger agreement, "
FOR
" the adjournment of the special
meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to
approve and adopt the merger agreement and "
FOR
" the proposal to approve, by non-binding, advisory vote, certain compensation arrangements for KMG's
named executive officers in connection with the merger.
Adjournments and Postponements
Although it is not currently expected, the special meeting may be adjourned for the purpose of soliciting additional proxies if there are
insufficient votes at the time of the special meeting (or any adjournment or postponement) to approve the proposal to approve and adopt the merger agreement or if a quorum is not present at the
special meeting. An adjournment generally may be made with the affirmative vote of the holders of a majority of the shares of KMG common stock entitled to vote thereon and present in person or
represented by proxy, whether or not a quorum is present. Any adjournment of the special meeting for the purpose of soliciting additional proxies will allow KMG
37
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shareholders
who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned.
Solicitation of Proxies; Payment of Solicitation Expenses
KMG has engaged Okapi Partners LLC to assist in the solicitation of proxies for the special meeting. KMG estimates that it will pay Okapi
Partners LLC a fee of $30,000 plus an additional fee of $5.00 per incoming and outgoing telephone contact and telephonic votes received. KMG has agreed to reimburse Okapi Partners LLC
for certain out-of-pocket fees and expenses and also will indemnify Okapi Partners LLC against certain claims, costs, damages, liabilities, judgments and expenses. KMG also may reimburse banks,
brokerage firms, other nominees or their respective agents for their expenses in forwarding proxy materials to beneficial owners of KMG common stock. KMG's directors, officers and employees also may
solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
Questions and Additional Information
If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of KMG common stock or need
additional copies of this proxy statement/prospectus or the enclosed proxy card, please contact Okapi Partners LLC, KMG's proxy solicitor, by calling toll-free at (855) 305-0856. Banks,
brokerage firms and other nominees may call collect at (212) 297-0720.
38
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KMG SHAREHOLDER PROPOSALS
If the merger is completed, KMG will not hold its 2018 Annual Meeting of shareholders. If the merger is not completed, you will continue to be
entitled to attend and participate in KMG's Annual Meetings of shareholders, and KMG will hold a 2018 Annual Meeting of shareholders, in which case KMG will provide notice of or otherwise publicly
disclose the date on which such 2018 Annual Meeting will be held. If the 2018 Annual Meeting is held, shareholder proposals will be eligible for consideration for inclusion in the proxy statement and
form of proxy for KMG's 2018 Annual Meeting of shareholders in accordance with Rule 14a-8 under the Exchange Act and KMG's Bylaws, as described below. Any shareholder who intends to present a
proposal at KMG's next Annual Meeting of shareholders must deliver or mail such proposal to KMG which must be received at KMG's offices at 300 Throckmorton Street, Fort Worth, Texas 76102, Attention:
Corporate Secretary.
Pursuant
to KMG's bylaws, in order for any business not included in the notice of meeting for the 2018 Annual Meeting of shareholders to be brought before the meeting by a shareholder
entitled to vote at the meeting (including nominations of candidates for director), the shareholder must give timely notice of that business to KMG's Corporate Secretary. To be timely, the notice must
not be received any earlier than August 2, 2018 (90 calendar days prior to October 30, 2018), nor any later than August 31, 2018 (60 calendar days prior to October 30,
2018). If the date of the 2018 Annual Meeting of shareholders is changed by more than 30 days from the date of the 2017 Annual Meeting, the deadline for submitting proposals is not later than
the close of business on the tenth (10th) calendar day following the day on which public announcement of the date of the 2018 Annual Meeting is first made. The notice also must contain the information
required by KMG's bylaws. The foregoing bylaw provisions do not affect a shareholder's ability to request inclusion of a proposal in KMG's proxy statement within the procedures and deadlines set forth
in Rule 14a-8 of the SEC's proxy rules and referred to in the paragraph above. A copy of KMG's bylaws are available upon request to: KMG Chemicals, Inc., 300 Throckmorton Street, Fort
Worth, Texas 76102, Attention: Corporate Secretary.
The
person named in KMG's form of proxy for the 2018 Annual Meeting of KMG shareholders will have discretionary authority to exclude any matter that is not properly presented in
accordance with these requirements.
In
order to avoid controversy as to the date on which KMG receives any such proposal, it is suggested that shareholders submit their proposals by certified mail, return receipt
requested, or other means that permit them to prove the date of delivery.
The
summaries set forth above are qualified by KMG's bylaws and Rule 14a-8.
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HOUSEHOLDING OF PROXY STATEMENT/PROSPECTUS
Some banks, brokerage firms or other nominees may be participating in the practice of "householding" proxy statements. This means that only one
copy of this proxy statement/prospectus may have been sent to multiple KMG shareholders sharing the same address. KMG will promptly deliver a separate copy of this proxy statement/prospectus to you if
you direct your request to Corporate Secretary, KMG Chemicals, Inc., at 300 Throckmorton Street, Fort Worth, Texas 76102, Telephone: (817) 761-6100. If you want to receive separate
copies of a KMG proxy statement in
the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, brokerage firm or other nominee, or you may contact KMG at
the above address and telephone number.
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WHERE YOU CAN FIND MORE INFORMATION
Cabot Microelectronics and KMG each file annual, quarterly and current reports, proxy statements and other information with the SEC under the
Exchange Act. You may read and copy any of this information at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including Cabot
Microelectronics and KMG, who file electronically with the SEC. The address of that site is www.sec.gov.
Investors
may also consult Cabot Microelectronics' or KMG's website for more information about Cabot Microelectronics or KMG, respectively. Cabot Microelectronics' website is
www.cabotcmp.com. KMG's website is www.kmgchemicals.com. Information included on these websites is not incorporated by reference into this proxy statement/prospectus.
Cabot
Microelectronics has filed with the SEC a registration statement of which this proxy statement/prospectus forms a part. The registration statement registers the shares of
Cabot Microelectronics common stock to be issued to KMG shareholders in the merger. The registration statement, including the attached exhibits, contains additional relevant information about Cabot
Microelectronics and Cabot Microelectronics common stock. The rules and regulations of the SEC allow Cabot Microelectronics and KMG to omit certain information included in the registration statement
from this proxy statement/prospectus.
In
addition, the SEC allows Cabot Microelectronics and KMG to disclose important information to you by referring you to other documents filed separately with the SEC. This information is
considered to be a part of this proxy statement/prospectus, except for any information that is superseded by information included directly in this proxy statement/prospectus or incorporated by
reference subsequent to the date of this proxy statement/prospectus as described below. This proxy statement/prospectus also contains summaries of certain provisions contained in some of the Cabot
Microelectronics or KMG documents
described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by reference to the actual documents. Some documents or
information, such as that called for by Item 2.02 and 7.01 on Form 8-K, or the exhibits related thereto under Item 9.01 on Form 8-K, are deemed furnished and not filed in
accordance with SEC rules. None of those documents and none of that information is incorporated by reference into this proxy statement/prospectus.
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This
proxy statement/prospectus incorporates by reference the documents listed below that Cabot Microelectronics and KMG have previously filed with the SEC. These documents contain
important information about the companies, their respective financial condition and other matters.
|
|
|
Cabot Microelectronics SEC Filings
(File No. 000-30205)
|
|
Period or File Date
|
Annual Report on Form 10-K
|
|
Year ended September 30, 2017
|
Quarterly Reports on Form 10-Q
|
|
Quarters ended December 31, 2017, March 31, 2018 and June 30, 2018
|
Current Reports on Form 8-K
|
|
Filed on November 17, 2017, December 11, 2017, December 12, 2017, March 6, 2018, March 7, 2018, April 9, 2018, June 12, 2018, August 15, 2018, August 17, 2018 and
September 26, 2018
|
Proxy Statement on Schedule 14A
|
|
Filed on January 23, 2018
|
The description of Cabot Microelectronics common stock contained in Cabot Microelectronics' registration statement on Form 8-A filed under Section 12 of the Exchange Act on April 3, 2000,
including any subsequently filed amendments and reports updating such description.
|
|
|
|
|
|
KMG SEC Filings (File No. 001-35577)
|
|
Period or File Date
|
Annual Report on Form 10-K
|
|
Year ended July 31, 2018
|
Current Reports on Form 8-K
|
|
Filed on June 15, 2017 (as amended by the Form 8-K/A filed on August 31, 2017 and the Form 8-K/A filed on October 17, 2017), August 15, 2018, August 17, 2018 and August 27,
2018
|
Proxy Statement on Schedule 14A
|
|
Filed on November 3, 2017
|
In
addition, Cabot Microelectronics and KMG incorporate by reference any future filings they make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
(i) after the date of the initial filing and prior to the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part and
(ii) after the date of this proxy statement/prospectus and prior to the date of the KMG special meeting (other than information furnished pursuant to Item 2.02 or Item 7.01 of any
Current Report on Form 8-K, or the exhibits related thereto under Item 9.01 on Form 8-K, unless expressly stated otherwise therein). Such documents are considered to be a part of
this proxy statement/prospectus, effective as of the date such documents are filed.
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You
can obtain any of these documents from the SEC, through the SEC's website at the address described above. You can also obtain any of these documents free of charge by requesting them
in writing at the following addresses and telephone numbers:
|
|
|
For Information Regarding Cabot Microelectronics:
Cabot Microelectronics Corporation
870 North Commons Drive
Aurora, Illinois 60504
(630) 499-2600
Attention: Investor Relations
|
|
For Information Regarding KMG:
KMG Chemicals, Inc.
300 Throckmorton Street
Fort Worth, Texas 76102
(817) 761-6006
Attention: Investor Relations
|
In
the event of conflicting information in this proxy statement/prospectus in comparison to any document incorporated by reference into this proxy statement/prospectus, or among
documents incorporated by reference, the information in the latest filed document controls.
You
should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is
different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated October 9, 2018. You should not assume that the
information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy
statement/prospectus is accurate as of any date other than the date of such incorporated document. Neither KMG's mailing of this proxy statement/prospectus to KMG shareholders nor the issuance by
Cabot Microelectronics of common stock in the merger will create any implication to the contrary.
This
document contains a description of the representations and warranties that each of Cabot Microelectronics and KMG made to the other in the merger agreement. Representations and
warranties made by Cabot Microelectronics, KMG and other applicable parties are also set forth in contracts and other documents that are attached or filed as exhibits to this proxy
statement/prospectus or are incorporated by reference into this proxy statement/prospectus. These materials are included or incorporated by reference to provide you with information regarding the
terms and conditions of the agreements. Accordingly, the representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read only in
conjunction with the other information provided elsewhere in this proxy statement/prospectus or incorporated by reference into this proxy statement/prospectus.
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Annex A
AGREEMENT AND PLAN OF MERGER
by and among
KMG CHEMICALS, INC.,
CABOT MICROELECTRONICS CORPORATION,
and
COBALT MERGER SUB CORPORATION
Dated as of August 14, 2018
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TABLE OF CONTENTS
A-i
Table of Contents
A-ii
Table of Contents
A-iii
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "
Agreement
"), dated as of August 14, 2018, is by and among KMG
Chemicals, Inc., a Texas corporation (the "
Company
"), Cabot Microelectronics Corporation, a Delaware corporation ("
Parent
"), and Cobalt
Merger Sub Corporation, a Texas corporation and wholly owned subsidiary of Parent ("
Merger Sub
"). Parent, Merger Sub and the Company are each sometimes referred to herein
as a "
Party
" and collectively as the "
Parties
."
WITNESSETH
:
WHEREAS, the Parties wish to effect a business combination through the Merger of Merger Sub with and into the Company, with the Company being
the surviving corporation, on terms and subject to the conditions set forth in this Agreement and in accordance with the Texas Business Organizations Code (the "
TBOC
");
WHEREAS,
in connection with the Merger, each outstanding share of common stock, par value $0.01 per share, of the Company (the "
Company Common Stock
") issued
and outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) will be automatically converted into the right to receive the Merger Consideration upon the
terms and conditions set forth in this Agreement and in accordance with the TBOC;
WHEREAS,
the board of directors of the Company (the "
Company Board of Directors
") has unanimously (i) approved and declared advisable this Agreement
and the transactions contemplated hereby, including the Merger, (ii) determined that the terms of this Agreement and the transactions contemplated hereby, including the Merger, are in the best
interests of the Company and its shareholders, (iii) approved the execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and agreements
contained herein and the consummation of the transactions contemplated hereby, including the Merger, on the terms and subject to the conditions contained herein and (iv) resolved to recommend
that the shareholders of the Company approve and adopt this Agreement and the transactions contemplated hereby, including the Merger (the "
Company Recommendation
");
WHEREAS,
the board of directors of Parent (the "
Parent Board of Directors
") has unanimously (i) approved and declared advisable this Agreement and the
transactions contemplated hereby, including the Merger and the issuance of shares of Parent Common Stock in connection with the Merger, (ii) determined that the terms of this Agreement and the
transactions contemplated by this Agreement are in the best interests of Parent and its stockholders and (iii) approved the execution and delivery by Parent of this Agreement, the performance
by Parent of its covenants and agreements contained herein and the consummation of the transactions contemplated hereby, including the Merger and the issuance of shares of Parent Common Stock in
connection with the Merger, on the terms and subject to the conditions contained herein;
WHEREAS,
the board of directors of Merger Sub has approved this Agreement and determined that this Agreement and the Merger are advisable and in the best interests of Merger Sub and its
sole shareholder;
WHEREAS,
the Parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also prescribe various conditions to the Merger; and
WHEREAS,
as an inducement to and condition of Parent's willingness to enter into this Agreement, certain shareholders of the Company are concurrently entering into voting agreements
pursuant to which, among other things, such persons agree to vote all of their shares of Company Common Stock in favor of adoption and approval of this Agreement, the Merger and any other matters
required to be approved or adopted in order to effect the Merger and the other transactions contemplated by this Agreement.
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NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1
The Merger
. Upon the terms and subject to the satisfaction or
valid waiver of the conditions set forth in this Agreement, and in accordance with the TBOC, at the Effective Time, Merger Sub shall be merged with and into the Company (the
"
Merger
"), whereupon the separate existence of Merger Sub will cease, with the Company surviving the Merger and continuing in accordance with the TBOC (the Company, as the
surviving entity in the Merger, sometimes being referred to herein as the "
Surviving Corporation
"), such that following the Merger, the Surviving Corporation will be a
wholly owned direct subsidiary of Parent. The Merger shall have the effects provided in this Agreement and as specified in the TBOC.
Section 1.2
Closing
. Unless another date or place is agreed to in writing by
the Company and Parent, the closing of the Merger (the "
Closing
") shall take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York at 10:00 a.m., New York City time, on the later of (i) the third (3rd) Business Day after the satisfaction or waiver of the last of the conditions set forth in
Article VI
to be satisfied or waived (other than any such conditions that by their nature are to be satisfied at or immediately prior to the Closing, but subject to
the satisfaction or waiver of such conditions at the Closing), and (ii) the earlier of (A) a date during the Marketing Period to be specified by Parent on no fewer than three
(3) Business Days' notice to the Company, and (B) the third (3rd) Business Day following the final day of the Marketing Period (subject, in the case of each of subclauses (A) and
(B) of this clause (ii), to the satisfaction or waiver of all the conditions set forth in
Article VI
as of the date determined pursuant to this
Section 1.2
(other than any such conditions that by their nature are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or
waiver of such conditions at the Closing). The date on which the Closing actually occurs is referred to as the "
Closing Date
."
Section 1.3
Effective Time
. On the Closing Date, the Parties shall cause a
certificate of merger with respect to the Merger (the "
Certificate of Merger
") to be duly executed and filed with the Secretary of State of the State of Texas (the
"
Texas Secretary
") as provided under the TBOC and make any other filings, recordings or publications required to be made by the Company, Merger Sub or Parent under the
applicable provisions of the TBOC in connection with the Merger. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Texas Secretary or on such other
date and time as shall be agreed to by the Company and Parent and specified in the Certificate of Merger (such date and time being hereinafter referred to as the "
Effective
Time
").
Section 1.4
Effects of the Merger
. The effects of the Merger shall be as
provided in this Agreement and in the applicable provisions of the TBOC. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all of the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation, all as provided under the TBOC.
Section 1.5
Organizational Documents of the Surviving Corporation
. At the
Effective Time, subject to
Section 5.10
, the certificate of formation of Merger Sub as in effect immediately prior to the Effective Time shall be the certificate of
formation of the Surviving Corporation, except that the name of the Surviving Corporation shall be KMG Chemicals, Inc., until thereafter changed or amended as provided therein or by applicable
Law. At the Effective Time, subject to
Section 5.10
, the bylaws of
A-2
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Merger
Sub as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.
Section 1.6
Officers and Directors of the Surviving Corporation
. Except as
otherwise directed by Parent prior to the Effective Time, subject to applicable Law, the directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving
Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. Except as otherwise directed by Parent prior to the
Effective Time, the officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1
Effect on Capital Stock
.
(a) At
the Effective Time, by virtue of the Merger and without any action on the part of any of the Parties or the holder of any shares of Company Common Stock or common
stock of Merger Sub:
(i)
Conversion of Company Common Stock
. At the Effective Time, subject to
Section 2.1(c)
and
Section 2.1(d)
, each share of Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than any Cancelled Shares, any Converted Shares, any Dissenting Shares and any shares of Company Common Stock underlying a Company Equity Award) shall be automatically converted into the
right to receive the following consideration on a per share basis, without interest: (i) $55.65 in cash (the "
Cash Consideration
") and (ii) a number of
validly issued, fully paid and nonassessable shares of Parent Common Stock equal to the Exchange Ratio (the "
Stock Consideration
" and, together with the Cash
Consideration, the "
Merger Consideration
"). From and after the Effective Time, all such shares of Company Common Stock (including all uncertificated shares of Company
Common Stock represented by book-entry form ("
Book-Entry Shares
") and each certificate that, immediately prior to the Effective Time, represented any such shares of
Company Common Stock (each, a "
Certificate
")) shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each applicable holder of
such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration (including the right to receive, pursuant to
Section 2.1(d)
, the Fractional Share Cash Amount and dividends pursuant to
Section 2.2(e)
, if any) upon the surrender of such
shares of Company Common Stock in accordance with
Section 2.2
.
(ii)
Cancellation of Company Common Stock; Certain Subsidiary Owned Shares
. Each
share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is owned or held in treasury by the Company and each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time that is owned by Parent or Merger Sub (collectively, the "
Cancelled Shares
") shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor. Each share of Company Common Stock issued and outstanding immediately prior to the
Effective Time that is owned by any direct or indirect wholly owned Subsidiary of the Company or Parent (other than Merger Sub) (collectively, the "
Converted Shares
")
shall be converted into such number of shares of Parent Common Stock equal to the sum of (A) such number of shares of Parent Common Stock equal to the quotient of the Cash Consideration divided
by the Parent Trading Price and (B) the Stock Consideration.
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(iii)
Treatment of Merger Sub Common Stock
. At the Effective Time, each issued and
outstanding share of common stock, par value $0.01 per share, of Merger Sub shall be automatically converted into and become one fully paid and nonassessable share of common stock of the Surviving
Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.
(b)
Shares of Dissenting Shareholders
. Anything in this Agreement to the contrary
notwithstanding, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a holder of record who has complied with the applicable provisions of
Chapter 10, Subchapter H of the TBOC prior to the Effective Time ("
Dissenting Shareholder Statute
" and any such shares meeting the requirement of this
sentence, "
Dissenting Shares
") shall not be converted into the right to
receive the Merger Consideration, but instead at the Effective Time shall be converted into the right to receive payment of such amounts as are payable in accordance with the Dissenting Shareholder
Statute (it being understood and acknowledged that at the Effective Time, such Dissenting Shares shall no longer be outstanding, shall automatically be cancelled and shall cease to exist, and such
holder shall cease to have any rights with respect thereto other than the right to receive the payment of such amounts as are payable in accordance with the Dissenting Shareholder Statute);
provided
,
however
, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to payment of the fair
market value of such Dissenting Shares under the Dissenting Shareholder Statute, then the right of such holder to any such payments shall cease and such Dissenting Shares shall be deemed to have been
converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, without interest or duplication, the Merger Consideration. The Company shall give prompt
written notice to Parent of any written demands, notices or instruments received by the Company pursuant to the Dissenting Shareholder Statute and or relating to the Dissenting Shareholder Statute or
any alleged dissenter's or similar rights, and any withdrawals of such demands, and Parent shall have the opportunity, at Parent's expense, to participate in and direct all negotiations and
proceedings with respect to such demands,
provided
, that Parent shall consult with the Company with respect to such negotiations and proceedings. Prior to the Effective
Time, the Company shall not, without the prior written consent of Parent, make any payment with respect to, or settle or compromise or offer to settle or compromise, any such demand, or agree to do
any of the foregoing.
(c)
Certain Adjustments
. If, between the date of this Agreement and the Effective
Time, the outstanding shares of Company Common Stock or Parent Common Stock shall have been changed into a different number of shares or a different class of shares by reason of any stock dividend,
subdivision, reorganization, reclassification, recapitalization, stock split, reverse stock split, combination or exchange of shares, or any similar event shall have occurred, or any record date for
any such purposes shall be established, then the Merger Consideration shall be equitably adjusted, without duplication, to proportionally reflect such change;
provided
that nothing in this
Section 2.1(c)
shall be construed to permit the Company to take any action with respect to its securities that is prohibited by the terms of
this Agreement.
(d)
No Fractional Shares
. No fractional shares of Parent Common Stock shall be
issued in connection with the Merger, no certificates or scrip representing fractional shares of Parent Common Stock shall be delivered upon the conversion of Company Common Stock pursuant to
Section 2.1(a)(i)
, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a holder of shares of Parent Common
Stock. In lieu of fractional shares, each holder of shares of Company Common Stock who would otherwise have been entitled to receive as a result of the Merger a fraction of a share of Parent Common
Stock (after aggregating all shares represented by the Certificates and Book-Entry Shares delivered by such holder) shall receive, in lieu thereof and upon surrender thereof, cash (without interest)
in an amount, rounded down to the nearest cent, determined
by multiplying
(i) the Parent Trading Price, rounded to the nearest one-hundredth of a
cent by (ii) the
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fraction
of a share (after taking into account all shares of Company Common Stock held by such holder at the Effective Time and rounded to the nearest one thousandth when expressed in decimal form) of
Parent Common Stock to which such holder would otherwise be entitled (the "
Fractional Share Cash Amount
"). No such holder shall be entitled to dividends, voting rights or
any other rights in respect of any fractional share of Parent Common Stock that would otherwise have been issuable as part of the Merger Consideration.
Section 2.2
Exchange of Certificates
.
(a)
Appointment of Exchange Agent
. Prior to the Effective Time, Parent shall
appoint a bank or trust company, which shall be reasonably acceptable to the Company, to act as exchange agent (the "
Exchange Agent
") for the payment of the Merger
Consideration in the Merger and shall enter into an agreement reasonably acceptable to the Company relating to the Exchange Agent's responsibilities under this Agreement.
(b)
Deposit of Merger Consideration
. Immediately prior to the Closing, Parent shall
deposit or cause to be deposited with the Exchange Agent cash sufficient to pay the aggregate Cash Consideration (together with, to the extent then determinable, the Fractional Share Cash Amount)
payable in the Merger at such time as is necessary for the payment to holders of Company Common Stock and shall deposit, or shall cause to be deposited, with the Exchange Agent evidence of Parent
Common Stock in book-entry form (and/or certificates representing such Parent Common Stock, at Parent's election) representing the number of shares of Parent Common Stock sufficient to deliver the
aggregate Stock Consideration payable in the Merger (such cash and certificates, together with any dividends or distributions with respect thereto, the "
Exchange Fund
");
provided
that the Exchange Fund shall not include any amounts or shares payable on account of any Converted Shares, any Dissenting Shares. The Exchange Agent shall invest
any cash included in the Exchange Fund as directed by Parent,
provided, however
, that (i) any investment of such cash shall in all events be limited to direct
short-term obligations of, or short-term obligations fully guaranteed as to principal and interest by, the U.S. government, in commercial paper rated P-1 or A-1 or better by Moody's Investors
Service, Inc. or Standard & Poor's Corporation, respectively, or in certificates of deposit, bank repurchase agreements or banker's acceptances of commercial banks with capital exceeding
$1.0 billion (based on the most recent financial statements of such bank that are then publicly available), (ii) no such investment shall have maturities that would prevent or delay
payments to be made pursuant to this Agreement and (iii) no such investment or loss thereon shall affect the amounts payable to holders of Certificates or any Book-Entry Shares pursuant to this
Article II
. Any loss of any of the funds included in the Exchange Fund shall be for the account of Parent and shall not alter Parent's obligation to cause to be
paid the Merger Consideration. Any interest or other income resulting from such investments shall be paid to Parent, upon demand. In the event that the Exchange Fund shall be insufficient to pay the
aggregate amount of all Cash Consideration and Fractional Share Cash Amounts (including as a result of any investment of the Exchange Fund), Parent shall promptly deposit additional funds with the
Exchange Agent in an amount that is equal to the deficiency in the amount required to make such payment. Parent shall cause the Exchange Agent to make, and the Exchange Agent shall make, delivery of
the Cash Consideration and Fractional Share Cash Amounts in accordance with this Agreement. The Exchange Fund shall not be used for any purpose that is not expressly provided for in this Agreement.
Except as otherwise agreed by the Company, any amount payable in respect of Company Equity Awards shall not be deposited with the Exchange Agent but shall instead be paid through the payroll of the
Company and its Affiliates in accordance with
Section 2.3
.
(c)
Exchange Procedures
. As soon as reasonably practicable after the Effective
Time, Parent shall cause the Exchange Agent to mail to each holder of record of shares of Company Common Stock whose shares of Company Common Stock were converted pursuant to
Section 2.1(a)(i)
into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates
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(or
affidavits of loss in lieu thereof) to the Exchange Agent and shall be in such form and have such other provisions as Parent shall reasonably designate) (the "
Letter of
Transmittal
") and (ii) instructions for use in effecting the surrender of Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares in exchange for the Merger
Consideration and the Fractional Share Cash Amount and any dividends or other distributions to which such Certificates or Book-Entry Shares become entitled in accordance with
Section 2.2(e)
.
(d)
Surrender of Certificates or Book-Entry Shares
. Upon surrender of Certificates
(or affidavits of loss in lieu thereof (and posting of a bond, if required) in accordance with
Section 2.2(i)
) or Book-Entry Shares to the Exchange Agent together
with the Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Exchange Agent, the
holder of such Certificates or Book-Entry Shares shall be entitled to receive in exchange therefor the Merger Consideration into which the shares represented by such Certificates or Book-Entry Shares
have been converted pursuant to this Agreement, together with the Fractional Share Cash Amount and any dividends or other distributions to which such Certificates or Book-Entry Shares become entitled
in accordance with
Section 2.2(e)
, and the Certificates or Book-Entry Shares so surrendered shall be cancelled. Any dividends or distributions to which such
Certificates or Book-Entry Shares become entitled in accordance with
Section 2.2(e)
shall become payable in accordance with
Section 2.2(e)
. In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the transfer or stock records of the Company,
any cash to be paid upon, or shares of Parent Common Stock to be issued upon, due surrender of the Certificate or Book-Entry Share formerly representing such shares of Company Common Stock shall be
paid or issued, as the case may be, to such a transferee if such Certificate or Book-Entry Share is presented to the Exchange Agent, accompanied by all documents reasonably required to evidence and
effect such transfer and to evidence to the reasonable satisfaction of the Exchange Agent and Parent that any applicable stock transfer or other similar Taxes have been paid or are not applicable. No
interest shall be paid or shall accrue on the cash payable upon surrender of any Certificate or Book-Entry Share. Until surrendered as contemplated by this
Section 2.2
, each Certificate and Book-Entry Share (other
than Dissenting Shares) shall be deemed at any time after the Effective Time to represent only the right to receive, upon such surrender, the Merger Consideration into which the shares represented by
such Certificates or Book-Entry Shares have been converted pursuant to this Agreement, together with the Fractional Share Cash Amount and any dividends or other distributions to which such
Certificates or Book-Entry Shares become entitled in accordance with
Section 2.2(e)
.
(e)
Treatment of Unexchanged Shares
. No dividends or other distributions, if any,
with a record date after the Effective Time with respect to Parent Common Stock, shall be paid to the holder of any unsurrendered share of Company Common Stock to be converted into shares of Parent
Common Stock pursuant to
Section 2.1(a)(i)
until such holder shall surrender such share in accordance with this
Section 2.2
.
After the surrender in accordance with this
Section 2.2
of a share of Company Common Stock to be converted into Parent Common Stock pursuant to
Section 2.1(a)(i)
, Parent shall cause the holder thereof to be paid, without interest, (i) the amount of dividends or other distributions with a record date
after the Effective Time and a payment date prior to such surrender with respect to such shares of Parent Common Stock to which such holder is entitled pursuant to this Agreement and (ii) at
the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and with a payment date subsequent to such
surrender payable with respect to such shares of Parent Common Stock. After the Effective Time, Parent shall cause the Company to pay on the applicable payment date the amount of dividends or other
distributions on shares of Company Common Stock that were declared in compliance with this Agreement (including Section 5.1 and Section 5.19) and have a record date prior to the
Effective Time and a payment date after the Effective Time to be made to the holders of Company Common Stock on such record date.
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(f)
No Further Ownership Rights in Company Common Stock
. The shares of Parent
Common Stock delivered and cash paid in accordance with the terms of this
Article II
in respect of any shares of Company Common Stock shall be deemed to have been
delivered and paid in full satisfaction of all rights pertaining to such shares of Company Common Stock (subject to the Dissenting Shareholder Statute). From and after the Effective Time,
(i) all holders of Certificates and Book-Entry Shares (other than Dissenting Shares) shall cease to have any rights as shareholders of the Company other than the right to receive the Merger
Consideration into which the shares represented by such Certificates or Book-Entry Shares have been converted pursuant to this Agreement upon the surrender of such Certificate or Book-Entry Share in
accordance with
Section 2.2(d)
(together with the Fractional Share Cash Amount and any dividends or other distributions to which such Certificates or Book-Entry
Shares become entitled in accordance with
Section 2.2(e)
), without interest, and (ii) the stock transfer books of the Company shall be closed with respect to
all shares of Company Common Stock outstanding immediately prior to the Effective Time. From and after the Effective Time, the stock transfer books of the Company shall be closed, and there shall be
no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, any Certificates or Book-Entry Shares formerly representing shares of Company Common Stock are presented to the Surviving Corporation, Parent or the Exchange Agent for any reason,
such Certificates or Book-Entry
Shares shall be cancelled and exchanged as provided in this
Article II
, subject to applicable Law in the case of Dissenting Shares.
(g)
Termination of Exchange Fund
. Any portion of the Exchange Fund (including any
interest or other amounts received with respect thereto) that remains unclaimed by, or otherwise undistributed to, the holders of Certificates and Book-Entry Shares for one year after the Effective
Time shall be delivered to Parent, upon Parent's demand, and any holder of Certificates or Book-Entry Shares who has not theretofore complied with this
Article II
shall thereafter look only to Parent or the Surviving Corporation (subject to abandoned property, escheat or other similar Laws), as general creditors thereof, for satisfaction of its claim for Merger
Consideration and any dividends and distributions which such holder has the right to receive pursuant to this
Article II
without any interest thereon.
(h)
No Liability
. None of Parent, the Company, Merger Sub or the Exchange Agent
shall be liable to any person in respect of any portion of the Exchange Fund or the Merger Consideration delivered to a public official if required by any applicable abandoned property, escheat or
similar Law. Any other provision of this Agreement notwithstanding, any portion of the Merger Consideration or the cash to be paid in accordance with this
Article II
that remains undistributed to the holders of Certificates and Book-Entry Shares immediately prior to the date on which the Merger Consideration or such
cash would otherwise escheat to or become the property of any Governmental Entity, 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.
(i)
Lost Certificates
. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Exchange Agent, the posting by such
person of a bond in such reasonable amount as Parent or the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it or the Surviving Corporation
with respect to such Certificate, the Exchange Agent (or, if subsequent to the termination of the Exchange Fund and subject to
Section 2.2(g)
, Parent) shall
deliver, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration and any dividends and distributions deliverable in respect thereof pursuant to this Agreement.
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Section 2.3
Company Equity Awards
.
(a) Immediately
prior to the Effective Time, each Company RSU Award and Company Performance Stock Award that is outstanding as of immediately prior to the Effective Time
shall vest (with any performance metrics applicable to Company Performance Stock Awards to be deemed satisfied based on the level of achievement specified in the applicable award agreement) and be
cancelled and converted automatically into the right to receive, as soon as reasonably practicable after the Effective Time (but no later than ten (10) Business Days thereafter), the Merger
Consideration in respect of each share of Company Common Stock underlying each such Company RSU Award and Company Performance Stock Award, as applicable. Any amounts withheld pursuant to
Section 2.5
as a result of any applicable Tax withholding due in respect of the payment described in the immediately preceding sentence shall be applied to first
reduce the portion of the Merger Consideration that is payable in cash and then, only if and to the extent that such withholding amount exceeds such cash portion, to reduce the portion of the Merger
Consideration that is payable in shares of Parent Common Stock (with the Stock Consideration valued for this purpose based on the closing price of Parent Common Stock on the Nasdaq on the last trading
day immediately preceding the Closing Date). Each holder of a Company Equity Award converted into the right to receive the Merger Consideration that would have otherwise been entitled to receive a
fraction of a share of Parent Common Stock (after aggregating all shares to be delivered in respect of all Company Equity Awards held by such holder) shall receive, in lieu thereof and upon surrender
thereof, a cash payment (rounded to the nearest cent and without interest) in an amount equal to such fractional share of Parent Common Stock (rounded to the nearest thousandth in decimal form)
multiplied by the Parent Trading Price.
(b) Immediately
prior to the Effective Time, each Company RSU Award that was granted on or following the date hereof (solely to the extent permitted pursuant to
Section 5.1(l)(C)
) and is outstanding as of immediately prior to the Effective Time shall be assumed and converted into a restricted stock unit award covering
shares of Parent Common Stock (an "
Adjusted RSU Award
") with the same terms and conditions as were applicable to such Company RSU Award immediately prior to the Effective
Time (including vesting terms) and relating to the number of shares of Parent Common Stock equal to (A) the number of shares of Company Common Stock subject to such Company RSU Award
immediately prior to the Effective Time,
multiplied by
(y) the Equity Award Exchange Ratio, with any fractional shares rounded to the nearest
whole Parent Common Share.
(c) Prior
to the Effective Time, the Company Board of Directors and/or the appropriate committee thereof shall adopt resolutions and shall take all such other actions as are
necessary to effectuate the treatment of the Company RSU Awards and Company Performance Stock Awards (collectively, the "
Company Equity Awards
") as contemplated by this
Section 2.3
.
Section 2.4
Further Assurances
. If at any time before or after the Effective
Time, Parent or the Company reasonably believes or is advised that any further instruments, deeds, assignments or assurances are reasonably necessary or desirable to consummate the Merger or to carry
out the purposes and intent of this Agreement at or after the Effective Time, then Parent, Merger Sub, the Company and the Surviving Corporation and their respective officers and directors or managers
shall execute and deliver all such proper instruments, deeds, assignments or assurances and do all other things reasonably necessary or desirable to consummate the Merger and to carry out the purposes
and intent of this Agreement.
Section 2.5
Withholding Rights
. Each of the Company, Parent, Merger Sub, the
Surviving Corporation and the Exchange Agent shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement, such amounts as may be required to be deducted or
withheld with respect to the making of such payment under any applicable Tax Law. Each such payor shall timely remit to the appropriate Governmental Entity the amount of Taxes withheld. Any amounts so
deducted or withheld, and, if required, paid over to the applicable Governmental Entity, shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such
deduction or withholding was made.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company SEC Documents filed since July 31, 2017 and prior to the date of this Agreement (excluding
any disclosures set forth in any "risk factor" or "forward-looking statements" sections or that are similarly predictive or forward-looking in nature) where the relevance of the information to a
particular representation is reasonably apparent on its face, or (ii) the disclosure schedule delivered by the Company to Parent immediately prior to the execution of this Agreement (the
"
Company Disclosure Schedule
") (
provided
that disclosure in any section of such
Company Disclosure Schedule shall apply only to the corresponding section of this Agreement except to the extent that the relevance of such disclosure to another section or representation is
reasonably apparent on its face), the Company represents and warrants to Parent as follows:
Section 3.1
Organization
.
(a) The
Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Texas. The Company has all requisite corporate power
and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Each Subsidiary of the Company is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except as would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Each of the Company and its Subsidiaries is duly qualified or licensed, and has all necessary
governmental approvals, to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such
approvals, qualification or licensing necessary, except where the failure to be so duly qualified or licensed, have such approvals and be in good standing would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. As of the date of this Agreement, Section 3.1(a) of the Company Disclosure Schedule sets forth a correct and complete list
of all Subsidiaries of the Company and any joint ventures, partnerships or similar arrangements in which the Company or its Subsidiaries has a limited liability, partnership or other equity interest
(and the amount and percentage of any such interest). Other than the Company's Subsidiaries listed on Section 3.1(a) of the Company Disclosure Schedule, there is no person whose results of
operations, cash flows, changes in shareholders' equity or financial position are consolidated in the financial statements of the Company.
(b) The
Company has made available to Parent prior to the date of this Agreement a true and complete copy of the Company's articles of incorporation (the
"
Company Articles
") and bylaws (the "
Company Bylaws
") (collectively, the "
Company Organizational Documents
"), and
the certificate of incorporation, bylaws, limited partnership agreement, limited liability company agreement or comparable constituent or organizational documents for each Subsidiary of the Company
(collectively, the "
Company Subsidiary Organizational Documents
"), in each case, as amended and in effect through the date hereof. The Company Organizational Documents and
the Company Subsidiary Organizational Documents are in full force and effect and neither the Company nor any Subsidiary of the Company is in violation of any of their provisions, except, in the case
of a Subsidiary of the Company, as would not, individually or in the aggregate be expected to constitute or result in a Company Material Adverse Effect. The Company has made available to Parent prior
to the date of this Agreement true and complete copies of the minute books of the Company;
provided
that minutes related to deliberations concerning a transaction between
the Company and potential acquirors may be redacted.
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Section 3.2
Capital Stock and Indebtedness
.
(a) The
authorized capital stock of the Company consists of 40,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.01 per share
(the "
Company Preferred Stock
"). As of August 13, 2018, (i) 15,509,733 shares of Company Common Stock were issued and outstanding (not including shares held
in treasury), (ii) no shares of Company Common Stock were held in treasury, (iii) no shares of Company Preferred Stock were issued or outstanding, (iv) 1,500,000 shares of Company
Common Stock were reserved for issuance under the Company Stock Plans in respect of outstanding and future awards, (v) 206,064 shares of Company Common Stock were subject to outstanding Company
RSU Awards, (vi) 476,337 shares of Company Common Stock were subject to outstanding Company Performance Stock Awards (assuming performance metrics are deemed satisfied at maximum), and
(vii) no other shares of capital stock or other voting securities of the Company were issued, reserved for issuance or outstanding.
