UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE TO

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

CDI Corp.

(Name of Subject Company (Issuer))

 

 

Nova Merger Sub, Inc.

(Name of Filing Person—Offeror)

Nova Intermediate Parent, LLC

(Name of Filing Person—Offeror)

AE Industrial Partners Fund I, L.P.

AE Industrial Partners Fund I-A, L.P.

AE Industrial Partners Fund I-B, L.P.

AE Industrial Partners Fund I GP, LP

AeroEquity GP, LLC

AE Industrial Partners, LLC

(Names of Filing Persons—Other)

Common Stock, par value $0.10 per share

(Title of Class of Securities)

125071100

(CUSIP Number of Class of Securities)

Wayne P. Garrett

AE Industrial Partners, LLC

2500 N. Military Trail, Suite 470

Boca Raton, FL 33431

(561) 372-7820

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons)

 

 

Copy to:

Gerald T. Nowak, P.C.

Kirkland & Ellis LLP

300 North LaSalle Street

Chicago, Illinois 60654

(312) 862-2000

 

 

CALCULATION OF FILING FEE

 

Transaction Valuation(1)   Amount of Filing Fee(2)
$157,508,621   $18,256
 
(1) Estimated for purposes of calculating the filing fee only. The calculation assumes the purchase of 18,793,206 shares of common stock of CDI Corp. The transaction value also includes $2,464,671 payable in respect of time vesting deferred stock awards, which are vested or will become vested in connection with the closing of the transactions contemplated herein.
(2) Calculated in accordance with Rule 0-11 under the Securities and Exchange Act of 1934, as amended, and Fee Rate Advisory #1 for fiscal year 2017, issued August 31, 2016, by multiplying the transaction value by 0.0001159.

 

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

 

Amount Previously Paid: None    Filing Party: N/A
Form of Registration No.: N/A    Date Filed: N/A

 

Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

 

  Third-party offer subject to Rule 14d-1.
  Issuer tender offer subject to Rule 13e-4.
  Going-private transaction subject to Rule 13e-3.
  Amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer:  ☐

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

 

  Rule 13e-4(i) (Cross-Border Issuer Tender Offer)
  Rule 14d-1(d) (Cross-Border Third Party Tender Offer)

 

 

 


This Tender Offer Statement on Schedule TO (which, together with any amendments and supplements thereto, collectively constitute this “Schedule TO”) relates to the tender offer (the “Offer”) by Nova Merger Sub, Inc., a Pennsylvania corporation (“Purchaser”) and a wholly-owned subsidiary of Nova Intermediate Parent, LLC, a Delaware limited liability company (“Parent”), to purchase all of the outstanding shares of common stock, par value $0.10 per share (the “Shares”), of CDI Corp., a Pennsylvania corporation (“CDI”), at a price of $8.25 per share net to the seller in cash, without interest and less any required withholding taxes, if any, upon the terms and conditions set forth in the offer to purchase dated August 14, 2017 (the “Offer to Purchase”), a copy of which is attached as Exhibit (a)(1)(A), and in the related letter of transmittal (the “Letter of Transmittal”), a copy of which is attached as Exhibit (a)(1)(B), which, together with any amendments or supplements, collectively constitute the “Offer.”

All of the information set forth in the Offer to Purchase is incorporated by reference herein in response to Items 1 through 9 and Item 11 of this Schedule TO, and is supplemented by the information specifically provided for in this Schedule TO.

Item 1. Summary Term Sheet.

Regulation M-A Item 1001

The information set forth in the section of the Offer to Purchase entitled “Summary Term Sheet” is incorporated herein by reference.

Item 2. Subject Company Information.

Regulation M-A Item 1002

(a) Name and Address. The name of the subject company and the issuer of the securities to which this Schedule TO relates is CDI Corp., a Pennsylvania corporation. CDI’s principal executive offices are located at 1735 Market Street, Suite 200, Philadelphia, PA 19103 and its telephone number is (215) 569-2200.

(b) Securities. This Schedule TO relates to the Offer by Purchaser to purchase all of the Shares at a purchase price of $8.25 per share, net to the seller in cash, without interest and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase and the Letter of Transmittal. CDI has advised Parent and Purchaser that, as of August 11, 2017, there were 18,793,206 Shares were issued and outstanding, 1,060,590 Shares were issuable under time vesting deferred stock awards (including 11,086 Shares issuable due to accumulated but unpaid dividend on such awards) and 53,491 Shares were issuable pursuant to options.

(c) Trading Market and Price. Information concerning the principal market in which the Shares are traded and the high and low sales prices for the Shares in the principal market for each quarter during the last two years is set forth in the section of the Offer to Purchase under the caption THE TENDER OFFER—Section 6 (“Price Range of Shares; Dividends”) and is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

Regulation M-A Item 1003

(a)-(c)  Name and Address; Business and Background of Entities; and Business and Background of Natural Persons. The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

SUMMARY TERM SHEET

THE TENDER OFFER—Section 8 (“Certain Information Concerning Parent and Purchaser”) and Schedule I attached thereto

 

1


Item 4. Terms of the Transaction.

Regulation M-A Item 1004

(a) Material Terms. The information set forth in the Offer to Purchase is incorporated herein by reference.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

Regulation M-A Item 1005

(a) Transactions. The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

SUMMARY TERM SHEET

THE TENDER OFFER—Section 8 (“Certain Information Concerning Parent and Purchaser”) and Schedule I attached thereto

THE TENDER OFFER—Section 10 (“Background of the Offer; Past Contacts or Negotiations with CDI”)

(b) Significant Corporate Events . The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

SUMMARY TERM SHEET

THE TENDER OFFER—Section 10 (“Background of the Offer; Past Contacts or Negotiations with CDI”)

THE TENDER OFFER—Section 11 (“The Merger Agreement; Other Agreements”)

THE TENDER OFFER—Section 12 (“Purpose of the Offer; Plans for CDI”)

Item 6. Purposes of the Transaction and Plans or Proposals.

Regulation M-A Item 1006

(a) Purposes . The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

THE TENDER OFFER—Section 12 (“Purpose of the Offer; Plans for CDI”)

(c)(1)-(7)  Plans. The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

SUMMARY TERM SHEET

THE TENDER OFFER—Section 9 (“Source and Amount of Funds”)

THE TENDER OFFER—Section 10 (“Background of the Offer; Past Contacts or Negotiations with CDI”)

THE TENDER OFFER—Section 11 (“The Merger Agreement; Other Agreements”)

THE TENDER OFFER—Section 12 (“Purpose of the Offer; Plans for CDI”)

THE TENDER OFFER—Section 13 (“Certain Effects of the Offer”)

THE TENDER OFFER—Section 14 (“Dividends and Distributions”)

 

2


Item 7. Source and Amount of Funds or Other Consideration.

Regulation M-A Item 1007

(a), (b), (d)  Source of Funds; Conditions; Borrowed Funds . The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

SUMMARY TERM SHEET

THE TENDER OFFER—Section 9 (“Source and Amount of Funds”)

THE TENDER OFFER—Section 10 (“Background of the Offer; Past Contacts or Negotiations with CDI”)

THE TENDER OFFER—Section 11 (“The Merger Agreement; Other Agreements”)

Item 8. Interest in Securities of the Subject Company.

Regulation M-A Item 1008

(a) Securities Ownership . The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

THE TENDER OFFER—Section 8 (“Certain Information Concerning Parent and Purchaser”) and Schedule I attached thereto

THE TENDER OFFER—Section 12 (“Purpose of the Offer; Plans for CDI”)

(b) Securities Transactions . The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

THE TENDER OFFER—Section 8 (“Certain Information Concerning Parent and Purchaser”)

THE TENDER OFFER—Section 10 (“Background of the Offer; Past Contacts or Negotiations with CDI”)

THE TENDER OFFER—Section 11 (“The Merger Agreement; Other Agreements”)

Item 9. Persons/Assets Retained, Employed, Compensated or Used.

Regulation M-A Item 1009

(a) Solicitations or Recommendations. The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

SUMMARY TERM SHEET

THE TENDER OFFER—Section 3 (“Procedures for Accepting the Offer and Tendering Shares”)

THE TENDER OFFER—Section 10 (“Background of the Offer; Past Contacts or Negotiations with CDI”)

THE TENDER OFFER—Section 17 (“Fees and Expenses”)

Item 10. Financial Statements.

Regulation M-A Item 1010

(a) Financial Information . Not applicable.

 

3


(b) Pro Forma Information . Not applicable.

Item 11. Additional Information.

Regulation M-A Item 1011

(a) Agreements, Regulatory Requirements and Legal Proceedings . The information set forth in the Offer to Purchase under the following captions is incorporated herein by reference:

SUMMARY TERM SHEET

THE TENDER OFFER—Section 10 (“Background of the Offer; Past Contacts or Negotiations with CDI”)

THE TENDER OFFER—Section 11 (“The Merger Agreement; Other Agreements”)

THE TENDER OFFER—Section 12 (“Purpose of the Offer; Plans for CDI”)

THE TENDER OFFER—Section 13 (“Certain Effects of the Offer”)

THE TENDER OFFER—Section 15 (“Certain Conditions of the Offer”)

THE TENDER OFFER—Section 16 (“Certain Legal Matters; Regulatory Approvals”)

(c) Other Material Information . The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference.

Item 12. Exhibits

 

Exhibit No.    Description
(a)(1)(A)    Offer to Purchase, dated August 14, 2017
(a)(1)(B)    Form of Letter of Transmittal
(a)(1)(C)    Form of Notice of Guaranteed Delivery
(a)(1)(D)    Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(1)(E)    Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(1)(F)    Form of Summary Advertisement as published on August 14, 2017 in the New York Times
(a)(1)(G)    Press Release issued by CDI Corp. on July 31, 2017 (incorporated by reference to Exhibit 99.1 to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9C, filed July 31, 2017)
(b)(1)    Commitment Letter, dated as of July 31, 2017, between Nova Intermediate Parent, LLC and PNC Bank, National Association
(d)(1)    Agreement and Plan of Merger, dated as of July 31, 2017, among CDI Corp., Nova Merger Sub, Inc. and Nova Intermediate Parent, LLC (incorporated by reference to Exhibit 2.1 to CDI Corp.’s Current Report on Form 8-K, filed August 1, 2017)
(d)(2)    Nondisclosure Agreement, dated as of May 12, 2017, by and between AE Industrial Partners, LLC and CDI Corp. (incorporated by reference to Exhibit (e)(6) to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9, filed August 14, 2017)
(d)(3)    Nondisclosure Agreement, dated as of February 27, 2017, by and between Belcan, LLC and CDI Corp. (incorporated by reference to Exhibit (e)(7) to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9, filed August 14, 2017)

 

4


Exhibit No.    Description
(d)(4)    Exclusivity Agreement, dated as of July 19, 2017, by and between AE Industrial Partners, LLC and CDI Corp. (incorporated by reference to Exhibit (e)(8) to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9, filed August 14, 2017)
(d)(5)    Equity Commitment Letter, dated July 31, 2017, by and among AE Industrial Partners Fund, L.P., AE Industrial Partners Fund I-A, L.P., AE Industrial Partners Fund I-B, L.P. and Nova Intermediate Parent, LLC. (incorporated by reference to Exhibit 99.1 to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9C, filed July 31, 2017)
(d)(6)    Form of Tender and Support Agreement
(g)    Not applicable
(h)    Not applicable

Item 13. Information required by Schedule 13E-3.

Not applicable.

 

5


SIGNATURES

After due inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: August 14, 2017

 

NOVA MERGER SUB, INC.
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Chairman and Secretary

 

NOVA INTERMEDIATE PARENT, LLC
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Chairman and Secretary

 

6


AE INDUSTRIAL PARTNERS FUND I, L.P.
By: AeroEquity Partners Fund I GP, LP
Its: General Partner
By: AeroEquity GP, LLC
Its: General Partner
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner
AE INDUSTRIAL PARTNERS FUND I-A, L.P.
By: AeroEquity Partners Fund I GP, LP
Its: General Partner
By: AeroEquity GP, LLC
Its: General Partner
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner
AE INDUSTRIAL PARTNERS FUND I-B, L.P.
By: AeroEquity Partners Fund I GP, LP
Its: General Partner
By: AeroEquity GP, LLC
Its: General Partner
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner

 

7


AE INDUSTRIAL PARTNERS FUND I GP, LP
By: AeroEquity GP, LLC
Its: General Partner
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner
AEROEQUITY GP, LLC
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner
AE INDUSTRIAL PARTNERS, LLC
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner

 

8


POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and appoints each of Michael Greene, Jon Nemo, Wayne P. Garrett and Kirk Konert, signing singly, the undersigned’s true and lawful attorney-in-fact to: (i) execute for and on behalf of the undersigned, the Tender Offer Statement Under Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934 on Schedule TO (the “Schedule TO”) of CDI Corp., a Pennsylvania corporation (the “Company”), any and all amendments thereto, and to file the Schedule TO, any and all such amendments, supplements, exhibits and documents thereto required in connection therewith with the Securities and Exchange Commission; (ii) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Schedule TO and timely file such form with the United States Securities and Exchange Commission and any stock exchange in which the Common Stock of the Company is listed on, if any; and (iii) take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact’s discretion.

The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact’s substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is the Company assuming, any of the undersigned’s responsibilities to comply with Section 14 of the Exchange Act.

This Power of Attorney shall remain in full force and effect until revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 14th day of August, 2017.

 

NOVA MERGER SUB, INC.
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Chairman and Secretary
NOVA INTERMEDIATE PARENT, LLC
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Chairman and Secretary

 

9


AE INDUSTRIAL PARTNERS FUND I, L.P.
By: AeroEquity Partners Fund I GP, LP
Its: General Partner
By: AeroEquity GP, LLC
Its: General Partner
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner
AE INDUSTRIAL PARTNERS FUND I-A, L.P.
By: AeroEquity Partners Fund I GP, LP
Its: General Partner
By: AeroEquity GP, LLC
Its: General Partner
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner
AE INDUSTRIAL PARTNERS FUND I-B, L.P.
By: AeroEquity Partners Fund I GP, LP
Its: General Partner
By: AeroEquity GP, LLC
Its: General Partner
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner

 

10


AE INDUSTRIAL PARTNERS FUND I GP, LP
By: AeroEquity GP, LLC
Its: General Partner
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner
AEROEQUITY GP, LLC
By: AE Industrial Partners, LLC
Its: Sole Member
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner
AE INDUSTRIAL PARTNERS, LLC
By:  

/s/ Michael Greene

Name:   Michael Greene
Title:   Managing Partner

 

11


Exhibit Index

 

Exhibit No.    Description
(a)(1)(A)    Offer to Purchase, dated August 14, 2017
(a)(1)(B)    Form of Letter of Transmittal
(a)(1)(C)    Form of Notice of Guaranteed Delivery
(a)(1)(D)    Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(1)(E)    Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(1)(F)    Form of Summary Advertisement as published on August 14, 2017 in the New York Times
(a)(1)(G)    Press Release issued by CDI Corp. on July 31, 2017 (incorporated by reference to Exhibit 99.1 to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9C, filed July 31, 2017)
(b)(1)    Commitment Letter, dated as of July 31, 2017, between Nova Intermediate Parent, LLC and PNC Bank, National Association
(d)(1)    Agreement and Plan of Merger, dated as of July 31, 2017, among CDI Corp., Nova Merger Sub, Inc. and Nova Intermediate Parent, LLC (incorporated by reference to Exhibit 2.1 to CDI Corp.’s Current Report on Form 8-K, filed August 1, 2017)
(d)(2)    Nondisclosure Agreement, dated as of May 12, 2017, by and between AE Industrial Partners, LLC and CDI Corp. (incorporated by reference to Exhibit (e)(6) to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9, filed August 14, 2017)
(d)(3)    Nondisclosure Agreement, dated as of February 27, 2017, by and between Belcan, LLC and CDI Corp. (incorporated by reference to Exhibit (e)(7) to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9, filed August 14, 2017)
(d)(4)    Exclusivity Agreement, dated as of July 19, 2017, by and between AE Industrial Partners, LLC and CDI Corp. (incorporated by reference to Exhibit (e)(8) to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9, filed August 14, 2017)
(d)(5)    Equity Commitment Letter, dated July 31, 2017, by and among AE Industrial Partners Fund, L.P., AE Industrial Partners Fund I-A, L.P., AE Industrial Partners Fund I-B, L.P. and Nova Intermediate Parent, LLC. (incorporated by reference to Exhibit 99.1 to CDI Corp.’s Solicitation/Recommendation Statement on Schedule 14D-9C, filed July 31, 2017)
(d)(6)    Form of Tender and Support Agreement
(g)    Not applicable
(h)    Not applicable

 

12

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Exhibit (a)(1)(A)

 

Offer to Purchase for Cash

All Outstanding Shares of Common Stock

of

CDI Corp.

at

$8.25 Net Per Share

by

Nova Merger Sub, Inc.,

a wholly owned subsidiary of

Nova Intermediate Parent, LLC,

an affiliate of funds managed by AE Industrial Partners, LLC.

 

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 9:00 AM, PHILADELPHIA, PENNSYLVANIA TIME, ON SEPTEMBER 12, 2017, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED.

The Offer (as defined herein) is being made pursuant to the Agreement and Plan of Merger, dated as of July 31, 2017 (as the same may be amended, the “Merger Agreement”), by and among Nova Intermediate Parent, LLC, a Delaware limited liability company (“Parent”), Nova Merger Sub, Inc., a Pennsylvania corporation and a direct wholly owned subsidiary of Parent (“Purchaser”), and CDI Corp., a Pennsylvania corporation (“CDI” or the “Company”). Purchaser is offering to purchase all of the outstanding shares of common stock, par value $0.10 per share, of CDI (the “Shares”) at a price of $8.25 per Share, net to the seller in cash, without interest and less any applicable withholding taxes (the “Offer Price”), upon the terms and subject to the conditions set forth in this Offer to Purchase (this “Offer to Purchase”) and the related Letter of Transmittal (the “Letter of Transmittal”), which, together with any amendments or supplements, collectively constitute the “Offer.” Pursuant to the Merger Agreement, following the consummation of the Offer and the satisfaction or waiver of each of the applicable conditions set forth in the Merger Agreement, Purchaser will merge with and into CDI (the “Merger”), with CDI continuing as the surviving corporation in the Merger and as a direct wholly owned subsidiary of Parent (the “Surviving Corporation”). As a result of the Merger, each outstanding Share (other than Shares owned by CDI, Purchaser or Parent or any subsidiary of CDI or Parent, or Shares as to which the holder thereof has properly demanded and not otherwise lost dissenters’ rights under Pennsylvania law) will be converted into the right to receive the Offer Price.

Following careful consideration, the board of directors of CDI has unanimously adopted resolutions: (i) approving and declaring that the Merger Agreement, the Merger and the other transactions contemplated thereby are advisable, fair to and in the best interests of the stockholders of the Company and the Company, (ii) approving the Merger Agreement and the transactions contemplated thereby, including the Offer, the Top-Up Option (as defined herein) and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement and (iii) determining to recommend that the stockholders of the Company accept the Offer and tender their Shares to Purchaser pursuant to the Offer and, if required to consummate the Merger, that the stockholders of the Company adopt the Merger Agreement.

The Offer is conditioned upon, among other things:

(a) there being validly tendered in accordance with the terms of the Offer and not validly withdrawn prior to 9:00 AM, Philadelphia, Pennsylvania time, on September 12, 2017, unless extended by Purchaser in accordance with the Merger Agreement (such date and time, as may be so extended by Purchaser, the “Expiration Date”) a number of Shares (excluding all Shares tendered in the Offer pursuant to guaranteed delivery instructions but not yet delivered to or on behalf of Purchaser) that, together with the number of Shares then-owned by Parent,


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Purchaser or any of their respective subsidiaries, equals at least one Share more than half of the sum of (i) all Shares then outstanding and (ii) all Shares issuable upon the exercise or vesting, as applicable, of all options to acquire Shares granted under the Company’s stock plans (“Company Options”) and all time-vested deferred stock of the Company granted under the Company’s stock plans (“Company TVDS Awards”) (the “Minimum Condition”);

(b) the expiration or termination of any waiting period applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which has been satisfied by the grant of early termination of the applicable waiting period by the Federal Trade Commission (the “FTC”) on August 7, 2017);

(c) there not being, at the Expiration Date, (i) any order, injunction, judgment or other similar requirement issued by a governmental authority or self-regulatory organization or (ii) any applicable law or regulation or similar requirement of a governmental authority or self-regulatory organization in effect that, in each case, would (1) make the Offer, the Top-Up Option (if applicable), the issuance of Shares pursuant to the Top-Up Option (if applicable), the Merger or the other transactions contemplated in the Merger Agreement illegal or (2) otherwise prevent or prohibit the consummation thereof; and

(d) the absence of a termination of the Merger Agreement in accordance with its terms.

The Offer is also subject to other conditions described in Section 15—“Certain Conditions of the Offer.” The Minimum Condition may be waived by Parent and Purchaser only with the prior written consent of CDI on the terms and subject to the conditions of the Merger Agreement and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

A summary of the principal terms of the Offer appears on pages 1 through 9. You should read this entire Offer to Purchase carefully before deciding whether to tender your Shares in the Offer.


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IMPORTANT

If you desire to tender all or any portion of your Shares to Purchaser pursuant to the Offer, you should either (i) complete and sign the Letter of Transmittal, which is enclosed with this Offer to Purchase, in accordance with the instructions contained in the Letter of Transmittal, and mail or deliver the Letter of Transmittal (or a manually executed facsimile thereof) and any other required documents to Computershare Trust Company, N.A., in its capacity as depositary for the Offer (the “Depositary”), and either deliver the certificates for your Shares to the Depositary along with the Letter of Transmittal (or a manually executed facsimile thereof) or tender your Shares by book-entry transfer by following the procedures described in Section 3—“Procedures for Accepting the Offer and Tendering Shares,” in each case prior to the Expiration Date, or (ii) request that your broker, dealer, commercial bank, trust company or other nominee effect the transaction for you. If you hold Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact that institution in order to tender your Shares to Purchaser pursuant to the Offer.

If you desire to tender your Shares pursuant to the Offer and the certificates representing your Shares are not immediately available, you cannot comply in a timely manner with the procedures for tendering your Shares by book-entry transfer or you cannot deliver all required documents to the Depositary prior to the Expiration Date, you may tender your Shares to Purchaser pursuant to the Offer by following the procedures for guaranteed delivery described in Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

* * * * *

Questions and requests for assistance regarding the Offer or any of the terms thereof may be directed to D.F. King & Co., Inc., as information agent for the Offer (the “Information Agent”), at the address and telephone number set forth for the Information Agent on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal, the notice of guaranteed delivery and other tender offer materials may be directed to the Information Agent. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance.

This Offer to Purchase and the Letter of Transmittal contain important information, and you should read both carefully and in their entirety before making a decision with respect to the Offer.

This transaction has not been approved or disapproved by the SEC or any state securities commission nor has the SEC or any state securities commission passed upon the fairness or merits of such transaction or upon the accuracy or adequacy of the information contained in this Offer to Purchase or the Letter of Transmittal. Any representation to the contrary is unlawful.


Table of Contents

TABLE OF CONTENTS

 

SUMMARY TERM SHEET

     1  

INTRODUCTION

     10  

THE TENDER OFFER

     13  

1. Terms of the Offer.

     13  

2. Acceptance for Payment and Payment for Shares.

     15  

3. Procedures for Accepting the Offer and Tendering Shares.

     16  

4. Withdrawal Rights.

     19  

5. Certain Material United States Federal Income Tax Consequences.

     20  

6. Price Range of Shares; Dividends.

     23  

7. Certain Information Concerning CDI.

     24  

8. Certain Information Concerning Parent and Purchaser.

     25  

9. Source and Amount of Funds.

     26  

10. Background of the Offer; Past Contacts or Negotiations with CDI.

     28  

11. The Merger Agreement; Other Agreements.

     31  

12. Purpose of the Offer; Plans for CDI.

     49  

13. Certain Effects of the Offer.

     52  

14. Dividends and Distributions.

     52  

15. Certain Conditions of the Offer.

     52  

16. Certain Legal Matters; Regulatory Approvals.

     54  

17. Fees and Expenses.

     57  

18. Miscellaneous

     57  

SCHEDULE I

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SUMMARY TERM SHEET

Purchaser, a direct wholly owned subsidiary of Parent, is offering to purchase all of the outstanding Shares at a price of $8.25 per Share, net to the seller in cash, without interest and less any applicable withholding taxes, as further described herein, upon the terms and subject to the conditions set forth in this Offer to Purchase and the Letter of Transmittal. The following are some questions you, as a stockholder of CDI, may have and answers to those questions. This summary term sheet highlights selected information from this Offer to Purchase and may not contain all of the information that is important to you and is qualified in its entirety by the more detailed descriptions and explanations contained in this Offer to Purchase and the Letter of Transmittal. To better understand the Offer and for a complete description of the legal terms of the Offer, you should read this Offer to Purchase and the Letter of Transmittal carefully and in their entirety. Questions or requests for assistance may be directed to the Information Agent at the address and telephone numbers set forth for the Information Agent on the back cover of this Offer to Purchase. Unless otherwise indicated in this Offer to Purchase or the context otherwise requires, all references in this Offer to Purchase to “we,” “our” or “us” refer to Purchaser.

 

Securities Sought

All outstanding shares of common stock, par value $0.10 per share, of CDI Corp., a Pennsylvania corporation.

 

Price Offered Per Share

$8.25 per share, net to the seller in cash, without interest and less any applicable withholding taxes.

 

Scheduled Expiration of Offer

9:00 AM, Philadelphia, Pennsylvania time, on September 12, 2017, unless the Offer is extended or terminated. See Section 1—“Terms of the Offer.”

 

Purchaser

Nova Merger Sub, Inc., a Pennsylvania corporation and a wholly owned subsidiary of Nova Intermediate Parent, LLC, a Delaware limited liability company. Nova Intermediate Parent, LLC is owned by investment funds managed by AE Industrial Partners, LLC.

Who is offering to buy my Shares?

Nova Merger Sub, Inc., a direct wholly owned subsidiary of Nova Intermediate Parent, LLC, is offering to purchase all of the outstanding Shares. Purchaser is a Pennsylvania corporation which was formed for the sole purpose of making the Offer and completing the process by which Purchaser will be merged with and into CDI. Parent is owned by AE Industrial Partners Fund I, L.P. (“Fund I”), AE Industrial Partners Fund I-A, L.P. (“Fund I-A”), and AE Industrial Partners Fund I-B, L.P. (“Fund I-B,” and, together with Fund I and Fund I-A, the “AE Funds”), which are investment funds managed by AE Industrial Partners, LLC (“AE Industrial”). See the “Introduction” and Section 8—“Certain Information Concerning Parent and Purchaser.”

How many Shares are you offering to purchase in the Offer?

We are making an offer to purchase all of the outstanding Shares on the terms and subject to the conditions set forth in this Offer to Purchase. See the “Introduction” and Section 1—“Terms of the Offer.”

Why are you making the Offer?

We are making the Offer because we want to acquire control of, and ultimately the entire equity interest in, CDI. If the Offer is consummated, Parent intends, as soon as practicable after consummation of the Offer, to have Purchaser consummate the Merger. Upon consummation of the Merger, CDI would be a wholly owned subsidiary of Parent.

 

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How much are you offering to pay and what is the form of payment? Will I have to pay any fees or commissions?

We are offering to pay $8.25 per Share, net to you in cash, without interest and less any applicable withholding taxes. If you are the holder of record of your Shares and you tender them to us in the Offer, you will not have to pay brokerage fees, commissions or similar expenses to do so. If you own your Shares through a broker or other nominee, and your broker tenders your Shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply. See the “Introduction,” Section 1—“Terms of the Offer,” and Section 2—“Acceptance for Payment and Payment for Shares.”

What are the most significant conditions to the Offer?

Our obligation to purchase Shares tendered in the Offer is subject to the satisfaction or waiver of a number of conditions set forth in the Merger Agreement, including, among other things:

 

    there being validly tendered in accordance with the terms of the Offer and not validly withdrawn prior to 9:00 AM, Philadelphia, Pennsylvania time, on September 12, 2017, unless extended by Purchaser in accordance with the Merger Agreement, a number of Shares (excluding all Shares tendered in the Offer pursuant to guaranteed delivery instructions but not yet delivered to or on behalf of Purchaser) that, together with the number of Shares then-owned by Parent, Purchaser or any of their respective subsidiaries, equals at least one Share more than half of the sum of (i) all Shares then outstanding and (ii) all Shares issuable upon the exercise or vesting, as applicable, of all Company Options and Company TVDS Awards;

 

    the expiration or termination of any waiting period applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which has been satisfied by the grant of early termination of the applicable waiting period by the FTC on August 7, 2017);

 

    there not being, at the Expiration Date, (i) any order, injunction, judgment or other similar requirement issued by a governmental authority or self-regulatory organization or (ii) any applicable law or regulation or similar requirement of a governmental authority or self-regulatory organization in effect that, in each case, would (1) make the Offer, the Top-Up Option (if applicable), the issuance of Shares pursuant to the Top-Up Option (if applicable), the Merger or the other transactions contemplated in the Merger Agreement illegal or (2) otherwise prevent or prohibit the consummation thereof; and

 

    the absence of a termination of the Merger Agreement in accordance with its terms.

The Offer is also subject to a number of other conditions. We can waive some of the conditions to the Offer without the consent of CDI. We cannot, however, waive the Minimum Condition or the Termination Condition without the consent of CDI. See Section 15—“Certain Conditions of the Offer.”

Do you have the financial resources to pay for all of the Shares that you are offering to purchase in the Offer and to consummate the Merger and the other transactions contemplated by the Merger Agreement?

Yes. We estimate that we will need approximately $167.2 million to purchase all of the Shares pursuant to the Offer, to complete the Merger (which estimate includes, to the extent required, payment in respect of outstanding Company Options, Company TVDS Awards, Company stock appreciation rights and Company performance units, in each case, granted pursuant to CDI’s equity plans which are eligible for payment and become payable under the terms of the Merger Agreement), to pay estimated related transaction fees and expenses and to repay or refinance certain indebtedness of CDI. Purchaser has received a debt commitment letter, pursuant to which PNC Bank, National Association has agreed to provide Parent with a $150.0 million asset backed revolving credit facility. Subject to satisfaction of certain customary conditions set forth in the debt

 

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commitment letter, the amounts under such facility shall be available to Parent to finance, in part, the Offer and the Merger, to repay or refinance certain indebtedness of CDI and to pay related fees and expenses. In addition, the AE Funds have provided Parent with an equity commitment letter, pursuant to which each AE Fund has agreed to contribute to Parent specified amounts to purchase equity securities of Parent that in aggregate total $167.2 million, subject to the satisfaction of certain customary conditions set forth in the equity commitment letter. To the extent necessary to finance the Offer, the Merger and the other contemplated transactions (the “Transactions”), Parent will contribute or otherwise advance to Purchaser the net proceeds from the equity commitments and the debt commitment, which, taken together with the Company’s cash on hand at the effective time of the Merger (the “Effective Time”), we anticipate will be sufficient to purchase all of the validly tendered Shares in the Offer and complete the Merger and related refinancing transactions, and to pay related transaction fees and expenses. See Section 9—“Source and Amount of Funds.”

The Offer is not conditional upon Parent and/or Purchaser obtaining third party debt financing.

Is your financial condition relevant to my decision to tender in the Offer?

We do not think that Purchaser’s financial condition is relevant to your decision whether to tender Shares and accept the Offer because:

 

    the Offer is being made for all outstanding Shares solely for cash;

 

    the Offer is not subject to any financing condition;

 

    Parent has received equity and debt commitments in respect of funds, which will be sufficient to purchase all Shares validly tendered pursuant to the Offer;

 

    the AE Funds are private equity funds engaged in the purchase, sale and ownership of private equity investments and have no business operations other than investing; only each AE Fund’s commitment to fund its equity commitment as described above and in Section 9—“Source and Amount of Funds” is material to your decision with respect to the Offer and each AE Fund has sufficient capital to support its equity commitment; and

 

    if Purchaser consummates the Offer, Purchaser will acquire all remaining Shares for the same cash price in the Merger.

See Section 9—“Source and Amount of Funds.”

How long do I have to decide whether to tender in the Offer?

You will have until 9:00 AM, Philadelphia, Pennsylvania time, on September 12, 2017 to tender your Shares in the Offer, subject to extension of the Offer in accordance with the terms of the Merger Agreement. Further, if you cannot deliver everything that is required in order to make a valid tender by that time, you may be able to use a guaranteed delivery procedure by which a broker, a bank or any other fiduciary that is an eligible institution may guarantee that the missing items will be received by the Depositary within three NYSE (as defined below) trading days. See Section 1—“Terms of the Offer” and Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

If you hold Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you should be aware that such institutions may establish their own earlier deadline for tendering Shares in the Offer. Accordingly, if you hold Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you should contact such institution as soon as possible in order to determine the times by which you must take action in order to tender Shares in the Offer. If you hold Shares in the CDI 401(k) Savings Plan, please go to https://participant.empower-retirement.com or call 1-888-411-4015 for further information on how to tender such Shares.

 

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Can the Offer be extended and under what circumstances can or will the Offer be extended?

In some cases, we are required to extend the Offer beyond its initial Expiration Date. If we extend the time period of this Offer, this extension will extend the time that you will have to tender your Shares. We are required to extend our Offer beyond its then-scheduled Expiration Date (i) for any period required by any applicable rule or regulation of the SEC or its staff or the New York Stock Exchange (“NYSE”) or (ii) for a period of 10 business days (or other period agreed to by the parties) at the request of CDI if any condition to the Offer is not met as of the then-scheduled Expiration Date; provided, that (A) if all conditions to the Offer other than the Minimum Condition have been met, we shall only be required to extend our Offer for a maximum of 30 business days in the aggregate and (B) in no event shall we be required to extend our Offer beyond October 30, 2017 or, if earlier, the termination of the Merger Agreement in accordance with its terms.

In addition, we may, without requiring the consent of CDI or any other person, extend our Offer for one or more periods of up to 10 business days each (or other period agreed to by the parties), if at the then-scheduled Expiration Date any of the conditions of the Offer have not been satisfied or waived by Purchaser. In no event, however, may we extend our Offer beyond October 30, 2017 or, if earlier, the termination of the Merger Agreement, without CDI’s prior written consent.

We have also reserved the right to provide, so long as CDI gives its written consent, a “subsequent offering period” of between three and twenty business days, inclusive, in accordance with Rule 14d-11 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if at the then-scheduled Expiration Date insufficient Shares have been tendered to permit a “short form” merger in accordance with the Pennsylvania Business Corporation Law of 1988, as amended, and the Pennsylvania Entity Transactions Law (collectively, the “PBCL”). A subsequent offering period is different from an extension of the Offer. During a subsequent offering period, you would not be able to withdraw any of the Shares that you had already tendered; you also would not be able to withdraw any of the Shares that you tender during the subsequent offering period.

See Section 1—“Terms of the Offer” for more details on our ability to extend the Offer.

How will I be notified if the Offer is extended?

If we extend the Offer, we will inform the Depositary of that fact and will make a public announcement of the extension not later than 9:00 AM, Philadelphia, Pennsylvania time, on the next business day after the day on which the Offer was scheduled to expire. See Section 1—“Terms of the Offer.”

How do I tender my Shares?

If you are the stockholder of record, to tender your Shares you must deliver the certificates (if any) representing your Shares or confirmation of a book-entry transfer of such Shares into the account of the Depositary at The Depository Trust Company, together with a completed Letter of Transmittal or an Agent’s Message (as defined herein), and any other documents required by the Letter of Transmittal, to the Depositary not later than the time the Offer expires. If your Shares are held in street name (that is, through a broker, dealer or other nominee), they can be tendered by your nominee through The Depository Trust Company. If you are unable to deliver any required document or instrument to the Depositary by the expiration of the Offer, you may gain some extra time by having a broker, a bank or any other fiduciary that is an eligible institution guarantee that the missing items will be received by the Depositary within three NYSE trading days. For the tender to be valid, however, the Depositary must receive the missing items within such three trading day period. See Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

Until what time may I withdraw previously tendered Shares?

You may withdraw previously tendered Shares any time prior to the expiration of the Offer by following the procedures for withdrawing your Shares in a timely manner. Thereafter, tenders of Shares are irrevocable, except

 

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that they may also be withdrawn after October 13, 2017, which is the 60th day after the commencement of the Offer, unless such Shares have already been accepted for payment by Purchaser pursuant to the Offer. If you tendered your Shares by giving instructions to a broker or other nominee, you must instruct your broker or nominee prior to the expiration of the Offer in a timely manner to arrange for the withdrawal of your Shares. However, Shares tendered during the subsequent offering period, if any, may not be withdrawn. See Section 4—“Withdrawal Rights.”

How do I withdraw previously tendered Shares?

To withdraw any of your previously tendered Shares, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to the Depositary while you still have the right to withdraw such Shares. If you tendered your Shares by giving instructions to a broker or other nominee, you must instruct your broker or nominee to arrange for the withdrawal of your Shares, who must withdraw such Shares while you still have the right to do so. See Section 4—“Withdrawal Rights.”

What is the Top-Up Option and when could it be exercised?

CDI has granted to Parent and Purchaser an irrevocable option to purchase (the “Top-Up Option”), at a price per Share equal to the Offer Price, that number of Shares (the “Top-Up Shares”) equal to the lowest number of Shares that, when added to the number of Shares owned by Parent, Purchaser and any of their respective subsidiaries at the time of exercise of the Top-Up Option, shall constitute one share more than 80% of the outstanding Shares immediately after the issuance of the Top-Up Shares on a fully diluted basis (which assumes conversion or exercise of all derivative securities regardless of the conversion or exercise price, the vesting schedule or other terms and conditions thereof).

The Top-Up Option shall be deemed exercised if, after consummation of the Offer, the number of Shares validly tendered and not validly withdrawn, when added to the Shares owned by Parent and its affiliates, is less than one share more than 80% of the Shares on a fully-diluted basis. The Top-Up Option is intended to expedite the timing of the completion of the Merger by permitting Purchaser to effect a “short-form” merger pursuant to applicable Pennsylvania law at a time when the approval of the Merger at a meeting of CDI’s stockholders would be assured because of Parent’s and Purchaser’s ownership of a majority of the Shares following completion of the Offer. CDI has sufficient remaining Shares authorized for issuance under its certificate of incorporation such that if the Minimum Condition is satisfied, the Top-Up Option will provide Purchaser the requisite number of Shares to hold over 80% of the then-outstanding Shares and consummate the Merger as a short-form merger. See Section 12—“Purpose of the Offer; Plans for CDI” and Section 16—“Certain Legal Matters; Regulatory Approvals.”

What does the board of directors of CDI think of the Offer?

We are making the Offer pursuant to the Merger Agreement, which has been approved by the board of directors of CDI (the “Company Board”). The Company Board has unanimously adopted the following resolutions (the “Company Board Recommendation”):

 

    approving and declaring that the Merger Agreement, the Merger and the other transactions contemplated thereby are advisable, fair to and in the best interests of the stockholders of the Company and the Company;

 

    approving the Merger Agreement and the transactions contemplated thereby, including the Offer, the Top-Up Option and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement; and

 

    determining to recommend that the stockholders of the Company accept the Offer and tender their shares to Purchaser pursuant to the Offer, and if required to consummate the Merger, that the stockholders of the Company adopt the Merger Agreement.

 

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See the “Introduction” and Section 10—“Background of the Offer; Past Contacts or Negotiations with CDI.”

Upon successful consummation of the Offer, will CDI continue as a public company?

No. Following the purchase of Shares in the Offer, we expect to consummate the Merger. The Merger will occur either promptly following purchase of the tendered Shares via a short form merger pursuant to the PBCL or, if, for reasons we do not currently anticipate, a short form merger is not possible, following the approval of CDI’s stockholders at a meeting called for such purpose. If the Merger takes place, CDI no longer will be publicly owned. Even if for some reason the Merger does not take place but we purchase all of the tendered Shares, then there may be so few remaining stockholders and publicly held Shares that the Shares will no longer be eligible to be traded on the NYSE or any other securities exchange, there may not be a public trading market for the Shares, and CDI may no longer be required to make filings with the SEC or otherwise comply with the rules of the SEC relating to publicly held companies. See Section 13—“Certain Effects of the Offer.”

Will the Offer be followed by the Merger if all of the Shares are not tendered in the Offer?

Yes. So long as a sufficient number of Shares are tendered to satisfy the Minimum Condition in the Offer, then Purchaser will be merged with and into CDI, subject to the satisfaction of certain conditions. If the Minimum Condition is not satisfied, pursuant to the Merger Agreement, we are not required to accept any Shares for purchase or consummate the Merger and we may not accept the Shares tendered without CDI’s consent. If the Merger takes place, Parent will own all of the Shares and all remaining Shares outstanding immediately prior to the Effective Time will be converted into the right to receive $8.25 per Share in cash, without interest and less any applicable withholding taxes (other than Shares owned by CDI, Purchaser or Parent or any subsidiary of CDI or Parent, which will be cancelled and for which no consideration will be paid in exchange therefor, and Shares as to which the holder thereof has properly demanded and not otherwise lost dissenters’ rights under the PBCL). See the “Introduction.”

If you do not consummate the Offer, will you nevertheless consummate the Merger?

No. None of Purchaser, Parent or CDI are under any obligation to pursue or consummate the Merger if the Offer has not been earlier consummated.

If I object to the price being offered, will I have dissenters’ rights?

Not in connection with the Offer. However, if the Merger takes place, stockholders who have not tendered their Shares in the Offer may be entitled to dissenters’ rights if (i) prior to the Merger (A) the Shares are no longer listed on a national securities exchange and (B) the Shares are held beneficially or of record by 2,000 persons or less or (ii) we own at least 80% of the Shares, including through exercise of the Top-Up Option, and the Merger is consummated as a “short-form” merger pursuant to applicable provisions of the PBCL. If you choose to exercise your dissenters’ rights in connection with the Merger and you are entitled to demand and properly demand appraisal of your Shares pursuant to, and comply in all respects with, the applicable provisions of Pennsylvania law, you will be entitled to payment for your Shares based on a judicial determination of the fair value of your Shares, together with interest, if any. The fair value may be more than, less than or equal to the price that we are offering to pay you for your Shares in the Offer. See Section 12—“Purpose of the Offer; Plans for CDI.”

If I decide not to tender, how will the Offer affect my Shares?

If the Offer is consummated and certain other conditions are met, the Merger will occur and all of the Shares outstanding prior to the Effective Time (other than Shares held by Parent, Purchaser or CDI (as treasury stock), any wholly owned subsidiary of Parent, Purchaser or CDI, or Shares as to which the holder thereof has properly demanded and not otherwise lost dissenters’ rights under Pennsylvania law) will at the Effective Time be

 

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converted into the right to receive the Offer Price without interest and less any applicable withholding taxes or deductions required by applicable law. Therefore, if the Merger takes place, the principal difference to you between tendering your Shares and not tendering your Shares is that you will be paid earlier if you tender your Shares and that no dissenters’ rights will be available in the Offer. We do not expect there to be significant time between the consummation of the Offer and the consummation of the Merger. Upon consummation of the Merger, there no longer will be any public trading market for the Shares. Also, the Company will no longer be required to make filings with the SEC or otherwise comply with the rules of the SEC relating to publicly-held companies. See the “Introduction” and Section 13—“Certain Effects of the Offer.”

What is the market value of my Shares as of a recent date?

On July 28, 2017, the last trading day before execution of the Merger Agreement was announced, the last sale price of a Share reported on the NYSE was $6.20 per share; the Offer Price represents a premium of approximately 33.1% to such price. On August 11, 2017, the last trading day before we commenced the Offer, the last sale price of a Share reported on the NYSE was $8.20 per share. We encourage you to obtain a recent quotation for Shares in deciding whether to tender your Shares. See Section 6—“Price Range of Shares; Dividends.”

Have any stockholders already agreed to tender their Shares in the Offer or to otherwise support the Offer?

Yes. We have entered into tender and support agreements (collectively, the “Tender Agreements”) with CDI’s directors and executive officers and certain trusts for descendants of Walter Garrison, CDI’s chairman and founder (the “Significant Stockholders”), which collectively owned approximately 4,957,587 Shares, which represent approximately 24.9% of all outstanding Shares on a fully diluted basis as of August 11, 2017, based on information provided by them. Pursuant to the Tender Agreements, each of these parties has agreed, among other things, to tender all of the Shares beneficially owned by him, her or it in the Offer, other than nontransferable restricted Shares or certain other specified exceptions (such as, in the case of Walter Garrison, shares that are transferred to a qualified charitable organization). Unless otherwise specified in the applicable Tender Agreement, each Significant Stockholder is required to tender such Shares within five business days after commencement of the Offer or, with respect to any Shares acquired after such date, prior to the Expiration Date. See Section 11—“The Merger Agreement; Other Agreements.”

Are there any compensation arrangements between AE Industrial and CDI’s executive officers or other key employees?

No. Although it is possible that certain members of CDI’s management team will enter into arrangements with the Surviving Corporation or Parent regarding future employment, severance, benefits and/or the right to purchase or participate in the equity of, the Surviving Corporation or Parent, as of the date of this Offer to Purchase no discussions have occurred between members of CDI’s current management and Parent, Purchaser or AE Industrial regarding such matters, and there can be no assurance that any parties will reach any agreements. Any new arrangements are currently expected to be discussed and entered into after completion of the Merger. See Section 12—“Purpose of the Offer; Plans for CDI.”

If I tender my Shares, when and how will I get paid?

If the conditions to the Offer as set forth in Section 15 are satisfied or waived and Purchaser consummates the Offer and accepts your Shares for payment, we will pay you an amount equal to the number of Shares you tendered multiplied by $8.25 per Share in cash, without interest and less any applicable withholding taxes, promptly following expiration of the Offer. See Section 1—“Terms of the Offer” and Section 2—“Acceptance for Payment and Payment for Shares.”

 

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What will happen to my stock options and stock appreciation rights in the Offer and the Merger?

Stock options to purchase Shares and stock appreciation rights are not sought in or affected by the Offer. However, all Company Options and stock appreciation rights (the “Company SARs”) granted under any CDI equity plan have a per-Share exercise price or per-Share base price (as applicable) that is greater than the Offer Price. Accordingly, pursuant to the Merger Agreement, each Company Option and Company SAR outstanding as of the Effective Time, whether vested or unvested, will be cancelled at the Effective Time with no payment due to the holder thereof. See Section 11—“The Merger Agreement; Other Agreements.”

What will happen to my time vested deferred stock awards in the Offer and the Merger?

Company TVDS Awards are not sought in or affected by the Offer. As of the Effective Time, each outstanding Company TVDS Award will be cancelled and converted into the right to receive (without interest) a cash payment equal to (i) the product of the Offer Price multiplied by the number of Shares underlying such Company TVDS Award immediately prior to the Effective Time, plus (ii) the accrued but unpaid dividend equivalents on such award as of immediately prior to the Effective Time, less any applicable taxes withheld (the “Company TVDS Payment”). The Company TVDS Payment relating to the portion of a Company TVDS Award that is vested as of the Effective Time (after giving effect to the Transactions) will be paid within three (3) business days after the Effective Time through the Surviving Corporation’s payroll system. The Company TVDS Payment relating to the portion of a Company TVDS Award that is not vested as of the Effective Time will be paid to the holder thereof at such times and to the extent that the associated Company TVDS Award would have become vested in accordance with the vesting schedule applicable to such award. If any portion of a Company TVDS Award that is not vested as of the Effective Time (after giving effect to the Transactions) does not become vested after the Effective Time in accordance with its terms, the portion of the Company TVDS Payment related to such unvested portion of the Company TVDS Award will be forfeited and will not be paid to the holder thereof. See Section 11—“The Merger Agreement; Other Agreements.” In addition, each outstanding Company TVDS Award held by a non-employee director of the Company will fully vest and be settled in Shares immediately prior to the Effective Time.

What will happen to my performance units in the Offer and the Merger?

Company performance units are not sought in or affected by the Offer. At the Effective Time, each Company performance unit that, by its terms and after giving effect to the Transactions, is vested based on actual performance through the Effective Time will be cancelled in exchange for the right of the holder thereof to receive (without interest) an amount in cash equal to the product of (i) the total number of Shares underlying the vested portion of the Company performance unit award immediately prior to the Effective Time multiplied by (ii) the Offer Price, which amount will be paid to the holder thereof within three (3) business days following the Effective Time. At the Effective Time, each Company performance unit award that, by its terms and after giving effect to the Transactions, is not vested will be cancelled with no payment due to the holder. See Section 11—“The Merger Agreement; Other Agreements.”

What are the United States federal income tax consequences of the Offer and the Merger?

The receipt of cash by you in exchange for your Shares pursuant to the Offer or the Merger will generally be a taxable transaction for U.S. federal income tax purposes if you are a United States holder (as defined in Section 5—“Certain Material United States Federal Income Tax Consequences”). In general, you will recognize gain or loss equal to the difference, if any, between your adjusted tax basis in the Shares you tender in the Offer or exchange in the Merger and the amount of cash you receive for those Shares (including any cash required to be withheld for tax purposes). If you are a United States holder and you hold your Shares as a capital asset, the gain or loss that you recognize will be a capital gain or loss and will be treated as a long-term capital gain or loss if you have held the Shares for at least one year. If you are a Non-United States holder (as defined in Section 5—“Certain Material United States Federal Income Tax Consequences”), you will generally not be subject to U.S. federal income tax on your receipt of cash in exchange for your Shares pursuant to the Offer or the Merger unless

 

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certain exceptions apply. A Non-United States holder may be subject to backup withholding with respect to cash payments made pursuant to the Offer and the Merger unless such holder certifies that it is not a U.S. person or otherwise establishes an exemption. See Section 5—“Certain Material United States Federal Income Tax Consequences” for a further discussion of U.S. federal income tax consequences of tendering Shares pursuant to the Offer or exchanging Shares in the Merger or exercising dissenters’ rights. The tax consequences of the Offer and Merger to you will depend on the facts of your own situation. You should consult your tax advisor for a full understanding of the U.S. federal tax consequences of the Offer and the Merger to you, as well as the tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.

