MAMS MAM Software Group Inc

Other Information – Historical Trading Ranges

Mirus observed additional information regarding historical trading ranges that was not considered part of its financial analysis with respect to its opinion, but which was noted as reference data for the Board.

Mirus reviewed historical trading prices of the shares of Company Common Stock during the 52-week period ended August 29, 2019 and observed the following:

Additional Considerations

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. Mirus believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering the analyses taken as a whole, would create an incomplete view of the process underlying the analyses set forth in its opinion. In addition, Mirus considered the results of all such analyses and did not assign relative weights to any of the analyses, but rather made qualitative judgments as to significance and relevance of each analysis and factor, so the ranges of valuations resulting from any particular analysis described above should not be taken to be Mirus’s view of the actual value of the Company.

In performing its analyses, Mirus made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond the control of the Company. The analyses performed by Mirus are not necessarily indicative of actual values, trading values or actual future results which might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. Such analyses were provided to the Board and were prepared solely as part of Mirus’s analysis of the fairness, from a financial point of view, to the holders of the Company Common Stock, other than the Excluded Holders, of the consideration to be received by such holders in connection with the Transaction. The analyses do not purport to be appraisals or to reflect the prices at which companies may actually be sold, and such estimates are inherently subject to uncertainty. The opinion of Mirus was one of many factors taken into consideration by the Board in making its determination to proceed with the Transaction. Consequently, the analyses described above should not be viewed as determinative of the Board’s or Company management’s opinion with respect to the value of the Company. The Company placed no limits on the scope of the analysis performed, or opinion expressed, by Mirus.

Mirus is actively involved in the investment banking business and regularly undertakes the valuation of investment securities in connection with mergers and acquisitions, private placements, and similar transactions.

Pursuant to the terms of Mirus’s engagement letters with the Special Committee, an aggregate fee of $1,006,319 is payable to Mirus for its services as financial advisor to the Company, the Board and the Special Committee. Mirus has acted as financial advisor to the Special Committee with respect to the proposed Transaction and will receive compensation that is contingent upon the successful completion of the Transaction. Of the aggregate fee, $75,000 was a non-contingent engagement fee and $150,000 was non-contingent and payable upon the delivery of Mirus’s opinion to the Board or upon Mirus’s determination that it was not able to deliver a fairness opinion, while the remaining $781,319 is contingent and will become payable upon consummation of the Transaction. In addition, the Company has agreed to reimburse Mirus for its reasonable and documented out-of-pocket expenses (including attorneys’ fees, expenses and disbursements) incurred in connection with, and to indemnify Mirus and related persons against certain liabilities arising out of, its engagement, including liabilities arising under the Federal securities laws.

During the 2-year period prior to the delivery of its opinion, no material relationship existed between Mirus and its affiliates and the Company, KCS or Accel-KKR, pursuant to which compensation was received by Mirus or its affiliates as a result of such a relationship, other than the financial advisory work performed on behalf of the Company, Mirus’s compensation for which is disclosed above. Mirus may provide financial or other services to the Company, KCS or Accel-KKR in the future and in connection with any such services Mirus may receive compensation.

Certain Effects of the Merger

Upon the consummation of the Merger, Merger Sub will be merged with and into the Company upon the terms set forth in the Merger Agreement. As the surviving corporation in the Merger, the Company will continue to exist following the Merger as a wholly owned indirect subsidiary of KCS.

None of KCS, Merger Sub or any of their controlled affiliates beneficially owns, or will prior to the closing date beneficially own, any shares of Company Common Stock. Following the Merger, all of the Company’s equity interests will be beneficially owned by KCS’s wholly owned subsidiary and none of the Company’s current stockholders will, by virtue of the Merger, have any ownership interest in, or be a stockholder of, the Company, or the Surviving Corporation after the consummation of the Merger. As a result, the Company’s current stockholders will no longer benefit from any increase in the value, nor will they bear the risk of any decrease in the value, of Company Common Stock. Following the Merger, KCS will benefit from any increase in the Company’s value and also will bear the risk of any decrease in the Company’s value.