(b) All
outstanding shares of Company Common Stock are, and shares of Company Common Stock reserved for issuance with respect to Company Equity Awards, when issued in
accordance with the respective terms thereof, will be, duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights. Except as set forth in Section 3.2 of the
Company Disclosure Schedule, there are no outstanding subscriptions, options, warrants, calls, convertible securities, exchangeable securities or other similar rights, agreements or commitments to
which the Company or any of its Subsidiaries is a party (whether or not currently exercisable) (A) obligating the Company or any of its Subsidiaries to (1) issue, transfer, exchange,
sell or register for sale any shares of capital stock or other equity interests of the Company or any Subsidiary of the Company or securities convertible into or exchangeable for such shares or equity
interests, (2) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, (3) redeem or otherwise
acquire any such shares of capital stock or other equity interests, (4) provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, the Company or
any Subsidiary of the Company, or (5) make any payment to any person the value of which is derived from or calculated based on the value of any shares of capital stock or other equity interests
in the Company or any Subsidiary of the Company, or (B) granting any preemptive or antidilutive or similar rights with respect to any security issued by the Company or any Subsidiary of the
Company. No Subsidiary of the Company owns any shares of capital stock of the Company. Neither the Company nor any of its Subsidiaries has outstanding any bonds, debentures, notes or other
indebtedness, the holders of which have the right to vote (or which are convertible or exchangeable into or exercisable for securities having the right to vote) with the shareholders of the Company on
any matter. There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the capital stock or other equity interest of
the Company or any Subsidiary of the Company or that restrict any person from purchasing, selling, pledging or otherwise disposing of any shares of Company Common Stock. Since August 13, 2018
through the date hereof, the Company has not issued or repurchased any shares of its capital stock, Company Equity Awards or related securities (other than in connection with the exercise, settlement
or vesting of Company Equity Awards in accordance with their respective terms).
(c) Section 3.2(c)
of the Company Disclosure Schedule sets forth a true and complete list of all Company Equity Awards outstanding as of August 13, 2018,
specifying, on a holder-by-holder basis, (i) the name of each holder, (ii) the number of shares subject to each such Company Equity Award (assuming performance metrics are deemed
satisfied at maximum) and the type of Company Equity Award, (iii) the grant date of each such Company Equity Award, (iv) the vesting schedule of each such Company Equity Award
(including, if applicable, any vesting as a result of the occurrence of a change in control, either alone or in combination with another event), and (v) the Company Stock Plan pursuant to which
the Company Equity Award was granted (such list, the "
Company Equity Schedule
"). The Company shall provide Parent with an updated Company Equity Schedule within three
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(3) Business
Days prior to the anticipated Effective Time to reflect any changes occurring between the date of the Company Equity Schedule and the applicable date of delivery of such updated
Company Equity Schedule. With respect to each grant of a Company Equity Award, (x) each such grant was made in accordance with the terms of the applicable Company Stock Plan, the Exchange Act
and all other applicable Laws, including the rules of the New York Stock Exchange ("
NYSE
"), and (y) each such
grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company and disclosed in the Company SEC Documents in accordance with the
Exchange Act and all other applicable Laws.
(d) The
Company or a Subsidiary of the Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity interests of each
Subsidiary of the Company, free and clear of any preemptive rights and any Liens other than Permitted Liens, and all of such shares of capital stock or other equity interests are duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights. Except for equity interests in the Company's Subsidiaries, neither the Company nor any of its Subsidiaries owns, directly or
indirectly, any equity interest in any person (or any security or other right, agreement or commitment convertible or exercisable into, or exchangeable for, any equity interest in any person). Neither
the Company nor any of its Subsidiaries has any obligation to acquire any equity interest, security, right, agreement or commitment or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in, any person.
Section 3.3
Corporate Authority Relative to this Agreement; No Violation
.
(a) The
Company has the requisite corporate power and authority to enter into this Agreement and, subject to the receipt of the Company Shareholder Approval, to consummate
the transactions contemplated by this Agreement, including the Merger. The execution, delivery and performance of this Agreement by the Company and the consummation of the Merger have been duly and
validly authorized by the Company Board of Directors and, other than the Company Shareholder Approval and the filing of the Certificate of Merger with the Texas Secretary, no other corporate
proceedings on the part of the Company or vote of the Company's shareholders are necessary to authorize the execution and delivery by the Company of this Agreement and the consummation of the Merger.
The Company Board of Directors has unanimously (i) approved and declared advisable this Agreement and the transactions contemplated hereby, including the Merger, (ii) determined that the
terms of this Agreement and the transactions contemplated hereby, including the Merger, are in the best interests of the Company and its shareholders, (iii) duly and validly approved the
execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and agreements contained herein and the consummation of the transactions contemplated hereby,
including the Merger, on the terms and subject to the conditions contained herein, (iv) resolved to make the Company Recommendation, and, subject to
Section 5.4
, to include such Company Recommendation in the Proxy Statement/Prospectus and (v) directed that the adoption of this Agreement be submitted to a
vote at a meeting of the Company's shareholders.
(b) The
requisite vote of the holders of the issued and outstanding shares of Company Common Stock in favor of the adoption of this Agreement (the "
Company
Shareholder Approval
") is the only vote of the holders of any class or series of Company capital stock that is necessary under applicable Law and the Company Articles and the Company
Bylaws to adopt, approve or authorize this Agreement, for the Company to engage in the transactions contemplated by this Agreement and to consummate the Merger.
(c) This
Agreement has been duly and validly executed and delivered by the Company and, assuming this Agreement constitutes the legal, valid and binding agreement of Parent
and Merger Sub, this Agreement constitutes the legal, valid and binding agreement of the Company and is enforceable against the Company in accordance with its terms, except that (i) such
enforcement may be subject to
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applicable
bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
(d) Other
than in connection with or in compliance with (i) the filing of the Certificate of Merger with the Texas Secretary, (ii) the filing of the
Form S-4 (including the Proxy Statement/Prospectus) with the SEC and any amendments or supplements thereto and declaration of effectiveness of the Form S-4, (iii) the U.S.
Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder (the "
Exchange Act
"), (iv) the U.S. Securities Act of 1933, as amended, and the
rules promulgated thereunder (the "
Securities Act
"), (v) applicable state securities, takeover and "blue sky" laws, (vi) the rules and regulations of the
NYSE, (vii) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "
HSR Act
"),
(viii) the Company Shareholder Approval and (ix) the approvals set forth in Section 3.3(d) of the Company Disclosure Schedule (collectively, the "
Company
Approvals
"), no authorization, consent, order, license, permit or approval of, or registration, declaration, notice or filing with, any Governmental Entity is necessary, under
applicable Law or the Company Organizational Documents, for the consummation by the Company of the Merger, except where the failure to obtain such consents, approvals, authorizations or permits of, or
to make such filings, registrations with or notifications to, any Governmental Entity, would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or
prevent or materially delay or impair the consummation of the Merger.
(e) The
execution and delivery by the Company of this Agreement does not, and (assuming the Company Approvals are obtained) the consummation of the Merger and compliance
with the provisions of this Agreement will not (i) result in any loss, or suspension, limitation or impairment of any right of the Company or any of its Subsidiaries to own or use any assets
required for the conduct of their business or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation,
first offer, first refusal, modification or acceleration of any obligation or to the loss of a benefit under any loan, guarantee, Company Permit or Contract that is binding upon the Company or any of
its Subsidiaries or by which or to which any of their respective properties, rights or assets are bound or subject, or result in the creation of any liens, claims, mortgages, encumbrances, pledges,
security interests, transfer or use restrictions, equities or charges of any kind (each, a "
Lien
") other than Permitted Liens, in each case, upon any of the properties or
assets of the Company or any of its Subsidiaries, (ii) conflict with or result in any violation of any provision of the Company Organizational Documents or Company Subsidiary Organizational
Documents or (iii) conflict with or violate any applicable Laws except, in the case of clauses (i) and (iii), for such losses, suspensions, limitations, impairments, conflicts,
violations, defaults, terminations, cancellations, first offers, first refusals, modifications, accelerations, losses of benefits or Liens as would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
Section 3.4
Reports and Financial Statements
.
(a) The
Company and each of its Subsidiaries has filed or furnished all forms, documents and reports required to be filed or furnished by it with the SEC (including under
the Securities Act and the Exchange Act) since July 31, 2015 (all such documents and reports filed or furnished by the Company or any of its Subsidiaries, the "
Company SEC
Documents
"). As of their respective dates or, if amended, as of the date of the last such amendment (and, in the case of registration statements and proxy statements, on the dates of
effectiveness and the dates of the relevant meetings, respectively), the Company SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act and the
Sarbanes-Oxley Act of 2002 (the "
Sarbanes-Oxley Act
"), as the case may be, and the applicable rules and regulations promulgated thereunder, and none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to state any material fact
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required
to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the Company's Subsidiaries is, or at any
time since July 31, 2015 has been, required to file any forms, reports or other documents with the SEC. Since July 31, 2015, no executive officer of the Company has failed in any respect
to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act. As of the date of this Agreement, (i) there are no outstanding or unresolved
comments in any comment letters of the staff of
the SEC received by the Company relating to the Company SEC Documents and (ii) none of the Company SEC Documents is, to the knowledge of the Company, the subject of ongoing SEC review.
(b) The
consolidated financial statements (including all related notes and schedules) of the Company included in or incorporated by reference into the Company SEC Documents
filed since July 31, 2015 (i) fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as at the respective dates
thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended, (ii) were prepared in conformity with U.S. generally accepted
accounting principles ("
GAAP
") (except, in the case of the unaudited statements, as permitted by Form 10-Q or any successor form under the Exchange Act and subject
to normal year-end audit adjustments and the absence of footnote disclosure) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto),
(iii) have been prepared from, and are in accordance with, the books and records of the Company and its consolidated subsidiaries in all material respects and (iv) complied, as of their
respective dates of filing with the SEC, in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act.
KPMG LLP has not resigned (or informed the Company that it intends to resign) or been dismissed as independent public accountants of the Company as a result of or in connection with any
disagreements with the Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
(c) Neither
the Company nor any of its Subsidiaries is a party to, nor does it have any commitment to become a party to, any off-balance sheet joint venture, off-balance
sheet partnership or any other "off-balance sheet arrangements" (as defined in Item 303(a) of Regulation S-K of the SEC).
(d) Since
July 31, 2015, none of the Company or any Subsidiary of the Company nor, to the knowledge of the Company, any director, officer, employee, auditor,
accountant or representative of the Company or any Subsidiary of the Company, has received any material complaint, allegation, assertion or claim, regarding the accounting, internal accounting
controls or auditing practices, procedures, methodologies or methods of the Company or any Subsidiary of the Company or any material complaint, allegation, assertion or claim from employees of the
Company or any Subsidiary of the Company regarding questionable accounting or auditing matters with respect to the Company or any Subsidiary of the Company.
Section 3.5
Internal Controls and Procedures
.
(a) The
Company has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. The Company's disclosure controls and procedures
are reasonably designed, and since July 31, 2015, have been reasonably designed, to ensure that all material information required to be disclosed by the Company in the reports that it files or
furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is
accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302
and 906 of the Sarbanes-Oxley Act. The Company's management has
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completed
an assessment of the effectiveness of the Company's system of internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act
for the fiscal year ended July 31, 2017, and such assessment concluded that such controls were effective, and the Company's independent registered accountant has issued an attestation report
concluding that the Company maintained effective internal control over financial reporting as of July 31, 2017. To the knowledge of the Company, as of the date hereof, there is no fact,
circumstance or event that would prevent or materially impair the completion of an assessment of the effectiveness of the Company's system of internal control over financial reporting in compliance
with the requirements of Section 404 of the Sarbanes-Oxley Act for the fiscal year ended July 31, 2018, such assessment concluding that such controls were effective, or the Company's
independent registered accountant issuing an attestation report concluding that the Company maintained effective internal control over financial reporting as of July 31, 2018. Based on such
evaluation, management of the Company has disclosed to the Company's auditors and the audit committee of the Company Board of Directors (i) any significant deficiencies and material weaknesses
in the design or operation of internal controls over financial reporting and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in
the Company's internal control over financial reporting, and each such deficiency, weakness and fraud so disclosed to auditors, if any, has been disclosed to Parent prior to the date hereof.
(b) The
Company is in compliance in all material respects with all current listing requirements of the NYSE applicable to the Company.
Section 3.6
No Undisclosed Liabilities
. There are no Liabilities of the
Company or any of its Subsidiaries of any nature whatsoever (whether accrued, absolute, determined, contingent or otherwise and whether due or to become due), except for (a) Liabilities that
are reflected or reserved against on the consolidated balance sheet of the Company and its Subsidiaries included in its Quarterly Report on Form 10-Q for the period ended April 30, 2018
(including any notes thereto), (b) Liabilities arising in connection with the transactions contemplated hereby, (c) Liabilities incurred in the ordinary course of business consistent
with past practice since April 30, 2018, (d) Liabilities that have been discharged or
paid in full in the ordinary course of business and (e) Liabilities that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.7
Compliance with Law; Permits
.
(a) The
Company and its Subsidiaries are, and since July 31, 2015 have been, in compliance with all applicable federal, state, local, and foreign laws, statutes,
ordinances, rules, regulations, judgments, orders, injunctions, decrees or legally binding agency requirements of Governmental Entities (collectively, "
Laws
" and each, a
"
Law
"), except where such non-compliance would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Since
July 31, 2015, neither the Company nor any of its Subsidiaries has (i) received any written notice or, to the knowledge of the Company, verbal notice from any Governmental Entity
regarding any actual or alleged failure to comply with any Law in any material respect or (ii) provided any notice to any Governmental Entity regarding any material violation by the Company or
any Company Subsidiary of any Law.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries hold all
franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals, clearances, permissions, qualifications and registrations and orders of all
applicable Governmental Entities, and have filed all tariffs, reports, notices and other documents with all Governmental Entities necessary for the Company and its Subsidiaries to own, lease and
operate their properties and assets and to carry on their businesses as currently conducted (the "
Company Permits
") and have paid all fees and assessments due and payable
in connection therewith. Except as would not reasonably be expected
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to
have, individually or in the aggregate, a Company Material Adverse Effect, (i) all Company Permits are valid and in full force and effect, are not subject to any administrative or judicial
proceeding that would reasonably be expected to result in any modification, termination or revocation thereof and, to the knowledge of the Company no suspension or cancellation of any such Company
Permit is threatened; and (ii) the Company and each of its Subsidiaries is in compliance with the terms and requirements of all Company Permits.
(c) None
of the Company or its Subsidiaries, or to the knowledge of the Company, any director, officer, employee, agent or other person acting on behalf of the Company or
any of its Subsidiaries has, directly or indirectly, violated or is in violation of, or is aware of any action taken that would result in a violation of, the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder, the UK Bribery Act of 2010 or its predecessor laws, or any analogous anti-corruption Law in any country or jurisdiction in which the Company or any
of its Subsidiaries conduct business (collectively, the "
Anti-Corruption Laws
"), nor (i) used any funds of the Company or any of its Subsidiaries for unlawful
contributions, unlawful gifts, unlawful entertainment or other unlawful expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic governmental officials or
employees or to foreign or domestic political parties or campaigns from funds of the Company or any of its Subsidiaries; (iii) established or maintained any unlawful fund of monies or other
assets of the Company or any of its Subsidiaries; (iv) made any fraudulent entry on the books or records of the Company or any of its Subsidiaries; (v) made any unlawful bribe, unlawful
rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, regardless of form, whether in money, property or services, to obtain
favorable treatment in securing business to obtain special concessions for the Company or any of its Subsidiaries or to influence any act or decision of a foreign government official or other person;
or (vi) engaged in any transaction or dealing in property or interests in property of, received from or made any contribution of funds, goods or services to or for the benefit of, provided any
payments or material assistance to, or otherwise engage in or facilitated any transactions with a Prohibited Person. No proceeding by or before any Governmental Entity involving the Company, any
Subsidiary of the Company or any Affiliate of the Company, or any of their directors, officers, employees, agents or other persons acting on their behalf, with respect to any Anti-Corruption Law is
pending or, to the knowledge of the Company, threatened, nor have any disclosures been submitted to any Governmental Entity with respect to violations of any Anti-Corruption Law by any such person.
(d) Since
July 31, 2015, the Company and each of its Subsidiaries has conducted its import and export transactions in accordance in all material respects with all
applicable U.S. import, export and re-export Laws and controls and all other applicable import, export and re-export Laws and controls in any country or jurisdiction in which the Company or any of its
Subsidiaries conduct business, including the Arms Export Control Act, the International Traffic in Arms Regulations, the Export Administration Regulations and executive orders and laws implemented by
OFAC.
(e) Since
July 31, 2015, the Company and its Subsidiaries have obtained all material consents, orders and declarations from, provided all material notices to, and
made all material filings with, all Governmental Entities required for (i) the export, import and re-export of its products, services and technologies, and (ii) releases of products,
services and technologies to foreign nationals located in the U.S. and abroad (the "
Export Approvals
"), and each of the Company and its Subsidiaries is and, since
July 31, 2015, has been in compliance in all material respects with the terms of all Export Approvals. There are no pending or, to the knowledge of the Company, threatened, claims against the
Company or any of its Subsidiaries with respect to such Export Approvals.
Section 3.8
Environmental Laws and Regulations
. Except for matters that,
individually or in the aggregate, would not reasonably be expected to result in a Company Material Adverse Effect, the
Company and the Company Subsidiaries are, and since January 1, 2014 have been, in compliance with all applicable Environmental Laws (which compliance includes the possession by the Company and
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each
of its Subsidiaries of all Company Permits required under applicable Environmental Laws to conduct their respective business and operations, and compliance with the terms and conditions thereof)
and there are no actions, suits, proceedings (whether administrative or judicial) pending, or to the knowledge of the Company, threatened, or to the knowledge of the Company any investigation pending
or threatened, against the Company or any of its Subsidiaries alleging non-compliance with or other Liability under any Environmental Law. There have been no Releases of Hazardous Materials by the
Company or any of its Subsidiaries, or to the knowledge of the Company, as a result of any operations or activities of the Company or any of its Subsidiaries or their contractors or third party
operators, at, on, in, under, or from any property currently or, to the knowledge of the Company, formerly owned, operated or leased by the Company or its Subsidiaries or, to the knowledge of the
Company, at which the Company or its Subsidiaries (or any predecessor thereof for purposes of Environmental Laws) conducted operations or activities, in each case that would reasonably be expected to
give rise to any material Liability to the Company or its Subsidiaries under Environmental Law. No Hazardous Materials (other than those Hazardous Materials that are commercial products which are
present on the facility as a part of the Company's ordinary course of business) are present at, on, in or under any property currently or formerly owned, operated or leased by the Company or its
Subsidiaries or at which the Company or its Subsidiaries conducted operations or activities the presence of which would reasonably be expected to result, individually or in the aggregate, in a Company
Material Adverse Effect. None of the Company and its Subsidiaries is subject to any Order, nor has the Company or its Subsidiaries given an indemnity covering the liability for the actions of another
person, in each case that would reasonably be expected to result in material Liabilities to the Company and its Subsidiaries under applicable Environmental Law. Neither the Company nor any Subsidiary
of the Company has received any written, unresolved claim, notice, complaint or request for information from a Governmental Entity or any other person relating to actual or alleged material
noncompliance with or material Liability under applicable Environmental Laws (including any such Liability or obligation arising under, retained or assumed by Contract by the Company or its
Subsidiaries). The Company has made available to Parent copies of all material, nonprivileged environmental reports, studies and assessments prepared within the past six (6) years that are in
the possession, custody or control of the Company or any of its Subsidiaries pertaining to Releases or non-compliance with Environmental Laws and which are not subject to any restriction on the right
to provide such items to a third party.
Section 3.9
Employee Benefit Plans
.
(a) Section 3.9(a)
of the Company Disclosure Schedule sets forth a correct and complete list of each material Company Benefit Plan. With respect to each such material
Company Benefit Plan, to the extent applicable, correct and complete copies of the following have been delivered or made available to Parent by the Company: (i) the Company Benefit Plan
(including all amendments and attachments thereto); (ii) all related trust and funding documents; (iii) the most recent annual report (Form 5500) and all schedules thereto filed
with the Internal Revenue Service (the "
IRS
"); (iv) the most recent determination, opinion or advisory letter from the IRS; (v) the most recent summary plan
description and any summary of material modifications thereto; (vi) any related material filings and communications received from or sent to any Governmental Entity within the past three years;
and (vii) the most recent audited financial statement and/or actuarial valuation, if any.
(b) Each
Company Benefit Plan has been established, operated and administered in all material respects in accordance with its terms and the requirements of all applicable
Laws, including ERISA and the Code. Neither the Company nor any of its Subsidiaries has taken any corrective action or made a filing under any voluntary correction program of the IRS, the Department
of Labor or any other Governmental Entity with respect to any Company Benefit Plan, and neither the Company nor any of its Subsidiaries has any knowledge of any material plan defect that would qualify
for correction under any such program. All contributions required to be made to any Company Benefit Plan by applicable Law or by any plan document or other contractual undertaking, and all premiums
due or payable with respect to insurance policies funding any Company Benefit Plan, have been timely made or paid in full or, to the extent not required to be made or paid on or before the date
hereof, have been fully reflected on the books and records of the Company in accordance with GAAP.
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(c) The
IRS has issued a favorable determination, opinion or advisory letter with respect to each Company Benefit Plan intended to be qualified under Section 401(a)
of the Code (each, a "
Qualified Plan
") and its related trust, and such determination, advisory or opinion letter has not been revoked and, to the knowledge of the Company
and its Subsidiaries, there are no existing circumstances and no events have occurred that would adversely affect the qualified status of any Qualified Plan or the related trust. No trust funding any
Company Benefit Plan is intended to meet the requirements of Section 501(c)(9) of the Code.
(d) None
of the Company and its Subsidiaries nor any of their respective ERISA Affiliates has, at any time, maintained, established, contributed to or been obligated to
contribute to any plan that is (i) a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA (a "
Multiemployer Plan
"), (ii) a plan that
has two (2) or more contributing sponsors at least two (2) of whom are not under common control, within the meaning of Section 4063 of ERISA (a "
Multiple Employer
Plan
"), (iii) a "single-employer plan" within the meaning of Section 40001(a)(15) of ERISA, or (iv) any other plan that is subject to Title IV or Section 302
of ERISA or Section 412, 430 or 4971 of the Code.
(e) There
are no material pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or
instituted, and, to the knowledge of the Company, no set of circumstances exists which may reasonably give rise to a material claim or lawsuit, against the (i) Company with respect to any
Company Benefit Plan, (ii) the Company Benefit Plans, (iii) any fiduciaries of the Company Benefit Plans with respect to their duties to the Company Benefit Plans or (iv) the
assets of any of the trusts under any of the Company Benefit Plans, which would reasonably be expected to result in any material Liability of the Company or any of its Subsidiaries (or any of their
respective ERISA Affiliates) or any Company Benefit Plan to the Pension Benefit Guaranty Corporation, the Department of the Treasury, the Department of Labor, any Multiemployer Plan, any Multiple
Employer Plan, any participant in a Company Benefit Plan, or any other party. None of the Company, any of its Subsidiaries or any of their ERISA Affiliates has incurred (either directly or indirectly,
including as a result of any indemnification obligation) any material Liability under or pursuant to Title I of ERISA or the penalty, excise Tax or joint and several Liability provisions of the Code
relating to employee benefit plans that has not been satisfied in full.
(f) Neither
the Company nor any of its Subsidiaries, sponsors, has sponsored or has any obligation with respect to any Company Benefit Plan that provides for any
post-employment or post-retirement medical or death benefits (whether or not insured) with respect to former or current directors or employees, or their respective beneficiaries or dependents, beyond
their retirement or other separation from service, except as required by Section 4980B of the Code or comparable U.S. state Laws or applicable non-U.S. Laws.
(g) Each
Company Benefit Plan that is or was a nonqualified deferred compensation plan subject to Section 409A of the Code (i) has been operated between
January 1, 2005 and December 31, 2008 in all material respects in good faith compliance with Section 409A of the Code and applicable guidance thereunder and (ii) since
January 1, 2010, has been, in all material respects, in documentary and operational compliance with Section 409A of the Code.
(h) Except
as set forth on Section 3.9(h) of the Company Disclosure Schedule, the execution of this Agreement and the consummation of the Merger will not, either
alone or in combination with another event, (i) entitle any current or former employee, director, consultant or officer of the Company or any of its Subsidiaries to severance pay, unemployment
compensation or accrued pension benefit or any other payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee, director, consultant
or officer, (iii) trigger any funding obligation under any Company Benefit Plan or impose any restrictions or limitations on the Company's rights to administer, amend, merge, terminate, or
receive a reversion of assets from any Company Benefit Plan, (iv) result in the forgiveness of Indebtedness for the benefit of any such current or former employee,
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director,
consultant or officer, or (v) result in any payment (whether in cash or property or the vesting of property) to any "disqualified individual" (as such term is defined in Treasury
Regulations
Section 1.280G-1) that would, individually or in combination with any other such payment, constitute an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code). No
Company Benefit Plan provides for, and neither the Company nor any of its Subsidiaries otherwise has any obligation to provide, a gross-up or reimbursement of Taxes imposed under Section 4999
of the Code, Section 409A of the Code, or otherwise.
(i) Each
Company Benefit Plan that is maintained outside of the United States or provides compensation or benefits to any employee or former employee of the Company or any
Company Subsidiary (or any dependent thereof) who resides outside the United States (each "
Company Foreign Plan
") (i) has been operated in material compliance with
its terms, any applicable collective bargaining or other works council agreements, and the applicable statutes or governmental regulations and rulings relating to such plans in the jurisdictions in
which such Company Foreign Plan is present or operates and, to the extent relevant, the United States, (ii) has obtained from the Governmental Entity having jurisdiction with respect to such
Company Foreign Plan any required determinations, if any, that such Company Foreign Plan is in compliance in all material respects with the applicable Laws of the relevant jurisdiction if such
determinations are required in order to give effect to such Company Foreign Plan, (iii) if intended to qualify for special tax treatment, has met (and continues to meet, in all material
respects) all requirements for such treatment, and (iv) is fully funded and/or book- reserved, as appropriate, based upon reasonable actuarial assumptions or generally accepted accounting
principles.
Section 3.10
Absence of Certain Changes or Events
.
(a) Since
July 31, 2017 through the date of this Agreement, the businesses of the Company and its Subsidiaries have been conducted in all material respects in the
ordinary course of business consistent with past practice, and except for the transactions contemplated by this Agreement, none of the Company or any Subsidiary of the Company has undertaken any
action that if taken after the date of this Agreement would require Parent's consent pursuant to
Section 5.1(b)
,
(c)
,
(d),
(e)
,
(g)
,
(h)
,
(i)
,
(m)
or
(p)
.
(b) Since
July 31, 2017 through the date of this Agreement, there has not been any fact, change, circumstance, event, occurrence, condition or development that has
had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.11
Investigations; Litigation
. As of the date hereof, except as
would not reasonably be expected to, individually or in the aggregate, a Company Material Adverse Effect, (a) there are no Proceedings or other written requests for information relating to
potential violations of Law pending (or, to the knowledge of the Company, threatened) against or affecting the Company or any of its Subsidiaries, or
any of their respective properties and (b) there are no Orders of, or before, any Governmental Entity against the Company or any of its Subsidiaries.
Section 3.12
Information Supplied
. The information supplied or to be
supplied by the Company in writing for inclusion in the Form S-4 (including the Proxy Statement/Prospectus) will not, at the time the Form S-4 (and any amendment or supplement thereto)
is declared effective, on the date that the Proxy Statement/Prospectus is first mailed to the shareholders of the Company, or on the date of the Company Special 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, except that no representation or warranty is made by the Company with respect to statements made therein based on information supplied by Parent or Merger Sub for inclusion or
incorporation therein.
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Section 3.13
Tax Matters
.
(a) Except
as is not materially adverse to the Company:
(i) each
of the Company and its Subsidiaries has prepared and timely filed (taking into account any valid extension of time within which to file) all Tax Returns required
to be filed by it, and all such Tax Returns are true, correct, complete and accurate;
(ii) each
of the Company and its Subsidiaries has timely paid all Taxes required to be paid by it (whether or not shown on any Tax Return);
(iii) the
Tax Returns of the Company and its Subsidiaries have been examined through the Tax year ending 2014, and neither the Company nor any of its Subsidiaries has waived
or extended any statute of limitations with respect to Taxes or agreed to any extensions of time with respect to a Tax assessment or deficiency;
(iv) all
assessments for Taxes due from the Company or any of its Subsidiaries with respect to completed and settled audits or examinations or any concluded litigation have
been timely paid in full;
(v) no
deficiencies for Taxes have been claimed, proposed or assessed by any Governmental Entity in writing against the Company or any of its Subsidiaries except for
deficiencies which have been fully satisfied by payment, settled or withdrawn;
(vi) there
are no audits, examinations, investigations or other proceedings pending or threatened in writing in respect of any Taxes or Tax matters (including Tax Returns)
of the Company or any of its Subsidiaries;
(vii) there
are no Liens for Taxes on any of the assets of the Company or any of its Subsidiaries other than statutory Liens for Taxes not yet due and payable;
(viii) each
of the Company and its Subsidiaries has complied with all applicable Laws relating to the payment, collection, withholding and remittance of Taxes (including
information reporting requirements), including with respect to payments made to or received from any employee, creditor, shareholder, customer or other third party;
(ix) neither
the Company nor any of its Subsidiaries (i) is or has been a member of any affiliated, consolidated, combined, unitary, group relief or similar group for
purposes of filing Tax Returns or paying Taxes (other than a group the common parent of which is the Company), (ii) is a party to any agreement or arrangement relating to the apportionment,
sharing, assignment, indemnification or allocation of any Tax or Tax asset (other than an agreement or arrangement solely between or among the Company and/or its Subsidiaries) or (iii) has any
Liability for Taxes of any person (other than the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any analogous or similar provision of state, local or
foreign Law), as transferee, successor, or otherwise; and
(x) neither
the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date, as a result of any (i) change in method of accounting pursuant to Section 481(c) of the Code (or any
analogous or similar provision of state, local or foreign Law) prior to the Closing, (ii) installment sale, intercompany transaction, or open transaction disposition made or entered into prior
to the Closing, or any "excess loss account," existing as of immediately prior to the Closing, (iii) prepaid amount received on or prior to the Closing, (iv) "closing agreement" within
the meaning of Section 7121 of the Code (or any similar or analogous provision of state, local or foreign Law) entered into prior to the Closing or (v) election pursuant to
Section 108(i) of the Code (or any analogous or similar provision of state, local or foreign Law).
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(b) None
of the Company or any of its Subsidiaries has been a "controlled corporation" or a "distributing corporation" (within the meaning of Section 355(a)(1)(A) of
the Code) in any distribution that was purported or intended to qualify for tax-free treatment under Section 355 of the Code (or any analogous or similar provision of state, local or foreign
Law) occurring during the two (2)-year period ending on the date of this Agreement.
(c) None
of the Company nor any of its Subsidiaries has participated in any "listed transaction" within the meaning of Treasury Regulations Section 1.6011-4(b)(2) (or
any analogous or similar provision of state, local or foreign Law).
Section 3.14
Employment and Labor Matters
. Each collective bargaining
agreement, labor union contract, works council agreement or trade union agreement (each, a "
Collective Bargaining Agreement
") to which the Company or any of its
Subsidiaries is a party is set forth on Section 3.14 of the Company Disclosure Schedule. Except as set forth on Section 3.14 of the Company Disclosure Schedule, no employee is
represented by a labor organization for purposes of collective bargaining with respect to the Company or any of its Subsidiaries. To the knowledge of the Company, from July 31, 2015 through the
date hereof, there have been no activities or proceedings of any labor or trade union seeking recognition of a collective bargaining unit, works council, trade union or similar organization of
employees of the Company or any of its Subsidiaries. No Collective Bargaining Agreement or renewal thereof is being negotiated by the Company or any of its Subsidiaries. From July 31, 2015
through the date hereof, there has been no strike, lockout, slowdown, or work stoppage against the Company or any of its Subsidiaries pending or, to the knowledge of the Company, threatened, that
would interfere in any material respect with the respective business activities of the Company or any of its Subsidiaries. There is no pending charge or complaint against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable Governmental Entity, and none of the Company nor any of its Subsidiaries is a party, or otherwise bound by, any consent decree
with, or citation by, any Governmental Entity relating to employees or employment practices, except as would not be, individually or in the aggregate, reasonably be expected to result in material
Liability to the Company or any Company Subsidiary. To the knowledge of the Company, as of the date of this Agreement there is no material claim or material grievance pending or threatened relating to
any labor and employment laws, including with respect to employment contracts, wages and hours, classification, plant closing notifications, employment statute or regulations, privacy rights, labor
disputes, workers' compensation policies or long-term disability policies, safety, retaliation, immigration or discrimination matters involving the Company or any Company Subsidiary, including charges
of unfair labor practices or harassment, complaints, claims or judicial or administrative proceedings, in each case which are pending or, to the knowledge of the Company, threatened, by or on behalf
of any employees of the Company or Company Subsidiary. Except as would not reasonably be expected to result in, individually or in the aggregate, material Liability to the Company, (i) the
Company and its Subsidiaries are in compliance with and have complied with all laws regarding employment and employment practices
(including anti-discrimination), terms and conditions of employment and wages and hours (including classification of employees and independent contractors, and equitable pay practices) and other laws
in respect of any reduction in force (including notice, information and consultation requirements), and, (ii) no claims relating to non-compliance with the foregoing are pending or, to the
knowledge of the Company, threatened.
Section 3.15
Intellectual Property and Information Technology
.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the Company or one of its
Subsidiaries own, or license in or otherwise possess the right to use, each of the Company Registrations used in or necessary for operation of the Company's business, (ii) to the Company's
knowledge, no patent or patent application, copyright registration or application or trademark registration or application of the Company is invalid or unenforceable, (iii) all issuance,
renewal, maintenance and other payments that are or have become
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due
with respect to the Company Registrations have been timely paid by or on behalf of the Company or the relevant Subsidiary and (iv) there are no pending, or to the knowledge of the Company,
threatened, inventorship challenges, reexaminations, cancellations, opposition or nullity proceedings or interferences against the Company or its Subsidiaries with respect to the Company
Registrations.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company or one of its Subsidiaries is the
sole and exclusive owner of all Company Owned Intellectual Property, free and clear of any Liens other than any Permitted Liens.
(c) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the Company and its Subsidiaries have
taken reasonable measures to (A) maintain the confidentiality of and protect the proprietary nature of each item of Company Owned Intellectual Property that the Company intended be retained as
confidential, and (B) maintain under confidentiality any confidential information owned by another person with respect to which the Company or any Company Subsidiary has a confidentiality
obligation, and (ii) to the Company's knowledge, the Company and each of its Subsidiaries has complied with all applicable contractual and legal requirements pertaining to information privacy
and security.
(d) Except
as would not in the aggregate be materially adverse to the Company: (i) to the Company's knowledge, neither the conduct of the business of the Company and
its Subsidiaries, nor the sale or use of any product or service offered by the Company or any of its Subsidiaries infringes or violates, or constitutes a misappropriation of, any Intellectual Property
rights of any third party, and (ii) the Company and its Subsidiaries have not received (A) any written complaint, claim or notice or, to the knowledge of the Company, threat of any of
the foregoing (including any notification that a license under any patent is or may be required) since July 31, 2015 alleging any such infringement, violation or misappropriation or
(B) any written request for indemnification or defense from any reseller, distributor, customer, user or any other third party of the Company or its Subsidiaries related to any such claim or
notice regarding the Intellectual Property rights of any third party.
(e) Except
as would not be materially adverse to the Company, to the knowledge of the Company, no person or entity (including any current or former employee or consultant of
the Company or any of its Subsidiaries) is infringing, violating or misappropriating any of the Company Owned Intellectual Property, or has done so since July 31, 2015.
(f) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries
is a member of or party to any patent pool, industry standards body, trade association or other organization pursuant to the rules of which it is obligated to license any Company Owned Intellectual
Property to any person or entity.
(g) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) each employee of the Company or any
of its Subsidiaries, and each individual independent contractor of the Company or any of its Subsidiaries, has executed a valid and binding written agreement, expressly assigning to the Company or a
Subsidiary all right, title and interest in any inventions and works of authorship, whether or not patentable, invented, created, developed, authored, conceived or reduced to practice during the term
of such employee's employment or such independent contractor's work for the Company or the relevant Subsidiary, and all Intellectual Property rights therein, and (ii) as of the date hereof,
none of the Company or any of its Subsidiaries has received any written claim since July 31, 2015 from any employee or individual independent contractor challenging or disputing the ownership
of any such Intellectual Property of the Company or any of its Subsidiaries, or challenging or disputing the ownership of any agreement with the Company or any of its Subsidiaries relating to
ownership of any such Intellectual Property.
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(h) Except
as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (i) since July 31, 2015, there has
been no failure, breakdown, loss or impairment of, or to the Company's knowledge, unauthorized access to or unauthorized use of, any information technology systems of the Company or any of its
Subsidiaries, that has resulted in a disruption or interruption in the operation of the business of the Company or any of its Subsidiaries or that has, to the Company's knowledge, resulted in
unauthorized disclosure of any confidential information of the Company or any of its Subsidiaries to any unauthorized person, and (ii) the Company and its Subsidiaries have in place
commercially reasonable disaster recovery and business continuity plans and procedures.
Section 3.16
Property
. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, with respect to the real property owned by the Company or any Subsidiary of the Company (the "
Company Owned
Real Property
"), either the Company or a Subsidiary of the Company has good and valid title to such Company Owned Real Property, free and clear of all Liens other than any Permitted
Liens. As of the date hereof, neither the Company nor any Subsidiary of the Company has received written notice of any pending condemnation proceeding with respect to any Company Owned Real Property,
and to the knowledge of the Company no such proceeding is threatened. Section 3.16 of the Company Disclosure Schedule sets forth a correct and complete list of all Company Owned Real Property
as of the date hereof. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, either the Company or a Subsidiary of the Company has a
good and valid leasehold interest in each lease, sublease and other agreement under which the Company or any of its Subsidiaries uses or occupies or has the right to use or occupy any real property
(such property subject to a lease, sublease or other agreement, the "
Company Leased Real Property
" and such leases, subleases and other agreements are, collectively, the
"
Company Real Property Leases
"), in each case, free and clear of all Liens other than any Permitted Liens. Section 3.16 of the Company Disclosure Schedule sets
forth a correct and complete list of all Company Leased Real Property as of the date hereof. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, each Company Real Property Lease (a) is a valid and binding obligation of the Company or the Subsidiary of the Company that is party thereto (except in each case as enforcement
may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors' rights generally, and that the remedy of
specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought),
and, to the knowledge of the Company, of each other party thereto, and is in full force and effect and (b) no uncured default on the part of the Company or, if applicable, its Subsidiary or, to
the knowledge of the Company, the landlord thereunder, exists under any such Company Real Property Lease, and (c) no event has occurred or circumstance exists which, with the giving of notice,
the passage of time, or both, would constitute a breach or default under any such Company Real Property Lease. Neither the Company nor any of its Subsidiaries is currently subleasing, licensing or
otherwise granting any person any right to use or occupy a Company Owned Real Property or a Company Leased Real Property. Except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries has since July 31, 2015 received notice of the existence of any outstanding Order or of any pending
proceeding, and, to the knowledge of the Company, there is no such Order or proceeding threatened, relating to the ownership, lease, use, occupancy or operation by the Company or its Subsidiaries of
the Company Owned Real Property or the Company Leased Real Property.