Who should I talk to if I have additional questions about the Offer?

You may call D.F. King & Co., Inc., the Information Agent for the Offer, toll-free at (877) 297-1738. Banks and brokers may call (212) 269-5550.

 

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INTRODUCTION

Nova Merger Sub, Inc. (“Purchaser”), a Pennsylvania corporation and a direct wholly owned subsidiary of Nova Intermediate Parent, LLC (“Parent”), a Delaware limited liability company controlled by investment funds managed by AE Industrial Partners, LLC (“AE Industrial”), hereby offers to purchase for cash all outstanding shares of common stock, par value $0.10 per share (each, a “Share”), of CDI Corp., a Pennsylvania corporation (“CDI”) at a price of $8.25 per Share, net to the seller in cash, without interest and less any applicable withholding taxes (the “Offer Price”), upon the terms and subject to the conditions set forth in this offer to purchase (this “Offer to Purchase”) and in the related letter of transmittal (the “Letter of Transmittal”) (which, together with any amendments or supplements hereto or thereto, collectively constitute the “Offer”). The Offer and the withdrawal rights will expire at 9:00 AM, Philadelphia, Pennsylvania time, on September 12, 2017, unless the Offer is extended in accordance with the terms of the Merger Agreement (as defined below) (as may be so extended, the “Expiration Date”).

The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of July 31, 2017 (as the same may be amended, the “Merger Agreement”), by and among Parent, Purchaser and CDI. The Merger Agreement provides that Purchaser will be merged with and into CDI (the “Merger”) with CDI continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Parent (the “Surviving Corporation”). Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each Share outstanding immediately prior to the Effective Time (other than Shares owned by CDI, Purchaser or Parent or any subsidiaries of CDI, Parent or Purchaser, all of which will be cancelled, and other than Shares as to which the holder thereof has properly demanded and not otherwise lost dissenters’ rights under Subchapter 15D of the Pennsylvania Business Corporation Law of 1988, as amended and the Pennsylvania Entity Transactions Law (the “PBCL”)) will be converted into the right to receive $8.25 in cash, without interest and less any applicable withholding taxes (the “Merger Consideration”). The Merger Agreement is more fully described in Section 11—“The Merger Agreement; Other Agreements,” which also contains a discussion of the treatment of options and other equity awards.

Tendering stockholders who are record owners of their Shares and tender directly to the Depositary (as defined below) will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares through a broker or bank should consult such institution as to whether it charges any service fees. Parent or Purchaser will pay all charges and expenses of Computershare Trust Company, N.A., as depositary for the Offer (the “Depositary”), and D.F. King & Co., Inc., as information agent for the Offer (the “Information Agent”), incurred in connection with the Offer. See Section 17—“Fees and Expenses.”

Following careful consideration the board of directors of CDI (the “Company Board”) has unanimously adopted resolutions: (i) approving and declaring that the Merger Agreement, the Merger and the other transactions contemplated thereby are advisable, fair to and in the best interests of the stockholders of the Company and the Company, (ii) approving the Merger Agreement and the transactions contemplated thereby, including the Offer, the Top-Up Option (as defined below) and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement and (iii) determining to recommend that the stockholders of the Company accept the Offer and tender their shares to Purchaser pursuant to the Offer, and if required to consummate the Merger, that the stockholders of the Company adopt the Merger Agreement (collectively, the “Company Board Recommendation”).

A more complete description of the Company Board’s reasons for authorizing and approving the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, is set forth in CDI’s Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is being mailed to the stockholders of CDI with this Offer to Purchase.

 

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The Offer is conditioned upon, among other things,

(a) there being validly tendered in accordance with the terms of the Offer and not validly withdrawn prior to the Expiration Date a number of Shares (excluding all Shares tendered in the Offer pursuant to guaranteed delivery instructions but not yet delivered to or on behalf of Purchaser) that, together with the number of Shares then-owned by Parent, Purchaser or any of their respective subsidiaries, equals at least one Share more than half of the sum of (i) all Shares then outstanding and (ii) all Shares issuable upon the exercise or vesting, as applicable, of all options to acquire Shares granted under the Company’s stock plans (“Company Options”) and all time-vested deferred stock of the Company granted under the Company’s stock plans (“Company TVDS Awards”) (the “Minimum Condition”);

(b) the expiration or termination of any waiting period applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which has been satisfied by the grant of early termination of the applicable waiting period by the Federal Trade Commission (the “FTC”) on August 7, 2017);

(c) there not being, at the Expiration Date, (i) any order, injunction, judgment or other similar requirement issued by a governmental authority or self-regulatory organization or (ii) any applicable law or regulation or similar requirement of a governmental authority or self-regulatory organization in effect that, in each case, would (1) make the Offer, the Top-Up Option (if applicable), the issuance of Shares pursuant to the Top-Up Option (if applicable), the Merger or the other transactions contemplated in the Merger Agreement illegal or (2) otherwise prevent or prohibit the consummation thereof; and

(d) the absence of a termination of the Merger Agreement in accordance with its terms (the “Termination Condition”).

The Offer is also subject to a number of other conditions. We can waive some of the conditions to the Offer without the consent of CDI. We cannot, however, waive the Minimum Condition or the Termination Condition without the consent of CDI. See Section 15—“Certain Conditions of the Offer.”

CDI has advised Parent that, as of the close of business on August 11, 2017, 18,793,206 Shares were issued and outstanding, 1,060,590 Shares were issuable under Company TVDS Awards (including 11,086 Shares issuable due to accumulated but unpaid dividend on outstanding TVDS Awards) and 53,491 Shares were issuable under Company Options. Assuming that no Shares are issued after August 11, 2017, there would be 19,907,287 Shares outstanding on a fully diluted basis; and 9,953,645 Shares would need to be validly tendered and not withdrawn prior to the Expiration Date in order to satisfy the Minimum Condition. The actual number of Shares required to be tendered to satisfy the Minimum Condition will depend on the actual number of Shares outstanding on the date we accept Shares for payment pursuant to the Offer. For purposes of this Offer to Purchase, “fully diluted” assumes the exercise or conversion of all CDI derivatives or securities that are vested or would be vested upon consummation of the Offer, regardless of the conversion or exercise price or other terms and conditions thereof. For the avoidance of doubt, CDI’s outstanding stock appreciation rights and performance units have no effect on the fully diluted number of Shares outstanding.

The Merger Agreement provides that, from and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, the directors of Purchaser immediately prior to the Effective Time will be the directors of the Surviving Corporation and the officers of CDI immediately prior to the Effective Time will be the officers of the Surviving Corporation.

This Offer to Purchase does not constitute a solicitation of proxies, and Purchaser is not soliciting proxies at this time. If Purchaser acquires at least 80% of the then-outstanding Shares in the Offer, including, if applicable, shares issued pursuant to the Top-Up Option, Purchaser may consummate the Merger under the PBCL without a stockholders’ meeting and without the approval of CDI’s stockholders. CDI has sufficient remaining Shares authorized for issuance under its certificate of incorporation such that, if the Minimum Condition is satisfied, the Top-Up Option will provide Purchaser the requisite number of Shares to hold over 80% of the then-outstanding

 

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Shares and consummate the Merger as a short-form merger. See Section 11—“The Merger Agreement; Other Agreements.”

Certain U.S. federal income tax consequences of the sale of Shares pursuant to the Offer and the exchange of Shares pursuant to the Merger are described in Section 5—“Certain Material United States Federal Income Tax Consequences.”

This Offer to Purchase and the Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer.

 

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THE TENDER OFFER

1. Terms of the Offer.

Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not properly withdrawn as permitted under Section 4—“Withdrawal Rights.” The term “Expiration Date” means 9:00 AM, Philadelphia, Pennsylvania time, on September 12, 2017, unless Purchaser, in accordance with the Merger Agreement, extends the period during which the Offer is open, in which event the term “Expiration Date” means the latest time and date on which the Offer, as so extended, expires.

The Offer is conditioned upon the satisfaction of the Minimum Condition and the other conditions set forth in Section 15—“Certain Conditions of the Offer.” Subject to the provisions of the Merger Agreement, Parent and Purchaser may waive any or all of the conditions to Purchaser’s obligation to purchase Shares pursuant to the Offer (other than the Minimum Condition or the Termination Condition, which may only be waived with the consent of CDI).

Purchaser is required to extend the Offer beyond its then-scheduled Expiration Date (i) for any period required by any applicable rule or regulation of the SEC or its staff or the New York Stock Exchange (“NYSE”), (ii) for a period of 10 business days (or other period agreed to by the parties) at the request of CDI if any condition to the Offer other than the Minimum Condition is not met as of the then-scheduled Expiration Date; provided, that (A) if all conditions to the Offer other than the Minimum Condition have been met, we shall only be required to extend our Offer for a maximum of 30 business days in the aggregate and (B) in no event shall we be required to extend our Offer beyond October 30, 2017 or, if earlier, the termination of the Merger Agreement in accordance with its terms.

In addition, Purchaser may, without requiring the consent of CDI or any other person, extend the Offer for one or more periods of up to 10 business days each (or other period agreed to by the parties), if at the then-scheduled Expiration Date any of the conditions of the Offer have not been satisfied or waived by Purchaser. In no event, however, may Purchaser extend the Offer beyond October 30, 2017 or, if earlier, the termination of the Merger Agreement, without CDI’s prior written consent.

The Merger Agreement also provides that, so long as CDI gives its written consent, Purchaser may provide for a subsequent offering period in accordance with Rule 14d-11 of the Exchange Act (the “Subsequent Offering Period”). The Subsequent Offering Period is an additional period of time of not less than three nor more than 20 business days in length during which time stockholders may tender, but not withdraw, their Shares and receive the Offer Price. Rule 14d-11 provides that Purchaser may provide for the Subsequent Offering Period so long as, among other things, (i) the Offer remained open for a minimum of 20 business days and has expired, (ii) the Offer is for all outstanding Shares, (iii) Purchaser accepts and promptly pays for all Shares tendered during the Offer prior to the Expiration Date, (iv) Purchaser announces the results of the Offer, including the approximate number and percentage of Shares deposited in the Offer, no later than 9:00 AM, Philadelphia, Pennsylvania time, on the next business day after the Expiration Date and immediately begins the Subsequent Offering Period, (v) Purchaser immediately accepts and promptly pays for Shares as they are tendered during the Subsequent Offering Period, and (vi) Purchaser offers the same form and amount of consideration to holders of Shares in both the initial Offer period and the Subsequent Offering Period. In the event that Purchaser elects to provide for the Subsequent Offering Period, it will provide an announcement to that effect by issuing a press release to a national news service on the next business day after the previously scheduled Expiration Date.

Subject to the applicable rules and regulations of the SEC and the provisions of the Merger Agreement, Purchaser expressly reserves the right (i) to extend the Offer if any of the conditions set forth in Section 15—“Certain Conditions of the Offer” have not been satisfied or waived by Purchaser, (ii) to waive any condition to

 

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the Offer in its sole discretion (other than the Minimum Condition or the Termination Condition, which waiver requires the consent of CDI) or (iii) to increase the Offer Price or otherwise modify the terms of the Offer, in each case by giving oral or written notice of such extension, termination, waiver or amendment to the Depositary and by making a public announcement thereof. Purchaser may not, however, among other actions, reduce the number of Shares subject to the Offer, reduce the Offer Price, modify or waive the Minimum Condition or the Termination Condition, add to the conditions to the Offer or otherwise modify or waive any term of the Offer in a manner adverse to CDI (prior to the consummation of the Offer) or the holders of Shares, extend the Offer in a manner not permitted by the Merger Agreement, change the form of consideration to be paid in the Offer, impose additional or different Offer conditions, adversely change any of the Offer terms or provide for a Subsequent Offering Period, in each case without the consent of CDI.

The rights reserved by Purchaser in the preceding paragraph are in addition to Purchaser’s rights pursuant to Section 15—“Certain Conditions of the Offer.” Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be made no later than 9:00 AM, Philadelphia, Pennsylvania time, on the next business day after the previously scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require that material changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to a national news service. As used in this Offer to Purchase, “business day” means any day other than a Saturday, Sunday or a federal holiday and shall consist of the time period from 12:01 AM through 12:00 midnight, Philadelphia, Pennsylvania time.

If Purchaser extends the Offer or if Purchaser (whether before or after its acceptance for payment of Shares) is delayed in its acceptance for payment of or payment for Shares or it is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to Purchaser’s rights under the Offer, the Depositary may retain tendered Shares on behalf of Purchaser, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described herein under Section 4—“Withdrawal Rights.” However, the ability of Purchaser to delay the payment for Shares that Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder promptly pay the consideration offered. Alternatively, if the Offer is not consummated, the Shares are not accepted for payment or Shares are properly withdrawn, Purchaser is obligated to return the securities deposited by or on behalf of stockholders promptly after the termination of the Offer or withdrawal of such Shares.

If Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, Purchaser will disseminate additional Offer materials and extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which an Offer must remain open following material changes in the terms of the Offer, other than a change in price, percentage of securities sought, or inclusion of or changes to a dealer’s soliciting fee, will depend upon the facts and circumstances, including the materiality, of the changes. In the SEC’s view, an offer to purchase should remain open for a minimum of five business days from the date the material change is first published, sent or given to stockholders and, if material changes are made with respect to information that approaches the significance of price and share levels, a minimum of 10 business days may be required to allow for adequate dissemination and investor response. Accordingly, if, prior to the Expiration Date, Purchaser decreases the number of Shares being sought or increases the consideration offered pursuant to the Offer, and if the Offer is scheduled to expire at any time earlier than the 10th business day from the date that notice of such increase or decrease is first published, sent or given to stockholders, the Offer will be extended at least until the expiration of such 10th business day.

If, on or before the Expiration Date, Purchaser increases the consideration being paid for Shares accepted for payment in the Offer, such increased consideration will be paid to all stockholders whose Shares are

 

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purchased in the Offer, whether or not such Shares were tendered before the announcement of the increase in consideration.

CDI has provided Purchaser with CDI’s stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the Letter of Transmittal will be mailed to record holders of Shares whose names appear on CDI’s stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing.

2. Acceptance for Payment and Payment for Shares.

Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment) and the satisfaction or earlier waiver of all the conditions to the Offer set forth in Section 15—“Certain Conditions of the Offer,” Purchaser will accept for payment and will pay for all Shares validly tendered prior to the Expiration Date and not properly withdrawn pursuant to the Offer promptly after the Expiration Date. Subject to the Merger Agreement and in compliance with Rule 14e-1(c) under the Exchange Act, Purchaser expressly reserves the right to delay payment for Shares pending receipt of regulatory or government approvals. Rule 14e-1(c) under the Exchange Act relates to the obligation of Purchaser to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer. See Section 16—“Certain Legal Matters; Regulatory Approvals.”

In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) if applicable, the certificates evidencing such Shares (the “Share Certificates”) or, if the Shares are held via a book entry at The Depository Trust Company (the “Book-Entry Transfer Facility”), confirmation (a “Book-Entry Confirmation”) of a book-entry transfer of such Shares into the Depositary’s account at the Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares,” (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer at the Book-Entry Transfer Facility, an Agent’s Message (as defined below) in lieu of the Letter of Transmittal, and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when Share Certificates, Letters of Transmittal or Book-Entry Confirmations with respect to Shares are actually received by the Depositary.

For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn as, if and when Purchaser gives oral or written notice to the Depositary of Purchaser’s acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Offer Price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from Purchaser and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. If, for any reason whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, or Purchaser is unable to accept for payment Shares tendered pursuant to the Offer, then, without prejudice to Purchaser’s rights under the Offer hereof, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares may not be withdrawn, except to the extent that the tendering stockholders are entitled to withdrawal rights as described in Section 4—“Withdrawal Rights” and as otherwise required by Rule 14e-1(c) under the Exchange Act.

Under no circumstances will interest on the Offer Price for Shares be paid, regardless of any delay in making such payment.

If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer, or if Share Certificates are submitted evidencing more Shares than are tendered, Share Certificates

 

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evidencing unpurchased or untendered Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer into the Depositary’s account at the Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares,” such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), promptly following the expiration or termination of the Offer.

If, prior to the Expiration Date, Purchaser increases the price being paid for Shares, Purchaser will pay the increased consideration for all Shares purchased pursuant to the Offer, whether or not those Shares were tendered prior to the increase in consideration.

3. Procedures for Accepting the Offer and Tendering Shares.

Valid Tenders. In order for a stockholder to validly tender Shares pursuant to the Offer, either (i) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees (or, in the case of a book-entry transfer at the Book Entry Transfer Facility, an Agent’s Message in lieu of the Letter of Transmittal), and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either the Share Certificates evidencing tendered Shares (if any) must be received by the Depositary at such address or, for Shares held via book entry at the Book-Entry Transfer Facility, such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date (except with respect to the Subsequent Offering Period, if it is provided), or (ii) the tendering stockholder must comply with the guaranteed delivery procedures described below. No alternative, conditional or contingent tenders will be accepted. For any uncertificated Shares held of record by a person other than a clearing corporation as nominee, such Shares will only be deemed to have been tendered for the purposes of satisfying the Minimum Condition upon physical receipt of an executed Letter of Transmittal (or a manually signed facsimile thereof) by the Depositary.

DTC Book-Entry Transfer. The Depositary will establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make a book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary’s account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility’s procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, either the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent’s Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date (except with respect to the Subsequent Offering Period, if it is provided), or the tendering stockholder must comply with the guaranteed delivery procedure described below. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary.

The term “Agent’s Message” means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against such participant.

For Shares to be validly tendered during the Subsequent Offering Period, if it is provided, the tendering stockholder must comply with the foregoing procedures, except that required documents and certificates must be received during the Subsequent Offering Period.

 

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Signature Guarantees. No signature guarantee is required on the Letter of Transmittal (i) if the Letter of Transmittal is signed by the registered holder (which term, for purposes of this Section 3, includes any participant in the Book-Entry Transfer Facility’s systems whose name appears on a security position listing as the owner of the Shares) of the Shares tendered therewith, unless such holder has completed either the box entitled “Special Delivery Instructions” or the box entitled “Special Payment Instructions” on the Letter of Transmittal or (ii) if the Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a member of or participant in a recognized “Medallion Program” approved by the Securities Transfer Association Inc., including the Security Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature Program (MSP), or any other “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 of the Exchange Act (each, an “Eligible Institution” and collectively, “Eligible Institutions”). In all other cases, all signatures on a Letter of Transmittal must be guaranteed by an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If a Share Certificate is registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made or delivered to, or a Share Certificate not accepted for payment or not tendered is to be issued in the name of or returned to, a person other than the registered holder(s), then the Share Certificate must be endorsed or accompanied by appropriate duly executed stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate, with the signature(s) on such Share Certificate or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.

Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and the Share Certificates evidencing such stockholder’s Shares are not immediately available or such stockholder cannot deliver the Share Certificates and all other required documents to the Depositary prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered; provided that all of the following conditions are satisfied:

 

  i. such tender is made by or through an Eligible Institution;

 

  ii. a properly completed and duly executed “Notice of Guaranteed Delivery,” substantially in the form made available by Purchaser, is received prior to the Expiration Date by the Depositary as provided below; and

 

  iii. if applicable, the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message), and any other documents required by the Letter of Transmittal are received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. As used in this Offer to Purchase, “trading day” means any day on which the NYSE is open for business.

The Notice of Guaranteed Delivery may be delivered by overnight courier or transmitted by facsimile transmission or mailed to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the form of Notice of Guaranteed Delivery made available by Purchaser. In the case of Shares held through the Book-Entry Transfer Facility, the Notice of Guaranteed Delivery must be delivered to the Depositary by a participant by means of the confirmation system of the Book-Entry Transfer Facility.

Shares tendered by a Notice of Guaranteed Delivery will not be deemed “received” for the purpose of satisfying the Minimum Condition unless and until Shares underlying such Notice of Guaranteed Delivery are delivered to the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase.

The method of delivery of Share Certificates, the Letter of Transmittal and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the option and risk of the tendering stockholder, and the delivery will be deemed made only when actually received by the

 

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Depositary (including, in the case of a book-entry transfer at the Book-Entry Transfer Facility, receipt of a Book-Entry Confirmation). If delivery is by mail, then registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

The tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder’s acceptance of the Offer, as well as the tendering stockholder’s representation and warranty that such stockholder has the full power and authority to tender and assign the Shares tendered, as specified in the Letter of Transmittal, and that when Purchaser accepts the Shares for payment, it will acquire good and unencumbered title, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. Purchaser’s acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and Purchaser upon the terms and subject to the conditions of the Offer.

Determination of Validity. All questions as to the validity, form, eligibility (including, without limitation, time of receipt) and acceptance for payment of any tender of Shares will be determined by Purchaser in its discretion. Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived to the satisfaction of Purchaser. None of Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Stockholders may challenge Purchaser’s interpretation of the terms and conditions of the Offer (including, without limitation, the Letter of Transmittal and the instructions thereto), and only a court of competent jurisdiction can make a determination that will be final and binding on all parties.

Appointment. By executing the Letter of Transmittal (or delivering an Agent’s Message) as set forth above, the tendering stockholder will irrevocably appoint designees of Purchaser, and each of them, as such stockholder’s attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such stockholder’s rights with respect to the Shares tendered by such stockholder and accepted for payment by Purchaser and with respect to any and all other Shares or other securities or rights issued or issuable in respect of such Shares. All such proxies will be considered coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, Purchaser accepts for payment Shares tendered by such stockholder as provided herein. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares or other securities or rights will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given by such stockholder (and, if given, will not be deemed effective) with respect thereto. Each designee of Purchaser will thereby be empowered to exercise all voting and other rights with respect to such Shares and other securities or rights, including, without limitation, in respect of any annual, special or adjourned meeting of CDI’s stockholders, actions by written consent in lieu of any such meeting or otherwise, as such designee in its sole discretion deems proper. Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser’s acceptance for payment of such Shares, Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares and other securities and rights, including voting at any meeting of stockholders.

Backup Withholding. Under the “backup withholding” provisions of U.S. federal income tax law, the Depositary may be required to withhold and pay over to the Internal Revenue Service (“IRS”) a portion of the amount of any payments pursuant to the Offer. In order to prevent backup federal income tax withholding with respect to payments to certain stockholders of the Offer Price of Shares purchased pursuant to the Offer, each such stockholder must provide the Depositary with such stockholder’s correct taxpayer identification number (“TIN”) and certify that such stockholder is not subject to backup withholding by completing the IRS Form W-9 in the Letter of Transmittal. Certain stockholders (such as corporations) are not subject to backup withholding. If

 

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a stockholder does not provide its correct TIN or fails to provide the certifications described above, the IRS may impose a penalty on the stockholder and payment of cash to the stockholder pursuant to the Offer may be subject to backup withholding. All United States holders surrendering Shares pursuant to the Offer should complete and sign the IRS Form W-9 included in the Letter of Transmittal to provide the information necessary to avoid backup withholding. Each tendering Non-United States holder (as defined in Section 5—“Certain Material United States Federal Income Tax Consequences”) must submit an appropriate properly completed IRS Form W-8 (a copy of which may be obtained from the Depositary) certifying, under penalties of perjury, to such Non-United States holder’s foreign status in order to establish an exemption from backup withholding. See Instruction 8 of the Letter of Transmittal.

4. Withdrawal Rights.

Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, tenders of Shares are irrevocable, except that they may also be withdrawn after October 13, 2017, which is the 60th day after the commencement of the Offer, unless such Shares have already been accepted for payment by Purchaser pursuant to the Offer.

For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares,” any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares.

If Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to Purchaser’s rights under the Offer, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described herein.

Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered at any time prior to the Expiration Date or during the Subsequent Offering Period (if any) by following one of the procedures described in Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

No withdrawal rights will apply to Shares tendered during the Subsequent Offering Period, if it is provided, and no withdrawal rights apply during the Subsequent Offering Period with respect to Shares tendered in the Offer and accepted for payment. See Section 1—“Terms of the Offer.”

All questions as to the form and validity (including, without limitation, time of receipt) of any notice of withdrawal will be determined by Purchaser, in its discretion, whose determination will be final and binding. None of Purchaser, the Depositary, the Information Agent or any other person will be under duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.

 

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5. Certain Material United States Federal Income Tax Consequences.

The following is a summary of certain material U.S. federal income tax consequences to beneficial holders of Shares upon the tender of Shares for cash pursuant to the Offer and the exchange of Shares for cash pursuant to the Merger. This summary is general in nature and does not discuss all aspects of U.S. federal income taxation that may be relevant to you in light of your particular circumstances. In addition, this summary does not describe any tax consequences arising under the laws of any local, state or foreign jurisdiction and does not consider any aspects of United States federal tax law other than income taxation (such as estate or gift tax laws or the Medicare tax on certain investment income). This summary deals only with Shares held as capital assets within the meaning of Section 1221 of the United States Internal Revenue Code of 1986, as amended (the “Code”) (generally, property held for investment), and does not address tax considerations applicable to any holder of Shares that may be subject to special treatment under the U.S. federal income tax laws, including:

 

    a bank or other financial institution;

 

    a tax-exempt organization;

 

    a retirement plan or other tax-deferred account;

 

    an insurance company;

 

    a mutual fund;

 

    a regulated investment company or real estate investment trust;

 

    partnerships and other pass-through entities and their partners or members;

 

    holders who exercise appraisal rights;

 

    S corporations;

 

    a dealer or broker in stocks and securities, or currencies;

 

    a trader in securities that elects mark-to-market treatment;

 

    a holder of Shares subject to the alternative minimum tax provisions of the Code;

 

    a holder of Shares that received the Shares through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;

 

    a person that has a functional currency other than the United States dollar;

 

    a person who received the Shares as compensation;

 

    a person that holds the Shares as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; or

 

    a United States expatriate.

If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Shares, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partner and the partnership. Holders that are partnerships and partners in such partnerships should consult their own tax advisors regarding the tax consequences of exchanging the Shares pursuant to the Offer or pursuant to the Merger.

This summary is based on the Code, the regulations promulgated under the Code, and rulings and judicial decisions, all as in effect as of the date of this Offer to Purchase, and all of which are subject to change or differing interpretations at any time, with possible retroactive effect. Any such changes could affect the accuracy of the statements and conclusions set forth herein. We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation.

 

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Because individual circumstances may differ, we urge you to consult your own tax advisor with respect to the specific tax consequences to you in connection with the Offer and the Merger in light of your own particular circumstances, including federal estate, gift and other non-income tax consequences, and tax consequences under state, local or foreign tax laws.

United States Holders

For purposes of this discussion, the term “United States holder” means a beneficial owner of Shares that is, for U.S. federal income tax purposes:

 

    an individual citizen or resident of the United States;

 

    a corporation (or any other entity or arrangement treated as a corporation for U.S. federal income tax purposes), organized in or under the laws of the United States or any state thereof or the District of Columbia;

 

    an estate, the income of which is subject to U.S. federal income taxation, regardless of its source; or

 

    a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust, and (ii) one or more United States persons have the authority to control all substantial decisions of the trust, or it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person.

Payments with Respect to Shares

The exchange of Shares for cash pursuant to the Offer or the Merger will be a taxable transaction for U.S. federal income tax purposes, and a United States holder who receives cash for Shares pursuant to the Offer or the Merger will recognize gain or loss, if any, equal to the difference between the amount of cash received and the holder’s adjusted tax basis in the Shares. Such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if such United States holder’s holding period for the Shares is more than one year at the time of the exchange of such holder’s Shares for cash.

Long-term capital gains of non-corporate United States holders are currently subject to U.S. federal income tax at a reduced rate. The ability to use any capital loss to offset other income or gain is subject to certain limitations under the Code. If a United States holder acquired different blocks of Shares at different times and different prices, such United States holder must determine the adjusted tax basis and holding period separately with respect to each such block of Shares. For purposes of the foregoing, a block of Shares generally consists of those Shares that were acquired at the same time at the same price.

Certain non-corporate United States holders are subject to a 3.8% tax, in addition to regular tax on income and gains, on some or all of their “net investment income,” which generally includes any gain recognized upon a disposition of Shares. United States holders should consult their tax advisors regarding the applicability of this tax in respect of their Shares.

Backup Withholding Tax

Proceeds from the exchange of Shares for cash pursuant to the Offer or the Merger generally will be subject to backup withholding tax at the applicable rate (currently 28%) unless the applicable United States holder or other payee provides valid taxpayer identification number and complies with certain certification procedures or otherwise establishes an exemption from backup withholding tax. Each United States holder should complete and sign the IRS Form W-9, which will be included with the Letter of Transmittal to be returned to the Depositary, to provide the information and certification necessary to avoid backup withholding, unless an exemption applies and is established in a manner satisfactory to the Depositary. See Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

 

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Backup withholding is not an additional tax. To the extent that any amounts withheld under the backup withholding tax rules from a payment to a United States holder results in an overpayment of tax, the amount of such overpayment may be refunded or allowed as a credit against that holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

Non-United States Holders

The following is a summary of certain U.S. federal income tax consequences that will apply to you if you are a Non-United States holder of Shares. The term “Non-United States holder” means a beneficial owner, other than a partnership, of Shares that is:

 

    a nonresidential alien individual;

 

    a foreign corporation; or

 

    a foreign estate or trust

The following discussion applies only to Non-United States holders, and assumes that no item of income, gain, deduction or loss derived by the Non-United States holder in respect of Shares at any time is effectively connected with the conduct of a United States trade or business. Special rules, not discussed herein, may apply to certain Non-United States holders, such as:

 

    certain former citizens or residents of the United States;

 

    controlled foreign corporations;

 

    passive foreign investment companies;

 

    corporations that accumulate earnings to avoid United States federal income tax;

 

    investors in pass-through entities that are subject to special treatment under the Code; and

 

    Non-United States holders that are engaged in the conduct of a United States trade or business.

Payments with Respect to Shares

Gain recognized on payments made to a Non-United States holder with respect to Shares exchanged for cash in the Offer or the Merger generally will be exempt from United States federal income tax unless:

 

    the gain is “effectively connected” with the Non-United States holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of the Non-United States holder or, in the case of an individual, a fixed base in the United States maintained by such non-U.S. holder);

 

    the Non-United States holder is an individual who is present in the United States for 183 or more days in the taxable year of the sale and certain other conditions exist; or

 

    CDI is or has been a United States real property holding corporation (“USRPHC”) for United States federal income tax purposes at any time during the lesser of (i) the five-year period ending on the date of the sale and (ii) the non-United States holder’s holding period in the Shares, and the non-United States holder owned (directly, indirectly or constructively) more than 5% of the outstanding Shares at any time during the applicable period.

A Non-United States holder described in the first bullet point above will generally be subject to tax on the net gain derived from the sale as if it were a United States person as defined under the Code. In addition, if a Non-United States holder described in the first bullet point above is a corporation for U.S. federal income tax purposes, it may be subject to an additional “branch profits tax” at a 30% rate, or at a lower rate if such holder is eligible for the benefits of an income tax treaty that provides for a lower rate, on after-tax profits effectively connected with a U.S. trade or business to the extent that such after-tax profits are not reinvested and maintained in the U.S. business.

 

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An individual Non-United States holder described in the second bullet point above will generally be subject to a flat 30% (or such lower rate as may be provided by an applicable income tax treaty) tax on the gain derived from the sale, which may be offset by U.S. source capital losses, even though the individual is not considered a resident of the United States, provided that such Non-United States holder has timely filed U.S. federal income tax returns with respect to such losses.

CDI has not been, is not and does not anticipate becoming a USRPHC prior to the Acceptance Time (or, if applicable, the Effective Time) for United States federal income tax purposes. In the event CDI is or becomes a USRPHC prior to the Acceptance Time (or, if applicable, the Effective Time), Shares will be treated as “United States real property interests,” subject to U.S. federal income tax, only with respect to a Non-United States holder that actually or constructively owns more than 5% of the Shares at any time during the five year period ending on date of the Acceptance Time (or, if applicable, the Effective Time).

Backup Withholding Tax

A Non-United States holder generally will be subject to backup withholding tax with respect to the proceeds from the disposition of Shares pursuant to this Offer to Purchase or the Merger unless the Non-United States holder certifies under penalties of perjury on an appropriate IRS Form W-8 that such Non-United States holder is not a “United States person” or the Non-United States holder otherwise establishes an exemption in a manner satisfactory to the Depositary. See Section 3—“Procedures for Accepting the Offer and Tendering Shares.”

Backup withholding is not an additional tax. To the extent that any amounts withheld under the backup withholding tax rules from a payment to a Non-United States holder results in an overpayment of tax, the amount of such overpayment may be refunded or allowed as a credit against that holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

This summary of the material U.S. federal income tax consequences is for general information purposes only and is not tax advice. Holders of Shares should consult their tax advisors as to the specific tax consequences to them of the Offer and the Merger, including the application of U.S. federal income tax laws to their particular circumstances as well as any tax consequences arising under the U.S. federal estate or gift tax rules, or under the laws of any state, local or foreign tax laws.

6. Price Range of Shares; Dividends.

The Shares are listed on the NYSE under the symbol “CDI.”

 

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The following table sets forth for the indicated periods the high and low sales prices per Share as reported on the NYSE, and the cash dividends declared per Share during the applicable period.

 

     High      Low      Cash
Dividends
Declared
 

Year Ended December 31, 2015:

        

First Quarter

     19.24        13.16        0.13  

Second Quarter

     14.71        11.93        0.13  

Third Quarter

     13.25        8.36        0.13  

Fourth Quarter

     9.39        6.46        0.13  

Year Ended December 31, 2016:

        

First Quarter

     6.79        4.31        —    

Second Quarter

     7.82        5.39        —    

Third Quarter

     7.03        4.84        —    

Fourth Quarter

     8.40        4.90        —    

Year Ending December 31, 2017:

        

First Quarter

     9.65        7.15        —    

Second Quarter

     8.70        5.45        —    

Third Quarter (through August 11, 2017)

     8.26        5.80        —    

On July 28, 2017, the last trading day before execution of the Merger Agreement was announced, the last sale price of a Share reported on the NYSE was $6.20 per share; the Offer Price represents a premium of approximately 33.1% to such price. On August 11, 2017, the last trading day before we commenced the Offer, the last sale price of a Share reported on the NYSE was $8.20 per share.

Stockholders are urged to obtain current market quotations for Shares before making a decision with respect to the Offer.

Under the terms of the Merger Agreement, CDI is not permitted to declare, accrue, set aside or pay any dividend or any other distribution in respect of the capital stock of CDI unless approved by Parent in writing.

7. Certain Information Concerning CDI.

The following description of CDI and its business has been taken from CDI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and is qualified in its entirety by reference to such report. We have no knowledge that would indicate that any statements contained herein based on such documents and records are untrue.

General. CDI and its subsidiaries seek to create extraordinary outcomes with its clients by delivering solutions based on skilled technical and professional talent. CDI’s business is comprised of four segments: Enterprise Talent, Specialty Talent and Technology Solutions, Engineering Solutions and Management Recruiters International (MRI). CDI provides to clients engineering and information technology solutions encompassing managed, project and talent services. CDI’s clients are in multiple industries, including energy, chemicals, infrastructure, aerospace, industrial equipment, technology, and also include municipal and state governments, and the United States (U.S.) Department of Defense. CDI has offices and delivery centers in the U.S. and Canada. In addition, CDI provides recruiting and staffing services through its global MRINetwork ® of franchisees.

CDI’s principal executive offices are at 1735 Market Street, Suite 200, Philadelphia, PA 19103 and its telephone number is (215) 569-2200.

 

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Available Information. CDI is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is obligated to file reports and other information with the SEC relating to its business, financial condition and other matters. Certain information, as of particular dates, concerning CDI’s business, principal physical properties, capital structure, material pending litigation, operating results, financial condition, directors and officers (including their remuneration and stock options granted to them), the principal holders of CDI’s securities, any material interests of such persons in transactions with CDI, and other matters is required to be disclosed in proxy statements and periodic reports distributed to CDI’s stockholders and filed with the SEC. Such reports, proxy statements and other information should be available for inspection at the public reference facilities maintained by the SEC at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. Copies of such materials may also be obtained by mail, upon payment of the SEC’s customary fees, by writing to its principal office at 100 F Street N.E., Washington, D.C. 20549. The SEC also maintains electronic reading rooms on the Internet at http://www.sec.gov that contains reports and other information regarding issuers that file electronically with the SEC. CDI also maintains a website at http://www.cdicorp.com. The information contained in, accessible from or connected to CDI’s website is not incorporated into, or otherwise a part of, this Offer to Purchase or any of CDI’s filings with the SEC. The website addresses referred to in this paragraph are inactive text references and are not intended to be actual links to the websites.

8. Certain Information Concerning Parent and Purchaser.

Parent is a Delaware limited liability company and Purchaser is a Pennsylvania corporation. Purchaser is a wholly owned subsidiary of Parent. Parent is owned by AE Industrial Partners Fund I, L.P. (“Fund I”), AE Industrial Partners Fund I-A, L.P. (“Fund I-A”), and AE Industrial Partners Fund I-B, L.P. (“Fund I-B”, and, together with Fund I and Fund I-A, the “AE Funds”), which are investment funds managed by AE Industrial Partners, LLC (“AE Industrial”). AE Industrial is a limited liability company organized under the laws of the State of Delaware. The principal office for each of Parent and Purchaser is located at c/o AE Industrial Partners, LLC, 2500 N. Military Trail, Suite 470, Boca Raton, FL 33431. The telephone number for each of Parent and Purchaser is (561) 372-7820. Purchaser and Parent were formed for the purpose of completing the Offer and the Merger and have conducted no business activities other than those related to the structuring and negotiation of the Offer and the Merger. The principal business of each AE Fund is as a private equity investment company.

The name, citizenship, business address, business phone number, principal occupation or employment and five-year employment history for each of the directors, executive officers and control persons of Parent, Purchaser, the AE Funds, the general partner for the AE Funds and AE Industrial (collectively, the “AE Entities”) and certain other information are set forth in Schedule I to this Offer to Purchase.

Except as otherwise described in this Offer to Purchase, (i) none of the AE Entities nor, to the best knowledge of the AE Entities, any of the persons listed in Schedule I to this Offer to Purchase or any associate or majority-owned subsidiary of Parent or Purchaser or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares and (ii) none of the AE Entities, nor, to the best knowledge of the AE Entities, any of the persons or entities referred to above nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in the Shares during the past 60 days.

Except as provided in the Merger Agreement or as otherwise described in this Offer to Purchase, none of the AE Entities, or their subsidiaries, nor, to the best knowledge of the AE Entities, any of the persons listed in Schedule I to this Offer to Purchase, has any present or proposed material agreement, arrangement, understanding or relationship with CDI or any of its executive officers, directors, controlling persons or subsidiaries. Except as provided in the Merger Agreement or as otherwise described in this Offer to Purchase, none of the AE Entities nor, to the best knowledge of the AE Entities, any of the persons listed in Schedule I to this Offer to Purchase, has any agreement, arrangement, or understanding with any other person with respect to any securities of CDI, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, finder’s fees, joint ventures, loan or option arrangements,

 

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puts or calls, guarantees of loans, guarantees against loss, guarantees of profits, division of profits or loss or the giving or withholding of proxies.

Except as set forth in this Offer to Purchase, none of the AE Entities nor, to the best knowledge of the AE Entities, any of the persons listed on Schedule I hereto, has had any business relationship or transaction with CDI or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the SEC applicable to the Offer. Except as set forth in this Offer to Purchase, there have been no material contacts, negotiations or transactions between any the AE Entity or any of their respective subsidiaries or, to the best knowledge of the AE Entities, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and CDI or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of CDI’s securities, an election of CDI’s directors or a sale or other transfer of a material amount of CDI’s assets during the past two years.

None of the persons listed in Schedule I has, to the knowledge of the AE Entities, during the past five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). None of the persons listed in Schedule I to this Offer to Purchase has, to the knowledge of the AE Entities, during the past five years, been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

9. Source and Amount of Funds.

The Offer is not conditioned upon any financing arrangements.

Parent and Purchaser estimate that the total amount of funds required (i) to purchase all outstanding Shares pursuant to the Offer and to complete the Merger, (ii) to pay for the cash-out of all derivative securities, including warrants, options, convertible or exchangeable securities or other rights to acquire Shares, of CDI required to be cashed out by the Merger Agreement, (iii) to repay or refinance certain indebtedness of CDI, and (iv) to pay fees and expenses in connection with the foregoing, will be approximately $167.2 million. Parent and Purchaser anticipate funding these payments through the incurrence or issuance of debt and/or equity of Parent and Purchaser, including the Debt Financing as described herein.

Debt Financing . Parent has received a commitment letter, dated as of July 31, 2017 (the “Commitment Letter”), from PNC Bank, National Association (the “Debt Financing Source”) pursuant to which the Debt Financing Source made loan commitments for the purpose of financing a portion of the funds required to complete the Offer and the Merger and the refinancing of certain indebtedness of CDI (such commitments, the “Debt Financing”). The proceeds of the Debt Financing, together with available cash (including cash on hand of CDI or one or more of its subsidiaries) will be sufficient to fund the acquisition of CDI, the refinancing of the indebtedness of CDI described below, and to pay the fees, premiums, expenses and other transaction costs incurred in connection with the foregoing.

Pursuant to the Commitment Letter, the Debt Financing Source has committed to provide, subject to the terms and conditions of the Commitment Letter, up to $150 million in aggregate principal amount of senior secured asset-based revolving credit commitments with a term of five years from the closing of the Merger (the “Closing”). The senior secured asset-based revolving loan is expected to bear interest, at the borrower’s option, at a rate equal to (i) 1.5% plus the highest of (x) the prime commercial lending rate of the Debt Financing Source, (y) the Federal funds open rate plus 0.50% per annum, and (z) a daily Eurodollar rate based on an interest period of one month plus 1.0% per annum or (ii) the Eurodollar rate plus 2.5% per annum. The commitments will be secured by a perfected first priority lien security interest in substantially all present and after-acquired assets of Parent, Purchaser, CDI and each of CDI’s direct and indirect wholly owned domestic subsidiaries, subject to customary exceptions.

 

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The funding of the Debt Financing is subject, among other things, to the execution and delivery of the definitive documentation of the Debt Financing; receipt of the AE Funds’ equity contribution; consummation of the debt refinancing described above; consummation of the transactions contemplated by the Merger Agreement (the “Transactions”) in all material respects in accordance with the Merger Agreement (without giving effect to any amendments to the Merger Agreement or waivers of or consents to the provisions thereof that, in any such case, are materially adverse to the interests of the lenders or PNC Capital Markets, LLC (the “Lead Arranger”) without the consent of the Lead Arranger, such consent not to be unreasonably withheld, conditioned or delayed); absence of any Company Material Adverse Effect (defined in the Merger Agreement); the Debt Financing Source’s receipt of certain historical and pro forma financial information; delivery of requested information required in connection with “know your customer” and anti-money laundering rules and regulations (including the PATRIOT Act); payment of required fees and expenses; execution and delivery of all actions or documents necessary for perfection of certain security interests; the accuracy of certain specified Merger Agreement representations and the accuracy of certain specified representations in all material respects; delivery of certain customary insurance certificates; and the execution of certain guarantees.

The foregoing summary of certain provisions of the Commitment Letter and all other provisions of the Commitment Letter discussed herein are qualified by reference to the full text of the Commitment Letter, a copy of which is filed as Exhibit (b)(1) to the Schedule TO and incorporated herein by reference.

Equity Financing . Parent has received an equity commitment letter (the “Equity Commitment Letter”), pursuant to which the AE Funds have committed to: (i) contribute to Parent at or immediately prior to the Closing cash in an aggregate amount equal to $167,237,300 solely for the purpose of enabling Parent and/or Purchaser to fund the consideration payable pursuant to the Merger Agreement, and to pay related closing fees and expenses pursuant to, and in accordance with, the Merger Agreement (the “Equity Commitment”) or (ii) pay, or cause an assignee to pay, cash in an aggregate amount equal to $12,600,690, solely for the purpose of enabling Parent and/or Purchaser to pay any monetary damages required to be paid pursuant to the Merger Agreement as described in Section 11—“The Merger Agreement; Other Agreements—Availability of Monetary Damages to CDI” (“the Damages Commitment”). AE Industrial believes each of the AE Funds has sufficient capital to satisfy its respective commitment.

The AE Funds’ obligations under the Equity Commitment Letter are subject to the condition that no material amendment to the Merger Agreement (including to the aggregate consideration payable) or material modification of the Merger Agreement has been made unless the AE Funds have consented to such amendment or modification in writing. The AE Funds’ obligations to fund the Equity Commitment are further subject to: (i) the satisfaction of the conditions to closing set forth in the Merger Agreement and (ii) CDI having irrevocably confirmed in writing to Parent that if the Equity Commitment is funded, then it would take all such actions that are within its control to cause the Closing to occur. The AE Funds’ obligations to fund the Damages Commitment are further subject to: (i) the issuance of a final, binding order of a court of competent jurisdiction requiring Parent to pay the Damages Commitment or (ii) an agreement between Parent and CDI regarding the amount of the Damages Commitment to be paid.

The AE Funds’ obligation to fund the Equity Commitment or Damages Commitment, as applicable, will automatically and immediately terminate upon the earliest to occur of (i) the consummation of the Closing in accordance with the Merger Agreement or (ii) the valid termination of the Merger Agreement in accordance with its terms; provided, however, that the AE Funds’ obligation to fund the Damages Commitment will survive and remain in full force and effect and will be enforceable by each of Parent and CDI to the extent necessary to cause the AE Funds to comply with their obligations to fund the Damages Commitment for a period of 30 days following termination of the Merger Agreement in accordance with its terms, unless prior to the end of such period CDI has commenced a legal proceeding alleging amounts payable by Parent and/or Purchaser in respect of the monetary damages remedy allowed for under the Merger Agreement, in which case such period will automatically be extended until the day immediately following the earlier to occur of (x) a final, non-appealable resolution of such legal proceeding and, if applicable, satisfaction of the Damages Commitment or (y) a written agreement signed by each of the AE Funds, Parent and CDI terminating the Damages Commitment.

 

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In addition, in the event that CDI or any of its affiliates or representatives institute any suit, action or other proceeding or make any claim (i) asserting that the provisions of the Equity Commitment Letter are illegal, invalid or unenforceable in whole or in part or that the AE Funds are liable in excess of the amount of the Equity Commitment or Damages Commitment, as applicable, (ii) against any affiliate of the AE Funds (other than the AE Funds themselves) related to the Transactions, or (iii) against Parent or Purchaser (except in accordance with the Merger Agreement) or against the AE Funds or its affiliates (except as described in this section or in connection with an alleged breach of the confidentiality agreements described in Section 11—“The Merger Agreement; Other Agreements—Confidentiality Agreements”), then the obligations and liabilities of the AE Funds under the Equity Commitment Letter will terminate immediately and will become be null and void, and if any AE Fund has previously made any payments under the Equity Commitment Letter, such AE Fund will be entitled to recover such payments.

CDI is an express third-party beneficiary of the Equity Commitment Letter and is entitled to seek and obtain specific performance of the AE Funds’ obligations to fund the Equity Commitment or the Damages Commitment, in each case on the terms and subject to the conditions set forth in the Merger Agreement.

This summary does not purport to be complete and is qualified in its entirety by reference to the full text of the Equity Commitment Letter, a copy of which has been filed as Exhibit (d)(5) to the Schedule TO and which is incorporated herein by reference.

Other than as discussed in this Section 9, as of the date hereof there are no alternative financing arrangements or alternative financing plans.

10. Background of the Offer; Past Contacts or Negotiations with CDI.

The following is a description of AE Industrial’s participation in a process with CDI that resulted in the execution of the Merger Agreement. For a review of CDI’s activities relating to this process, please refer to CDI’s Schedule 14D-9 being mailed to stockholders with this Offer to Purchase. References to AE Industrial in this section may be references to affiliates and representatives of AE Industrial, and to actions to be taken by or on behalf of Parent or Purchaser, entities that are controlled by AE Industrial.

AE Industrial is a private investment firm engaged in, among other activities, the making and managing of equity investments in and acquisitions of business organizations.

In 2015, affiliates of AE Industrial acquired Belcan, LLC (“Belcan”). Following the acquisition, representatives of AE Industrial, on behalf of Belcan, contacted CDI from time to time to express interest in discussing a transaction with CDI.

On February 22, 2017, Houlihan Lokey Capital, Inc. (“Houlihan Lokey”), CDI’s financial advisor contacted AE Industrial. Through Kirk Konert, a principal at AE Industrial, representatives of AE Industrial and Belcan were invited to meet with CDI on March 3, 2017 to discuss their interest in a transaction.

On February 27, 2017, CDI entered into a non-disclosure agreement with Belcan.

On March 3, 2017, Belcan and representatives of AE Industrial met with senior executives of CDI to enable them to decide whether to pursue a potential acquisition of CDI.

On March 9, 2017, Belcan received a process letter from Houlihan Lokey, inviting it to submit a non-binding proposal for the acquisition of CDI. This letter included an indication-of-interest deadline of March 15, 2017 for such proposal. Shortly thereafter, AE Industrial informed Houlihan Lokey that Belcan would not continue in CDI’s sale process.