Upon consummation of the Merger, each share of Company Common Stock issued and outstanding immediately prior to the effective time of the Merger (other than shares owned by the Company, any subsidiary of the Company, KCS, Merger Sub or any other subsidiary of KCS or shares with respect to which appraisal rights have been properly perfected and not withdrawn under Section 262) will be converted into the right to receive $12.12 in cash, without interest and less any applicable withholding taxes. All shares of Company Common Stock so converted will, at the effective time of the Merger, be cancelled.

Please see the sections of this Information Statement entitled “The Merger Agreement—Consideration to be Received in the Merger” and “The Merger Agreement—Cancellation of Shares.”

For information regarding the effects of the Merger on the Company’s outstanding equity awards, please see the sections below under “—Interests of the Company’s Directors and Executive Officers in the Merger” and “The Merger Agreement—Treatment of Equity-Based Awards.”

The Company Common Stock is currently registered under the Exchange Act and trades on Nasdaq under the symbol “MAMS.” Following the consummation of the Merger, shares of Company Common Stock will no longer be traded on Nasdaq or any other public market. In addition, the registration of shares of Company Common stock under the Exchange Act will be terminated and the Company will no longer be required to file periodic and other reports with the SEC with respect to the shares of Company Common Stock. Termination of registration of the shares of Company Common Stock under the Exchange Act will reduce the information required to be furnished by the Company to the Company’s stockholders and the SEC, and would make provisions of the Exchange Act, such as the requirement to file annual and quarterly reports pursuant to Section 13(a) or 15(d) of the Exchange Act, the short-swing trading provisions of Section 16(b) of the Exchange Act and the requirement to furnish a proxy statement in connection with stockholders’ meetings pursuant to Section 14(a) of the Exchange Act, no longer applicable to the Company.

Effects on the Company if the Merger is Not Completed

If the Merger is not completed for any reason, the Company’s stockholders will not receive any payment for their shares of Company Common Stock in connection with the Merger. Instead, the Company will remain an independent public company, the shares of Company Common Stock will continue to be listed and traded on Nasdaq, the shares of Company Common stock will continue to be registered under the Exchange Act and the Company’s stockholders will continue to own their shares of the Company Common Stock and will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of Company Common Stock.

If the Merger is not completed, there is no assurance as to the effect of these risks and opportunities on the future value of your shares of Company Common Stock, including the risk that the market price of the Company Common Stock may decline to the extent that the current market price of the Company Common Stock reflects a market assumption that the Merger will be completed. If the Merger is not completed, there is no assurance that any other transaction acceptable to the Company will be offered or that the business, operations, financial condition, earnings or prospects of the Company will not be adversely impacted. Pursuant to the Merger Agreement, under certain circumstances, the Company and KCS are permitted to terminate the Merger Agreement. Please see the section of this Information Statement entitled “The Merger Agreement—Termination.”

Under certain circumstances, if the Merger Agreement is terminated, a termination fee or reverse termination fee may be payable by the Company or KCS, respectively. Please see the section of this Information Statement entitled “The Merger Agreement—Termination Fee.”

Financing of the Merger

The Merger is not subject to a financing condition. KCS plans to use a combination of funds provided by certain existing shareholders, supported by the equity commitment letter from certain private equity funds affiliated with Accel-KKR, and financing provided pursuant to incremental facilities to be made available by, inter alia, funds managed or advised by Guggenheim Partners Europe Limited under the terms of KCS’s existing senior facilities agreement (the “Debt Financing”), together with other available sources of financing. The Merger is not subject to a financing condition.

Debt Financing

The funding of the Debt Financing is contingent upon the satisfaction of certain customary conditions, including, among others, (i) the consummation of the Merger substantially concurrently with the borrowings under such Debt Financing in all material respects in accordance with the Merger Agreement (other than in respect of any modifications, amendments or waivers that are not materially adverse to the lenders thereunder); (ii) delivery of certain financial information; (iii) the accuracy of certain limited representations; (iv) the absence of certain limited defaults; (v) payment of fees in connection with such Debt Financing; and (vi) delivery of any relevant “know your customer” documentation.

Equity Financing

On August 30, 2019, each of Accel-KKR Capital Partners IV, LP and Accel-KKR Capital Partners IV Strategic Fund, LP (each, an “Accel-KKR Fund” and collectively, the “Accel-KKR Funds”) entered into an equity commitment letter with KCS pursuant to which the Accel-KKR Funds committed to making an equity contribution (the “Equity Financing”), to KCS, which amount KCS will use, together with the proceeds of the Debt Financing and cash and cash equivalents, to satisfy its obligations to pay the Merger Consideration.