Section 3.17
Insurance
. The Company and its Subsidiaries maintain insurance
with reputable insurers in such amounts and against such risks as is customary for the industries in which it and its Subsidiaries operate and as the management of the Company has in good faith
determined to be prudent and appropriate in all material respects. Except as would not, individually or in the aggregate,
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reasonably
be expected to have a Company Material Adverse Effect, (a) all insurance policies maintained by or on behalf of the Company or any of its Subsidiaries as of the date of this
Agreement are in full force and effect, (b) all premiums and other payments due on such policies have been paid by the Company or its Subsidiaries and all claims thereunder have been filed in
due and timely fashion, (c) the Company and its Subsidiaries are in material compliance with the terms and provisions of all insurance policies maintained by or on behalf of the Company or any
of its Subsidiaries as of the date of this Agreement, and (d) neither the Company nor any of its Subsidiaries is in breach or default under, has received any written notice of, or has taken any
action that would permit cancellation, termination or modification of, any such material insurance policies. During the one-year period prior to the date of this Agreement, neither the Company nor any
Subsidiary of the Company has received any written communication notifying the Company or Subsidiary of the Company of any: (i) premature cancellation or invalidation of any material insurance
policy held by the Company or any Subsidiary of the Company; (ii) refusal of any coverage or rejection of any material claim under any material insurance policy held by the Company or any
Subsidiary of the Company; or (iii) material adjustment in the amount of the premiums payable with respect to any material insurance policy held by the Company or any Subsidiary of the Company.
As of the date of this Agreement, there is no pending material claim by the Company or any Subsidiary of the Company against any insurance carrier under any insurance policy held by the Company or any
Subsidiary of the Company.
Section 3.18
Material Contracts
.
(a) Except
as set forth in Section 3.18(a) of the Company Disclosure Schedule and except for Company Benefit Plans, as of the date of this Agreement, neither the
Company nor any of its Subsidiaries is a party to or bound by:
(i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC);
(ii) any
Contract between the Company or any Subsidiary of the Company, on the one hand, and any officer, director, shareholder or affiliate (other than a wholly owned
Subsidiary of the Company) of the Company or any Subsidiary of the Company or any of their respective "associates" or "immediate family" members (as such terms are defined in Rule 12b-2 and
Rule 16a-1 of the Exchange Act), on the other hand, including (but not limited to) any Contract pursuant to which the Company or any Subsidiary of the Company has an obligation to indemnify
such officer, director, shareholder, affiliate or family member, but not including any Company Benefit Plans;
(iii) any
Contract that imposes any restriction on the right or ability of the Company, any of its Subsidiaries or any Affiliate of any of them to conduct or compete with
any other person in any line of business or geographic region, solicit any customer (or that following the Effective Time will restrict the ability of Parent or its Subsidiaries to engage in any line
of business or compete in any geographic area);
(iv) any
Contract that obligates the Company or its Subsidiaries (or following the Effective Time, Parent or its Subsidiaries) to conduct business with any third party on a
preferential or exclusive basis or which contains a "most favored nation" or similar covenant;
(v) any
agreement relating to Indebtedness of the Company or any of its Subsidiaries having an outstanding principal amount (or, in the case of Indebtedness of the type
described in clause (F) thereof, with a termination value) in excess of $1,000,000;
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(vi) any
Contract that grants any right of first refusal, right of first offer or similar right with respect to any material assets, rights or properties of the Company or
its Subsidiaries;
(vii) any
Contract that provides for the acquisition or disposition of any assets (other than acquisitions or dispositions of assets in the ordinary course of business) or
business (whether by merger, sale of stock or otherwise) that contain ongoing obligations that are material to the Company and its Subsidiaries, taken as a whole;
(viii) any
joint venture, partnership or limited liability company agreement or other similar Contract relating to the formation, creation, operation, management or control
of any joint venture, partnership or limited liability company, other than any such Contract solely between the Company and its Subsidiaries or among the Company's Subsidiaries;
(ix) any
Contract expressly limiting or restricting the ability of the Company or any of its Subsidiaries (A) to make distributions or declare or pay dividends in
respect of their capital stock, partnership
interests, membership interests or other equity interests, as the case may be, (B) to make loans to the Company or any of its Subsidiaries, or (C) to grant liens on the property of the
Company or any of its Subsidiaries;
(x) any
Contract that obligates the Company or any of its Subsidiaries to make any loans, advances or capital contributions to, or investments in, any Person, except for
(A) loans or advances for indemnification, attorneys' fees, or travel and other business expenses in the ordinary course of business, (B) extended payment terms for customers in the
ordinary course of business, (C) prepayment of Taxes for repatriated employees of the Company and its Subsidiaries or (D) loans, advances or capital contributions to, or investments in,
any Person (other than the Company or any of its Subsidiaries) not in excess of $1,000,000 individually;
(xi) any
settlement entered into since July 31, 2015 (A) with a Governmental Entity, (B) that requires the Company and its Subsidiaries to pay more than
$1,000,000 or (C) imposes any material restrictions on the business of the Company or its Subsidiaries;
(xii) any
Contract that is material to the business of the Company and its Subsidiaries, taken as a whole, (A) granting the Company or one of its Subsidiaries any
right to use any Intellectual Property (which for purposes of this
Section 3.18(a)(xii)
, excludes generally commercially available software) or
(B) permitting any third person to use any Company Owned Intellectual Property, including any license agreements, coexistence agreements and covenants not to sue, but excluding licenses granted
to customers and third party service providers in the ordinary course of business;
(xiii) any
Contract that involved the payment of more than $5,000,000 by the Company and its Subsidiaries in the twelve months ended July 31, 2018 or that is
reasonably expected to result in the payment of such amount by the Company and its Subsidiaries in the twelve months ended July 31, 2019;
(xiv) any
Contract that involved the receipt of more than $5,000,000 by the Company and its Subsidiaries in the twelve months ended July 31, 2018 or that is expected
to result in the receipt of such amount by the Company and its Subsidiaries in the twelve months ended July 31, 2019;
(xv) any
Contract providing for the outsourcing, contract manufacturing, testing, assembly or fabrication of any material products, Technology or services of the Company or
any of its Subsidiaries;
(xvi) any
material Government Contract that has not been closed out;
(xvii) any
Contract relating to the creation or existence of any Lien (other than Permitted Liens) with respect to any material asset of the Company or any Subsidiary of the
Company; or
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(xviii) any
Contract with any Top Customer (excluding purchase orders issued in the ordinary course of business).
All contracts of the types referred to in clauses (i) through (xviii) above (whether or not set forth on Section 3.18(a) of the Company Disclosure
Schedule), are referred to herein as "
Company Material Contracts
." The Company has made available to Parent prior to the date of this Agreement a complete and correct copy
of each Company Material Contract as in effect on the date of this Agreement.
(b) Neither
the Company nor any Subsidiary of the Company is in breach of or default under the terms of any Company Material Contract and, to the knowledge of the Company,
no other party to any Company Material Contract is in breach of or default under the terms of any Company Material Contract and no event has occurred or not occurred through the Company's or any of
its Subsidiaries' action or inaction or, to the knowledge of the Company, through the action or inaction of any third party, that with notice or the lapse of time or both would constitute a breach of
or default under the terms of any Company Material Contract, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Each
Company Material Contract is a valid and binding obligation of the Company or the Subsidiary of the Company that is party thereto and, to the knowledge of the Company, of each other party thereto
(except in each case as enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors' rights
generally, and that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought), and is in full force and effect, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect. There are no disputes pending or, to the knowledge of the Company, threatened with respect to any Company Material Contract and neither the Company nor any of its Subsidiaries has received any
written notice of the intention of any other party to any Company Material Contract prior to its stated expiration date to terminate for default, convenience or otherwise any Company Material
Contract, nor to the knowledge of the Company, is any such party threatening to do so, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) Section 3.18(c)
of the Company Disclosure Schedule sets forth, as of the date of this Agreement, a list of each Top Customer and Top Vendor, the corresponding
revenues or expenditures, as applicable, during the twelve (12) months ended July 31, 2018 (in the case of a Top Customer) or during the six (6) months ended January 31,
2018 (in the case of a Top Vendor), and a brief description of the products supplied or purchased, as the case may be. No Top Customer or Top Vendor has canceled, terminated or substantially curtailed
its relationship with the Company or any Subsidiary of the Company, given notice to the Company or any Subsidiary of the Company of any intention to cancel, terminate or substantially curtail its
relationship with the Company or any Subsidiary of the Company, or, to the knowledge of the Company, threatened to do any of the foregoing.
Section 3.19
Products Warranty and Liability
. Except as would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect, since July 31, 2015, each product manufactured, sold, leased or delivered by the Company or any of its
Subsidiaries has been in material conformance with all applicable contractual commitments and all express and implied warranties. To the knowledge of the Company, there are no material defects in the
products and parts sold by the Company or any of its Subsidiaries and there is no material failure of any such products or parts to satisfy the warranty applicable to their sale.
Section 3.20
Finders or Brokers
. Except for KeyBanc Capital
Markets Inc., neither the Company nor any of its Subsidiaries has employed any investment banker, broker or finder in connection with the Merger who would be entitled to any fee or any
commission in connection with or upon consummation of the Merger.
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Section 3.21
Opinion of Financial Advisor
. The Company Board of Directors
has received the opinion of KeyBanc Capital Markets Inc. to the effect that, as of the date thereof and subject to the assumptions, limitations, qualifications and other matters considered in
the preparation thereof, the Merger Consideration to be received by the holders of Company Common Stock in the Merger pursuant to this Agreement is fair, from a financial point of view, to such
holders. The Company will make available to Parent a copy of such opinion as soon as practicable following the execution of this Agreement for informational purposes only.
Section 3.22
State Takeover Statutes
. Assuming the accuracy of Parent's
representations set forth in
Section 4.19
, the Company Board of Directors has taken all action necessary to render inapplicable to this Agreement and the
transactions contemplated hereby (including the Merger) all potentially applicable state anti-takeover statutes or regulations and any similar provisions in the Company Articles or Company Bylaws.
Section 3.23
No Other Representations or Warranties
.
(a) Except
for the representations and warranties expressly contained in this
Article III
, neither the Company, the Company Subsidiaries
nor any other Representative or person makes any express or implied representation or warranty (whether at law, including common law or by statute, or in equity) on behalf of the Company. The Company
hereby expressly disclaims any such other representation or warranty, whether by the Company, any Company Subsidiary, or any of their respective Representatives or any other person, notwithstanding
the delivery or disclosure to Parent, Merger Sub or any other person of any documentation or other written or oral information by the Company, any Company Subsidiary or any of their respective
Representatives or any other person, and neither the Company, the Company Subsidiaries nor any other Representative or other person will have or be subject to any liability or indemnification
obligation to Parent, Merger Sub or any other person resulting from such delivery or disclosure, or Parent's or Merger Sub's use, of any such documentation or other information (including any
information, documents, projections, forecasts or other material made available to Parent or Merger Sub in certain "data rooms", management presentations or other written materials provided to Parent
in connection with the transactions contemplated hereby).
(b) The
Company hereby acknowledges and agrees that notwithstanding anything herein to the contrary (i) other than the specific representations and warranties set
forth in
Article IV
, none of Parent, Merger Sub or their respective Representatives makes or has made any representation or warranty, express or implied, at law or
in equity, (A) in respect of Parent or any of its Affiliates or their respective businesses, assets, employees, liabilities or operations, or (B) with respect to (x) any
projections, estimates, prospects, forecasts, plans, and budget information furnished by Parent or their respective Representatives (including the reasonableness of the assumptions underlying such
projections, estimates, prospects, forecasts, plans, and budget information); (y) the operation of Parent after the Closing; or (z) the probable commercial success, profitability or
commercial prospects of Parent after the Closing; and (ii) except as specifically set forth in this Agreement, none of Parent, Merger Sub or their respective Representatives will have or be
subject to any liability or indemnification obligation to the Company, its Representatives or to any other Person resulting from the distribution to the Company or its Representatives of, or the
Company's or its Representatives' use of, any information relating to Parent or Merger Sub, including any information, documents, offering materials or other material made available to the Company or
its Representatives, whether orally or in writing, in certain "data rooms," management presentations, functional "break-out" discussions, "expert sessions," site tours or visits, diligence calls or
meetings, responses to questions submitted on behalf of the Company or its Representatives or in any other form in connection with the transactions contemplated by this Agreement. The Company hereby
(I) expressly acknowledges and agrees to Parent's and Merger Sub's disclaimer of certain representations and warranties and liability and indemnification obligations, in each case as set forth
in
Section 4.21
; and (II) expressly waives and relinquishes any right to any claim (whether in contract or in tort or otherwise, whether at law or in
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equity)
based on, arising out of or relating to any representations and warranties other than those specifically set forth in
Article IV
. The Company and its
Representatives have received and may continue to receive from Parent, Merger Sub and their respective Representatives information that may relate to Parent or Merger Sub, including any information,
documents, projections, estimates, prospects, forecasts, plans, and budget information. The Company acknowledges that such projections, estimates, prospects, forecasts, plans, and budget information
and the assumptions on which they are based were prepared for specific purposes and may vary significantly from each other. Further, the Company acknowledges that there are uncertainties inherent in
attempting to make such projections, estimates, prospects, forecasts, plans, and budget information, that the Company is taking full responsibility for making its own evaluations of the adequacy and
accuracy of all projections, estimates, prospects, forecasts, plans, and budget information so furnished to it, and the Company is not relying on, and except as specifically set forth in this
Agreement hereby expressly waives and relinquishes any right to any claim (whether in contract or in tort or otherwise, whether at law or in equity) based on, arising out of or relating to, any
projections, estimates, prospects, forecasts, plans, and budget information furnished by Parent, Merger Sub or their respective Representatives (or any assumptions on which any such projections,
estimates, prospects, forecasts, plans, and budget information are based), and the Company shall not, and shall cause its Representatives not to, hold any such Person liable with respect thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in (i) the Parent SEC Documents filed since September 30, 2017 and prior to the date of this Agreement
(excluding any disclosures set forth in any "risk factor" or "forward-looking statements" sections or that are similarly predictive or forward-looking in nature) where the relevance of the information
to a particular representation is reasonably apparent on its face, or (ii) the disclosure schedule delivered by Parent to the Company immediately prior to the execution of this Agreement (the
"
Parent Disclosure Schedule
") (
provided
that disclosure in any section of such Parent Disclosure Schedule shall apply only to the
corresponding section of this Agreement except to the extent that the relevance of such disclosure to another section or representation is reasonably apparent on its face), Parent and Merger Sub
jointly and severally represent and warrant to the Company as follows:
Section 4.1
Organization
.
(a) Each
of Parent and Merger Sub is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of organization. Each of
Parent and Merger Sub has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except as would not
reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Each Subsidiary of Parent is a legal entity duly organized, validly existing and in good standing
under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its
business as presently conducted, except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Each of Parent and its Subsidiaries is duly
qualified or licensed, and has all necessary governmental approvals, to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of
the business conducted by it makes such approvals, qualification or licensing necessary, except where the failure to be so duly qualified or licensed, have such approvals and be in good standing would
not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. As of the date of this Agreement, Section 4.1(a) of the Parent Disclosure Schedule sets
forth a correct and complete list of all Subsidiaries of Parent and any joint ventures, partnerships or similar arrangements in which Parent or its Subsidiaries has a
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limited
liability, partnership or other equity interest (and the amount and percentage of any such interest). Other than Parent's Subsidiaries listed on Section 4.1(a) of the Parent Disclosure
Schedule, there is no person whose results of operations, cash flows, changes in shareholders' equity or financial position are consolidated in the financial statements of Parent.
(b) Parent
has made available to the Company prior to the date of this Agreement a true and complete copy of Parent's certificate of incorporation (the "
Parent
Certificate
"), Parent's by-laws (the "
Parent By-laws
" and together with the Parent Certificate, the "
Parent Organizational
Documents
"), and the certificate of incorporation, bylaws, limited partnership agreement, limited liability company agreement or comparable constituent or organizational documents for
each Subsidiary of Parent including Merger Sub (collectively, the "
Parent Subsidiary Organizational Documents
", in each case, as amended and in effect through the date of
this Agreement. The Parent Organizational Documents and the Parent Subsidiary Organizational Documents are in full force and effect and neither Parent nor any Subsidiary of Parent is in violation of
any of their provisions, except, in the case of a Subsidiary of Parent (other than Merger Sub), as would not, individually or in the aggregate be expected to constitute or result in a Parent Material
Adverse Effect.
Section 4.2
Capitalization
.
(a) The
authorized capital stock of Parent consists of 200,000,000 shares of common stock, par value $0.001 per share (the "
Parent Common
Stock
"). As of August 13, 2018, (i) 35,859,085 shares of Parent Common Stock were issued and outstanding (not including shares held in treasury), (ii) 10,309,948
shares of Parent Common Stock were held in treasury, (iii) 2,005,101 shares of Parent Common Stock were reserved for issuance under the Parent Stock Plans in respect of outstanding and future
awards (any such awards, collectively, "
Parent Stock Awards
"), (iv) 1,126,912 shares of Parent Common Stock were subject to outstanding options under the Parent
Stock Plans, (v) 356,618 shares of Parent Common Stock were subject to outstanding restricted stock units under the Parent Stock Plans (assuming, if applicable, achievement of all performance
goals at maximum level), (vi) no shares of Parent Common Stock were subject to outstanding rights to receive shares of Parent Common Stock or payments measured by the value of a share of Parent
Common Stock under Parent's Director Deferred Compensation Plan, (vii) no shares of Parent Common Stock were subject to contingent rights to receive the cash value of a share of Parent Common
Stock granted under the Parent Stock Plans, and (viii) no other shares of capital stock or other voting securities of Parent were issued, reserved for issuance or outstanding.
(b) All
outstanding shares of Parent Common Stock are, and shares of Parent Common Stock reserved for issuance with respect to Parent Stock Awards, when issued in accordance
with the respective terms thereof, will be, duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights. Except as set forth in Section 4.2 of the Parent
Disclosure Schedule, as of August 13, 2018, there are no outstanding subscriptions, options, warrants, calls, convertible securities, exchangeable securities or other similar rights, agreements
or commitments to which Parent or any of its Subsidiaries is a party (whether or not currently exercisable) (A) obligating Parent or any of its Subsidiaries to (1) issue, transfer,
exchange, sell or register for sale any shares of capital stock or other equity interests of Parent or any Subsidiary of Parent or securities convertible into or exchangeable for such shares or equity
interests, (2) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, (3) redeem or otherwise
acquire any such shares of capital stock or other equity interests, (4) provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, Parent or any
Subsidiary of Parent or (5) make any payment to any person the value of which is derived from or calculated based on the value of any shares of capital stock or other equity interests in Parent
or any Subsidiary of Parent, or (B) granting any preemptive or antidilutive or similar rights with respect to any security issued by Parent or any Subsidiary of Parent. No Subsidiary of Parent
owns any shares of capital stock of Parent. Neither Parent nor any of its Subsidiaries has outstanding any bonds, debentures, notes or
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other
indebtedness, the holders of which have the right to vote (or which are convertible or exchangeable into or exercisable for securities having the right to vote) with the stockholders of Parent
on any matter. Since August 13, 2018 through the date hereof, Parent has not issued or repurchased any shares of its capital stock, Parent Stock Awards or related securities (other than in
connection with the exercise, settlement or vesting of Parent Stock Awards in accordance with their respective terms).
(c) Parent
or a Subsidiary of Parent owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity interests of each Subsidiary of
Parent, free and clear of any preemptive rights and any Liens other than Permitted Liens. Neither Parent nor any of its Subsidiaries has any obligation to acquire any equity interest, security, right,
agreement or commitment or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any person.
Section 4.3
Corporate Authority Relative to this Agreement; No Violation
.
(a) Each
of Parent and Merger Sub has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this
Agreement, including the Merger. The execution, delivery and performance of this Agreement by Parent and Merger Sub and the consummation by each of them of the Merger have been duly and validly
authorized by the Parent Board of Directors and the board of directors of Merger Sub and, other than the filing of the Certificate of Merger with the Texas Secretary, no other corporate proceedings on
the part of either of Parent or Merger Sub or vote of Parent's stockholders is necessary to authorize the execution and delivery by Parent and Merger Sub of this Agreement and the consummation of the
Merger. The Parent Board of Directors has unanimously (i) approved and declared advisable this Agreement and the transactions contemplated hereby, including the Merger and the issuance of
shares of Parent Common Stock in connection with the Merger, (ii) determined that the terms of this Agreement and the transactions contemplated hereby, including the Merger, are in the best
interests of Parent and its stockholders and (iii) duly and validly approved the execution and delivery by Parent of this Agreement, the performance by Parent of its covenants and agreements
contained herein and the consummation of the transactions contemplated hereby, including the Merger and the issuance of shares of Parent Common Stock in connection with the Merger, on the terms and
subject to the conditions contained herein.
(b) This
Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming this Agreement constitutes the legal, valid and binding agreement
of the Company, this Agreement constitutes the legal, valid and binding agreement of Parent and Merger Sub and is enforceable against Parent and Merger Sub in accordance with its terms, except that
(i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors' rights generally and
(ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(c) Other
than in connection with or in compliance with (i) the filing of the Certificate of Merger with the Texas Secretary, (ii) the filing of the
Form S-4 (including the Proxy Statement/Prospectus) with the SEC and any amendments or supplements thereto and declaration of effectiveness of the Form S-4, (iii) the Exchange
Act, (iv) the Securities Act, (v) applicable state securities, takeover and "blue sky" laws, (vi) the rules and regulations of Nasdaq, (vii) the HSR Act, (viii) the
adoption of this Agreement by Parent as the sole shareholder of Merger Sub, which will occur immediately following the execution of this Agreement and (ix) the approvals set forth in
Section 4.3(c) of the Parent Disclosure Schedule (collectively, the "
Parent Approvals
"), no authorization, consent, order, license, permit or approval of, or
registration, declaration, notice or filing with, any Governmental Entity is necessary, under applicable Law or the Parent Organizational Documents, for the consummation by Parent or Merger Sub of the
Merger, except where the failure to obtain such consents, approvals, authorizations or
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permits
of, or to make such filings, registrations with or notifications to, any Governmental Entity, would not reasonably be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect or prevent or materially delay or impair the consummation of the Merger.
(d) The
execution and delivery by Parent and Merger Sub of this Agreement does not, and (assuming the Parent Approvals are obtained) the consummation of the Merger and
compliance with the provisions of this Agreement will not (i) result in any loss, or suspension, limitation or impairment of any right of Parent or any of its Subsidiaries to own or use any
assets required for the conduct of their business or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation, first offer, first refusal, modification or acceleration of any obligation or to the loss of a benefit under any loan, guarantee, Parent Permit or Contract that is binding upon Parent or
any of its Subsidiaries or by which or to which any of their respective properties, rights or assets are bound or subject, or result in the creation of any Liens other than Permitted Liens, in each
case, upon any of the properties or assets of Parent or any of its Subsidiaries, (ii) conflict with or result in any violation of any provision of the Parent Organizational Documents or
(iii) conflict with or violate any applicable Laws, except, in the case of clauses (i) and (iii), for such losses, suspensions, limitations, impairments, conflicts, violations, defaults,
terminations, cancellations, first offers, first refusals, modifications, accelerations, losses of benefits or Liens as would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
Section 4.4
Reports and Financial Statements
.
(a) Parent
and each of its Subsidiaries has filed or furnished all forms, documents and reports required to be filed or furnished by Parent or any of its Subsidiaries with
the SEC (including under the Securities Act and the Exchange Act) since September 30, 2015 (all such documents and reports filed or furnished by Parent, the "
Parent SEC
Documents
"). As of their respective dates or, if amended, as of the date of the last such amendment (and, in the case of registration statements and proxy statements, on the dates of
effectiveness and the dates of the relevant meetings, respectively), the Parent SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act and the
Sarbanes-Oxley Act, as the case may be, and the applicable rules and regulations promulgated thereunder, and none of the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state any 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. None of Parent's
Subsidiaries is, or at any time since September 30, 2015 has been, required to file any forms, reports or other documents with the SEC. Since September 30, 2015, no executive officer of
Parent has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act. As of the date of this Agreement, (i) there are no
outstanding or unresolved comments in any comment letters of the staff of the SEC received by Parent relating to the Parent SEC Documents and (ii) none of the Parent SEC Documents is, to the
knowledge of Parent, the subject of ongoing SEC review.
(b) The
consolidated financial statements (including all related notes and schedules) of Parent included in or incorporated by reference into the Parent SEC Documents filed
since September 30, 2015 (i) fairly present in all material respects the consolidated financial position of Parent and its consolidated Subsidiaries, as at the respective dates thereof,
and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended, (ii) were prepared in conformity with GAAP (except, in the case of the
unaudited statements, as permitted by Form 10-Q or any successor form under the Exchange Act and subject to normal year-end audit adjustments and the absence of footnote disclosure) applied on
a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto), (iii) have been prepared from, and are in accordance with, the books and records of
Parent and its consolidated subsidiaries in all material respects and (iv) complied, as of their respective dates of filing with the SEC, in all material respects with the applicable accounting
requirements and with the rules and regulations of the SEC, the Exchange Act
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and
the Securities Act. PricewaterhouseCoopers LLP has not resigned (or informed Parent that it intends to resign) or been dismissed as independent public accountants of Parent as a result of
or in connection with any disagreements with Parent on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
(c) Neither
Parent nor any of its Subsidiaries is a party to, nor does it have any commitment to become a party to, any off-balance sheet joint venture, off-balance sheet
partnership or any other "off-balance sheet arrangements" (as defined in Item 303(a) of Regulation S-K of the SEC).
(d) Since
September 30, 2015, none of Parent or any Subsidiary of Parent nor, to the knowledge of Parent, any director, officer, employee, auditor, accountant or
representative of Parent or any Subsidiary of Parent, has received any material complaint, allegation, assertion or claim, regarding the accounting, internal accounting controls or auditing practices,
procedures, methodologies or methods of Parent or any Subsidiary of Parent or any material complaint, allegation, assertion or claim from employees of Parent or any Subsidiary of Parent regarding
questionable accounting or auditing matters with respect to Parent or any Subsidiary of Parent.
Section 4.5
Internal Controls and Procedures
.
(a) Parent
has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e)
and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. Parent's disclosure controls and procedures are reasonably designed, and
since September 30, 2015, have been reasonably designed, to ensure that all material information required to be disclosed by Parent in the reports that it files or furnishes under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to
Parent's management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.
Parent's management has completed an assessment of the effectiveness of Parent's system of internal control over financial reporting in compliance with the requirements of Section 404 of the
Sarbanes-Oxley Act for the fiscal year ended September 30, 2017 and such assessment concluded that such controls were effective and the Company's independent registered accountant has issued an
attestation report concluding that Parent maintained effective internal control over financial reporting as of September 30, 2017. Based on such evaluation, management of Parent has disclosed
to Parent's auditors and the audit committee of the Parent Board of Directors (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over
financial reporting and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Parent's internal control over financial reporting,
and each such deficiency, weakness and fraud so disclosed to auditors, if any, has been disclosed to the Company prior to the date hereof.
(b) Parent
is in compliance in all material respects with all current listing requirements of Nasdaq applicable to Parent.
Section 4.6
No Undisclosed Liabilities
. There are no Liabilities of Parent
or any of its Subsidiaries of any nature whatsoever (whether accrued, absolute, determined, contingent or otherwise and whether due or to become due), except for (a) Liabilities that are
reflected or reserved against on the consolidated balance sheet of Parent and its Subsidiaries included in its Quarterly Report on Form 10-Q for the period ended June 30, 2018 (including
any notes thereto), (b) Liabilities arising in connection with the transactions contemplated hereby or in connection with obligations under existing Contracts or applicable Law,
(c) Liabilities incurred in the ordinary course of business since June 30, 2018, (d) Liabilities that have been discharged or paid in full in the ordinary course of business and
(e) Liabilities that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
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Section 4.7
Compliance with Law; Permits
.
(a) Parent
and its Subsidiaries are, and since September 30, 2015 have been, in compliance with all applicable Laws, except where such non-compliance would not
reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Since September 30, 2015, neither Parent nor any of its Subsidiaries has (i) received
any written notice or, to the knowledge of Parent, verbal notice from any Governmental Entity regarding any actual or possible failure to comply with any Law in any material respect or
(ii) provided any notice to any Governmental Entity regarding any material violation by Parent or its Subsidiaries of any Law.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent and its Subsidiaries hold all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals, clearances, permissions, qualifications and registrations and orders of all applicable
Governmental Entities, and have filed all tariffs, reports, notices and other documents with all Governmental Entities necessary for Parent and its Subsidiaries to own, lease and operate their
properties and assets and to carry on their businesses as currently conducted (the "
Parent Permits
") and have paid all fees and assessments due and payable in connection
therewith. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) all Parent Permits are valid and in full
force and effect, are not subject to any administrative or judicial proceeding that would reasonably be expected to result in any modification, termination or revocation thereof and to the knowledge
of Parent, no suspension or cancellation of any such Parent Permit is threatened, and (ii) Parent and each of its Subsidiaries is in compliance with the terms and requirements of all Parent
Permits.
(c) None
of Parent or its Subsidiaries, or to the knowledge of Parent, any director, officer, employee, agent or other person acting on behalf of Parent or any of its
Subsidiaries has, directly or indirectly, violated or is in violation of, or is aware of any action taken that would result in a violation of, any Anti-Corruption Laws, nor (i) used any funds
of Parent or any of its Subsidiaries for unlawful contributions, unlawful gifts, unlawful entertainment or other unlawful expenses relating to political activity; (ii) made any unlawful payment
to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns from funds of Parent or any of its Subsidiaries; (iii) established or
maintained any unlawful fund of monies or other assets of Parent or any of its Subsidiaries; (iv) made any fraudulent entry on the books or records of Parent or any of its Subsidiaries;
(v) made any unlawful bribe, unlawful rebate, unlawful payoff, unlawful influence payment, unlawful kickback or other unlawful payment to any person, private or public, regardless of form,
whether in money, property or services, to obtain favorable treatment in securing business to obtain special concessions for Parent or any of its Subsidiaries or to influence any act or decision of a
foreign government official or other person; or (vi) engaged in any transaction or dealing in property or interests in property of, received from or made any contribution of funds, goods or
services to or for the benefit of, provided any payments or material assistance to, or otherwise engage in or facilitated any transactions with a Prohibited Person. No proceeding by or before any
Governmental Entity involving Parent, any Subsidiary of Parent or any Affiliate of Parent, or any of their directors, officers, employees, agents or other persons acting on their behalf, with respect
to any Anti-Corruption Law is pending or, to the knowledge of Parent, threatened, nor have any disclosures been submitted to any Governmental Entity with respect to violations of any Anti-Corruption
Law by any such person.
(d) Since
September 30, 2015, Parent and each of its Subsidiaries has conducted its import and export transactions in accordance in all material respects with all
applicable U.S. import, export and re-export Laws and controls and all other applicable import, export and re-export Laws and controls in any country or jurisdiction in which Parent or any of its
Subsidiaries conduct business, including the Arms Export Control Act, the International Traffic in Arms Regulations, the Export Administration Regulations and executive orders and laws implemented by
OFAC.
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(e) Since
September 30, 2015, Parent and its Subsidiaries have obtained all material consents, orders and declarations from, provided all material notices to, and
made all material filings with, all Governmental Entities required for Export Approvals, and each of Parent and its Subsidiaries is and, since July 31, 2015, has been in compliance in all
material respects with the terms of all Export Approvals. There are no pending or, to the knowledge of Parent, threatened, claims against Parent or any of its Subsidiaries with respect to such Export
Approvals.
Section 4.8
Environmental Laws and Regulations
. Except for matters that,
individually or in the aggregate, would not reasonably be expected to result in a Parent Material Adverse Effect, Parent and its Subsidiaries are, and since July 31, 2015 have been, in
compliance with all applicable Environmental Laws (which compliance includes the possession by Parent and each of its Subsidiaries of all material Parent Permits required under applicable
Environmental Laws to conduct their respective business and operations, and material compliance with the terms and conditions thereof) and there are no actions, suits, proceedings (whether
administrative or judicial) pending, or to the knowledge of Parent, threatened, or to the knowledge of Parent any investigation pending or threatened, against Parent or any of its Subsidiaries
alleging material non-compliance with or other material Liability under any Environmental Law.
Section 4.9
Employee Benefit Plans
.
(a) Each
Parent Benefit Plan has been established, operated and administered in all material respects in accordance with its terms and the requirements of all applicable
Laws, including ERISA and the Code. All contributions required to be made to any Parent Benefit Plan by applicable Law or by any plan document or other contractual undertaking, and all premiums due or
payable with respect to insurance policies funding any Parent Benefit Plan, have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have
been fully reflected on the books and records of Parent in accordance with GAAP.
(b) None
of Parent and its Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the past six years, maintained, established, contributed to or
been obligated to contribute to any plan that is (i) a Multiemployer Plan, (ii) a Multiple Employer Plan, (iii) a "single-employer plan" within the meaning of
Section 40001(a)(15) of ERISA, or (iv) any other plan that is subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code.
Section 4.10
Absence of Certain Changes or Events
.
(a) Since
September 30, 2017 through the date of this Agreement, the businesses of Parent and its Subsidiaries have been conducted in all material respects in the
ordinary course of business consistent with past practice.
(b) Since
September 30, 2017 through the date of this Agreement, there has not been any fact, change, circumstance, event, occurrence, condition or development that
has had or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.11
Investigations; Litigation
. As of the date hereof, except as
would not reasonably be expected to, individually or in the aggregate, a Parent Material Adverse Effect, (a) there are no Proceedings or other written requests for information relating to
potential violations of Law pending (or, to the knowledge of Parent, threatened) against or affecting Parent or any of its Subsidiaries, or any of their respective properties and (b) there are
no Orders of, or before, any Governmental Entity against Parent or any of its Subsidiaries.
Section 4.12
Information Supplied
. The information supplied or to be
supplied by Parent in writing for inclusion in the Form S-4 (including the Proxy Statement/Prospectus) will not, at the time the Form S-4 (and any amendment or supplement thereto) is
declared effective, on the date that the Proxy Statement/Prospectus is first mailed to the shareholders of the Company, or on the date of the
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Company
Special 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, except that no representation or warranty is made by Parent with respect to statements made therein based on information supplied by the
Company for inclusion or incorporation therein.
Section 4.13
Employment and Labor Matters
. Neither Parent nor any Parent
Subsidiary is party to any Collective Bargaining Agreement. From July 31, 2015 through the date hereof, to the knowledge of Parent, there have been no activities or proceedings of any labor or
trade union seeking recognition of a collective bargaining unit of employees of Parent or any of its Subsidiaries. From July 31, 2015 through the date hereof, there has been no strike, lockout,
slowdown, or work stoppage against Parent or any of its Subsidiaries pending or, to the knowledge of Parent, threatened, that will interfere in any material respect with the respective business
activities of Parent or any of its Subsidiaries. Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) Parent and its
Subsidiaries are in compliance with and have complied with all laws regarding employment and employment practices (including anti-discrimination), terms and conditions of employment and wages and
hours (including classification of employees and independent contractors, and equitable pay practices) and other laws in respect of any reduction in force (including notice, information and
consultation requirements), and (ii) no claims relating to non-compliance with the foregoing are pending or, to the knowledge of Parent, threatened.
Section 4.14
Intellectual Property
.
(a) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect: (i) Parent or one of its Subsidiaries own,
or license in or otherwise possess the right to use, each of the Parent Registrations used in or necessary for operation of Parent's business, (ii) to Parent's knowledge, no patent or patent
application, copyright registration or application or trademark registration or application of Parent is invalid or unenforceable, (iii) all issuance, renewal, maintenance and other payments
that are or have become due with respect to the Parent Registrations have been timely paid by or on behalf of Parent or the relevant Subsidiary and (iv) there are no pending, or to the
knowledge of Parent, threatened, inventorship challenges, reexaminations, cancellations, opposition or nullity proceedings or interferences against Parent or its Subsidiaries with respect to the
Parent Registrations.
(b) Except
as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect: (i) neither the conduct of the business of
Parent and its Subsidiaries, nor the sale or use of any product or service offered by Parent or any of its Subsidiaries infringes or violates, or constitutes a misappropriation of, any Intellectual
Property rights of any third party and (ii) Parent and its Subsidiaries have not received (A) any written complaint, claim or notice or, to the knowledge of Parent, threat of any of the
foregoing (including any notification that a license under any patent is or may be required) since July 31, 2015 alleging any such infringement, violation or misappropriation or (B) any
written request for indemnification or defense from any reseller, distributor, customer, user or any other third party of Parent or its Subsidiaries related to any such claim or notice regarding the
Intellectual Property rights of any third party.
Section 4.15
Finders or Brokers
. Except for Goldman
Sachs & Co. LLC, neither Parent nor any of Parent's Subsidiaries has employed any investment banker, broker or finder in connection with the Merger who would be entitled to any
fee or any commission in connection with or upon consummation of the Merger.
Section 4.16
Financing
. As of the Closing Date, Parent and Merger Sub shall
have sufficient funds immediately available to Parent and Merger Sub, as applicable, to consummate the Merger and to make all other payments and perform the other obligations of Parent and Merger Sub
contemplated by this Agreement to be consummated on the Closing Date, including the payment of the Cash
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Consideration
and any amounts required to repay any indebtedness of Parent, the Company or any of their respective Subsidiaries that Parent elects to, or that Parent or the Company is required to,
repay or cause to be repaid in connection with the transactions contemplated hereby (funds in such amount, the "
Merger Amounts
"). Parent and Merger Sub acknowledge that
their obligations under this Agreement are not contingent or conditioned in any manner on obtaining any financing. Parent has provided the Company with accurate and complete copies of the executed
financing commitment letter, dated August 14, 2018 (such letter, together with all annexes and exhibits attached thereto, the "
Commitment Letter
") from the
Financing Entities party thereto pursuant to which such Financing Entities have agreed, subject to the terms and conditions set forth therein, to provide financing for the amounts set forth therein
for the purposes of funding the Merger Amounts. As of the execution and delivery hereof, the Commitment Letter has not been amended or modified. As of the execution and delivery hereof, the Commitment
Letter (a) is in full force and effect and (b) constitutes the legal, valid, binding and enforceable obligation of Parent, and to the knowledge of Parent, each of the other parties
thereto, in each case, except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, or moratorium Laws, other similar Laws affecting creditors' rights and general
principles of equity affecting the availability of specific performance and other equitable remedies. As of the execution and delivery hereof, no event has occurred which, with notice or lapse of time
or both, would reasonably be expected to constitute a default or breach on the part of Parent, Merger Sub or, to the knowledge of Parent, the other parties thereto under the Commitment Letter and, to
the knowledge of Parent, the respective commitments contained therein have not been withdrawn or rescinded in any respect and there are no conditions precedent or other contingencies relating to the
funding of the Financing covered thereby contemplated to be funded on the Closing Date, except as stated therein. As of the execution and delivery hereof, all fees required to be paid under the
Commitment Letter prior to the date hereof have been paid in full. Assuming the satisfaction of the conditions set forth in
Article VI
, Parent has no reason to
believe that any of the conditions to the Financing will not be satisfied or that the full amount of the Financing contemplated by the Commitment Letter to be funded on the Closing Date will not be
made available to Parent on the Closing Date.
Section 4.17
Merger Sub
. Parent is the sole shareholder of Merger Sub. Since
its date of incorporation, Merger Sub has not carried on any business nor conducted any operations other than the execution of this Agreement, the performance of its obligations hereunder and matters
ancillary thereto.