 

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On April 26, 2017, AE Industrial informed Houlihan Lokey that it had decided to, independently of Belcan, make a bid for CDI under which CDI would remain a separate portfolio company of AE Industrial. Later that day, AE Industrial submitted an indication of interest at $9.00 per Share.

On May 10, 2017 and May 11, 2017, representatives of AE Industrial met with senior executives of CDI to conduct due diligence regarding CDI’s business and to begin diligence regarding CDI’s quality of earnings. AE Industrial continued to conduct due diligence, and conducted additional on-site visits of CDI’s offices on May 30, 2017, May 31, 2017, June 5, 2017, and June 6, 2017.

On May 12, 2017, AE Industrial signed a non-disclosure agreement with CDI. AE Industrial had previously conducted due diligence on CDI subject to confidentiality obligations as a representative of Belcan under CDI’s non-disclosure agreement with Belcan.

On June 1, 2017, on behalf of AE Industrial, Kirkland & Ellis LLP (“Kirkland”) sent Dechert LLP (“Dechert”), CDI’s legal advisor, AE Industrial’s initial markup of the merger agreement, which had been initially prepared by Dechert. Among other revisions, AE Industrial’s markup scaled back the antitrust covenant in the merger agreement by limiting the buyer entity’s obligation to obtain antitrust approval and had changed the proposed transaction structure from a two-step tender offer to a one-step merger. The markup also deleted the “go-shop” provision (which permitted CDI to continue to look for alternative buyers who might be able to make a superior proposal for the purchase of the Company even after the merger agreement was signed) and increased the termination fee from 2.25% of the Company’s equity value to 4% of the Company’s equity value. Between June 1, 2017 and June 19, 2017, AE Industrial and CDI had discussions regarding the initial markup of the merger agreement and the contemplated transaction. During such discussions, AE Industrial indicated that it could agree to the antitrust covenant proposed in CDI’s initial bid draft and to a two-step tender offer transaction structure, pending further review of the proposed language.

On June 14, 2017, AE Industrial submitted a written bid at a price of $8.06 per Share and continued negotiations with CDI.

On June 19, 2017, Dechert sent a revised merger agreement to Kirkland which, along with other changes, accepted AE Industrial’s deletion of the “go-shop” provision, proposed a compromise termination fee of 3%, rejected AE Industrial’s changes to the antitrust covenant, provided for full specific performance as a remedy without any limitation on CDI’s ability to pursue money damages, and returned to the two-step tender offer transaction structure contemplated by CDI’s initial draft.

On June 22, 2017, Kirkland sent Dechert a revised merger agreement and an initial draft equity commitment letter between the AE Funds and the proposed buyer entity. In this markup of the merger agreement and in accordance with prior discussions, AE Industrial had agreed to CDI’s preferred two-step tender offer transaction structure and had retained the antitrust covenant. Among other revisions, the revised merger agreement reverted to a 4% termination fee.

On June 30, 2017, Dechert sent Kirkland an initial draft of CDI’s disclosure schedules as well as a revised merger agreement which incorporated changes designed to address the outstanding issues with the previous AE Industrial markup from a legal standpoint. The revised draft proposed a termination fee of 3.5% and required the AE Funds to execute a limited guarantee with CDI which would provide funds equal to up to 30% of the aggregate purchase price to support the shell buyer in the event of a breach of the shell buyer’s obligations and which would permit CDI to enforce the buyer’s rights as a third-party beneficiary of the equity commitment letter.

On July 2, 2017, Houlihan Lokey discussed with AE Industrial whether AE Industrial was prepared to submit a revised bid of $8.60 per Share, and AE Industrial indicated that such a bid would be dependent upon its review of certain Company financial information to be provided by CDI. Through the first two weeks of July 2017, AE Industrial continued to conduct due diligence of CDI, and Kirkland continued to evaluate and negotiate

 

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the merger agreement, and CDI further revised its disclosure schedules. During this time, AE Industrial informed Houlihan Lokey that it wanted to review the Company’s second quarter financial results before submitting a final bid.

On July 5, 2017, Kirkland sent Dechert a list of issues it felt were significant points in the negotiation of the merger agreement. The list included a number of issues on which AE Industrial was willing to move toward CDI’s position. However, AE Industrial declined to provide the requested limited guarantee from the AE Funds and was not willing to commit funding to support the shell buyer to complete pre-closing requirements to get to a closing or for monetary damages in excess of 8% of the aggregate purchase price (as opposed to CDI’s proposal of 30%). AE Industrial was willing to agree to CDI’s ability to pursue and receive specific performance of the buyer’s obligations in certain circumstances and the obligation of the AE Funds to fund the buyer entity as required under the equity commitment letter (to which CDI would be a third-party beneficiary), but would not agree to obligate the AE Funds to take any action other than to fund its equity commitment at closing or in connection with limited monetary damages.

On July 13, 2017, Houlihan Lokey provided copies of CDI’s unaudited second quarter financial results to AE Industrial.

On July 14, 2017, after Houlihan Lokey called AE Industrial and requested that AE Industrial raise its bid, AE Industrial raised its bid to $8.25 per Share.

On July 16, 2017, Dechert and Kirkland held conference calls to attempt to resolve outstanding issues in the merger agreement. On the evening of July 16, Kirkland informed Dechert that AE Industrial required a one-week period of exclusivity to finalize the transaction documentation and that AE Industrial would not engage on the remaining open issues in the transaction documents until CDI agreed to exclusivity.

On July 18, 2017, Houlihan Lokey and Dechert informed AE Industrial and Kirkland, respectively, that CDI would consent to a one-week period of exclusivity and Dechert and Kirkland began negotiating the terms of an exclusivity agreement.

On July 19, 2017, CDI entered into an exclusivity agreement with AE Industrial under which CDI agreed not to communicate with or solicit bids from other potential buyers until 11:59 p.m. on July 25, 2017 (subject to certain exceptions). That same day, Kirkland sent Dechert a revised draft of the equity commitment letter and an initial draft of the tender and support agreements which CDI’s officers and directors (as well as several trusts for descendants of Walter R. Garrison) would be required to sign as a condition to AE Industrial’s willingness to enter into the merger agreement.

On July 20, 2017, Kirkland sent Dechert a revised markup of AE Industrial’s draft of the merger agreement and an initial markup of CDI’s disclosure schedules. That same day, Dechert sent Kirkland a markup of the tender and support agreement. On July 22, 2017, Dechert and Kirkland had a conference call to discuss the equity commitment letter but were unable to reach an agreement on the scope of the obligations of the AE Funds.

On July 24, 2017, Dechert sent revised drafts of the merger agreement and the disclosure schedules to Kirkland.

On July 25, 2017, Kirkland sent Dechert a revised merger agreement and Dechert sent Kirkland a revised draft of the tender and support agreement. Kirkland reviewed the tender and support agreement and indicated that it presented no further issues and was therefore in agreed form.

On July 26, 2017, Kirkland sent Dechert a revised draft of the disclosure schedules.

On July 27, 2017, Dechert sent Kirkland revised drafts of the merger agreement, disclosure schedules, and equity commitment letter.

 

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On the morning of July 31, 2017, the Merger Agreement was executed and the Transactions were publicly disclosed.

On August 1, 2017, Dechert informed AE Industrial that Houlihan Lokey had received a communication from a party who had previously indicated interest in acquiring all or part of CDI in a joint bid, however Dechert noted that it did not consider such communication to constitute an Acquisition Proposal (as defined in Section 11—“The Merger Agreement; Other Agreements”).

11. The Merger Agreement; Other Agreements.

The following is a summary of certain provisions of the Merger Agreement and certain other agreements entered into in connection with the Merger Agreement. This summary of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed as Exhibit (d)(1) to the Schedule TO, which is incorporated herein by reference. Copies of the Merger Agreement and the Schedule TO, and any other filings that we make with the SEC with respect to the Offer or the Merger, may be obtained in the manner set forth in Section 7—“Certain Information Concerning CDI.” Capitalized terms used but not defined herein shall have the respective meanings given to them in the Merger Agreement. Stockholders and other interested parties should read the Merger Agreement for a more complete description of the provisions summarized below.

The Offer. The Merger Agreement provides that Purchaser will commence the Offer as promptly as practicable, but in no event later than 10 business days, after the date of the Merger Agreement. Subject to the satisfaction of the Minimum Condition and the other conditions that are described in Section 15—“Certain Conditions of the Offer,” Purchaser will, and Parent will cause Purchaser to, consummate the Offer, accept for payment and thereafter pay for all Shares validly tendered and not validly withdrawn pursuant to the Offer as soon as practicable after the Expiration Date and, in any event, no later than three business days after the consummation of the Offer. If the Offer is consummated, each CDI stockholder will receive $8.25 for each Share validly tendered and not properly withdrawn by such stockholder prior to the Expiration Date, without interest thereon and subject to deduction for any withholding taxes. The Offer is initially scheduled to expire at 9:00 AM (Philadelphia, Pennsylvania time) on September 12, 2017, but may be extended and re-extended as described below.

Purchaser has reserved the right (but is not obligated) at any time and from time to time in its sole discretion to waive any Offer condition or modify the terms of the Offer, except that, without the prior written consent of CDI, Purchaser may not (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) modify or waive the Minimum Condition or the Termination Condition, (iv) add to the Offer conditions or otherwise modify or waive any term of the Offer in a manner adverse to CDI (prior to the consummation of the Offer) or the holders of Shares, (v) extend the Offer (except as required or permitted by the Merger Agreement), (vi) change the form of consideration payable in the Offer or (vii) provide for a “subsequent offering period” (or any extension thereof) in accordance with Rule 14d-11 under the Exchange Act.

Extensions of the Offer . The Merger Agreement provides that Purchaser may extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof or NYSE applicable to the Offer (including in order to comply with Rule 14e-1(b) under the Exchange Act in respect of any change in the Offer Price). Subject to Parent’s and CDI’s termination rights under the Merger Agreement, if as of any scheduled Expiration Date, any condition to the Offer is not satisfied and has not been waived by Purchaser or Parent, Purchaser may, in its sole discretion (and without the consent of CDI or any other person), extend the Offer on one or more occasions in consecutive increments of up to 10 business days each (or such longer or shorter period as Parent, Purchaser and CDI may agree), until such time as all conditions to the Offer are satisfied or waived. Purchaser cannot, however, without CDI’s written consent, extend the Offer beyond the earlier of October 30, 2017 (the “End Date”) and the termination of the Merger Agreement in accordance with the terms thereof, the provisions of which are summarized under “—Termination.”

 

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If, as of any Expiration Date, any condition to the Offer is not satisfied and has not been waived by Purchaser, at the request of CDI, Purchaser will extend the Offer on one or more occasions in consecutive increments of up to 10 business days (or such longer or shorter period as Parent, Purchaser and CDI may agree in writing) to permit such condition to the Offer to be satisfied; however, if the Minimum Condition is the only unsatisfied Offer condition, then Purchaser will be required to extend the Expiration Date for additional periods not to exceed an aggregate of 30 business days. Purchaser will not be required to extend the Offer beyond the earlier of the End Date and the termination of the Merger Agreement in accordance with the terms thereof.

Top-Up Option . CDI has granted to Purchaser an option that is irrevocable during the term of the Merger Agreement (the “Top-Up Option”) to purchase, at a price per Share equal to the Offer Price, an aggregate number of newly issued Shares (the “Top-Up Shares”) equal to the lowest number of Shares that, when added to the aggregate number of Shares owned by Parent, Purchaser and any of their respective subsidiaries and affiliates at the time of exercise of the Top-Up Option, will constitute one Share more than 80% of the outstanding Shares immediately after the issuance of the Top-Up Shares on a fully diluted basis. Purchaser may exercise the Top-Up Option only once, in whole but not in part, at any time following the consummation of the Offer and prior to the earlier to occur of (i) the Effective Time and (ii) the termination of the Merger Agreement in accordance with its terms. The Top-Up Option is intended to expedite the timing of the completion of the Merger by effecting the Merger pursuant to Pennsylvania’s “short form” merger statute. The aggregate purchase price for the Top-Up Shares may be paid by paying in cash an amount equal to not less than the aggregate par value of such Shares and by executing and delivering to CDI a promissory note having a principal amount equal to the remaining purchase price.

Termination of the Offer. The Merger Agreement provides that Purchaser may not terminate or withdraw the Offer prior to the Expiration Date without the prior written consent of CDI, except in the event that the Merger Agreement is terminated pursuant to its terms. In the event that the Merger Agreement is terminated pursuant to its terms, Purchaser will (and Parent will cause Purchaser to) promptly (and in any event within two business days of such termination), irrevocably and unconditionally terminate the Offer and promptly return, or cause any depositary acting on its behalf to return, all tendered Shares to the registered holders thereof in accordance with applicable law.

The Merger. The Merger Agreement provides that the Closing will take place as promptly as possible following the satisfaction (or, to the extent permitted under the Merger Agreement, waiver) of the conditions described below, or such other date as Purchaser, Parent and CDI agree to in writing.

At the Effective Time, Purchaser will be merged with and into CDI, with CDI continuing as the Surviving Corporation. The separate corporate existence of CDI, with all its rights, privileges, immunities, powers and franchises, will continue unaffected by the Merger.

The respective obligations of Parent, Purchaser and CDI to consummate the Merger are subject to the satisfaction or waiver (where permissible under applicable law) at or prior to the Effective Time, of each of the following conditions:

 

    Purchaser has irrevocably accepted for purchase all Shares validly tendered and not validly withdrawn pursuant to the Offer; and

 

    No order, injunction, judgment, decision, determination, award, writ, ruling, stipulation, assessment or decree or other similar requirement of, or entered, enacted, adopted, promulgated or applied by, a governmental body, or a self regulatory organization or arbitrator, nor any applicable law, is in effect that, in each case, makes consummation of the Merger illegal or otherwise prohibited.

Effect on Capital Stock . At the Effective Time:

 

   

Each Share outstanding immediately prior to the Effective Time (other than (i) Cancelled Shares (as defined below), and (ii) Shares as to which the holder thereof has properly exercised dissenters’ rights

 

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in accordance with Subchapter D of Chapter 15 of the PBCL (“Dissenting Shares”)) will be converted into the right to receive cash in an amount equal to the Offer Price, upon surrender of the certificate representing such Share (or, in the case of a lost, stolen, destroyed or mutilated certificate, upon delivery of an appropriate affidavit and/or bond if required by Parent or the payment agent) or non-certificated Share represented by book-entry, in each case in the manner provided in the Merger Agreement;

 

    Each Share held by CDI or any subsidiary of CDI (or held in CDI’s treasury) immediately prior to the Effective Time, as well as each Share held by Parent, Purchaser or any subsidiary of Parent immediately prior to the Effective Time (collectively, the “Cancelled Shares”) will be cancelled and will cease to exist, and no consideration will be paid in exchange therefor; and

 

    Each share of common stock of Purchaser outstanding immediately prior to the Effective Time will be converted into one share of common stock of the Surviving Corporation.

Treatment of Company Options and SARs. All Company Options and Company stock appreciation rights (“Company SAR”) have a per-share exercise price or per share base price (as applicable) that is equal to or greater than the Offer Price. Accordingly, pursuant to the Merger Agreement, each Company Option and Company SAR outstanding as of the Effective Time, whether vested or unvested, will be cancelled at the Effective Time with no payment due to the holder thereof.

Treatment of Company TVDS Awards . As of the Effective Time, each Company TVDS Award outstanding immediately prior to the Effective Time will be cancelled and converted into the right to receive (without interest) an amount in cash equal to (i) the product of the Offer Price multiplied by the number of Shares underlying such Company TVDS Award immediately prior to the Effective Time, plus (ii) the accrued but unpaid dividend equivalents on such award as of immediately prior to the Effective Time, less any applicable taxes required to be withheld (the “Company TVDS Payment”). The Company TVDS Payment relating to the portion of a Company TVDS Award that is vested as of the Effective Time will be paid to the holder thereof within three business days following the Effective Time through the Surviving Corporation’s payroll system. The Company TVDS Payment relating to the portion of a Company TVDS Award that is not vested as of the Effective Time will be paid to the holder thereof at such times and to the extent that the associated Company TVDS Award would have become vested in accordance with the vesting schedule applicable to such award. If any portion of a Company TVDS Award that is not vested as of the Effective Time (after giving effect to the Transactions) does not become vested after the Effective Time in accordance with its terms, the portion of payment related to such unvested portion of the Company TVDS Award will be forfeited and will not be paid to the holder thereof.

Treatment of Company Performance Units . At the Effective Time, each Company performance unit that, by its terms (and after giving effect to the Transactions), is vested based on actual performance through the Effective Time will be cancelled in exchange for the right of the holder thereof to receive (without interest) an amount in cash equal to the product of (i) the total number of Shares underlying the vested portion of the Company performance unit award immediately prior to the Effective Time multiplied by (ii) the Offer Price. The amounts payable in respect of Company performance units will be paid to the holder thereof within three business days following the Effective Time. At the Effective Time, each Company performance unit award that, by its terms and after giving effect to the Transactions, is not vested will be cancelled with no payment due the holder thereof.

Adjustments to the Offer Price. The Merger Agreement provides that if, during the period between the date of the Merger Agreement and the Effective Time, any change in the outstanding shares of capital stock of CDI occurs (other than the issuance of Top-Up Shares, the issuance of Shares in connection with the exercise or settlement of Company TVDS Awards, Company SARs, Company performance units and Company Options), including by reason of any reclassification, recapitalization, stock split (including reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend, then the Offer Price will be appropriately adjusted.

 

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Certificate of Incorporation and Bylaws. The Merger Agreement provides that, at the effective time: (i) the certificate of incorporation of Purchaser will become the certificate of incorporation of the Surviving Corporation, except that the name of the Surviving Corporation will be “CDI Corp.”; and (ii) the bylaws of Purchaser in effect immediately prior to the Effective Time will become the bylaws of the Surviving Corporation (aside from the name of the surviving corporation being “CDI Corp.”).

Board of Directors and Officers at the Effective Time. The Merger Agreement provides that the directors of Purchaser immediately prior to the Effective Time will become the directors of the Surviving Corporation and the officers of CDI immediately prior to the Effective Time will become the officers of the Surviving Corporation.

Representations and Warranties. The Merger Agreement contains representations and warranties made by CDI to Parent and Purchaser and representations and warranties made by Parent and Purchaser to CDI. The representations, warranties and covenants set forth in the Merger Agreement (i) were made solely for purposes of the Merger Agreement and solely for the benefit of the contracting parties, (ii) may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made to Parent and Purchaser in connection with the Merger Agreement, (iii) will not survive consummation of the Merger, (iv) are qualified in certain circumstances by a materiality standard which may differ from what may be viewed as material by stockholders or other persons, (v) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement, and (vi) may have been included in the Merger Agreement for the purpose of allocating risk between the parties rather than establishing matters as facts. Stockholders are not third-party beneficiaries under the Merger Agreement.

In the Merger Agreement, CDI made customary representations and warranties to Parent and Purchaser with respect to, among other things:

 

    corporate existence and power;

 

    organizational documents;

 

    corporate authorization;

 

    governmental authorization and enforceability;

 

    non-contravention;

 

    capitalization;

 

    subsidiaries;

 

    SEC filings and the Sarbanes-Oxley Act;

 

    financial statements; internal controls;

 

    disclosure documents;

 

    absence of certain changes;

 

    no undisclosed liabilities;

 

    litigation;

 

    compliance with applicable law;

 

    material contracts;

 

    taxes;

 

    employee benefits plans;

 

    labor and employment matters;

 

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    insurance policies;

 

    environmental matters;

 

    intellectual property;

 

    real property;

 

    brokers’ fees;

 

    opinion of financial advisor;

 

    takeover laws;

 

    affiliate and related party transactions;

 

    customers; and

 

    government contracts and government bids.

Some of the representations and warranties in the Merger Agreement made by CDI are qualified as to “materiality” or “Company Material Adverse Effect.” For purposes of the Merger Agreement, a “Company Material Adverse Effect” means any fact, circumstance, event, condition, change, development, occurrence or effect (each, an “Effect”) that, individually or in combination with any other Effect, (i) has had or would reasonably be expected to have a material adverse effect on the business, assets, financial condition or results of operations of CDI and its subsidiaries, taken as a whole or (ii) would prevent CDI from consummating the Transactions; provided, however, that no Effect will be deemed to constitute or contribute to a Company Material Adverse Effect pursuant to clause (i) to the extent that such Effect arises out of, or results from, and none of the following will be taken into account in determining whether a Company Material Adverse Effect has occurred or is continuing: (A) general economic, business or regulatory conditions in the United States or elsewhere in the world; (B) credit, debt, financial or capital markets, interest or exchange rates or commodity prices, in each case, in the United States or elsewhere in the world; (C) conditions generally affecting the industry in which CDI and its subsidiaries operate; (D) any national or international political conditions, any military conflict, declared or undeclared war, armed hostilities, acts of foreign or domestic terrorism or civil disobedience; (E) any hurricane, flood, tornado, earthquake or other natural disaster or pandemic; (F) changes or proposed changes in any applicable law or generally accepted accounting principles (or interpretation thereof); (G) any failure by CDI or any of its subsidiaries to meet any internal or external projections, estimates, expectations, earnings predictions or forecasts for any period, or to meet its internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations for any period (but excluding, in each case, the underlying causes of such failure unless such underlying causes would otherwise be excepted from this definition); (H) changes in the trading volume or trading price of the Shares or CDI’s credit rating (but excluding, in each case, the underlying causes of such failure unless such underlying causes would otherwise be excepted from this definition); (I) the public announcement of the Merger Agreement, the Offer or the Merger (including the identity of Parent as the acquirer of CDI), including the impact thereof on relationships, contractual or otherwise, with officers, employees, customers, suppliers, distributors, vendors, licensors, licensees, lenders or governmental authorities or governmental officials; (J) any action required to be taken by CDI or its subsidiaries pursuant to the Merger Agreement or to which Parent has consented or the failure to take any action by CDI or its subsidiaries if that action is prohibited by the Merger Agreement and Parent has refused, after a written request from CDI, to consent or provide a waiver in a timely manner to permit such action to be taken; or (K) any stockholder litigation relating to the Merger Agreement or the Transactions; provided, further, that any Effect referred to in clause (A), (B), (C), (D), (E) or (F) above may constitute, and be taken into account in determining the occurrence of, a Company Material Adverse Effect if and only to the extent that such change or event has a disproportionate adverse impact on CDI and its subsidiaries, taken as a whole, as compared to the other companies that operate in the industry in which CDI and its subsidiaries operate.

 

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In the Merger Agreement, each of Parent and Purchaser has made customary representations and warranties to CDI with respect to:

 

    corporate existence and power;

 

    authorization; enforceability;

 

    governmental authorization;

 

    non-contravention;

 

    capitalization and operation of Purchaser;

 

    no vote of Parent stockholders; required approval;

 

    disclosure documents;

 

    litigation;

 

    ownership of Shares;

 

    available funds; solvency;

 

    Parent Material Adverse Effect;

 

    brokers’ fees; and

 

    financing.

Interim Operations . Except as expressly contemplated, required or permitted by the Merger Agreement, as required by applicable law or as consented to in writing by Parent (which consent will not be unreasonably withheld, conditioned or delayed), during the period between the date of the Merger Agreement and the earlier of the Effective Time or the termination of the Merger Agreement pursuant to its terms, CDI has agreed to use commercially reasonable efforts to conduct its business in the ordinary course and use its commercially reasonable efforts to maintain and preserve intact its business organization, assets and technology and material business relationships.

Furthermore, except as expressly contemplated by the Merger Agreement and the schedules thereto, as required by applicable law, or as consented to in writing by Parent (which consent will not be unreasonably withheld, conditioned or delayed), during the period between the date of the Merger Agreement and the earlier of the Effective Time or the termination of the Merger Agreement, CDI may not, and will not permit any of its subsidiaries to do any of the following:

 

    declare, set aside, or pay any dividends on, or make any other distributions (whether in cash, stock or property) with respect to, any of its capital stock, other than dividends or distributions by a wholly owned subsidiary of CDI or the payment of accrued dividends with respect to awards granted under CDI’s stock plans that become vested after the date of the Merger Agreement; split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in substitution for shares of its capital stock; or purchase, redeem or otherwise acquire any shares of its capital stock or other voting securities or any options, warrants, calls or rights to acquire, or any securities convertible into or exchangeable for, any such shares or voting securities (except (i) upon the net exercise of, or withholding of Shares to satisfy tax obligations upon vesting or exercise of, options, stock appreciation rights, warrants, calls or rights disclosed in the Merger Agreement or schedules thereto and (ii) in connection with the satisfaction of any tax liability relating to an outstanding award granted under any of CDI’s stock plans);

 

    issue, deliver, sell, transfer, grant, pledge or otherwise encumber or subject to any lien any shares of its capital stock or other voting securities or any options, warrants, calls or rights to acquire any such shares or other securities, subject to certain exceptions;

 

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    amend the organizational documents of CDI or materially amend the organizational documents of any of its subsidiaries;

 

    merge or consolidate with, or purchase an equity interest in, or acquire all or substantially all of the assets of, any person or entity or any division or business thereof, if the consideration paid or transferred by CDI and its subsidiaries in connection with such transactions would exceed $1,000,000 individually or $2,000,000 in the aggregate of all such transactions;

 

    sell, lease or otherwise dispose of any of its real or personal properties or assets (including capital stock of any of its subsidiaries) that are material, individually or in the aggregate, to CDI and its subsidiaries, taken as a whole, other than sales of inventory and other assets in the ordinary course of business or subleases of real property or negotiated buyouts with landlords of unused or unoccupied office spaces;

 

    incur any indebtedness, or guarantee any indebtedness, other than (i) indebtedness under its existing lines of credit or other facilities, (ii) indebtedness incurred to finance any permitted capital expenditures described in the following item, and (iii) indebtedness incurred in connection with the refinancing of any indebtedness existing on the date of the Merger Agreement on substantially similar or more favorable terms and of an equal or lesser amount or permitted to be incurred, assumed or otherwise entered into pursuant to the exceptions described in this item; or make any loans or capital contributions to, or investments in, any entity or person other than subsidiaries of CDI, other than in the ordinary course of business;

 

    make or commit to make any capital expenditures other than: (i) in connection with the repair or replacement of facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance); (ii) capital expenditures accounted for in the 2017 budget provided by CDI to Parent; (iii) in connection with an obligation to directly serve a customer pursuant to a customer contract in the ordinary course of business; or (iv) otherwise in an aggregate amount not to exceed $500,000;

 

    enter into any material contract or modify, amend or terminate any material contract to which CDI or any of its subsidiaries is a party in any manner, in each case other than in the ordinary course of business or as required by applicable law;

 

    grant any material increase in base salary or bonus opportunity to any employees, officers, directors or individual consultants of CDI or its subsidiaries, except as required under the terms of existing contracts (including the terms of any employee plan); adopt, enter into, establish or terminate any material employee plan (except as required by applicable law); amend in any material respect any employee plan, except as required by applicable law or to maintain the tax-qualified status of any such plan; enter into any employment, deferred compensation, severance, retention, transaction, change in control bonus or other similar agreement (or amend any such existing agreement) for the benefit of any of the current employees, directors, individual consultants or other service providers of CDI or its subsidiaries; accelerate or commit to accelerate the funding, payment, or vesting of any compensation or benefits of any current or former employee, officer, director, or individual consultant (except as required by applicable law or the terms of any employee plan); or hire any new employees having an annual base salary in excess of $250,000 (unless such hiring is in the ordinary course of business consistent with past practice);

 

    communicate in writing with employees of CDI or any of its subsidiaries regarding the compensation or benefits that they will receive in connection with the transactions contemplated by the Merger Agreement, unless any such communications are consistent with the Merger Agreement, prior directives or documentation provided to Parent by CDI;

 

    make any material change in accounting methods, principles or practices, except insofar (i) as may have been required by a change in GAAP (or any interpretation thereof) or Regulation S-X under the U.S. Securities Act of 1933, as amended, (ii) as may be required by a change in applicable law or (iii) as disclosed in CDI’s filings with the SEC or as required by a governmental authority or quasi-governmental entity;

 

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    sell, assign, transfer, grant any license or sublicense with respect to, subject to any lien, abandon, permit to lapse, or otherwise dispose of any material intellectual property or take or fail to take any action that could reasonably be expected to result in the loss, expiration, lapse, or abandonment of any material intellectual property;

 

    disclose any material trade secret or material confidential information to any person except on terms requiring that person to maintain the confidentiality of such trade secret and confidential information; provided that disclosures by any person (other than senior management employees) which were not authorized by senior management employees will not constitute a breach of the obligations described in this item;

 

    waive, relinquish, release, grant, transfer or assign any right with a value of more than $500,000 in any individual case or $1,000,000 in the aggregate or, subject to the terms of the Merger Agreement, consent to any material matter with respect to which its consent is required under any material confidentiality or similar agreement;

 

    settle, compromise or otherwise resolve any disputed claim or disputed liability, any material litigation, arbitration or other legal proceeding (other than stockholder litigation relating to the Merger Agreement or the Transactions), in each case other than (a) in an amount involving an out-of-pocket net payment of not more than $500,000 individually or $1,500,000 in the aggregate or (b) in an amount equal to or less than the amount reserved against the matter in CDI’s audited financial statements;

 

    adopt a plan or agreement of, or resolutions providing for or authorizing, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization, in each case with respect to CDI or any of its subsidiaries;

 

    mortgage, pledge, hypothecate, grant any security interest in, or otherwise willfully subject to any other lien any material assets of CDI or any of its subsidiaries, in each case subject to certain exceptions;

 

    implement or announce any plant closings or material staff employee layoffs;

 

    except as required by applicable law, make, change or revoke any material tax election, file any material amended tax return, enter into any closing agreement within the meaning of Section 7121 of the Code, surrender any right to claim a refund of a material amount of taxes, or consent to an extension or waiver of the limitation period applicable to any material tax claim or assessment for any material tax liability, fail to pay any material tax that becomes due and payable (including estimated tax payments), prepare or file any tax return in a manner materially inconsistent with past practices, adopt or materially change any of its material methods of reporting income or deductions for tax purposes, or settle or compromise any material tax liability, claim, audit or dispute; or

 

    authorize any of, or commit or agree in writing to take any of, the foregoing actions.

No Solicitation . From the date of the Merger Agreement, CDI, its subsidiaries and its and their respective Representatives (as defined below) were required to:

 

    immediately cease and cause to be terminated all discussions or negotiations with any person currently or previously conducted with respect to any offer or proposal (other than an offer or proposal by Parent) contemplating or otherwise relating to any Acquisition Transaction (as defined below) (an “Acquisition Proposal”), or any inquiry or proposal that could reasonably be expected to lead to, or result in, an Acquisition Proposal;

 

    terminate access by any third party to any physical or electronic data room relating to any potential Acquisition Transaction;

 

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    request the prompt return or destruction of any confidential information provided to any third party within the 12 months immediately preceding the date of the Merger Agreement in connection with a proposed Acquisition Transaction; and

 

    enforce the provisions of any existing confidentiality or non-disclosure agreement entered into with respect to any potential Acquisition Transaction.

Subject to the paragraph below, at all times since the Merger Agreement was entered into and continuing until the earlier to occur of the consummation of the Offer and the termination of the Merger Agreement pursuant to its terms, CDI and its affiliates may not, and may not authorize or permit its or their respective directors, officers, financial advisors, attorneys, accountants, consultants, agents and other authorized representatives (collectively, “Representatives”) to do any of the following:

 

    initiate, solicit or knowingly encourage or knowingly facilitate the making of any Acquisition Proposal or any inquiry, proposal or request for information that could reasonably be expected to lead to, or result in, an Acquisition Proposal;

 

    engage in negotiations or discussions with, or furnish any information concerning CDI or any of its subsidiaries to, any third party who has made, or in response to, an Acquisition Proposal or any inquiry, proposal or request for information that could reasonably be expected to lead to, or result in, an Acquisition Proposal (other than informing third parties of the existence of the provisions described in this section);

 

    grant any waiver, amendment or release under any standstill or confidentiality agreement; or

 

    resolve or agree to do any of the foregoing.

Notwithstanding anything to the contrary contained in the Merger Agreement, if at any time after the date of the Merger Agreement and prior to the consummation of the Offer, CDI receives an unsolicited written Acquisition Proposal (which Acquisition Proposal was made after the date of the Merger Agreement and did not result from a material breach of the provisions described in this section), CDI and the Company Board and/or their Representatives may, subject to compliance with the provisions described in this section, engage in negotiations or discussions with, or furnish any information and reasonable access to, such third party making such Acquisition Proposal and/or its representatives or potential financing sources if the Company Board determines in good faith, after consultation with CDI’s outside legal counsel and financial advisor, and based on information then available, that such Acquisition Proposal constitutes, or could reasonably be expected to lead to, or result in, a Superior Proposal (as defined below). However, prior to furnishing any non public information, CDI is required to receive from such third party an executed confidentiality agreement with terms comparable to or more favorable to CDI than the terms of CDI’s confidentiality agreements with affiliates of Parent described in “—Confidentiality Agreements” (an “Acceptable Confidentiality Agreement”). Further, CDI may not furnish any non public information unless such information has been previously provided or made available to Parent or is provided or made available to Parent promptly (and in any event within 24 hours) after it is so furnished to such third party. Notwithstanding anything to the contrary contained in the Merger Agreement, CDI may, following the receipt of an Acquisition Proposal, contact the third party that has made such Acquisition Proposal to (i) clarify and understand the terms and conditions thereof to facilitate the Company Board’s (or committee’s) determination with respect to whether such Acquisition Proposal constitutes, or could reasonably be expected to lead to, or result in, a Superior Proposal and (ii) inform such third party of the provisions described in this Section.

The Company Board Recommendation . The Company Board has unanimously adopted resolutions: (i) approving and declaring that the Merger Agreement, the Merger and the other transactions contemplated thereby are advisable, fair to and in the best interests of the stockholders of the Company and the Company, (ii) approving the Merger Agreement and the transactions contemplated thereby, including the Offer, the Top-Up Option and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement and

 

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(iii) determining to recommend that the stockholders of the Company accept the Offer and tender their shares to Purchaser pursuant to the Offer, and if required to consummate the Merger, that the stockholders of the Company adopt the Merger Agreement (the “Company Board Recommendation”).

The Merger Agreement provides that neither the Company Board nor any committee thereof will: (i) withhold, withdraw (or not continue to make), qualify or modify (or publicly propose or resolve to withhold, withdraw (or not continue to make), qualify or modify in any manner adverse to Parent) in any manner, the Company Board Recommendation, (ii) take any action to exempt any person (other than Parent and its affiliates) from any applicable state takeover statute, (iii) approve, adopt or recommend any Acquisition Proposal, or propose publicly to approve, adopt or recommend, any Acquisition Proposal, (iv) fail to publicly reaffirm the Company Board Recommendation within 4 business days after Parent so requests in writing, or (v) fail to recommend against any Acquisition Proposal subject to Regulation 14D under the Exchange Act in a Solicitation/Recommendation Statement on Schedule 14D-9 within 10 business days after the commencement of such Acquisition Proposal (each such foregoing action or failure to act in clauses (i) through (iv) being referred to as a “Change in Recommendation”).

The Merger Agreement further provides that neither the Company Board nor any committee thereof will allow CDI or any of its subsidiaries to execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, alliance agreement, partnership agreement or similar agreement or arrangement (other than an Acceptable Confidentiality Agreement) with any third party providing for an Acquisition Transaction or potential Acquisition Transaction or requiring CDI to abandon, terminate or fail to consummate the Merger or any of the other Transactions, or requiring CDI to fail to comply with the provisions described under the headings “—No Solicitation” or “—The Company Board Recommendation” (an “Alternative Acquisition Agreement”).

Notwithstanding anything to the contrary contained in the Merger Agreement, at any time prior to the consummation of the Offer, in the event a material development, event, fact, occurrence or material change in circumstances (other than an Acquisition Proposal) occurs or arises after the date of the Merger Agreement that was not known or reasonably foreseeable by the Company Board as of the date of the Merger Agreement, the Company Board may make a Change in Recommendation if the Company Board determines, after consultation with its outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with the Company Board’s fiduciary duties under applicable law; provided, that CDI has provided Parent four business days’ prior written notice advising Parent that it intends to take such action and specifying, in reasonable detail, the reasons for such action.

Notwithstanding anything to the contrary contained in the Merger Agreement, but subject to the conditions described under “Notice Requirements,” at any time prior to the consummation of the Offer if, in response to an unsolicited written Acquisition Proposal made after the date of the Merger Agreement that did not result from a material breach of the provisions described under the headings “—No Solicitation” or “—The Company Board Recommendation,” the Company Board determines in good faith (after consultation with its outside legal counsel and financial advisor) that (i) such Acquisition Proposal constitutes a Superior Proposal and (ii) the failure to approve or recommend such Superior Proposal would be reasonably likely to be inconsistent with the Company Board’s fiduciary duties under applicable law, CDI may make a Change in Recommendation and/or terminate the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to such Superior Proposal; provided, however, that CDI may not terminate the Merger Agreement unless (i) it has complied in all material respects with its obligations described under the headings “—No Solicitation,” “—The Company Board Recommendation” and “—Notice Requirements” and (ii) it pays, or causes to be paid, the fee described under the heading “—Termination Fee” concurrently with such termination.

Notice Requirements . Notwithstanding the above, CDI will not be permitted to make a Change in Recommendation or terminate the Merger Agreement unless (i) it has provided to Parent four business days’ prior written notice (a “Superior Proposal Notice”) advising Parent that CDI intends to take such action (and

 

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specifying, in reasonable detail, the material terms and conditions of any such Superior Proposal and, if applicable and not prohibited by the terms of any confidentiality or non-disclosure agreement to which CDI is a party as of the date of the Merger Agreement, providing a copy of the relevant proposed transaction agreement (it being understood that, in the event of any change in the per share consideration or form of consideration offered under, or any other material amendment or modification of any Acquisition Proposal, the time periods described in this section will be extended by two additional business days) and (ii):

 

    during such four business day period, if requested by Parent, CDI has engaged in good faith negotiations with Parent regarding changes to the terms of the Merger Agreement intended to cause such Acquisition Proposal to no longer constitute a Superior Proposal; and

 

    the Company Board has considered any adjustments to the Merger Agreement (including a change to the price terms thereof), the Equity Commitment Letter and any other adjustments that may be irrevocably proposed in writing by Parent no later than 5:00 p.m., Philadelphia, Pennsylvania time, on the fourth business day of such four business day period and has determined in good faith (after consultation with its outside legal counsel and financial advisor) that the Superior Proposal would continue to constitute a Superior Proposal if such proposed adjustments were to be given effect.

The Merger Agreement further requires that CDI promptly (and in any event within 24 hours) advise Parent in writing in the event that it receives any Acquisition Proposal, and in connection with such notice, if applicable, provide to Parent the material terms and conditions (including, unless prohibited by the terms of any confidentiality or non-disclosure agreement existing as of the date of this Agreement, the identity of the person making any such Acquisition Proposal) of any such Acquisition Proposal. CDI has agreed to (i) keep Parent reasonably informed on a reasonably current basis of the status of any such Acquisition Proposal, (ii) promptly (and in any event within 24 hours) notify Parent in writing of any material change to the material terms of any such Acquisition Proposal or any determination by the Company Board that such Acquisition Proposal constitutes, or could reasonably be expected to lead to, or result in, a Superior Proposal, (iii) promptly (and in any event within 24 hours) notify Parent in writing if, to CDI’s knowledge, such third party has advised CDI in writing of its final decision not to pursue such Acquisition Proposal and (iv) provide to Parent as soon as practicable (and in any event within 24 hours) after receipt or delivery thereof of any written indication of interest (or amendment thereto) or any written material that constitutes an Acquisition Proposal (or amendment thereto) including copies of any proposed Alternative Acquisition Agreements and any financing commitments related thereto.

For the purposes of this Offer to Purchase:

 

    “Acquisition Transaction” means any transaction or series of related transactions with a person or “group” (as defined in the Exchange Act) relating to the acquisition of at least 15% of the assets of, equity interests in (including outstanding Shares) or business (as determined by reference to consolidated revenues) of CDI and its subsidiaries, taken as a whole, pursuant to a merger, reorganization, recapitalization, consolidation or other business combination, sale of shares of capital stock, sale of assets, tender offer, exchange offer or other similar transaction.

 

    “Superior Proposal” means an Acquisition Proposal (as defined above, except that the reference to “15%” will be deemed to be “50%” for the purposes of this definition) made by a third party that the Company Board determines in good faith, after consultation with CDI’s outside legal counsel and financial advisor, and considering such factors as the Company Board consider in good faith to be appropriate (including the conditionality (including with respect to financing), timing and likelihood of consummation of such proposal, stockholder litigation, breakup fees and expense reimbursement provisions), (i) is on terms that are more favorable to the stockholders of CDI than the Transactions (including after giving effect to any adjustments proposed in accordance with the provisions set forth in “Notice Requirements” above) from a financial point of view and (ii) is reasonably likely to be consummated on a timely basis.

 

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Directors’ and Officers’ Indemnification and Insurance . The Merger Agreement provides for certain indemnification rights in favor of CDI’s and its subsidiaries’ current and former directors and officers. Specifically:

 

    For six years after the Effective Time, Parent will cause the Surviving Corporation to, and the Surviving Corporation will, maintain officers’ and directors’ liability insurance in respect of acts or omissions occurring at or prior to the Effective Time covering each such person currently covered by CDI’s officers’ and directors’ liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date of the Merger Agreement; provided, however, that the Surviving Corporation will not be obligated to pay annual premiums in excess of 300% of the amount CDI paid in its last full fiscal year prior to the date of the Merger Agreement (the “Current Premium”) and if such premiums would at any time exceed 300% of the Current Premium, then the Surviving Corporation will cause to be maintained policies of insurance that provide the maximum coverage available at an annual premium equal to 300% of the Current Premium. This provision will be deemed to have been satisfied if prepaid “tail” or “runoff” policies have been obtained by CDI prior to the Effective Time, which policies provide such directors and officers with coverage for an aggregate period of six years with respect to claims arising from facts or events that occurred on or before the Effective Time, including in respect of the Transactions. If such prepaid policies have been obtained prior to the Effective Time, the Surviving Corporation will maintain such policies in full force and effect for their full term, and continue to honor the obligations thereunder.

 

    From and after the Effective Time, the Surviving Corporation will fulfill and honor in all respects the obligations of CDI and its subsidiaries pursuant to (i) each indemnification, exculpation or expense reimbursement or advance agreement in effect between CDI or any of its subsidiaries and any individual who at the Effective Time is, or at any time prior to the Effective Time was, a director or officer of, or serving as a director or officer of another person or entity at the request of, CDI or its subsidiaries (each, an “Indemnified Party,” and each such indemnification agreement, a “D&O Indemnification Agreement”); and (ii) any indemnification or expense reimbursement or advance provision and any exculpation provision set forth in the certificate of incorporation or by-laws of CDI or other similar organizational documents of any subsidiary of CDI as in effect on the date of the Merger Agreement. For a period of six years from and after the Effective Time, Parent and the Surviving Corporation will not amend, repeal or otherwise modify the certificate of incorporation and bylaws (and other similar organizational documents) of the Surviving Corporation and any subsidiaries of CDI to contain provisions no less favorable with respect to exculpation, indemnification and reimbursement and advance of expenses of directors and officers of CDI for periods at and prior to the Effective Time than are currently set forth in the organizational documents of CDI and such subsidiaries of CDI. To the fullest extent permitted by applicable law, Parent and the Surviving Corporation will cause the D&O Indemnification Agreements to continue in full force and effect in accordance with their terms following the Effective Time.

 

    If either of Parent or the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person or entity and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person or entity, then, and in each such case, proper provision will be made so that the successors and assigns of Parent or the Surviving Corporation, as applicable, will assume the obligations described in this section.

Reasonable Best Efforts . Each of Parent, Purchaser and CDI are required to use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable under applicable laws or otherwise to consummate and make effective the Transactions as promptly as practicable, including (i) the obtaining of all necessary actions or non-actions, waivers, consents, clearances, approvals, and expirations or terminations of waiting periods from governmental authorities and the making of all necessary registrations and filings and the taking of all steps as

 

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may be necessary to obtain an approval, clearance or waiver from, or to avoid an action or proceeding by, any governmental authority, including in connection with any regulatory law, (ii) the delivery of required notices to, and the obtaining of all necessary consents, approvals or waivers from third parties and (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging the Merger Agreement or the consummation of the Transactions; provided, that in no event will CDI or any of its subsidiaries be required to pay prior to the Closing any fee, penalty or other consideration to any third party for any consent or approval required for the consummation of the Transactions under any contract or agreement.

Anti-Takeover Laws . The Merger Agreement provides that CDI will, and will cause its subsidiaries to, take all actions necessary so that none of the provisions of Subchapters D (with respect to Section 2538 of the PBCL), E, F, G, H, I and J of Chapter 25 of the PBCL (each, an “Anti Takeover Statute”) becomes applicable to the transactions contemplated by the Merger Agreement. If any Anti-Takeover Statute becomes or is deemed to be applicable to CDI, Parent, Purchaser, the Offer, the Merger or any other Transaction, then each of CDI, Parent, Purchaser and their respective boards of directors will use commercially reasonable efforts to ensure that the Offer, the Merger and any other Transaction contemplated by the Merger Agreement may be consummated as promptly as practicable on the terms contemplated by the Merger Agreement and otherwise act to eliminate or minimize the effects of such Anti-Takeover Statute on the Merger Agreement, the Offer, the Top-Up Option, the issuance of the Top-Up Shares, the Merger and any other Transaction contemplated thereby.

Employee Matters . The Merger Agreement requires that during the 12 month period immediately following the consummation of the Merger, Parent will provide, or cause its affiliates to provide, employees who are employed by CDI or one of its subsidiaries as of the Effective Time (“Continuing Employees”) with (i) the base hourly wage or base salary and annual cash target bonus opportunity that, in each case, are no less than those in effect for such Continuing Employee immediately prior to the Closing and (ii) all other material benefits (other than participation in any equity or equity-based, deferred compensation, post retirement medical, dental, vision or life insurance, or defined benefit pension plan) that are substantially similar in the aggregate to such Continuing Employee as those provided to such Continuing Employee immediately prior to the Closing under the existing employee benefit plans of CDI. In the event of the termination of employment of any Continuing Employee during the 12 month period immediately following the Closing, Parent will provide such Continuing Employee with severance payments and benefits that are no less favorable, in the aggregate, than the severance payments and benefits to which such Continuing Employee would have been entitled under the severance plan or policy of the Company or a subsidiary of the Company applicable to such Continuing Employee immediately prior to Closing.

Parent also must cause the service of each such Continuing Employee with CDI, the Surviving Corporation and their respective subsidiaries, and all of their respective predecessors, to be recognized for purposes of eligibility to participate, levels of benefits, vesting, and, with respect to paid time off benefits only, benefit accrual (other than for any equity or equity-based, deferred compensation or post-retirement welfare plans or for purposes of benefit accrual under any defined benefit pension plan) under each employee benefit plan, program or arrangement of the Surviving Corporation, Parent or any of their respective affiliates (collectively, the “Parent Benefit Plans”) in which any Continuing Employee is or becomes eligible to participate to the same extent such service was recognized under the corresponding employee benefit plan of CDI, except to the extent such credit would result in a duplication of benefits. Additionally, Parent will use commercially reasonable efforts to permit each Continuing Employee to be immediately eligible to participate, without any waiting time, in any and all Parent Benefit Plans that are health and welfare plans to the extent coverage under such plan replaces coverage under a comparable employee benefit plan of CDI in which such Continuing Employee participated immediately before the replacement and such waiting time requirement was met under such plan of CDI.

Pursuant to the terms of the Merger Agreement, nothing will be construed to limit the right of Parent, any of its subsidiaries (including, following the Effective Time, the Surviving Corporation or any of its subsidiaries) or any of their respective affiliates to amend, modify or terminate any employee plan or agreement or other benefit or compensation plan, policy, program, contract, agreement or arrangement, nor will anything be construed to

 

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require Parent or any of its subsidiaries (including, following the Effective Time, the Surviving Corporation) to retain the employment of any particular Continuing Employee for any fixed period of time, or be construed to confer on any person any right to employment or service or any particular term or condition of employment or service, following the Effective Time.

Each of Parent, Purchaser and CDI have agreed that the provisions of the Merger Agreement described above are for the sole benefit of the parties to the Merger Agreement and will not create any right in any other person, including any right to continued employment or service with Parent, CDI, the Surviving Corporation or any of their respective affiliates. In addition, such provisions will not be deemed to establish or amend any employee benefit plan of CDI or the Parent or limit the right of the Parent, CDI, the Surviving Corporation or any of their respective affiliates to amend, merge or terminate any such plan.

Financing Cooperation . CDI has agreed to use its reasonable best efforts, and to cause its subsidiaries and to direct its management, officers and other representatives to use their reasonable best efforts, to provide cooperation and assistance reasonably requested by Parent in connection with the arrangement, syndication, negotiation and receipt of any debt financing, including:

 

    furnishing Parent with reasonably available financial information regarding CDI and its subsidiaries as may be reasonably requested by Parent;

 

    furnishing Parent with all reasonably available documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations;

 

    upon reasonable prior notice and in reasonably convenient locations (or via telephonic meeting), making management of CDI and its subsidiaries available to participate in a reasonable number of meetings, lender presentations, rating agency presentations and due diligence sessions;

 

    cooperating with the syndication process relating to any debt financing;

 

    permitting the debt financing sources and their representatives to examine, evaluate and assess CDI and its subsidiaries;

 

    facilitating the obtainment of third party appraisals and field examinations and assisting in providing a reasonably detailed calculation of the borrowing base prior to the Closing Date and facilitating the setting up of accounts and systems as required by any asset-based debt financing sources; and

 

    directing officers of CDI and its subsidiaries who will be officers of the the Surviving Corporation or its subsidiaries after the Closing to take reasonable corporate actions, subject to the occurrence of the Closing, necessary to permit the consummation of the Debt Financing.