Section 4.18
State Takeover Statutes
. The Parent Board of Directors has
taken all action necessary to render inapplicable to this Agreement and the transactions contemplated hereby (including the Merger) all potentially applicable state anti-takeover statutes or
regulations and any similar provisions in the Parent Certificate or Parent By-laws.
Section 4.19
Ownership of Company Common Stock
. As of and for the three
years prior to the date of this Agreement, neither Parent nor any of its Subsidiaries beneficially owns or owned, directly or indirectly, any shares of Company Common Stock or other securities
convertible into, exchangeable into or exercisable for shares of Company Common Stock.
Section 4.20
No Vote of Parent Stockholders
. No vote of the stockholders of
Parent or the holders of any other securities of Parent (equity or otherwise) is required by Law, the Parent Organizational Documents or the applicable rules of any exchange on which securities of
Parent are traded in order for Parent to consummate the transactions contemplated by this Agreement, including the Merger and the Financing.
Section 4.21
No Other Representations or Warranties
.
(a) Except
for the representations and warranties expressly contained in this
Article IV
, neither Parent, the Subsidiaries of Parent nor
any other Representative or person makes any express or implied
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representation
or warranty (whether at law, including common law or by statute, or in equity) on behalf of Parent or Merger Sub. Each of Parent and Merger Sub hereby expressly disclaims any such other
representation or warranty, whether by Parent, any Subsidiary of Parent, or any of their respective Representatives or any other person, notwithstanding the delivery or disclosure to the Company or
any other person of any documentation or other written or oral information by Parent, any Subsidiary of Parent, or any of their respective Representatives or any other person, and neither Parent, the
Subsidiaries of Parent nor any other Representative or other person will have or be subject to any liability or indemnification obligation to the Company or any other person resulting from such
delivery or disclosure, or the Company's use, of any such documentation or other information (including any information, documents, projections, forecasts or other material made available to the
Company in certain "data rooms", management presentations or other written materials provided to the Company in connection with the transactions contemplated hereby).
(b) Each
of Parent and Merger Sub hereby acknowledges and agrees that notwithstanding anything herein to the contrary (i) other than the specific representations and
warranties set forth in
Article III
, none of the Company or its Representatives makes or has made any representation or warranty, express or implied, at law or in
equity, (A) in respect of the Company or any of its Affiliates or their respective businesses, assets, employees, liabilities or operations, or (B) with respect to (x) any
projections, estimates, prospects, forecasts, plans, and budget information furnished by the Company or its Representatives (including the reasonableness of the assumptions underlying such
projections, estimates, prospects, forecasts, plans, and budget information); (y) the operation of the Company by Parent after the Closing; or (z) the probable commercial success,
profitability or commercial prospects of the Company after the Closing; and (ii) except as specifically set forth in this Agreement, none of the Company or its Representatives will have or be
subject to any liability or indemnification obligation to Parent, Merger Sub, their respective Representatives or to any other Person resulting from the distribution to Parent, Merger Sub or their
respective Representatives of, or Parent's, Merger Sub's or their respective Representatives' use of, any information relating to the Company, including any information, documents, offering materials
or other material made available to Parent, Merger Sub or their respective Representatives or potential financing sources, whether orally or in writing, in certain "data rooms," management
presentations, functional "break-out" discussions, "expert sessions," site tours or visits, diligence calls or meetings, responses to questions submitted on behalf of Parent, Merger Sub or their
respective Representatives or in any other form in connection with the transactions contemplated by this Agreement. Each of Parent and Merger Sub hereby (I) expressly acknowledges and agrees to
the Company's disclaimer of certain representations and warranties and liability and indemnification obligations, in each case as set forth in
Section 3.23
; and
(II) expressly waives and relinquishes any right to any claim (whether in contract or in tort or otherwise, whether at law or in equity) based on, arising out of or relating to any
representations and warranties other than those specifically set forth in
Article III
. Parent, Merger Sub and their respective Representatives have received and may
continue to receive from the Company and its Representatives information that may relate to the Company, including any information, documents, projections, estimates, prospects, forecasts, plans, and
budget information. Parent and Merger Sub each acknowledges that such projections, estimates, prospects, forecasts, plans, and budget information and the assumptions on which they are based were
prepared for specific purposes and may vary significantly from each other. Further, Parent and Merger Sub each acknowledges that there are uncertainties inherent in attempting to make such
projections, estimates, prospects, forecasts, plans, and budget information, that Parent and Merger Sub are taking full responsibility for making their own evaluations of the adequacy and accuracy of
all projections, estimates, prospects, forecasts, plans, and budget information so furnished to them, and neither Parent nor Merger Sub is not relying on, and except as specifically set forth in this
Agreement hereby expressly waives and relinquishes any right to any claim (whether in contract or in tort or otherwise, whether at law or in equity) based on, arising out of or relating to, any
projections, estimates, prospects, forecasts, plans, and budget information furnished by the Company or its
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Representatives
(or any assumptions on which any such projections, estimates, prospects, forecasts, plans, and budget information are based), and Parent and Merger Sub shall not, and shall cause their
respective Representatives not to, hold any such Person liable with respect thereto.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1
Conduct of Business of the Company
. During the period from the
date hereof through the Effective Time, except (i) as may be required by a Governmental Entity or applicable Law, (ii) with the prior written consent of Parent (which consent or denial
thereof shall be delivered by Parent within five (5) Business Days following receipt of a written request therefor in accordance with
Section 8.7
),
(iii) as permitted by the terms of this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure Schedule, the Company shall, and shall cause each of its
Subsidiaries to, conduct its business in the ordinary course consistent with past practice in all material respects and, to the extent consistent therewith, use reasonable best efforts to maintain and
preserve intact its assets and business organization and its relationships with employees, officers, customers, suppliers, distributors, Governmental Entities and other business partners. Without
limiting the foregoing, during the period from the date hereof through the Effective Time, except (i) as may be required by a Governmental Entity or applicable Law, (ii) with the prior
written consent of Parent (which consent or denial thereof shall be delivered by Parent within five (5) Business Days following receipt of a written request therefor in accordance with
Section 8.7
), (iii) as expressly permitted by the terms of this Agreement or (iv) as set forth in Section 5.1 of the Company Disclosure
Schedule, the Company shall not, and shall cause its Subsidiaries not to:
(a) amend
the Company Organizational Documents or the Company Subsidiary Organizational Documents in any material respect;
(b) split,
combine or reclassify any of its capital stock;
(c) make,
declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase, exchange or otherwise acquire, any shares of its
capital stock, or any other securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable
for any shares of its capital stock, except (A) dividends paid by any wholly owned Subsidiaries of the Company to the Company or to any of their wholly owned Subsidiaries, respectively,
(B) the acceptance of shares of Company Common Stock as payment for withholding Taxes incurred in connection with the vesting or settlement of Company Equity Awards outstanding as of the date
hereof in accordance with past practice and the terms of the Company Stock Plans, or (C) quarterly dividends on the Company Common Stock in the ordinary course consistent with past practice, in
an amount not to exceed $0.03 per fiscal quarter;
(d) (A)
issue, sell or otherwise permit to become outstanding any additional shares of its capital stock or securities convertible or exchangeable into, or exercisable for,
any shares of its capital stock or any options, warrants, or other rights of any kind to acquire any shares of its capital stock, except pursuant to the settlement of Company Equity Awards outstanding
as of the date hereof in accordance with their terms or the grant of Company Equity Awards in accordance with the terms set forth on Section 5.1(d) of the Company Disclosure Letter, or enter
into any agreement, understanding or arrangement with respect to the sale or voting of its capital stock or equity interests or (B) enter into any agreement, understanding or arrangement with
respect to the sale or voting of its capital stock or other equity interests;
(e) adopt
a plan of complete or partial liquidation or dissolution;
(f) (A)
incur, assume, endorse, guarantee or otherwise become liable for any Indebtedness or issue or sell any debt securities or calls, options, warrants or other rights to
acquire any debt securities
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(directly,
contingently or otherwise), except for any Indebtedness among the Company and its wholly owned Subsidiaries or among wholly owned Subsidiaries of the Company or (B) incur any Lien on
any of its property or assets except for Liens securing the Company's obligations under the Company Credit Agreement as and to the extent required by the terms thereof as in effect as of the date
hereof;
(g) make
any loans or advances to any other person, except for loans, advances or capital contributions among the Company and any of its wholly owned Subsidiaries;
(h) (A)
sell, license, assign, mortgage, encumber, dispose of or otherwise transfer any of its material properties, assets or Intellectual Property to any person other than
to the Company or a wholly owned Subsidiary of the Company, other than sales of inventory, excess raw materials or of obsolete equipment in the ordinary course of business consistent with past
practice or pursuant to Contracts or commitments existing as of the date of this Agreement and set forth on Section 5.1(h) of the Company Disclosure Schedule and Permitted Liens, or
(B) cancel, release or assign any Indebtedness of any person owed to it or any claims held by it against any person;
(i) (A)
acquire (whether by merger or consolidation, acquisition of stock or assets or by formation of a joint venture or otherwise) any other person or business,
(B) acquire any assets, deposits or properties of any other person with a value in excess of $1,000,000 individually or $3,000,000 in the aggregate, or (C) make any investment in any
other person either by purchase of stock or securities, contributions to capital, property transfers or purchase of property or assets of any person other than a wholly owned Subsidiary of the
Company;
(j) make
any capital expenditures other than capital expenditures as and to the extent itemized in the 2019 fiscal year capital expenditure budget in the form mutually
agreed by Parent and the Company prior to the date hereof other than as may be necessary in connection with any emergency repair, maintenance or replacement;
(k) except,
in the case of a Company Material Contract of the type described in
Section 3.18(a)(xii)
,
(xiii)
,
(xiv)
,
(xv)
or
(xvii)
, in the ordinary course of business consistent
with past practice and following consultation with Parent, (A) terminate, materially amend, or waive, release or assign any material right under, any Company Material Contract or any Contract
with a Top Customer or Top Vendor or (B) enter into any contract that would constitute a Company Material Contract if it were in effect on the date of this Agreement, or any Contract with any
party that would have been a Top Customer or Top Vendor if such contract had been in force since the beginning of the 2018 fiscal year;
(l) except
as required by the terms of any Company Benefit Plan as in effect on the date of this Agreement and either set forth on Section 3.9(a) of the Company
Disclosure Schedule or made available to Parent prior to the date hereof, (A) establish, adopt, enter into, amend or terminate any Collective Bargaining Agreement or Company Benefit Plan
(including, but not limited to, any employment, change-in-control, retention, severance, compensation or similar agreement or arrangement) or any plan that would be a Company Benefit Plan if in effect
on the date hereof (including, but not limited to, any employment, change-in-control, retention, severance, compensation or similar agreement or arrangement), (B) increase in any manner the
compensation (including severance, change-in-control and retention compensation) or benefits of any of the current or former directors, employees, or other service providers of the Company or its
Subsidiaries, (C) pay or award, or commit to pay or award, any bonuses or incentive compensation (including Company Equity Awards or retention bonuses), (D) accelerate the vesting or
payment timing of any rights or benefits, (E) establish or fund any rabbi trust or other funding arrangement in respect of any Company Benefit Plan, or (F) hire, promote or terminate
(other than for cause as determined by the Company) the employment or services of any directors, employees, or other service providers who have annualized base compensation greater than $100,000;
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(m) implement
or adopt any material change in its financial accounting principles, practices or methods, other than as may be required by changes in GAAP;
(n) commence,
settle or compromise any litigation, claim, suit, action or proceeding, except for settlements or compromises that (A) involve solely monetary remedies
with a value not in excess of $500,000, with respect to any individual litigation, claim, suit, action or proceeding or $1,000,000 in the aggregate, (B) do not impose any material restriction
on its business or the business of its Subsidiaries, (C) do not create adverse precedent for material claims that are reasonably likely to be made against it or its Subsidiaries, (D) do
not relate to any litigation by the Company's shareholders in connection with this Agreement or the Merger, and (E) do not include an admission of liability or fault on the part of the Company
or any of its Subsidiaries;
(o) make,
change or revoke any material Tax election, change or adopt any annual Tax accounting period or adopt or change any material method of Tax accounting, file any
amended material Tax Return, enter into any "closing agreement" within the meaning of Section 7121 of the Code (or any analogous or similar provision of state, local or foreign Law) with
respect to a material amount of Taxes, request any Tax ruling from any Governmental Entity with respect to any material Tax matter, settle or compromise any material Tax liability or any audit,
examination or other proceeding relating to a material amount of Taxes, or surrender any claim for a material refund of Taxes, or, except in the ordinary course of business agree to an extension or
waiver of the statute of limitations with respect to a material amount of Taxes;
(p) (A)
enter into any new line of business or (B) except as required by changes in applicable Law, regulation or policies imposed by any Governmental Entity, change
any material policy established by the Company Board of Directors or executive officers of the Company that generally applies to the operations of the Company;
(q) except
in the ordinary course of business consistent with past practice, materially reduce the amount of insurance coverage or fail to renew any material existing
insurance policies;
(r) amend
any material Company Permits in a manner that adversely impacts its ability to conduct its business in any material respect, or terminate or allow to lapse, any
material Company Permits;
(s) cancel
or permit to lapse any material Intellectual Property of the Company, or disclose to any third party any trade secret included in the Intellectual Property of the
Company in a way that results in loss of trade secret protection;
(t) take
any action that would reasonably be expected to result in the failure of the conditions set forth in
Section 6.1
or
Section 6.3
to be satisfied prior to the End Date; or
(u) agree
to take, or make any commitment to take, any of the foregoing actions that are prohibited pursuant to this
Section 5.1
.
Section 5.2
Conduct of Business of Parent
. During
the period from the date hereof through the Effective Time, except (i) as may be required by a Governmental Entity or applicable Law, (ii) with the prior written consent of the Company
(which consent or denial thereof shall be delivered by the Company within five (5) Business Days following receipt of a written request therefor in accordance with
Section 8.7
), (iii) as permitted by the terms of this Agreement or (iv) as set forth in Section 5.2 of the Parent Disclosure Schedule, Parent
shall, and shall cause each of its Subsidiaries to, conduct its
business in the ordinary course consistent with past practice in all material respects and, to the extent consistent therewith, use reasonable best efforts to maintain and preserve intact its assets
and business organization and its relationships with employees, officers, customers, suppliers, distributors, Governmental Entities and other business partners. Without limiting the foregoing, during
the period from the date hereof through the Effective Time, except (i) as may be required by a Governmental
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Entity
or applicable Law, (ii) with the prior written consent of the Company (which consent or denial thereof shall be delivered by the Company within five (5) Business Days following
receipt of a written request therefor in accordance with
Section 8.7
), (iii) as expressly permitted by the terms of this Agreement or (iv) as set
forth in Section 5.2 of the Parent Disclosure Schedule, Parent shall not, and shall cause its Subsidiaries not to:
(a) amend
the Parent Organizational Documents or the certificate of incorporation or bylaws or Merger Sub in a manner materially adverse to the holders of Company Common
Stock;
(b) split,
combine or reclassify any of its capital stock;
(c) other
than the issuance, grant or settlement of Parent Stock Awards, (A) issue, sell or otherwise permit to become outstanding any additional shares of its
capital stock or securities convertible or exchangeable into, or exercisable for, any shares of its capital stock or any options, warrants, or other rights of any kind to acquire any shares of its
capital stock, or enter into any agreement, understanding or arrangement with respect to the sale or voting of its capital stock or equity interests or (B) enter into any agreement,
understanding or arrangement with respect to the sale or voting of its capital stock or other equity interests;
(d) convene
any meeting of the holders of Parent Common Stock for the purpose of revoking or varying the authority of the directors of Parent to issue Parent Common Stock;
(e) adopt
a plan of complete or partial liquidation or dissolution;
(f) take
any action that would reasonably be expected to result in the failure of (A) the conditions set forth in
Section 6.1
or
Section 6.2
to be satisfied prior to the End Date or (B) Parent to obtain Financing in an amount sufficient, together with any other sources available to
Parent and Merger Sub, to fund the payment of the Merger Amounts on or prior to the End Date; and
(g) agree
to take, or make any commitment to take, any of the foregoing actions that are prohibited pursuant to this
Section 5.2
.
Section 5.3
Access
.
(a) For
purposes of furthering the transactions contemplated hereby and other legitimate business purposes, the Company shall (x) afford Parent and its employees,
accountants, consultants, internal and external legal counsel, financial advisors, tax advisors, financing sources and agents and other representatives (collectively, the "
Parent 5.3
Representatives
") reasonable access during normal business hours upon reasonable advance notice to the Company, throughout the period from the date hereof until the earlier of the
termination of this Agreement in accordance with its terms and the Effective Time, to its and its Subsidiaries' personnel, properties, Contracts, commitments, books and records and any report,
schedule or other document filed or received by it pursuant to the requirements of applicable Laws and, during such period and (y) make available to Parent and Parent 5.3 Representatives all
other available information concerning its business, properties and personnel as Parent may reasonably request. Parent shall use its commercially reasonable efforts to minimize any disruption to the
businesses of the Company that may result from such requests for access, data and information. Each of the Company and Parent shall, and shall cause its respective Subsidiaries to, without limitation
to the preceding obligations, make available to the other Party and its Representatives (i) a copy of each report, schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws (other than reports or documents that such disclosing Party is not permitted to disclose under applicable Law) and
(ii) a copy of all correspondence between the disclosing Party or any of its Subsidiaries and any party to a Contract with regard to any material action, consent, approval or waiver that is
required to be taken or obtained with respect to such Contract in connection with the consummation of the Merger. The foregoing notwithstanding, neither the Company nor Parent shall be required to
provide access to
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or
make available to any person any document or information if doing so would, in the reasonable judgment of the Company or Parent, as applicable, after consultation with its respective outside
counsel, (A) violate any Law, (B) result in a violation of a confidentiality agreement with a third party entered into prior to the date of this Agreement or entered into after the date
of this Agreement in the ordinary course of business consistent with past practice, (C) jeopardize the attorney-client, attorney work product or other legal privilege of a Party or any of its
Subsidiaries, or (D) result in the disclosure of any trade secrets of the Company or Parent, as applicable or any third parties;
provided
that the applicable Party
will inform the other Party of the general nature of the document or information being withheld and reasonably cooperate with the other Party to devise and implement alternative arrangements to
provide such document or information to the other Party in a manner that would not
result in violation of Law, violation of a confidentiality agreement, the loss or waiver of such privilege or the disclosure of a trade secret.
(b) No
investigation by the Company or Parent or their respective representatives shall affect or be deemed to modify or waive the representations and warranties of the
other Party set forth in this Agreement.
(c) The
Parties hereto hereby agree that all information provided to them or their respective officers, directors, employees or representatives in connection with this
Agreement and the consummation of the Merger shall be governed in accordance with the confidentiality agreement, dated as of October 6, 2016, as amended by Amendment no. 1 dated
June 26, 2018, between the Company and Parent (the "
Confidentiality Agreement
").
Section 5.4
No Solicitation by the Company
.
(a) Except
as expressly permitted by this
Section 5.4
, the Company shall and shall cause each of its controlled Affiliates and its and
their respective officers, directors, employees, and shall use reasonable best efforts to cause its financial advisors, investment bankers, attorneys, accountants and other representatives acting on
the Company's behalf: (i) to immediately cease and cause to be terminated any solicitation, knowing encouragement, discussions or negotiations with any persons (other than Parent and Parent's
Affiliates and its and their respective Representatives) that may be ongoing with respect to a Company Takeover Proposal and (ii) not to, directly or indirectly, (A) solicit, initiate or
knowingly encourage or knowingly facilitate any inquiries regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Takeover Proposal,
(B) engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any information in connection with or for the purpose of
encouraging or facilitating a Company Takeover Proposal (other than, in response to an unsolicited inquiry, to refer the inquiring person to this
Section 5.4
and
limiting its communication exclusively to such referral), or (C) approve, adopt, recommend or enter into, or propose to approve, adopt, recommend or enter into, any letter of intent, agreement,
commitment, or agreement in principle (whether written or oral, binding or nonbinding) with respect to a Company Takeover Proposal. The Company shall not, and shall cause its Affiliates not to,
release any third party from, or waive, amend or modify any provision of, or grant permission under, or fail to enforce, any standstill provision in any agreement to which the Company or any of its
Affiliates is a party;
provided
that, if the Company Board of Directors determines in good faith, after consultation with the Company's outside legal counsel, that the
failure to take such action would be inconsistent with the Company Board of Directors' fiduciary duties under applicable Laws, the Company may waive any such standstill provision applicable to any
such persons to the extent necessary to permit a third party to make a confidential Company Takeover Proposal to the Company Board of Directors;
provided
that the Company
promptly informs Parent that it is taking such action and the identity of the party or parties with respect to which it is taking such action.
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(b) The
Company shall promptly following the date of this Agreement cause the termination of access of any third party to any data room (virtual or actual) containing
any information of or regarding the Company or any of its Subsidiaries.
(c) Anything
to the contrary contained in
Section 5.4(a)
notwithstanding, if at any time after the date of this Agreement and prior to
the time that the Company Shareholder Approval is obtained, but not after, the Company or any of its Representatives receives a bona fide, unsolicited written Company Takeover Proposal from any person
that did not result from a material breach of this
Section 5.4
by the Company and if the Company Board of Directors determines in good faith, after consultation
with its independent financial advisor and outside legal counsel, that such Company Takeover Proposal constitutes or would reasonably be expected to lead to a Company Superior Proposal and that the
failure to take the action described in the following clauses (i) and (ii) would be inconsistent with the Company Board of Directors' fiduciary duties under applicable Law, then the
Company and its Representatives may, (i) furnish, pursuant to an Acceptable Confidentiality Agreement, information (including non-public information) with respect to the Company and its
Subsidiaries to the person who has made such Company Takeover Proposal (and such person's Representatives);
provided
that the Company shall substantially concurrently with
the delivery to such person (or such person's Representatives) provide or make available to Parent any non-public information concerning the Company or any of its Subsidiaries that is provided or made
available to such person or its Representatives unless such non-public information has been previously provided to Parent, and (ii) engage in or otherwise participate in discussions or
negotiations with the person making such Company Takeover Proposal and its Representatives regarding such Company Takeover Proposal. The Company shall promptly (and in any event within twenty-four
(24) hours) notify Parent in writing if the Company Board of Directors makes a determination that a Company Takeover Proposal constitutes or is reasonably expected to lead to a Company Superior
Proposal or if the Company furnishes non-public information and/or enters into discussions or negotiations as provided in this
Section 5.4(c)
.
(d) Without
limiting the foregoing, the Company shall promptly (and in no event later than twenty-four (24) hours after, to the knowledge of the Company, its receipt)
notify Parent in writing in the event that the Company directly or indirectly receives a Company Takeover Proposal or a request for information relating to the Company or its Subsidiaries or other
inquiry or communication that is reasonably likely to lead to or that contemplates a Company Takeover Proposal, including the identity of the person making the Company Takeover Proposal and the
material terms and conditions thereof (including an unredacted copy of such Company Takeover Proposal or, where such Company Takeover Proposal is not in writing, a description of the terms thereof).
The Company shall keep Parent reasonably informed, on a current basis, as to the status of (including any material developments, discussions or negotiations related thereto) such Company Takeover
Proposal (including by promptly (and in no event later than twenty-four (24) hours after receipt) providing to Parent copies of any correspondence, proposals, indications of interest, and/or
draft agreements relating to such Company Takeover Proposal). The Company agrees that it and its Affiliates will not enter into any agreement with any person subsequent to the date of this Agreement
which prohibits the Company from providing any information to Parent in accordance with, or otherwise complying with, this
Section 5.4
.
(e) Except
as expressly permitted by this
Section 5.4(e)
, the Company Board of Directors shall not (i) (A) fail to include the
Company Recommendation in the Proxy Statement/Prospectus when disseminated to the Company's shareholders, (B) change, qualify, withhold, withdraw or modify, or authorize or publicly propose to
change, qualify, withhold, withdraw or modify the Company Recommendation, (C) fail to recommend against any Company Takeover Proposal that is a tender or exchange offer subject to
Regulation 14D under the Exchange Act in a Solicitation/Recommendation Statement on Schedule 14D-9 within ten (10) Business Days after the commencement (within the meaning of
Rule 14d-2 under the Exchange Act) of such tender or exchange offer or after such tender or exchange offer is subsequently amended in any material respect or (D) adopt, approve or
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recommend
to shareholders of the Company, or resolve to or publicly propose or announce its intention to adopt, approve or recommend to shareholders of the Company, a Company Takeover Proposal (any
action described in this clause (i) being referred to as a "
Company Adverse Recommendation Change
"), or (ii) authorize, cause or permit the Company or any of
its Subsidiaries to enter into any letter of intent, memorandum of understanding, agreement (including an acquisition agreement, merger agreement, joint venture agreement or other similar agreement),
commitment or agreement in principle with respect to any Company Takeover Proposal (other than an Acceptable Confidentiality Agreement entered into in accordance with
Section 5.4(c))
(a "
Company Acquisition Agreement
"). Anything to the contrary set forth in this Agreement notwithstanding, prior to the
time that the Company Shareholder Approval is obtained, but not after, the Company Board of Directors may, with respect to a bona fide, unsolicited Company Takeover Proposal that did not result from a
material breach by the Company of this
Section 5.4
, make a Company Adverse Recommendation Change if, and only if, prior to taking such action, (x) the
Company Board of Directors has determined in good faith, after consultation with the Company's independent financial advisor and outside legal counsel, that such Company Takeover Proposal constitutes
a Company Superior Proposal and that the failure to take such action would be inconsistent with the Company Board of Directors' fiduciary duties under applicable Law and (y) (A) the Company has
given Parent at least four (4) Business Days' prior written notice of its intention to take such action, and specifying the reasons therefor, and has provided to Parent the identity of the
person making, any such Company Takeover Proposal and a copy of any proposed Company Acquisition Agreements constituting such Company Takeover Proposal (or, if not provided in writing to the Company,
a written summary of the material terms thereof) and a written summary of the material terms of any financing commitments relating thereto, (B) if requested by Parent, the Company and its
Representatives shall have engaged in good faith in discussions and negotiations with Parent and its Representatives during such notice period regarding changes to the terms of this Agreement proposed
in writing by Parent so that the failure to take such action would no longer be inconsistent with the Company Board of Directors' fiduciary duties under applicable Law, (C) following the end of
such notice period, the Company Board of Directors shall have considered in good faith any revisions to the terms of this Agreement committed to in writing by Parent, and shall have determined, after
consultation with the Company's independent financial advisor and outside legal counsel, that the Company Superior Proposal would nevertheless continue to constitute a Company Superior Proposal and
that the failure to take such action would be inconsistent with the Company Board of Directors' fiduciary duties under applicable Law if the revisions committed to in writing by Parent were to be
given effect, and (D) in the event of any change to any of the material financial terms or any other material terms of such Company Superior Proposal, the Company shall, in each case, have
delivered to Parent an additional notice consistent with that described in clause (A) above of this proviso and a new notice period under clause (A) of this proviso shall commence
(except that the four (4) Business Day notice period referred to in clause (A) above of this proviso shall instead end at the later of (1) 11:59 p.m. (Eastern Time) on the
second (2
nd
) Business Day immediately following Parent's receipt of such notice and (2) the end of the original notice period, during which time the Company shall be required to
comply with the requirements of clauses (B), (C) and (D) above of this proviso. The actions of the Company Board of Directors in making a determination that a Company Takeover
Proposal constitutes a Company Superior Proposal and the Company's authorizing and providing the notices to Parent required by this
Section 5.4(e)
, if done in
accordance with this
Section 5.4(e)
and so long as the Company Board of Directors determines finally, at the end of any notice periods required pursuant to this
Section 5.4(e)
with respect to such Company Takeover Proposal, that such Company Takeover Proposal does not constitute a Company Superior Proposal and reaffirms the
Company Recommendation, shall not in and of itself, constitute a Company Adverse Recommendation Change, a violation of this
Section 5.4
or trigger any rights
allowing for a termination of this Agreement. Anything to the contrary contained herein notwithstanding, neither the Company nor any Company Subsidiary shall enter into any Company Acquisition
Agreement unless this Agreement has been terminated in accordance with its terms.
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(f) Anything
in this Agreement to the contrary notwithstanding, other than in connection with a Company Takeover Proposal, the Company may, at any time prior to the date the
Company Shareholder Approval has been obtained, but not after, make a Company Adverse Recommendation Change in response to a Company Intervening Event (a "
Company Intervening Event
Recommendation Change
") if, and only if, prior to taking such action, the Company Board of Directors has determined in good faith, after consultation with the Company's independent
financial advisor and outside legal counsel, that the failure to take such action would be inconsistent with the Company Board of Directors' fiduciary duties under applicable Law;
provided
,
however
, that prior to making such Company Intervening Event Recommendation Change, (i) the Company has given Parent at least
four (4) Business Days' prior written notice of its intention to take such action, and specifying the reasons therefor, including specifying in reasonable detail the applicable Company
Intervening Event and (ii) following the end of such notice period, the Company Board of Directors shall have considered in good faith any revisions to the terms of this Agreement committed to
in writing by Parent, and shall have determined, after consultation with the Company's independent financial advisor and outside legal counsel, that the failure to make a Company Intervening Event
Recommendation Change would be inconsistent with the Company Board of Directors' fiduciary duties under applicable Law;
provided
, that the actions of the Company Board of
Directors in making such determination and the Company's authorizing and providing of such notice pursuant to this
Section 5.4(f)
shall not, if done in accordance
with
Section 5.4(f)
and so long as the Company Board of Directors determines finally, at the end of any notice periods required pursuant to this
Section 5.4(f)
, not to make a Company Intervening Event Recommendation Change and reaffirms the Company Recommendation, in and of itself, constitute a Company
Adverse Recommendation Change, a violation of this
Section 5.4
or a termination of this Agreement.
(g) Nothing
contained in this Agreement shall prohibit the Company or the Company Board of Directors from (i) taking and disclosing to the shareholders of the Company
a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or making any "stop, look and listen" communication to the shareholders of the Company pursuant
to Rule 14d-9(f) under the Exchange Act pending disclosure of its position thereunder, (ii) directing any person (or the representative of that person) that makes a Company Takeover
Proposal to the provisions of this
Section 5.4
or (iii) making a factually accurate public statement limited to a description of the Company's receipt of a
Company Takeover Proposal and the operation of this Agreement with respect thereto;
provided
that in the case of either clause (i), (ii) or (iii) no
such action, position or disclosure that would amount to a Company Adverse Recommendation Change shall be permitted, made or taken other than in compliance with
Section 5.4(e)
.
Section 5.5
Employee Matters
.
(a) Parent
shall provide, or shall cause the Surviving Corporation to provide, to each employee of the Company or its Subsidiaries who continues to be employed by Parent or
the Surviving Corporation or any of their respective Subsidiaries following the Effective Time (collectively, the "
Company Employees
") for so long as such Company Employee
remains employed by Parent or the Surviving Corporation during the relevant period, (i) for one year following the Effective Time, a base salary or base wage rate no less than that provided to
such Company Employee immediately prior to the Effective Time, (ii) for the remainder of the fiscal year in effect as of the Effective Time, a target annual cash incentive opportunity no less
favorable than that provided to such Company Employee immediately prior to the Effective Time and (iii) for one year following the Effective Time, employee benefits (including equity-based
compensation eligibility and severance benefits, and excluding any defined benefit retirement benefits and retiree welfare benefits) that are, in Parent's election, substantially comparable in the
aggregate to (A) those generally provided to similarly situated employees of Parent and its Subsidiaries (other than the Company and its Subsidiaries) or (B) those generally provided to
employees of the Company as of immediately prior to the Effective Time
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(it being
understood that the Company Employees may commence participation in Parent's compensation and benefit plans on different dates following the Effective Time with respect to different
compensation and benefit plans).
(b) Following
the Effective Time, Parent shall, or shall cause the Surviving Corporation to, cause any employee benefit plans sponsored or maintained by Parent or the
Surviving Corporation or their Subsidiaries in which the Company Employees are eligible to participate following the Closing Date (collectively, the "
Post-Closing Plans
")
to recognize the service of each Company Employee with the Company and its ERISA Affiliates prior to the Closing Date for purposes of eligibility, vesting and benefit accrual under such Post-Closing
Plans, in each case, to the same extent such service was recognized immediately prior to the Effective Time under a comparable Company Benefit Plan in which such Company Employee was eligible to
participate immediately prior to the Effective Time;
provided
that such recognition of service shall not (i) apply for purposes of any defined benefit retirement
plan or plan that provides retiree welfare benefits, (ii) operate to duplicate any benefits of a Company Employee with respect to the same period of service, (iii) apply for purposes of
any Post-Closing Plans (x) adopted after the Closing Date and under which similarly situated employees of Parent and its Subsidiaries do not receive credit for prior service or (y) that
is grandfathered or frozen, either with respect to level of benefits or participation. With respect to any Post-Closing Plan that provides medical, dental or vision insurance benefits, for the plan
year in which such Company Employee is first eligible to participate, Parent shall use commercially reasonable and good faith efforts to (A) cause any preexisting condition limitations or
eligibility waiting periods under such plan to be waived with respect to such Company Employee to the extent such limitation or waiting period would have been waived or satisfied under the Company
Benefit Plan in which such Company Employee participated immediately prior to the Effective Time, and (B) credit each Company Employee for an amount equal to any medical, dental or vision
expenses incurred by such Company Employee in the plan year in which such Company Employee is first eligible to participate in such Post-Closing Plan, for purposes of any applicable deductible and
annual out-of-pocket expense requirements under any such Post-Closing Plan to the extent such expenses would have been credited under the Company Benefit Plan in which such Company Employee
participated immediately prior to the Effective Time. Such credited expenses shall also count toward any annual or lifetime limits, treatment or visit limits or similar limitations that apply under
the terms of the applicable plan.
(c) If
requested by Parent in writing delivered to the Company not less than ten (10) Business Days before the anticipated Effective Time, the Company Board of
Directors (or the appropriate committee thereof) shall adopt resolutions and take such corporate action as is necessary to terminate the Company's 401(k) plans (collectively, the
"
Company 401(k) Plan
"), effective as of the date prior to the Closing Date. Following the Effective Time, the assets thereof shall be distributed to the
participants, and Parent shall, to the extent permitted by Parent's applicable 401(k) plan (the "
Parent 401(k) Plan
"), permit the Company Employees who are then
actively employed to make rollover contributions of "eligible rollover distributions" (within the meaning of Section 401(a)(31) of the Code, inclusive of loans to participants), in the form of
cash (or in the case of loans, notes), in an amount equal to the full account balance distributed to such Company Employee from the Company 401(k) Plan to the Parent 401(k) Plan.
(d) The
Company shall submit any communications with any employees or service providers of the Company and its Subsidiaries relating to (i) the transactions
contemplated by this Agreement, (ii) employee benefits (other than those communications made in the ordinary course of business that do not relate to this Agreement or the transactions
contemplated by this Agreement) and (iii) post-Closing terms of employment, to Parent for its review, comment and approval (not to be unreasonably withheld, conditioned or delayed) prior to
distribution of such communications.
(e) Nothing
in this Agreement shall confer upon any Company Employee or other service provider any right to continue in the employ or service of Parent, the Surviving
Corporation or any
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Affiliate
of Parent, or shall interfere with or restrict in any way the rights of Parent, the Surviving Corporation or any of their Affiliates, which rights are hereby expressly reserved, to discharge
or terminate the services of any Company Employee at any time for any reason whatsoever, with or without cause. In no event shall the terms of this Agreement be deemed to (i) establish, amend,
or modify any Company Benefit Plan or any other benefit plan, program, agreement or arrangement maintained or sponsored by Parent, the Surviving Corporation, the Company or any of their Subsidiaries
or Affiliates; or (ii) alter or limit the ability of Parent, the Surviving Corporation, the Company or any of their Subsidiaries or Affiliates to amend, modify or terminate any Company Benefit
Plan or any other compensation or benefit or employment plan, program, agreement or arrangement after the Closing Date. Without limiting the generality of
Section 8.13
and any provision in this Agreement to the contrary notwithstanding, nothing in this Agreement shall create any third party beneficiary rights in any
person other than the Parties hereto, including any Company Employee or current or former service provider of the Company or its Affiliates (or any beneficiaries or dependents thereof).
Section 5.6
Regulatory Approvals; Efforts
.
(a) Prior
to the Closing, Parent, Merger Sub and the Company shall use their respective reasonable best efforts to take, or cause to be taken, all reasonable actions, and to
do, or cause to be done, all reasonable things necessary, proper or advisable under any applicable Laws to consummate and make effective the Merger, including (i) the preparation and filing of
all forms, registrations and notices required to be filed to consummate the Merger, (ii) the satisfaction of the conditions to consummating the Merger, (iii) as promptly as reasonably
practicable, taking all reasonable actions necessary to obtain (and cooperating with each other in obtaining) any consent, authorization, Order, waiting period expiration or approval of, or any
exemption by, any third party, including any Governmental Entity (which actions shall include furnishing all information and documentary material required under the HSR Act) required to be obtained or
made by Parent, Merger Sub, the Company or any of their respective Subsidiaries in connection with the Merger or the transactions contemplated by this Agreement, and (iv) the execution and
delivery of any reasonable additional instruments necessary to consummate Merger and to fully carry out the purposes of this Agreement in accordance with its terms. Parent shall not, and shall cause
its controlled Affiliates not to, enter into a transaction to acquire any asset, property, right, business or Person (including by way of merger, consolidation, share exchange, investment, joint
venture, strategic alliance, other business combination, asset, stock or equity purchase or otherwise), that would reasonably be expected to prevent or materially delay satisfaction of the conditions
set forth in
Section 6.1(c)
and
6.1(d)
.
(b) Parent
and the Company shall each keep the other apprised of the status of matters relating to the completion of the Merger and work cooperatively in connection with
obtaining all required consents, authorizations, Orders, expiration or termination of waiting periods, or approvals of, or any exemptions by, any Governmental Entity undertaken pursuant to the
provisions of this
Section 5.6
. In that regard, prior to the Closing, each Party shall promptly consult with the other Parties to this Agreement with respect to and
provide any necessary information and assistance as the other Parties may reasonably request with respect to (and, in the case of correspondence, provide the other Parties (or their counsel) copies
of) all notices, submissions, or filings made by such Party with any Governmental Entity or any other information supplied by such Party to, or material correspondence with, a Governmental Entity in
connection with this Agreement and the Merger. Each Party to this Agreement shall (A) promptly inform the other Parties to this Agreement, and if in writing, furnish the other Parties with
copies of (or, in the case of oral communications, advise the other Parties orally of) any material communication from or to any Governmental Entity regarding the Merger, (B) permit the other
Parties to review and discuss in advance, and consider in good faith the views of the other Parties in connection with, any proposed communication with any such Governmental Entity and (C) to
the extent permitted by any applicable Governmental Entity, give the other Party a reasonable opportunity
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to
attend and participate in any in-person meetings with such Governmental Entity regarding the Merger. The foregoing notwithstanding, the Parties agree that it is Parent's primary right to devise the
strategy for all filings, notifications, submissions and communications in connection with any filing, notice, petition, statement, registration, submission of information, application or similar
filing subject to this
Section 5.6
after consulting with, and taking into account in good faith any comments of, the Company or its Representatives relating to such
strategy. If any Party to this Agreement or any Representative of such Parties receives a request for additional information or documentary material from any Governmental Entity with respect to the
Merger, then such Party will use reasonable best efforts to make, or cause to be made, promptly and after consultation with the other Parties to this Agreement in good faith, an appropriate response
in substantial compliance with such request. Each Party shall furnish the other Parties with copies of all correspondence, filings and communications (and memoranda setting forth the substance
thereof) between it and any such Governmental Entity with respect to this Agreement and the Merger, and furnish the other Parties with such necessary information and reasonable assistance as the other
Parties may reasonably request in connection with its preparation of necessary filings or submissions of information to any such Governmental Entity;
provided
,
however
, that Parent and the Company may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other under this
Section 5.6
as "Antitrust Counsel Only Material." Such materials and the information contained therein shall be given only to the outside antitrust counsel of the
recipient and will not be disclosed by such outside counsel to employees, officers or directors of the recipient unless express permission is obtained in advance from the source of the materials
(Parent or the Company, as the case may be) or its legal counsel. Anything to the contrary contained in this
Section 5.6
notwithstanding, materials provided
pursuant to this
Section 5.6
may be redacted (i) to remove references concerning the valuation of the Company and the Merger or other confidential
information, (ii) as necessary to comply with contractual arrangements, and (iii) as necessary to address reasonable privilege concerns.
(c) The
Company and Parent shall use their respective reasonable best efforts to file, as promptly as practicable, but in any event no later than ten (10) Business
Days after the date of this Agreement, all notifications required under the HSR Act and appropriate filings, if any are required, pursuant to foreign Antitrust Laws as promptly as practicable. In the
event that the Parties receive a request for information or documentary material pursuant to the HSR Act (a "
Second Request
"), the Parties will use their respective
reasonable best efforts to respond to such Second Request as promptly as practicable, and counsel for both Parties will closely cooperate during the entirety of any such Second Request review process.
The Parties agree to use reasonable best efforts to supply as promptly as practicable and advisable any additional information and documentary material that may be required under any other Antitrust
Law and to take all other actions necessary to cause the expiration or termination of the applicable waiting periods under any other Antitrust Law prior to the End Date.
(d) Parent
shall solely to the extent necessary to consummate and make effective the Merger (i) agree to propose, negotiate, offer to commit and effect (and if such
offer is accepted, commit to and effect) by consent decree, hold separate order or otherwise, the sale, divestiture, license, holding separate, or other disposition of or restriction on any assets,
licenses, rights, product lines, operations or businesses of Parent, the Company or any of their respective Subsidiaries, and (ii) accept any operational restrictions or otherwise take or
commit to take actions that would, after the Effective Time, limit Parent's or any of its Affiliates' freedom of action with respect to, or its ability to retain, any of the assets, licenses, rights,
product lines, operations or businesses of any of Parent or the Company or any of their respective Subsidiaries;
provided
that Parent shall not be required to take (and
the Company shall not without the prior written consent of Parent agree to take) any of the actions set forth in clauses (i) or (ii), in each case, if any such action, individually or in the
aggregate, would be reasonably likely to materially and adversely affect (measured on a scale relative to the Company and its Subsidiaries, taken as a whole) the business of Parent, the Company, and
their Subsidiaries, including the Surviving Corporation, after the Closing Date and giving effect to the Merger.
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(e) In
the event that any litigation, claim, suit, action or proceeding is commenced challenging the Merger or the other transactions contemplated by this Agreement under
any Antitrust Law, each of the Company, Parent and Merger Sub shall cooperate with each other and use its respective reasonable best efforts to contest and resist any such litigation, claim, suit,
action or proceeding and to have vacated, lifted, reversed or overturned any Order resulting therefrom, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the Merger or the other transactions contemplated by this Agreement.
Section 5.7
Preparation of the Form S-4 and the Proxy Statement/
Prospectus; Company Shareholders Meeting
.
(a) As
promptly as reasonably practicable following the date of this Agreement, (i) the Company and Parent shall jointly prepare and cause to be filed with the SEC
the Proxy Statement/Prospectus in preliminary form, and (ii) Parent shall prepare and cause to be filed with the SEC, the Form S-4 with respect to the shares of Parent Common Stock
issuable in the Merger, which will include the Proxy Statement/Prospectus with respect to the Company Special Meeting. Each of the Company and Parent shall use its reasonable best efforts to
(A) have the Form S-4 declared effective under the Securities Act as promptly as reasonably practicable after such filing, (B) ensure that the Form S-4 complies in all
material respects with the applicable provisions of the Exchange Act or Securities Act, and (C) keep the Form S-4 effective for so long as necessary to complete the Merger. Each of the
Company and Parent shall furnish all information concerning itself, its Affiliates and the holders of its shares to the other and provide such other assistance as may be reasonably requested in
connection with the preparation, filing and distribution of the Form S-4 and Proxy Statement/Prospectus. Each of the Company and Parent shall promptly notify the other upon the receipt of any
comments from the SEC or any request from the SEC for amendments or supplements to the Form S-4 or Proxy Statement/Prospectus, and shall, as promptly as practicable after receipt thereof,
provide the other with copies of all correspondence between it and its Representatives, on one hand, and the SEC, on the other hand, and all written comments with respect to the Proxy
Statement/Prospectus or the Form S-4 received from the SEC and advise the other party on any oral comments with respect to the Proxy Statement/Prospectus or the Form S-4 received from
the SEC. Each of the Company and Parent shall use its reasonable best efforts to respond as promptly as practicable to any comments from the SEC with respect to the Proxy Statement/Prospectus and the
Form S-4. The foregoing notwithstanding, prior to filing the Form S-4 (or any amendment or supplement thereto) or mailing the Proxy Statement/Prospectus (or any amendment or supplement
thereto) or responding to any comments of the SEC with respect thereto, each of the Company and Parent shall cooperate and provide the other a reasonable opportunity to review and comment on such
document or response in advance (including the proposed final version of such document or response), except to the extent such disclosures relate to a Company Adverse Recommendation Change. Parent
shall advise the Company, promptly after it receives notice thereof, of the time of effectiveness of the Form S-4, the issuance of any stop order relating thereto or the suspension of the
qualification of the shares of Parent Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, and Parent shall use its reasonable best efforts to have any such
stop order or suspension lifted, reversed or otherwise terminated. Parent shall also take any other action required to be taken under the Securities Act, the Exchange Act, any applicable foreign or
state securities or "blue sky" Laws and the rules and regulations thereunder in connection with the issuance of the shares of Parent Common Stock in the Merger, and the Company shall furnish all
information concerning the Company and the holders of the Company Common Stock as may be reasonably requested in connection with any such actions.
(b) If,
at any time prior to the receipt of the Company Shareholder Approval, any information relating to the Company or Parent, or any of their respective Affiliates,
should be discovered by the Company or Parent which, in the reasonable judgment of the Company or Parent, should be set forth in an amendment of, or a supplement to, any of the Form S-4 or the
Proxy Statement/Prospectus, so
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that
any of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which
they
were made, not misleading, the Party which discovers such information shall promptly notify the other Parties, and the Company and Parent shall cooperate in the prompt filing with the SEC of any
necessary amendment of, or supplement to, the Proxy Statement/Prospectus or the Form S-4 and, to the extent required by Law, in disseminating the information contained in such amendment or
supplement to shareholders of the Company. Nothing in this
Section 5.7(b)
shall limit the obligations of any Party under
Section 5.7(a)
.
(c) As
promptly as reasonably practicable following the date of this Agreement, the Company shall, in consultation with Parent and in accordance with applicable Law and the
Company Organizational Documents, establish a record date for, duly call, give notice of, convene and hold a special meeting of the Company's shareholders to consider the proposal to adopt this
Agreement (the "
Company Special Meeting
"). The Company shall use its reasonable best efforts to cause the Proxy Statement/Prospectus to be mailed to the shareholders of
the Company entitled to vote at the Company Special Meeting and to hold the Company Special Meeting as soon as reasonably practicable after the Form S-4 is declared effective under the
Securities Act. The Company shall, through the Company Board of Directors, make the Company Recommendation, include such Company Recommendation in the Proxy Statement/Prospectus and shall solicit and
use its reasonable best efforts to obtain the Company Shareholder Approval, except, in each case, during such time as a valid Company Adverse Recommendation Change in accordance with
Section 5.4
is in effect. The Company shall not submit any other proposal to such holders in connection with the Company Special Meeting without the prior written
consent of Parent. The Company shall ensure that all proxies solicited in connection with the Company Special Meeting are solicited in compliance with applicable Law. The foregoing provisions of this
Section 5.7(c)
notwithstanding, if, on a date for which the Company Special Meeting is scheduled, the Company (i) determines in good faith (after
consultation with its outside legal counsel) that any supplement or amendment to the disclosure documents is required by Law to be provided to the Company's shareholders or (ii) has not
received proxies representing a sufficient number of shares of Company Common Stock to constitute a quorum or obtain the Company Shareholder Approval, the Company shall have the right to make one or
more successive postponements or adjournments of the Company Special Meeting;
provided
that, without the prior written consent of Parent, in no event may the Company
Special Meeting be postponed to later than the date that is twenty (20) Business Days after the date for which the Company Special Meeting was originally scheduled. All other postponements or
adjournments shall require the prior written consent of Parent, which consent shall not be unreasonably withheld, conditioned or delayed. Nothing in this Agreement shall be interpreted to excuse the
Company or the Company Board of Directors from complying with its unqualified obligation to submit this Agreement to its shareholders at the Company Special Meeting, and neither the Company nor the
Company Board of Directors shall submit to the vote of its shareholders any Company Takeover Proposal other than the Merger, in each case without regard to whether a Company Takeover Proposal has been
made or whether the Company Board of Directors has effected a Company Adverse Recommendation Change. Without limiting the foregoing, if the Company Board of Directors has effected a Company Adverse
Recommendation Change as expressly permitted by
Section 5.4
, then the Company Board of Directors may submit this Agreement to its shareholders without
recommendation (although the resolutions approving this Agreement as of the date hereof may not be rescinded or amended)
and
to the extent so requested by the Company to
disclose (i) a Company Adverse Recommendation Change and (ii) a statement of the reason of the Company Board of Directors for making such Company Adverse Recommendation Change, the
Company and Parent shall cooperate regarding, and shall promptly file with the SEC, any necessary amendment of, or supplement, to the Proxy Statement/Prospectus or the Form S-4, and to the
extent required by Law, shall cooperate in disseminating the information contained in such amendment or supplement to shareholders of the Company.
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Section 5.8
Takeover Statutes
. The Parties shall use their respective
reasonable best efforts (a) to take all action necessary so that no "moratorium," "control share acquisition," "fair price," "supermajority," "affiliate transactions" or "business combination
statute or regulation" or other similar state anti-takeover Laws becomes applicable to the Merger or any of the other transactions contemplated by this Agreement and (b) if any such Law may
become, or may purport to be, applicable to the Merger, or any of the transactions contemplated by this Agreement, to grant such approvals and take such actions as are reasonably necessary so that the
Merger and the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise eliminate or minimize the effects of
such Law on the transactions contemplated by this Agreement.
Section 5.9
Public Announcements
. Without limiting
Section 5.4
or
Section 5.7
or the Confidentiality Agreement, the Parties shall consult with one another prior to issuing, and
provide each other with the opportunity to review and comment upon, and consider in good faith the comments of the other Parties on, any public announcement, statement or other disclosure with respect
to this Agreement or the Merger and shall not issue any such public announcement or statement prior to such consultation, except as may be required by Law or by the rules and regulations of the Nasdaq
or the NYSE, as applicable;
provided
that each of the Company and Parent may make any public statements in response to questions by the press, analysts, investors or
analyst or investor calls, so long as such statements are not inconsistent with previous statements made jointly by the Company and Parent (or made by one party after having consulted with the other
party). Without limiting
Section 5.4
, the Company shall not be required to provide any review or comment to Parent regarding any statement, release or disclosure in
response to or in connection with the receipt and existence of a Company Takeover Proposal, its consideration of making or its making of Company Adverse Recommendation Change or any matters related
thereto. The Company and Parent agree to issue the previously agreed upon form of joint press release announcing the execution and delivery of this Agreement promptly following the execution of this
Agreement.
Section 5.10
Indemnification and Insurance
.
(a) All
rights to indemnification and exculpation from Liabilities for acts or omissions occurring at or prior to the Effective Time and related advancement of expenses now
existing in favor of any present and former director, officer, employee of the Company or any of its Subsidiaries and each person who served as a director, officer, member, trustee or fiduciary of
another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request or for the benefit of the Company or any of its Subsidiaries (in each case,
when acting in such capacity) (collectively, together with their respective heirs, executors and administrators, the "
Company Indemnified Parties
") as provided in the
Company Organizational Documents (or Company Subsidiary Organizational Documents) or any indemnification agreements in existence as of the date hereof and set forth on Section 5.10(a) of the
Company Disclosure Schedule, shall survive the Merger and shall continue in full force and effect in accordance with their terms, and shall not be amended, repealed or otherwise modified for a period
of six (6) years after the Effective Time in any manner that would adversely affect the rights thereunder of such Company Indemnified Parties, and Parent shall cause the Surviving Corporation
to perform its obligations thereunder. The foregoing notwithstanding, if any claim, action, suit, proceeding or investigation (whether arising before, at or after the Effective Time) is made against
any Company Indemnified Party with respect to matters subject to indemnification hereunder on or prior to the sixth anniversary of the Effective Time, the rights to indemnification and exculpation
from Liabilities and advancement of expenses referenced in the preceding sentence shall continue in effect until the final disposition of such claim, action, suit, proceeding or investigation.
(b) From
and after the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, indemnify and hold harmless each Company
Indemnified Party against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, damages or Liabilities
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incurred
in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of the fact that such person is or was a
director or officer of the Company or any of its Subsidiaries or other fiduciary in any entity, trust, pension or other employee benefit plan or enterprise at the request or for the benefit of the
Company and pertaining to matters existing or occurring or actions or omissions taken prior to or at the Effective Time, including with respect to this Agreement and the Merger, to the fullest extent
permitted by applicable Law, and the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, also advance expenses to the Company Indemnified Parties as incurred to the
fullest extent permitted by applicable Law;
provided
that the Company Indemnified Party to whom expenses are advanced provides an undertaking to repay such advances if it
is ultimately determined by a final and nonappealable judicial determination that such Company Indemnified Party is not entitled to indemnification under this
Section 5.10
or otherwise.
(c) For
a period of six (6) years after the Effective Time, the Surviving Corporation shall and Parent shall cause the Surviving Corporation to maintain in effect the
current policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by the Company (
provided
that the Surviving Corporation may
substitute therefor policies with a substantially comparable insurer of at least the same coverage and amounts containing terms and conditions which are no less advantageous to the insured) with
respect to claims arising from facts or events, or actions or omissions, which occurred or are alleged to have occurred at or before the Effective Time;
provided
,
however
, that the Surviving Corporation shall not be obligated to make annual premium payments for such insurance to the extent such premiums exceed 300% of the annual
premium paid for the year ending December 31, 2017 by the Company for such insurance (the "
Premium Cap
"), and if such premiums for such insurance would at any time
exceed the Premium Cap, then the Surviving Corporation shall cause to be maintained policies of insurance which, in the Surviving Corporation's good faith determination, provide the maximum coverage
available at an annual premium equal to the Premium Cap. In lieu of the foregoing, Parent or the Company (following prior consultation with Parent) may obtain at or prior to the Effective Time a six
(6)-year prepaid "tail" policy providing equivalent coverage to that described in the preceding sentence;
provided
that if the total cost for such prepaid "tail" policy
exceeds the Premium Cap, then the Surviving Corporation may obtain a prepaid "tail" policy with the maximum coverage available for a total cost of the Premium Cap. If such prepaid policies have been
obtained prior to the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, maintain such policies in full force and effect for such six-year period,
and continue to honor the obligations thereunder.
(d) In
the event that Parent or the Surviving Corporation (i) consolidates with or merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then proper provision shall be made so that such
continuing or surviving corporation or entity or transferee of such assets, as the case may be, shall assume the obligations set forth in this
Section 5.10
.
(e) The
rights of each Company Indemnified Party pursuant to this
Section 5.10
shall be in addition to, and not in limitation of, any
other rights such Company Indemnified Party may have under the Company Organizational Documents (or Company Subsidiary Organizational Documents) or under applicable Law. The provisions of this
Section 5.10
shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each Company Indemnified Party and his or her
heirs and representatives. In the event of any breach by the Surviving Corporation or Parent of this
Section 5.10
, Parent or the Surviving Corporation shall pay all
reasonable expenses, including attorneys' fees, that may be incurred by the Company Indemnified Parties in enforcing the indemnity and other obligations provided in this
Section 5.10
as such fees are incurred upon the written request of such Company Indemnified Party.
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(f) From
and after the Effective Time, Parent shall cause the Surviving Corporation to perform all of its respective obligations under this
Section 5.10
.
Section 5.11
Control of Operations
. Without in any way limiting any Party's
rights or obligations under this Agreement, the Parties understand and agree that (a) nothing contained in this Agreement shall give Parent or the Company, directly or indirectly, the right to
control or direct the other Party's operations prior to the Effective Time and (b) prior to the Effective Time, each of the Company and Parent shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its operations.
Section 5.12
Section 16 Matters
. Prior to the Effective Time, Parent
and the Company shall take all such steps as may be required to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) or acquisitions of
shares of Parent Common Stock (including derivative securities with respect to Parent Common Stock) resulting from the Merger by each individual who is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to the Company or will become subject to such reporting requirements with respect to Parent, to be exempt under Rule 16b-3 promulgated
under the Exchange Act, to the extent permitted by applicable Law.
Section 5.13
Financing and Financing Cooperation
.
(a) Parent
and Merger Sub shall use their reasonable best efforts to obtain the Financing contemplated by the Commitment Letter (or in the event any portion or all of such
Financing becomes unavailable or otherwise undesirable, alternative financing (in an amount sufficient, together with the remaining Financing contemplated by the Commitment Letter, if any, and any
other sources available to Parent and Merger Sub, to fund the payment of the Merger Amounts) from the same or other sources) as and to the extent (but only to the extent) required to fund the Merger
Amounts. Parent shall keep the Company informed on a reasonably current basis and in reasonable detail of the status of its efforts to arrange the Financing (or replacement thereof). Without limiting
the generality of the foregoing, Parent shall give the Company prompt notice (i) upon becoming aware of any material breach or default by any party to the Commitment Letter (or any replacement
thereof) or definitive agreements related to the Financing and (ii) of the receipt of any notice or other communication from any Person party to any definitive document relating to the
Financing (or any replacement thereof) or the Commitment Letter (or any replacement thereof) with respect to any material breach of Parent or any of its Affiliates of its obligations under any such
document or letter or default, termination or repudiation by any party to any such document or letter. Unless the Financing contemplated by the Commitment Letter (or any replacement thereof) becomes
unavailable in whole or in part, Parent shall not, without the prior written consent of the Company agree to amend, modify, supplement, restate, substitute or replace the Commitment Letter (or any
replacement thereof) if such amendment, modification, supplement, restatement, substitution or replacement (a) materially expands the conditions precedent to the funding on the Closing Date of
the Financing as set forth in the Commitment Letter as in effect as of the date hereof (or in such replacement, as applicable) or (b) taking into account the expected timing of the Marketing
Period, would reasonably be expected to delay or prevent the consummation of the transactions contemplated by this Agreement.
(b) The
Company shall and shall cause its Subsidiaries to, and shall use its reasonable best efforts to cause its and their respective Representatives to provide all
cooperation that is necessary, customary or advisable and requested by Parent to assist Parent and Merger Sub in arranging, obtaining and syndicating any of the Financing including, without
limitation, by (i) making senior management and advisors of the Company and its Subsidiaries available to participate at reasonable times in a reasonable number of meetings, presentations, road
shows and due diligence sessions that are requested a reasonable time period in advance with proposed lenders, underwriters, initial purchasers or placement agents, and in sessions with rating
agencies, (ii) providing reasonable and timely
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assistance
to Parent and the Financing Entities in their preparation of (1) materials for lender presentations, confidential information memoranda (public and non-public), offering memoranda,
prospectuses and similar documents customary or required in connection with the Financing and (2) customary pro forma financial statements reflecting the Merger and the Financing (it being
understood that nothing in this
Section 5.13(b)
shall require the Company to prepare any pro forma financial statements), (iii) as promptly as practicable on
an ongoing basis, furnishing Parent and the Financing Entities with (I) the Required Financial Information; (II) the Closing Financial Information and (III) such other financial
and other information relating to the Company and its Subsidiaries as is customary or reasonably necessary for the arrangement, syndication and completion of the Financing, (iv) if requested in
writing by Parent at least eight (8) Business Days prior to the Closing Date, furnish to Parent and the Financing Parties all information regarding the Company and its Subsidiaries that is
requested by Parent and required in connection with the Financing by regulatory authorities under applicable "beneficial ownership," "know your customer" and anti-money laundering rules and
regulations, including the Patriot Act, at least five (5) Business Days prior to the Closing Date, (v) providing customary authorization letters authorizing the distribution of
information to prospective lenders and containing a customary representation to the Financing Parties for the Financing that such information does not contain a material misstatement or omission and
containing a representation to the Financing Parties that the public side versions of such documents, if any, do not include material non-public information about the Company and its Subsidiaries or
its or their securities, (vi) executing and delivering definitive financing documents, including any pledge and security documents, any loan agreements, guarantees, currency or interest hedging
agreements, certificates, and other definitive financing documents, and in each case assisting in the preparation of applicable schedules and other information necessary in connection therewith, and
(vii) using reasonable best efforts to facilitate the pledging of collateral (including delivery of stock and other equity certificates of Company and its Subsidiaries at the Effective Time).
To the extent practicable, the Company shall be given a reasonable opportunity to review and comment on any information regarding the Company contained in any materials, documents or memoranda to be
presented at any meetings conducted in connection with the Financing at which the senior management or advisors of the Company and its Subsidiaries are requested by Parent or Merger Sub to be present.
(c) The
provisions of
Section 5.13(b)
notwithstanding, nothing in the foregoing
Section 5.13(b)
will
require the Company or any of its Subsidiaries or any of their respective Representatives to (i) agree to pay any fees or reimburse any expenses prior to the Effective Time for which it has not
received prior reimbursement or is not otherwise indemnified by or on behalf of Parent, (ii) take any action or provide any assistance that would unreasonably interfere with the conduct of the
business of the Company and its Subsidiaries, (iii) take any action or provide any information that will conflict with or violate its organizational documents or any applicable material Laws or
(in the case of the disclosure of information) would result in the waiver of any legal privilege (
provided
,
however
, that the Company shall
use its commercially reasonable efforts to provide an alternative means of disclosing or providing such information to the maximum extent permitted by Law or to the maximum extent that does not result
in a loss of such legal privilege, as applicable, and in the event that the Company or any of its Subsidiaries does not provide access or information in reliance on this clause, the Company shall
provide notice to Parent that information is being withheld), (iv) give indemnities that are effective prior to the Effective Time for which it is not simultaneously indemnified by Parent,
(v) pass resolutions or consents to approve or authorize the execution of the Financing or any definitive agreements with respect thereto prior to the Effective Time, provided that the Company
and its Subsidiaries and Representatives shall cooperate with Parent to replace any officers and directors of the Company and its Subsidiaries who will not be employed thereby immediately after
Closing with Persons designated by Parent and to add any officers and directors designated by Parent, such replacements and additions to become effective immediately at Closing, (vi) cause the
execution of any certificates or other documents (other than customary authorization and representation letters) by any employee
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whose
employment by the Company or any of its Subsidiaries will terminate prior to or upon Closing, or (vii) take any action pursuant to this
Section 5.13
or
any other provision of this Agreement that would reasonably be expected to result in personal liability to a director, officer or other personnel. In
addition, no action, liability or obligation of the Company, any of its Subsidiaries or any of their respective Representatives pursuant to any certificate, agreement, arrangement, document or
instrument (other than customary authorization and representation letters) relating to the Financing will be required to be effective until the Effective Time.
(d) Notwithstanding
anything herein or in the Confidentiality Agreement to the contrary, all non-public or other confidential information provided by the Company or any of
its Representatives to Parent pursuant to this Agreement will be kept confidential in accordance with the Confidentiality Agreement, except that Parent will be permitted to disclose such information
to any Financing Parties or prospective Financing Parties (and, in each case, to their respective counsel and auditors) so long as such information is furnished by Parent subject to customary
confidentiality undertakings in connection with the Financing.
(e) Parent
shall promptly, upon request by the Company, reimburse the Company for all reasonable costs and expenses (including reasonable attorneys' fees, but excluding the
costs of the Company's preparation of its annual and quarterly financial statements) incurred by the Company or any of its Subsidiaries or their respective Representatives in connection with the
Financing and the cooperation of the Company and its Subsidiaries and Representatives contemplated by
Section 5.13(a)
, and shall indemnify and hold harmless the
Company, its Subsidiaries and their respective Representatives from and against any and all losses, damages, claims, costs or expenses suffered or incurred by any of them in connection with the
arrangement of the Financing, any cooperation pursuant to
Section 5.13(a)
and any information used in connection therewith, except with respect to (i) any
information provided in writing by the Company or any of its Subsidiaries for use in connection with the Financing or (ii) any fraud, intentional misrepresentation, gross negligence or willful
misconduct by any such persons or material breach by any such persons of their obligations hereunder.
(f) The
Company shall and shall cause each of its Subsidiaries to deliver all notices and take other actions required to facilitate the termination of commitments under the
Company Credit Agreement, repayment in full of all obligations under the Company Credit Agreement and release of any Liens and guarantees in connection therewith on the Closing Date. The Company
shall, and shall cause its Subsidiaries to, use reasonable best efforts to furnish to Parent, no later than one (1) Business Day prior to the Closing Date, a customary payoff letter with
respect to the Company Credit Agreement (the "
Payoff Letter
") in substantially final form and in form and substance reasonably satisfactory to Parent from all financial
institutions and other Persons to which Indebtedness under the Company Credit Agreement or "Credit Agreement Obligations" (as defined in the Company Credit Agreement) are owed, or the applicable
agent, trustee or other representative on behalf of all such Persons, which Payoff Letter shall (x) indicate the total amount required to be paid to fully satisfy all principal, interest,
prepayment premiums, penalties, breakage costs or other outstanding and unpaid obligations related to such Indebtedness and other obligations as of the Closing Date (the "
Payoff
Amount
") and (y) state that all obligations (including guarantees) in respect thereof and Liens in connection therewith on the assets of the Company or any Subsidiary of the
Company shall be, substantially concurrently with the receipt of the Payoff Amount on the Closing Date by the Persons holding such Indebtedness or other obligations, be released and terminated, or
arrangements satisfactory to Parent for such release shall have been made by such time, subject, as applicable, to the replacement (or cash collateralization or backstopping) of any then outstanding
letters of credit or similar Indebtedness.
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Section 5.14
Transaction Litigation
.
(a) Prior
to the Effective Time, the Company shall provide Parent with prompt notice of any shareholder litigation or claim against the Company and/or its directors or
officers relating to the Merger or the other transactions contemplated by this Agreement ("
Company Transaction Litigation
") (including by providing copies of all pleadings
with respect thereto). The Company shall control the defense, settlement (subject to the limitations in the following sentence) or prosecution of any Company Transaction Litigation and the Company
shall allow Parent to participate in and shall consult with Parent with respect to the defense, settlement and prosecution of any Company Transaction Litigation and shall consider in good faith
Parent's advice with respect to such Company Transaction Litigation. The Company may not compromise, settle or come to an arrangement regarding, or offer or agree to compromise, settle or come to an
arrangement regarding, any Company Transaction Litigation without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed);
provided
,
however
, if any Company Transaction Litigation continues after the Effective Time, the Company's pre-Effective Time directors and
officers may continue to retain the same counsel engaged prior to the Effective Time with respect thereto.
(b) Prior
to the Effective Time, Parent shall provide the Company with prompt notice of any stockholder litigation or claim against Parent and/or its directors or officers
relating to the Merger or the other transactions contemplated by this Agreement ("
Parent Transaction Litigation
") (including by providing copies of all pleadings with
respect thereto). Parent shall control the defense, settlement (subject to the limitations in the following sentence) or prosecution of any Parent Transaction Litigation and Parent shall consult with
the Company with respect to the defense, settlement and prosecution of any Parent Transaction Litigation and shall consider in good faith the Company's advice with respect to such Parent Transaction
Litigation. Parent may not compromise, settle or come to an arrangement regarding, or offer or agree to compromise, settle or come to an arrangement regarding, any Parent Transaction Litigation that
would prevent or materially delay or impair the consummation of the Merger without the prior written consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed).
If any litigation or claim meets the definition of both Company Transaction Litigation and Parent Transaction Litigation, it shall be treated as Parent Transaction Litigation, unless such litigation
or claim against Parent and/or its directors or officers is only with respect to aiding and abetting or similar theories, in which case such litigation or claim shall be treated as Company Transaction
Litigation.
Section 5.15
Stock Exchange Matters
.
(a) Parent
shall file a notification of listing of additional shares (or such other form as may be required) with Nasdaq with respect to the shares of Parent Common
Stock to be issued in the Merger and such other shares of Parent Common Stock to be reserved for issuance in connection with the Merger, and shall use reasonable best efforts to cause the shares of
Parent Common Stock to be issued in the Merger and such other shares of Parent Common Stock to be reserved for issuance in connection with the Merger to be approved for listing on the Nasdaq, subject
to official notice of issuance, prior to the Effective Time.
(b) Prior
to the Effective Time, Parent and the Company shall cooperate in taking, or causing to be taken, all actions reasonably necessary to delist the Company Common
Stock from the NYSE and terminate its registration under the Exchange Act, in each case, as promptly as practicable after the Effective Time,
provided
that such delisting
and termination shall not be effective until after the Effective Time.
Section 5.16
Additional Agreements
. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of this Agreement in accordance with its terms or to vest the Surviving Corporation with full title to all properties,
assets, rights, approvals, immunities and franchises of any of the Parties to the Merger, the officers of the Surviving Corporation shall be authorized to, in the name and on behalf of the Company,
execute and deliver such deeds, bills of sale, assignment or assurances and take all such other action as may be necessary in connection therewith.
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Section 5.17
Advice of Changes
. The Company and
Parent shall each promptly advise the other Party (a) of any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the
Merger or (b) upon receiving any communication from any Governmental Entity or third party (including any securities market or exchange) whose consent or approval is required for consummation
of the Merger that causes such Party to believe that there is a reasonable likelihood that any such consent or approval will not be obtained or that the receipt of any such consent or approval will be
materially delayed.
Section 5.18
Obligations of Merger Sub
. Parent shall cause Merger Sub and
the Surviving Corporation to perform their respective obligations under this Agreement.
Section 5.19
Dividend Record Dates
. The Company shall coordinate with Parent
to designate the record dates and payment dates for the Company's quarterly dividends to coincide with the record dates and payment dates for Parent's quarterly dividends, it being the intention of
the parties that holders of Parent Common Stock and Company Common Stock shall not receive two dividends, or fail to receive for one dividend, for any single fiscal quarter with respect to their
Parent Common Stock and Company Common Stock as set forth on Schedule 5.19 of the Parent Disclosure Schedule.
Section 5.20
Director Resignations
. Except as otherwise directed by Parent
prior to the Effective Time, the Company shall cause to be delivered to Parent prior to the Closing resignations executed by each director in office as of immediately prior to the Effective Time of
the Company and each of its Subsidiaries designated by Parent and effective upon the Effective Time.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1
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 (or waiver by the Company and Parent, to the extent permissible under applicable Law) at or prior to the
Closing of the following conditions:
(a)
Shareholder Approval
. The affirmative vote of the holders of a majority of the
issued and outstanding shares of the Company Common Stock in favor of the adoption of this Agreement shall have been obtained.
(b)
Registration Statement
. The Form S-4 shall have been declared effective
by the SEC under the Securities Act and no stop order suspending the effectiveness of the Form S-4 shall have been issued by the SEC and no Proceedings for that purpose shall have been
initiated by the SEC.
(c)
No Legal Prohibition
. No Governmental Entity shall have entered or issued an
Order or adopted or enacted a Law that continues to be effective, in each case that temporarily or permanently prohibits, enjoins or makes illegal the consummation of the Merger.
(d)
Regulatory Approval
. Any waiting period (and extensions thereof) applicable to
the Merger under the HSR Act shall have expired or been terminated.
(e)
Listing
. The shares of Parent Common Stock to be issued in the Merger shall
have been approved for listing on Nasdaq, subject to official notice of issuance.
Section 6.2
Conditions to Obligations of Parent and Merger Sub
. The
respective obligations of Parent and Merger Sub to effect the Merger shall be subject to the fulfillment (or waiver by Parent, to the extent permissible under applicable Law) at or prior to the
Closing of the following additional conditions:
(a)
Representations and Warranties
. The representations and warranties of the
Company set forth in (i)
Article III
(other than in
Section 3.2(a)
,
Section 3.2(b)
,
Section 3.3(a)
,
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Section 3.3(b)
,
Section 3.3(c)
,
Section 3.10(b)
and
Section 3.20
), shall be true and correct at and as of the Closing Date as though made at and as of the Closing Date, other than for failures to be so true and
correct (without regard to materiality, Company Material Adverse Effect and similar qualifiers contained in such representations and warranties) that, individually or in the aggregate, have not had or
would not reasonably be expected to have a Company Material Adverse Effect, (ii)
Section 3.2(a)
shall be true and correct at and as of the Closing Date as
though made at and as of the Closing Date, except for any
de minimis
inaccuracies, (iii)
Section 3.2(b)
,
Section 3.3(a)
,
Section 3.3(b)
,
Section 3.3(c)
, and
Section 3.20
shall be true and correct in all material respects at and as of the Closing Date as though made at and as of the Closing Date and
(iv)
Section 3.10(b)
shall be true and correct at and as of the Closing Date as though made at and as of the Closing Date;
provided
,
however
, that
representations and warranties that are made as of a particular date or period need be true and correct (in the manner set forth in clauses (i), (ii), (iii) and (iv), as applicable) only
as of such date or period.
(b)
Performance of Obligations of the Company
. The Company shall have performed or
complied in all material respects with all covenants required by the Agreement to be performed or complied with by it at or prior to the Closing.
(c)
No Company Material Adverse Effect
. Since the date of this Agreement, there has
not been any fact, change, circumstance, event, occurrence, condition or development that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(d)
Closing Certificate
. The Company shall have delivered to Parent a certificate,
dated the Closing Date and signed by its Chief Executive Officer or another senior officer, certifying to the effect that the conditions set forth in
Section 6.2(a)
,
Section 6.2(b)
and
Section 6.2(c)
have been satisfied.
Section 6.3
Conditions to Obligations of the Company
. The obligations of the
Company to effect the Merger shall be subject to the fulfillment (or waiver by the Company, to the extent permissible under applicable Law) at or prior to the Closing of the following additional
conditions:
(a)
Representations and Warranties
. The representations and warranties of Parent
set forth in (i)
Article IV
(other than in
Section 4.2(a)
,
Section 4.2(b)
,
Section 4.3(a)
,
Section 4.3(b)
,
Section 4.10(b)
and
Section 4.15
) shall be true and correct at and as of the Closing Date as though made at and as of the Closing Date, other than for failures to be so true and
correct (without regard to "materiality," Parent Material Adverse Effect and similar qualifiers contained in such representations and warranties) that, individually or in the aggregate, have not had
or would not reasonably be expected to have a Parent Material Adverse Effect, (ii)
Section 4.2(a)
shall be true and correct at and as of the Closing Date as
though made at and as of the Closing Date, except for any
de minimis
inaccuracies, (iii)
Section 4.2(b)
,
Section 4.3(a)
,
Section 4.3(b)
and
Section 4.15
shall be true and correct in all material
respects at and as of the Closing Date as though made at and as of the Closing Date and (iv)
Section 4.10(b)
shall be true and correct at and as of the
Closing Date as though made at and as of the Closing Date;
provided
,
however
, that representations and warranties that are made as of a
particular date or period need be true and correct (in the manner set forth in clauses (i), (ii), (iii) and (iv), as applicable) only as of such date or period.
(b)
Performance of Obligations of Parent and Merger Sub
. Parent and Merger Sub
shall have performed or complied in all material respects with all covenants required by the Agreement to be performed or complied with by them at or prior to the Closing.
(c)
No Parent Material Adverse Effect
. Since the date of this Agreement, there has
not been any fact, change, circumstance, event, occurrence, condition or development that has had or
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would
reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(d)
Closing Certificate
. Parent shall have delivered to the Company a certificate,
dated the Closing Date and signed by its Chief Executive Officer or another senior officer, certifying to the effect that the conditions set forth in
Section 6.3(a)
,
Section 6.3(b)
and
Section 6.3(c)
have been satisfied.
ARTICLE VII
TERMINATION
Section 7.1
Termination or Abandonment
. Anything in this Agreement to the
contrary notwithstanding, this Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (except as otherwise provided below, whether before or after receipt
of the Company Shareholder Approval), as follows:
(a) by
the mutual written consent of the Company and Parent;
(b) by
either the Company or Parent, if the Effective Time shall not have occurred on or prior to February 14, 2019 (the "
End Date
");
provided
,
however
, that the right to terminate this Agreement pursuant to this
Section 7.1(b)
shall not be
available to any Party whose breach of any of its representations, warranties, covenants or agreements contained in this Agreement was the principal cause of the Effective Time not occurring prior to
the End Date, and
provided
,
further
, that if on the End Date all of the conditions to Closing, other than the condition set forth in
Section 6.1(c)
or
Section 6.1(d)
as it relates to an Antitrust Law, shall have been satisfied or waived (other than any such
conditions that by their nature are to be satisfied at or immediately prior to the Closing, which conditions shall be capable of being satisfied at such time), the End Date may be extended by either
Party to May 14, 2019 by written notice to the other Party;
(c) by
either the Company or Parent, if a Governmental Entity of competent jurisdiction shall have entered or issued a final and nonappealable Order that remains in effect,
or shall have adopted or enacted a Law that remains in effect, in either case, that permanently restrains, enjoins or makes illegal the consummation of the Merger;
provided
,
however
, that the right to terminate this Agreement under this
Section 7.1(c)
shall not be
available to a Party if such Order (or such Order becoming final and nonappealable) was due to the material breach by such Party of any covenant or other agreement of such Party set forth in this
Agreement;
(d) by
either the Company or Parent, if the Company Shareholder Approval shall not have been obtained upon a vote held at the Company Special Meeting as it may be adjourned
or postponed in accordance with this Agreement;
(e) by
the Company (
provided
that the Company is not then in material breach of any of its representations, warranties, covenants or agreements
contained in this Agreement) if (i) Parent or Merger Sub has materially breached or failed to perform any of its representations, warranties, covenants or agreements contained in this
Agreement, which breach would result in the conditions in
Section 6.1
or
Section 6.3
not being satisfied and (ii) which
breach, failure to perform or inaccuracy is either not curable or is not cured by the earlier of (A) the End Date and (B) the date that is thirty (30) Business Days following
written notice from the Company to Parent describing such breach or failure to perform in reasonable detail;
(f) by
Parent (
provided
that Parent is not then in material breach of any of its representations, warranties, covenants or agreements contained
in this Agreement), if the Company has materially breached or failed to perform any of its representations, warranties, covenants or agreements contained in this Agreement, which breach would result
in the conditions in
Section 6.1
or
Section 6.2
not being
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satisfied
and which breach or failure to perform is either not curable or is not cured by the earlier of (A) the End Date and (B) the date that is thirty (30) Business Days
following written notice from Parent to the Company describing such breach or failure to perform in reasonable detail; or
(g) by
Parent, prior to receipt of the Company Shareholder Approval, (i) at any time following a Company Adverse Recommendation Change or (ii) in the event of
a Willful Breach by the Company of any of the material covenants or agreements contained in
Section 5.4
or
Section 5.7
, which
breach is either not curable or is not cured by the earlier of (A) the End Date and (B) the date that is thirty (30) Business Days following written notice from Parent to the
Company describing such breach in reasonable detail.