Notwithstanding the foregoing, (i) no cooperation requested pursuant to the provisions described in this section will be permitted to unreasonably interfere with the ongoing business or operations of CDI or its subsidiaries, (ii) no obligation of CDI and its subsidiaries under any certificate, document or instrument will be effective until the Closing (other than customary authorization or representation letters), and CDI and its subsidiaries will not be required to pay any commitment or similar fee or incur any other liability, execute or deliver any certificate, document or instrument, or prepare any financial statements or other financial information in connection with the arrangement of any financing prior to the Closing other than customary authorization and representation letters and (iii) no cooperation requested pursuant to the provisions described in this section will require any of CDI and its subsidiaries to take any action that would conflict with any applicable material law or their respective organizational documents.

Parent will, upon written request by CDI, promptly reimburse CDI and its subsidiaries for all reasonable and documented out-of-pocket costs and expenses incurred by CDI and its subsidiaries in connection with the financing cooperation described in this section (other than in respect of the preparation of historical financial

 

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statements to the extent required to be included in CDI’s filings with the SEC) in connection with the arrangement of financing and any information used in connection therewith. Parent and Purchaser have agreed, on a joint and several basis, to indemnify and hold harmless CDI, its affiliates and their respective representatives from and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties actually incurred by any of them in connection with the arrangement of any debt financing arrangements described in this section, except in the event such liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments or penalties arose out of or result from the willful misconduct, gross negligence or bad faith of CDI, its affiliates or their respective representatives.

Other Covenants . The Merger Agreement contains other covenants, including covenants relating to notifications of certain events, actions relating to a CDI stockholder meeting (if needed), access to information, public announcements, director resignations, stockholder litigation, confidentiality, stock exchange delisting, the transfer of intellectual property, the repatriation of cash held by certain foreign subsidiaries of CDI and certain matters relating to Rule 14d-10 and Rule 16b-3 under the Exchange Act.

Terminatio n. The Merger Agreement may be terminated and the Offer and the Merger may be abandoned at any time prior to the consummation of the Offer:

 

  by mutual written agreement of Parent and CDI;

 

  by either Parent or CDI if:

 

    the Offer has not been consummated in accordance with its terms and the Merger Agreement on or before the End Date or the Offer is terminated or withdrawn pursuant to its terms and the terms of the Merger Agreement without any Shares being purchased thereunder; provided, however, that the right to terminate the Merger Agreement pursuant to this provision will not be available to any party whose material breach of any of its obligations under the Merger Agreement has been the primary cause of, or resulted in, the failure of the Offer to be consummated;

 

    any governmental authority or self regulatory body of competent jurisdiction has issued a final, non-appealable order, injunction, judgment, decision, determination, award, writ, ruling, stipulation, assessment or decree or other similar requirement permanently restraining, enjoining or otherwise prohibiting the Merger or the other Transactions; provided, however, that the right to terminate the Merger Agreement pursuant to this provision will not be available to any party whose material breach (including with respect to Parent, a material breach by Purchaser) of any of its obligations under the Merger Agreement has been the primary cause of, or resulted in, such order, injunction, judgment or similar requirement; or

 

    any law has been promulgated, entered, enacted or issued or is applicable to the Merger by any governmental authority or self regulatory body that prohibits, prevents or makes illegal the consummation of the Merger or the other Transactions, and such law is final and non-appealable.

 

  by Parent if:

 

    a Change in Recommendation has occurred;

 

    CDI has committed an intentional and knowing breach of any material provision described under the headings “—No Solicitation,” “—The Company Board Recommendation” or “—Notice Requirements”; or

 

   

CDI has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure to perform would: (i) give rise to the failure of any of the Offer conditions relating to CDI’s representations and warranties or the occurrence of a Company Material Adverse Effect and (ii) such breach or failure to perform is incapable of being cured or has not been cured by CDI by the earlier of (1) 30 days after written notice has been given to Parent by the Company of such breach or failure to perform and (2) the

 

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End Date; provided, however, that Parent may not terminate the Merger Agreement pursuant to this provision if, at the time such termination would otherwise take effect in accordance with the foregoing, Parent or Purchaser is in material breach of any provision of the Merger Agreement such that the Company has the right (or would following notice and an opportunity to cure) to terminate the Merger Agreement in accordance with its terms due to a material breach of Parent; or

 

  by CDI if:

 

    the Company Board has determined to terminate the Merger Agreement in response to a Superior Proposal, and concurrently with such termination CDI enters into a definitive Alternative Acquisition Agreement with respect to such Superior Proposal and pays to Parent the fee described under “—Termination Fee”;

 

    Parent has breached or failed to perform in any respect any of its representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure to perform (i) has or would reasonably be expected to prevent or materially delay, interfere with, impair or hinder Purchaser or Parent from performing any of its obligations under the Merger Agreement and (ii) is incapable of being cured or has not been cured by Parent within 30 business days after written notice has been given by CDI to Parent of such breach or failure to perform; provided, however, that CDI may not terminate the Merger Agreement pursuant to this provision if, at the time such termination would otherwise take effect in accordance with the foregoing, CDI is in material breach of any provision of the Merger Agreement; or

 

    if Purchaser fails to commence the Offer or consummate the Offer, in each case, in accordance with the terms of the Merger Agreement; provided, however, that CDI may not terminate the Merger Agreement pursuant to this provision if such failure to commence the Offer resulted from the breach of the Merger Agreement by CDI.

Effect of Termination . In the event of the termination of the Merger Agreement as provided under “—Termination,” the Merger Agreement will be void and of no effect; provided, however, that (i) certain provisions of the Merger Agreement and the Equity Commitment Letter will survive the termination of the Merger Agreement and will remain in full force and effect, and (ii) the termination of the Merger Agreement will not relieve any party from liability for fraud or any intentional and knowing material breach prior to such termination.

Expense Reimbursement . In the event that (i) the Merger Agreement is terminated by Parent or CDI because the Offer has been terminated or has not been consummated by the End Date and, as of such termination the Minimum Condition has not been satisfied but all other conditions to the Offer and the Merger have been satisfied or waived (other than those conditions that by their nature are to be satisfied or waived at the consummation of the Offer or the Merger, provided that such conditions are capable of being satisfied) or (ii) the Merger Agreement is terminated by Parent because of a material breach by CDI, then CDI will promptly pay up to $2,500,000 of reasonable and documented out-of-pocket fees and expenses (including legal fees and expenses) incurred by Parent and its affiliates on or prior to the termination of the Merger Agreement in connection with the Transactions. Notwithstanding the foregoing, the existence of circumstances which could require the Termination Fee to become subsequently payable by CDI pursuant to the Merger Agreement will not relieve CDI of its obligations to pay the expense reimbursement described in this section, and the payment by CDI of any expense reimbursement described in this section will not relieve CDI of any subsequent obligation to pay the Termination Fee (except to the extent of any expenses previously reimbursed).

Termination Fee . CDI has agreed to pay Parent $5,512,802 (the “Termination Fee”) (less any amount previously paid to Parent pursuant to the provisions set forth under “—Expense Reimbursement”) if:

 

    the Merger Agreement is validly terminated by CDI in response to a Superior Proposal in and concurrently with such termination CDI enters into a definitive Alternative Acquisition Agreement Parent; with respect to such Superior Proposal

 

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    the Merger Agreement is validly terminated by Parent because of a Change in Recommendation or because CDI has committed an intentional and knowing breach of any material provision described under the headings “—No Solicitation,” “—The Company Board Recommendation” or “—Notice Requirement”; or

 

    the Merger Agreement is terminated by Parent or CDI because the Offer has been terminated or has not been consummated by the End Date or by Parent because of a material breach by CDI and at any time on or after the date of the Merger Agreement and prior to such termination an Acquisition Proposal has been publicly announced (and not publicly withdrawn) and (i) within 12 months after the date of such termination, CDI enters into a definitive agreement to engage in an Acquisition Transaction, and thereafter such Acquisition Transaction is consummated (whether or not such consummation occurs before or after such 12 month period), or (ii) within 12 months after the date of such termination, any Acquisition Transaction is consummated (except, in each case, that the reference to “15%” in the definition of “Acquisition Transaction” will be deemed to be “50%”).

Subject to the remedies described under “—Availability of Specific Performance to Parent and Purchaser,” each of Parent and Purchaser have acknowledged and agreed that Parent’s right to receive payment of the Termination Fee and/or the reimbursement described under “—Expense Reimbursement” will constitute the sole and exclusive remedy of Parent, Purchaser and their affiliates and representatives against CDI, its subsidiaries and any of their respective former, current or future representatives, general or limited partners, stockholders, members, managers, employees, affiliates or assignees for all damages, costs, fees, expenses, liabilities, penalties or losses of any kind suffered as a result of or in connection with the Merger Agreement (including the negotiation, execution, performance or breach thereof), the failure of the Transactions to be consummated or otherwise. Notwithstanding the foregoing, nothing will limit any right or remedy of Parent or Purchaser with respect to fraud by CDI or relieve CDI of any liability with respect to fraud.

Availability of Specific Performance to Parent and Purchaser . CDI has agreed that, at any time prior to the valid termination of the Merger Agreement, Parent and Purchaser will be entitled to seek and obtain an injunction or injunctions to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement without the need to secure or post any bond in connection therewith, in addition to any other remedy to which Parent and Purchaser are entitled at law or in equity (subject to the limitations set forth in the Merger Agreement).

Availability of Specific Performance to CDI . Parent and Purchaser have agreed that, at any time prior to the valid termination of the Merger Agreement, CDI will be entitled to seek and obtain an injunction or injunctions to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement without the need to secure or post any bond in connection therewith, in addition to any other remedy to which CDI is entitled at law or in equity (subject to the limitations set forth in the Merger Agreement); provided that, CDI will only be entitled to seek and obtain an injunction, specific performance and other equitable remedies to enforce Parent’s and Purchaser’s obligations to cause the Equity Financing to be funded and to consummate the Merger only in the event that each of the following conditions has been satisfied: (i) all conditions to the Offer and the consummation of the Merger (other than those conditions that by their nature are to be satisfied at the Closing, provided that such conditions are capable of being satisfied at the Closing) have been satisfied but for the failure of the Equity Financing to be funded, and (ii) CDI has irrevocably confirmed in writing to Parent that if the Equity Financing is funded, then it would take all such actions that are within its control to cause the Closing to occur.

Availability of Monetary Damages to CDI . In the event that Parent or Purchaser have committed an intentional and knowing breach of the Merger Agreement, CDI has sought specific performance described under “—Availability of Specific Performance to CDI” and a court of competent jurisdiction has refused to grant such specific performance for any reason, CDI will be entitled to pursue monetary damages against Parent and Purchaser; provided that in no event will Parent and/or Purchaser be required to pay such damages in excess of $12,600,690 in the aggregate.

 

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Governing Law . The Merger Agreement and any proceedings arising out of or related to the Merger Agreement or to the Transactions will be governed by and construed in accordance with the laws of the state of Delaware, including all matters of construction, validity and performance, without regard to the conflicts of law rules of the state of Delaware that would refer a matter to the laws of another jurisdiction, except that Pennsylvania law will apply with respect to the rights and duties of the Company Board and where such law is otherwise mandatorily applicable.

Equity Commitment Letter

The description of the Equity Commitment Letter included in Section 9—“Source and Amount of Funds—Equity Financing” is incorporated into this Section 11 by reference.

Exclusivity Agreement

On July 19, 2017, CDI and AE Industrial entered into a letter agreement (the “Exclusivity Agreement”), pursuant to which CDI agreed that (other than interactions with AE Industrial and its affiliates) neither it nor any of its subsidiaries or representatives would engage in any discussions or negotiations regarding any acquisition proposal, or would otherwise initiate, solicit, or knowingly encourage, assist or facilitate any effort relating to an acquisition proposal or an item that would reasonably be expected to lead to an acquisition proposal, or have conversations with or furnish information to any party that made an acquisition proposal or inquiries that could reasonably be expected to lead to an acquisition proposal. Notwithstanding the foregoing, CDI was permitted to respond to unsolicited written acquisition proposals made after the date of the Exclusivity Agreement that did not result from a breach of the Exclusivity Agreement, if CDI gave prior written notice to AE Industrial and CDI determined in good faith after consultation with its outside legal counsel and financial advisor that such acquisition proposal constitutes or could reasonably be expected to lead to or result in a proposal that is more favorable to CDI’s stockholders than the acquisition proposed by AE Industrial. The Exclusivity Agreement further provided that the exclusivity period would terminate upon the end of the day on July 25, 2017, and included provisions providing for early termination if the terms of the proposed acquisition became materially less favorable to CDI or negotiations were abandoned. This summary of the Exclusivity Agreement is qualified in its entirety by reference to the full text of the Exclusivity Agreement, a copy of which is filed as Exhibit (d)(4) to the Schedule TO, which is incorporated herein by reference.

Tender Agreements

In connection with the Merger Agreement, CDI’s directors and executive officers and certain trusts for descendants of Walter Garrison (CDI’s chairman and founder), who are referred to as the “Significant Stockholders”, entered into separate tender and support agreements with Parent and Purchaser, dated July 31, 2017 (each, a “Tender Agreement” and collectively, the “Tender Agreements”).

Each Tender Agreement provides that, except in the case of Walter Garrison in his individual capacity (who is required to tender into the Offer no later than the Expiration Date), no later than five business days after the commencement of the Offer, the applicable Significant Stockholder will tender into the Offer all outstanding Shares such Significant Stockholder directly owns (with certain specified exceptions) as of the date of the Tender Agreement or of which such Significant Stockholder acquires direct ownership after such date until the termination of the Tender Agreement (the “Subject Shares”) except for (i) Walter Garrison, who may, in lieu of tendering his Shares, transfer them to a charitable organization described in Section 501(c)(3) of the Code and (ii) certain family trusts, which may distribute a specified number of Shares to their beneficiaries pursuant to such beneficiaries’ withdrawal rights. Walter Garrison holds approximately 1,186,762 Shares and the applicable family trusts hold 161,338 Shares that may be distributed rather than tendered.

Each Tender Agreement terminates on the earliest to occur of such date and time as (i) such Merger Agreement has been terminated for any reason, (ii) the Merger has become effective in accordance with the terms

 

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and provisions of the Merger Agreement, (iii) Parent has acquired all of the Subject Shares of the Significant Stockholder, whether pursuant to the Merger or otherwise; (iv) any amendment, change or waiver to the Merger Agreement is effected without the Significant Stockholder’s consent that (a) decreases the amount, or changes the form or (except with respect to extensions of the Offer in accordance with the terms of the Merger Agreement) timing of consideration payable to the Significant Stockholder pursuant to the terms of the Merger Agreement or (b) materially and adversely affects the Significant Stockholder; (v) is agreed to in writing by Parent and the Significant Stockholder; (vi) if the Significant Stockholder is a trust whose trustee is not a director or officer of CDI, the determination by such trustee following a material development, event, fact, occurrence or material change in circumstances that first occurs or first arises after the date of such Tender Agreement that was not known or reasonably foreseeable by such trustee, after consultation with its outside legal counsel, that the failure to terminate such Tender Agreement would violate the trustee’s fiduciary duties under applicable law; or (vii) a Change in Recommendation has occurred.

The Significant Stockholders collectively own 4,957,587 Shares, or approximately 26.4% of the Shares outstanding on August 11, 2017 and approximately 24.9% of the fully diluted Shares outstanding on August 11, 2017.

This summary of the Tender Agreements is qualified in its entirety by reference to the form of Tender Agreement, a copy of which is filed as Exhibit (d)(6) to the Schedule TO, which is incorporated herein by reference.

Confidentiality Agreements

On February 27, 2017, CDI and Belcan, LLC, a portfolio company of the AE Funds, entered into a confidentiality agreement (the “Belcan Confidentiality Agreement”) in connection with Belcan’s evaluation of the potential acquisition of CDI, pursuant to which AE Industrial and its affiliates received certain confidential information regarding CDI. On May 12, 2017, CDI and AE Industrial entered into a confidentiality agreement (the “AE Confidentiality Agreement” and together with the Belcan Confidentiality Agreement, the “Confidentiality Agreements”). Under the Confidentiality Agreements, subject to certain exceptions, AE Industrial and its representatives are to keep confidential any non-public information concerning CDI and agreed to certain non-solicitation provisions relating to CDI’s employees for a period of 18 months and certain standstill provisions for a period of 15 months. This summary of the Confidentiality Agreements is qualified in its entirety by reference to the full text of the Belcan Confidentiality Agreement and the AE Confidentiality Agreement, a copy of which is filed as Exhibits (d)(3) and (d)(2) to the Schedule TO, respectively, which are incorporated herein by reference.

12. Purpose of the Offer; Plans for CDI.

Purpose of the Offer. The purpose of the Offer is to acquire control of, and the entire equity interest in, CDI. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. All Shares acquired by Purchaser pursuant to the Offer will be retained by Purchaser pending the Merger. If the Offer is successful, Purchaser intends to consummate the Merger as promptly as practicable.

If you sell your Shares in the Offer, you will cease to have any equity interest in CDI or any right to participate in its earnings and future growth. If you do not tender your Shares, but the Merger is consummated, you also will no longer have an equity interest in CDI. Similarly, after selling your Shares in the Offer or the subsequent Merger, you will not bear the risk of any decrease in the value of CDI.

Merger Without a Meeting . If the Minimum Condition is satisfied, Purchaser will have sufficient voting power to adopt the Merger Agreement at a meeting of CDI’s stockholders without the affirmative vote of any other stockholder. If Purchaser acquires at least 80% of the then outstanding Shares pursuant to the Offer, the Top-Up Option, or otherwise, the Merger may be consummated without a stockholders’ meeting and without the

 

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approval of CDI’s stockholders. The Merger Agreement provides that Purchaser will be merged into CDI and that the certificate of incorporation of CDI, as amended and restated in its entirety to read identically to the certificate of incorporation of Purchaser (aside from the name remaining “CDI Corp.”), and the by-laws of Purchaser in effect immediately prior to the Effective Time will be the by-laws of the Surviving Corporation following the Merger (aside from the name remaining “CDI Corp.”).

Dissenters’ Rights. Under the PBCL, holders of Shares do not have dissenters’ rights as a result of the Offer. However, if the Merger takes place, stockholders who have not tendered their Shares in the Offer may be entitled to dissenters’ rights if if (i) prior to the Merger (A) the Shares are no longer listed on a national securities exchange and (B) the Shares are held beneficially or of record by 2,000 persons or less or (ii) we own at least 80% of the Shares, including through exercise of the Top-Up Option, and the Merger is consummated as a “short-form” merger pursuant to Subchapter 15D of the PBCL. Stockholders who comply with the applicable statutory procedures under the PBCL will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with interest, if any, as set forth below.

Any such judicial determination of the fair value of the Shares could be based upon considerations other than or in addition to the price per Share paid in the Merger and the market value of the Shares. Stockholders should recognize that the value determined in a judicial process could be higher or lower than the price per Share paid pursuant to the Offer or the consideration per Share to be paid in the Merger. Moreover, Purchaser may argue in an appraisal proceeding that, for purposes of such a proceeding, the fair value of the Shares is less than the price paid in the Offer or the Merger. Stockholders also should note that investment banking opinions as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the Offer or the Merger, are not opinions as to fair value under the PBCL.

When the fair value has been determined, the applicable court will direct the payment by the Surviving Corporation of an amount equal to the difference between such fair value and the amount previously remitted (if any), together with interest, to the stockholders entitled thereto.

Failure to follow the steps required by Subchapter 15D of the PBCL for perfecting dissenters’ rights may result in the loss of such rights. The foregoing discussion is not a complete statement of the law relating to dissenters’ rights and is qualified in its entirety by Subchapter 15D of the PBCL.

Dissenters’ rights cannot be exercised at this time. The information set forth above is for informational purposes only with respect to alternatives available to stockholders who have not tendered their Shares if the Merger is consummated. Stockholders who will be entitled to dissenters’ rights in connection with the Merger will receive additional information concerning dissenters’ rights and the procedures to be followed in connection therewith before such stockholders have to take any action relating thereto.

Going Private Transaction. The SEC has adopted Rule 13e-3 under the Exchange Act which is applicable to certain “going private” transactions and which may under certain circumstances be applicable to the Merger or another business combination following the purchase of Shares pursuant to the Offer in which Purchaser seeks to acquire the remaining Shares not held by it. Purchaser and CDI believe that Rule 13e-3 will not be applicable to the Merger because it is anticipated that the Merger will be effected within one year following the consummation of the Offer and, in the Merger, stockholders will receive the same price per Share as paid in the Offer. Rule 13e-3 requires, among other things, that certain financial information concerning CDI and certain information relating to the fairness of the proposed transaction and the consideration offered to minority stockholders be filed with the SEC and disclosed to stockholders prior to consummation of the transaction.

Plans for CDI. If the Offer and Merger are consummated, at the Effective Time, the Surviving Corporation’s certificate of incorporation as in effect immediately prior to the Effective Time will be amended

 

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and restated in its entirety to be identical to Purchaser’s certificate of incorporation (aside from the name remaining “CDI Corp.”), and the Surviving Corporation’s bylaws will be amended and restated in its entirety to conform to the bylaws of Purchaser as in effect immediately prior to the Effective Time (aside from the name remaining “CDI Corp.”). Purchaser’s directors immediately prior to the Effective Time will be the initial directors of the Surviving Corporation until their successors have been elected or appointed. CDI’s officers immediately prior to the Effective Time will be the initial officers of the Surviving Corporation until their successors have been elected or appointed.

Except as otherwise provided herein, it is expected that, initially following the Merger, the business and operations of CDI will, except as set forth in this Offer to Purchase, be continued substantially as they are currently being conducted. We intend to divest one or more divisions of CDI to third parties and/or affiliated portfolio companies following the Closing. Based on available information, we are conducting a detailed review of CDI and its assets, corporate structure, dividend policy, capitalization, indebtedness, operations, properties, policies, management and personnel, obligations to report under Section 15(d) of the Exchange Act and the delisting of its securities from a registered national securities exchange, and will consider what, if any, other changes would be desirable in light of the circumstances which exist upon completion of the Offer. We will continue to evaluate the business and operations of CDI during the pendency of the Offer and after the consummation of the Offer and will take such actions as we deem appropriate under the circumstances then existing. Thereafter, we intend to review such information as part of a comprehensive review of CDI’s business, operations, capitalization and management with a view to optimizing development of CDI’s potential. Possible changes could include changes in CDI’s business, corporate structure, articles of incorporation, by-laws, capitalization, board of directors, management, business development opportunities, indebtedness or dividend policy, and although, except as disclosed in this Offer to Purchase, we have no current plans with respect to any of such matters, Parent, Purchaser and the Surviving Corporation expressly reserve the right to make any changes they deem appropriate in light of such evaluation and review or in light of future developments.

As of the date of this Offer to Purchase, no member of CDI’s current management has entered into any agreement, arrangement or understanding with Parent, Purchaser or their affiliates regarding employment with, or the right to participate in the equity of, the Surviving Corporation or Parent. Moreover, as of the date of this Offer to Purchase, no discussions have been held between members of CDI’s current management and Parent, Purchaser or their affiliates with respect to any such agreement, arrangement or understanding. Parent may establish equity-based compensation plans for management of the Surviving Corporation. It is anticipated that awards granted under any such equity-based compensation plans would generally vest over a number of years of continued employment and would entitle management to share in the future appreciation of the Surviving Corporation. Although it is possible that certain members of CDI’s management team will enter into arrangements with the Surviving Corporation or Parent regarding future employment, severance, benefits and/or the right to purchase or participate in the equity of, the Surviving Corporation or Parent, as of the date of this Offer to Purchase no discussions have occurred between members of CDI’s current management and Parent, Purchaser or AE Industrial regarding such matters, and there can be no assurance that any parties will reach any agreements. Any new arrangements are currently expected to be discussed and entered into after completion of the Merger.

Except as described above or elsewhere in this Offer to Purchase, Purchaser and Parent have no present plans or proposals that would relate to or result in (i) any extraordinary corporate transaction involving CDI or any of its subsidiaries (such as a merger, reorganization, liquidation, relocation of any operations or sale or other transfer of a material amount of assets), (ii) any sale or transfer of a material amount of assets of CDI or any of its subsidiaries, (iii) any change in the Company Board or management of CDI, (iv) any material change in CDI’s capitalization, indebtedness or dividend policy, (v) any other material change in CDI’s corporate structure or business, (vi) a class of securities of CDI being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association or (vii) a class of equity securities of CDI being eligible for termination of registration pursuant to Section 12(g) of the Exchange Act.

 

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13. Certain Effects of the Offer.

Market for the Shares. If the Offer is successful, there will be no market for the Shares because Parent and Purchaser intend to consummate the Merger as promptly as practicable following the consummation of the Offer.

NYSE Listing. The Shares are listed on the NYSE. Immediately following the consummation of the Merger (which is expected to occur as promptly as practicable following the consummation of the Offer), CDI’s common stock will no longer meet the requirements for continued listing on the NYSE because the only stockholder will be Parent. Immediately following the consummation of the Merger, we intend to and will cause the Company to delist the Shares from the NYSE.

Exchange Act Registration. The Shares currently are registered under the Exchange Act. The purchase of Shares pursuant to the Offer may result in the Shares becoming eligible for deregistration under the Exchange Act. Registration of the Shares may be terminated by CDI upon application to the SEC if the outstanding Shares are not listed on a “national securities exchange” and if there are fewer than 300 holders of record of the Shares.

Parent intends to seek to cause CDI to apply for termination of registration of the Shares as soon as possible after consummation of the Offer if the requirements for termination of registration are met. Termination of registration of the Shares under the Exchange Act would reduce the information required to be furnished by CDI to its stockholders and to the SEC and would ultimately make certain provisions of the Exchange Act (such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement or information statement in connection with stockholders’ meetings or actions in lieu of a stockholders’ meeting pursuant to Section 14(a) and 14(c) of the Exchange Act and the related requirement of furnishing an annual report to stockholders) no longer applicable with respect to the Shares. In addition, if the Shares are no longer registered under the Exchange Act, the requirements of Rule 13e-3 with respect to “going private” transactions would no longer be applicable to CDI. Furthermore, the ability of “affiliates” of CDI and persons holding “restricted securities” of CDI to dispose of such securities pursuant to Rule 144 under the U.S. Securities Act of 1933, as amended, may be impaired or eliminated.

If registration of the Shares is not terminated prior to the Merger, then the registration of the Shares under the Exchange Act will be terminated following completion of the Merger.

Margin Regulations. The Shares are currently “margin securities” under the regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), which has the effect, among other things, of allowing brokers to extend credit using such Shares as collateral. Depending upon factors similar to those described above regarding listing and market quotations, following the Offer, the Shares may no longer constitute “margin securities” for the purposes of the margin regulations of the Federal Reserve Board, in which event the Shares would be ineligible as collateral for margin loans made by brokers.

14. Dividends and Distributions.

As discussed in Section 11—“The Merger Agreement; Other Agreements,” the Merger Agreement provides that from the date of the Merger Agreement to the Effective Time, without the prior written approval of Parent, CDI will not, and will not allow its subsidiaries to, authorize or pay any dividends on or make any distribution with respect to the outstanding Shares.

15. Certain Conditions of the Offer.

Purchaser is not required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Exchange Act Rule 14e-l(c) (relating to Purchaser’s obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer, unless, immediately prior to the applicable Expiration Date:

 

  (i)

there have been validly tendered in the Offer and not properly withdrawn that number of Shares that, together with the number of Shares then-owned by Parent, Purchaser or any of their respective

 

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  subsidiaries, equals at least one Share more than half of the sum of (i) all Shares then outstanding and (ii) all Shares issuable upon the exercise or vesting, as applicable, of all Company Options and Company TVDS Awards;

 

  (ii) any applicable waiting period under the HSR Act has expired or been terminated (which has been satisfied by the grant of early termination of the applicable waiting period by the FTC on August 7, 2017);

 

  (iii) no order, injunction, judgment, decision, determination, award, writ, ruling, stipulation, assessment or decree or other similar requirement issued by a governmental authority or self regulatory body, and no applicable law is in effect that would (1) make the Offer, the Top-Up Option (if applicable), the issuance of the Top-Up Shares (if applicable), the Merger or the other Transactions illegal or (2) otherwise prevent or prohibit the consummation thereof;

 

  (iv) the representations and warranties of CDI contained in the Merger Agreement:

 

  (A) set forth in Section 4.01, Section 4.03, Section 4.06 (except to the extent such provisions impact the aggregate consideration payable), Section 4.23 or Section 4.25, which relate to corporate existence and power, corporate authorization, capitalization, brokers’ fees and takeover laws, respectively, are true and correct in all material respects;

 

  (B) set forth in Section 4.06 (to the extent such provisions impact the aggregate consideration payable), which relate to capitalization, are true and correct in all respects, except to the extent that any inaccuracies would be de minimis;

 

  (C) set forth in Section 4.11(b), which relate to the absence of a Company Material Adverse Effect, are true and correct in all respects; and

 

  (D) not covered by the foregoing clauses (A), (B) and (C) are true and correct in all respects (after disregarding any qualifications that reference material, materiality or Company Material Adverse Effect) except to the extent that any inaccuracies in such representations and warranties would not have a Company Material Adverse Effect;

 

     in each case as if such representations and warranties were made on and as of the Expiration Date (or, in the case of such representations and warranties made only as of a specified time or date, on and as of such specified time or date);

 

  (v) since the date of the Merger Agreement there has been no Company Material Adverse Effect;

 

  (vi) CDI has performed in all material respects its obligations and complied in all material respects with all agreements and covenants of CDI to be performed or complied with by it under the Merger Agreement prior to such time; and

 

  (vii) CDI has delivered to Parent a certificate signed by a senior executive officer dated as of the Expiration Date certifying that the conditions specified in clauses (iv), (v) and (vi) are true; and

 

  (viii) the Merger Agreement has not been terminated in accordance with its terms.

Purchaser expressly reserves the right (but is not obligated) to waive any of the foregoing conditions in whole or in part at any time, and from time to time, in its sole discretion, subject in each case to the terms of the Merger Agreement and applicable law; provided that the foregoing conditions set forth in clauses (i) and (viii) may not be waived without the prior written consent of CDI and Parent.

Any extension, delay, termination, waiver or amendment of the Offer will be followed as promptly as practicable by a public announcement thereof. In the case of an extension of the Offer, Parent and Purchaser will make a public announcement of such extension no later than 9:00 a.m., Philadelphia, Pennsylvania time, on the next business day after the previously scheduled Expiration Date.

 

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16. Certain Legal Matters; Regulatory Approvals.

General . Except as described in this Section 16, Purchaser is not aware of any pending legal proceeding relating to the Offer. Except as described in this Section 16, based on its examination of publicly available information filed by CDI with the SEC and other publicly available information concerning CDI, Purchaser is not aware of any governmental license or regulatory permit that appears to be material to CDI’s business that might be adversely affected by Purchaser’s acquisition of Shares as contemplated herein or of any approval or other action by any governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by Purchaser or Parent as contemplated herein. Should any such approval or other action be required, Purchaser currently contemplates that, except as described below under “State Takeover Statutes,” such approval or other action will be sought. While Purchaser does not currently intend to delay acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken, adverse consequences might not result to CDI’s business, or certain parts of CDI’s business might not have to be disposed of, any of which could cause Purchaser to elect to terminate the Offer without the purchase of Shares thereunder under certain conditions. See Section 15—“Certain Conditions of the Offer.”

State Takeover Statutes. A number of states (including Pennsylvania, where CDI is incorporated) have adopted takeover laws and regulations which purport, to varying degrees, to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have substantial assets, stockholders, principal executive offices or principal places of business therein.

The Pennsylvania Takeover Disclosure Law (“PTDL”) purports to regulate certain attempts to acquire a corporation which (i) is organized under the laws of Pennsylvania or (ii) has its principal place of business and substantial assets located in Pennsylvania. In Crane Co. v. Lam , the United States District Court for the Eastern District of Pennsylvania preliminarily enjoined, on grounds arising under the United States Constitution, enforcement of at least the portion of the PTDL involving the pre-offer waiting period thereunder. Section 8(a) of the PTDL provides an exemption for any offer to purchase securities as to which the board of directors of the target company recommends acceptance to its stockholders, if at the time such recommendation is first communicated to stockholders the offeror files with the Pennsylvania Securities Commission (“PSC”) a copy of the Schedule TO and certain other information and materials, including an undertaking to notify stockholders of the target company that a notice has been filed with the PSC which contains substantial additional information about the offering and which is available for inspection at the PSC’s principal office during business hours. The Company Board has unanimously adopted resolutions: (a) approving and declaring that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of CDI’s stockholders and CDI, (b) approving the Merger Agreement and the transactions contemplated thereby, including the Offer, the Top-Up Option and the Merger, on the terms and subject to the conditions set forth therein, (c) determining to recommend that the stockholders of the Company accept the Offer and tender their shares to Purchaser pursuant to the Offer, and if required to consummate the Merger, that CDI’s stockholders adopt the Merger Agreement and (d) electing, to the extent permitted by applicable law, to make inapplicable all state takeover laws or similar laws, to the extent they might otherwise apply to the execution, delivery, performance or consummation of the Merger Agreement or any of the transactions contemplated therein.

While reserving and not waiving its right to challenge the validity of the PTDL or its applicability to the Offer, Purchaser is making a Section 8(a) filing with the PSC in order to qualify for the exemption from the PTDL. Pursuant to Section 10 of the PTDL, Purchaser will submit the appropriate $100 notice filing fee along with the Section 8(a) filing. Additional information about the Offer has been filed with the PSC pursuant to the PTDL and should be available for inspection at the PSC’s office at 17 North Second Street, Suite 1300, Harrisburg, Pennsylvania 17101 during business hours.

 

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Chapter 25 of the PBCL contains other provisions relating generally to takeovers and acquisitions of certain publicly owned Pennsylvania corporations such as CDI that have a class or series of shares entitled to vote generally in the election of directors of a corporation registered under the Exchange Act (a “registered corporation”). The following discussion is a general and abbreviated summary of certain features of such chapter, is not intended to be complete or to completely address potentially applicable exceptions or exemptions, and is qualified in its entirety by reference to Chapter 25 of the PBCL.

In addition to other provisions not applicable to the Offer or the Merger, Subchapter 25D of the PBCL includes provisions requiring, among other things, approval of a merger of a registered corporation with its stockholder by the affirmative vote of the stockholders entitled to cast at least a majority of the votes that all stockholders other than the interested stockholder are entitled to cast with respect to the transaction without counting the votes of the interested stockholder. This disinterested stockholder approval requirement is not applicable to a transaction (i) approved by a majority of disinterested directors, (ii) in which the consideration to be received by stockholders for shares of any class of which shares are owned by the interested stockholder is not less than the highest amount paid by the interested stockholder in acquiring shares of the same class, or (iii) effected without submitting the merger to a vote of stockholders as permitted in Section 321(d)(1)(ii) of the PBCL (i.e., the “short form” merger provision). CDI has represented to Parent and Purchaser in the Merger Agreement that the Company Board has taken any and all action necessary to render the provisions of Subchapter 25D of the PBCL inapplicable to Parent and Purchaser, and to the Merger Agreement and the Transactions.

Subchapter 25E of the PBCL provides that, in the event that a purchaser (or a group of related persons, or any other person or group of related persons) were to acquire Shares that would cause them to hold at least 20% of the voting power of CDI, in connection with the Offer or otherwise (a “Control Transaction”), stockholders of CDI would have the right to demand “fair value” of such stockholders’ Shares and to be paid such fair value upon compliance with the requirements of Subchapter 25E. Under Subchapter 25E, “fair value” may not be less than the highest price per share paid by the controlling person or group at any time during the 90-day period ending on and including the date of the Control Transaction, plus an increment, if any, representing any value, including, without limitation, any proportion of value payable for acquisition of control of CDI, that may not be reflected in such price. CDI has represented to Parent and Purchaser in the Merger Agreement that the Company Board has taken any and all action necessary to render the provisions of Subchapter 25E inapplicable to Parent and Purchaser, and to the Merger Agreement and the Transactions.

Subchapter 25F of the PBCL prohibits under certain circumstances certain “business combinations,” including mergers and sales or pledges of significant assets, of a registered corporation with an “interested stockholder” for a period of five years. Subchapter 25F exempts, among other things, business combinations approved by the board of directors prior to a stockholder becoming an interested stockholder. The Company Board approved the Merger Agreement and the transactions thereunder prior to the time the Merger Agreement was executed and CDI has represented to Parent and Purchaser in the Merger Agreement that the Company Board has taken any and all action necessary to render the provisions of Subchapter 25F inapplicable to Parent and Purchaser, and to the Merger Agreement and the Transactions.

Subchapter 25G of the PBCL, relating to “control-share acquisitions,” prevents under certain circumstances the owner of a control-share block of shares of a registered corporation from voting such shares unless a majority of both the “disinterested” shares and all voting shares approve such voting rights. Failure to obtain such approval may result in a forced sale by the control-share owner of the control share block to the corporation at a possible loss. CDI has represented to Parent and Purchaser in the Merger Agreement that the Company Board has taken any and all action necessary to render the provisions of Subchapter 25G inapplicable to Parent and Purchaser, and to the Merger Agreement and the Transactions.

Subchapter 25H of the PBCL, relating to profit disgorgement by certain stockholders of a registered corporation who obtained or sought to obtain control of such corporation, provides that under certain circumstances any profit realized by such a stockholder from the disposition of shares of the corporation to any

 

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person (including to CDI under Subchapter 25G or otherwise) will be recoverable by CDI. CDI has represented to Parent and Purchaser in the Merger Agreement that the Company Board has taken any and all action necessary to render the provisions of Subchapter 25H inapplicable to Parent and Purchaser, and to the Merger Agreement and the Transactions.

Subchapter 25I of the PBCL entitles “eligible employees” of a registered corporation to a lump sum payment of severance compensation under certain circumstances if the employee is terminated, other than for willful misconduct, within 90 days before voting rights lost as a result of a control-share acquisition are restored by a vote of disinterested stockholders pursuant to Subchapter 25G (if such termination was pursuant to an agreement with the acquiring stockholder) or 24 months after such control share approval is obtained. Subchapter 25J of the PBCL provides protection against termination or impairment under certain circumstances of “covered labor contracts” of a registered corporation as a result of a “business combination transaction” if the business operation to which the covered labor contract relates was owned by the registered corporation at the time voting rights of the acquired Shares are restored by stockholder vote after a control-share acquisition. CDI has represented to Parent and Purchaser in the Merger Agreement that the Company Board has taken any and all action necessary to render the provisions of Subchapters 25I and 25J inapplicable to Parent and Purchaser, and to the Merger Agreement and the Transactions.

Section 2504 of the PBCL provides that the applicability of Chapter 25 of the PBCL to a registered corporation having a class or series of shares entitled to vote generally in the election of directors registered under the Exchange Act or otherwise satisfying the definition of a registered corporation under Section 2502(1) of the PBCL will terminate immediately upon the termination of the status of the corporation as a registered corporation.

Purchaser is not aware of any other state takeover laws or regulations which are applicable to the Offer or the Merger and has not attempted to comply with any such state takeover laws or regulations. If any government official or third party should seek to apply any such state takeover law to the Offer or the Merger or other business combination between Purchaser or any of its affiliates and CDI, Purchaser will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Shares, and Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer or the Merger. In such case, Purchaser may not be obligated to accept for payment or pay for any tendered Shares. See Section 15—“Certain Conditions of the Offer.”

United States Antitrust Compliance . Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice (the “Antitrust Division”), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. These requirements apply to Purchaser’s acquisition of the Shares in the Offer and the Merger.

Under the HSR Act, the purchase of Shares in the Offer may not be completed until the expiration of a fifteen (15) calendar day waiting period which begins when Parent files a Pre-merger Notification and Report Form under the HSR Act with the FTC and the Antitrust Division, unless such waiting period is earlier terminated by the FTC and the Antitrust Division. Parent and CDI each filed a Pre-merger Notification and Report Form under the HSR Act with the FTC and the Antitrust Division in connection with the purchase of Shares in the Offer and the Merger on July 31, 2017. Early termination for the waiting period under the HSR Act was granted effective August 7, 2017.

At any time before or after Parent’s acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC could take such action under the antitrust laws as either deems necessary or desirable in the public interest,

 

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including seeking to enjoin the purchase of Shares pursuant to the Offer, or seeking the divestiture of Shares acquired by Parent or the divestiture of substantial assets of CDI or its subsidiaries or Parent or its subsidiaries. State attorneys general may also bring legal action under both state and Federal antitrust laws, as applicable. Private parties may also bring legal action under the antitrust laws under certain circumstances. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if such a challenge is made, the result thereof.

17. Fees and Expenses.

We have retained the Depositary and the Information Agent in connection with the Offer. Each of the Depositary and the Information Agent will receive customary compensation, reimbursement for reasonable out-of-pocket expenses, and indemnification against certain liabilities in connection with the Offer, including liabilities under the federal securities laws.

As part of the services included in such retention, the Information Agent may contact holders of Shares by personal interview, mail, electronic mail, telephone, and other methods of electronic communication and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer materials to beneficial holders of Shares.

Except as set forth above, we will not pay any fees or commissions to any broker or dealer or other person for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will upon request be reimbursed by us for customary mailing and handling expenses incurred by them in forwarding the offering material to their customers.

18. Miscellaneous

The Offer is being made to all holders of Shares other than CDI. Purchaser is not aware of any jurisdiction in which the making of the Offer or the tender of Shares in connection therewith would not be in compliance with the laws of such jurisdiction. If Purchaser becomes aware of any jurisdiction in which the making of the Offer would not be in compliance with applicable law, Purchaser will make a good faith effort to comply with any such law. If, after such good faith effort, Purchaser cannot comply with any such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares residing in such jurisdiction. In those jurisdictions where applicable laws require that the Offer be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by Purchaser.

No person has been authorized to give any information or to make any representation on behalf of Parent or Purchaser not contained herein or in the Letter of Transmittal, and, if given or made, such information or representation must not be relied upon as having been authorized.

Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, together with exhibits furnishing certain additional information with respect to the Offer, and may file amendments thereto. A copy of such documents, and any amendments thereto, may be examined at, and copies may be obtained from, the SEC in the manner set forth under Section 7—“Certain Information Concerning CDI.”

 

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SCHEDULE I

Directors and Executive Officers of Parent and Purchaser and Certain Related Parties

This schedule sets forth certain information regarding the directors and executive officers of Parent and Purchaser and certain related parties. Unless otherwise indicated, the current business address of each person is c/o AE Industrial Partners, LLC, 2500 N. Military Trail, Suite 470, Boca Raton, FL 33431 and the current business telephone number of each such person is (561) 372-7820.

1. Parent . The AE Funds are the members of Parent. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each officer and manager of Parent.

 

Name

 

Citizenship

 

Present Principal Occupation or Employment;

Material Positions Held During the Past Five Years

Michael Greene

Chairman, Secretary and Manager

 

USA

 

Mr. Greene is a managing partner of AE Industrial and has responsibility for the overall management of the firm and primarily focuses on the negotiating, executing and monitoring of portfolio investments. Since joining AE Industrial in 2008, Mr. Greene has worked with several portfolio companies including AeroSat, Inc., Dynamic Precision Group, Inc., and TurboCombustor Corp; currently sits on the boards of two of AE Industrial’s portfolio companies, Belcan and Moeller Aerospace, and is actively involved in AE Industrial’s investments in AC&A, Global Jet Capital and Kellstrom Materials. Previously, Mr. Greene was with UBS Capital Americas, LLC and UBS Capital, LLC from 1990 to 2008. Mr. Greene was a founding partner of the non-investment grade debt and equity businesses at Union Bank of Switzerland, the predecessor to UBS AG, and was a principal architect in creating the firm’s internal investment review processes and monitoring systems. Mr. Greene also had primary responsibility for running the General Industrial Group for UBS Capital Americas, LLC. Mr. Greene serves as a Trustee of The College of the Holy Cross in Worcester, Massachusetts where he is Chairman of the endowment’s Investment Committee. Mr. Greene received a BA from The College of the Holy Cross and an MBA from Harvard Business School.

 

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Name

 

Citizenship

 

Present Principal Occupation or Employment;

Material Positions Held During the Past Five Years

Jonathan Nemo

President and Manager

 

USA

 

Mr. Nemo is a Partner at AE Industrial and focuses on the origination, execution and monitoring of portfolio investments. Prior to joining AE Industrial in 2016, Mr. Nemo was a Managing Director and Head of the Aerospace, Defense & Government Services Group at Harris Williams & Co., a leader in middle market mergers & acquisitions advisory. Prior to Harris Williams, Mr. Nemo was a Managing Director in the Aerospace & Defense Investment Banking Group at Jefferies & Company (formerly Jefferies Quarterdeck) and at CIBC World Markets, as a Managing Director in the Industrial Growth & Services Investment Banking Group. Mr. Nemo received a BA from the University of Michigan in 1995.

Wayne P. Garrett

Vice President and Treasurer

 

 

USA

 

Mr. Garrett is AE Industrial’s CFO and is primarily responsible for the financial management of the firm, including all aspects of reporting and compliance. Mr. Garrett joined AE Industrial in 2007 following the sale of Power Systems Mfg. (PSM) to Alstom SA. Mr. Garrett served as interim CFO of AeroSat Corp., a prior AE Industrial investment, and was actively involved in its sale to a strategic buyer in 2013. Mr. Garrett was a co-founding member of PSM in 1998 and was responsible for building the Company’s financial systems from the ground up. Mr. Garrett was also instrumental in PSM’s add-on acquisition of Babcock Borsig as well as two sale transactions for PSM. Mr. Garrett’s previous finance experience includes acting as CFO of a public company and work at Argus Management Corp. with a focus on distressed financial operations. Mr. Garrett received a BS and MBA from Boston College and is a CPA.

 

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Name

 

Citizenship

 

Present Principal Occupation or Employment;

Material Positions Held During the Past Five Years

Kirk Konert

Vice President and Manager

 

USA

 

Mr. Konert is a Principal at AE Industrial and is primarily focused on originating, executing and monitoring AE Industrial’s portfolio investments. Mr. Konert currently sits on the board of AE Industrial’s portfolio company, AC&A, actively manages AE Industrial’s investment in Belcan, and has been involved in the firm’s investments in Global Jet Capital and Kellstrom Aerospace. Prior to joining AE Industrial in 2014, Mr. Konert was a Senior Associate at Sun Capital Partners where he focused on sourcing, screening and executing middle market buyout transactions across several industries, as well as handling portfolio company responsibilities. Prior to Sun Capital, Mr. Konert was a member of Wells Fargo Securities’ Industrials Group, where he focused on M&A and corporate finance transactions. Mr. Konert received a BA in Economics from Davidson College.

2. Purchaser . Nova Intermediate Parent, LLC, a limited liability company organized under the laws of the State of Delaware, is currently the sole stockholder of Purchaser. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and officer of Purchaser.

 

Name

  Citizenship   

Present Principal Occupation or Employment;

Material Positions Held During the Past Five Years

Michael Greene

Chairman, Secretary and Director

  USA    See Mr. Greene’s entry in paragraph 1 above.

Jonathan Nemo

President and Director

  USA    See Mr. Nemo’s entry in paragraph 1 above.

Wayne P. Garrett

Vice President and Treasurer

  USA    See Mr. Garrett’s entry in paragraph 1 above.

Kirk Konert

Vice President and Director

  USA    See Mr. Konert’s entry in paragraph 1 above.

3. AE Funds . The general partner of each AE Fund is AE Industrial Partners Fund I GP, LP (“AE GP”). The principal business of each of the AE Funds is making private equity investments.

4. AE GP . The general partner of AE GP is AeroEquity GP, LLC (“AeroEquity GP”), a Delaware limited liability company organized under the laws of the State of Delaware. The principal business of AE GP is to act as the general partner of the AE Funds.

5. AeroEquity GP . The sole member of AeroEquity GP is AE Industrial. The principal business of AeroEquity GP is to act as the general partner of AE GP.

 

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6. AE Industrial . AE Industrial’s principal business is as a private equity management company. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and officer of AE Industrial.

 

Name

  Citizenship  

Present Principal Occupation or Employment;

Material Positions Held During the Past Five Years

Michael Greene

Manager

 

USA

 

See Mr. Greene’s entry in paragraph 1 above.

David H. Rowe

Manager

 

USA

 

Mr. Rowe has responsibility for the overall management of the firm and primarily focuses on the sourcing, negotiation and strategic positioning of portfolio investments. Mr. Rowe co-founded AE Industrial’s predecessor firm, AeroEquity Partners, Inc., in 1998 and has been involved in all of the firm’s investments since inception. Mr. Rowe also manages AE Industrial’s relationship with The Carlyle Group, which dates back to the 2001 investment in Aviall, Inc., and encompasses nine portfolio investments. Mr. Rowe has served on the board of nine of AE Industrial’s portfolio companies and currently sits on the boards of Belcan, Dynamic Precision Group, Global Jet Capital and Kellstrom Aerospace. Prior to co-founding AE Industrial, Mr. Rowe was an Executive Vice President at Gulfstream Financial Services Corp., where he created a leasing portfolio for its parent, Gulfstream Aerospace Corp. Previously, Mr. Rowe spent 12 years at GE Aerospace and GE Capital, where he managed a multi-billion dollar portfolio of commercial aircraft and engine assets with responsibility for fleet management, repossessions, trading and restructuring asset portfolios. Mr. Rowe graduated from GE’s Financial Management Program and received a BA from Tulane University.