The
party seeking to terminate this Agreement pursuant to this
Section 7.1
shall give written notice of such termination to the other parties in accordance with
Section 8.7
, specifying the provision of this Agreement pursuant to which such termination is effected.
Section 7.2
Effect of Termination
. In the event of termination of this
Agreement pursuant to
Section 7.1
, this Agreement shall become null and void and of no effect without Liability on the part of any Party hereto, and all rights and
obligations of any Party hereto shall cease, except (i) as provided in
Section 7.3
or (ii) Liability arising out of or resulting from fraud or any
Willful Breach of any provision of this Agreement occurring prior to termination (in which case the aggrieved Party shall be entitled to all rights and remedies available at law or in equity);
provided
that the Confidentiality Agreement and the provisions of this
Section 7.2
,
Section 7.3
and
Article VIII
shall survive any termination of this Agreement.
Section 7.3
Termination Fees
.
(a) If
(i) this Agreement is terminated pursuant to
Section 7.1(b)
,
Section 7.1(d)
or
Section 7.1(f)
(for a Willful Breach only), (ii) a Company Takeover Proposal shall have been publicly announced or publicly disclosed after the date of this
Agreement and prior to such termination shall not have been publicly withdrawn and (iii) at any time on or prior to the twelve (12)-month anniversary of such termination, the Company enters
into a definitive agreement with respect to, or consummates, the Company Takeover Proposal referred to in clause (ii) above (a "
Company Takeover Transaction
"), the
Company shall pay Parent the Termination Fee, by wire transfer (to an account designated by Parent) in immediately available funds, upon the earlier of entering into such definitive agreement with
respect to the Company Takeover Transaction or the consummation of the Company Takeover Transaction;
provided
that for the purposes of clause (iii) only, all
references in the definition of Company Takeover Proposal to "twenty-five percent (25%)" shall instead be references to "fifty percent (50%)."
(b) If
Parent terminates this Agreement pursuant to
Section 7.1(g)
, the Company shall pay Parent the Termination Fee, by wire transfer
(to an account designated by Parent) in immediately available funds, within three (3) Business Days after such termination.
(c) "
Termination
Fee
" shall be $38,765,000, in cash. Anything to the contrary in this Agreement notwithstanding, if the Termination Fee shall
become due and payable in accordance with this
Section 7.3
, from and after such termination and payment of the Termination Fee in full pursuant to and in accordance
with this
Section 7.3
, the Company and its Affiliates and Representatives (in the case of a payment of the Termination Fee by the Company) shall have no further
Liability of any kind for any reason in connection with this Agreement or the termination contemplated hereby other than as provided under this
Section 7.3
, except
in the case of fraud. Each of the Parties hereto acknowledges that the Termination Fee is not intended to be a penalty, but rather is liquidated damages in a reasonable amount that will compensate
Parent in the circumstances in which such Termination Fee is due and payable and do not involve fraud, for the efforts and resources expended and opportunities foregone while negotiating this
Agreement and in reliance on this Agreement and on the expectation of the consummation of the Merger, which amount would otherwise be impossible to calculate with
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precision.
In no event shall Parent be entitled to more than one payment of the Termination Fee in connection with a termination of this Agreement pursuant to which such Termination Fee is payable.
For the avoidance of doubt, while Parent and Merger Sub may pursue both a grant of specific performance in accordance with
Section 8.5
and the payment of the
Company Termination Fee under this
Section 7.3
, under no circumstances shall Parent and Merger Sub be permitted or entitled to receive the Termination Fee (if
entitled under this
Section 7.3
) if the Merger is consummated.
(d) The
Company acknowledges that the agreements contained in this
Section 7.3
are an integral part of the Merger, and that, without
these agreements, Parent and Merger Sub would not enter into this Agreement. Accordingly, if the Company fails to pay in a timely manner any amount due pursuant to this
Section 7.3
, then (i) the Company shall reimburse Parent for all costs and expenses (including disbursements and reasonable fees of counsel) incurred in the
collection of such overdue amount, including in connection with any related claims, actions or proceedings commenced and (ii) the Company shall pay to Parent interest on such amount from and
including the date payment of such amount was due to but excluding the date of actual payment at the prime rate set forth in
The Wall Street Journal
in
effect on the date such payment was required to be made plus two percent (2%).
ARTICLE VIII
MISCELLANEOUS
Section 8.1
No Survival
. None of the representations, warranties, covenants
and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Merger, except for covenants and agreements which contemplate performance after the
Effective Time or otherwise expressly by their terms survive the Effective Time.
Section 8.2
Expenses; Transfer Taxes
.
(a) Except
as set forth in
Section 7.3
, whether or not the Merger is consummated, all costs and expenses incurred in connection with the
Merger, this Agreement and the other transactions contemplated by this Agreement shall be paid by the Party incurring or required to incur such expenses;
provided
,
however
, that Parent and the Company shall each pay one-half of all filing fees required under the HSR Act and filing fees and printing and mailing costs for the Proxy
Statement/Prospectus.
(b) Except
as otherwise provided in
Section 2.2(d)
, all transfer, documentary, sales, use, stamp, registration and other such similar
non-income Taxes imposed with respect to the transfer of Company Common Stock pursuant to the Merger shall be borne by Parent or Merger Sub and expressly shall not be a liability of holders of Company
Common Stock.
Section 8.3
Counterparts; Effectiveness
. This Agreement may be executed in
two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more
counterparts have been signed by each of the Parties and delivered (by telecopy, electronic delivery or otherwise) to the other Parties. Signatures to this Agreement transmitted by facsimile
transmission, by electronic mail in "portable document format" ("
.pdf
") form, or by any other electronic means intended to preserve the original graphic and pictorial
appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.
Section 8.4
Governing Law
. This Agreement, and all claims or causes of
action (whether at Law, in contract or in tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by
and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware;
provided
that matters
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relating
to the fiduciary duties of the Company Board of Directors shall be subject to the laws of the State of Texas.
Section 8.5
Jurisdiction; Specific Enforcement
. The Parties' rights in this
Section 8.5
are an integral part of the transactions contemplated by this Agreement. The Parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed, or were threatened to be not performed, in accordance with their specific terms or were otherwise breached, and that money damages would not be an
adequate remedy, even if available. It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages, each of the Parties shall be entitled to an
injunction or injunctions to prevent breaches or threatened breaches
of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of
Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) (in addition to any and all other
rights and remedies at law or in equity, and all such rights and remedies shall be cumulative, except, in each case, as may be limited by
Section 7.3
), and each
Party hereby waives any objection to the availability of such injunctive relief to prevent breaches or threatened breaches of this Agreement. In the event any Party seeks any remedy referred to in
this
Section 8.5
, such Party shall not be required to prove damages or obtain, furnish, provide or post any bond or similar instrument in connection with or as a
condition to obtaining any remedy referred to in this
Section 8.5
and each Party waives any objection to the imposition of such relief or any right it may have to
require the obtaining, furnishing, providing or posting of any such bond or similar instrument. In addition, each of the Parties hereto irrevocably agrees that any legal action or proceeding with
respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising
hereunder brought by the other Party hereto or its successors or assigns, shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within
the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the Parties
hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid
courts and agrees that it will not bring any action relating to this Agreement or the Merger in any court other than the aforesaid courts. Each of the Parties hereto hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (i) any claim that it is not personally subject to
the jurisdiction of the above named courts, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts
(whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by
applicable Law, any claim that (A) the suit, action or proceeding in such court is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper or
(C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. To the fullest extent permitted by applicable Law, each of the Parties hereto hereby consents to the
service of process in accordance with
Section 8.7
;
provided
,
however
, that nothing herein shall affect the
right of any Party to serve legal process in any other manner permitted by Law.
Section 8.6
WAIVER OF JURY TRIAL
. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE MERGER (INCLUDING ANY DISPUTE ARISING OUT OF OR RELATING TO THE FINANCING).
Section 8.7
Notices
. All notices and other communications hereunder shall be
in writing in one of the following formats and shall be deemed given (a) upon actual delivery if personally delivered to
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the
Party to be notified; (b) when sent if sent by email or facsimile to the Party to be notified;
provided
,
however
, that notice given
by email or facsimile shall not be effective unless (i) such notice specifically states that it is being delivered pursuant to this
Section 8.7
and
(ii) either (A) a duplicate copy of such email or facsimile notice is promptly given by one of the other methods described in this
Section 8.7
or
(B) the receiving Party delivers a written confirmation of receipt for such notice either by email (excluding "out of office" or similar automated replies) or facsimile or any other method
described in this
Section 8.7
; or (c) when delivered if sent by a courier (with confirmation of delivery); in each case to the Party to be notified at the
following address:
|
|
|
If to Parent or Merger Sub, to:
|
Cabot Microelectronics Corporation
|
870 North Commons Drive
|
Aurora, Illinois 60504
|
Facsimile:
|
|
(630) 499-2655
|
Attention:
|
|
H. Carol Bernstein
|
|
|
Vice President, Secretary and General Counsel
|
Email:
|
|
carol_bernstein@cabotcmp.com
|
with copies (which shall not constitute notice) to:
|
Wachtell, Lipton, Rosen & Katz
|
51 West 52nd Street
|
New York, New York 10019
|
Facsimile:
|
|
(212) 403-2000
|
Attention:
|
|
Edward D. Herlihy
|
|
|
Brandon C. Price
|
Email:
|
|
EDHerlihy@wlrk.com
|
|
|
BCPrice@wlrk.com
|
If to the Company, to:
|
KMG Chemicals, Inc.
|
300 Throckmorton Street, Suite 1900
|
Fort Worth, Texas 76102
|
Facsimile:
|
|
(817) 720-1043
|
Attention:
|
|
Roger C. Jackson
|
|
|
Vice President, General Counsel and Secretary
|
Email:
|
|
rjackson@kmgchemicals.com
|
with copies (which shall not constitute notice) to:
|
Haynes and Boone, LLP
|
1221 McKinney Street, Suite 2100
|
Houston, Texas 77010
|
Facsimile:
|
|
(713) 236-5557
|
Attention:
|
|
Bill Nelson
|
|
|
Kristina Trauger
|
Email:
|
|
bill.nelson@haynesboone.com
|
|
|
kristina.trauger@haynesboone.com
|
Shearman & Sterling LLP
|
599 Lexington Avenue
|
New York, New York 10022
|
Facsimile:
|
|
(212) 848-7179
|
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|
|
|
Attention:
|
|
George A. Casey
|
|
|
Heiko Schiwek
|
Email:
|
|
george.casey@shearman.com
|
|
|
hschiwek@shearman.com
|
or
to such other address as any Party shall specify by written notice so given. Any Party to this Agreement may notify any other Party of any changes to the address or any of the other details
specified in this paragraph;
provided
,
however
, that such notification shall only be effective on the date specified in such notice or five
(5) Business Days after the notice is given, whichever is later. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall
be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.
Section 8.8
Assignment; Binding Effect
. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned or delegated by any of the Parties hereto without the prior written consent of the other Parties;
provided
,
however
, that each of Merger Sub and Parent may assign any of their rights hereunder to a wholly owned direct or indirect Subsidiary
of Parent without the prior written consent of the Company, but no such assignment shall relieve Parent or Merger Sub of any of its obligations hereunder. Subject to the first sentence of this
Section 8.8
, this Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and assigns. Any purported
assignment not permitted under this
Section 8.8
shall be null and void.
Section 8.9
Severability
. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 8.10
Entire Agreement
. This Agreement together with the exhibits
hereto, schedules hereto and the Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the Parties, or
any of them, with respect to the subject matter hereof and thereof, and this Agreement is not intended to grant standing to any person other than the Parties hereto.
Section 8.11
Amendments; Waivers
. At any time prior to the Effective Time,
any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of a waiver by the Party against whom enforcement is sought,
and in the case of an amendment, by the Company, Parent, and Merger Sub, provided that after receipt of the Company Shareholder Approval, no amendment to this Agreement shall be made that by Law
requires further approval by such stockholders without obtaining such further approval. At any time and from time to time prior to the Effective Time, either the Company, on the one hand, or Parent
and Merger Sub, on the other hand, may, to the extent permissible by applicable Law and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations
or other acts of Parent or Merger Sub, in the case of an extension by the Company, or of the Company, in the case of an extension by Parent and Merger Sub, as applicable, (b) waive any
inaccuracies in the representations and warranties made to such Party contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or
conditions for the benefit of any such Party contained herein. The foregoing notwithstanding, no failure or delay by any Party hereto in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.
Section 8.12
Headings
. Headings of the Articles and Sections of this
Agreement are for convenience of the Parties only and shall be given no substantive or interpretive effect whatsoever. The table of contents to this Agreement is for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
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Section 8.13
No Third-Party Beneficiaries
. Each of
Parent, Merger Sub and the Company agrees that (a) their respective representations, warranties, covenants and agreements set forth herein are solely for the benefit of the other Parties
hereto, in accordance with and subject to the terms of this Agreement, and (b) except for the provisions of
Section 5.10
, this Agreement is not intended to,
and does not, confer upon any person other than the Parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.
Notwithstanding the foregoing, each Company Indemnified Party shall be an express third-party beneficiary of and shall be entitled to rely upon
Section 5.10
and
this
Section 8.13
.
Section 8.14
Interpretation
. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, unless the context otherwise requires. The word "since"
when used in this Agreement in reference to a date shall be deemed to be inclusive of such date. All terms defined in this Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant thereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter genders of such term. References in this Agreement to specific laws or to specific provisions of laws shall include all rules and regulations
promulgated thereunder, and any statute defined or referred to herein or in any agreement or instrument referred to herein shall mean such statute as from time to time amended, modified or
supplemented, including by succession of comparable successor statutes. References herein to a person are also to such person's successors and permitted assigns. All references in this Agreement to
"$" or other monetary amounts refer to U.S. dollars. Each of the Parties has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation
arises, this Agreement must be construed as if it is drafted by all the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of authorship of any of
the provisions of this Agreement.
Section 8.15
Financing Parties
. Notwithstanding anything in this Agreement
to the contrary, the Company on behalf of itself, its Subsidiaries and each of its controlled Affiliates hereby: (a) agrees that any Proceeding, whether in law or in equity, whether in contract
or in tort or otherwise, involving the Financing Parties, arising out of or relating to, this Agreement, the Financing or any of the agreements entered into in connection with the Financing or any of
the transactions contemplated hereby or thereby or the performance of any services thereunder shall be subject to the exclusive jurisdiction of any federal or state court in the Borough of Manhattan,
New York, New York, so long as such forum is and remains available, and any appellate court thereof and each party hereto irrevocably submits itself and its property with respect to any such
Proceeding to the exclusive jurisdiction of such court, (b) agrees that any such Proceeding shall be governed by the laws of the State of New York (without giving effect to any conflicts of law
principles that would result in the application of the laws of another state), except as otherwise provided in any agreement relating to the Financing, (c) agrees not to bring or support or
permit any of its Affiliates to bring or support any Proceeding of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against any Financing Party in any
way arising out of or relating to, this Agreement, the Financing, the Commitment Letter or any of the transactions contemplated hereby or thereby or the performance of any services thereunder in any
forum other than any federal or state court in the Borough of Manhattan, New York, New York, (d) agrees that service of process upon the Company, its Subsidiaries or its controlled Affiliates
in any such Proceeding or proceeding shall be effective if notice is given in accordance with
Section 8.7
, (e) irrevocably waives, to the fullest extent that
it may effectively do so, the defense of an inconvenient forum to the maintenance of such Proceeding in any such court, (f) knowingly, intentionally and
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voluntarily
waives to the fullest extent permitted by applicable law trial by jury in any Proceeding brought against the Financing Parties in any way arising out of or relating to, this Agreement, the
Financing, the Commitment Letter or any of the transactions contemplated hereby or thereby or the performance of any services thereunder, (g) agrees that none of the Financing Parties will have
any liability to the Company or any of its Subsidiaries or any of their respective Affiliates or Representatives (in each case, other than Parent, Merger Sub or their respective Subsidiaries) relating
to or arising out of this Agreement, the Commitment Letter, the Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder, whether in law or in
equity, whether in contract or in tort or otherwise, (h) hereby waives any and all claims and causes of action against the Financing Parties relating to or arising out of this Agreement, the
Commitment Letter, the Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder, whether in law or in equity, whether in contract or in tort or
otherwise, (i) agrees not to commence (and if commenced agree to dismiss or otherwise terminate, and not to assist) any Proceeding against any Financing Party under this Agreement, the
Financing, the Commitment Letter or the transactions contemplated hereby or thereby, (j) agrees that the Financing Parties are express third party beneficiaries of, and may enforce, any of the
provisions of this
Section 8.15
, and (k) agrees that the provisions of this Section 8.15 and the definitions of "Financing Entities" and "Financing
Parties" (and any other provisions of this Agreement to the extent a modification thereof would affect the substance of any of the foregoing) shall not be amended in any manner adverse to the
Financing Parties without the prior written consent of the Financing Entities.
Section 8.16
Definitions
.
(a)
General Definitions
. References in this Agreement to
"
Subsidiaries
" of any Party means any corporation, partnership, association, trust or other form of legal entity of which (i) fifty percent (50%) or more of the
voting power of the outstanding voting securities are on the date hereof directly or indirectly owned by such Party or (ii) such Party or any Subsidiary of such Party is a general partner on
the date hereof. References in this Agreement (except as specifically otherwise defined) to "
Affiliates
" means, as to any person, any other person which, directly or
indirectly, controls, or is controlled by, or is under common control with, such person. As used in this definition, "
control
" (including, with its correlative meanings,
"
controlled by
" and "
under common control with
") means the possession, directly or indirectly, of the power to direct or cause the direction
of management or policies of a person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. References in this Agreement (except as
specifically otherwise defined) to "
person
" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity,
group (as such term is used in Section 13 of the Exchange Act) or organization, including a Governmental Entity, and any permitted successors and assigns of such person. As used in this
Agreement, "
knowledge
" means (i) with respect to Parent and its Subsidiaries, the knowledge, after reasonable inquiry, of the individuals listed in
Section 8.16(a) of the Parent Disclosure Schedule and (ii) with respect to the Company and its Subsidiaries, the knowledge, after reasonable inquiry, of the individuals listed on
Section 8.16(a) of the Company Disclosure Schedule.
(b)
Certain Specified Definitions
. As used in this Agreement:
(i) "
Acceptable
Confidentiality Agreement
" means any customary confidentiality agreement that contains provisions that are no less favorable in
any material respect to the Company than those that are contained in the Confidentiality Agreement (including standstill terms;
provided
, that such "standstill terms" need
not restrict a Person from making confidential proposals to the Company (including the Company Board of Directors in respect of a Company Takeover Proposal).
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(ii) "
Antitrust
Laws
" means any antitrust, competition or trade regulation Laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition, including, but not limited to, the HSR Act.
(iii) "
Business
Day
" means any day other than a Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized
or required by Law to close.
(iv) "
Closing
Financial Information
" means (i) the information relating to the Company and its Subsidiaries described in Section 5
of Exhibit C to the Commitment Letter as in effect as of the date hereof and (ii) all financial and related information relating to the Company and its Subsidiaries that is necessary to
permit Parent and Merger Sub to prepare the information described in Section 6 of Exhibit C to the Commitment Letter as in effect as of the date hereof.
(v) "
Code
"
means the U.S. Internal Revenue Code of 1986, as amended.
(vi) "
Company
Benefit Plan
" means each employee benefit plan, program, policy, agreement or arrangement, including pension, retirement,
supplemental retirement, profit-sharing, deferred compensation, stock option, change in control, retention, employment, equity or equity-based compensation, stock purchase, employee stock ownership,
severance pay, vacation, bonus or other incentive plans, medical, retiree medical, vision, dental or other health plans, life insurance plans, and each other compensatory or employee benefit plan or
fringe benefit plan, including any "employee benefit plan" as that term is defined in Section 3(3) of ERISA, in each case, whether oral or written, funded or unfunded, or insured or
self-insured, maintained or sponsored by the Company or any Subsidiary or any of their ERISA Affiliates, or to which the Company or any Subsidiary or any of their
ERISA Affiliates contributes or is obligated to contribute or might otherwise have or reasonably be expected to have any Liability.
(vii) "
Company
Credit Agreement
" means the Credit Agreement, dated as of June 15, 2017, by and among the Company, as the borrower, the
lenders party thereto, and KeyBank National Association, as administrative agent, as amended by that certain First Amendment to Credit Agreement, dated as of December 19, 2017, by and between
the Company, KeyBank National Association, as administrative agent, and the other parties thereto.
(viii) "
Company
Intervening Event
" means any fact, change, circumstance, event, occurrence or development or combination thereof that
(A) was not known or reasonably foreseeable to the Company Board of Directors as of the date of this Agreement and (B) does not relate to any Company Takeover Proposal;
provided
,
however
, that (1) any change in the price or trading volume of the Company Common Stock or Parent Common Stock shall not be
taken into account for purposes of determining whether a Company Intervening Event has occurred (it being understood, however, that any underlying cause thereof may be taken into account for purposes
of determining whether a Company Intervening Event has occurred); and (2) in no event shall any fact, circumstance, occurrence, event, development, change or condition or combination thereof
that has had or would reasonably be expected to have an adverse effect on the business or financial condition of Parent or any of its Subsidiaries constitute a Company Intervening Event unless such
fact, circumstance, occurrence, event, development, change or condition or combination thereof has had or would reasonably be expected to have a Parent Material Adverse Effect.
(ix) "
Company
Material Adverse Effect
" means any fact, change, circumstance, event, occurrence, condition, development or combination of the
foregoing (x) which is materially adverse to the business, results of operations or financial condition of the Company and its
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Subsidiaries
taken as a whole;
provided
,
however
, that no fact, change, circumstance, event, occurrence, condition, development or combination
of the foregoing resulting from or arising out of any of the following, individually or in the aggregate, shall constitute a Company Material Adverse Effect or be taken into account in determining
whether a Company Material Adverse Effect has occurred: (A) changes after the date of this Agreement in GAAP or the official interpretation or enforcement thereof; (B) changes after the
date of this Agreement in Laws or the official interpretation or enforcement thereof; (C) changes after the date of this Agreement in global, national or regional political conditions,
outbreaks or escalations of hostilities, declared or undeclared acts of war, or acts of terrorism, epidemics or pandemics (including the general worsening of any of the foregoing), national
or international emergencies in any country, or changes in economic or market conditions (including securities markets, credit markets, currency markets and other financial markets) in any country;
(D) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters or weather conditions; (E) the announcement or pendency of this Agreement,
including the identity of Parent or any of its Affiliates or any public or written communication by Parent or any of its Affiliates (including the impact thereof on the relationship of the Company or
any of Company's Subsidiaries, contractual or otherwise, with its customers, suppliers, distributors, vendors, licensors, licensees, lenders, employees or partners); (F) changes in the trading
price or trading volume of the Company Common Stock or the failure of the Company to meet any internal or public projections, estimates or expectations of the Company's revenue, earnings or other
financial performance or results of operations for any period, or any failure by the Company to meet any internal budgets, plans or forecasts of its revenues, earnings or other financial performance
or results of operations, or changes in the credit rating or the ratings outlook for the Company or any of its Subsidiaries (but not, in each case, the underlying cause of such changes or failures,
except to the extent such underlying cause would otherwise be excepted from this definition); (G) any breach, violation or non-performance of any provision of this Agreement by Parent or any of
its Affiliates; (H) any actions taken or omitted to be taken by the Company or any of its Subsidiaries at the written request of Parent or any of its Representatives; and (I) any claims
or actions arising from allegations of breach of fiduciary duty or otherwise relating to this Agreement or the Merger (including any shareholder litigation); except, with respect to
clauses (A), (B), (C) or (D), to the extent that the effects of such fact, change, circumstance, event, occurrence, condition, development or combination of the foregoing are
disproportionately adverse to the business, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole, as compared to other companies in the industries in
which the Company and its Subsidiaries operate, in which case only the incremental disproportionate impact may be taken into account in determining whether there has been a Company Material Adverse
Effect, or (y) which prevents the ability of the Company to consummate the Merger prior to the End Date.
(x) "
Company
Owned Intellectual Property
" means all Intellectual Property that, in whole or in part, is owned by the Company or any of its
Subsidiaries and that is material to the Company and its Subsidiaries, taken as a whole.
(xi) "
Company
Performance Stock Award
" means each Company RSU Award that is subject to performance-based vesting conditions.
(xii) "
Company
Registrations
" means all Intellectual Property Registrations that are included in the Company Owned Intellectual Property.
(xiii) "
Company
RSU Award
" means each compensatory stock unit with respect to a share of Company Common Stock granted under a Company Stock Plan
that is subject to vesting,
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repurchase,
lapse or other similar restrictions and is not a Company Performance Stock Award.
(xiv) "
Company
Stock Plans
" means the 2016 Long Term Incentive Plan, as amended and 2009 Long-Term Incentive Plan, and any applicable award
agreements governing awards granted under any of the foregoing, collectively.
(xv) "
Company
Superior Proposal
" means a bona fide written Company Takeover Proposal (
provided
that, for purposes
of this definition, references in the definition of Company Takeover Proposal to "twenty-five percent (25%)" shall be deemed references to "fifty percent (50%)") that the Company Board of Directors
determines in good faith, after consultation with the Company's independent financial advisor and outside legal counsel, taking into account the timing and likelihood of consummation relative to the
transactions contemplated by this Agreement and after giving effect to any changes to this Agreement committed to in writing by Parent in response to such Company Takeover Proposal and all other
financial, legal, regulatory, tax and other aspects of such proposal, including all conditions contained therein and the person making such Company Takeover Proposal, as the Company Board of Directors
deems relevant, is reasonably capable of being completed on the terms proposed and is more favorable to the shareholders of the Company from a financial point of view than the Merger.
(xvi) "
Company
Takeover Proposal
" means any proposal or offer from any person (other than Parent and its Subsidiaries) relating to, whether in a
single transaction or a series of related transactions, (A) a merger, consolidation, business combination, recapitalization, binding share exchange, liquidation, dissolution or other similar
transaction involving the Company or any of its Subsidiaries, (B) any acquisition of twenty-five percent (25%) or more of the outstanding Company Common Stock or securities of the Company
representing more than twenty-five percent (25%) of the voting power of the Company, (C) any acquisition (including the acquisition of stock in any Subsidiary of the Company) of assets or
businesses of the Company or its Subsidiaries, including pursuant to a joint venture, representing twenty-five percent (25%) or more of the consolidated assets, revenues or net income of the Company,
(D) any tender offer or exchange offer that if consummated would result in any person beneficially owning twenty-five percent (25%) or more of the outstanding Company Common Stock or securities
of the Company representing more than twenty-five percent (25%) of the voting power of the Company, or (E) any combination of the foregoing types of transactions if the sum of the percentage of
consolidated assets, consolidated revenues or earnings and Company Common Stock (or voting power of securities of the Company other than the Company Common Stock) involved is twenty-five percent (25%)
or more.
(xvii) "
Contract
"
means any contract, note, bond, mortgage, indenture, deed of trust, license, lease, agreement, arrangement, commitment,
purchase order or other instrument or obligation that is legally binding.
(xviii) "
Copyrights
"
means copyrights, designs, data and database rights and registrations and applications for registration thereof, including
moral rights of authors, and all copyrights in other works of authorship, including software.
(xix) "
Environmental
Law
" means any Law relating to the protection, preservation or restoration of the environment (including air, surface
water, groundwater, drinking water supply, surface land, subsurface land, or any other natural resource), or any exposure to or Release of, or the management, use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production or disposal of any Hazardous Materials, in each case as in effect as of the date of this Agreement.
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(xx) "
Equity
Award Exchange Ratio
" means the sum of (A) the Exchange Ratio and (B) the quotient (rounded to four decimal places)
obtained by dividing the Cash Consideration by the Parent Trading Price.
(xxi) "
ERISA
"
means the Employee Retirement Income Security Act of 1974, as amended.
(xxii) "
ERISA
Affiliate
" means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the
relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade
or business, or that is, or was at the relevant time, a member of the same "controlled group" as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
(xxiii) "
Exchange
Ratio
" means 0.2000.
(xxiv) "
Financing
"
means any equity, debt or other financing arranged or obtained (or attempted to be arranged or obtained) by Parent or Merger
Sub for the purpose of financing the payment by Parent and Merger Sub of the Merger Amounts.
(xxv) "
Financing
Entities
" means each equity, debt and other financing provider and each other Person (including each agent and arranger) that
commits to provide or has otherwise entered into agreements with Parent or any of its Subsidiaries to provide Financing to Parent or Merger Sub.
(xxvi) "
Financing
Parties
" means the Financing Entities and their respective Affiliates and their and their respective Affiliates' officers,
directors, employees, agents and representatives and their respective successors and assigns;
provided
that neither Parent nor any Affiliate of Parent shall be a Financing
Party.
(xxvii) "
Government
Contract
" means any prime contract, subcontract, basic ordering agreement, letter contract, purchase order, delivery order,
change order, arrangement, tender or other commitment of any kind between the Company or any Subsidiary of the Company, on the one hand, and any Governmental Entity or prime contractor or
subcontractor to a Governmental Entity, on the other hand.
(xxviii) "
Governmental
Entity
" means any U.S. federal, state, local or foreign government, any transnational governmental organization or any
court of competent jurisdiction, arbitral, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, or any national securities exchange or national
quotation system or any SRO.
(xxix) "
Hazardous
Materials
" means all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law, including any petroleum or natural gas
hydrocarbons or any fraction thereof, asbestos or asbestos-containing material in friable form, polychlorinated biphenyls, lead paint, and any substance defined or regulated under any Environmental
Law as toxic, radioactive, or infectious, or as a hazardous substance, material or agent.
(xxx) "
Indebtedness
"
means, with respect to any person, without duplication, as of the date of determination, (A) all obligations of such
person for borrowed money, including accrued and unpaid interest, and any prepayment fees or penalties, (B) all obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such person issued or assumed as the deferred purchase price of property (including any potential future earn-out, purchase price adjustment, release of
"holdback" or similar payment, but excluding obligations of such person incurred in the ordinary course of business consistent
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with
past practice), (D) all lease obligations of such person that are required to be capitalized in accordance with GAAP on the books and records of such person, (E) all Indebtedness of
others secured by a Lien on property or assets owned or acquired by such person, whether or not the Indebtedness secured thereby have been assumed, (F) all obligations of such person under
interest rate, currency or commodity derivatives or hedging transactions or similar arrangement or any derivative transaction of any kind (valued at the termination value thereof), (G) all
letters of credit or performance bonds issued for the account of such person, to the extent drawn upon, and (H) all guarantees and keepwell arrangements of such person of any Indebtedness of
any other person other than a wholly owned subsidiary of such person.
(xxxi) "
Intellectual
Property
" means the following, subsisting anywhere in the world:
(A) Patent
Rights;
(B) registered
trademarks and service marks, corporate names and doing business designations and all registrations and applications for registration of the foregoing, common
law trademarks and service marks and trade dress ("
Trademarks
"), and all goodwill in the foregoing;
(C) Copyrights;
(D) rights
in trade secrets and confidential business information, including rights in know-how, manufacturing and product processes and techniques, research and development
information, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, whether patentable or nonpatentable,
whether copyrightable or noncopyrightable and whether or not reduced to practice;
(E) Internet
domain names; and
(F) any
other proprietary rights relating to any of the foregoing (including remedies against infringement thereof and rights of protection of interest therein under the
laws of all jurisdictions).
(xxxii) "
Intellectual
Property Registrations
" means issued and applied-for Patent Rights, registrations and applications for Trademarks, and
registrations and applications for Copyrights.
(xxxiii) "
Liability
"
means any and all debts, liabilities and obligations, whether fixed, contingent or absolute, matured or unmatured, accrued
or not accrued, determined or determinable, secured or unsecured, disputed or undisputed, subordinated or unsubordinated, or otherwise.
(xxxiv) "
Marketing
Period
" means the first period of eighteen (18) consecutive Business Days after the date of this Agreement throughout
which (i) Parent shall have received from the Company all of the Required Financial Information and during which period such information shall remain accurate and complete and (ii) the
conditions set forth in
Section 6.1
and
Section 6.2
(other than
Section 6.1(a)
and
Section 6.1(e)
and those conditions that by their terms are to be satisfied at Closing) have been satisfied and nothing has occurred and no condition exists that
would cause any of the conditions set forth in
Section 6.1
and
Section 6.2
to fail to be satisfied, assuming that the Closing
Date were to be scheduled for any time during such eighteen (18) Business Day period;
provided
that (i) November 23, 2018 shall not constitute a
Business Day for the purposes of the Marketing Period, (ii) if the Marketing Period has not ended by August 17, 2018 then the Marketing Period shall not begin before September 4,
2018 and (iii) if the Marketing Period has not ended on or prior to December 21, 2018, then the Marketing Period shall not begin before January 2, 2019;
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provided
,
further
, that the Marketing Period will not be deemed to have commenced if prior to the completion of the Marketing Period,
(A) the Company's auditors shall have withdrawn any of their audit opinions contained in the Required Financial Information in which case the Marketing Period shall not be deemed to commence
unless and until a new unqualified audit opinion is issued with respect thereto by the Company's auditors, or (B) the Company issues a public statement indicating its intent to restate any
historical financial statements of the Company or that any such restatement is under consideration or may be a possibility, in which case the Marketing Period shall not be deemed to commence unless
and until such restatement has been completed and the relevant financial statements included in the Required Financial Information have been amended and delivered to Parent or the Company has
announced that it has concluded that no restatement shall be required in accordance with GAAP.
(xxxv) "
Nasdaq
"
means the Nasdaq Global Select Market.
(xxxvi) "
OFAC
"
means the U.S. Department of Treasury, Office of Foreign Assets Control.
(xxxvii) "
Order
"
means any charge, order, writ, injunction, judgment, decree, ruling, determination, directive, award or settlement of a
Governmental Entity, whether civil, criminal or administrative and whether formal or informal.
(xxxviii) "
Parent
Benefit Plan
" means each employee benefit plan, program, policy, agreement or arrangement, including pension, retirement,
supplemental retirement, profit-sharing, deferred compensation, stock option, change in control, retention, employment, equity or equity-based compensation, stock purchase, employee stock ownership,
severance pay, vacation, bonus or other incentive plans, medical, retiree medical, vision, dental or other health plans, life insurance plans, and each other compensatory or employee benefit plan or
fringe benefit plan, including any "employee benefit plan" as that term is defined in Section 3(3) of ERISA, in each case, whether oral or written, funded or unfunded, or insured or
self-insured, maintained or sponsored by Parent or any Subsidiary or any of their ERISA Affiliates, or to which Parent or any Subsidiary or any of their ERISA Affiliates contributes or is obligated to
contribute or might otherwise have or reasonably be expected to have any Liability.
(xxxix) "
Parent
Material Adverse Effect
" means any fact, change, circumstance, event, occurrence, condition, development or combination of the
foregoing (x) which is materially adverse to the business, results of operations or financial condition of Parent and its Subsidiaries taken as a whole;
provided
,
however
, that no fact, change, circumstance, event, occurrence, condition, development or combination of the foregoing resulting from or arising out of any of the
following, individually or in the aggregate, shall constitute a Parent Material Adverse Effect or be taken into account in determining whether a Parent Material Adverse Effect has occurred:
(A) changes after the date of this Agreement in GAAP or the official interpretation or enforcement thereof; (B) changes after the date of this Agreement in Laws or the official
interpretation or enforcement thereof; (C) changes after the date of this Agreement in global, national or regional political conditions, outbreaks or escalations of hostilities, declared or
undeclared acts of war, or acts of terrorism, epidemics or pandemics (including the general worsening of any of the foregoing), national or international emergencies in any country, or changes in
economic or market conditions (including securities markets, credit markets, currency markets and other financial markets) in any country; (D) earthquakes, hurricanes, tsunamis, tornadoes,
floods, mudslides, wild fires or other natural disasters or weather conditions; (E) the announcement or pendency of this Agreement, including the identity of the Company or any of its
Affiliates or any public or written communication by Company or any of its Affiliates (including the impact thereof on the
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relationship
of Parent or any of Parent's Subsidiaries, contractual or otherwise, with its customers, suppliers, distributors, vendors, licensors, licensees, lenders, employees or partners);
(F) changes in the trading price or trading volume of the Parent Common Stock or the failure of Parent to meet any internal or public projections, estimates or expectations of Parent's revenue,
earnings or other financial performance or results of operations for any period, or any failure by Parent to meet any internal budgets, plans or forecasts of its revenues, earnings or other financial
performance or results of operations, or changes in the credit rating or the ratings outlook for Parent or any of its Subsidiaries (but not, in each case, the underlying cause of such changes or
failures, except to the extent such underlying cause would otherwise be excepted from this definition); (G) any breach, violation or non-performance of any provision of this Agreement by the
Company or any of its Affiliates; (H) any actions taken or omitted to be taken by Parent or any of its Subsidiaries at the written request of the Company or any of its Representatives or as
expressly permitted by this Agreement; and (I) any claims or actions arising from allegations of breach of fiduciary duty or otherwise relating to this Agreement or the Merger (including any
stockholder litigation); except, with respect to clauses (A), (B), (C) or (D), to the extent that the effects of such fact, change, circumstance, event, occurrence, condition,
development or combination of the foregoing are disproportionately adverse to the business, results of operations or financial condition of Parent and its Subsidiaries, taken as a whole, as compared
to other companies in the industries in which Parent and its Subsidiaries operate, in which case only the incremental disproportionate impact may be taken into account in determining whether there has
been a Parent Material Adverse Effect, or (y) which prevents the ability of Parent to consummate the Merger prior to the End Date.
(xl) "
Parent
Owned Intellectual Property
" means all Intellectual Property that, in whole or in part, is owned by Parent or any of its
Subsidiaries and that is material to Parent and its Subsidiaries, taken as a whole.
(xli)
"
Parent Registrations
" means all Intellectual Property Registrations that are included in the Parent Owned Intellectual Property.
(xlii)
"
Parent Stock Plans
" means Parent's 2012 Omnibus Incentive Plan and the 2000 Equity Incentive Plan, as amended and restated, and any applicable award
agreements governing awards granted under any of the foregoing, collectively.
(xliii)
"
Parent Trading Price
" means the volume weighted average price per share (calculated to the nearest one-hundredth of one cent) of Parent Common Stock
on the Nasdaq, for the consecutive period of five (5) trading days beginning on the seventh (7th) trading day immediately preceding the
Effective Time and concluding at the close of trading on the third (3rd) trading day immediately preceding the Effective Time, as calculated by Bloomberg Financial LP under the function "VWAP."
(xliv)
"
Patent Rights
" means all patents, patent applications (including provisional patent applications), utility models, design registrations and
certificates of invention and other governmental grants for the protection of inventions or industrial designs (including all related continuations, continuations-in-part, divisionals, reissues and
reexaminations).
(xlv)
"
Permitted Lien
" means (A) any Lien for Taxes not yet due or delinquent or which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been established in the applicable financial statements in accordance with GAAP, (B) vendors', mechanics', materialmen's, carriers', workers', landlords',
repairmen's, warehousemen's, construction and other similar Liens arising or incurred in the ordinary and usual course of business and consistent with past practice or with respect to Liabilities that
are not yet due and payable or, if due, are not delinquent or are being contested in good faith by
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appropriate
proceedings and for which adequate reserves (based on good faith estimates of management) have been set aside for the payment thereof, (C) Liens imposed or promulgated by applicable
Law or any Governmental Entity with respect to real property, including zoning, building or similar restrictions, which do not materially affect the value or use of the properties or the assets
subject thereto or affected thereby or otherwise materially impair business operations at such properties, (D) pledges or deposits in connection with workers' compensation, unemployment
insurance, and other social security legislation, or (E) Liens relating to intercompany borrowings among a person and its wholly owned subsidiaries.
(xlvi)
"
Proceeding
" means legal, administrative, arbitral or other proceedings, suits, actions, investigations, examinations, claims, audits, hearings,
charges, complaints, indictments, litigations or examinations.
(xlvii)
"
Prohibited Person
" means (a) an entity that has been determined by a competent authority to be the subject of a prohibition on such conduct
of any Law, regulation, rule or executive order administered by OFAC; (b) the government, including any political subdivision, agency or instrumentality thereof, of any country against which
the United States maintains comprehensive economic sanctions or embargoes; (c) any individual or entity that acts on behalf of or is owned or
controlled by a government of a country against which the United States maintains comprehensive economic sanctions or embargoes; (d) any individual or entity that has been identified on the
OFAC Specially Designated Nationals and Blocked Persons List (Appendix A to 31 C.F.R. Ch. V), as amended from time to time, or fifty percent (50%) or more of which is owned, directly or
indirectly, by an such individual or entity; or (e) any individual or entity that has been designated on any similar list or order published by a Governmental Entity in the United States.
(xlviii)
"
Proxy Statement/Prospectus
" means the prospectus of Parent related to the registration of the shares of Parent Common Stock to be issued in the
Merger, which shall include the proxy statement of the Company related to the Company Special Meeting.
(xlix)
"
Release
" means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration of Hazardous
Materials into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata).
(l) "
Representatives
"
means, when used with respect to Parent, Merger Sub or the Company, the directors, officers, employees, consultants,
financial advisors, accountants, legal counsel, investment bankers, lenders and other agents, advisors and representatives.
(li)
"
Required Financial Information"
means, with respect to any Marketing Period, (i) the information relating to the Company and its Subsidiaries
described in Section 5 of Exhibit C to the Commitment Letter as in effect as of the date hereof (with references therein to the "Closing Date" deemed for purposes of this definition of
"Required Financial Information" to refer to the fourth Business Day of such Marketing Period) and (ii) all financial and related information relating to the Company and its Subsidiaries that
is necessary to permit Parent and Merger Sub to prepare the information described in Section 6 of Exhibit C to the Commitment Letter as in effect as of the date hereof (with references
therein to the "Closing Date" deemed for purposes of this definition of "Required Financial Information" to refer to the fourth Business Day of such Marketing Period). If the Company in good faith
reasonably believes that it has provided the Required Financial Information in connection with the commencement of the Marketing Period, it may deliver to Parent a written notice to that effect
(stating when it believes it completed such delivery), in which case the Company shall be deemed to have delivered the Required Financial Information unless Parent in good faith reasonably believes
the Company has not completed the delivery of the Required Financial
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Information
and, within six Business Days after the delivery of such notice by the Company, delivers a written notice to the Company to that effect (stating with reasonable specificity which Required
Financial Information the Company has not delivered).
(lii)
"
SEC
" means the Securities and Exchange Commission.
(liii)
"
SRO
" means (i) any "self-regulatory organization" as defined in Section 3(a)(26) of the Exchange Act and (ii) any other United
States or foreign securities exchange, futures exchange, commodities exchange or contract market.
(liv)
"
Tax
" means any federal, state, local or foreign tax, impost, levy, duty, fee or other assessment of any nature whatsoever (including any net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer, real estate transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security,
unemployment, excise, escheat, severance, stamp, occupation, real or personal property and estimated tax, customs duty, or other tax), together with any interest, penalty, addition to tax or
additional amount imposed by any Governmental Entity with respect thereto.
(lv)
"
Tax Return
" means any return, report, information return, claim for refund, election, estimated tax filing or declaration or similar filing (including
any attached schedules, supplements and additional or supporting material) filed or required to be filed with respect to Taxes, including any amendments thereof.
(lvi)
"
Top Customer
" means a top ten (10) customer of either Parent and its Subsidiaries or the Company and its Subsidiaries, as applicable, taken as
a whole, based on revenues during the twelve (12) months ended July 31, 2018.
(lvii)
"
Top Vendor
" means a top ten (10) supplier of products or services to the Company and its Subsidiaries, taken as a whole, based on expenditures
during the six (6) months ended January 31, 2018.
(lviii)
"
Willful Breach
" means an action or omission taken or omitted to be taken that the breaching party intentionally takes (or fails to take) and knows
would, or would reasonably be expected to, cause a material breach of this Agreement.
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Index of Defined Terms
|
|
|
|
|
Section
|
.pdf
|
|
8.3
|
Acceptable Confidentiality Agreement
|
|
8.16(b)(i)
|
Adjusted RSU Award
|
|
2.3(b)
|
Affiliates
|
|
8.16(a)
|
Agreement
|
|
Preamble
|
Anti-Corruption Laws
|
|
3.7(c)
|
Antitrust Laws
|
|
8.16(b)(ii)
|
Book-Entry Shares
|
|
2.1(a)(i)
|
Business Day
|
|
8.16(b)(iii)
|
Cancelled Shares
|
|
2.1(a)(ii)
|
Cash Consideration
|
|
2.1(a)(i)
|
Certificate
|
|
2.1(a)(i)
|
Certificate of Merger
|
|
1.3
|
Closing
|
|
1.2
|
Closing Date
|
|
1.2
|
Closing Financial Information
|
|
8.16(b)(iv)
|
Code
|
|
8.16(b)(v)
|
Collective Bargaining Agreement
|
|
3.14
|
Commitment Letter
|
|
4.16
|
Company
|
|
Preamble
|
Company 401(k) Plan
|
|
5.5(c)
|
Company Acquisition Agreement
|
|
5.4(e)
|
Company Adverse Recommendation Change
|
|
5.4(e)
|
Company Approvals
|
|
3.3(d)
|
Company Articles
|
|
3.1(b)
|
Company Benefit Plan
|
|
8.16(b)(vi)
|
Company Board of Directors
|
|
Recitals
|
Company Bylaws
|
|
3.1(b)
|
Company Common Stock
|
|
Recitals
|
Company Credit Agreement
|
|
8.16(b)(vii)
|
Company Disclosure Schedule
|
|
Article III
|
Company Employees
|
|
5.5(a)
|
Company Equity Awards
|
|
2.3(c)
|
Company Equity Schedule
|
|
3.2(c)
|
Company Indemnified Parties
|
|
5.10(a)
|
Company Intervening Event
|
|
8.16(b)(viii)
|
Company Intervening Event Recommendation Change
|
|
5.4(f)
|
Company Leased Real Property
|
|
3.16
|
Company Material Adverse Effect
|
|
8.16(b)(ix)
|
Company Material Contracts
|
|
3.18(a)
|
Company Organizational Documents
|
|
3.1(b)
|
Company Owned Intellectual Property
|
|
8.16(b)(x)
|
Company Owned Real Property
|
|
3.16
|
Company Performance Stock Award
|
|
8.16(b)(xi)
|
Company Permits
|
|
3.7(b)
|
Company Preferred Stock
|
|
3.2(a)
|
Company Real Property Leases
|
|
3.16
|
Company Recommendation
|
|
Recitals
|
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Table of Contents
|
|
|
|
|
Section
|
Company Registrations
|
|
8.16(b)(xii)
|
Company RSU Award
|
|
8.16(b)(xiii)
|
Company SEC Documents
|
|
3.4(a)
|
Company Shareholder Approval
|
|
3.3(b)
|
Company Special Meeting
|
|
5.7(c)
|
Company Stock Plans
|
|
8.16(b)(xiv)
|
Company Subsidiary Organizational Documents
|
|
3.1(b)
|
Company Superior Proposal
|
|
8.16(b)(xv)
|
Company Takeover Proposal
|
|
8.16(b)(xvi)
|
Company Takeover Transaction
|
|
7.3(a)
|
Company Transaction Litigation
|
|
5.14(a)
|
Confidentiality Agreement
|
|
5.3(c)
|
Contract
|
|
8.16(b)(xvii)
|
control
|
|
8.16(a)
|
Converted Shares
|
|
2.1(a)(ii)
|
Copyrights
|
|
8.16(b)(xviii)
|
Dissenting Shareholder Statute
|
|
2.1(b)
|
Dissenting Shares
|
|
2.1(b)
|
Effective Time
|
|
1.3
|
End Date
|
|
7.1(b)
|
Environmental Law
|
|
8.16(b)(xix)
|
Equity Award Exchange Ratio
|
|
8.16(b)(xx)
|
ERISA
|
|
8.16(b)(xxi)
|
ERISA Affiliate
|
|
8.16(b)(xxii)
|
Exchange Act
|
|
3.3(d)
|
Exchange Agent
|
|
2.2(a)
|
Exchange Fund
|
|
2.2(b)
|
Exchange Ratio
|
|
8.16(b)(xxiii)
|
Export Approvals
|
|
3.7(e)
|
Financing
|
|
8.16(b)(xxiv)
|
Financing Entities
|
|
8.16(b)(xxv)
|
Financing Parties
|
|
8.16(b)(xxvi)
|
Foreign Plan
|
|
3.9(i)
|
Fractional Share Cash Amount
|
|
2.1(d)
|
GAAP
|
|
3.4(b)
|
Government Contract
|
|
8.16(b)(xxvii)
|
Governmental Entity
|
|
8.16(b)(xxviii)
|
Hazardous Materials
|
|
8.16(b)(xxix)
|
HSR Act
|
|
3.3(d)
|
Indebtedness
|
|
8.16(b)(xxx)
|
Intellectual Property
|
|
8.16(b)(xxxi)
|
Intellectual Property Registrations
|
|
8.16(b)(xxxii)
|
IRS
|
|
3.9(a)
|
knowledge
|
|
8.16(a)
|
Law
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3.7(a)
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Laws
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3.7(a)
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Letter of Transmittal
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2.2(c)
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Liability
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8.16(b)(xxxiii)
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Lien
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3.3(e)
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Marketing Period
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8.16(b)(xxxiv)
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Section
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Merger
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1.1
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Merger Amounts
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4.16
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Merger Consideration
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2.1(a)(i)
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Merger Sub
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Preamble
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Multiemployer Plan
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3.9(d)
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Multiple Employer Plan
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3.9(d)
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Nasdaq
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8.16(b)(xxxv)
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NYSE
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3.2(c)
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OFAC
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8.16(b)(xxxvi)
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Order
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8.16(b)(xxxvii)
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Parent
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Preamble
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Parent 401(k) Plan
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5.5(c)
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Parent 5.3 Representatives
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5.3(a)
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Parent Approvals
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4.3(c)
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Parent Benefit Plan
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8.16(b)(xxxviii)
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Parent Board of Directors
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Recitals
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Parent By-laws
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4.1(b)
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Parent Certificate
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4.1(b)
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Parent Common Stock
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4.2
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Parent Disclosure Schedule
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Article IV
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Parent Material Adverse Effect
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8.16(b)(xxxix)
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Parent Organizational Documents
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4.1(b)
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Parent Owned Intellectual Property
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8.16(b)(xl)
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Parent Permits
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4.7(b)
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Parent Registrations
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8.16(b)(xli)
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Parent SEC Documents
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4.4(a)
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Parent Stock Awards
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4.2
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Parent Stock Plans
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8.16(b)(xlii)
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Parent Subsidiary Organizational Documents
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4.1(b)
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Parent Trading Price
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8.16(b)(xliii)
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Parent Transaction Litigation
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5.14(b)
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Parties
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Preamble
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Party
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Preamble
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Patent Rights
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8.16(b)(xliv)
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Payoff Amount
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5.13(f)
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Payoff Letter
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5.13(f)
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Permitted Lien
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8.16(b)(xlv)
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person
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8.16(a)
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Post-Closing Plans
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5.5(b)
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Premium Cap
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5.10(c)
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Proceeding
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8.16(b)(xlvi)
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Prohibited Person
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8.16(b)(xlvii)
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Proxy Statement/Prospectus
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8.16(b)(xlviii)
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Qualified Plan
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3.9(c)
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Release
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8.16(b)(xlix)
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Representatives
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8.16(b)(l)
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Required Financial Information
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8.16(b)(li)
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Sarbanes-Oxley Act
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3.4(a)
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SEC
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8.16(b)(lii)
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Second Request
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5.6(c)
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Section
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Securities Act
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3.3(d)
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SRO
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8.16(b)(liii)
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Stock Consideration
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2.1(a)(i)
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Subsidiaries
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8.16(a)
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Surviving Corporation
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1.1
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Tax
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8.16(b)(liv)
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Tax Return
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8.16(b)(lv)
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TBOC
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Recitals
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Termination Fee
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7.3(b)
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Texas Secretary
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1.3
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Top Customer
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8.16(b)(lvi)
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Top Vendor
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8.16(b)(lviii)
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Trademarks
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8.16(b)(xxxi)(B)
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Willful Breach
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8.16(b)(lix)
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[SIGNATURE
PAGE FOLLOWS]
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Table of Contents
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.
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KMG CHEMICALS, INC.
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By:
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/s/ Christopher T. Fraser
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Name:
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Christopher T. Fraser
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Title:
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President and Chief Executive Officer
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CABOT MICROELECTRONICS
CORPORATION
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By:
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/s/ David H. Li
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Name:
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David H. Li
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Title:
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President and Chief Executive Officer
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COBALT MERGER SUB CORPORATION
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By:
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/s/ David H. Li
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Name:
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David H. Li
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Title:
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President and Chief Executive Officer
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[Signature
Page to Agreement and Plan of Merger]
Table of Contents
Annex B
VOTING AND SUPPORT AGREEMENT
This Voting and Support Agreement (this "
Agreement
") dated as of August 14, 2018, is by and between Cabot
Microelectronics Corporation, a Delaware corporation ("
Parent
") and Christopher T. Fraser ("
Shareholder
").
WHEREAS,
Parent, KMG Chemicals, Inc., a Texas corporation (the "
Company
"), and Cobalt Merger Sub Corporation, a Texas corporation and wholly owned
subsidiary of Parent ("
Merger Sub
"), propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (as it may be amended from time to time, the
"
Merger Agreement
"), which provides, among other things, for the merger of
Merger Sub with and into the Company (the "
Merger
"), with the Company being the surviving corporation, upon the terms and conditions set forth in the Merger Agreement
(capitalized terms used herein without definition shall have the respective meanings specified in the Merger Agreement);
WHEREAS,
Shareholder owns shares of common stock, par value $0.01 per share, of the Company ("
Company Common Stock
") (together with any other shares of
capital stock of the Company acquired (whether beneficially or of record) by such Shareholder after the date hereof, including any shares of Company Common Stock acquired by means of purchase,
dividend or distribution, or as a result of the exercise or vesting of Company Equity Awards or the conversion of any convertible securities or otherwise, being collectively referred to herein as the
"
Shares
"); and
WHEREAS,
as a condition to the willingness of Parent to enter into the Merger Agreement and as an inducement and in consideration therefor, Shareholder is entering into this Agreement.
NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
VOTING
Section 1.1
Voting
. From and after the date hereof until the earlier of
(a) the consummation of the Merger, (b) the termination of the Merger Agreement pursuant to and in compliance with the terms therein, and (c) the entry without the prior written
consent of Shareholder into any amendment or modification of the Merger Agreement or any material waiver of any of the Company's rights under the Merger Agreement, in each case, which results in a
decrease in, or change in the composition of, the Merger Consideration or imposes any material restrictions or additional constraints on the payment of the Merger Consideration (such earlier date, the
"
Expiration Date
"), Shareholder hereby agrees that at any meeting (whether annual or special and each adjourned or postponed meeting) of the Company's shareholders,
however called, or in connection with any written consent of the Company's shareholders, Shareholder will (i) appear at such meeting or otherwise cause all of the Shares to be counted as
present thereat for purposes of calculating a quorum and (ii) vote or cause to be voted (including by proxy or written consent, if applicable) all of the Shares (A) in favor of the
adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger; (B) in favor of any proposal to adjourn or postpone such meeting of the
Company's shareholders to a later date if there are not sufficient votes to adopt the Merger Agreement and such adjournment or postponement is undertaken in compliance with the Merger Agreement;
(C) against any action, proposal, transaction, or agreement that relates to a Company Takeover Proposal; and (D) against any action, proposal, transaction or agreement that would
(i) result in a breach of any
covenant, representation or warranty or any other obligation or agreement of the Company contained in the Merger Agreement, or of Shareholder contained in this Agreement or (ii) prevent, impede
or delay the Company's or Parent's ability to consummate the transactions contemplated by the Merger Agreement, including the Merger. Notwithstanding the foregoing, this
Section 1.1
shall not apply during any period in which the Company Board of Directors has qualified, withheld, withdrew or modified the
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Company
Recommendation in response to a Company Superior Proposal or a Company Intervening Event in accordance with the terms of the Merger Agreement;
provided
, that to
the extent that the Company Board of Directors reinstates its recommendation of the Merger Agreement, this
Section 1.1
shall apply.
Section 1.2
Restrictions on Transfers
. Shareholder hereby agrees that, from
the date hereof until the Expiration Date, it shall not, directly or indirectly, (a) sell, transfer, assign, tender in any tender or exchange offer, pledge, encumber, hypothecate or similarly
dispose of (by merger, by testamentary disposition, by operation of law or otherwise) (a "
Transfer
") or enter into any contract, option or other arrangement or
understanding with respect to the Transfer of any Shares, other than any Transfer made solely for estate planning purposes or philanthropic purposes, but only if, in each case, prior to or upon the
effectiveness of such Transfer, the transferee agrees in writing to be bound by the terms hereof and notice of such Transfer is delivered to Parent pursuant to
Section 5.2
hereof, (b) deposit any Shares into a voting trust or enter into a voting agreement or arrangement or grant any proxy or power of attorney with
respect thereto that is inconsistent with this Agreement, or (c) agree (whether or not in writing) to take any of the actions referred to in the foregoing clause (a) or (b).
Section 1.3
Inconsistent Agreements
. Shareholder hereby covenants and agrees
that, except for this Agreement it (a) shall not enter into at any time while this Agreement remains in effect, any voting agreement or voting trust with respect to the Shares and
(b) shall not grant at any time while this Agreement remains in effect a proxy, consent or power of attorney with respect to the Shares.
ARTICLE II
CAPACITY
Section 2.1
Capacity
. Shareholder is signing this Agreement solely in his,
her or its capacity as a Shareholder of the Company and nothing contained herein shall in any way limit or affect any actions taken or not taken by any Shareholder or its Representative in his or her
capacity as a director of the Company, and no action taken or not taken in any such capacity as a director shall be deemed to constitute a breach of this Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF SHAREHOLDER
Section 3.1
Representations and Warranties
. Shareholder represents and
warrants to Parent as follows: (a) Shareholder has full legal right and capacity to execute and deliver this Agreement, to perform Shareholder's obligations hereunder and to consummate the
transactions contemplated hereby, (b) this Agreement has been duly executed and delivered by Shareholder and no other actions or proceedings on the part of Shareholder are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby, (c) assuming the due authorization, execution and delivery by Parent, this Agreement constitutes the valid and
binding agreement of Shareholder, enforceable against Shareholder in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought, (d) the execution and delivery of this Agreement by
Shareholder does not, and the consummation of the transactions contemplated hereby and the compliance with the provisions hereof will not, conflict with or violate any Laws or agreement binding upon
Shareholder or the Shares, nor require any authorization, consent or approval of any Governmental Entity, in each case, except as would not prevent or delay the consummation of the Merger or
Shareholder's ability to perform its obligations hereunder, (e) Shareholder owns, beneficially and of record, or controls 248,303 shares of Common Stock, and (f) Shareholder owns,
beneficially and
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of
record, or controls all of the Shares free and clear of any proxy, voting restriction, adverse claim or other Lien (other than any restrictions created by this Agreement or under applicable Laws)
and has sole voting power with respect to the Shares and sole power of disposition with respect to all of the Shares, with no restrictions on Shareholder's rights of voting or disposition pertaining
thereto, and no person other than Shareholder has any right to direct or approve the voting or disposition of any of the Shares in each case, except as would not prevent or delay the consummation of
the Merger or Shareholder's ability to perform its obligations hereunder, except in case of (e) and (f) for any spousal rights under applicable law.
Section 3.2
Covenants
. Shareholder hereby:
(a) irrevocably
waives, and agrees not to exercise, any rights of appraisal or rights of dissent from the Merger that Shareholder may have with respect to the Shares;
(b) agrees
to promptly notify Parent of the number of any new Shares acquired by Shareholder after the date hereof and prior to the Expiration Date (and any such Shares
shall automatically be subject to the terms of this Agreement as though owned by Shareholder on the date hereof);
(c) agrees
to permit the Company to publish and disclose in filings with the Securities and Exchange Commission, this Agreement and Shareholder's identity and ownership of
the Shares and the nature of Shareholder's commitments under this Agreement;
(d) shall
and does authorize Parent or its counsel to notify the Company's transfer agent that there is a stop transfer order with respect to all of the Shares (and that
this Agreement places limits on the voting and transfer of such Shares as described herein),
provided
that Parent shall, or shall cause its counsel to, promptly notify the
Company's transfer agent to lift and vacate the stop transfer order with respect to the Shares promptly (and in no event more than one (1) Business Day) following the Expiration Date; and
(e) agrees
to execute and deliver such additional instruments and documents and take such further action as may be reasonably necessary to effectuate and comply with his,
her or its respective obligations under this Agreement.
ARTICLE IV
TERMINATION
This
Agreement shall terminate and be of no further force or effect on the Expiration Date. Notwithstanding the preceding sentence, this
Article IV
and
Article V
shall survive any termination of this Agreement. Nothing in this
Article IV
shall relieve or otherwise limit any party of liability for willful breach of this Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.1
Expenses
. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring or required to incur such expenses.
Section 5.2
Notices
. All notices and other communications hereunder shall be
in writing in one of the following formats and shall be deemed given (a) upon actual delivery if personally delivered to the party to be notified; (b) when sent if sent by email or
facsimile to the party to be notified;
provided
,
however
, that notice given by email or facsimile shall not be effective unless
(i) such notice specifically states that it is being delivered pursuant to this
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Section 5.2
and (ii) either (A) a duplicate copy of such email or facsimile notice is promptly given by one of the other methods described in this
Section 5.2
or (B) the receiving party delivers a written confirmation of receipt for such notice either by email (excluding "out of office" or similar
automated replies) or facsimile or any other method described in this
Section 5.2
; or (c) when delivered if sent by a courier (with confirmation of
delivery); in each case to the party to be notified at the following address:
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Cabot Microelectronics Corporation
870 North Commons Drive
Aurora, Illinois 60504
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Facsimile:
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(630) 499-2655
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Attention:
|
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H. Carol Bernstein
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Vice President, Secretary and General Counsel
|
Email:
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carol_bernstein@cabotcmp.com
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Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
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Facsimile:
|
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(212) 403-2000
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Attention:
|
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Edward D. Herlihy
|
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Brandon C. Price
|
Email:
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EDHerlihy@wlrk.com
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BCPrice@wlrk.com
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KMG Chemicals, Inc.
300 Throckmorton Street
Fort Worth, Texas 76102
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Facsimile:
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(713) 988-9298
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Attention:
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Christopher T. Fraser
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President, Chief Executive Officer and Chairman of the Board
|
Email:
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cfraser@kmgchemicals.com
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or
to such other Persons or addresses as may be designated in writing by the party to receive such notice as provided above.
Section 5.3
Amendments; Waivers
. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of a waiver by the party against whom enforcement is sought, and in the case of an amendment, by
Parent and Shareholder. The foregoing notwithstanding, no failure or delay by any party hereto in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right hereunder.
Section 5.4
Assignment
. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by any of party hereto without the prior written consent of the other party;
provided
,
however
, that each of Merger Sub and Parent may assign any of their rights hereunder to a wholly owned direct or indirect Subsidiary of Parent without the prior written
consent of Shareholder. Subject to the first sentence of this
Section 5.4
, this Agreement shall be binding upon
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and
shall inure to the benefit of the parties hereto and their respective successors and assigns. Any purported assignment not permitted under this
Section 5.4
shall be null and void.
Section 5.5
No Partnership, Agency, or Joint Venture
. This Agreement is
intended to create, and creates, a contractual relationship and is not intended to create, and does not create, any agency, partnership, joint venture or any like relationship between the parties
hereto.
Section 5.6
Severability
. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 5.7
Entire Agreement
. This Agreement and the Merger Agreement
constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and thereof, and this
Agreement is not intended to grant standing to any person other than the parties hereto.
Section 5.8
No Third-Party Beneficiaries
. Each party agrees that
(a) their respective representations, warranties, covenants and agreements set forth herein are solely for the benefit of the other party hereto, in accordance with and subject to the terms of
this Agreement, and (b) this Agreement is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder, including the right to rely upon
the representations and warranties set forth herein.
Section 5.9
Jurisdiction; Specific Enforcement; Waiver of Trial by Jury
. The
parties' rights in this
Section 5.9
are an integral part of the transactions contemplated by this Agreement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed, or were threatened to be not performed, in accordance with their specific terms or were otherwise breached, and that money
damages would not be an adequate remedy, even if available. It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages, each of the parties
shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the
Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any
state or federal court within the State of Delaware) (in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative). In the event any
party seeks any remedy referred to in this
Section 5.9
, such party shall not be required to prove damages or obtain, furnish, provide or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred to in this
Section 5.9
and each party
waives any objection to the imposition of such relief or any right it may have to require the obtaining, furnishing, providing or posting of any such bond or similar instrument. In addition, each of
the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any
judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns, shall be brought and determined exclusively in
the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any
state or federal court within the State of Delaware). Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property,
generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or the transactions contemplated hereby in
any court other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way
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of
motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (i) any claim that it is not personally subject to the jurisdiction of the above
named courts, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by applicable Law, any claim that
(A) the suit, action or proceeding in such court is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper or (C) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts. To the fullest extent permitted by applicable Law, each of the parties hereto hereby consents to the service of process in accordance
with
Section 5.9
;
provided
,
however
, that nothing herein shall affect the right of any party to serve
legal process in any other manner permitted by Law. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 5.10
Governing Law
. This Agreement, and all claims or causes of
action (whether at Law, in contract or in tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by
and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
Section 5.11
Interpretation
. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any
particular provision of this Agreement, unless the context otherwise requires. The word "since" when used in this Agreement in reference to a date shall be deemed to be inclusive of such date. All
terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. References in this
Agreement to specific laws or to specific provisions of laws shall include all rules and regulations promulgated thereunder, and any statute defined or referred to herein or in any agreement or
instrument referred to herein shall mean such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. References herein to a person
are also to such person's successors and permitted assigns. All references in this Agreement to "$" or other monetary amounts refer to U.S. dollars. Each of the parties has participated in the
drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties, and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
Section 5.12
Counterparts
. This Agreement may be executed in two or more
counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered (by telecopy, electronic delivery or otherwise) to the other parties. Signatures to this Agreement transmitted by facsimile transmission, by
electronic mail in ".pdf" form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the
paper document bearing the original signature.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.
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CABOT MICROELECTRONICS CORPORATION
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By:
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/s/ David H. Li
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Name:
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David H. Li
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Title:
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President and Chief Executive Officer
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SHAREHOLDER
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By:
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/s/ Christopher T. Fraser
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Name:
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Christopher T. Fraser
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[Signature Page to Voting and Support Agreement]
Table of Contents
VOTING AND SUPPORT AGREEMENT
This Voting and Support Agreement (this "
Agreement
") dated as of August 14, 2018, is by and between Cabot
Microelectronics Corporation, a Delaware corporation ("
Parent
") and Fred C. Leonard III ("
Shareholder
").
WHEREAS,
Parent, KMG Chemicals, Inc., a Texas corporation (the "
Company
"), and Cobalt Merger Sub Corporation, a Texas corporation and wholly owned
subsidiary of Parent ("
Merger Sub
"), propose to enter into an Agreement and Plan of Merger, dated as of the date hereof (as it may be amended from time to time, the
"
Merger Agreement
"), which provides, among other things, for the merger of Merger Sub with and into the Company (the "
Merger
"), with the
Company being the surviving corporation, upon the terms and conditions set forth in the Merger Agreement (capitalized terms used herein without definition shall have the respective meanings specified
in the Merger Agreement);
WHEREAS,
Shareholder owns shares of common stock, par value $0.01 per share, of the Company ("
Company Common Stock
") (together with any other shares of
capital stock of the Company acquired (whether beneficially or of record) by such Shareholder after the date hereof, including any shares of Company Common Stock acquired by means of purchase,
dividend or distribution, or as a result of the exercise or vesting of Company Equity Awards or the conversion of any convertible securities or otherwise, being collectively referred to herein as the
"
Shares
"); and
WHEREAS,
as a condition to the willingness of Parent to enter into the Merger Agreement and as an inducement and in consideration therefor, Shareholder is entering into this Agreement.
NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
VOTING
Section 1.1
Voting
. From and after the date hereof until the earlier of
(a) the consummation of the Merger, (b) the termination of the Merger Agreement pursuant to and in compliance with the terms therein, and (c) the entry without the prior written
consent of Shareholder into any amendment or modification of the Merger Agreement or any material waiver of any of the Company's rights under the Merger Agreement, in each case, which results in a
decrease in, or change in the composition of, the Merger Consideration or imposes any material restrictions or additional constraints on the payment of the Merger Consideration (such earlier date, the
"
Expiration Date
"), Shareholder hereby agrees that at any meeting (whether annual or special and each adjourned or postponed meeting) of the Company's shareholders,
however called, or in connection with any written consent of the Company's shareholders, Shareholder will (i) appear at such meeting or otherwise cause all of the Shares to be counted as
present thereat for purposes of calculating a quorum and (ii) vote or cause to be voted (including by proxy or written consent, if applicable) all of the Shares (A) in favor of the
adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger; (B) in favor of any proposal to adjourn or postpone such meeting of the
Company's shareholders to a later date if there are not sufficient votes to adopt the Merger Agreement and such adjournment or postponement is undertaken in compliance with the Merger Agreement;
(C) against any action, proposal, transaction, or agreement that relates to a Company Takeover Proposal; and (D) against any action, proposal, transaction or agreement that would
(i) result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the Merger Agreement, or of Shareholder contained in this
Agreement or (ii) prevent, impede or delay the Company's or Parent's ability to consummate the transactions contemplated by the Merger Agreement, including the Merger. Notwithstanding the
foregoing, this
Section 1.1
shall not apply during any period in which the Company Board of Directors has qualified, withheld, withdrew or modified the
Company Recommendation in response to a Company Superior Proposal or a Company Intervening Event in accordance with the terms of the Merger Agreement;
provided
, that to
the extent that the
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Company
Board of Directors reinstates its recommendation of the Merger Agreement, this
Section 1.1
shall apply.
Section 1.2
Restrictions on Transfers
. Shareholder hereby agrees that, from
the date hereof until the Expiration Date, it shall not, directly or indirectly, (a) sell, transfer, assign, tender in any tender or exchange offer, pledge, encumber, hypothecate or similarly
dispose of (by merger, by testamentary disposition, by operation of law or otherwise) (a "
Transfer
") or enter into any contract, option or other arrangement or
understanding with respect to the Transfer of any Shares, other than any Transfer made solely for estate planning purposes or philanthropic purposes, but only if, in each case, prior to or upon the
effectiveness of such Transfer, the transferee agrees in writing to be bound by the terms hereof and notice of such Transfer is delivered to Parent pursuant to
Section 5.2
hereof, (b) deposit any Shares into a voting trust or enter into a voting agreement or arrangement or grant any proxy or power of attorney with
respect thereto that is inconsistent with this Agreement, or (c) agree (whether or not in writing) to take any of the actions referred to in the foregoing clause (a) or (b).
Section 1.3
Inconsistent Agreements
. Shareholder hereby covenants and agrees
that, except for this Agreement it (a) shall not enter into at any time while this Agreement remains in effect, any voting agreement or voting trust with respect to the Shares and
(b) shall not grant at any time while this Agreement remains in effect a proxy, consent or power of attorney with respect to the Shares.
ARTICLE II
CAPACITY
Section 2.1
Capacity
. Shareholder is signing this Agreement solely in his,
her or its capacity as a Shareholder of the Company and nothing contained herein shall in any way limit or affect any actions
taken or not taken by any Shareholder or its Representative in his or her capacity as a director of the Company, and no action taken or not taken in any such capacity as a director shall be deemed to
constitute a breach of this Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF SHAREHOLDER
Section 3.1
Representations and Warranties
. Shareholder represents and
warrants to Parent as follows: (a) Shareholder has full legal right and capacity to execute and deliver this Agreement, to perform Shareholder's obligations hereunder and to consummate the
transactions contemplated hereby, (b) this Agreement has been duly executed and delivered by Shareholder and no other actions or proceedings on the part of Shareholder are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby, (c) assuming the due authorization, execution and delivery by Parent, this Agreement constitutes the valid and
binding agreement of Shareholder, enforceable against Shareholder in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought, (d) the execution and delivery of this Agreement by
Shareholder does not, and the consummation of the transactions contemplated hereby and the compliance with the provisions hereof will not, conflict with or violate any Laws or agreement binding upon
Shareholder or the Shares, nor require any authorization, consent or approval of any Governmental Entity, in each case, except as would not prevent or delay the consummation of the Merger or
Shareholder's ability to perform its obligations hereunder, (e) Shareholder owns, beneficially and of record, or controls 464,251 shares of Common Stock, and (f) Shareholder owns,
beneficially and of record, or controls all of the Shares free and clear of any proxy, voting restriction, adverse claim or other Lien (other than any restrictions created by this Agreement or under
applicable Laws) and has
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sole
voting power with respect to the Shares and sole power of disposition with respect to all of the Shares, with no restrictions on Shareholder's rights of voting or disposition pertaining thereto,
and no person other than Shareholder has any right to direct or approve the voting or disposition of any of the Shares in each case, except as would not prevent or delay the consummation of the Merger
or Shareholder's ability to perform its obligations hereunder, except in case of (e) and (f) for any spousal rights under applicable law.
Section 3.2
Covenants
. Shareholder hereby:
(a) irrevocably
waives, and agrees not to exercise, any rights of appraisal or rights of dissent from the Merger that Shareholder may have with respect to the Shares;
(b) agrees
to promptly notify Parent of the number of any new Shares acquired by Shareholder after the date hereof and prior to the Expiration Date (and any such Shares
shall automatically be subject to the terms of this Agreement as though owned by Shareholder on the date hereof);
(c) agrees
to permit the Company to publish and disclose in filings with the Securities and Exchange Commission, this Agreement and Shareholder's identity and ownership of
the Shares and the nature of Shareholder's commitments under this Agreement;
(d) shall
and does authorize Parent or its counsel to notify the Company's transfer agent that there is a stop transfer order with respect to all of the Shares (and that
this Agreement places limits on the voting and transfer of such Shares as described herein),
provided
that Parent shall, or shall cause its counsel to, promptly notify the
Company's transfer agent to lift and vacate the stop transfer order with respect to the Shares promptly (and in no event more than one (1) Business Day) following the Expiration Date; and
(e) agrees
to execute and deliver such additional instruments and documents and take such further action as may be reasonably necessary to effectuate and comply with his,
her or its respective obligations under this Agreement.
ARTICLE IV
TERMINATION
This
Agreement shall terminate and be of no further force or effect on the Expiration Date. Notwithstanding the preceding sentence, this
Article IV
and
Article V
shall survive any termination of this Agreement. Nothing in this
Article IV
shall relieve or otherwise limit any party of liability for willful breach of this Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.1
Expenses
. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring or required to incur such expenses.
Section 5.2
Notices
. All notices and other communications hereunder shall be
in writing in one of the following formats and shall be deemed given (a) upon actual delivery if personally delivered to the party to be notified; (b) when sent if sent by email or
facsimile to the party to be notified;
provided
,
however
, that notice given by email or facsimile shall not be effective unless
(i) such notice specifically states that it is being delivered pursuant to this
Section 5.2
and (ii) either (A) a duplicate copy of such email
or facsimile notice is promptly given by one of the other methods described in this
Section 5.2
or (B) the receiving party delivers a written confirmation of
receipt for such notice either by email (excluding "out of office" or similar automated replies) or facsimile or any other method
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described
in this
Section 5.2
; or (c) when delivered if sent by a courier (with confirmation of delivery); in each case to the party to be notified at the
following address:
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Cabot Microelectronics Corporation
870 North Commons Drive
Aurora, Illinois 60504
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Facsimile:
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(630) 499-2655
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Attention:
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H. Carol Bernstein
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Vice President, Secretary and General Counsel
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Email:
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carol_bernstein@cabotcmp.com
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Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
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Facsimile:
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(212) 403-2000
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Attention:
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Edward D. Herlihy
Brandon C. Price
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Email:
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EDHerlihy@wlrk.com
BCPrice@wlrk.com
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KMG Chemicals, Inc.
300 Throckmorton Street
Fort Worth, Texas 76102
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Facsimile:
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(713) 988-9298
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Attention:
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Fred C. Leonard III
Director
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Email:
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fleonard@kmgchemicals.com
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or
to such other Persons or addresses as may be designated in writing by the party to receive such notice as provided above.
Section 5.3
Amendments; Waivers
. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of a waiver by the party against whom enforcement is sought, and in the case of an amendment, by
Parent and Shareholder. The foregoing notwithstanding, no failure or delay by any party hereto in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right hereunder.
Section 5.4
Assignment
. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated by any of party hereto without the prior written consent of the other party;
provided
,
however
, that each of Merger Sub and Parent may assign any of their rights hereunder to a wholly owned direct or indirect Subsidiary of Parent without the prior written
consent of Shareholder. Subject to the first sentence of this
Section 5.4
, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns. Any purported assignment not permitted under this
Section 5.4
shall be null and void.
Section 5.5
No Partnership, Agency, or Joint Venture
. This Agreement is
intended to create, and creates, a contractual relationship and is not intended to create, and does not create, any agency, partnership, joint venture or any like relationship between the parties
hereto.
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Section 5.6
Severability
. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
Section 5.7
Entire Agreement
. This Agreement and the Merger Agreement
constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and thereof, and this
Agreement is not intended to grant standing to any person other than the parties hereto.
Section 5.8
No Third-Party Beneficiaries
. Each party agrees that
(a) their respective representations, warranties, covenants and agreements set forth herein are solely for the benefit of the other party hereto, in accordance with and subject to the terms of
this Agreement, and (b) this Agreement is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder, including the right to rely upon
the representations and warranties set forth herein.