 

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The Letter of Transmittal, certificates for Shares and any other required documents should be sent by each stockholder of CDI or such stockholder’s broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows:

The Depositary for the Offer is:

 

LOGO

Mail or deliver the Letter of Transmittal, or a facsimile, together with the certificate(s) (if any) representing your shares, to:

 

If delivering by mail:    If delivering by hand, express mail, courier, or other
expedited service:

Computershare Trust Company, N.A.

Attn: Corporate Actions Voluntary Offer

P.O. Box 43011

Providence, RI 02940-3011

  

Computershare Trust Company, N.A.

Attn: Corporate Actions Voluntary Offer

250 Royall Street, Suite V

Canton, MA 02021

Other Information:

Questions or requests for assistance or additional copies of this Offer to Purchase, the Letter of Transmittal, and the Notice of Guaranteed Delivery may be directed to the Information Agent at its location and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer.

The Information Agent for the Offer is:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokerage Firms, Please Call: (212) 269-5550

Stockholders and All Others Call Toll-Free: (877) 297-1738

Email: cdi@dfking.com

Exhibit (a)(1)(B)

 

LETTER OF TRANSMITTAL

To Tender Shares of Common Stock

of

CDI CORP.

at

$8.25 Net Per Share

by

Nova Merger Sub, Inc.,

a wholly owned subsidiary of

Nova Intermediate Parent, LLC, an affiliate of funds managed by AE Industrial Partners, LLC

 

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 9:00 AM PHILADELPHIA, PENNSYLVANIA

TIME, ON SEPTEMBER 12, 2017, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED.

 

The Depositary for the Offer is:

 

 

LOGO

Method of delivery of the certificate(s) is at the option and risk of the owner thereof. See Instruction 1.

Mail or deliver this Letter of Transmittal, or a facsimile, together with the certificate(s) (if any) representing your shares, to:

 

If delivering by mail:   

If delivering by, express mail, courier, or

other expedited service:

Computershare Trust Company, N.A.

Attn: Corporate Actions Voluntary Offer

P.O. Box 43011

Providence, RI 02940

  

Computershare Trust Company, N.A.

Attn: Corporate Actions Voluntary Offer

250 Royall Street, Suite V

Canton, MA 02021

 

DESCRIPTION OF SHARES TENDERED

Name(s) and Address of Registered Holder(s)

If there is any error in the name or address shown below,

please make the necessary corrections

 

Shares Tendered

(attached additional list if necessary)

     Certificated Shares**   Book-Entry Shares
    

Certificate

Number(s)*

 

Total Number

of Shares

Represented by

Certificate(s)*

 

Number

of Shares

Represented by

Certificate(s)

Tendered**

 

Book-Entry

Shares

Tendered

                 
                 
                 
                 
                 
                 
                 
                 
   

Total Shares

           

*  Need not be completed by stockholders tendering solely by book-entry transfer.

**  Unless otherwise indicated, it will be assumed that all shares of common stock represented by certificates described above are being tendered hereby. See Instruction 4.

 

Corporate Actions Voluntary COY - CDIA


The Offer (as defined below) is not being made to (nor will tender of Company Shares (as defined below) be accepted from or on behalf of) stockholders in any jurisdiction where it would be illegal to do so.

This Letter of Transmittal is to be used by stockholders of CDI Corp. (“Seller”) for delivery if certificates for Company Shares (“Share Certificates”) are to be forwarded herewith, or if delivery of Company Shares is to be made by book-entry transfer at the Depositary (pursuant to the procedures set forth in Section 3 of the Offer to Purchase). If delivery of Company Shares is to be made by book-entry transfer to an account maintained by the Depositary at DTC, Company Shares may be delivered by means of this Letter of Transmittal or by means of an Agent’s Message (as defined in Instruction 2 below). Company Shares held in book-entry other than through DTC ( e.g. , the Seller is the holder of record of Company Shares) may only be delivered by means of this Letter of Transmittal.

Stockholders whose Share Certificates are not immediately available, or who cannot complete the procedure for book-entry transfer on a timely basis, or who cannot deliver all other required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), must tender their Company Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase in order to participate in the Offer. See Instruction 2. Delivery of documents to DTC does not constitute delivery to the Depositary.

Additional Information if Company Shares Have Been Lost, Are Being Delivered By Book-Entry Transfer

Through DTC, or Are Being Delivered Pursuant to a Previous Notice of Guaranteed Delivery

If any Share Certificate(s) you are tendering with this Letter of Transmittal has been lost, stolen, destroyed or mutilated, then you should contact Computershare Trust Company, N.A., as Transfer Agent (the “Transfer Agent”), at (800) 368-5948 or (781) 575-4223, regarding the requirements for replacement. You may be required to post a bond to secure against the risk that the Share Certificate(s) may be subsequently recirculated. You are urged to contact the Transfer Agent immediately in order to receive further instructions, for a determination of whether you will need to post a bond and to permit timely processing of this documentation. See Instruction  11.

 

Check here if tendered Company Shares are being delivered by book-entry transfer made to an account maintained by the Depositary with DTC and complete the following (note that only financial institutions that are participants in the system of DTC may deliver Company Shares by book-entry transfer):

 

Name of Tendering Institution—    

 

DTC Account Number—    

 

   Transaction Code Number—    

 

 

Check here if tendered Company Shares are being delivered pursuant to a Notice of Guaranteed Delivery previously sent to the Depositary and complete the following:

 

Name(s) of Tendering Stockholder(s)—    

 

Window Ticket Number (if any)—    

 

Date of Execution of Notice of Guaranteed Delivery—    

 

Name of Eligible Institution that Guaranteed Delivery—    

 

 

Corporate Actions Voluntary COY - CDIA


NOTE:    SIGNATURES MUST BE PROVIDED BELOW.

PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY.

Ladies and Gentlemen:

The undersigned hereby tenders to Nova Merger Sub, Inc., a Pennsylvania corporation (“Purchaser”) and a wholly owned subsidiary of Nova Intermediate Parent, LLC, a Delaware limited liability company (“Parent”), the above described shares of common stock, par value $0.10 per share (the “Company Shares”), of CDI Corp., a Pennsylvania corporation (the “Company”), pursuant to Purchaser’s offer to purchase all outstanding Company Shares, at a purchase price of $8.25 per share, net to the tendering stockholder in cash, without interest and less any required withholding taxes (the “Offer Price”), upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 14, 2017 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), receipt of which is hereby acknowledged, and in this Letter of Transmittal (as it may be amended or supplemented from time to time, this “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer”).

Upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms and conditions of any such extension or amendment) and subject to, and effective upon, acceptance for payment of Company Shares validly tendered herewith and not properly withdrawn prior to the Expiration Date in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to or upon the order of Purchaser all right, title and interest in and to all Company Shares that are being tendered hereby (and any and all dividends, distributions, rights, other Company Shares or other securities issued or issuable in respect thereof on or after August 14, 2017 (collectively, “Distributions”)) and irrevocably constitutes and appoints Computershare Trust Company, N.A. (the “Depositary”) the true and lawful agent and attorney-in-fact of the undersigned with respect to such Company Shares (and any and all Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest in the Company Shares tendered by this Letter of Transmittal), to (i) deliver Share Certificates for such Company Shares (and any and all Distributions) or transfer ownership of such Company Shares (and any and all Distributions) on the account books maintained by the DTC, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser, (ii) present such Company Shares (and any and all Distributions) for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Company Shares (and any and all Distributions), all in accordance with the terms and subject to the conditions of the Offer.

By executing this Letter of Transmittal, the undersigned hereby irrevocably appoints Michael Greene, Jon Nemo and Kirk Konert, and any other designees of Purchaser, and each of them, as attorneys-in-fact and proxies of the undersigned, each with full power of substitution, (i) to vote at any annual or special meeting of the Company’s stockholders or any adjournment or postponement thereof or otherwise in such manner as each such attorney-in-fact and proxy or its, his or her substitute shall in its, his or her sole discretion deem proper with respect to, (ii) to execute any written consent concerning any matter as each such attorney-in-fact and proxy or its, his or her substitute shall in its, his or her sole discretion deem proper with respect to and (iii) to otherwise act as each such attorney-in-fact and proxy or its, his or her substitute shall in its, his or her sole discretion deem proper with respect to, all Company Shares (and any and all Distributions) tendered hereby and accepted for payment by Purchaser. This appointment will be effective if and when, and only to the extent that, Purchaser accepts such Company Shares for payment pursuant to the Offer. This power of attorney and proxy are irrevocable and are granted in consideration of the acceptance for payment of such Company Shares in accordance with the terms of the Offer. Such acceptance for payment shall, without further action, revoke any prior powers of attorney and proxies granted by the undersigned at any time with respect to such Company Shares (and any and all Distributions), and no subsequent powers of attorney, proxies, consents or revocations may be given by the undersigned with respect thereto (and, if given, will not be deemed effective). Purchaser reserves the right to require that, in order for Company Shares to be deemed validly tendered, immediately upon Purchaser’s acceptance for payment of such Company Shares, Purchaser or its designees must be able to exercise

 

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full voting, consent and other rights with respect to such Company Shares (and any and all Distributions), including voting at any meeting of the Company’s stockholders.

The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer any and all Company Shares tendered hereby (and any and all Distributions) and that, when the same are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title to such Company Shares (and any and all Distributions), free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claims. The undersigned hereby represents and warrants that the undersigned is the registered owner of the Company Shares, or the Share Certificate(s) have been indorsed to the undersigned in blank, or the undersigned is a participant in DTC whose name appears on a security position listing as the owner of the Company Shares. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of any and all Company Shares tendered hereby (and any and all Distributions). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of Purchaser all Distributions in respect of any and all Company Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may deduct from the purchase price of Company Shares tendered hereby the amount or value of such Distribution as determined by Purchaser in its sole discretion.

It is understood that the undersigned will not receive payment for the Company Shares unless and until the Company Shares are accepted for payment and until the Share Certificate(s) owned by the undersigned (if any) are received by the Depositary at the address set forth above, together with such additional documents as the Depositary may require, or, in the case of Company Shares held in book-entry form through DTC, ownership of Company Shares is validly transferred on the account books maintained by DTC, and until the same are processed for payment by the Depositary.

All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive, the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable.

The undersigned hereby acknowledges that delivery of any Share Certificate shall be effected, and risk of loss and title to such Share Certificate shall pass, only upon the proper delivery of such Share Certificate to the Depositary.

The undersigned understands that the valid tender of Company Shares pursuant to any of the procedures described in the Offer to Purchase and in the Instructions hereto will constitute the undersigned’s acceptance of the terms and conditions of the Offer. Purchaser’s acceptance of such Company Shares for payment will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms of or the conditions of any such extension or amendment).

Unless otherwise indicated under “Special Payment Instructions,” please issue the check for the purchase price of all of Company Shares purchased and, if appropriate, return any Share Certificates not tendered or accepted for payment in the name(s) of the registered holder(s) appearing above under “Description of Shares Tendered.” Similarly, unless otherwise indicated under “Special Delivery Instructions,” please mail the check for the purchase price of all Company Shares purchased and, if appropriate, return any Share Certificates not tendered or not accepted for payment (and any accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under “Description of Shares Tendered.” In the event that the boxes entitled “Special Payment Instructions” and “Special Delivery Instructions” are both completed, please issue the check for the purchase price of all Company Shares purchased and, if appropriate, return any Share Certificates

 

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not tendered or not accepted for payment (and any accompanying documents, as appropriate) in the name(s) of, and deliver such check and, if appropriate, return any such Share Certificates (and any accompanying documents, as appropriate) to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled “Special Payment Instructions,” please credit any Company Shares tendered herewith by book-entry transfer that are not accepted for payment by crediting the applicable account at the Transfer Agent or DTC, as the case may be. The undersigned recognizes that Purchaser has no obligation, pursuant to the “Special Payment Instructions,” to transfer any Company Shares from the name of the registered holder thereof if Purchaser does not accept for payment any of such Company Shares so tendered.

LOST CERTIFICATES: PLEASE CALL COMPUTERSHARE TRUST COMPANY, N.A. AT (800) 368-5948 or (781) 575-4223 TO OBTAIN NECESSARY DOCUMENTS TO REPLACE YOUR LOST SHARE CERTIFICATES.

 

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SPECIAL PAYMENT INSTRUCTIONS

(See Instructions 1, 5, 6 and 7)

 

To be completed ONLY if the check for the purchase price of Company Shares accepted for payment and/or Share Certificates not tendered or not accepted for payment are to be issued in the name of someone other than the undersigned.


 

Issue  ☐    Check and/or  ☐    Share Certificates to:

 

Name        
  (Please Print)
Address    
 
(Include Zip Code)
 
(Taxpayer Identification or Social Security No.)

 

(Also Complete IRS Form W-9 Included Herein or the appropriate version of IRS Form W-8)

SPECIAL DELIVERY INSTRUCTIONS

(See Instructions 1, 5, 6 and 7)

 

To be completed ONLY if the check for the purchase price of Company Shares accepted for payment and/or Share Certificates not tendered or not accepted are to be mailed to someone other than the undersigned or to the undersigned at an address other than that shown above.

 

Mail  ☐    Check and/or  ☐    Share Certificates to:

 

Name        
  (Please Print)
Address    
 
(Include Zip Code)
 
(Taxpayer Identification or Social Security No.)

 

(Also Complete IRS Form W-9 Included Herein or the appropriate version of IRS Form W-8)

 

 

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IMPORTANT

STOCKHOLDER: SIGN HERE

(Please complete and return the IRS Form W-9 included in this Letter of Transmittal or the appropriate version of

IRS Form W-8)

 

 

 

 

Signature(s) of Holder(s) of Company Shares

Dated:                                         , 201     

Name(s)     
(Please Print)

Capacity (full title)

(See Instruction 5) 

   
 

Address 

   
 

(Include Zip Code)

Area Code and Telephone No.     

Tax Identification or Social Security No. (See IRS Form W-9 included  herein) 

   

 

Must be signed by registered holder(s) exactly as name(s) appear(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by Share Certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.

 

 

Guarantee of Signature(s)

(If Required—See Instructions 1 and 5)

 

 

Authorized Signature     

Name 

   

Name of Firm 

   

Address 

   
     

(Include Zip Code)

Area Code and Telephone No. 

   

 

Dated:

 

 

 

 

 , 201     

 

 


 

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INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. Guarantee of Signatures. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in DTC’s systems whose name(s) appear(s) on a security position listing as the owner(s) of Company Shares) of Company Shares tendered herewith, unless such registered holder(s) has completed either the box entitled “Special Payment Instructions” or the box entitled “Special Delivery Instructions” on the Letter of Transmittal or (b) if such Company Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program or by any other “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 under the U.S. Securities Exchange Act, as amended (each, an “Eligible Institution”). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.

2. Requirements of Tender. This Letter of Transmittal is to be completed if Share Certificates are to be forwarded herewith or, unless an Agent’s Message is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer. Share Certificates (if any) evidencing tendered Company Shares, or, in the case of book-entry transfer through DTC, timely confirmation of such transfer of Company Shares (a “Book-Entry Confirmation”) into the Depositary’s account at DTC, as well as this Letter of Transmittal (or a manually signed facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent’s Message in connection with a book-entry transfer, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Stockholders whose Share Certificates are not immediately available, or who cannot complete the procedure for delivery by book-entry transfer on a timely basis or who cannot deliver all other required documents to the Depositary prior to the Expiration Date, may tender their Company Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) Share Certificates (if any), or in the case of Company Shares held at DTC, a Book-Entry Confirmation, evidencing all tendered Company Shares, in proper form for transfer, in each case together with this Letter of Transmittal (or a manually signed facsimile hereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery through DTC, an Agent’s Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three (3) New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. If Share Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal must accompany each such delivery.

The term “Agent’s Message” means a message, transmitted by DTC to, and received by, the Depositary and forming part of a Book-Entry Confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering the Shares which are the subject of such Book-Entry Confirmation that such participant has received and agrees to be bound by the terms of this Letter of Transmittal and that Purchaser may enforce such agreement against the participant.

The method of delivery of this Letter of Transmittal, Share Certificates (if any) and all other required documents, including delivery through DTC, is at the election and the risk of the tendering stockholder and the delivery of all such documents will be deemed made (and the risk of loss and title to Share Certificates will pass) only when actually received by the Depositary (including, in the case of Book-Entry Transfer through DTC, by Book-Entry Confirmation). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery prior to the expiration of the Offer.

 

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Purchaser will not accept any alternative, conditional or contingent tenders, and no fractional Company Shares will be purchased. By executing this Letter of Transmittal (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of Company Shares.

3. Inadequate Space. If the space provided herein is inadequate, Share Certificate numbers, the number of Company Shares represented by such Share Certificates and/or the number of Company Shares tendered should be listed on a signed separate schedule attached hereto.

4. Partial Tenders (Not Applicable to Stockholders who Tender by Book-Entry Transfer). If fewer than all Company Shares represented by any Share Certificate delivered to the Depositary are to be tendered, fill in the number of Company Shares which are to be tendered in the box entitled “Total Number of Shares Tendered.” In such case, a new certificate for the remainder of Company Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the expiration or termination of the Offer. All Company Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated.

5. Signatures on Letter of Transmittal; Stock Powers and Indorsements.

(a) Exact Signatures. If this Letter of Transmittal is signed by the registered holder(s) of Company Shares tendered hereby, then the signature(s) must correspond with the name(s) as written on the face of such Share Certificates (if any) for such Company Shares without alteration, enlargement or any change whatsoever.

(b) Holders. If any Company Shares tendered hereby are held of record by two or more persons, then all such persons must sign this Letter of Transmittal.

(c) Different Names on Share Certificates. If any Company Shares tendered hereby are registered in different names on different Share Certificates, then it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Share Certificates.

(d) Indorsements. If this Letter of Transmittal is signed by the registered holder(s) of Company Shares tendered hereby, then no indorsements of Share Certificates for such Company Shares or separate stock powers are required unless payment of the purchase price is to be made, or Company Shares not tendered or not purchased are to be returned, in the name of any person other than the registered holder(s). Signatures on any such Share Certificates or stock powers must be guaranteed by an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the registered holder(s) of Company Shares tendered hereby, then such Share Certificates for such Company Shares must be indorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificates for such Company Shares. Signature(s) on any such Share Certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1.

If this Letter of Transmittal or any Share Certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other legal entity or other person acting in a fiduciary or representative capacity, then such person should so indicate when signing, and proper evidence satisfactory to the Depositary of the authority of such person so to act must be submitted.

6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6, Purchaser or any successor entity thereto will pay all stock transfer taxes with respect to the transfer and sale of any Company Shares to it or its order pursuant to the Offer (for the avoidance of doubt, transfer taxes do not include U.S. federal income tax or backup withholding taxes). If, however, payment of the purchase price is to be made to, or if Share Certificate(s) for Company Shares not tendered or not accepted for payment are to be registered in the name of, any person(s) other than the registered holder(s), or if tendered Share Certificate(s) are registered in the name of any person(s) other than the person(s) signing this Letter of Transmittal, then the amount of any stock transfer

 

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taxes or other taxes required by reason of the payment to a person other than the registered holder(s) of such Share Certificate (in each case whether imposed on the registered holder(s) or such other person(s)) payable on account of the transfer to such other person(s) will be deducted from the purchase price of such Company Shares purchased unless evidence satisfactory to Purchaser of the payment of such taxes, or exemption therefrom, is submitted.

Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to Share Certificate(s) evidencing the Company Shares tendered hereby.

7. Special Payment and Delivery Instructions. If a check is to be issued for the purchase price of any Company Shares tendered by the Letter of Transmittal in the name of, and, if appropriate, Share Certificates for Company Shares not tendered or not accepted for payment are to be issued or returned to, any person(s) other than the signer of this Letter of Transmittal or if a check and, if appropriate, such Share Certificates are to be returned to any person(s) other than the person(s) signing this Letter of Transmittal or to an address other than that shown in this Letter of Transmittal, then the appropriate boxes on this Letter of Transmittal must be completed.

8. IRS Form  W-9. To avoid backup withholding, a tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number (“TIN”) on Internal Revenue Service (“IRS”) Form W-9, which is included herein following “Important Tax Information” below, and to certify, under penalties of perjury, that such number is correct and that such stockholder is not subject to backup withholding of federal income tax, and that such stockholder is a U.S. person (as defined for U.S. federal income tax purposes). If a tendering stockholder has been notified by the IRS that such stockholder is subject to backup withholding, such stockholder must cross out item (2) of the Certification section of the IRS Form W-9, unless such stockholder has since been notified by the IRS that such stockholder is no longer subject to backup withholding. Failure to provide the information on the IRS Form W-9 may subject the tendering stockholder to federal income tax withholding on the payment of the purchase price of all Company Shares purchased from such stockholder. If the tendering stockholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such stockholder should write “Applied For” in the space for the TIN on the IRS Form W-9, sign and date the IRS Form W-9 and sign and date the Certificate of Awaiting Taxpayer Identification Number under “Important Tax Information” below. If you write “Applied For” in the space for the TIN and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold a portion of all payments of the purchase price to such stockholder until a TIN is provided to the Depositary.

Certain stockholders (such as corporations) may not be subject to backup withholding. Foreign stockholders should submit an appropriate and properly completed IRS Form W-8, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. Such stockholders should consult a tax advisor to determine which Form W-8 is appropriate. See the instructions enclosed with the IRS Form W-9 included in this Letter of Transmittal for more instructions.

Failure to complete and return the IRS Form W-9 or the appropriate IRS Form W-8, as applicable, may result in backup withholding of a portion of any payments made to you pursuant to the offer or the merger, as applicable. PLEASE review the “Important Tax Information” section below.

9. Irregularities. All questions as to purchase price, the form of documents and the validity, eligibility (including, without limitation, time of receipt) and acceptance for payment of any tender of Company Shares will be determined by Purchaser in its sole discretion, which determinations shall be final and binding on all parties. Purchaser reserves the absolute right to reject any or all tenders of Company Shares it determines not to be in proper form or the acceptance of which or payment for which may, in the opinion of Purchaser, be unlawful. Purchaser also reserves the absolute right to waive any of the conditions of the Offer (other than the Minimum Condition or the Termination Condition (as each is defined in the Offer to Purchase), each of which may only be waived with the consent of the Company) and any defect or irregularity in the tender of any particular Company

 

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Shares, and Purchaser’s interpretation of the terms of the Offer (including, without limitation, these instructions), will be final and binding on all parties. No tender of Company Shares will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as Purchaser shall determine. None of Purchaser, the Depositary, the Information Agent (as the foregoing are defined in the Offer to Purchase) or any other person is or will be obligated to give notice of any defects or irregularities in tenders, and none of them will incur any liability for failure to give any such notice.

10. Requests for Additional Copies. Questions or requests for assistance may be directed to the Information Agent at its address and telephone number set forth below or to your broker, dealer, commercial bank or trust company. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be obtained from the Information Agent as set forth below, and will be furnished at Purchaser’s expense.

11. Lost, Destroyed or Stolen Certificates. If any Share Certificate representing Company Shares has been lost, destroyed or stolen, then the stockholder should promptly notify the Transfer Agent at (800) 368-5948 or (781) 575-4223. The stockholder will then be instructed as to the steps that must be taken in order to replace such Share Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Share Certificates have been followed.

This Letter of Transmittal, properly completed and duly executed, together with Share Certificates (if any) representing Company Shares being tendered (or confirmation of book-entry transfer through DTC) and all other required documents, must be received before 9:00 AM Philadelphia, Pennsylvania time, on the Expiration Date, or the tendering stockholder must comply with the procedures for guaranteed delivery.

IMPORTANT TAX INFORMATION

Under U.S. federal income tax law, a stockholder who is a “United States person” (as defined under the United States Internal Revenue Code of 1986, as amended (the “Code”)) surrendering Company Shares must, unless an exemption applies, provide the Depositary (as payer) with the stockholder’s correct TIN on IRS Form W-9, a copy of which is included in this Letter of Transmittal. If the stockholder is an individual, then the stockholder’s TIN is such stockholder’s Social Security number. If the correct TIN is not provided, then the stockholder may be subject to a penalty imposed by the IRS and payments of cash to the stockholder (or other payee) pursuant to the Offer may be subject to backup withholding of a portion of all payments of the purchase price.

Certain stockholders (such as corporations) may not be subject to backup withholding and reporting requirements. In order for an exempt foreign stockholder to avoid backup withholding, such person should complete, sign and submit an appropriate IRS Form W-8 signed under penalties of perjury, attesting to his, her or its exempt status. An IRS Form W-8 can be obtained from the Depositary. Such stockholders should consult a tax advisor to determine which IRS Form W-8 is appropriate. Exempt stockholders, other than foreign stockholders, should furnish their TIN, check the “Exempt payee” box on the IRS Form W-9 and sign, date and return the IRS Form W-9 to the Depositary in order to avoid erroneous backup withholding. See the instructions enclosed with the IRS Form W-9 included in this Letter of Transmittal for additional instructions.

If backup withholding applies, the Depositary is required to withhold and pay over to the IRS a portion of any payment made to a stockholder. Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained from the IRS.

Please consult your tax advisor for further guidance regarding the completion of IRS Form W-9, or the appropriate W-8, as applicable, to claim exemption from U.S. withholding.

 

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Purpose of IRS Form W-9

To prevent backup withholding on payments that are made to a stockholder with respect to Company Shares purchased pursuant to the Offer, the stockholder who is a “United States person” (as defined under the Code) is required to notify the Depositary of the stockholder’s correct TIN by completing the IRS Form W-9 included in this Letter of Transmittal certifying that (1) the TIN provided on the IRS Form W-9 is correct (or that such stockholder is awaiting a TIN), (2) the stockholder is not subject to backup withholding because (i) the stockholder is exempt from backup withholding, (ii) the stockholder has not been notified by the IRS that the stockholder is subject to backup withholding as a result of a failure to report all interest and dividends or (iii) the IRS has notified the stockholder that the stockholder is no longer subject to backup withholding, and (3) the stockholder is a “United States person” (as defined under the Code).

 

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What Number to Give the Depositary

The tendering stockholder is required to give the Depositary the TIN, generally the Social Security number or employer identification number, of the record holder of all Company Shares tendered hereby. If such Company Shares are in more than one name or are not in the name of the actual owner, consult the instructions enclosed with the IRS Form W-9 included in this Letter of Transmittal for additional guidance on which number to report. If the tendering stockholder who is a “United States person” (as defined under the Code) has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, such stockholder should write “Applied For” in the space for the TIN on the IRS Form W-9, sign and date the IRS Form W-9 and sign and date the Certificate of Awaiting Taxpayer Identification Number below. If the tendering stockholder writes “Applied For” in the space for the TIN and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold a portion of all payments of the purchase price, which will be refunded if a TIN is provided to the Depositary within sixty (60) days of the Depositary’s receipt of the Certificate of Awaiting Taxpayer Identification Number. If the Depositary is provided with an incorrect TIN in connection with such payments, then the stockholder may be subject to a penalty imposed by the IRS.

 

NOTE: FAILURE TO COMPLETE AND RETURN THE IRS FORM W-9 INCLUDED IN THIS LETTER OF TRANSMITTAL MAY RESULT IN BACKUP WITHHOLDING OF A PORTION OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE INSTRUCTIONS ENCLOSED WITH THE IRS FORM W-9 INCLUDED IN THIS LETTER OF TRANSMITTAL FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE “APPLIED FOR” IN THE SPACE FOR THE TIN ON THE IRS FORM W-9.

 

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate IRS Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, a portion of all reportable payments made to me will be withheld, but that such amounts will be refunded to me if I then provide a taxpayer identification number within sixty (60) days.

 

 

 

  

 

Signature    Date

 

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Form  W-9

(Rev. December 2014)

Department of the Treasury

Internal Revenue Service

 

Request for Taxpayer

Identification Number and Certification

 

Give Form to the

requester. Do not

send to the IRS.

Print or type

See

Specific Instructions

on page 2.

 

 

 

 1   Name (as shown on your income tax return). Name is required on this line; do not leave this line blank.

 

    
 

 

 2   Business name/disregarded entity name, if different from above

 

                             
   3   Check appropriate box for federal tax classification; check only one of the following seven boxes:           

Exemptions (codes apply only to

certain entities, not individuals; see

instructions on page 3):

 

Exempt payee code (if any)                  

 

Exemption from FATCA reporting

code (if any)                                        

 

(Applies to accounts maintained outside the U.S.)

 

  ☐   Individual/sole proprietor
       orsingle-member LLC    
    C Corporation         S Corporation         Partnership         Trust/Estate               
  ☐   Limited liability company.
       Enterthe tax classification (C=C corporation,  S=S corporation, P=partnership)   u                                    

 

Note. For a single-member LLC that is disregarded, do not check LLC; check the appropriate box in the
line above for the tax classification of the single-member owner.

 

☐ Other (see instructions)   u

 

     
 

 

 5   Address (number, street, and apt. or suite no.)

 

      

 

  Requester’s name and address (optional)

 

 

 6   City, state, and ZIP code

 

         
    

 

 7   List account number(s) here (optional)

 

                        
Part I    Taxpayer Identification Number (TIN)
  

 

Enter your TIN in the appropriate box. The TIN provided must match the name given on line 1 to avoid backup withholding. For individuals, this is generally your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the Part I instructions on page 3. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to get a TIN on page 3.

 

Note. If the account is in more than one name, see the instructions for line 1 and the chart on page 4 for guidelines on whose number to enter.

                 
 

Social security number

                               
  or
 

Employer identification number

                                 
Part II    Certification

Under penalties of perjury, I certify that:

 

1.   The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and

 

2.   I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and

 

3.   I am a U.S. citizen or other U.S. person (defined below); and

 

4.   The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions on page 3.

 

Sign
Here
   Signature of
U.S. person  
u
     Date   u

 

General Instructions

Section references are to the Internal Revenue Code unless otherwise noted.

Future developments . Information about developments affecting Form W-9 (such as legislation enacted after we release it) is at www.irs.gov/fw9 .

Purpose of Form

An individual or entity (Form W-9 requester) who is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) which may be your social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number (ATIN), or employer identification number (EIN), to report on an information return the amount paid to you, or other amount reportable on an information return. Examples of information returns include, but are not limited to, the following:

● Form 1099-INT (interest earned or paid)

● Form 1099-DIV (dividends, including those from stocks or mutual funds)

● Form 1099-MISC (various types of income, prizes, awards, or gross proceeds)

● Form 1099-B (stock or mutual fund sales and certain other transactions by brokers)

● Form 1099-S (proceeds from real estate transactions)

● Form 1099-K (merchant card and third party network transactions)

● Form 1098 (home mortgage interest), 1098-E (student loan interest), 1098-T (tuition)

● Form 1099-C (canceled debt)

● Form 1099-A (acquisition or abandonment of secured property)

Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN.

If you do not return Form W-9 to the requester with a TIN, you might be subject to backup withholding. See What is backup withholding? on page 2 .

By signing the filled-out form, you:

1. Certify that the TIN you are giving is correct (or you are waiting for a number to be issued),

2. Certify that you are not subject to backup withholding, or

3. Claim exemption from backup withholding if you are a U.S. exempt payee. If applicable, you are also certifying that as a U.S. person, your allocable share of any partnership income from a U.S. trade or business is not subject to the withholding tax on foreign partners’ share of effectively connected income, and

4. Certify that FATCA code(s) entered on this form (if any) indicating that you are exempt from the FATCA reporting, is correct. See What is FATCA reporting? on page 2 for further information.

 

 

 

    Cat. No. 10231X  

Form W-9 (Rev. 12-2014)


Form W-9 (Rev. 12-2014)

Page  2

 

 

Note. If you are a U.S. person and a requester gives you a form other than Form W-9 to request your TIN, you must use the requester’s form if it is substantially similar to this Form W-9.

Definition of a U.S. person. For federal tax purposes, you are considered a U.S. person if you are:

● An individual who is a U.S. citizen or U.S. resident alien;

● A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States;

● An estate (other than a foreign estate); or

● A domestic trust (as defined in Regulations section 301.7701-7).

Special rules for partnerships. Partnerships that conduct a trade or business in the United States are generally required to pay a withholding tax under section 1446 on any foreign partners’ share of effectively connected taxable income from such business. Further, in certain cases where a Form W-9 has not been received, the rules under section 1446 require a partnership to presume that a partner is a foreign person, and pay the section 1446 withholding tax. Therefore, if you are a U.S. person that is a partner in a partnership conducting a trade or business in the United States, provide Form W-9 to the partnership to establish your U.S. status and avoid section 1446 withholding on your share of partnership income.

In the cases below, the following person must give Form W-9 to the partnership for purposes of establishing its U.S. status and avoiding withholding on its allocable share of net income from the partnership conducting a trade or business in the United States:

● In the case of a disregarded entity with a U.S. owner, the U.S. owner of the disregarded entity and not the entity;

● In the case of a grantor trust with a U.S. grantor or other U.S. owner, generally, the U.S. grantor or other U.S. owner of the grantor trust and not the trust; and

● In the case of a U.S. trust (other than a grantor trust), the U.S. trust (other than a grantor trust) and not the beneficiaries of the trust.

Foreign person. If you are a foreign person or the U.S. branch of a foreign bank that has elected to be treated as a U.S. person, do not use Form W-9. Instead, use the appropriate Form W-8 or Form 8233 (see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities).

Nonresident alien who becomes a resident alien. Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a “saving clause.” Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of income even after the payee has otherwise become a U.S. resident alien for tax purposes.

If you are a U.S. resident alien who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement to Form W-9 that specifies the following five items:

1. The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as a nonresident alien.

2. The treaty article addressing the income.

3. The article number (or location) in the tax treaty that contains the saving clause and its exceptions.

4. The type and amount of income that qualifies for the exemption from tax.

5. Sufficient facts to justify the exemption from tax under the terms of the treaty article.

Example. Article 20 of the U.S.-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student temporarily present in the United States. Under U.S. law, this student will become a resident alien for tax purposes if his or her stay in the United States exceeds 5 calendar years. However, paragraph 2 of the first Protocol to the U.S.-China treaty (dated April 30, 1984) allows the provisions of Article 20 to continue to apply even after the Chinese student becomes a resident alien of the United States. A Chinese student who qualifies for this exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his or her scholarship or fellowship income would attach to Form W-9 a statement that includes the information described above to support that exemption.

If you are a nonresident alien or a foreign entity, give the requester the appropriate completed Form W-8 or Form 8233.

Backup Withholding

What is backup withholding? Persons making certain payments to you must under certain conditions withhold and pay to the IRS 28% of such payments. This is called “backup withholding.” Payments that may be subject to backup withholding include interest, tax-exempt interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, payments made in settlement of payment card and third party network transactions, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding.

You will not be subject to backup withholding on payments you receive if you give the requester your correct TIN, make the proper certifications, and report all your taxable interest and dividends on your tax return.

Payments you receive will be subject to backup withholding if:

1. You do not furnish your TIN to the requester,

2. You do not certify your TIN when required (see the Part II instructions on page 3 for details),

3. The IRS tells the requester that you furnished an incorrect TIN,

4. The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only), or

5. You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only).

Certain payees and payments are exempt from backup withholding. See Exempt payee code on page 3 and the separate Instructions for the Requester of Form W-9 for more information.

Also see Special rules for partnerships above.

What is FATCA reporting?

The Foreign Account Tax Compliance Act (FATCA) requires a participating foreign financial institution to report all United States account holders that are specified United States persons. Certain payees are exempt from FATCA reporting. See Exemption from FATCA reporting code on page 3 and the Instructions for the Requester of Form W-9 for more information.

Updating Your Information

You must provide updated information to any person to whom you claimed to be an exempt payee if you are no longer an exempt payee and anticipate receiving reportable payments in the future from this person. For example, you may need to provide updated information if you are a C corporation that elects to be an S corporation, or if you no longer are tax exempt. In addition, you must furnish a new Form W-9 if the name or TIN changes for the account; for example, if the grantor of a grantor trust dies.

Penalties

Failure to furnish TIN. If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

Civil penalty for false information with respect to withholding. If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.

Criminal penalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

Misuse of TINs. If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties.

Specific Instructions

Line 1

You must enter one of the following on this line; do not leave this line blank. The name should match the name on your tax return.

If this Form W-9 is for a joint account, list first, and then circle, the name of the person or entity whose number you entered in Part I of Form W-9.

a. Individual. Generally, enter the name shown on your tax return. If you have changed your last name without informing the Social Security Administration (SSA) of the name change, enter your first name, the last name as shown on your social security card, and your new last name.

Note. ITIN applicant: Enter your individual name as it was entered on your Form W-7 application, line 1a. This should also be the same as the name you entered on the Form 1040/1040A/1040EZ you filed with your application.

b. Sole proprietor or single-member LLC. Enter your individual name as shown on your 1040/1040A/1040EZ on line 1. You may enter your business, trade, or “doing business as” (DBA) name on line 2.

c. Partnership, LLC that is not a single-member LLC, C Corporation, or S Corporation. Enter the entity’s name as shown on the entity’s tax return on line 1 and any business, trade, or DBA name on line 2.

d. Other entities. Enter your name as shown on required U.S. federal tax documents on line 1. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on line 2.

e. Disregarded entity. For U.S. federal tax purposes, an entity that is disregarded as an entity separate from its owner is treated as a “disregarded entity.” See Regulations section 301.7701-2(c)(2)(iii). Enter the owner’s name on line 1. The name of the entity entered on line 1 should never be a disregarded entity. The name on line 1 should be the name shown on the income tax return on which the income should be reported. For example, if a foreign LLC that is treated as a disregarded entity for U.S. federal tax purposes has a single owner that is a U.S. person, the U.S. owner’s name is required to be provided on line 1. If the direct owner of the entity is also a disregarded entity, enter the first owner that is not disregarded for federal tax purposes. Enter the disregarded entity’s name on line 2, “Business name/disregarded entity name.” If the owner of the disregarded entity is a foreign person, the owner must complete an appropriate Form W-8 instead of a Form W-9. This is the case even if the foreign person has a U.S. TIN.

 


Form W-9 (Rev. 12-2014)

Page  3

 

 

Line 2

If you have a business name, trade name, DBA name, or disregarded entity name, you may enter it on line 2.

Line 3

Check the appropriate box in line 3 for the U.S. federal tax classification of the person whose name is entered on line 1. Check only one box in line 3.

Limited Liability Company (LLC). If the name on line 1 is an LLC treated as a partnership for U.S. federal tax purposes, check the “Limited Liability Company” box and enter “P” in the space provided. If the LLC has filed Form 8832 or 2553 to be taxed as a corporation, check the “Limited Liability Company” box and in the space provided enter “C” for C corporation or “S” for S corporation. If it is a single-member LLC that is a disregarded entity, do not check the “Limited Liability Company” box; instead check the first box in line 3 “Individual/sole proprietor or single-member LLC.”

Line 4, Exemptions

If you are exempt from backup withholding and/or FATCA reporting, enter in the appropriate space in line 4 any code(s) that may apply to you.

Exempt payee code.

● Generally, individuals (including sole proprietors) are not exempt from backup withholding.

● Except as provided below, corporations are exempt from backup withholding for certain payments, including interest and dividends.

● Corporations are not exempt from backup withholding for payments made in settlement of payment card or third party network transactions.

● Corporations are not exempt from backup withholding with respect to attorneys’ fees or gross proceeds paid to attorneys, and corporations that provide medical or health care services are not exempt with respect to payments reportable on Form 1099-MISC.

The following codes identify payees that are exempt from backup withholding. Enter the appropriate code in the space in line 4.

1—An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2)

2—The United States or any of its agencies or instrumentalities

3—A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities

4—A foreign government or any of its political subdivisions, agencies, or instrumentalities

5—A corporation

6—A dealer in securities or commodities required to register in the United States, the District of Columbia, or a U.S. commonwealth or possession

7—A futures commission merchant registered with the Commodity Futures Trading Commission

8—A real estate investment trust

9—An entity registered at all times during the tax year under the Investment Company Act of 1940

10—A common trust fund operated by a bank under section 584(a)

11—A financial institution

12—A middleman known in the investment community as a nominee or custodian

13—A trust exempt from tax under section 664 or described in section 4947

The following chart shows types of payments that may be exempt from backup withholding. The chart applies to the exempt payees listed above, 1 through 13.

 

IF the payment is for . . .   THEN the payment is exempt for . . .
Interest and dividend payments   All exempt payees except for 7
Broker transactions   Exempt payees 1 through 4 and 6 through 11 and all C corporations. S corporations must not enter an exempt payee code because they are exempt only for sales of noncovered securities acquired prior to 2012.
Barter exchange transactions and patronage dividends   Exempt payees 1 through 4
Payments over $600 required to be reported and direct sales over $5,000 1   Generally, exempt payees 1 through 5 2
Payments made in settlement of payment card or third party network transactions   Exempt payees 1 through 4

 

1   See Form 1099-MISC, Miscellaneous Income, and its instructions.

 

2   However, the following payments made to a corporation and reportable on Form 1099-MISC are not exempt from backup withholding: medical and health care payments, attorneys’ fees, gross proceeds paid to an attorney reportable under section 6045(f), and payments for services paid by a federal executive agency.

Exemption from FATCA reporting code. The following codes identify payees that are exempt from reporting under FATCA. These codes apply to persons submitting this form for accounts maintained outside of the United States by certain foreign financial institutions. Therefore, if you are only submitting this form for an account you hold in the United States, you may leave this field blank. Consult with the person requesting this form if you are uncertain if the financial institution is subject to these requirements. A requester may indicate that a code is not required by providing you with a Form W-9 with “Not Applicable” (or any similar indication) written or printed on the line for a FATCA exemption code.

A—An organization exempt from tax under section 501(a) or any individual retirement plan as defined in section 7701(a)(37)

B—The United States or any of its agencies or instrumentalities

C—A state, the District of Columbia, a U.S. commonwealth or possession, or any of their political subdivisions or instrumentalities

D—A corporation the stock of which is regularly traded on one or more established securities markets, as described in Regulations section 1.1472-1(c)(1)(i)

E—A corporation that is a member of the same expanded affiliated group as a corporation described in Regulations section 1.1472-1(c)(1)(i)

F—A dealer in securities, commodities, or derivative financial instruments (including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any state

G—A real estate investment trust

H—A regulated investment company as defined in section 851 or an entity registered at all times during the tax year under the Investment Company Act of 1940

I—A common trust fund as defined in section 584(a)

J—A bank as defined in section 581

K—A broker

L—A trust exempt from tax under section 664 or described in section 4947(a)(1)

M—A tax exempt trust under a section 403(b) plan or section 457(g) plan

Note. You may wish to consult with the financial institution requesting this form to determine whether the FATCA code and/or exempt payee code should be completed.

Line 5

Enter your address (number, street, and apartment or suite number). This is where the requester of this Form W-9 will mail your information returns.

Line 6

Enter your city, state, and ZIP code.

Part I. Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an ITIN, see How to get a TIN below.

If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN. However, the IRS prefers that you use your SSN.

If you are a single-member LLC that is disregarded as an entity separate from its owner (see Limited Liability Company (LLC) on this page), enter the owner’s SSN (or EIN, if the owner has one). Do not enter the disregarded entity’s EIN. If the LLC is classified as a corporation or partnership, enter the entity’s EIN.

Note. See the chart on page 4 for further clarification of name and TIN combinations.

How to get a TIN. If you do not have a TIN, apply for one immediately. To apply for an SSN, get Form SS-5, Application for a Social Security Card, from your local SSA office or get this form online at www.ssa.gov. You may also get this form by calling 1-800-772-1213. Use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or Form SS-4, Application for Employer Identification Number, to apply for an EIN. You can apply for an EIN online by accessing the IRS website at www.irs.gov/businesses and clicking on Employer Identification Number (EIN) under Starting a Business. You can get Forms W-7 and SS-4 from the IRS by visiting IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

If you are asked to complete Form W-9 but do not have a TIN, apply for a TIN and write “Applied For” in the space for the TIN, sign and date the form, and give it to the requester. For interest and dividend payments, and certain payments made with respect to readily tradable instruments, generally you will have 60 days to get a TIN and give it to the requester before you are subject to backup withholding on payments. The 60-day rule does not apply to other types of payments. You will be subject to backup withholding on all such payments until you provide your TIN to the requester.

Note. Entering “Applied For” means that you have already applied for a TIN or that you intend to apply for one soon.

Caution: A disregarded U.S. entity that has a foreign owner must use the appropriate Form W-8.

 


Form W-9 (Rev. 12-2014)

Page  4

 

 

Part II. Certification

To establish to the withholding agent that you are a U.S. person, or resident alien, sign Form W-9. You may be requested to sign by the withholding agent even if items 1, 4, or 5 below indicate otherwise.

For a joint account, only the person whose TIN is shown in Part I should sign (when required). In the case of a disregarded entity, the person identified on line 1 must sign. Exempt payees, see Exempt payee code earlier.

Signature requirements. Complete the certification as indicated in items 1 through 5 below.

1. Interest, dividend, and barter exchange accounts opened before 1984 and broker accounts considered active during 1983. You must give your correct TIN, but you do not have to sign the certification.

2. Interest, dividend, broker, and barter exchange accounts opened after 1983 and broker accounts considered inactive during 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form.

3. Real estate transactions. You must sign the certification . You may cross out item 2 of the certification.

4. Other payments. You must give your correct TIN, but you do not have to sign the certification unless you have been notified that you have previously given an incorrect TIN. “Other payments” include payments made in the course of the requester’s trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments made in settlement of payment card and third party network transactions, payments to certain fishing boat crew members and fishermen, and gross proceeds paid to attorneys (including payments to corporations).

5. Mortgage interest paid by you, acquisition or abandonment of secured property, cancellation of debt, qualified tuition program payments (under section 529), IRA, Coverdell ESA, Archer MSA or HSA contributions or distributions, and pension distributions. You must give your correct TIN, but you do not have to sign the certification.

What Name and Number To Give the Requester

 

For this type of account:    Give name and SSN of:
  1.      Individual    The individual
  2.      Two or more individuals (joint account)    The actual owner of the account or, if combined funds, the first individual on the account 1
  3.      Custodian account of a minor (Uniform Gift to Minors Act)    The minor 2
  4.     

a. The usual revocable savings trust (grantor is also trustee)

   The grantor-trustee 1
  

b. So-called trust account that is not a legal or valid trust under state law

   The actual owner 1
  5.      Sole proprietorship or disregarded entity owned by an individual    The owner 3
  6.      Grantor trust filing under Optional Form 1099 Filing Method 1 (see Regulations section 1.671-4(b)(2)(i)(A))    The grantor*
For this type of account:    Give name and EIN of:
  7.      Disregarded entity not owned by an individual    The owner
  8.      A valid trust, estate, or pension trust    Legal entity 4
  9.      Corporation or LLC electing corporate status on Form 8832 or Form 2553    The corporation
  10.      Association, club, religious, charitable, educational, or other tax-exempt organization    The organization
For this type of account:    Give name and EIN of:
  11.      Partnership or multi-member LLC    The partnership
  12.      A broker or registered nominee    The broker or nominee
  13.      Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments    The public entity
  14.      Grantor trust filing under the Form 1041 Filing Method or the Optional Form 1099 Filing Method 2 (see Regulations section 1.671-4(b)(2)(i)(B))    The trust

 

1   List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person’s number must be furnished.

 

2   Circle the minor’s name and furnish the minor’s SSN.

 

3   You must show your individual name and you may also enter your business or DBA name on the “Business name/disregarded entity” name line. You may use either your SSN or EIN (if you have one), but the IRS encourages you to use your SSN.

 

4   List first and circle the name of the trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Also see Special rules for partnerships on page 2.

 

* Note. Grantor also must provide a Form W-9 to trustee of trust.

Note. If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.

Secure Your Tax Records from Identity Theft

Identity theft occurs when someone uses your personal information such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund.

To reduce your risk:

● Protect your SSN,

● Ensure your employer is protecting your SSN, and

● Be careful when choosing a tax preparer.

If your tax records are affected by identity theft and you receive a notice from the IRS, respond right away to the name and phone number printed on the IRS notice or letter.

If your tax records are not currently affected by identity theft but you think you are at risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Theft Hotline at 1-800-908-4490 or submit Form 14039.

For more information, see Publication 4535, Identity Theft Prevention and Victim Assistance.

Victims of identity theft who are experiencing economic harm or a system problem, or are seeking help in resolving tax problems that have not been resolved through normal channels, may be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059.

Protect yourself from suspicious emails or phishing schemes. Phishing is the creation and use of email and websites designed to mimic legitimate business emails and websites. The most common act is sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.

The IRS does not initiate contacts with taxpayers via emails. Also, the IRS does not request personal detailed information through email or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts.

If you receive an unsolicited email claiming to be from the IRS, forward this message to phishing@irs.gov . You may also report misuse of the IRS name, logo, or other IRS property to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484. You can forward suspicious emails to the Federal Trade Commission at: spam@uce.gov or contact them at www.ftc.gov/idtheft or 1-877-IDTHEFT (1-877-438-4338).

Visit IRS.gov to learn more about identity theft and how to reduce your risk.

 

 

Privacy Act Notice

Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons (including federal agencies) who are required to file information returns with the IRS to report interest, dividends, or certain other income paid to you; mortgage interest you paid; the acquisition or abandonment of secured property; the cancellation of debt; or contributions you made to an IRA, Archer MSA, or HSA. The person collecting this form uses the information on the form to file information returns with the IRS, reporting the above information. Routine uses of this information include giving it to the Department of Justice for civil and criminal litigation and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their laws. The information also may be disclosed to other countries under a treaty, to federal and state agencies to enforce civil and criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. You must provide your TIN whether or not you are required to file a tax return. Under section 3406, payers must generally withhold a percentage of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to the payer. Certain penalties may also apply for providing false or fraudulent information.


The Depositary for the Offer is:

 

 

LOGO

Mail or deliver this Letter of Transmittal, or a facsimile, together with the certificate(s) (if any) representing your shares, to:

 

If delivering by mail:   

If delivering by express mail, courier, or

other expedited service:

Computershare Trust Company, N.A.

Attn: Corporate Actions Voluntary Offer

P.O. Box 43011

Providence, RI 02940

  

Computershare Trust Company, N.A.

Attn: Corporate Actions Voluntary Offer

250 Royall Street, Suite V

Canton, MA 02021

Questions or requests for assistance may be directed to the Information Agent at the telephone numbers and address set forth below. Questions or requests for assistance or additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent at the address and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer.

The Information Agent for the Offer is:

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokerage Firms, Please Call: (212) 269-5550

Stockholders and All Others Call Toll-Free: (877) 297-1738

Email: cdi@dfking.com

 

Corporate Actions Voluntary COY - CDIA

Exhibit (a)(1)(C)

 

NOTICE OF GUARANTEED DELIVERY

For Tender of Shares of Common Stock

of

CDI CORP.

at

$8.25 NET PER SHARE

Pursuant to the Offer to Purchase dated August 14, 2017

by

NOVA MERGER SUB, INC.,

a wholly owned subsidiary of

NOVA INTERMEDIATE PARENT, LLC

an affiliate of funds managed by

AE INDUSTRIAL PARTNERS, LLC

 

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 9:00 AM PHILADELPHIA, PENNSYLVANIA

TIME, ON SEPTEMBER 12, 2017, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED.

 

This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (as defined below) if (i) certificates representing shares of common stock, par value $0.10 per share (the “Shares”), of CDI Corp., a Pennsylvania corporation (“CDI”), are not immediately available, (ii) the procedure for book-entry transfer cannot be completed prior to the expiration of the Offer or (iii) time will not permit all required documents to reach Computershare Trust Company, N.A. (the “Depositary”) prior to the expiration of the Offer. This Notice of Guaranteed Delivery may be delivered by mail, facsimile transmission or overnight courier to the Depositary. See Section 3 of the Offer to Purchase (as defined below).

The Depositary for the Offer is:

 

 

LOGO

 

If delivering by mail or Email:   

If delivering by, express mail, courier, or

other expedited service:

Computershare Trust Company, N.A.

Attn: Corporate Actions Voluntary Offer

P.O. Box 43011

Providence, RI 02940

CANOTICEOFGUARANTEE@computershare.com

  

Computershare Trust Company, N.A.

Attn: Corporate Actions Voluntary Offer

250 Royall Street, Suite V

Canton, MA 02021

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN “ELIGIBLE INSTITUTION” UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE APPROPRIATE LETTER OF TRANSMITTAL.

 

Corporate Actions Voluntary COY - CDIA


The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal or an Agent’s Message (as defined in the Offer to Purchase) and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution.

Ladies and Gentlemen:

The undersigned hereby tenders to Nova Merger Sub, Inc., a Pennsylvania corporation and a wholly owned subsidiary of Nova Intermediate Parent, LLC, a Delaware limited liability company, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated August 14, 2017 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer”), receipt of which is hereby acknowledged, the number of shares of common stock, par value $0.10 per share, of CDI Corp., a Pennsylvania corporation (“CDI”), specified below, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.

 

Number of Shares and Certificate No(s)

(if available)

 

 

      Check here if Shares will be tendered by book entry transfer.

Name of Tendering Institution:   

 

DTC Account Number:   

 

Dated:                                                          , 201     

Name(s) of Record Holder(s):

      
      
(Please type or print)

Address(es): 

   

 

(Zip Code)

Area Code and Tel. No

    
   (Daytime telephone number)

Signature(s): 

 

 

      
 

 

Corporate Actions Voluntary COY - CDIA


GUARANTEE

(Not to be used for signature guarantee)

The undersigned, an Eligible Institution (defined in Section 3 of the Offer to Purchase), hereby (i) represents that the tender of Shares effected hereby complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended and (ii) guarantees delivery to the Depositary, at one of its addresses set forth above, of certificates representing the Shares tendered hereby, in proper form for transfer, or a confirmation of a book-entry transfer of such Shares into the Depositary’s account at DTC (pursuant to the procedures set forth in Section 3 of the Offer to Purchase), in either case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or, in the case of a book-entry transfer, an Agent’s Message (defined in Section 3 of the Offer to Purchase), together with any other documents required by the Letter of Transmittal, all within three (3) New York Stock Exchange trading days after the date hereof.

 

Name of Firm:

   

Address:

   
   
  (Zip Code)

Area Code and Tel. No.:

   
    
   (Authorized Signature)

Name:

    
   (Please type or print)

Title:

    

Date:

    
 

 

Corporate Actions Voluntary COY - CDIA


NOTE: DO NOT SEND CERTIFICATES REPRESENTING TENDERED SHARES WITH THIS NOTICE. CERTIFICATES REPRESENTING TENDERED SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

Exhibit (a)(1)(D)

 

Offer To Purchase For Cash

All Outstanding Shares of Common Stock

of

CDI CORP.

at

$8.25 NET PER SHARE

Pursuant to the Offer to Purchase dated August 14, 2017

by

NOVA MERGER SUB, INC.,

a wholly owned subsidiary of

NOVA INTERMEDIATE PARENT, LLC

an affiliate of funds managed by

AE INDUSTRIAL PARTNERS, LLC

 

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 9:00 AM PHILADELPHIA,

PENNSYLVANIA TIME, ON SEPTEMBER 12, 2017, UNLESS THE OFFER IS EXTENDED.

August 14, 2017

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

We have been engaged by Nova Merger Sub, Inc., a Pennsylvania corporation (“Purchaser”) and a wholly owned subsidiary of Nova Intermediate Parent, LLC, a Delaware limited liability company, to act as Information Agent in connection with Purchaser’s offer to purchase all outstanding shares of common stock, par value $0.10 per share (the “Shares”), of CDI Corp., a Pennsylvania corporation (“CDI”), at a purchase price of $8.25 per Share, net to the seller in cash without interest, less any applicable withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated August 14, 2017 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer”) enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares registered in your name or in the name of your nominee.

Certain conditions to the Offer are described in Section 15 of the Offer to Purchase.

For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents:

1. The Offer to Purchase;

2. The Letter of Transmittal for your use in accepting the Offer and tendering Shares and for the information of your clients, together with “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” providing information relating to backup U.S. federal income tax withholding;

3. A Notice of Guaranteed Delivery to be used to accept the Offer if the Shares and all other required documents cannot be delivered to Computershare Trust Company, N.A. (the “Depositary”) by the expiration date of the Offer or if the procedure for book-entry transfer cannot be completed by the expiration date of the Offer;

4. A form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients’ instructions with regard to the Offer;


5. A letter to stockholders of CDI from the President, Interim Chief Executive Officer and Chief Financial Officer of CDI, accompanied by CDI’s Solicitation/Recommendation Statement on Schedule 14D-9; and

6. A return envelope addressed to the Depositary for your use only.

We urge you to contact your clients as promptly as possible. Please note that the Offer and withdrawal rights will expire at 9:00 AM Philadelphia, Pennsylvania time, on September 12, 2017, unless the Offer is extended.

For Shares to be properly tendered pursuant to the Offer, (a) the share certificates (if any) or confirmation of receipt of such Shares under the procedure for book-entry transfer through The Depository Trust Company (“DTC”), together with a properly completed and duly executed Letter of Transmittal, including any required signature guarantees, or an “Agent’s Message” (as defined in Section 3 of the Offer to Purchase) in the case of book-entry transfer through DTC, and any other documents required in the Letter of Transmittal, must be timely received by the Depositary or (b) the tendering stockholder must comply with the guaranteed delivery procedures, all in accordance with the Offer to Purchase and the Letter of Transmittal.

Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Depositary and the Information Agent as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. Purchaser will pay all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal.

Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, the undersigned at the addresses and telephone numbers set forth on the back cover of the Offer to Purchase.

Very truly yours,

D.F. KING & CO., INC.

Nothing contained herein or in the enclosed documents shall render you the agent of the Purchaser, the Information Agent or the Depositary or any affiliate of any of them or authorize you or any other person to use any document or make any statement on behalf of any of them in connection with the Offer other than the enclosed documents and the statements contained therein.

Exhibit (a)(1)(E)

 

Offer To Purchase For Cash

All Outstanding Shares of Common Stock

of

CDI CORP.

at

$8.25 NET PER SHARE

Pursuant to the Offer to Purchase dated August 14, 2017

by

NOVA MERGER SUB, INC.,

a wholly owned subsidiary of

NOVA INTERMEDIATE PARENT, LLC

an affiliate of funds managed by

AE INDUSTRIAL PARTNERS, LLC

 

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 9:00 AM

PHILADELPHIA, PENNSYLVANIA TIME, ON SEPTEMBER 12, 2017, UNLESS THE OFFER IS

EXTENDED OR EARLIER TERMINATED.

August 14, 2017

To Our Clients:

Enclosed for your consideration are the Offer to Purchase, dated August 14, 2017 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer”) in connection with the offer by Nova Merger Sub, Inc., a Pennsylvania corporation (“Purchaser”) and a wholly owned subsidiary of Nova Intermediate Parent, LLC, a Delaware limited liability company (“Parent”), to purchase all outstanding shares of common stock, par value $0.10 per share (the “Shares”), of CDI Corp., a Pennsylvania corporation (“CDI”), at a purchase price of $8.25 per Share, net to the seller in cash without interest, less any required withholding taxes, upon the terms and subject to the conditions of the Offer.

Also enclosed is a letter to stockholders of CDI from the President, Interim Chief Executive Officer and Chief Financial Officer of CDI, accompanied by CDI’s Solicitation/Recommendation Statement on Schedule 14D-9.

We or our nominees are the holder of record of Shares held for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal accompanying this letter is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account.

We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the enclosed Offer to Purchase and the Letter of Transmittal.

Please note carefully the following:

 

  1. The offer price for the Offer is $8.25 per Share, net to you in cash without interest, less any applicable withholding taxes.

 

  2. The Offer is being made for all outstanding Shares.


  3. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of July 31, 2017, (together with any amendments or supplements thereto, the “Merger Agreement”), among Parent, Purchaser and CDI, pursuant to which, after the completion of the Offer and the satisfaction or waiver of the conditions set forth therein, Purchaser will be merged with and into CDI, and CDI will be the surviving corporation (the “Merger”).

 

  4. The board of directors of CDI has unanimously adopted resolutions: (i) approving and declaring that the Merger Agreement, the Merger and the other transactions contemplated thereby are advisable, fair to and in the best interests of the stockholders of CDI and to CDI, (ii) approving the Merger Agreement and the transaction contemplated thereby, including the Offer and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement and (iii) determining to recommend that the stockholders of the Company accept the Offer and tender their Shares to Purchaser pursuant to the Offer, and if required to consummate the Merger, that the stockholders of the Company adopt the Merger Agreement.

 

  5. The Offer and withdrawal rights will expire at 9:00 AM Philadelphia, Pennsylvania time, on September 12, 2017, unless the Offer is extended by Purchaser.

 

  6. The Offer is subject to certain conditions described in Section 15 of the Offer to Purchase.

 

  7. Any transfer taxes applicable to the sale of Shares to Purchaser pursuant to the Offer will be paid by the Purchaser, except as otherwise provided in the Letter of Transmittal.

If you wish to have us tender any or all of your Shares, then please so instruct us by completing, executing, detaching and returning to us the Instruction Form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, then all such Shares will be tendered unless otherwise specified on the Instruction Form.

Your prompt action is requested. Your Instruction Form should be forwarded to us in ample time to permit us to submit the tender on your behalf before the expiration of the Offer.

The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction.


INSTRUCTION FORM

With Respect to the Offer to Purchase for Cash

All Outstanding Shares of Common Stock

of

CDI CORP.

at

$8.25 NET PER SHARE

Pursuant to the Offer to Purchase dated August 14, 2017

by

NOVA MERGER SUB, INC.,

a wholly owned subsidiary of

NOVA INTERMEDIATE PARENT, LLC

an affiliate of funds managed by

AE INDUSTRIAL PARTNERS, LLC

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated August 14, 2017 (as it may be amended or supplemented from time to time, the “Offer to Purchase”), and the related Letter of Transmittal (as it may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer”), in connection with the offer by Nova Merger Sub, Inc., a Pennsylvania corporation (“Purchaser”) and a wholly owned subsidiary of Nova Intermediate Parent, LLC, a Delaware limited liability company (“Parent”), to purchase all outstanding shares of common stock, par value $0.10 per share (the “Shares”), of CDI Corp., a Pennsylvania corporation (“CDI”), at a purchase price of $8.25 per Share, net to the seller in cash without interest, less any applicable withholding taxes, upon the terms and subject to the conditions of the Offer.

The undersigned hereby instruct(s) you to tender to Purchaser the number of Shares indicated below or, if no number is indicated, all Shares held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer.

ACCOUNT NUMBER:                                                                          

NUMBER OF SHARES BEING TENDERED HEREBY:                SHARES*

The method of delivery of this document is at the election and risk of the tendering stockholder. If delivery is by mail, then registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.

 

* Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered.

 

   

 

Dated:                                                                       , 201     

   
   
   

 

   
     (Signature(s))     
   
    

 

    
     (Please Print Name(s))     
   
   

Address

 

 

   
     Include Zip Code     
   
   

Area Code and

Telephone No.

 

 

   
   
   

Taxpayer Identification

or Social Security No.

 

 

 

 

   

Exhibit (a)(1)(F)

This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase, dated August 14, 2017 and the related Letter of Transmittal and any amendments or supplements thereto. Purchaser (as defined below) is not aware of any jurisdiction in which the making of the Offer or the tender of Shares in connection therewith would not be in compliance with the laws of such jurisdiction. If Purchaser becomes aware of any jurisdiction in which the making of the Offer would not be in compliance with applicable law, Purchaser will make a good faith effort to comply with any such law. If, after such good faith effort, Purchaser cannot comply with any such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares residing in such jurisdiction. In those jurisdictions where applicable laws require that the Offer be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by Purchaser.

Notice of Offer to Purchase for Cash

All Outstanding Shares of Common Stock

of

CDI Corp.

at

$8.25 Net Per Share

by

NOVA MERGER SUB, INC.

a wholly owned subsidiary of

NOVA INTERMEDIATE PARENT, LLC

an affiliate of funds managed by

AE INDUSTRIAL PARTNERS, LLC

Nova Merger Sub, Inc., a Pennsylvania corporation (“Purchaser”) and a wholly owned subsidiary of Nova Intermediate Parent, LLC, a Delaware limited liability company (“Parent”), which is owned by investment funds managed by AE Industrial Partners, LLC, is offering to purchase for cash all outstanding shares (each, a “Share”) of common stock, par value $0.10 per share, of CDI Corp., a Pennsylvania corporation (“CDI”), at a price of $8.25 per Share, net to the seller in cash, without interest thereon and less any applicable withholding taxes (the “Offer Price”), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated August 14, 2017 (as may be amended or supplemented from time to time, the “Offer to Purchase”), and in the related Letter of Transmittal (as may be amended or supplemented from time to time, the “Letter of Transmittal” and, together with the Offer to Purchase, the “Offer”). Tendering stockholders who have Shares registered in their names and who tender directly to the Computer share Trust Company, N.A. (the “Depositary”) will not be obligated to pay brokerage fees or commissions or, except as set forth in the Letter of Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares through a broker or bank should consult with such institution as to whether it charges any service fees or commissions.

 

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 9:00 AM, PHILADELPHIA, PENNSYLVANIA TIME, ON SEPTEMBER 12, 2017, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED.

The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of July 31, 2017, among Parent, Purchaser and CDI (as the same may be amended, the “Merger Agreement”), pursuant to which, after completion of the Offer and the satisfaction or waiver of certain limited conditions, Purchaser will be merged with and into CDI, with CDI being the surviving corporation after such merger (the “Merger”) and each issued and outstanding Share (other than Shares owned by CDI, Purchaser or Parent or any other subsidiaries of CDI or Parent, or Shares as to which the holder thereof has properly demanded and not otherwise lost dissenters rights under Pennsylvania law) will, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and converted into the right to receive an amount in cash equal to the Offer Price, without interest and less any applicable withholding taxes, payable upon the surrender of the certificate formerly representing such Share. As a result of the Merger, CDI will cease to be a publicly traded company and will become wholly owned by Parent. The Merger Agreement is more fully described in the Offer to Purchase.

The Offer is not subject to a financing condition. The Offer is conditioned upon, among other things, (a) there being validly tendered and not validly withdrawn prior to 9:00 AM, Philadelphia, Pennsylvania time, on September 12, 2017, unless extended by Purchaser in accordance with the Merger Agreement (such date and time, as may be so extended by Purchaser, the “Expiration Date”) a number of Shares (excluding all Shares tendered in the Offer pursuant to guaranteed delivery instructions but not yet delivered to or on behalf of Purchaser) that, together with the number of Shares then-owned by Parent, Purchaser or any of their respective subsidiaries, equals at least one Share more than half of the sum of (i) all Shares then outstanding and (ii) all Shares issuable upon the exercise or vesting, as applicable, of all options to acquire Shares granted under the Company’s stock plans and all time-vested deferred stock of the Company granted under the Company’s stock plans (the “Minimum Condition”); (b) the expiration or termination of any waiting period applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which has been satisfied by the grant of early termination of the applicable waiting period by the Federal Trade Commission on August 7, 2017); (c) there not being, at the Expiration Date, (i) any order, injunction, judgment or other similar requirement issued by a governmental authority or self-regulatory organization or (ii) any applicable law or regulation or similar requirement of a governmental authority or self-regulatory organization in effect that, in each case, would (1) make the Offer, the Top-Up Option (as defined below), if applicable, the issuance of Shares pursuant to the Top-Up Option (if applicable), the Merger or the other transactions contemplated in the Merger Agreement illegal or (2) otherwise prevent or prohibit the consummation thereof; and (d) the absence of a termination of the Merger Agreement in accordance with its terms (the “Termination Condition”). The Offer is also subject to other conditions described in the Offer to Purchase.

The purpose of the Offer is for Parent, through Purchaser, to acquire control of, and the entire equity interest in, CDI. Following the consummation of the Offer, Purchaser intends to effect the Merger.

The board of directors of CDI (the “Company Board”) has unanimously adopted resolutions: (i) approving and declaring that the Merger Agreement, the Merger and the other transactions contemplated thereby are advisable, fair to and in the best interests of the stockholders of the Company and the Company, (ii) approving the Merger Agreement and the transactions contemplated thereby, including the Offer, the Top-Up Option (as defined below) and the Merger, on the terms and subject to the conditions set forth in the Merger Agreement and (iii) determining to recommend that the stockholders of the Company accept the Offer and tender their Shares to Purchaser pursuant to the Offer, and if required to consummate the Merger, that the shareholders of the Company adopt the Merger Agreement.

CDI has granted to Parent and Purchaser an irrevocable option to purchase (the “Top-Up Option”), at a price per Share equal to the Offer Price, that number of Shares equal to the lowest number of Shares that, when added to the number of Shares owned by Parent, Purchaser and any of their respective subsidiaries at the time of exercise of the Top-Up Option, will constitute one share more than 80% of the outstanding Shares immediately after the issuance of the Top-Up Shares on a fully diluted basis (assuming the conversion or exercise of all derivative securities regardless of the conversion or exercise price, the vesting schedule or other terms and conditions thereof). The Top-Up Option is intended to expedite the timing of the completion of the Merger by permitting Purchaser to effect a “short-form” merger pursuant to applicable Pennsylvania law at a time when the approval of the Merger at a meeting of CDI’s stockholders would be assured because of Parent’s and Purchaser’s ownership of a majority of the Shares following completion of the Offer. CDI has sufficient remaining Shares authorized for issuance under its certificate of incorporation such that if the Minimum Condition is satisfied, the Top-Up Option will provide Purchaser the requisite number of Shares to hold over 80% of the then-outstanding Shares and consummate the Merger as a short-form merger.

Subject to the provisions of the Merger Agreement, Parent and Purchaser may waive any or all of the conditions to Purchaser’s obligation to purchase Shares pursuant to the Offer (other than the Minimum Condition or the Termination Condition, which may only be waived with the consent of CDI). Purchaser is required to extend the Offer beyond its then-scheduled Expiration Date (i) for any period required by any applicable rule or regulation of the SEC or its staff or the New York Stock Exchange, (ii) for a period of 10 business days (or other period agreed to by the parties) at the request of CDI if any condition to the Offer other than the Minimum Condition is not met as of the then-scheduled Expiration Date; provided, that (A) if all conditions to the Offer other than the Minimum Condition have been met, Purchaser will only be required to extend the Offer for a maximum of 30 business days in the aggregate and (B) in no event will Purchaser be required to extend the Offer beyond October 30, 2017 or, if earlier, the termination of the Merger Agreement in accordance with its terms. In addition, Purchaser may, without requiring the consent of CDI or any other person, extend the Offer for one or more periods of up to 10 business days each (or other period agreed to by the parties), if at the then-scheduled Expiration Date any of the conditions of the Offer have not been satisfied or waived by Purchaser. In no event, however, may Purchaser extend the Offer beyond October 30, 2017 or, if earlier, the termination of the Merger Agreement, without CDI’s prior written consent.

Subject to the applicable rules and regulations of the SEC and the provisions of the Merger Agreement, Purchaser expressly reserves the right (i) to extend the Offer if any of the conditions to Purchaser’s obligation to purchase Shares have not been satisfied or waived by Purchaser, (ii) to waive any condition to the Offer in its sole discretion (other than the Minimum Condition or the Termination Condition, which waiver requires the consent of CDI) or (iii) to increase the Offer Price or otherwise modify the terms of the Offer, in each case by giving oral or written notice of such extension, termination, waiver or amendment to the Depositary and by making a public announcement thereof. Purchaser may not, however, among other actions, reduce the number of Shares subject to the Offer, reduce the Offer Price, modify or waive the Minimum Condition or the Termination Condition, add to the conditions to the Offer or otherwise modify or waive any term of the Offer in a manner adverse to CDI (prior to the consummation of the Offer) or the holders of Shares, extend the Offer in a manner not permitted by the Merger Agreement, change the form of consideration to be paid in the Offer, impose additional or different Offer conditions, adversely change any of the Offer terms or provide for a subsequent offering period, in each case without the consent of CDI.

Pursuant to Rule 14d-11 of the General Rules and Regulations under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), Purchaser may, with CDI’s consent, elect to provide a subsequent offering period of between three and 20 business days following Purchaser’s acceptance of Shares tendered in the Offer. No withdrawal rights apply to Shares tendered in a subsequent offering period, and no withdrawal rights apply during a subsequent offering period with respect to Shares previously tendered in the Offer and accepted for payment.

Any extension, delay, termination, waiver or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, and such announcement in the case of an extension will be made no later than 9:00 AM, Philadelphia, Pennsylvania time, on the next business day after the previously scheduled expiration of the Offer.

For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn as, if and when Purchaser gives oral or written notice to the Depositary of Purchaser’s acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Offer Price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from Purchaser and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. Under no circumstances will interest be paid on the consideration paid for Shares pursuant to the Offer, regardless of any extension of the Offer or any delay in payment for Shares.

In all cases, Purchaser will pay for Shares tendered and accepted for payment pursuant to the Offer only after timely receipt by the Depositary of (a) if applicable, certificates representing such Shares or confirmation of the book-entry transfer of such Shares into the Depositary’s account at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in the Offer to Purchase, (b) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent’s Message (as defined in the Offer to Purchase) in lieu of the Letter of Transmittal, and (c) any other documents required by the Letter of Transmittal.

Shares tendered pursuant to the Offer may be withdrawn at any time on or before the expiration of the Offer. Thereafter, tenders of Shares are irrevocable, except that they may also be withdrawn at any time after October 13, 2017, which is the 60th day after the commencement of the Offer, unless such Shares have already been accepted for payment by Purchaser pursuant to the Offer.

For a withdrawal of Shares to be effective, the Depositary must receive at one of its addresses set forth on the back cover of the Offer to Purchase a written or facsimile transmission notice of withdrawal before the Offer has expired or the Shares have been accepted for payment. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share certificates, the serial numbers shown on such Share certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer to the Depositary’s account at DTC as set forth in the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at DTC to be credited with the withdrawn Shares and must otherwise comply with DTC’s procedures. All questions as to the form and validity (including, without limitation, time of receipt) of any notice of withdrawal will be determined by Purchaser, in its discretion, whose determination will be final and binding. None of Purchaser, the Depositary, the Information Agent (listed below) or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by following one of the procedures for tendering Shares described in the Offer to Purchase at any time prior to the expiration of the Offer.

CDI has provided to the Purchaser its list of stockholders and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and related Letter of Transmittal will be mailed to record holders of Shares whose names appear on CDI’s stockholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of Shares.

The receipt of cash as payment for the Shares pursuant to the Offer or pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign tax laws. For a more detailed description of certain U.S. federal income tax consequences of the Offer and the Merger, see the Offer to Purchase. Each holder of Shares should consult its own tax advisor regarding the tax consequences of the Offer and the Merger, including such holder’s status as a U.S. holder or a non-U.S. holder, as well as any tax consequences that may arise under the laws of any federal, state, local, foreign or other taxing jurisdiction and the possible effects of changes in U.S. federal or other tax laws.

The information required to be disclosed by paragraph (d)(1) of Rule 14d-6 of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference.

The Offer to Purchase and the related Letter of Transmittal contain important information and both documents should be read carefully and in their entirety before any decision is made with respect to the Offer.

Questions and requests for assistance may be directed to the Information Agent at the address and telephone numbers set forth below. Requests for copies of the Offer to Purchase and the related Letter of Transmittal may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. Such copies will be furnished promptly at Purchaser’s expense. Neither Parent nor Purchaser will pay any fees or commissions to any broker or dealer or any other person (other than the Depositary and the Information Agent) for soliciting tenders of Shares pursuant to the Offer.

The Information Agent for the Offer is :

D. F. King & Co. , Inc.

48 Wall Street, 22nd Floor

New York, New York 10005

Banks and Brokers Call Collect: (212) 269-5550

All Others Call Toll-Free: (877) 297-1738

Email: cdi@dfking.com

August 14, 2017



Exhibit (b)(1)

EXECUTION COPY

 

  

PNC BANK, NATIONAL ASSOCIATION

205 Datura Street, 10th Floor

West Palm Beach, Florida 33401

July 31, 2017

Nova Intermediate Parent, LLC

c/o AE Industrial Partners, LLC

2500 N. Military Trail, Suite 470

Boca Raton, Florida 33431

Attention: Kirk Konert

Project Nova

Facility

Commitment Letter

Ladies and Gentlemen:

You have advised PNC Bank, National Association (“ PNC ”, “ us ” or “ we ”), that you intend to acquire, directly or indirectly, the Company (as defined in Exhibit  A hereto) (the “ Acquisition ”) and consummate the other transactions described in Exhibit  A hereto. Capitalized terms used but not defined herein are used with the meanings assigned to them on the Exhibits attached hereto (such Exhibits, together with this letter, collectively, the “ Commitment Letter ”).

 

1. Commitments

In connection with the Transactions, PNC is pleased to advise you of its commitment to provide, and hereby agrees to provide 100% of the entire aggregate principal amount of the Facility (in such capacity, the “ Initial Lender ”), upon the terms expressly set forth in this Commitment Letter (including, without limitation, in the Summary of Terms and Conditions attached hereto as Exhibit B (the “ Term Sheet ”)) and subject solely to the Exclusive Funding Conditions (as defined below).

 

2. Titles and Roles

You hereby appoint (i) PNC Capital Markets, LLC, to act as lead arranger and bookrunning manager (in such capacity, the “ Lead Arranger ”) and (ii) PNC to act as sole administrative agent and collateral agent (in such capacity, the “ Administrative Agent ”). You agree that no other bookrunners, agents or arrangers will be appointed, no other titles will be awarded and no compensation (other than that compensation expressly contemplated by this Commitment Letter and the Fee Letter referred to below, in each case dated as of the date hereof) will be paid to obtain a party’s commitment to participate in the Facility unless you and we shall so agree.

 

3. Syndication

The Lead Arranger intends to syndicate the Facility to a group of banks, financial institutions and other lenders reasonably acceptable to you (together with the Initial Lender but excluding Disqualified Institutions (as defined below), the “ Lenders ”); provided , that the Lead Arranger will not syndicate to (a) (i) those persons that are bona fide competitors of you, your subsidiaries, the Company and its subsidiaries so long as such person is identified by you to us in writing from time to time and (ii) any


affiliates of any such competitors (other than affiliates that are bona fide debt funds or fixed income investors that are engaged in making or purchasing commercial loans in the ordinary course of business, except to the extent otherwise disqualified pursuant to following clause (b)  or (c) ), that are either (x) identified in writing by you from time to time or (y) clearly identifiable as such on the basis of such affiliate’s name, (b) those banks, financial institutions and other persons separately identified by you or the Sponsor to us in writing prior to the date of this Commitment Letter or any affiliate thereof clearly identifiable as such on the basis of such affiliate’s name, (c) Excluded Parties (as defined below) (such persons or entities in clause (a) , (b) or (c) , collectively, the “ Disqualified Institutions ”) or (d) any other person for whom you have affirmatively denied consent in writing. For clarity, the identification of any person as a Disqualified Institution after the date of this Commitment Letter in accordance with the preceding sentence shall be effective only as of the time of such identification and any such identification shall have no retroactive effect of any kind, including to disqualify any person that theretofore shall have become or shall have been committed to become a Lender. Notwithstanding any other provision of this Commitment Letter to the contrary and notwithstanding any assignment by the Initial Lender, (a) the Initial Lender shall not be relieved or novated from its obligations hereunder (including its obligation to fund the Facility on the Closing Date on the terms and conditions hereof) in connection with any syndication, assignment or participation of the Facility, including its commitments in respect thereof, until the initial funding of the Facility on the Closing Date, (b) no assignment or novation shall become effective (as between you and the Initial Lender) with respect to all or any portion of the Initial Lender’s commitments in respect of the Facility until the initial funding of the Facility on the Closing Date, and (c) the Initial Lender shall retain exclusive control over all rights and obligations with respect to its commitments in respect of the Facility, including all rights with respect to consents, modifications, supplements and amendments thereto, until the Closing Date has occurred.

Without limiting your obligations to assist with syndication efforts as set forth herein, it is understood that the Initial Lender’s commitments hereunder are not conditioned upon the syndication of, or receipt of commitments or participations in respect of, the Facility. The Lead Arranger intends to commence syndication efforts with respect to the Facility promptly following your execution and delivery of this Commitment Letter and, until the 90 th day after Closing Date (such period, the “ Syndication Period ”), you agree to use commercially reasonable efforts to assist (and (to the extent not in contravention of the Acquisition Agreement) to use commercially reasonable efforts to cause the Company to assist) the Lead Arranger in completing a syndication reasonably satisfactory to the Lead Arranger and you. Such assistance shall include the following: (i) using your commercially reasonable efforts to ensure that the syndication efforts benefit from your and the Sponsor’s and, to the extent not in contravention of the Acquisition Agreement, the Company’s existing banking relationships; (ii) direct contact between your and the Sponsor’s senior management and representatives and the proposed Lenders (and (to the extent not in contravention of the Acquisition Agreement) using your commercially reasonable efforts to obtain such contact between the senior management and representatives of the Company and the proposed Lenders) at times and locations to be mutually agreed; and (iii) your using commercially reasonable efforts to ensure that, until the end of the Syndication Period, there shall be no other issues of competing debt securities or commercial bank or other credit facilities of Holdings, the Borrower and their respective subsidiaries and the Company and its subsidiaries being offered, placed or arranged (other than the Facility, intercompany indebtedness, deferred purchase price obligations and ordinary course indebtedness (including, without limitation, working capital facilities, capital leases obligations, purchase money and equipment financings and letters of credit)), which could reasonably be expected to have a materially adverse impact on the primary syndication of the Facility. Notwithstanding anything to the contrary contained in this Commitment Letter or the Fee Letter or any other letter agreement or undertaking concerning the financing of the Transactions to the contrary, we agree that neither obtaining the ratings referred to above nor the compliance with any of the other provisions set forth in clauses (i) ( iii ) above nor any other provision of this Commitment Letter (other than the Exclusive Funding Conditions) nor the commencement or the completion of the syndication of the

 

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Facility shall constitute a condition precedent to the Closing Date. In addition, you agree to promptly prepare and provide (and to use commercially reasonable efforts to cause the Company to provide) to us all reasonably available information with respect to you, the Company and each of your and its respective subsidiaries and the Transactions that the Lead Arranger may reasonably request. For the avoidance of doubt, you will not be required to provide any information to the extent that the provision thereof would violate any attorney-client privilege, fiduciary duty, law, rule or regulation, or any obligation of confidentiality binding on you, the Company or your or its respective affiliates and the only historical financial statements that shall be required to be provided to the Lead Arranger or the Initial Lender in connection with the syndication of the Facility shall be those required to be delivered pursuant to paragraph  6 of Exhibit C hereto.

Subject in all respects to your rights set forth in the second preceding paragraph of this Section  3 , the Lead Arranger will manage, in consultation with you, including decisions as to the selection of institutions (other than Disqualified Institutions) to be approached and when they will be approached, when the Lenders’ commitments will be accepted, which Lenders (other than Disqualified Institutions) will participate, the allocation of the commitments among the Lenders and the amount and distribution of fees among the Lenders.

You acknowledge that (a) the Lead Arranger on your behalf will make available an information package and presentation to the proposed syndicate of Lenders by posting the information package and presentation on IntraLinks, SyndTrak or another similar electronic system and (b) certain prospective Lenders may be “public side” Lenders ( i.e. , Lenders that have personnel that do not wish to receive material non-public information (within the meaning of the United States Federal securities laws, “ MNPI ”) with respect to you, the Company, the Borrower, your or their respective subsidiaries and the respective securities of any of the foregoing and who may be engaged in investment and other market-related activities with respect to such entities’ securities). At the reasonable request of the Lead Arranger, you agree to use commercially reasonable efforts to assist, and (to the extent not in contravention of the Acquisition Agreement) to use commercially reasonable efforts to cause the Company to assist, in the preparation of a version of the information package and presentation consisting exclusively of information and documentation with respect to you, the Company, the Borrower, your or their respective subsidiaries and the respective securities of any of the foregoing that is (a) publicly available, (b) information that would be required to be made publicly available if you, the Borrower, the Company, your or their respective subsidiaries were to become reporting companies or (c) not material with respect to you, the Borrower, the Company, your or its respective subsidiaries, or any of your or their respective securities for purposes of United States Federal and state securities laws (all such information and documentation being “ Public Lender Information ” and with any information and documentation that is not Public Lender Information being referred to herein as “ Private Lender Information ”). It is understood that in connection with your assistance described above, customary authorization letters will be included in any information package and presentation whereby you authorize the distribution of such information to prospective Lenders, confirm to the Lead Arranger that the Public Lender Information does not include Private Lender Information about the Borrower, the Company, or their respective subsidiaries or securities, and the Public Lender Information will contain customary language exculpating us, our affiliates, you, the Sponsor, the Borrower, the Company and your and their affiliates with respect to any liability related to the use of the contents of such Public Lender Information or any related marketing material by the recipients thereof in violation of applicable securities laws. You acknowledge and agree that the following documents may be distributed to potential Lender wishing to receive only the Public Lender Information (unless you promptly notify us otherwise and provided that you have been given a reasonable opportunity to review such documents): (a) drafts and final definitive documentation with respect to the Facility (excluding schedules thereof); (b) administrative materials prepared by the Lead Arranger for prospective Lenders (such as a Lender meeting invitation, allocations and funding and closing memoranda (but excluding any projections)); and (c) term sheets and notification of changes in

 

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the terms of the Facility. You also agree to identify that portion of any other Information (as defined below) as relating to you, the Borrower, the Company and any of your or their respective subsidiaries (the “ Borrower Materials ”) to be distributed to “public side” Lenders and that you will clearly and conspicuously mark such materials “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof. By marking Borrower Materials “PUBLIC”, you shall be deemed to have authorized the Lead Arranger and the proposed “public side” Lenders to treat such Borrower Materials as not containing any MNPI with respect to you, the Company, the Borrower, any of your or their respective subsidiaries or any of your or their respective securities (it being understood that you shall not be under any obligation to mark the Information Materials “PUBLIC”). You agree that, unless expressly identified as Public Lender Information, each document to be disseminated by the Lead Arranger to any Lender in connection with the Facility will be deemed to contain Private Lender Information.

 

4. Information

You hereby represent and warrant that, and with respect to the Company and its subsidiaries and their respective business, to your knowledge that, (a) all written information, other than projections, budgets, estimates, forward looking statements and information of a general economic or industry-specific nature, concerning the Transactions, you or the Company or your or its subsidiaries (the “ Information ”), that has been or will be made available to us by you or your representatives in connection with the transactions contemplated hereby, when taken as a whole and as supplemented as provided below, does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made, as supplemented and updated as provided below, and (b) the projections that have been or will be made available to us by or on behalf of you will be prepared in good faith based upon assumptions believed by you to be reasonable at the time furnished (it being recognized by PNC that (i) such projections are not to be viewed as facts or a guarantee of performance and are subject to significant uncertainties and contingencies many of which are beyond your control, (ii) no assurance can be given that any particular financial projections will be realized, and (iii) that actual results during the period or periods covered by any such projections may differ from the projected results, and such differences may be material). You agree that if, at any time prior to the later of the Closing Date and the end of the Syndication Period, you become aware that any of the representations and warranties in the preceding sentence are incorrect in any material respect if the Information or projections were being furnished and such representations and warranties were being made at such time, then you will use commercially reasonable efforts to promptly supplement the Information and the projections so that (with respect to Information and projections relating to the Company or its subsidiaries, to your knowledge) such representations are correct, in all material respects, under those circumstances. The accuracy of the foregoing representations and warranties, whether or not cured, shall not be a condition to the obligations of PNC hereunder unless the inaccuracy results in an express condition hereunder otherwise not having been satisfied. You understand that in arranging and syndicating the Credit Facility we may use and rely on the Information and the projections without independent verification thereof, and we do not assume responsibility for the accuracy or completeness of the Information or the projections.

 

5. Fees

As consideration for the commitments and agreements of PNC and the Lead Arranger hereunder, you agree to pay or cause to be paid the nonrefundable compensation described in the fee letter, dated as of the date hereof, between PNC and you (the “ Fee Letter ”), on the terms and subject to the conditions expressly set forth therein.

 

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6. Conditions

Notwithstanding anything in this Commitment Letter, the Fee Letter, the Credit Documentation or any other letter agreement or other undertaking concerning the financing of the transactions contemplated hereby to the contrary, (a) the only representations the accuracy of which shall be a condition to availability of the Facility on the Closing Date shall be (i) such of the representations made by the Company or regarding the Company and its subsidiaries in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that you or your applicable affiliates have the right (determined without regard to any notice requirement)) to terminate your or their obligations under the Acquisition Agreement or decline to consummate the Acquisition as a result of a breach of one or more of such representations in the Acquisition Agreement (the “ Specified Acquisition Agreement Representations ”) and (ii) the Specified Representations (as defined below), and (b) the terms of the Credit Documentation shall be in a form such that they do not impair the availability of the Facility on the Closing Date if the conditions expressly set forth in this Commitment Letter are satisfied (or waived), it being understood that, to the extent any Collateral (including the creation or perfection of any security interest) is not or cannot be provided on the Closing Date (other than the creation and perfection of security interest in Collateral with respect to which a lien may be perfected solely by the filing of financing statements under the Uniform Commercial Code (“ UCC ”) and/or by delivering stock certificates of the certificated stock of the Borrower and any wholly-owned U.S. domestic subsidiaries of the Borrower to the extent the capital stock represented thereby is required to be pledged under the Term Sheets) after your use of commercially reasonable efforts to do so and without undue burden or expense, then the provision and/or perfection, as applicable, of any such Collateral shall not constitute a condition precedent to the availability of the Facility, but may instead be provided within ninety (90) days after the Closing Date, subject to such extensions as are reasonably agreed by the Administrative Agent, pursuant to arrangements to be mutually agreed by the parties hereto acting reasonably. “ Specified Representations ” means the representations in the Credit Documentation made by the Borrower and the Guarantors relating to corporate or other organizational existence of the Borrower and the Guarantors, organizational power and authority of the Borrower and the Guarantors (as they relate to due authorization, execution, delivery and enforceability of the Credit Documentation); due authorization, execution, delivery and enforceability, in each case relating to the borrowing under, granting of security interests in the Collateral and performance of the Credit Documentation; solvency as of the Closing Date (after giving effect to the Transactions) of the Borrower, the Guarantors and their respective subsidiaries on a consolidated basis (solvency to be defined in a manner consistent with which solvency is defined in the solvency certificate in the form attached as Annex I to Exhibit C ); the incurrence of the loans and the provision of the guarantees under the Credit Documentation and the granting of the security interests in the Collateral to secure the Facility not conflicting with the Borrower’s or Guarantors’ constitutional documents (after giving effect to the Acquisition); Federal Reserve margin regulations; the Investment Company Act; laws against sanctioned persons; use of loan proceeds not violating the PATRIOT Act, OFAC or FCPA; and the creation, validity, priority and perfection of the security interests (subject to customary permitted liens) and subject in all respects to the foregoing provisions of this paragraph. Notwithstanding anything in this Commitment Letter, the Fee Letter, the Credit Documentation or any other letter agreement or other undertaking concerning the financing of the transactions contemplated hereby to the contrary, (a) the commitments of the Initial Lender hereunder and the Lead Arranger’s agreements to perform the services described herein are subject solely to the conditions expressly set forth in this paragraph and the Term Sheet under the heading “CERTAIN CONDITIONS—Initial Conditions” and in Exhibit  C hereto (collectively, the “ Exclusive Funding Conditions ”) and (b) the only conditions (express or implied) to the availability of the Facility on the Closing Date are the Exclusive Funding Conditions. This paragraph, and the provisions herein, shall be referred to as the “ Certain Funds Provision ”. Without limiting the conditions precedent provided herein to funding the consummation of the Acquisition with the proceeds of the Facility, the Lead Arranger will cooperate with you as reasonably requested in coordinating the timing and procedures for the funding of the Facility in a manner consistent with the Acquisition Agreement.

 

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7. Indemnification and Expenses

You agree (a) to indemnify and hold harmless PNC, its affiliates and controlling persons and the respective directors, officers, employees, partners, advisors, agents and other representatives of each of the foregoing and their respective successors (excluding any Excluded Party in their capacity as such, each, an “ indemnified person ”) from and against any and all actual losses, claims, damages, liabilities and expenses, joint or several, to which any such indemnified person may become subject arising out of or in connection with this Commitment Letter, the Fee Letter or the Transactions or any claim, litigation, investigation or proceeding (a “ Proceeding ”) relating to any of the foregoing, regardless of whether any indemnified person is a party thereto, whether or not such Proceedings are brought by you, the Company, your or its equity holders, affiliates, creditors or any other person, and to reimburse each indemnified person within thirty days of written demand (together with reasonable backup documentation) for any reasonable out-of-pocket expenses incurred in connection with investigating or defending any of the foregoing (but limited, in the case of legal fees and expenses, to one counsel for all indemnified persons in respect of the Facility and, in the case of an actual conflict of interest, one additional counsel to the affected indemnified persons similarly situated, taken as a whole, in each case excluding the allocated costs of in-house counsel (and, if reasonably necessary, of one regulatory counsel in any material regulatory area and of one local counsel in any material relevant jurisdiction for all such indemnified persons, taken as a whole)); provided , that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses to the extent they arise from (i) the willful misconduct, bad faith, fraud or gross negligence of such indemnified person (or its affiliates and controlling persons and the respective directors, officers, employees, partners, advisors, agents and other representatives) as determined in a final, non-appealable judgment of a court of competent jurisdiction, (ii) the material breach of the Commitment Letter or the Fee Letter by any indemnified person (or its affiliates and controlling persons and the respective directors, officers, employees, partners, advisors, agents and other representatives) as determined in a final, non-appealable judgment of a court of competent jurisdiction or (iii) any disputes solely among indemnified persons (other than any claims against PNC in its capacity as the Administrative Agent, Lead Arranger or any similar role under the Facility) and not arising out of any act or omission of the Sponsor, Borrower or the Company, or any of your or their respective affiliates, and (b) to reimburse each of the Lead Arranger and the Administrative Agent and their respective affiliates (other than any Excluded Party in its capacity as such) for all reasonable and documented out-of-pocket expenses (including, but not limited to, due diligence expenses, syndication expenses, travel expenses, and reasonable fees, charges and disbursements of counsel to the Administrative Agent identified on Exhibit B (and, if reasonably necessary, of one local counsel in any material relevant jurisdiction), incurred in connection with each of the Facility and any related documentation (including this Commitment Letter, the Fee Letter and the Credit Documentation) or the enforcement, administration, amendment, modification or waiver of any of the foregoing) on the Closing Date (to the extent invoiced three days in advance of the Closing Date), or if invoiced thereafter, within 30 days of written demand (including documentation reasonably supporting such request); provided, that if the Closing Date does not occur, your reimbursement obligations under this clause (b) shall not exceed $100,000 plus documented out-of-pocket legal fees and expenses of Administrative Agent’s counsel. No indemnified person or person a party hereto shall be liable for any damages arising from the use by others of Information or other materials obtained through electronic, telecommunications or other information transmission systems, including, without limitation, SyndTrak, Intralinks, the internet, email or similar electronic transmission systems, in each case, except to the extent any such damages are found in a final non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence, bad faith, fraud or willful misconduct of, or material breach of this Commitment Letter or the Fee Letter by such person (or its affiliates and controlling persons and the respective directors, officers, employees,

 

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partners, advisors, agents and other representatives) as determined in a final, non-appealable judgment of a court of competent jurisdiction. None of the indemnified persons or you, the Sponsor, the Company or any of your or their respective affiliates or the respective directors, officers, employees, advisors, and agents of the foregoing shall be liable for any indirect, special, punitive or consequential damages in connection with this Commitment Letter, the Fee Letter, the Facility or the transactions contemplated hereby; provided , that nothing contained in this sentence shall limit your indemnification and reimbursement obligations to the extent expressly set forth herein. You have no obligation to reimburse any indemnified person for fees and expenses unless such indemnified person provides to you an undertaking in which such indemnified person agrees to refund and return any and all amounts paid by you to such indemnified person to the extent any of the foregoing exceptions in clause (a)(i) through (iii)  above applies.

You shall not be liable for any settlement of any Proceeding (or any expenses related thereto) effected without your consent (which consent shall not be unreasonably withheld or delayed), but if settled with your written consent, or if there is a final judgment for or against an indemnified person in any such Proceeding, you agree to indemnify and hold harmless each indemnified person to the extent and in the manner set forth above. You shall not, without the prior written consent of an indemnified person (which consent shall not be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened Proceeding against an indemnified person in respect of which indemnity could have been sought hereunder by such indemnified person unless (a) such settlement includes an unconditional release of such indemnified person from all liability or claims that are the subject matter of such Proceeding and (b) such settlement does not include any statement as to or any admission of fault, culpability or wrongdoing or failure to act (it being agreed that PNC may reasonably withhold its consent if such settlement does not comply with clauses (a) and (b) of this sentence).

Notwithstanding anything to the contrary contained herein, upon the execution of Credit Documentation, (i) the relevant provisions of such definitive documentation shall supersede the provisions of the preceding paragraphs (to the extent covered thereby) and (ii) you shall be released from this provision of the Commitment Letter and shall have no further liability or obligation pursuant to this Commitment Letter to reimburse an indemnified person for losses, claims, damages, liabilities, expenses, fees or any such indemnified obligations or any other expense reimbursement (but only to the extent that such liability or obligation is covered by such documentation).

 

8. Sharing of Information, Absence of Fiduciary Relationship, Affiliate Activities

You acknowledge that PNC (and its affiliates) are full service securities firms and such persons may from time to time (a) effect transactions, for their own or their respective affiliates’ account or the account of customers, and hold positions in loans, securities or options on loans or securities of you, the Company or your or its affiliates and of other companies that may be the subject of the transactions contemplated by this Commitment Letter or with which you, the Sponsor or the Company or your or its subsidiaries may have commercial or other relationships or (b) provide debt financing, equity capital, investment banking, financial advisory services, securities trading, hedging, financing and brokerage activities and financial planning and benefits counseling to other companies in respect of which you may have conflicting interests. In addition, consistent with PNC’s policy to hold in confidence the affairs of its customers, PNC will not furnish confidential information obtained from you, the Sponsor, the Company or your or their respective affiliates and representatives to any of their other clients (or to clients of their affiliates) or in connection with the performance by PNC and its affiliates of services for its other clients (or for clients of their affiliates). You also acknowledge that PNC and its affiliates have no obligation to use in connection with the transactions contemplated hereby, or to furnish to you, confidential information obtained from other companies or other persons.

 

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You further acknowledge and agree that (a) no fiduciary, advisory or agency relationship between you and us is intended to be or has been created in respect of any of the transactions contemplated by this Commitment Letter, irrespective of whether we have advised or are advising you on other matters, (b) we, on the one hand, and you, on the other hand, have an arm’s-length business relationship that does not directly or indirectly give rise to, nor do you rely on, any fiduciary duty owed by us, and (c) you waive, to the fullest extent permitted by law, any claims you may have against us for breach of fiduciary duty or alleged breach of fiduciary duty and agree that we shall have no liability (whether direct or indirect) to you in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of you, including your equity holders, employees or creditors. You shall consult with your own advisors concerning such matters and shall be responsible for making your own independent investigation and appraisal of the transactions contemplated hereby (including, without limitation, with respect to any consents needed in connection therewith), and we shall have no responsibility or liability to you with respect thereto.