Section 5.9
Jurisdiction; Specific Enforcement; Waiver of Trial by Jury
. The
parties' rights in this
Section 5.9
are an integral part of the transactions contemplated by this Agreement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed, or were threatened to be not performed, in accordance with their specific terms or were otherwise breached, and that money
damages would not be an adequate remedy, even if available. It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages, each of the parties
shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the
Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any
state or federal court within the State of Delaware) (in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative). In the event any
party seeks any remedy referred to in this
Section 5.9
, such party shall not be required to prove damages or obtain, furnish, provide or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred to in this
Section 5.9
and each party waives any objection to the imposition of
such relief or any right it may have to require the obtaining, furnishing, providing or posting of any such bond or similar instrument. In addition, each of the parties hereto irrevocably agrees that
any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the
rights and obligations arising hereunder brought by the other party hereto or its successors or assigns, shall be brought and determined exclusively in the Delaware Court of Chancery and any state
appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of
Delaware). Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal
jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or the transactions contemplated hereby in any court other than the aforesaid courts. Each
of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement,
(i) any claim that it is not personally subject to the jurisdiction of the above named courts, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise) and (iii) to the fullest extent permitted by applicable Law, any claim that (A) the suit, action or proceeding in such
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court
is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by
such courts. To the fullest extent permitted by applicable Law, each of the parties hereto hereby consents to the service of process in accordance with
Section 5.9
;
provided
,
however
, that nothing herein shall affect the right of any party to serve legal process in any other manner permitted by Law. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE MERGER AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
Section 5.10
Governing Law
. This Agreement, and all claims or causes of
action (whether at Law, in contract or in tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by
and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
Section 5.11
Interpretation
. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement, unless the context otherwise requires. The word "since" when used in this Agreement in reference to a date shall be
deemed to be inclusive of such date. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and
neuter genders of such term. References in this Agreement to specific laws or to specific provisions of laws shall include all rules and regulations promulgated thereunder, and any statute defined or
referred to herein or in any agreement or instrument referred to herein shall mean such statute as from time to time amended, modified or supplemented, including by succession of comparable successor
statutes. References herein to a person are also to such person's successors and permitted assigns. All references in this Agreement to "$" or other monetary amounts refer to U.S. dollars. Each of the
parties has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all
the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
Section 5.12
Counterparts
. This Agreement may be executed in two or more
counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered (by telecopy, electronic delivery or otherwise) to the other parties. Signatures to
this Agreement transmitted by facsimile transmission, by electronic mail in ".pdf" form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a
document, will have the same effect as physical delivery of the paper document bearing the original signature.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date and year first written above.
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CABOT MICROELECTRONICS CORPORATION
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By:
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/s/ David H. Li
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Name:
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David H. Li
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Title:
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President and Chief Executive Officer
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SHAREHOLDER
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By:
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/s/ Fred C. Leonard III
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Name:
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Fred C. Leonard III
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[Signature Page to Voting and Support Agreement]
Table of Contents
Annex C
August 14,
2018
Board of Directors
KMG Chemicals, Inc.
300 Throckmorton Street, Suite 1900
Fort Worth, TX 76102
Members of the Board of Directors:
You
have requested our opinion as to the fairness, from a financial point of view, to the holders of the issued and outstanding shares of common stock, $.01 par value per share (the
"Company Common Stock") of KMG Chemicals, Inc., a Texas corporation (the "Company") of the consideration to be paid to these holders pursuant to the Agreement and Plan of Merger dated as of
August 14, 2018 (the "Merger Agreement") to be entered into by and among the Company, Cabot Microelectronics Corporation, a Delaware corporation ("Parent"), and Cobalt Merger Sub Corporation, a
Texas corporation and wholly owned subsidiary of Parent ("Merger Sub") (the "Transaction").
You
have advised us that under the terms of the Merger Agreement, all of the issued and outstanding shares of Company Common Stock, other than such shares of Company Common Stock owned
or held in treasury by the Company or owned by Parent or Merger Sub, all of which will be cancelled, or as to which dissenter's rights have been properly exercised, will be converted into the right to
receive consideration per share equal to $55.65 in cash (the "Cash Consideration") and .2000 shares (the "Stock Consideration", and, together with the Cash Consideration, the "Consideration") of
Parent's common stock, par value $.001 per share (the "Parent Common Stock"). The terms and conditions of the Transaction are more fully set forth in the Merger Agreement.
In
connection with rendering this opinion, we have reviewed and analyzed, among other things, the following: (i) a draft of the Merger Agreement, dated August 13, 2018,
which we understand to be in substantially final form; (ii) certain publicly available information concerning the Company, including the Annual Reports on Form 10-K of the Company for
each of the years in the three-year period ended July 31, 2017, and the Quarterly Reports on Form 10-Q of the Company for the quarters ended April 30, 2018, January 31,
2018 and October 31, 2017, and Parent, including the Annual Reports on Form 10-K of the Company for each of the years in the three-year period ended September 30, 2017, and the
Quarterly Reports on Form 10-Q of the Company for the quarters ended June 30, 2018, March 31, 2018 and December 31, 2017; (iii) the current and historical market
prices of the Company Common Stock and Parent Common Stock; (iv) certain internal financial analyses and forecasts prepared by the management of the Company relating to the business of the
Company as approved for our use by the Company; (v) certain forecasts prepared by management of Parent relating to the business of Parent, as well as estimated amount of synergies expected to
result from the Transaction (the "Synergies"); (vi) certain publicly available information with respect to certain other publically traded companies that we believe to be comparable to the
Company and the trading markets for certain of such other companies' securities; and (vii) certain publically available information concerning the nature and terms of certain other transactions
that we consider relevant to our inquiry. We have also met with certain officers and employees of the Company to discuss the business, financial condition, operations and prospects of the Company, as
well as other matters we believed relevant to our inquiry. We have also
performed such other financial studies and analyses and considered such other data and information as we deemed appropriate.
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In
our review and analysis and in arriving at our opinion, we have assumed and relied upon the accuracy and completeness of all of the financial and other information provided to or
otherwise reviewed by or discussed with us or publicly available, and we have assumed that the representations and warranties of the Company, Parent and Merger Sub contained in the Merger Agreement
are and will be true and correct in all respects material to our analysis. We have not been engaged to, and have not independently attempted to, verify any of such information or its accuracy or
completeness. We have also relied upon the management of the Company as to the reasonableness and achievability of the financial analyses and forecasts (and the assumptions and bases therefor)
provided to us and, with your consent, we have assumed that such financial analyses and forecasts were reasonably prepared on bases that reflect the best currently available estimates and judgments of
management of the Company of the future financial performance of the Company, Parent and other matters covered thereby. With respect to the financial analyses and forecasts provided to and examined by
us, we note that projecting future results of any company is inherently subject to uncertainty. We have not been engaged to assess the reasonableness or achievability of such financial analyses and
forecasts (including the Synergies) or the assumptions on which they were based, and we express no view as to such analyses, forecasts, Synergies and assumptions. In addition, we have not conducted a
physical inspection, valuation or appraisal of any of the assets or liabilities of the Company or Parent nor have we been furnished with any such inspection, valuation or appraisal. We are not legal,
regulatory or tax experts and have relied on the assessments made by the advisors to the Company with respect to such issues. We have also assumed that all governmental, regulatory or other consents
and approvals necessary for the consummation of the Transaction will be obtained without any adverse effect on the Company, Parent or the Transaction that would be meaningful to our analysis.
We
have not been asked to, nor do we, offer any opinion as to the material terms of the Merger Agreement or the form of the Transaction. In addition, in preparing this opinion, we have
not taken into account any tax consequences of the Transaction to any holder of Company Common Stock. In rendering our opinion, we have assumed, with your consent, that the final executed form of the
Merger Agreement will not differ in any material respect from the draft that we have examined, and that the conditions to the Transaction as set forth in the Merger Agreement will be satisfied and
that the Transaction will be consummated on a timely basis on the terms set forth in the Merger Agreement without waiver or modification of any term or condition that would be meaningful to our
analysis.
It
should be noted that this opinion is based on economic and market conditions and other circumstances existing on, and information made available to us as of, the date hereof and does
not address any matters subsequent to such date. In addition, our opinion is, in any event, limited to the fairness, as of the date hereof, from a financial point of view, of the consideration to be
paid to the holders of the Company Common Stock pursuant to the Merger Agreement and does not address the Company's underlying business decision to engage in the Transaction or any other terms of the
Transaction or the fairness of the Transaction, or any consideration paid in connection therewith, to creditors or other constituencies of the Company. In addition, we do not express any opinion as to
the fairness of the Transaction or the amount or the nature of the compensation now paid or to be paid to any of the directors, officers or employees of the Company, or class of such persons, relative
to the consideration to be paid to public shareholders of the Company. We do not express any opinion as to the impact of the Transaction on the solvency or viability of the Company, Parent or its
affiliates or the ability of the Company, Parent or its affiliates to pay their respective obligations when they come due. We do not express any opinion herein as to the price at which the Company
Common Stock or Parent Common Stock will trade at any future time. It should be noted that although subsequent developments may affect this opinion, we do not have any obligation to update, revise or
reaffirm our opinion. This opinion has been approved by a fairness committee of KBCM.
We
have acted as financial advisor to the Company in connection with, and have participated in certain of the negotiations leading to, the Transaction and will receive from the Company a
fee for our
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services,
a significant portion of which is contingent upon the consummation of the Transaction (the "Transaction Fee"). In addition, the Company has agreed to reimburse us for certain expenses and to
indemnify us under certain circumstances for certain liabilities that may arise out of our engagement. We also will receive a fee in connection with the delivery of this opinion, which fee will be
credited against any Transaction Fee earned.
We
acted as financial advisor to Arsenal Capital Partners and Flowchem LLC in connection with the Company's acquisition of Flowchem LLC (the "Flowchem Acquisition"). In
connection with the Flowchem Acquisition, we served as Joint Lead Arranger and Joint Book Runner and our affiliate, KeyBank National Association, served as Agent, in connection with the Company's
June 15, 2017 Credit Agreement. In the ordinary course of our businesses, we and our affiliates, employees of us and our affiliates, and funds or other entities that such persons manage or
invest in or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans,
commodities, currencies, credit default swaps and other financial instruments of the Company, Parent, any of their respective affiliates and third parties or any currency or commodity that may be
involved in the Transaction, in each case for our own account or for the accounts of customers. We may in the future provide financial advisory and/or underwriting services to the Company and its
affiliates and to Parent and its affiliates for which we may receive compensation.
It
is understood that this opinion was prepared for the use of the Board of Directors of the Company in connection with and for the purpose of its evaluation of the proposed Transaction.
This opinion letter is not to be used, circulated, quoted or otherwise referred to for any other purpose, nor is it to be filed with, included in or referred to in whole or in part in any registration
statement, proxy statement or any other document, except in accordance with our prior written consent. Our opinion
does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the Transaction or any other matter.
Based
upon and subject to the foregoing, it is our opinion that as of the date hereof, the Consideration to be paid to the holders of the Company Common Stock pursuant to the Merger
Agreement is fair, from a financial point of view, to such holders.
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Very truly yours,
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KEYBANC CAPITAL MARKETS INC.
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Annex D
DISSENTERS' RIGHTS PROVISIONS OF THE TEXAS BUSINESS ORGANIZATIONS CODE
SUBCHAPTER H. RIGHTS OF DISSENTING OWNERS
Sec. 10.351.
APPLICABILITY OF SUBCHAPTER.
(a) This
subchapter does not apply to a fundamental business transaction of a domestic entity if, immediately before the effective date of the fundamental business
transaction, all of the ownership interests of the entity otherwise entitled to rights to dissent and appraisal under this code are held by one owner or only by the owners who approved the fundamental
business transaction.
(b) This
subchapter applies only to a "domestic entity subject to dissenters' rights," as defined in Section 1.002. That term includes a domestic for-profit
corporation, professional corporation, professional association, and real estate investment trust. Except as provided in Subsection (c), that term does not include a partnership or limited
liability company.
(c) The
governing documents of a partnership or a limited liability company may provide that its owners are entitled to the rights of dissent and appraisal provided by this
subchapter, subject to any modification to those rights as provided by the entity's governing documents.
Sec. 10.352.
DEFINITIONS. In this subchapter:
(1) "Dissenting
owner" means an owner of an ownership interest in a domestic entity subject to dissenters' rights who:
-
(A)
-
provides
notice under Section 10.356; and
-
(B)
-
complies
with the requirements for perfecting that owner's right to dissent under this subchapter.
(2) "Responsible
organization" means:
-
(A)
-
the
organization responsible for:
-
(i)
-
the
provision of notices under this subchapter; and
-
(ii)
-
the
primary obligation of paying the fair value for an ownership interest held by a dissenting owner;
-
(B)
-
with
respect to a merger or conversion:
-
(i)
-
for
matters occurring before the merger or conversion, the organization that is merging or converting; and
-
(ii)
-
for
matters occurring after the merger or conversion, the surviving or new organization that is primarily obligated for the payment of the fair value of the
dissenting owner's ownership interest in the merger or conversion;
-
(C)
-
with
respect to an interest exchange, the organization the ownership interests of which are being acquired in the interest exchange;
-
(D)
-
with
respect to the sale of all or substantially all of the assets of an organization, the organization the assets of which are to be transferred by sale or in
another manner; and
-
(E)
-
with
respect to an amendment to a domestic for-profit corporation's certificate of formation described by Section 10.354(a)(1)(G), the corporation.
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Sec. 10.353.
FORM AND VALIDITY OF NOTICE.
(a) Notice
required under this subchapter:
-
(1)
-
must
be in writing; and
-
(2)
-
may
be mailed, hand-delivered, or delivered by courier or electronic transmission.
(b) Failure
to provide notice as required by this subchapter does not invalidate any action taken.
Sec. 10.354.
RIGHTS OF DISSENT AND APPRAISAL.
(a) Subject
to Subsection (b), an owner of an ownership interest in a domestic entity subject to dissenters' rights is entitled to:
-
(1)
-
dissent
from:
-
(A)
-
a
plan of merger to which the domestic entity is a party if owner approval is required by this code and the owner owns in the domestic entity an ownership interest
that was entitled to vote on the plan of merger;
-
(B)
-
a
sale of all or substantially all of the assets of the domestic entity if owner approval is required by this code and the owner owns in the domestic entity an
ownership interest that was entitled to vote on the sale;
-
(C)
-
a
plan of exchange in which the ownership interest of the owner is to be acquired;
-
(D)
-
a
plan of conversion in which the domestic entity is the converting entity if owner approval is required by this code and the owner owns in the domestic entity an
ownership interest that was entitled to vote on the plan of conversion;
-
(E)
-
a
merger effected under Section 10.006 in which:
-
(i)
-
the
owner is entitled to vote on the merger; or
-
(ii)
-
the
ownership interest of the owner is converted or exchanged; or
-
(F)
-
a
merger effected under Section 21.459(c) in which the shares of the shareholders are converted or exchanged; or
-
(G)
-
if
the owner owns shares that were entitled to vote on the amendment, an amendment to a domestic for-profit corporation's certificate of formation
to:
-
(i)
-
add
the provisions required by Section 3.007(e) to elect to be a public benefit corporation; or
-
(ii)
-
delete
the provisions required by Section 3.007(e), which in effect cancels the corporation's election to be a public benefit corporation; and
-
(2)
-
subject
to compliance with the procedures set forth in this subchapter, obtain the fair value of that ownership interest through an appraisal.
(b) Notwithstanding
Subsection (a), subject to Subsection (c), an owner may not dissent from a plan of merger or conversion in which there is a single
surviving or new domestic entity or non-code organization, or from a plan of exchange, if:
-
(1)
-
the
ownership interest, or a depository receipt in respect of the ownership interest, held by the owner is part of a class or series of ownership interests, or
depository receipts in respect of ownership interests, that are, on the record date set for purposes of determining which owners are entitled to vote on the plan of merger, conversion, or exchange, as
appropriate:
-
(A)
-
listed
on a national securities exchange; or
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(B)
-
held
of record by at least 2,000 owners;
-
(2)
-
the
owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner's ownership interest any consideration
that is different from the consideration to be provided to any other holder of an ownership interest of the same class or series as the ownership interest held by the owner, other than cash instead of
fractional shares or interests the owner would otherwise be entitled to receive; and
-
(3)
-
the
owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner's ownership interest any consideration
other than:
-
(A)
-
ownership
interests, or depository receipts in respect of ownership interests, of a domestic entity or non-code organization of the same general organizational type
that, immediately after the effective date of the merger, conversion, or exchange, as appropriate, will be part of a class or series of ownership interests, or depository receipts in respect of
ownership interests, that are:
-
(i)
-
listed
on a national securities exchange or authorized for listing on the exchange on official notice of issuance; or
-
(ii)
-
held
of record by at least 2,000 owners;
-
(B)
-
cash
instead of fractional ownership interests the owner would otherwise be entitled to receive; or
-
(C)
-
any
combination of the ownership interests and cash described by Paragraphs (A) and (B).
(c) Subsection (b)
shall not apply either to a domestic entity that is a subsidiary with respect to a merger under Section 10.006 or to a corporation with
respect to a merger under Section 21.459(c).
(d) Notwithstanding
Subsection (a), an owner of an ownership interest in a domestic for-profit corporation subject to dissenters' rights may not dissent from an
amendment to the corporation's certificate of formation described by Subsection (a)(1)(G) if the shares held by the owner are part of a class or series of shares, on the record date set for
purposes of determining which owners are entitled to vote on the amendment:
-
(A)
-
listed
on a national securities exchange; or
-
(B)
-
held
of record by at least 2,000 owners.
Sec. 10.355.
NOTICE OF RIGHT OF DISSENT AND APPRAISAL.
(a) A
domestic entity subject to dissenters' rights that takes or proposes to take an action regarding which an owner has a right to dissent and obtain an appraisal under
Section 10.354 shall notify each affected owner of the owner's rights under that section if:
-
(1)
-
the
action or proposed action is submitted to a vote of the owners at a meeting; or
-
(2)
-
approval
of the action or proposed action is obtained by written consent of the owners instead of being submitted to a vote of the owners.
(b) If
a parent organization effects a merger under Section 10.006 and a subsidiary organization that is a party to the merger is a domestic entity subject to
dissenters' rights, the responsible organization shall notify the owners of that subsidiary organization who have a right to dissent to the merger under Section 10.354 of their rights under
this subchapter not later than the 10th day after the effective date of the merger. The notice must also include a copy of the certificate of merger and a statement that the merger has become
effective.
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(b-1) If
a corporation effects a merger under Section 21.459(c), the responsible organization shall notify the shareholders of that corporation who have a right to
dissent to the plan of merger under Section 10.354 of their rights under this subchapter not later than the 10th day after the effective date of the merger. Notice required under this
subsection that is given to shareholders before the effective date of the merger may, but is not required to, contain a statement of the merger's effective date. If the notice is not given to the
shareholders until on or after the effective date of the merger, the notice must contain a statement of the merger's effective date.
(c) A
notice required to be provided under Subsection (a), (b), or (b-1) must:
-
(1)
-
be
accompanied by a copy of this subchapter; and
-
(2)
-
advise
the owner of the location of the responsible organization's principal executive offices to which a notice required under Section 10.356(b)(1) or a
demand under Section 10.356(b)(3), or both, may be provided.
(d) In
addition to the requirements prescribed by Subsection (c), a notice required to be provided:
-
(1)
-
under
Subsection (a)(1) must accompany the notice of the meeting to consider the action;
-
(2)
-
under
Subsection (a)(2) must be provided to:
-
(A)
-
each
owner who consents in writing to the action before the owner delivers the written consent; and
-
(B)
-
each
owner who is entitled to vote on the action and does not consent in writing to the action before the 11th day after the date the action takes effect; and
-
(3)
-
under
Subsection (b-1) must be provided:
-
(A)
-
if
given before the consummation of the tender or exchange offer described by Section 21.459(c)(2), to each shareholder to whom that offer is made; or
-
(B)
-
if
given after the consummation of the tender or exchange offer described by Section 21.459(c)(2), to each shareholder who did not tender the shareholder's
shares in that offer.
(e) Not
later than the 10th day after the date an action described by Subsection (a)(1) takes effect, the responsible organization shall give notice that the
action has been effected to each owner who voted against the action and sent notice under Section 10.356(b)(1).
(f) If
the notice given under Subsection (b-1) did not include a statement of the effective date of the merger, the responsible organization shall, not later than the
10th day after the effective date, give a second notice to the shareholders notifying them of the merger's effective date. If the second notice is given after the later of the date on which the
tender or exchange offer described by Section 21.459(c)(2) is consummated or the 20th day after the date notice under Subsection (b-1) is given, then the second notice is required to be
given to only those shareholders who have made a demand under Section 10.356(b)(3).
Sec. 10.356.
PROCEDURE FOR DISSENT BY OWNERS AS TO ACTIONS; PERFECTION OF RIGHT OF DISSENT AND
APPRAISAL.
(a) An
owner of an ownership interest of a domestic entity subject to dissenters' rights who has the right to dissent and appraisal from any of the actions referred to in
Section 10.354 may exercise that right to dissent and appraisal only by complying with the procedures specified in this subchapter. An owner's right of dissent and appraisal under
Section 10.354 may be exercised by an owner only with respect to an ownership interest that is not voted in favor of the action.
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(b) To
perfect the owner's rights of dissent and appraisal under Section 10.354, an owner:
-
(1)
-
if
the proposed action is to be submitted to a vote of the owners at a meeting, must give to the domestic entity a written notice of objection to the action
that:
-
(A)
-
is
addressed to the entity's president and secretary;
-
(B)
-
states
that the owner's right to dissent will be exercised if the action takes effect;
-
(C)
-
provides
an address to which notice of effectiveness of the action should be delivered or mailed; and
-
(D)
-
is
delivered to the entity's principal executive offices before the meeting;
-
(2)
-
with
respect to the ownership interest for which the rights of dissent and appraisal are sought:
-
(A)
-
must
vote against the action if the owner is entitled to vote on the action and the action is approved at a meeting of the owners; and
-
(B)
-
may
not consent to the action if the action is approved by written consent; and
-
(3)
-
must
give to the responsible organization a demand in writing that:
-
(A)
-
is
addressed to the president and secretary of the responsible organization;
-
(B)
-
demands
payment of the fair value of the ownership interests for which the rights of dissent and appraisal are sought;
-
(C)
-
provides
to the responsible organization an address to which a notice relating to the dissent and appraisal procedures under this subchapter may be sent;
-
(D)
-
states
the number and class of the ownership interests of the domestic entity owned by the owner and the fair value of the ownership interests as estimated by the
owner; and
-
(E)
-
is
delivered to the responsible organization at its principal executive offices at the following time:
-
(i)
-
not
later than the 20th day after the date the responsible organization sends to the owner the notice required by Section 10.355(e) that the action has
taken effect, if the action was approved by a vote of the owners at a meeting;
-
(ii)
-
not
later than the 20th day after the date the responsible organization sends to the owner the notice required by Section 10.355(d)(2) that the action
has taken effect, if the action was approved by the written consent of the owners;
-
(iii)
-
not
later than the 20th day after the date the responsible organization sends to the owner a notice that the merger was effected, if the action is a merger
effected under Section 10.006; or
-
(iv)
-
not
later than the 20th day after the date the responsible organization gives to the shareholder the notice required by Section 10.355(b-1) or the
date of the consummation of the tender or exchange offer described by Section 21.459(c)(2), whichever is later, if the action is a merger effected under Section 21.459(c).
(c) An
owner who does not make a demand within the period required by Subsection (b)(3)(E) or, if Subsection (b)(1) is applicable, does not give the notice of
objection before the meeting of the owners is bound by the action and is not entitled to exercise the rights of dissent and appraisal under Section 10.354.
(d) Not
later than the 20th day after the date an owner makes a demand under Subsection (b)(3), the owner must submit to the responsible organization any
certificates representing the ownership
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interest
to which the demand relates for purposes of making a notation on the certificates that a demand for the payment of the fair value of an ownership interest has been made under this section. An
owner's failure to submit the certificates within the required period has the effect of terminating, at the option of the responsible organization, the owner's rights to dissent and appraisal under
Section 10.354 unless a court, for good cause shown, directs otherwise.
(e) If
a domestic entity and responsible organization satisfy the requirements of this subchapter relating to the rights of owners of ownership interests in the entity to
dissent to an action and seek appraisal of those ownership interests, an owner of an ownership interest who fails to perfect that owner's right of dissent in accordance with this subchapter may not
bring suit to recover the value of the ownership interest or money damages relating to the action.
Sec. 10.357.
WITHDRAWAL OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
(a) An
owner may withdraw a demand for the payment of the fair value of an ownership interest made under Section 10.356 before:
-
(1)
-
payment
for the ownership interest has been made under Sections 10.358 and 10.361; or
-
(2)
-
a
petition has been filed under Section 10.361.
(b) Unless
the responsible organization consents to the withdrawal of the demand, an owner may not withdraw a demand for payment under Subsection (a) after either of
the events specified in Subsections (a)(1) and (2).
Sec. 10.358.
RESPONSE BY ORGANIZATION TO NOTICE OF DISSENT AND DEMAND FOR FAIR VALUE BY DISSENTING
OWNER.
(a) Not
later than the 20th day after the date a responsible organization receives a demand for payment made by a dissenting owner in accordance with
Section 10.356(b)(3), the responsible organization shall respond to the dissenting owner in writing by:
-
(1)
-
accepting
the amount claimed in the demand as the fair value of the ownership interests specified in the notice; or
-
(2)
-
rejecting
the demand and including in the response the requirements prescribed by Subsection (c).
(b) If
the responsible organization accepts the amount claimed in the demand, the responsible organization shall pay the amount not later than the 90th day after the
date the action that is the subject of the demand was effected if the owner delivers to the responsible organization:
-
(1)
-
endorsed
certificates representing the ownership interests if the ownership interests are certificated; or
-
(2)
-
signed
assignments of the ownership interests if the ownership interests are uncertificated.
(c) If
the responsible organization rejects the amount claimed in the demand, the responsible organization shall provide to the owner:
-
(1)
-
an
estimate by the responsible organization of the fair value of the ownership interests; and
-
(2)
-
an
offer to pay the amount of the estimate provided under Subdivision (1).
(d) If
the dissenting owner decides to accept the offer made by the responsible organization under Subsection (c)(2), the owner must provide to the responsible
organization notice of the acceptance of the offer not later than the 90th day after the date the action that is the subject of the demand took effect.
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(e) If,
not later than the 90th day after the date the action that is the subject of the demand took effect, a dissenting owner accepts an offer made by a responsible
organization under Subsection (c)(2) or a dissenting owner and a responsible organization reach an agreement on the fair value of the ownership interests, the responsible organization shall pay
the agreed amount not later than the 120th day after the date the action that is the subject of the demand took effect, if the dissenting owner delivers to the responsible
organization:
-
(1)
-
endorsed
certificates representing the ownership interests if the ownership interests are certificated; or
-
(2)
-
signed
assignments of the ownership interests if the ownership interests are uncertificated.
Sec. 10.359.
RECORD OF DEMAND FOR FAIR VALUE OF OWNERSHIP
INTEREST.
(a) A
responsible organization shall note in the organization's ownership interest records maintained under Section 3.151 the receipt of a demand for payment from any
dissenting owner made under Section 10.356.
(b) If
an ownership interest that is the subject of a demand for payment made under Section 10.356 is transferred, a new certificate representing that ownership
interest must contain:
-
(1)
-
a
reference to the demand; and
-
(2)
-
the
name of the original dissenting owner of the ownership interest.
Sec. 10.360.
RIGHTS OF TRANSFEREE OF CERTAIN OWNERSHIP INTEREST.
A
transferee of an ownership interest that is the subject of a demand for payment made under Section 10.356 does not acquire additional rights with respect to the responsible
organization following the transfer. The transferee has only the rights the original dissenting owner had with respect to the responsible organization after making the demand.
Sec. 10.361.
PROCEEDING TO DETERMINE FAIR VALUE OF OWNERSHIP INTEREST AND OWNERS ENTITLED TO PAYMENT; APPOINTMENT
OF APPRAISERS.
(a) If
a responsible organization rejects the amount demanded by a dissenting owner under Section 10.358 and the dissenting owner and responsible organization are
unable to reach an agreement relating to the fair value of the ownership interests within the period prescribed by Section 10.358(d), the dissenting owner or responsible organization may
file a petition requesting a finding and determination of the fair value of the owner's ownership interests in a court in:
-
(1)
-
the
county in which the organization's principal office is located in this state; or
-
(2)
-
the
county in which the organization's registered office is located in this state, if the organization does not have a business office in this state.
(b) A
petition described by Subsection (a) must be filed not later than the 60th day after the expiration of the period required by Section 10.358(d).
(c) On
the filing of a petition by an owner under Subsection (a), service of a copy of the petition shall be made to the responsible organization. Not later than the
10th day after the date a responsible organization receives service under this subsection, the responsible organization shall file with the clerk of the court in which the petition was filed a
list containing the names and addresses of each owner of the organization who has demanded payment for ownership interests under Section 10.356 and with whom agreement as to the value of the
ownership interests has not been reached with the responsible organization. If the responsible organization files a petition under Subsection (a), the petition must be accompanied by
this list.
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(d) The
clerk of the court in which a petition is filed under this section shall provide by registered mail notice of the time and place set for the hearing
to:
-
(1)
-
the
responsible organization; and
-
(2)
-
each
owner named on the list described by Subsection (c) at the address shown for the owner on the list.
(e) The
court shall:
-
(1)
-
determine
which owners have:
-
(A)
-
perfected
their rights by complying with this subchapter; and
-
(B)
-
become
subsequently entitled to receive payment for the fair value of their ownership interests; and
-
(2)
-
appoint
one or more qualified appraisers to determine the fair value of the ownership interests of the owners described by Subdivision (1).
(f) The
court shall approve the form of a notice required to be provided under this section. The judgment of the court is final and binding on the responsible organization,
any other organization obligated to make payment under this subchapter for an ownership interest, and each owner who is notified as required by this section.
(g) The
beneficial owner of an ownership interest subject to dissenters' rights held in a voting trust or by a nominee on the beneficial owner's behalf may file a
petition described by Subsection (a) if no agreement between the dissenting owner of the ownership interest and the responsible organization has been reached within the period prescribed by
Section 10.358(d). When the beneficial owner files a petition described by Subsection (a):
-
(1)
-
the
beneficial owner shall at that time be considered, for purposes of this subchapter, the owner, the dissenting owner, and the holder of the ownership interest
subject to the petition; and
-
(2)
-
the
dissenting owner who demanded payment under Section 10.356 has no further rights regarding the ownership interest subject to the petition.
Sec. 10.362.
COMPUTATION AND DETERMINATION OF FAIR VALUE OF OWNERSHIP
INTEREST.
(a) For
purposes of this subchapter, the fair value of an ownership interest of a domestic entity subject to dissenters' rights is the value of the ownership interest on the
date preceding the date of the action that is the subject of the appraisal. Any appreciation or depreciation in the value of the ownership interest occurring in anticipation of the proposed action or
as a result of the action must be specifically excluded from the computation of the fair value of the ownership interest.
(b) In
computing the fair value of an ownership interest under this subchapter, consideration must be given to the value of the domestic entity as a going concern without
including in the computation of value any control premium, any minority ownership discount, or any discount for lack of marketability. If the domestic entity has different classes or series of
ownership interests, the relative rights and preferences of and limitations placed on the class or series of ownership interests, other than relative voting rights, held by the dissenting owner must
be taken into account in the computation of value.
(c) The
determination of the fair value of an ownership interest made for purposes of this subchapter may not be used for purposes of making a determination of the fair
value of that ownership interest for another purpose or of the fair value of another ownership interest, including for purposes of determining any minority or liquidity discount that might apply to a
sale of an ownership interest.
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Sec. 10.363.
POWERS AND DUTIES OF APPRAISER; APPRAISAL
PROCEDURES.
-
(a)
-
An
appraiser appointed under Section 10.361 has the power and authority that:
-
(1)
-
is
granted by the court in the order appointing the appraiser; and
-
(2)
-
may
be conferred by a court to a master in chancery as provided by Rule 171, Texas Rules of Civil Procedure.
-
(b)
-
The
appraiser shall:
-
(1)
-
determine
the fair value of an ownership interest of an owner adjudged by the court to be entitled to payment for the ownership interest; and
-
(2)
-
file
with the court a report of that determination.
-
(c)
-
The
appraiser is entitled to examine the books and records of a responsible organization and may conduct investigations as the appraiser considers appropriate. A
dissenting owner or responsible organization may submit to an appraiser evidence or other information relevant to the determination of the fair value of the ownership interest required by
Subsection (b)(1).
-
(d)
-
The
clerk of the court appointing the appraiser shall provide notice of the filing of the report under Subsection (b) to each dissenting owner named in the
list filed under Section 10.361 and the responsible organization.
Sec. 10.364.
OBJECTION TO APPRAISAL; HEARING.
(a) A
dissenting owner or responsible organization may object, based on the law or the facts, to all or part of an appraisal report containing the fair value of an ownership
interest determined under Section 10.363(b).
(b) If
an objection to a report is raised under Subsection (a), the court shall hold a hearing to determine the fair value of the ownership interest that is the
subject of the report. After the hearing, the court shall require the responsible organization to pay to the holders of the ownership interest the amount of the determined value with interest,
accruing from the 91st day after the date the applicable action for which the owner elected to dissent was effected until the date of the judgment.
(c) Interest
under Subsection (b) accrues at the same rate as is provided for the accrual of prejudgment interest in civil cases.
(d) The
responsible organization shall:
-
(1)
-
immediately
pay the amount of the judgment to a holder of an uncertificated ownership interest; and
-
(2)
-
pay
the amount of the judgment to a holder of a certificated ownership interest immediately after the certificate holder surrenders to the responsible organization
an endorsed certificate representing the ownership interest.
(e) On
payment of the judgment, the dissenting owner does not have an interest in the:
-
(1)
-
ownership
interest for which the payment is made; or
-
(2)
-
responsible
organization with respect to that ownership interest.
Sec. 10.365.
COURT COSTS; COMPENSATION FOR APPRAISER.
(a) An
appraiser appointed under Section 10.361 is entitled to a reasonable fee payable from court costs.
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(b) All
court costs shall be allocated between the responsible organization and the dissenting owners in the manner that the court determines to be fair and equitable.
Sec. 10.366.
STATUS OF OWNERSHIP INTEREST HELD OR FORMERLY HELD BY DISSENTING
OWNER.
(a) An
ownership interest of an organization acquired by a responsible organization under this subchapter:
-
(1)
-
in
the case of a merger, conversion, or interest exchange, shall be held or disposed of as provided in the plan of merger, conversion, or interest exchange; and
-
(2)
-
in
any other case, may be held or disposed of by the responsible organization in the same manner as other ownership interests acquired by the organization or held in
its treasury.
(b) An
owner who has demanded payment for the owner's ownership interest under Section 10.356 is not entitled to vote or exercise any other rights of an owner with
respect to the ownership interest except the right to:
-
(1)
-
receive
payment for the ownership interest under this subchapter; and
-
(2)
-
bring
an appropriate action to obtain relief on the ground that the action to which the demand relates would be or was fraudulent.
(c) An
ownership interest for which payment has been demanded under Section 10.356 may not be considered outstanding for purposes of any subsequent vote or action.
Sec. 10.367.
RIGHTS OF OWNERS FOLLOWING TERMINATION OF RIGHT OF DISSENT.
(a) The
rights of a dissenting owner terminate if:
-
(1)
-
the
owner withdraws the demand under Section 10.356;
-
(2)
-
the
owner's right of dissent is terminated under Section 10.356;
-
(3)
-
a
petition is not filed within the period required by Section 10.361; or
-
(4)
-
after
a hearing held under Section 10.361, the court adjudges that the owner is not entitled to elect to dissent from an action under this subchapter.
(b) On
termination of the right of dissent under this section:
-
(1)
-
the
dissenting owner and all persons claiming a right under the owner are conclusively presumed to have approved and ratified the action to which the owner dissented
and are bound by that action;
-
(2)
-
the
owner's right to be paid the fair value of the owner's ownership interests ceases;
-
(3)
-
the
owner's status as an owner of those ownership interests is restored, as if the owner's demand for payment of the fair value of the ownership interests had not
been made under Section 10.356, if the owner's ownership interests were not canceled, converted, or exchanged as a result of the action or a subsequent action;
-
(4)
-
the
dissenting owner is entitled to receive the same cash, property, rights, and other consideration received by owners of the same class and series of ownership
interests held by the owner, as if the owner's demand for payment of the fair value of the ownership interests had not been made under Section 10.356, if the owner's ownership interests were
canceled, converted, or exchanged as a result of the action or a subsequent action;
-
(5)
-
any
action of the domestic entity taken after the date of the demand for payment by the owner under Section 10.356 will not be considered ineffective or
invalid because of the
D-10
Table of Contents
Sec. 10.368.
EXCLUSIVITY OF REMEDY OF DISSENT AND APPRAISAL.
In
the absence of fraud in the transaction, any right of an owner of an ownership interest to dissent from an action and obtain the fair value of the ownership interest under this
subchapter is the exclusive remedy for recovery of:
-
(1)
-
the
value of the ownership interest; or
-
(2)
-
money
damages to the owner with respect to the action.
D-11
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. KMG CHEMICALS, INC. 300 THROCKMORTON STREET, SUITE 1900 FORT WORTH, TEXAS 76102 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E51273-TBD KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KMG CHEMICALS, INC. THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE FOLLOWING PROPOSALS: For Against Abstain 1. Proposal to approve and adopt the Agreement and Plan of Merger, dated as of August 14, 2018, as it may be amended from time to time, by and among KMG Chemicals, Inc., Cabot Microelectronics Corporation and Cobalt Merger Sub Corporation (the "Agreement and Plan of Merger"). Proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the Agreement and Plan of Merger if there are insufficient votes to approve the proposal to approve the Agreement and Plan of Merger at the time of the special meeting or any adjournment or postponement thereof. 2. 3. Proposal to approve by non-binding, advisory vote, certain compensation arrangements for KMG's named executive officers in connection with the merger contemplated by the Agreement and Plan of Merger. Yes No Please indicate if you plan to attend this meeting. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting: The Notice and Proxy Statement are available at www.proxyvote.com. E51274-TBD KMG CHEMICALS, INC. 300 THROCKMORTON STREET FORT WORTH, TEXAS 76102 SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 13, 2018 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS The undersigned revoking all prior proxies, hereby appoints Christopher T. Fraser and Roger C. Jackson, as proxies, each with the power to appoint his substitute, and hereby authorizes each of them to represent and vote, as designated on the reverse side, all shares of common stock of KMG Chemicals, Inc. held of record by the undersigned on October 4, 2018 at the Special Meeting of Shareholders to be held on November 13, 2018, at 10:00 a.m., Fort Worth time, at The Worthington Renaissance Fort Worth Hotel, 200 Main Street, Fort Worth, Texas 76102, and any adjournments or postponements thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS LISTED AND, IN THE DISCRETION OF CHRISTOPHER FRASER AND ROGER JACKSON, ON ANY OTHER ITEMS THAT ARE PRESENTED AT THE SPECIAL MEETING. At the present time, the Board of Directors knows of no other business to be presented at the Special Meeting. AT TEN DANC E O F THE U N DERSIGN ED AT T HE SPEC IAL M EET ING OR AT AN Y ADJO URNM ENT OR PO STPO NEM EN T THER EO F W ILL N OT BE DEEM ED T O REVO KE T HE PR OXY UN L ESS THE U NDER SIGN ED V OT ES IN P ERSON OR REVO KES THIS PROX Y IN WRI TIN G. Continued and to be signed on reverse side