You further acknowledge and agree that (a) you are capable of evaluating and understanding, and you understand and accept, the terms, risks and conditions of the transactions contemplated by this Commitment Letter, (b) you have been advised that PNC and its affiliates are engaged in a broad range of transactions that may involve interests that differ from your and your affiliates’ interests and that PNC has no obligation to disclose such interests and transactions to you or your affiliates, (c) we are not advising you as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction (including, without limitation, with respect to any consents needed in connection with the transactions contemplated hereby) and you have consulted your own legal, accounting, regulatory, investment and tax advisors to the extent you have deemed appropriate and you are not relying on PNC for such advice, and (d) neither PNC nor its affiliates has any obligation to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein or in any other express writing executed and delivered by PNC and the Borrower. Any review by us of the Borrower, the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for our benefit and shall not be on behalf of you or any of your affiliates.

You further acknowledge and agree that you are responsible for making your own independent judgment with respect to the transactions contemplated by this Commitment Letter and the process leading thereto.

You further acknowledge that we are a full-service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, we may provide investment banking and other financial services to, and/or acquire, hold or sell, for our own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of you, Holdings, the Borrower, the Company and other companies with which you, Holdings, the Borrower or the Company may have commercial or other relationships. With respect to any securities and/or financial instruments so held by us or any of our customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.

 

9. Confidentiality

This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter nor the Fee Letter nor any of their terms shall be disclosed to any other person except to (a) the Sponsor and any actual or potential co-investor, and your and their respective officers, directors, employees, affiliates, members, partners, stockholders, attorneys, accountants, agents and advisors that are involved in the Transactions on a confidential basis, (b) the Seller and the Company and the Seller’s and the Company’s officers, directors, employees, affiliates, members, partners, stockholders, attorneys,

 

8


accountants, agents and advisors, in each case, that are involved in the Transactions on a confidential basis, provided that any disclosure of the Fee Letter or its terms or substance under this clause (b) prior to the Closing Date shall be redacted in respect of the amounts, percentages, and basis points of compensation set forth therein (and, after the Closing Date, may be disclosed in an unredacted version to the Company and its respective officers, directors, employees, affiliates, members, partners, stockholders, attorneys, accountants, agents and advisors, in each case, on a confidential basis), (c) in any legal, judicial or administrative proceeding or as otherwise required by applicable law, rule or regulation or as requested by a governmental authority (in which case you agree, to the extent permitted by law, rule or regulation, to inform us promptly thereof prior to such disclosure), (d) in connection with the exercise of any remedy or enforcement of any right under this Commitment Letter and the Fee Letter, (e) the Term Sheet and Exhibit  C hereto (but not the Fee Letter or the contents thereof other than the existence thereof and the contents thereof as to aggregate fees as part of projections, pro forma information and a generic disclosure of aggregate sources and uses) may be disclosed to actual and potential Lenders and to any rating agency in connection with the Acquisition, (f) to the extent any such information becomes publicly available other than by reason of disclosure by you, your subsidiaries or your representatives in violation of this Commitment Letter, (g) to enforce your rights hereunder or under the Fee Letter and (h) with our consent (not to be unreasonably withheld, conditioned or delayed) in writing (including via e-mail). Other than the restrictions with respect to disclosure of the amounts, percentages, and basis points of compensation set forth in the Fee Letter, the foregoing restrictions shall cease to apply upon the earlier to occur of (i) the execution and delivery of the definitive Credit Documentation by the parties hereto and (ii) the second anniversary of the date of this Commitment Letter (in each case, other than with respect to any economics referenced in the fee Letter).

We shall treat confidentially all information received by us from you, the Company, the Sponsor or your or its respective affiliates and representatives in connection with the Acquisition and the other Transactions and only use such information for the purposes of providing the services contemplated by this Commitment Letter; provided , however , that nothing herein shall prevent PNC from disclosing any such information (a) to rating agencies in connection with obtaining the ratings described above, (b) to any actual Lenders or participants or prospective Lenders or participants or derivative counterparties or prospective derivative counterparties (other than Disqualified Institutions and persons to whom you have affirmatively denied to provide your consent to this assignment or syndication thereto (in each case effective as of the date such Disqualified Institution is identified as such in accordance with the terms hereof or as of the date of such denial, as applicable)); provided , that the disclosure of any such information to any Lenders or prospective Lenders or participants or derivative counterparties or prospective derivative counterparties referred to above shall be made subject to the acknowledgment and acceptance by such Lender or prospective Lender or participant that such information is being disseminated on a confidential basis (on substantially the terms set forth in this paragraph or as is otherwise reasonably acceptable to you and us, including, without limitation, as agreed in any confidential information memorandum or other marketing materials) in accordance with the standard syndication processes of PNC or customary market standards for dissemination of such type of information, in the event of any electronic access through Intralinks, Syndtrak, another website or similar electronic system or platform, which shall in any event require “click through” or other affirmative action on the part of the recipient to access such information and acknowledge its confidentiality obligations in respect thereof, in each case on terms reasonably acceptable to you;, (c) in any legal, judicial, or administrative proceeding or other compulsory process or otherwise as required by applicable law, rule or regulations or as requested by a governmental authority (in which case PNC shall promptly notify you, in advance, to the extent permitted by law, rule or regulation), (d) upon the request or demand of any governmental or regulatory authority having jurisdiction over PNC or any of its affiliates or upon the good faith determination by counsel that such information should be disclosed in light of ongoing oversight or review of PNC by any governmental or regulatory authority having jurisdiction over PNC or its affiliates (in which case PNC shall, except with respect to any audit or examination conducted by bank accountants

 

9


or any governmental bank regulatory authority exercising examination or regulatory authority, promptly notify you, in advance, to the extent lawfully permitted to do so), (e) to the officers, directors, employees, legal counsel, independent auditors, professionals and other experts or agents of PNC (collectively, “ Representatives ”) on a “need-to-know” basis and who are informed of the confidential nature of such information and have been advised of their obligation to keep information of this type confidential and PNC shall be responsible for the compliance of its Representatives with this paragraph, (f) to any of our affiliates and Representatives of our affiliates ( provided , that any such affiliate or Representative is advised of its obligation to retain such information as confidential, and PNC shall be responsible for the compliance of its affiliates and Representatives of its affiliates with this paragraph) solely in connection with the Facility and the related Transactions, provided , that, no such disclosure shall be made by PNC to (x) any of its affiliates that (i) are engaged as principals primarily in private equity, mezzanine financing or venture capital (a “ Private Equity Affiliate ”), and (ii) are engaged directly or indirectly in a sale of the Company and its subsidiaries as sell-side representative (a “ Sell Side Person ” and, together with the Private Equity Affiliates, the “ Excluded Parties ”), in each case other than a limited number of senior employees who are required, in accordance with industry regulations or PNC’s internal policies and procedures, to act in a supervisory capacity and PNC’s internal legal compliance, risk management, credit or investment committee members or (y) any Disqualified Institution, (g) to the extent any such information becomes publicly available other than by reason of disclosure by PNC, its affiliates or Representatives in breach of this Commitment Letter or other obligation of confidentiality owed to you, the Sponsor, the Company or their respective affiliates, (h) for purposes of establishing a defense, (i) to the extent that such information is received by PNC from a third party that is not known (after due inquiry) by PNC to be subject to confidentiality obligations to you or your affiliates, the Sponsor or the Company or its affiliates, and (j) to enforce our rights hereunder or under the Fee Letter. Our obligations under this paragraph shall automatically terminate and be superseded by the confidentiality provisions in the Credit Documentation upon the execution and delivery thereof.

 

10. Miscellaneous

This Commitment Letter shall not be assignable by any party hereto (except by you to one or more of your affiliates that is a newly formed domestic “shell” company controlled, directly or indirectly, by the Sponsor to effect the consummation of the Acquisition and that will directly or indirectly wholly own the Company so long as the Fee Letter are contemporaneously assigned to the applicable assignee, or as expressly permitted and subject to the limitations herein) without the prior written consent of the other parties hereto (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and the indemnified persons and is not intended to and does not confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and the indemnified persons to the extent expressly set forth herein, except to the extent that you and we otherwise agree in writing. PNC shall be liable solely in respect of its own commitment to the Facility on a several, and not joint, basis with any other Lender. Any and all obligations of, and services to be provided by, us hereunder may be performed and any and all of our rights hereunder may be exercised by or through any of our affiliates or branches (to the extent such affiliate or branch is not an Excluded Party); provided we shall not be relieved of any of our obligations hereunder in the event any affiliate or branch through which we shall perform our obligations shall fail to perform the same in accordance with the terms hereof. This Commitment Letter may not be amended or waived except by an instrument in writing signed by us and you. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment Letter by facsimile or other electronic transmission (e.g., “ pdf ” or “ tif ”) shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter and the Fee Letter are the only agreements that have been entered into among us and you and supersede all prior understandings, whether written or oral, among us with respect to the Facility and set forth the entire understanding of the parties with respect thereto. This Commitment Letter

 

10


shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York; provided , however, that the laws of the Commonwealth of Pennsylvania shall govern in determining (a) the interpretation of a “Material Adverse Effect” and whether a “Material Adverse Effect” has occurred, (b) the accuracy of any Specified Acquisition Agreement Representation and whether as a result of any inaccuracy thereof you or your applicable affiliate has the right (without regard to any notice requirement) to terminate your or its obligations (or to refuse to consummate the Acquisition) under the Acquisition Agreement, and (c) whether the Acquisition has been consummated in accordance with the terms of the Acquisition Agreement (in each case, without regard to the principles of conflicts of laws thereof, to the extent that the same are not mandatorily applicable by statute and would require or permit the application of the law of another jurisdiction). Each of the parties hereto agrees that (i) this Commitment Letter, if accepted by you as provided below, is a binding and enforceable agreement with respect to the subject matter herein, including an agreement to negotiate in good faith the Credit Documentation, notwithstanding that the funding of the Facility is subject to certain conditions, including the execution and delivery of the Credit Documentation as provided in this Commitment Letter and (ii) the Fee Letter are binding and enforceable agreements with respect to the subject matter contained therein. Section headings used herein are for convenience of reference only and are not to affect the construction of, or to be taken into consideration in interpreting, this Commitment Letter.

Each of the parties hereto irrevocably and unconditionally (a) submits, for itself and its property, to the exclusive jurisdiction of any federal court sitting in the Borough of Manhattan in the City of New York or, if that court does not have subject matter jurisdiction, in any state court located in the City and County of New York, and any appellate court from any thereof, over any suit, action or proceeding arising out of or relating to the Transactions or the other transactions contemplated hereby, this Commitment Letter or the Fee Letter or the performance of services hereunder or thereunder or for recognition or enforcement of any judgment and agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York state or, to the extent permitted by law, in such federal court; provided , however , that PNC shall be entitled to assert jurisdiction over you and your property in any court in which jurisdiction may be held over you or your property, and (b) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. You and we agree that service of any process, summons, notice or document by registered mail addressed to any of the parties hereto at the applicable addresses above shall be effective service of process for any suit, action or proceeding brought in any such court. You and we hereby irrevocably and unconditionally waive, to the fullest extent you and we may legally and effectively do so, any objection to the laying of venue of any such suit, action or proceeding brought in any court in accordance with clause (a)  of the first sentence of this paragraph and any claim that any such suit, action or proceeding has been brought in any inconvenient forum. YOU AND WE HEREBY IRREVOCABLY WAIVE (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THE TRANSACTIONS, THIS COMMITMENT LETTER OR THE FEE LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER OR THEREUNDER.

PNC hereby notifies you that, pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the “ PATRIOT Act ”), it is required to obtain, verify and record information that identifies the Borrower and each Guarantor, which information includes names, addresses, tax identification numbers and other information that will allow PNC or such Lender to identify the Borrower and each Guarantor in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act and is effective for PNC and each Lender.

The syndication, indemnification, reimbursement (solely as provided in clause (a)  of the first paragraph in Section  7 ), compensation (if applicable), jurisdiction, waiver of jury trial, service of process,

 

11


venue, governing law, sharing of information, no agency or fiduciary duty and confidentiality provisions contained herein and in the Fee Letter shall remain in full force and effect regardless of whether definitive financing documentation shall be executed and delivered and notwithstanding the termination or expiration of this Commitment Letter or the commitments hereunder; provided , that your obligations under this Commitment Letter (other than your confidentiality and syndication obligations and your understandings and agreements regarding no agency or fiduciary duty) shall automatically terminate and be superseded by the provisions of the Credit Documentation to the extent covered thereby upon the initial funding thereunder and the payment of all amounts owed pursuant to this Commitment Letter and the Fee Letter on the Closing Date, and you shall automatically be released from all liability in connection therewith at such time. You may terminate the Initial Lender’s commitments hereunder at any time, in whole or in part, subject to the provisions of the preceding sentence.

If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms of this Commitment Letter and the Fee Letter by returning to us executed counterparts of this Commitment Letter and each of the Fee Letter not later than 11:59 p.m., New York City time, on July 31, 2017. This offer will automatically expire at such time if we have not received such executed counterparts in accordance with the preceding sentence. In the event that the initial borrowing under the Facility does not occur on or before the Expiration Date, then this Commitment Letter and the commitments hereunder shall automatically terminate unless we shall, in our sole discretion, agree in writing to an extension. “ Expiration Date ” means the earliest of (i) 11:59 p.m., New York City time, on October 17, 2017, (ii) the Closing Date, (iii) the closing of the Acquisition without the use of the Facility, and (iv) the valid termination of the Acquisition Agreement prior to the closing of the Acquisition; provided , that the termination of any commitment pursuant to this sentence does not prejudice your rights and remedies in respect of any breach of this Commitment Letter.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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We are pleased to have been given the opportunity to assist you in connection with this important financing.

 

Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By:  

  /s/ Christopher J. Griffith

Name:   Christopher J. Griffith
Title:   Senior Vice President

Signature Page to Commitment Letter

(Project Nova)


Accepted and agreed to as of

the date first above written:

 

NOVA INTERMEDIATE PARENT, LLC
By:  

  /s/ Kirk Konert

Name:     Kirk Konert
Title:   Vice President

Signature Page to Commitment Letter

(Project Nova)


EXHIBIT A

PROJECT NOVA

Facility

Transaction Summary

Capitalized terms used but not defined in this Exhibit  A shall have the meanings set forth in the letter to which this Exhibit  A is attached or in Exhibits  B or C thereto.

AE Industrial Partners, LLC (“ AE ”) and its controlled affiliates and associated funds (together with AE, collectively, the “ Sponsor ”) and certain other investors designated by the Sponsor (together with the Sponsor, collectively, the “ Investors ”) intend to acquire (the “ Acquisition ”), directly or indirectly, the outstanding equity interests of the entity previously identified to us as “Nova” (the “ Company ”), pursuant to the Acquisition Agreement defined below. In connection therewith, it is intended that:

(a) The Sponsor will form (i) Nova Merger Sub, Inc., a Pennsylvania corporation (“ Merger Sub ”) and (ii) Nova Intermediate Parent, LLC, a Delaware limited liability company, the parent company of Borrower (“ Holdings ”).

(b) Pursuant to the Agreement and Plan of Merger, dated as of the date hereof, (together with the exhibits and disclosure schedules thereto, as amended, modified, supplemented or waived, the “ Acquisition Agreement ”), by and among Nova, Holdings and the Borrower. After giving effect to the Transactions, the Sponsor will control and beneficially own, directly or indirectly, a majority of the voting equity interests of Holdings.

(c) The Sponsor and other Investors shall make an investment in cash directly or indirectly to Borrower (which investment in Borrower shall (i) be contributed as common equity to the Borrower and (ii) take the form of the Sponsor Borrowing Base Guaranty and the Sponsor Alternative Borrowing Base Guaranty described herein) (the “ Equity Contribution ”) in an amount not less than $83,300,000.

(d) Prior to, or substantially contemporaneously with funding the Facility, all material debt for borrowed money of Holdings, the Company and their respective subsidiaries outstanding on the Closing Date (other than the Facility and any other debt that the Lead Arranger reasonably agrees may remain outstanding) will be refinanced, all commitments thereunder will be terminated and any security interests or guaranties established in connection therewith will have been terminated or released (the “ Refinancing ”), including all guaranties and security granted by the Company and its Subsidiaries under that certain Credit Agreement, dated as of October 30, 2015 among Nova, the subsidiaries of Nova party thereto, Bank of America, N.A. as administrative agent and the lenders party thereto (the “ Termination and Release ”).

(e) The Borrower will obtain a senior secured ABL revolving credit facility in an aggregate principal amount of up to $150 million (the “ Facility ”), as described in Exhibit B to the Commitment Letter.

(f) The proceeds of the Equity Contribution, a portion of the Facility (limited as set forth herein), and cash on hand at the Company and its subsidiaries on the Closing Date will be applied to fund the Acquisition and the Refinancing and to pay the fees, premiums, expenses and other transaction costs incurred in connection with the Transactions (the “ Transaction Costs ”) to the extent earned, due and payable on the Closing Date.

 

A-1


The transactions described above are collectively referred to herein as the “ Transactions ”. For purposes of the Commitment Letter and the Fee Letter, “ Closing Date ” shall mean the date of the satisfaction or waiver of the Exclusive Funding Conditions and the initial funding of the Facility and the consummation of the Acquisition.

 

A-2


EXHIBIT B

PROJECT NOVA

$150 million ABL Revolving Credit Facility

Summary of Terms and Conditions

Set forth below is a summary of the principal terms and conditions for the Facility. Capitalized terms used but not defined in this Exhibit  B shall have the meanings set forth in the letter to which this Exhibit  B is attached or in Exhibits A or C attached thereto.

 

1. PARTIES

 

Borrower :

   Initially, Merger Sub and after giving effect to the merger pursuant to the Acquisition Agreement, the Company (such relevant borrowing entity, the “ Borrower ”); provided that, Borrower may in consultation with the Administrative Agent designate one or more of its direct or indirect domestic wholly-owned subsidiaries as co-borrower.

Guarantors :

  

Nova Intermediate Parent, LLC, a Delaware limited liability company and direct parent company of the Borrower (“ Holdings ”), and each of Borrower’s direct and indirect wholly-owned U.S. subsidiaries (collectively, the “ Guarantors ” and, collectively, with Borrower and Holdings, the “ Loan Parties ”), except (i) any U.S. subsidiary of a foreign subsidiary or any U.S. subsidiary substantially all of the assets of which are capital stock of a foreign subsidiary and, if applicable, debt of such foreign subsidiary (each, a “ Pass-Through Foreign Holdco ”), (ii) unrestricted subsidiaries, (iii) captive insurance companies, (iv) not-for-profit subsidiaries, (v) certain special purpose entities, (vi) immaterial subsidiaries (defined in a manner to be mutually agreed), (vii) to the extent a guarantee is prohibited or restricted by contracts existing on the Closing Date (or if the subsidiary (or any restricted subsidiary thereof) is acquired after the Closing Date, on the date of such acquisition) (but in each case not created in contemplation thereof) or applicable law (including any requirement to obtain governmental authority or third party consent) or could reasonably be expected to result in adverse tax consequences as reasonably determined by Borrower, and (viii) to the extent the Administrative Agent and Borrower determine the cost and/or burden of obtaining the guaranty outweigh the benefit to the Lenders, in each case consistent with the ABL Documentation Principles (as defined below).

 

Notwithstanding anything to the contrary contained herein, the requirements of the preceding paragraphs shall be, as of the Closing Date, subject to the limitations set forth in the Commitment Letter, including the Certain Funds Provision.

 

All the above-described guarantees shall be created on terms, and pursuant to documentation, consistent with the ABL Documentation Principles, unless otherwise reasonably agreed by the Administrative Agent and the Borrower.

 

B-1


Administrative Agent :

   PNC Bank, National Association (acting alone or through or with affiliates selected by it) (in such capacity and collectively with its permitted successors and assigns, the “ Administrative Agent ”).

Lead Arranger :

   PNC Capital Markets, LLC (in such capacity, the “ Lead Arranger ”).

Lenders :

   A syndicate of banks, financial institutions and other entities, including the Initial Lender, arranged by the Lead Arranger (excluding any Disqualified Institutions) and subject to the approval of the Borrower (collectively, the “ Lenders ”); provided that, nothing herein shall affect the consent rights of Borrower set forth below under the heading “Assignments and Participations.”

ASSET-BASED REVOLVING CREDIT FACILITY

 

Type and Amount :

   An asset-based revolving credit facility in an aggregate principal amount of $150 million made available to the Borrower (the “ Facility ”, and the loans under the Facility (including, unless the context otherwise requires) the Swingline Loans referred to below), the “ ABL Loans ”; the commitments thereunder, the “ ABL Commitments ”). The Facility will be available in U.S. Dollars and other currencies to be mutually agreed.

Availability and Maturity :

  

The final maturity date of the Facility shall be five years from the Closing Date (the “ ABL Maturity Date ”).

 

ABL Loans may be borrowed, repaid and reborrowed on and after the Closing Date (without premium or penalty) and prior to the ABL Maturity Date in accordance with the terms of the Credit Documentation referred to below.

 

Borrowing availability shall be substantially consistent with the Specified ABL Precedent, but shall be modified as necessary to give effect to the terms set forth in this Exhibit B and the Acquisition.

 

ABL Loans and Letters of Credit will be available on and after the Closing Date as specified below under the headings “Use of Proceeds” and “Letters of Credit”, respectively, in minimum principal amounts to be agreed upon.

Swingline Loans

  

A portion to be mutually determined of the Facility shall be available for swingline loans (the “ Swingline Loans ”) from the Administrative Agent (in such capacity, the “ Swingline Lender ”) on same-day notice in U.S. Dollars. Any Swingline Loans will reduce availability under the Facility on a dollar-for-dollar basis. Each Lender shall be irrevocably and unconditionally required to purchase a participation in each Swingline Loan on a pro rata basis.

 

If any Lender becomes a Defaulting Lender, then the Swingline Loan

 

B-2


   exposure of such Defaulting Lender will automatically be reallocated among the non-defaulting Lenders pro rata in accordance with its ABL Commitment up to an amount such that the exposure of such non-defaulting Lender does not exceed its ABL Commitment. In the event that such reallocation does not fully cover the Swingline Loan exposure of such Defaulting Lender, the Swingline Lender may require the Borrower to repay such “uncovered” exposure and will have no obligation to make new Swingline Loans under the Facility to the extent Swingline Loan exposure under the Facility would exceed the ABL Commitments of the non-defaulting Lenders, unless such “uncovered” exposure is either cash collateralized to the Swingline Lender’s reasonable satisfaction or the Borrower obtains a backstop letter of credit from an issuer reasonably satisfactory to the Swing Line Lender to support such Defaulting Lender’s pro rata share of outstanding Swingline Loans. The Borrower shall have the right to terminate the ABL Commitment of any Defaulting Lender to the extent such termination does not cause the exposure of under the Facility to exceed the ABL Commitments.
Borrowing Base :   

The “ Borrowing Base ” shall be calculated in accordance with the Specified ABL Precedent but giving effect to the terms set forth in this Exhibit B (including the immediately following paragraph below) and the Acquisition. Notwithstanding anything to the contrary contained in the Credit Documentation, the imposition of reserves, and determination of eligible accounts receivable and eligible unbilled receivables and related Borrowing Base concepts (including applicable sublimits, if any) will be determined taking into account the Borrower’s industry and the results of field exams and appraisals and a Permitted Discretion (as defined below) standard.

 

The Borrowing Base shall not exceed the sum of the following:

 

I. Up to 85% of Eligible U.S. and Canadian Billed Accounts Receivable aged 60 days or less past due, not to exceed 120 days from invoice date, cross aged on the basis of 50% or more past due, plus;

 

II. 85% of Eligible U.S. and Canadian Unbilled Accounts Receivable aged not more than 60 days from the applicable service date (to include a cap of 27.5% of the Borrowing Base before the payroll reserve and availability block), plus;

 

III. 100% of the maximum remaining dollar amount of the Sponsor Borrowing Base Guaranty, less;

 

IV. Reserves established by the Administrative Agent, including a payroll reserve in the amount of $10,000,000 and an availability block of $15,000,000. Up to $5,000,000 of the availability block shall be released at any time after (i) Administrative Agent’s receipt of Borrower’s required audited financial statements for the fiscal year ending December 31, 2017 and (ii) Borrower demonstrates (A) a FCCR (as defined below) calculated as of the end of the most recent

 

B-3


  

fiscal quarter then ended, on a trailing twelve month basis, of not less than 1.10 to 1 and (B) Excess Availability of not less than $10,000,000). The remaining $10,000,000 of the availability block and the payroll reserve shall be subject to release at any time after (i) Administrative Agent’s receipt of Borrower’s required audited financial statements for the fiscal year ending December 31, 2018, and (ii) Borrower demonstrates (A) a FCCR (as defined below) calculated as of the end of the most recent fiscal quarter then ended, on a trailing twelve month basis, of not less than 1.10 to 1 and (B) Excess Availability of not less than $10,000,000).

 

The “ Sponsor Borrowing Base Guaranty ” shall mean a guaranty to be entered into by one or more affiliated funds of the Sponsor in favor of the Agent in an aggregate amount not to exceed $10,000,000. At the election of the Sponsor, the Sponsor Borrowing Base Guaranty may be released at any time so long as an Overadvance does not exist after giving effect to such release.

 

The Borrowing Base shall be computed on a monthly basis (or more frequently (but not more frequently than weekly) in the Borrower’s sole discretion) pursuant to a monthly borrowing base certificate (a “ Borrowing Base Certificate ”) to be delivered by the Borrower to the Administrative Agent not later than the date that is 20 days after the end of each calendar month).

 

The Administrative Agent will have the right to establish and modify reserves against the Borrowing Base assets in its Permitted Discretion with five business days’ prior written notice to the Borrower; provided that (i) two business days’ prior written notice to the Borrower shall be required for the institution of any reserve relating to an eligible receivable becoming ineligible as a result of such receivable failing to satisfy an objective element of the definition of eligibility and (ii) no reserve regarding any circumstance, event or contingency disclosed to the Administrative Agent on or prior to the Closing Date shall be established after the Closing Date or, in the case of any such reserve established on the Closing Date, increased after the Closing Date, except, in each case, to the extent of any material deterioration or materially adverse change in such circumstance, event or contingency that occurs after the Closing Date or to the extent that such reserve, by its nature, is intended to fluctuate based on the applicable circumstances; provided, further, that notwithstanding the foregoing, the Administrative Agent shall only be permitted to impose rent reserves equal to one month’s rent against the Borrowing Base assets if the Borrower does not deliver to the Administrative Agent a reasonably satisfactory landlord lien waiver for any location for which, pursuant to the ABL Facility Documentation, a landlord lien waiver is required to so be delivered (which shall be subject to minimum dollar thresholds for eligible inventory) or that is located in a “Landlord Lien State” (for the purposes hereof, “Landlord Lien State” means any state in which a landlord’s claim for rent has priority by operation of applicable law over the lien of the Administrative Agent in any of the

 

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Collateral). Upon establishment or increase in reserves, the Administrative Agent agrees to make itself available to discuss the reserve or increase, and the Borrower may take such action as may be required so that the event, condition, circumstance, or fact that is the basis for such Reserve or increase no longer exists, in a manner and to the extent reasonably satisfactory to the Administrative Agent in the exercise of its Permitted Discretion.

 

Permitted Discretion ” shall mean a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset-based lender in a comparable asset-based lending transaction) business judgment. Any reserve established or modified by the Administrative Agent shall have a reasonable relationship to circumstances, conditions, events or contingencies that are the basis for such reserve, as reasonably determined, without duplication, by the Administrative Agent in good faith.

 

Maximum Borrowing Amount ” shall mean (x) the lesser of (a) the aggregate amount of the ABL Commitments and (b) the Borrowing Base (such lesser amount for the Facility at any time, the “ Maximum Borrowing Amount ”) minus (y) the sum of the aggregate outstanding amount of ABL Loans, Swingline Loans, unreimbursed drawings under Letters of Credit (as defined below) and, except to the extent cash collateralized at 103% of the face value thereof or backstopped pursuant to arrangements reasonably acceptable to the Issuing Lender, the undrawn amount of outstanding Letters of Credit (collectively, the “ ABL Exposure ”). “ Specified Availability ” shall mean at any time the sum of (i) without duplication, the aggregate Excess Availability plus (ii) Specified Unrestricted Cash (to be defined in a mutually agreeable manner giving effect to the ABL Documentation Principles and subject to appropriate reporting requirements but in any event to require that such cash is in accounts that are subject to deposit account control agreements in favor of the Administrative Agent, including those maintained at Administrative Agent). “ Excess Availability ” means at any time (i) the aggregate Maximum Borrowing Amount minus (ii) the ABL Exposure.

 

Specified Default ” shall mean any payment or bankruptcy or insolvency Event of Default, any Event of Default arising from failure to comply with Borrowing Base requirements ( i.e ., failure to deliver a Borrowing Base Certificate (after the expiration of any applicable grace period) or a material breach of a representation and warranty therein), failure to comply with cash management provisions or failure to comply with the Minimum Consolidated EBITDA Covenant, Fixed Charge Coverage Ratio or any other financial covenant or failure to deliver financial statements (after the expiration of any applicable grace period).

 

Use of Proceeds :    In the event the Administrative Agent has not completed more recent field examinations and/or appraisals prior to the Closing Date than those completed prior to the date of the Commitment Letter, Borrower

 

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shall ensure that the Administrative Agent and its advisors and consultants shall have sufficient access and relevant information relating to the Loan Parties and their assets to complete such field examinations and/or appraisals on or before the 60th day after the Closing Date and during the period from the Closing Date and until the later of (x) Administrative Agent’s receipt and reasonable opportunity to review such field examinations and/or appraisals and (y) the 60th day after the Closing Date, Availability shall be based on an alternative borrowing base (the “ Alternative Borrowing Base ”) equal to the greater of (a) $100 million and (b) an amount equal to the borrowing base then calculated pursuant to the field examinations and appraisals prior to the date of the Commitment Letter. On and after the Administrative Agent’s receipt and reasonable opportunity to review such field examinations and/or appraisals, Availability shall no longer be based on the Alternative Borrowing Base but shall be based on the Borrowing Base as provided above.

 

In connection with the Alternative Borrowing Base, one or more affiliated funds of the Sponsor shall execute a guaranty in favor of the Agent (the “ Sponsor Alternative Borrowing Base Guaranty ”) in an aggregate amount not to exceed $10,000,000. The Sponsor Alternative Borrowing Base Guaranty may be called by the Agent in the event the Borrower relies on clause (a) of the Alternative Borrowing Base at Closing and after all such final field examinations and/or appraisals are completed Excess Availability is less than $20,000,000 as a result of such final field examinations and/or appraisals, with the call amount being equal to the lesser of (x) $10,000,000 and (y) $20,000,000 minus the Excess Availability as calculated on such date. The Sponsor Alternative Borrowing Base Guaranty shall be automatically released after all such final field examinations and/or appraisals are completed and any required payments are made thereunder.

 

Letters of Credit :   

Up to $4.0 million of the Facility shall be available for the issuance of stand-by and trade letters of credit (the “ Letters of Credit ”) by the Administrative Agent and/or any other Lender reasonably satisfactory to Borrower (in such capacity, the “ Issuing Lender ”). No Letter of Credit shall have an expiration date after the earlier of (a) one year after the date of issuance unless consented to by the Issuing Lender (or 180 days in the case of trade Letters of Credit) and (b) the ABL Maturity Date (unless cash collateralized or backstopped); provided that, any standby Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in the immediately foregoing clause (b)  above, unless cash collateralized or backstopped). Letters of Credit shall be issued in U.S. Dollars and other freely transferable currencies to be mutually agreed from time to time by Borrower, the Administrative Agent and the Issuing Lender.

 

   Drawings under any Letter of Credit shall be reimbursed by the Borrower (whether with its own funds or with the proceeds of ABL Loans) within one business day after written notice of such drawing is

 

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received by the Borrower from the Issuing Lender. To the extent that the Borrower does not so reimburse the Issuing Lender, the Lenders under the Facility shall be irrevocably and unconditionally obligated to fund participations in the reimbursement obligations on a pro rata basis (which, subject to the satisfaction (or waiver) of conditions (b) and (c) under “On-Going Conditions after the Closing Date” but without regard to any required borrowing amounts, shall be deemed to be ABL Loans under the Facility which shall initially be ABR Loans and such ABL Loans shall discharge any obligations of the Borrower in respect of such reimbursement).

 

 

Letters of Credit may be issued on the Closing Date to replace or provide credit support for any existing letters of credit (including, if applicable, by “grandfathering” such existing letters of credit into the Facility).

 

If any Lender becomes a “Defaulting Lender” (to be mutually defined), then the Letter of Credit exposure of such Defaulting Lender will automatically be reallocated among the non-defaulting Lenders in the Facility pro rata in accordance with their ABL Commitments in the Facility up to an amount such that the exposure of such non-defaulting Lender under the Facility does not exceed its ABL Commitment in the Facility. In the event that such reallocation does not fully cover the Letter of Credit exposure of such Defaulting Lender under the Facility, the Issuing Lender may require the Borrower to cash collateralize such “uncovered” exposure in respect of each outstanding Letter of Credit under the Facility and will have no obligation to issue new Letters of Credit, or to extend or renew existing Letters of Credit to the extent Letter of Credit exposure under the Facility would exceed the ABL Commitments of the non-defaulting Lenders under the Facility, unless such “uncovered” exposure is cash collateralized to the Issuing Bank’s reasonable satisfaction. The Borrower shall also have the right to terminate the ABL Commitment of any Defaulting Lender to the extent such termination does not cause the exposure under the Facility to exceed the ABL Commitments under the Facility.

CERTAIN PAYMENT PROVISIONS

 

Fees and Interest Rates :

 

 

As set forth in Annex I to Exhibit B attached hereto.

 

Closing Fees :  

As set forth in the Fee Letter.

 

Optional Prepayments and Commitment Reductions :   ABL Loans may be prepaid and ABL Commitments may be reduced, in whole or in part without premium or penalty, in minimum amounts to be mutually agreed, but in no event shall the ABL Commitments be reduced to less than $50 million without the consent of the Required Lenders, at the option of the Borrower at any time upon one business day’s (or, in the case of a prepayment of Eurodollar Loans (as defined in Annex I to Exhibit B attached hereto), three business days’) prior written notice, subject to reimbursement of the Lenders’ redeployment costs actually incurred (other than lost profits) in the case of a

 

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prepayment of Eurodollar Loans prior to the last day of the relevant interest period. Optional prepayments shall be applied as directed by the Borrower. Optional commitment reductions of any ABL Commitments shall be applied as directed by the Borrower, including to any class of extending or existing ABL Commitments (including any ABL Commitments under Incremental ABL Facilities, extended ABL Facilities and refinancing ABL Facilities).

 

Mandatory Prepayments :   If at any time the ABL Exposure exceeds the aggregate Maximum Borrowing Amount, prepayments of ABL Loans and/or Swingline Loans (and/or cash collateralization of Letters of Credit) shall be required to be made promptly after the Borrower receives written notice (which may include an “e-mail” or telephonic notification pursuant to procedures to be mutually agreed between the Administrative Agent and the Borrower) of such excess from the Administrative Agent in an amount equal to such excess. The application of proceeds from mandatory prepayments shall not reduce the aggregate amount of ABL Commitments and amounts prepaid may be reborrowed, subject to borrowing availability under the Facility.

COLLATERAL

 

Collateral :   Subject to the Certain Funds Provision and the provisions of the immediately following paragraphs and consistent with the ABL Documentation Principles, (a) the obligations of each Loan Party in respect of the Facility and (b) any swap (other than excluded swap obligations (the definition of which shall be mutually agreed)) and cash management obligations owed by the Borrower or any of its restricted subsidiaries to Lenders or affiliates of Lenders or the Administrative Agent or affiliates of the Administrative Agent (as of the Closing Date or as of the time of entering into such arrangements) shall be secured by a perfected first priority lien security interest in substantially all present and after-acquired assets of the Loan Parties, including, without limitation (subject to customary exceptions) equipment, general intangibles, intercompany notes, intellectual property, inventory, accounts receivable, any cash or cash equivalents and any deposit accounts (and, to the extent evidencing or otherwise related to such items, all general intangibles, intercompany debt, insurance proceeds, letter of credit rights, claims, including commercial tort claims, chattel paper, instruments, supporting obligations, documents, investment property, contract rights and payment intangibles and, the proceeds of any of the foregoing and all books and records (whether tangible or electronic) relating to, or arising from, any of the foregoing and the capital stock of the Borrower and each direct, wholly owned restricted subsidiary held by any Loan Party (which pledge (i) in the case of the Facility and stock of a Domestic Foreign Holdco and any CFC, shall be limited to 65% of the voting stock of such foreign subsidiary or such U.S. entity, as the case may be, and (ii) shall exclude any equity the pledge of which would violate applicable law or agreements in effect on the Closing Date or on the date on which the applicable subsidiary is formed or acquired (so long as the violated

 

B-8


  

provision of such agreement is not included in anticipation of such formation or acquisition)) and proceeds of the foregoing (such collateral, the “ Collateral ”), in each case subject to permitted liens and to certain customary exceptions to be mutually agreed upon consistent with the ABL Documentation Principles.

 

   Notwithstanding anything to the contrary, the Collateral shall exclude the following: (a) (i) any fee-owned real property with a fair market value of less than an amount to be mutually agreed (with all required mortgages permitted to be delivered post-closing) and any leasehold interest (with no requirement to obtain landlord waivers, estoppels or collateral access letters); (ii) motor vehicles, airplanes and other assets subject to certificates of title; (iii) letter of credit rights (other than to the extent such rights constitute supporting obligations with respect to other collateral) and commercial tort claims in amounts less than an amount to be mutually determined; (iv) any governmental licenses or state or local franchises, charters and governmental authorizations to the extent the granting of security interests therein are prohibited or restricted thereby; (v) pledges and security interests prohibited or restricted by applicable law (including any requirement to obtain the consent of any governmental authority or third party, unless such consent has been obtained (it being understood that there shall be no obligation to obtain such consent)) (after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code); (vi) (A) property subject to a purchase money security agreement, capital lease or similar arrangement to the extent the granting of a security interest therein is prohibited thereby or otherwise requires consent and/or (B) any lease, license, permit or agreement or any property subject to such agreement, in each case in existence on the Closing Date or upon acquisition of the relevant Subsidiary party thereto, to the extent that a grant of a security interest therein would violate or invalidate such lease, license, permit or agreement or create a right of termination in favor of any other party thereto or otherwise require consent thereunder (after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code or other applicable law, the assignment of which is expressly deemed effective under the Uniform Commercial Code or other applicable law notwithstanding such prohibition) and in each case other than proceeds and receivables thereof; (vii) any assets to the extent a security interest in such assets could reasonably be expected to result in adverse tax consequences as reasonably determined by the Borrower; (viii) Excluded Accounts (as defined below); (ix) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law; (x) stock and assets of unrestricted subsidiaries, captive insurance subsidiaries, certain special purpose entities, receivables subsidiaries and immaterial subsidiaries (to be defined); (xi) interests in any person other than wholly-owned restricted subsidiaries; (xii) margin stock; (xiii) other exceptions to be

 

B-9


 

mutually agreed; and (xiv) assets where the cost of obtaining a security interest therein exceeds the practical benefit to the Lenders afforded thereby as agreed by Administrative Agent and the Borrower (in their reasonable judgment in writing); and (b) any assets located or titled outside of the U.S. or any assets that require action under the law of any non-U.S. jurisdiction to create or perfect a security interest in such assets, including any intellectual property registered in any non-U.S. jurisdiction (and no security agreements or pledge agreements governed under the laws of any non-U.S. jurisdiction shall be required).

 

All the above-described pledges, security interests and mortgages shall be created on terms, and pursuant to documentation, consistent with the ABL Documentation Principles and subject to exceptions permitted under the Credit Documentation. Notwithstanding the foregoing, the requirements of the preceding paragraphs of this “Collateral” section shall be, as of the Closing Date, subject to the Certain Funds Provision.

 

Cash Dominion :  

Within 60 days of the Closing Date, unless otherwise agreed to by the Administrative Agent in its sole discretion, the Loan Parties will implement cash management procedures, to be mutually agreed consistent with the ABL Documentation Principles, including (but not be limited to) entering into customary deposit account control agreements which will provide for the Administrative Agent to have control of certain deposit accounts (other than payroll accounts, employee benefit accounts, withholding tax and trust and other fiduciary accounts, escrow accounts in respect of arrangements with non-affiliated third parties, workers’ compensation accounts and customs accounts that are funded by the Loan Parties in the ordinary course of business or as required by any requirement of law, certain cash collateral accounts subject to liens expressly permitted to be cash collateralized or otherwise pledged under the Credit Documentation, petty cash accounts that contain an average daily balance of less than an amount to be mutually agreed for any one account and for all such petty cash accounts in the aggregate, and accounts held by non-Loan Parties (collectively, “ Excluded Accounts ”)); it being understood and agreed that the Loan Parties will cause or direct all cash (subject to exceptions described above and other exceptions to be mutually agreed between the Borrower and the Administrative Agent) to be transferred daily to, or otherwise maintained in, accounts subject to an account control agreement and the Administrative Agent will require that all such cash be swept on a daily basis to an account of the Administrative Agent maintained at the Administrative Agent to be applied by the Administrative Agent to repay or cash collateralize outstanding ABL Exposure (or if no amounts are outstanding and all letters of credit have been cash collateralized, such amounts shall be available for use by the Borrower).

 

Cash Dominion can be converted to springing dominion at Borrower’s election so long as (i) Agent has received the financial statements for the fiscal year ending 2018 or any quarter end financial statements

 

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   thereafter, (ii) no event of default has occurred and is continuing and (iii) Borrowers’ Excess Availability for each of the prior 45 consecutive days was at least 12.5% of the aggregate amount of the ABL Commitments. Upon the occurrence of a Cash Dominion Triggering Event, Cash Dominion shall be reinstituted until a Cash Dominion Satisfaction Event. A “ Cash Dominion Triggering Event ” shall mean any of the following: (a) Excess Availability is less than 12.5% of the aggregate amount of the ABL Commitments on any Business Day or (b) an event of default has occurred and is continuing and the Agent shall have provided notice to the Borrower instituting a Cash Dominion period. “ Cash Dominion Satisfaction Event ” shall mean the earliest date on which all of the following conditions precedent have been satisfied: (a) if the Cash Dominion Triggering Event shall have occurred as a result of the occurrence of an Excess Availability triggering event, Excess Availability is equal to or greater than 12.5% of the aggregate amount of the ABL Commitments for forty-five (45) consecutive days; and (b) if the Cash Dominion Triggering Event shall have occurred as a result of the occurrence of an Event of Default, such Event of Default shall have been waived in writing by the Required Lenders.

CERTAIN CONDITIONS

 

Initial Conditions :   

Subject to the Certain Funds Provision, the availability of the Facility on the Closing Date will be subject only to the Exclusive Funding Conditions.

 

On-Going Conditions after the Closing Date :    After the Closing Date, the making of each ABL Loan or the issuance of a Letter of Credit (except in connection with certain incurrences) shall be conditioned solely upon (a) delivery of a notice of borrowing or credit extension, (b) the accuracy in all material respects of all representations and warranties in the Credit Documentation (although any representation or warranty which expressly relates to a given date or period shall be required only to be true and correct in all material respects as of the respective date or for the respective period, as the case may be, and the foregoing materiality qualifier shall not be applicable to any representation qualified or modified by materiality), (c) there being no default or event of default in existence at the time of, or immediately after giving effect to the making of, such extension of credit, and (d) availability under the Maximum Borrowing Amount.

DOCUMENTATION

 

Credit Documentation :    The definitive documentation for the Facility (the “ Credit Documentation ”) shall be drafted by counsel to the Administrative Agent, shall reflect the provisions set forth in the Commitment Letter and this Term Sheet and shall otherwise give due regard to the Specified ABL Precedent and, to the extent agreed by Sponsor and the Lead Arranger, other precedent asset-based facility documentations for financings by affiliates of “top-tier” sponsors and will take into account differences related to Holdings, its subsidiaries and their

 

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business (including (i) as to operational requirements of Holdings and its subsidiaries in light of their industries, businesses and business practices, (ii) in light of the size, cash flows and leverage of Holdings and its subsidiaries, and (iii) in light of the financial model of the projected operations of Holdings and its subsidiaries after giving effect to the Acquisition delivered to the Administrative Agent on June 14, 2017 (the “Sponsor Bank Model”) and modifications will be made to reflect (x) changes in law or accounting standards or cure mistakes or defects, (y) the operational and strategic requirements of the Borrower and its subsidiaries in light of their size, industries, businesses and business practices, locations, operations, financial accounting, and the projections set forth in the Sponsor Bank Model, and (z) administrative and operational requirements of the Administrative Agent, and in any event will contain only those conditions to borrowing, mandatory prepayments, representations, warranties, affirmative, negative and financial covenants and events of default expressly set forth in this Term Sheet, together with other customary loan document provisions and other terms and provisions in each case to be mutually agreed upon, the definitive terms of which will be negotiated in good faith to finalize the Credit Documentation, giving effect to the Certain Funds Provision, as promptly as reasonably practicable and shall be consistent with this Term Sheet (collectively, the “ ABL Documentation Principles ”).

 

Specified ABL Precedent ” shall mean that certain Credit Agreement dated as of July 13, 2015 among Propulsion Acquisition, LLC, Belcan, LLC, Belcan Design Build, Inc., Belcan Alliances, Inc., Belcan Engineering Group, LLC, Belcan Services Group Holdings, LLC, Belcan Services Group Limited Partnership, Tandel Holdings, Inc., Tandel Systems, Inc., Intercom Communications Corporation, Intercom Consulting Corporation, Intercom Federal Systems Corporation, The Kemtah Group, Inc., Propulsion Intermediate Holdings, LLC, the lenders from time to time party thereto and PNC Bank, National Association, as administrative agent and as collateral Agent (as amended, restated, supplemented or otherwise modified prior to the date of the Commitment Letter).

 

Representations and Warranties :    Consistent with the ABL Documentation Principles (applicable to Holdings (in limited cases), the Borrower and its Restricted Subsidiaries, limited to the following (and subject on the Closing Date in all respects to the Certain Funds Provision) in each case with customary exceptions, limitations and qualifications to be mutually agreed and otherwise consistent with the ABL Documentation Principles: organization, existence, qualification and power; compliance with laws; no contravention; governmental authorizations and other material third party consents; due authorization, execution, delivery and enforceability and binding effect of the Credit Documentation; accuracy of historical financial statements; projections; no Material Adverse Effect (after the Closing Date); litigation; labor matters; ownership of material property; environmental matters; taxes; ERISA; subsidiaries; margin regulations;

 

B-12


  

Investment Company Act; PATRIOT Act; OFAC; anti-terrorism laws; FCPA; laws against sanctioned persons; disclosure; intellectual property; solvency (on a consolidated basis) as of the Closing Date (which representation shall be consistent with the solvency certificate in the form attached to Exhibit C as Annex I ); and creation, validity, perfection and priority of security interests in Collateral (subject to permitted liens).

 

Material Adverse Effect ” means any event, change or condition that, individually or in the aggregate, has had, or could reasonably be expected to have (i) a material adverse effect on the business, financial condition or results of operations of the Borrower and its restricted subsidiaries, taken as a whole, (ii) a material and adverse effect on the rights and remedies of the Administrative Agent or the Lenders or (iii) a material and adverse effect on the ability of the Borrower and Guarantors taken as a whole to perform their payment obligations under the Credit Documentation.

 

Affirmative Covenants :   

Subject to the Certain Funds Provision, consistent with the ABL Documentation Principles.

 

Financial Covenants :   

Minimum Consolidated Unadjusted EBITDA (the “ Minimum Consolidated EBITDA Covenant ”) which, covenant, (i) until the quarter ending September 30, 2018, shall include a cushion of $5,000,000 based on Sponsor’s projections of Borrower’s unadjusted EBITDA and (ii) at all times thereafter when in effect, shall be set at 65% of the Sponsor’s projections of Borrower’s unadjusted EBITDA . For the avoidance of doubt, Unadjusted EBITDA shall include an add-back for the loss on sales of assets and all non-cash charges. The Minimum Consolidated Unadjusted EBITDA covenant shall only apply until such time as the Borrower’s Fixed Charge Coverage Ratio, calculated as of the end of any fiscal quarter on a trailing twelve month basis, equals or exceeds 1.10 to 1.

 

Commencing with the quarter following the last quarter in which the Minimum Consolidated EBITDA covenant applies and as of each quarter end thereafter, the Borrower shall maintain a Fixed Charge Coverage Ratio, calculated as of the end of the quarter, in each case on a trailing twelve month basis, of not less than 1.10 to 1 (the “ FCCR ” and together with Minimum Consolidated EBITDA Covenant, collectively, the “ Financial Covenants ”).

 

Consolidated EBITDA ” as used herein shall be defined in a manner to be mutually agreed and consistent with the ABL Documentation Principles, but in any event shall include, without duplication, (A) add-backs for (1) extraordinary, unusual or non-recurring charges, expenses or losses (including in connection with the renewal of material contracts), subject to an aggregate cap to be agreed for the duration of the Facility, provided that extraordinary charges, expenses or losses shall not be subject to such cap, (2) non-cash charges, expenses or losses, including, without limitation, any non-cash expense

 

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relating to the vesting of warrants, (3) restructuring costs, integration costs, retention, recruiting, relocation and signing bonuses and expenses, stock option and other equity-based compensation expenses, severance costs, transaction fees and expenses and management fees and expenses, including, without limitation, any one time expense relating to enhanced accounting function or other transaction costs, including those associated with becoming a public company, (4) without duplication of actual cost savings already reflected in Consolidated EBITDA, LTM pro forma results for acquisitions (including the commencement of material activities constituting such business and material dispositions (including the termination or discontinuance of activities constituting such business) of business entities or properties or assets constituting a division or line of business of any business entity that is the subject of any such acquisition or disposition, and operational changes (including, to the extent applicable, from the Transactions), including synergies, operating expense reductions and other operating improvements and cost savings, in all cases as certified by the Borrower as having been determined in good faith to be reasonably anticipated to be realizable within 18 months following any such acquisition or disposition or operational change, (5) without duplication of actual cost savings already reflected in Consolidated EBITDA, the pro forma adjustments previously identified and agreed to in writing by the Administrative Agent, including all such adjustments set forth in the Sponsor Bank Model, (6) other accruals, payments and expenses (including rationalization, legal, tax, structuring and other costs and expenses) related to the Transactions, acquisitions, investments, dividends, dispositions or issuances of debt or equity permitted under the Credit Documentation, (7) any non-cash increase in expenses due to purchase accounting associated with the Transactions, and (8) charges, losses or expenses to the extent indemnified or insured or reimbursed by a third party; and (B) subtractions for income and gain items corresponding to those referred to in clauses (1)  and (2) above (other than the accrual of revenue in the ordinary course), (with all financial definitions to be consistent with Documentation Principles).

 

Fixed Charge Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated EBITDA minus unfinanced capital expenditures minus cash taxes paid to (b) Fixed Charges (as defined below), in each case for the most recently ended four-fiscal quarter period for which financial statements are available.

 

Fixed Charges ” means the sum of (a) consolidated interest expense paid or payable currently in cash, (b) scheduled principal amortization payments of debt for borrowed money (including principal payments in respect of capital leases but excluding intercompany debt among Loan Parties) payable in cash, and (c) solely for the purpose of calculating the Fixed Charge Coverage Ratio for additional restricted payments and dividends made in reliance on the Payment Conditions (definition to be mutually agreed), any such restricted payments and dividends made in cash.

 

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Any cash qualified equity contribution made to the Borrower (or any direct or indirect parent thereof and then contributed to the Borrower) after the beginning of the most recently ended fiscal quarter and on or prior to the day that is ten business days after the day on which financial statements are required to be delivered for such fiscal quarter will, at the request of the Borrower, be included in the calculation of Consolidated EBITDA for the purposes of determining compliance with the Financial Covenants at the end of such fiscal quarter and applicable subsequent periods (any such equity contribution so included in the calculation of Consolidated EBITDA, a “ Specified Equity Contribution ”); provided , that (a) no more than two Specified Equity Contributions may be made in any consecutive four fiscal quarter period and no more than four Specified Equity Contributions may be made during the term of the Facility, (b) a Specified Equity Contribution shall not be greater than the amount required to cause the Borrower to be in compliance with the Financial Covenants, (c) the Specified Equity Contributions shall be applied to the outstanding amounts under the Facility and counted solely for the purposes of the Financial Covenants and shall not be included for the purposes of determining pricing, financial ratio-based conditions, the availability or amount of any covenant baskets or carve-outs, and (d) there shall be no effect given to any reduction of indebtedness with the proceeds of any Specified Equity Contribution.

 

Upon the delivery by the Borrower of written notice that it intends to make a Specified Equity Contribution, any resultant event of default or potential event of default shall be deemed retroactively not to have occurred, subject to the terms and conditions set forth above. Neither the Administrative Agent nor any Lender shall exercise the right to accelerate the ABL Loans and none of the Administrative Agent, any Lender or any other secured party shall exercise any right to foreclose on or take possession of the Collateral or exercise any other remedy prior to the expiration of the Cure Period solely on the basis of an event of default having occurred and being continuing with respect to the Financial Covenants; provided , however , until such event of default is cured or waived no Lender shall be required to make any ABL Loans or issue any Letters of Credit.

 

Negative Covenants :    Consistent with the ABL Documentation Principles in certain circumstances and instances to be subject to the Payment Conditions (definition to be mutually agreed) and to otherwise permit the Borrower to make restricted payments in an amount equal to the net cash proceeds (to be mutually defined) received from asset sales so long as no event of default exists, a minimum Excess Availability threshold (to be agreed) is satisfied and the Borrower is projected (on a pro forma basis) to meet the minimum EBITDA covenant as of the next test date.

 

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Unrestricted Subsidiaries :   

Consistent with the ABL Documentation Principles, the Credit Documentation will contain provisions pursuant to which, subject to customary limitations on investments, loans, advances to, and other investments in, unrestricted subsidiaries, the Borrower will be permitted to designate any existing or subsequently acquired or organized subsidiary as an “unrestricted subsidiary” and subsequently re-designate any such unrestricted subsidiary as a “restricted subsidiary”; provided that no event of default shall have occurred and be continuing or would result from any such designation. Unrestricted subsidiaries will not be subject to the mandatory prepayment, representation and warranty, affirmative or negative covenant or event of default provisions of the Credit Documentation and the cash held by, results of operations, indebtedness and interest expense of unrestricted subsidiaries will not be taken into account for purposes of determining any financial ratio or covenant contained in the Credit Documentation.

 

Events of Default :   

Consistent with the ABL Documentation Principles, and, in addition, to include, in each case substantially consistent with the Specified ABL Precedent, but, in each case, giving effect to the terms of this Exhibit B, and the Acquisition, maintenance of cash management as required under “Cash Dominion” above (subject to a two business day grace period), and failure to deliver compliance certificates and Borrowing Base certificates (subject to a two business day grace period for failure to deliver such certificates).

 

Voting :    Amendments and waivers of the Credit Documentation will require the approval of Lenders (other than defaulting Lenders) holding more than 50% of the aggregate principal amount of the ABL Loans and ABL Commitments (the “ Required Lenders ”), except that (i) the consent of each Lender directly and adversely affected thereby (but not Required Lenders with respect to the immediately following clauses (a), (b) and (c)) shall be required with respect to, (a) increases in the commitment of such Lender, (b) reductions of principal, interest or fees owed to such Lender (other than waivers of prepayments), (c) extensions of the final maturity or the scheduled due date of any interest or fee payment due to such Lender (other than waivers of prepayments, default interest, defaults or events of default) and, (d) except as otherwise permitted by the Credit Documentation, releases of all of the Collateral or one or more Loan Parties; (ii) the consent of all Lenders shall be required with respect to reductions in voting thresholds; (iii) the consent of Lenders holding more than 66 2/3% of the aggregate principal amount of ABL Loans and ABL Commitments shall be required with respect to changes to the definition of Borrowing Base or the constituent definitions in a manner that would have the effect of increasing availability thereunder (including changes in eligibility criteria and advance rate), other than changes in reserves implemented by the Administrative Agent in its Permitted Discretion it being understood that additional extensions of credit permitted under the Credit Documentation shall not require the consent of all Lenders; (iv) the consent of the Issuing Lender, the Swingline Lender and the

 

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Administrative Agent, respectively, shall be required with respect to amendments directly and adversely affecting their respective rights and duties. It being understood that (A) additional extensions of credit permitted under the Credit Documentation shall not require the consent of all Lenders (or the Required Lenders) but instead shall only require the consent of each Lender extending such credit, (B) any applicable intercreditor agreement may be amended solely with the consent of the Administrative Agent to give effect thereto or to carry out the purposes thereof, and (C) there shall be no “class” voting requirement for amendments, modifications or supplements to the Credit Documentation, and (v) if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders (excluding any Defaulting Lender).

 

  

Notwithstanding the foregoing, provisions regarding pro rata payments or sharing of payments shall permit loan buy-back or similar programs, Refinancing Facilities, “amend and extend” transactions or additions of one or more tranches of debt and the like as described in this Term Sheet and modifications to such pro rata and sharing of payment provisions for such further programs or debt, shall only require approval of the Required Lenders, and non-pro rata distributions and commitment reductions will be permitted in connection with any such loan buy-back or similar programs, amend and extend transactions or additions of one or more tranches of debt on terms set forth herein.

 

  

The Credit Documentation shall contain customary provisions relating to (a) “defaulting” Lenders and agents (including for insolvency, including provisions relating to providing cash collateral to support Swingline Loans or Letters of Credit (after reallocation to other non “defaulting” Lenders)), the suspension of voting rights and rights to receive fees of and interest, non-payment/escrow of amounts owed to, and assignment and termination of commitments or repayment of ABL Loans of, such Lender and (if applicable) replacement of the Administrative Agent and (b) the right of the Borrower to replace (and repay ABL Loans on a non-pro rata basis of) any Lender (as the Borrower shall elect but reasonably acceptable to the Administrative Agent to the extent such consent would otherwise be required; provided, no consent of the Administrative Agent shall be required if the Administrative Agent is the “defaulting” Lender or agent) in connection with amendments and waivers requiring the consent of all Lenders or of all Lenders directly and adversely affected thereby (so long as the Required Lenders or at least a majority (in dollar amount) of the Lenders directly and adversely affected thereby consent, as applicable), increased costs, taxes, etc. and “defaulting” or insolvent Lenders.

 

   The Credit Documentation shall contain a mechanism to permit the Borrower with the consent of each directly and adversely affected Lender under the Facility, but without the consent of any other Lender or the Required Lenders, to extend the ABL Maturity Date and to provide for different interest rates and fees and voluntary prepayments

 

B-17


  

for the Lender providing such extended ABL Maturity Date, in each case, so long as an offer to extend the final expiration or maturity date of the Facility is made to all Lenders participating in the Facility on a pro rata basis pursuant to procedures established by the Administrative Agent and with the consent of each directly and adversely affected Lender under the Facility (but no other Lender), to provide for a “re-pricing” amendment which reduces the interest rate accruing in respect of the ABL Loans held by such consenting Lenders.

 

  

In addition, the Credit Documentation shall provide for the amendment (or amendment and restatement) of the Credit Documentation to (a) add one or more replacement credit facilities thereto and changes related thereto and (b) to provide for term loans replacing all or a portion of the ABL Loans, subject to customary limitations, with the consent of the Administrative Agent, the Borrower and the lenders providing such replacement term loans and, in connection with any of the foregoing, the right of the Borrower to require the Lenders to assign their ABL Loans and ABL Commitments to the providers of any replacement credit facility or loans or to prepay their outstanding loans and terminate their commitments.

 

  

In addition, if the Administrative Agent and Borrower shall have jointly identified an obvious error, mistake, ambiguity or any error or omission of a technical nature (or otherwise need to amend the collateral documents to comply with applicable laws or otherwise conform to the credit agreement) in the Credit Documentation or related security documents, then the Administrative Agent and Borrower shall be permitted to amend such provision without further action or consent of any other party if the same is not objected to in writing by the Required Lenders to the Administrative Agent within five business days following receipt of notice thereof.

 

  

The Administrative Agent shall be entitled to extend any deadline or requirement in connection with compliance with guarantee and security provisions.

 

Assignments and Participations :    The Lenders will be permitted to assign (a) ABL Loans and ABL Commitments with the consent of the Borrower (not to be unreasonably withheld or delayed); provided , in each case, that, no consent of the Borrower shall be required if (i) if such assignment is made to another Lender or an affiliate or approved fund of such a Lender or (ii) after the occurrence and during the continuance of a Specified Default; provided , further , that no assignments shall be made to natural persons, the Sponsor, Holdings, any affiliate of the Sponsor or Holdings and any Disqualified Institutions. All assignments will also require the consent of the Administrative Agent, the Swingline Lenders and the Issuing Lenders, not to be unreasonably withheld or delayed. Each assignment will be in an amount of an integral multiple of $5,000,000 or, if less, all of such Lender’s remaining ABL Loans and ABL Commitments. Assignments will be by novation and will not be required to be pro rata among the Facility.

 

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The Lenders will have the right to participate their ABL Commitments and ABL Loans to other persons to other persons (other than any natural persons, the Sponsor, Holdings, any Non-Debt Fund Affiliate and any Disqualified Institution). Voting rights of participants shall be limited solely to those matters set forth in clauses (i)  and (ii) under the first paragraph under the heading “Voting” with respect to which the affirmative vote of the Lender from which it purchased its participation would be required. Pledges of ABL Loans in accordance with applicable law shall be permitted without restriction, including without limitation to the Federal Reserve Bank.

 

Yield Protection :   

The Credit Documentation will contain provisions for increased costs or loss of yield consistent with the ABL Documentation Principles.

 

Expenses and Indemnification :   

The Borrower, shall pay promptly following written demand (including documentation reasonably supporting such request) (a) all reasonable and documented out-of-pocket expenses of the Administrative Agent, the Issuing Lenders and the Lead Arranger associated with the negotiation and execution of this Commitment Letter, syndication of the Facility and the preparation, execution, delivery and administration of the Credit Documentation and any amendment or waiver with respect thereto including with respect to collateral audits, field exams and inventory appraisals and subject to the limitations set forth herein (but limited, in the case of legal fees and expenses, to the reasonable fees, disbursements and other charges of the counsel to the Administrative Agent, the Issuing Lender and the Lead Arranger, taken as a whole listed below and, if reasonably necessary, of one local counsel in any relevant material jurisdiction, in each case excluding allocated costs of in-house counsel) and (b) all reasonable and documented out-of-pocket expenses of the Administrative Agent, the Issuing Lenders and the Lead Arranger (but limited, in the case of legal fees and expenses, to the fees, disbursements and other charges of one counsel to the Administrative Agent and the Lenders, taken as a whole (and, if reasonably necessary, of one local counsel in any relevant material jurisdiction, and in the case of an actual conflict of interest, one additional counsel to the affected Lenders to the extent they are similarly situated)) in connection with the enforcement of the Credit Documentation or protection of rights thereunder; provided, that if the Closing Date does not occur, the Borrower’s reimbursement obligations shall not exceed $100,000 plus documented out-of-pocket legal fees and expenses of Administrative Agent’s counsel.

 

  

The Credit Documentation shall contain provisions for indemnification consistent with the ABL Documentation Principles.

 

Governing Law and Forum :    New York.

 

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Counsel to the Administrative Agent :    Blank Rome LLP.

 

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Annex I to

EXHIBIT B

INTEREST AND CERTAIN FEES

 

Interest Rate Options:

The Borrower may elect that the ABL Loans comprising each borrowing under the Facility bear interest at a rate per annum equal to (a) the ABR plus the Applicable Margin or (b) the Eurodollar Rate, plus the Applicable Margin; provided , that all Swingline Loans shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.

 

  As used herein:

 

  ABR ” means the highest of (i) the prime commercial lending rate of the Administrative Agent, as publicly announced to be in effect from time to time (which rate is determined from time to time by Administrative Agent as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by Administrative Agent to any particular class or category of customers of Administrative Agent), (ii) the Federal funds open rate from time to time, plus 0.50% per annum, and (iii) a daily Eurodollar Rate based on an interest period of one month, plus 1.00% per annum.

 

  ABR Loans ” means ABL Loans bearing interest based upon the ABR.

 

  Applicable Margin ” means in the case of Eurodollar Loans, 2.50% per annum or, in the case of ABR Loans, 1.50% per annum.

 

  Eurodollar Rate ” means the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for a period equal to one, two or three (as selected by the Borrower) appearing on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (a “ Eurodollar Alternate Source ”), at approximately 11:00 a.m., London time two (2) business days prior to the first day of the applicable interest period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Eurodollar Alternate Source, a comparable replacement rate determined by the Agent at such time (which determination shall be conclusive absent manifest error)) for an amount comparable to such Eurodollar Loan and having a borrowing date and a maturity comparable to such interest period; provided that, the Eurodollar Rate shall not be less than 0.00%.

 

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  Eurodollar Loans ” means ABL Loans bearing interest based upon the Eurodollar Rate.

 

Interest Payment Dates :

In the case of ABR Loans, monthly in arrears.

 

  In the case of Eurodollar Loans, on the last day of each relevant interest period.

 

Commitment Fees :

The Borrower shall pay to the Lenders (other than Defaulting Lenders) a commitment fee at the rate of 0.375% per annum on the unused portion of the Credit Facility.

 

Letter of Credit Fees :

The Borrower shall pay a fee with respect to Letters of Credit, a per annum rate equal to the Applicable Margin for the ABL Loans which are Eurodollar Loans. Such fee shall be shared ratably among the Lenders (other than Defaulting Lenders) and shall be payable quarterly in arrears.

 

  A fronting fee in an amount to be agreed (but in any event not to exceed 0.25% per annum) on the face amount of each Letter of Credit shall be payable quarterly in arrears to the Issuing Lender for its own account. The Borrower shall also pay to the Issuing Lender for its own account such Issuing Lender’s customary and reasonable issuance and administration fees.

 

Default Rate :

At any time when the Borrower is in default under the Facility after giving effect to any applicable grace period, amounts owed to Lenders (other than defaulting Lenders) shall bear interest at 2.00% per annum above the rate otherwise applicable thereto (or, in the event there is no applicable rate, 2.00% per annum in excess of the rate otherwise applicable to ABL Loans maintained as ABR Loans from time to time).

 

Rate and Fee Basis :

All per annum rates shall be calculated on the basis of a year of 360 days (or 365/366 days in the case of ABR Loans the interest rate payable on which is then based on the Prime Rate) for actual days elapsed.

 

Collections :

All customers shall be directed to make remittances to a lockbox or blocked account approved and controlled by the Administrative Agent subject to the springing dominion concepts as discussed in this Exhibit B. For the purpose of crediting the Borrower’s loan account and calculating interest, all items of payment shall be deemed applied to the outstanding Obligations under the Facility by the Administrative Agent one (1) business day following the business day of the Administrative Agent’s receipt thereof.

 

B-I-2


EXHIBIT C

PROJECT NOVA

Conditions

The availability of the Facility shall be subject solely to the satisfaction or waiver by the Lead Arranger of the following additional conditions (subject to the Certain Funds Provision). Capitalized terms used but not defined in this Exhibit  C have the meanings set forth in the letter to which this Exhibit  C is attached or in Exhibits  A or B thereto.

1. The Credit Documentation (which, in each case, shall be consistent with the Commitment Letter and subject to the Certain Funds Provision and, the initial drafts of which, shall be drafted by counsel to the Administrative Agent) shall have been duly executed and delivered by the Administrative Agent, the applicable Lenders, Holdings, the Borrower and the Guarantors to the extent party thereto, and the Administrative Agent shall have received:

(a) a customary notice of borrowing;

(b) customary closing certificates and customary legal opinions; and

(c) a certificate (substantially in the form of Annex I to this Exhibit C ) from the chief financial officer (or other officer with reasonably equivalent duties) of the Borrower certifying that the Borrower and its subsidiaries, on a consolidated basis after giving effect to the Transactions, are solvent.

2. Prior to, or substantially concurrently with the initial fundings contemplated by the Commitment Letter, the Borrower shall have (directly or indirectly) received the Equity Contributions (to the extent not otherwise applied to the Transactions), in the manner described in Exhibit  A to the Commitment Letter.

3. On the Closing Date, after giving effect to the Refinancing, none of Holdings, the Borrower or any of their respective subsidiaries shall have any material indebtedness for borrowed money (other than the Facility and other debt for borrowed money reasonably acceptable to us). Prior to, or substantially concurrently with the initial fundings contemplated by the Commitment Letter, the Termination and Release shall have been consummated.

4. The Acquisition Agreement shall be reasonably satisfactory to PNC and in full force and effect (it being understood that the draft agreement provided to PNC at 4:35 p.m., New York City time, on July 29, 2017 is reasonably satisfactory to PNC). The Acquisition (including completion of the merger) shall be consummated in all material respects pursuant to the Acquisition Agreement substantially concurrently with the initial funding of the Facility without giving effect to any amendments to the execution copy of the Acquisition Agreement made available to PNC prior to its execution and delivery of the Commitment Letter on the date hereof or waivers of or consents to the provisions thereof that, in any such case, are materially adverse to the interests of the Lenders or the Lead Arranger without the consent of the Lead Arranger, such consent not to be unreasonably withheld, conditioned or delayed (it being understood and agreed that (i) any increase in the consideration for the Acquisition shall not be deemed to be materially adverse to the interests of the Lenders and the Lead Arranger (so long as any increase in the purchase price shall be funded with common equity contributions), (ii) the following decreases in the consideration for the Acquisition shall not be deemed to be materially adverse to the interests of the Lenders and the Lead Arranger (x) decreases pursuant to any purchase price or similar adjustment provisions set forth in the Acquisition Agreement, (y) decreases of less than ten percent (10%) of the total Acquisition

 

C-1


consideration, and (z) decreases to the extent they are applied first, to reduce the Equity Contribution to a percentage not less than the minimum percentage set forth in clause (c)  of Exhibit A , (iii) any amendment, consent, waiver or other modification to the definition of Material Adverse Effect (as defined in the Acquisition Agreement on the date hereof) shall be deemed to be materially adverse to the interests of the Lenders and the Lead Arranger, and (iv) any adverse modifications to any of the provisions relating to the Administrative Agent’s, the Lead Arranger’s or any Lender’s liability, jurisdiction or status as a third party beneficiary under the Acquisition Agreement shall be deemed to be materially adverse to the interests of the Lenders and the Lead Arranger); provided that in each case the Lead Arranger shall be deemed to have consented to such modification, amendment, waiver or consent unless they shall object thereto within 5 business days of receipt of written notice of such modification, amendment, consent or waiver.

5. Since the date of the Acquisition Agreement there shall not have been a Company Material Adverse Effect (as defined in the Acquisition Agreement on the date hereof).

6. PNC shall have received (1) audited consolidated balance sheets and statements of income, changes in stockholders’ equity, and cash flow as of and for the fiscal years ended December 31, 2014, December 31, 2015 and December 31, 2016 for Company and its Subsidiaries (and PNC acknowledges receipt of such audited consolidated balance sheets and related statements of income, changes in stockholders’ equity and cash flows); (2) unaudited consolidated balance sheets and statements of income, cash flows, and changes in stockholders’ as of and for the three (3) months ended March 31, 2017 and for each subsequent fiscal quarter ended at least 45 days prior to the Closing Date (and PNC acknowledges receipt of such unaudited consolidated balance sheets and related statements of income and cash flows for the period ending March 31, 2017); and (3) a pro forma consolidated balance sheet and related statements of income of the Borrower as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period ended at least 45 days (or 90 days in case such period is the end of the Borrower’s fiscal year) prior to the Closing Date, prepared after giving effect to the Transactions as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of income) and any other adjustments as agreed by the Sponsor and the Lead Arranger (which need not be prepared in compliance with Regulations S-X of the Securities Act of 1933, as amended, or include adjustments for purchase accounting).

7. So long as requested at least ten (10) business days prior to the Closing Date, PNC shall have received, at least five (5) business days prior to the Closing Date, all documentation and other information with respect to Borrower and the Guarantors that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act.

8. All reasonable out of pocket fees and expenses due and payable to PNC, the Lead Arranger and the Lenders on the Closing Date shall have been paid (which amounts may be funded from the proceeds of the initial fundings under the Facility) to the extent, in the case of reimbursement of such expenses, invoices have been received at least one day prior to the Closing Date.

9. Subject to the Certain Funds Provision, with respect to the Facility, all actions or documents necessary to establish that Administrative Agent, as applicable, will have a perfected security interest in the Collateral under the Facility shall have been taken or executed and delivered, in each case, to the extent such Collateral (including the creation or perfection of any security interest) is required by the Commitment Letter to be provided on the Closing Date.

 

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10. The Specified Acquisition Agreement Representations shall be true and correct to the extent required by the Certain Funds Provision, and the Specified Representations shall be true and correct in all material respects.

11. The Specified Availability (after giving effect to the Alternative Borrowing Base, if applicable) shall be in an aggregate amount of at least $20,000,000 (or such lesser amount as shall be acceptable to the Administrative Agent in its sole discretion) on the Closing Date, after giving effect to the transactions contemplated under the Commitment Letter.

12. PNC shall have received customary insurance certificates naming PNC as additional insured and lender loss payee on the Loan Parties’ insurance policies to the extent required by the Credit Documentation.

13. PNC shall have received the Sponsor Borrowing Base Guaranty and, if applicable, the Sponsor Alternative Borrowing Base Guaranty together with a customary opinion of Sponsor counsel, a secretary certificate from an officer of Sponsor setting forth the qualified uncalled capital commitments available to the Sponsor and the remaining amount of the investments permitted to be made in Borrower under the applicable Sponsor documents and excerpts of the audited financial statements of the applicable Sponsor setting forth its qualified uncalled capital commitments.

 

C-3


Annex I to Exhibit C

FORM OF SOLVENCY CERTIFICATE

[    ],             

1. This Solvency Certificate is being executed and delivered pursuant to Section [    ] of that certain [    ] 1 (the “ ABL Credit Agreement ”; the terms defined therein being used herein as therein defined.

2. I, [    ], the [chief financial officer/equivalent officer] of Borrower, solely in such capacity and not in an individual capacity, hereby certify that I am the [chief financial officer/equivalent officer] of Borrower and that I am generally familiar with the businesses and assets of Borrower and its Subsidiaries (taken as a whole), I have made such other investigations and inquiries as I have deemed appropriate and I am duly authorized to execute this Solvency Certificate on behalf of Borrower pursuant to each of the Credit Agreements.

3. I further certify, solely in my capacity as [chief financial officer/equivalent officer] of Borrower, and not in my individual capacity, as of the date hereof and after giving effect to the Transactions and the incurrence of the indebtedness and obligations being incurred in connection with the ABL Credit Agreement and the Transactions on the date hereof, that, (a) the sum of the liabilities (including contingent liabilities) of Borrower and its Subsidiaries, taken as a whole, does not exceed the present fair saleable value (on a going concern basis) of the assets of Borrower and its Subsidiaries, taken as a whole; (b) the capital of Borrower and its Subsidiaries, taken as a whole, is not unreasonably small in relation to the business of Borrower and its Subsidiaries, taken as a whole, contemplated as of the date hereof; (c) the present fair salable value of the assets (on a going concern basis) of the Borrower and its Subsidiaries is greater than the amount that will be required to pay the probable liabilities (including contingent liabilities) of the Borrower and its Subsidiaries as they become absolute and matured and (d) the Borrower and its Subsidiaries, taken as a whole, have not incurred and do not intend to incur, or believe that they will incur, liabilities including current obligations beyond their ability to pay such liabilities as they mature in the ordinary course of business. For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

[Remainder of page intentionally left blank]

 

 

1   Describe ABL Credit Agreement.

 

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IN WITNESS WHEREOF, I have executed this Solvency Certificate on the date first written above.

 

By:  

 

  Name: [    ]
  Title: [    ]

Signature Page to

Solvency Certificate

Exhibit (d)(6)

TENDER AND SUPPORT AGREEMENT

This TENDER AND SUPPORT AGREEMENT (this “ Agreement ”) is made and entered into as of [●], 2017 by and between Nova Intermediate Parent, LLC, a Delaware limited liability Company (“ Parent ”), Nova Merger Sub, Inc., a Pennsylvania corporation and a wholly owned subsidiary of Parent (“ Merger Sub ”), and the undersigned stockholder (the “ Stockholder ”) of CDI Corp., a Pennsylvania corporation (the “ Company ”).

RECITALS

WHEREAS , Parent, Merger Sub and the Company have entered into an Agreement and Plan of Merger of even date herewith (the “ Merger Agreement ”), which provides for, among other things, (i) the commencement by Merger Sub of a tender offer (the “ Offer ”) to purchase any and all of the shares of common stock, par value $0.10 per share, of the Company (the “ Company Common Stock ”), at a price per share of $[●], payable net to the seller thereof in cash, without interest, and subject to certain deductions and adjustments pursuant to the Merger Agreement (the “ Offer Price ”); and (ii) following the acceptance for payment of shares of Company Common Stock pursuant to the Offer, upon the terms and subject to the conditions set forth in the Merger Agreement, the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation (the “ Merger ”), pursuant to which each issued and outstanding share of Company Common Stock (other than certain shares to be canceled in accordance with the Merger Agreement and Dissenting Shares) will be converted into the right to receive the Offer Price;

WHEREAS , the Stockholder is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), of such number of shares of Company Common Stock as is indicated on the signature page of this Agreement; and

WHEREAS , as a condition to their willingness to enter into the Merger Agreement, Parent and Merger Sub have required the Stockholder, and in order to induce Parent and Merger Sub to enter into the Merger Agreement, the Stockholder (solely in the Stockholder’s capacity as such) has agreed, to enter into this Agreement and tender all of the Subject Shares as described herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties to this Agreement agree as follows:

1. Certain Definitions . All capitalized terms that are used but not defined herein shall have the respective meanings ascribed to them in the Merger Agreement. For all purposes of and under this Agreement, the following terms shall have the following respective meanings:


(a) “ Encumbrance ” shall mean any lien, hypothecation, adverse claim, charge, security interest, pledge or option, proxy, right of first refusal, preemptive right, voting trust or any other similar right.

(b) “ Expiration Date ” shall mean the earliest to occur of such date and time as (i) the Merger Agreement shall have been terminated for any reason; (ii) the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement; (iii) the acquisition by Parent of all the Subject Shares of the Stockholder, whether pursuant to the Merger or otherwise; (iv) any amendment, change or waiver to the Merger Agreement is effected without the Stockholder’s consent that (A) decreases the amount, or changes the form or (except with respect to extensions of the Offer in accordance with the terms of the Merger Agreement) timing of consideration payable to the Stockholder pursuant to the terms of the Merger Agreement; or (B) materially and adversely affects the Stockholder; (v) is agreed to in writing by Parent and the Stockholder; (vi) if the Stockholder is a trust whose trustee is not a director or officer of the Company, the determination by such trustee of the Stockholder following a material development, event, fact, occurrence or material change in circumstances that first occurs or first arises after the date hereof that was not known or reasonably foreseeable by the trustee of the Stockholder, after consultation with its outside legal counsel, that the failure to terminate this Agreement would violate the trustee’s fiduciary duties under applicable Law; or (vii) the Company Board of Directors shall have made a Change in Recommendation.

(c) “ Permitted Encumbrance ” shall mean (i) any Encumbrance arising (A) hereunder (in connection therewith any restrictions on transfer or any other Encumbrance that has been waived by appropriate consent) and (B) under securities laws; (ii) any right, agreement, understanding or arrangement which represents a financial interest in cash received upon sale of the Subject Shares and not an Encumbrance upon the Subject Shares prior to such sale; and (iii) any withdrawal rights under contract, deed or applicable Law applicable to any trust that is also a stockholder of the Company as of the date hereof.

(d) “ Subject Shares ” shall mean, other than nontransferable restricted shares of Company Common Stock, (i) all shares of Company Common Stock owned directly by the Stockholder as of the date hereof; and (ii) all additional shares of Company Common Stock of which the Stockholder acquires direct ownership during the period from the date of this Agreement through the Expiration Date (including by way of stock dividend or distribution, split-up, recapitalization, combination, exchange of shares or issued upon the exercise of any options, the settlement of any restricted stock or other conversion of any convertible securities) [provided, however, that Subject Shares shall not include any shares of Company Common Stock pledged to the Wilmington Savings Fund Society, FSB] 1 .

(e) “ Transfer .” A Person shall be deemed to have effected a “ Transfer ” of a Subject Share if such person, directly or indirectly, (i) sells, pledges, creates an Encumbrance with respect to (other than Permitted Encumbrances), assigns, exchanges, grants an option with respect to, transfers, gifts, disposes of or enters into any derivative arrangement with respect to such Subject Share or any interest therein; or (ii) enters into an agreement or commitment

 

1   To be included in the form of Tender and Support Agreement executed by Walter Garrison; Mr. Garrison has pledged 640,000 Shares to Wilmington Savings Fund Society, FSB.

 

2


providing for the sale, pledge, creation of an Encumbrance (other than Permitted Encumbrances), assignment, exchange, transfer, gift, disposition of or any derivative arrangement with respect to, or grant of an option with respect to, such Subject Share or any interest therein.

2. Transfer of Subject Shares .

(a) Transfer Restrictions . Except as expressly contemplated by this Agreement or the Merger Agreement, the Stockholder shall not cause or voluntarily consent to any Transfer of any of the Subject Shares to be effected.

(b) Transfer of Voting Rights . The Stockholder shall not (i) deposit any Subject Shares in a voting trust or grant any proxy or power of attorney or enter into any voting agreement or similar agreement with respect to any of the Subject Shares or (ii) take (or knowingly refrain from taking) any other action that would in any way restrict, limit or interfere with the performance of the Stockholder’s obligations hereunder or otherwise make any representation or warranty of the Stockholder herein untrue or incorrect. Any action taken in violation of the foregoing sentence shall be null and void ab initio and such Stockholder agrees that any such prohibited action may and should be enjoined.

(c) Exceptions . Nothing in this Section 2 shall prohibit a Transfer of Subject Shares by Stockholder: (i) if Stockholder is an individual, pursuant to applicable laws of descent and distribution; [or] (ii) if Stockholder is a partnership, corporation, limited liability company or trust, to one or more partners, shareholders or members of Stockholder or to an affiliated entity under common control with Stockholder or to any trustee or beneficiary of the trust; [or (iii)] [if Stockholder is a trust, to distribute up to [●] shares to its beneficiaries pursuant to the withdrawal rights of beneficiaries] 2 /[to a charitable organization described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended] 3 ; provided , however , that a Transfer referred to in Section 2(c)(i) or (ii)  hereof shall be permitted only if the transferee agrees in writing, reasonably satisfactory in form and substance to Parent, to be bound by the terms of this Agreement.

(d) Involuntary Transfer . If any involuntary Transfer of any of the Subject Shares shall occur (including, but not limited to, a sale by the Stockholder’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Subject Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until valid termination of this Agreement.

3. Agreement to Tender .

(a) Tender of Shares . The Stockholder shall tender, pursuant to and in accordance with the terms of the Offer, the Subject Shares. No later than five (5) business days after commencement of the Offer, the Stockholder shall (a) deliver to the depositary designated

 

2   To be included in the form of Tender and Support Agreements executed by family trusts; up to 161,338 Shares in the aggregate may be distributed to the beneficiaries of such trusts under this provision.
3   To be included in the form of Tender and Support Agreement executed by Walter Garrison; Mr. Garrison holds approximately 1,186,762 Shares (including 640,000 Shares pledged to Wilmington Savings Fund Society, FSB).

 

3


in the Offer all documents or instruments required to be delivered in order to tender the Subject Shares pursuant to the terms of the Offer, and/or (b) instruct its broker or such other person who is the holder of record of any Subject Shares to tender such shares for exchange in the Offer pursuant to the terms and conditions of the Offer. Prior to the Expiration Date, the Stockholder shall not tender the Subject Shares into any exchange or tender offer commenced by a third party other than Parent or Merger Sub. Notwithstanding anything to the contrary herein, the Stockholder may withdraw such Subject Shares from the Offer at any time following the termination of this Agreement. For the avoidance of doubt, (x) the Stockholder shall not be required, for purposes of this Agreement, to exercise any unexercised Company equity award held by the Stockholder and (y) the Stockholder shall not have any obligation under this Section 3 to tender (or caused to be tendered) any Subject Shares into the Offer to the extent such tender could cause the Stockholder to incur liability under Section 16(b) of the Exchange Act.

(b) Return of Shares . If the Offer is terminated or withdrawn by Merger Sub or the Merger Agreement is terminated prior to the purchase of Subject Shares in the Offer, Parent and Merger Sub shall promptly return, and shall cause any depository or paying agent, acting on behalf of Parent and Merger Sub, to promptly return all tendered Subject Shares to the Stockholder.

4. Directors and Officers . Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall (or shall require the Stockholder to attempt to) limit or restrict the Stockholder in his or her capacity as a director or officer of the Company or any designee of the Stockholder who is a director or officer of the Company from acting in such capacity or voting in such person’s sole discretion on any matter (it being understood that this Agreement shall apply to the Stockholder solely in the Stockholder’s capacity as a stockholder of the Company and that any director or officer of the Company who signs this Agreement on behalf of the Stockholder is signing only as an individual and not in any other capacity). No action (or inaction) taken by the Stockholder in their capacity as a director or officer of the Company shall be deemed to constitute a breach of this Agreement.

5. Trustees . Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall (or shall require the Stockholder to attempt to) limit or restrict any trustee of the Stockholder in his or her capacity as a director or officer of the Company from acting in such capacity or voting in such person’s sole discretion on any matter (it being understood that this Agreement shall apply to the Stockholder solely in the Stockholder’s capacity as a stockholder of the Company and that any trustee who signs this Agreement on behalf of the Stockholder is signing only in his or her capacity as a trustee and not as an individual or in any other capacity). No action (or inaction) taken by any trustee in their capacity as a director or officer of the Company shall be deemed to constitute a breach of this Agreement.

6. No Ownership Interest . Nothing contained in this Agreement shall be deemed to vest in Parent or Merger Sub any direct or indirect ownership or incidence of ownership of or with respect to any Subject Shares. All rights, ownership and economic benefits of and relating to the Subject Shares shall remain vested in and belong to the Stockholder, and neither Parent nor Merger Sub shall have the authority by virtue of this Agreement or the transactions to be consummated pursuant hereto to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or authority to direct the Stockholder in the voting of any of the Subject Shares to the extent such Subject Shares are entitled to be voted, except as otherwise provided herein.

 

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7. Representations and Warranties of the Stockholder . The Stockholder represents and warrants to Parent and Merger Sub as follows:

(a) Power; Binding Agreement . The Stockholder has full power and authority, and, if Stockholder is an individual, the legal capacity, to execute and deliver this Agreement, to perform the Stockholder’s obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder and the consummation by the Stockholder of the transactions contemplated hereby have been duly and validly authorized by the Stockholder and no other actions or proceedings on the part of the Stockholder are necessary to authorize the execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder or the consummation by the Stockholder of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Stockholder, and, assuming this Agreement constitutes a valid and binding obligation of Parent and Merger Sub, constitutes a valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance and other equitable remedies.

(b) No Conflicts . Except for filings under the Exchange Act and filings under the HSR Act, no filing with, and no permit, authorization, consent, or approval of, any Governmental Authority is necessary for the execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder and the consummation by the Stockholder of the transactions contemplated hereby. None of the execution and delivery by the Stockholder of this Agreement, the performance by the Stockholder of its obligations hereunder or the consummation by the Stockholder of the transactions contemplated hereby will (i) conflict with or result in any breach of any organizational documents applicable to the Stockholder; (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, commitment, arrangement, understanding or other agreement to which the Stockholder is a party or by which the Stockholder or any of the Stockholder’s properties or assets may be bound; or (iii) violate any order, writ, injunction, decree, judgment, order, statute, rule, or regulation applicable to the Stockholder or any of the Stockholder’s properties or assets, except as would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby.

(c) Ownership of Shares . The Stockholder (i) is the sole beneficial owner of the shares of Company Common Stock indicated on the signature page of this Agreement, all of which are free and clear of any Encumbrances (other than Permitted Encumbrances); (ii) is the sole owner of options that are exercisable for the number of shares of Company Common Stock indicated on the signature page of this Agreement, all of which options and shares of Company Common Stock issuable upon the exercise of such options are free and clear of any

 

5


Encumbrances (other than Permitted Encumbrances); (iii) is the sole owner of unvested restricted stock awards for the number of shares of Company Common Stock indicated on the signature page of this Agreement, all of which are free and clear of any Encumbrances (other than Permitted Encumbrances) and (iv) does not directly own any securities of the Company other than those described in the preceding clauses (i)–(iii).

(d) Voting and Disposition Power . The Stockholder has full voting power with respect to the Subject Shares and full power of disposition, full power to issue instructions with respect to the matters set forth herein and full power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Subject Shares. None of the shares of Company Common Stock indicated on the signature page of this Agreement are subject to any stockholders’ agreement, proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject Shares.

(e) Reliance . The Stockholder has been represented by or had the opportunity to be represented by, independent counsel of its own choosing, and that it has had the full right and opportunity to consult with its attorney, that to the extent, if any, that it desired, it availed itself of this right and opportunity, that it or its authorized officers (as the case may be) have carefully read and fully understand this Agreement, the Offer and the exhibits thereto and the Merger Agreement in its entirety and have had it fully explained to them by its counsel, that it is fully aware of the contents thereof and its meaning, intent and legal effect, and that it or its authorized officer (as the case may be) is competent to execute this Agreement and has executed this Agreement free from coercion, duress or undue influence. The Stockholder understands and acknowledges that the Company, Parent and Merger Sub are entering into the Merger Agreement in reliance upon the Stockholder’s execution, delivery and performance of this Agreement.

(f) Absence of Litigation . With respect to the Stockholder, as of the date hereof, there is no action, suit, claim, proceeding, charge, arbitration or investigation pending against, or, to the actual knowledge of the Stockholder, threatened in writing against the Stockholder or any of the Stockholder’s properties or assets (including the Subject Shares) before or by any Governmental Authority that could reasonably be expected to prevent or materially delay or impair the consummation by such Stockholder of the transactions contemplated by this Agreement or otherwise materially impair the Stockholder’s ability to perform its obligations hereunder.

(g) Brokers . No broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Stockholder.

8. Representations and Warranties of Parent and Merger Sub . Parent and Merger Sub represent and warrant to the Stockholder as follows:

(a) Organization and Qualification . Each of Parent and Merger Sub is a duly organized and validly existing in good standing under the Laws of the jurisdiction of its organization or formation. All of the issued and outstanding capital stock of Merger Sub is owned directly or indirectly by Parent.

 

6


(b) Power; Binding Agreement . Each of Parent and Merger Sub has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by Parent and Merger Sub of this Agreement, the performance by each of Parent and Merger Sub of its obligations hereunder and the consummation by Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by each of Parent and Merger Sub and no other actions or proceedings on the part of Parent or Merger Sub are necessary to authorize the execution and delivery by Parent or Merger Sub, the performance by either Parent or Merger Sub of its obligations hereunder or the consummation by Parent or Merger Sub of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of Parent and Merger Sub, and, assuming this Agreement constitutes a valid and binding obligation of the Stockholder, constitutes a valid and binding obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance and other equitable remedies.

(c) No Conflicts . Except for filings under the Exchange Act and filings under the HSR Act, no filing with, and no permit, authorization, consent, or approval of, any Governmental Authority is necessary for the execution and delivery by Parent or Merger Sub of this Agreement, the performance by each of Parent or Merger Sub of its obligations hereunder and the consummation by Parent or Merger Sub of the transactions contemplated hereby. None of the execution and delivery by Parent or Merger Sub of this Agreement, the performance by each of Parent or Merger Sub of its obligations hereunder or the consummation by Parent or Merger Sub of the transactions contemplated hereby will (i) conflict with or result in any breach of any organizational documents applicable to Parent or Merger Sub; (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or provisions of any note, loan agreement, bond, mortgage, indenture, commitment, arrangement, understanding or other agreement to which Parent or Merger Sub is a party or by which Parent or Merger Sub or any of Parent’s or Merger Sub’s properties or assets may be bound; or (iii) violate any order, writ, injunction, decree, judgment, order, statute, rule, or regulation applicable to Parent or Merger Sub or any of Parent’s or Merger Sub’s properties or assets, except as would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby.

9. Disclosure . The Stockholder shall permit the Company, Parent and Merger Sub to publish and disclose in all documents and schedules filed with the SEC, and any press release or other disclosure document that the Company, Parent or Merger Sub determines to be necessary or desirable in connection with the Offer, the Merger and any transactions related thereto, the Stockholder’s identity and ownership of Subject Shares and the nature of the commitments, arrangements and understandings under this Agreement. Parent and Merger Sub shall permit the Stockholder to publish and disclose in all disclosure documents required by Law (including any Schedule 13D/A filing), the nature of the commitments, arrangements and understandings under this Agreement.

 

7


10. Further Assurances . Subject to the terms and conditions of this Agreement, each party shall use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary to fulfill such party’s obligations under this Agreement.

11. Termination . This Agreement shall terminate and shall have no further force or effect as of the Expiration Date. Notwithstanding the foregoing, nothing set forth in this Section 11 or elsewhere in this Agreement shall relieve either party hereto from liability, or otherwise limit the liability of either party hereto, for any material breach of this Agreement.

12. Miscellaneous Provisions .

(a) Amendment or Supplement . This Agreement may be amended or supplemented in any and all respects by written agreement signed by all of the parties hereto.

(b) Extension of Time, Waiver, etc . Any party may, subject to applicable Law, solely as to itself: (i) waive any inaccuracies in the representations and warranties of any other party hereto; (ii) extend the time for the performance of any of the obligations or acts of any other party hereto; or (iii) waive compliance by any other party with any of the agreements contained in this Agreement or, except as otherwise provided in this Agreement, waive any of such party’s conditions set forth in this Agreement. Notwithstanding the foregoing, no failure or delay by the Stockholder, Parent or Merger Sub in exercising any right hereunder shall operate as a waiver of rights, nor shall any single or partial exercise of such rights preclude any other or further exercise of such rights or the exercise of any other right hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.

(c) Entire Agreement; No Third Party Beneficiary . This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter of this Agreement. Except for the rights of the Company set forth in Section 9 , this Agreement is not intended, and shall not be deemed, to confer any rights or remedies upon any person other than the parties hereto and their respective successors and permitted assigns or to otherwise create any third-party beneficiary hereto. This Agreement shall not be effective unless and until (i) the Company Board of Directors has voted to approve the Merger Agreement, (ii) the Merger Agreement is executed by all the parties thereto, and (iii) this Agreement is executed by all the parties hereto.

(d) Applicable Law; Jurisdiction . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws. All actions and proceedings arising out of or relating to this Agreement or the negotiation, validity or performance of this Agreement, shall be heard and determined in the Court of Chancery of the State of Delaware, and the parties irrevocably submit to the jurisdiction of such court (and, in the case of appeals, the appropriate appellate court therefrom), in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding. The consents to jurisdiction set forth in this paragraph shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as

 

8


provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. The parties agree that service of any court paper may be made in any manner as may be provided under the applicable Laws or court rules governing service of process in such court. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.

(e) Specific Enforcement . The parties hereto agree that irreparable damage would occur for which monetary damages would not be an adequate remedy in the event that any of the provisions of this Agreement are not performed in accordance with the terms hereof or are otherwise breached, and that the party seeking to enforce this Agreement against such nonperforming party under this Agreement shall be entitled to specific performance and the issuance of injunctive and other equitable relief. The parties hereto further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief, this being in addition to any other remedy to which they are entitled at law or in equity.

(f) Assignment . Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of Law or otherwise), without the prior written consent of the other parties, and any attempt to make any such assignment without such consent shall be null and void, except that Merger Sub may assign, in its sole discretion, any or all of its rights, interests and obligations under this Agreement to any one or more direct or indirect wholly owned Subsidiaries of Parent without the consent of the Stockholder, but no such assignment shall relieve Merger Sub of any of its obligations under this Agreement. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns.

(g) Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly delivered: (i) four (4) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid; (ii) one (1) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service; or (iii) on the date of confirmation of receipt (or the first (1st) Business Day following such receipt if the date of such receipt is not a Business Day) of transmission by electronic mail or facsimile, in each case to the intended recipient as set forth below (or to such other address, electronic mail address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto):

if to Parent or Merger Sub:

c/o AE Industrial Partners, LLC

2500 N. Military Trail, Suite 470

Boca Raton, FL 33431

 

9


  Attn:   Mike Greene
    Jon Nemo
    Kirk Konert
  Email:     mgreene@aeroequity.com
    jnemo@aeroequity.com
    kkonert@aeroequity.com
  Fax: (561) 392-6908

with a copy to (which copy shall not constitute notice):

 

  Kirkland & Ellis LLP
  300 North LaSalle Street
  Chicago, Illinois 60654
  Attention:     Jeremy S. Liss, P.C.,
    Gerald T. Nowak, P.C.,
    Matthew Arenson
  Email:   jliss@kirkland.com
    gnowak@kirkland.com
    marenson@kirkland.com
  Fax: (312) 862-2200

if to the Stockholder:

 

    
    
    

Attention:                                                  

Fax:                                 

with a copy to:

[    ] 4

(h) Severability . Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit such term or provision, to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision.

 

4  

Stockholder counsel, if any.

 

10


(i) Construction .

(i) For purposes of this Agreement, whenever the context requires: (A) the singular number shall include the plural, and vice versa; (B) the masculine gender shall include the feminine and neuter genders; (C) the feminine gender shall include the masculine and neuter genders; and (D) the neuter gender shall include the masculine and feminine genders.

(ii) The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement.

(iii) As used in this Agreement, the words “ include ” and “ including ,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “ without limitation .”

(j) Descriptive Headings . The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

(k) Counterparts; Signatures . This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed and delivered 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, or by combination of such means, each of which shall be deemed an original.

(l) No Recourse . Parent and Merger Sub agree that the Stockholder (in his capacity as a stockholder of the Company) will not be liable for claims, losses, damages, liabilities or other obligations resulting from the Company’s breach of the Merger Agreement.

[Remainder of Page Intentionally Left Blank ]

 

11


IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed to be effective as of the date first above written.

 

STOCKHOLDER:
 

 

By:  

 

 

Name:  

 

 

Title:  

 

Subject Shares Directly Owned

                  [      ] 5

 

5   To include all stock directly owned by Stockholder as well as any Company equity awards that are transferable in accordance with the terms thereof.

 

[Signature Page to Tender and Support Agreement]


NOVA INTERMEDIATE PARENT, LLC

 

By:  

 

Name:  

 

Title:  

 

NOVA MERGER SUB, INC.

 

By:  

 

Name:  

 

Title:  

 

[Signature Page to Tender and Support Agreement]