The Equity Financing is subject to the following conditions:

Each of the Accel-KKR Funds’ obligations to fund their respective share of the Equity Financing will automatically terminate upon the earliest to occur of: (i) the termination of the Merger Agreement in accordance with its terms, (ii) the funding in full by the Accel-KKR Funds of the Equity Financing pursuant to the equity commitment letter, (iii) the consummation of the Merger and (iv) the date that the Company, any of its affiliates, their respective non-recourse parties or any person claiming by, through, on behalf of, or for the benefit of, any of the foregoing persons, (A) asserts in any litigation or other proceeding that any of the limitations on any Accel-KKR Fund’s liability herein are illegal, invalid or unenforceable in whole or in part, (B) asserts any theory of liability against any Accel-KKR Fund, its affiliates, or any of their respective related parties with respect to the transactions contemplated by the Merger Agreement or the equity commitment letter, other than with respect to each Accel-KKR Fund’s pro rata percentage of the equity commitment under the express provisions of the equity commitment letter, (C) seeks as a remedy against any Accel-KKR Fund anything other than specifically enforcing the terms of the equity commitment letter to require any Accel-KKR Fund to fulfill its pro rata percentage of the Equity Financing pursuant to the equity commitment letter, (D) requires (or seeks to require) any Accel-KKR Fund to contribute or otherwise fund any amounts in excess of its pro rata percentage of the Equity Financing or (E) institutes any litigation or other proceeding other than in a chosen court.

The Company is an express third-party beneficiary of the equity commitment letter and has the right to enforce the equity commitment letter against the Accel-KKR Funds, solely to the extent the Company has the right to, and seeks, specific performance under the Merger Agreement.

Interests of the Company’s Directors and Executive Officers in the Merger

Details of the beneficial ownership of the Company’s directors and executive officers of Company Common Stock are set out in the section of this Information Statement entitled “Security Ownership of Certain Beneficial Owners and Management.” In addition to their interests in the Merger as stockholders, certain of the Company’s directors and executive officers have interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. You should be aware of these interests. In addition, where applicable, the interests held by any individual who was an executive officer of the Company since the beginning of fiscal year 2018 are described below as required by SEC rules, including those individuals who are no longer employees of the Company. The members of the Board were aware of and considered these interests in reaching the determination to approve the Merger Agreement and deem the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement to be advisable, fair to, and in the best interests of, the Company and the Company’s stockholders. These interests include:

The Company’s directors and officers also have the right to indemnification following the closing of the Merger.

Certain Assumptions

Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:

Treatment of Shares of Common Stock

For information regarding beneficial ownership of Company Common Stock, other than the equity-based awards described below, by each of the Company’s directors and named executive officers and all of such directors and executive officers as a group, please see the section of this Information Statement entitled “Security Ownership of Certain Beneficial Owners and Management.” Each of the Company’s directors and executive officers will be entitled to receive, for each share of Company Common Stock he or she holds, the same per share Merger Consideration in cash in the same manner as other stockholders.

Treatment of Equity-Based Awards

Treatment of Stock Options and Restricted Shares

The Merger Agreement provides that each stock option, whether vested or unvested and whether or not exercisable, will be canceled and converted into the right to receive an amount in cash, without interest, equal to the excess, if any, of the Merger Consideration over the per share exercise price of the applicable EMI Option.

The Merger Agreement provides that each restricted share will be treated as fully vested and canceled at the effective time of the Merger, with the holder of such restricted share becoming entitled to receive an amount in cash, without interest, equal in value to the per share Merger Consideration.

The table below shows the number of outstanding unvested restricted shares held by the Company’s non-employee directors and executive officers as of the Assumed Merger Closing Date, and the cash consideration each of them can expect to receive for such restricted shares as of promptly following the effective time of the Merger, assuming continued service through the Assumed Merger Closing Date. Restricted shares that have vested prior to the Assumed Merger Closing Date will be treated in the same manner as outstanding shares of Company Common Stock for which Merger Consideration is paid to the other stockholders of the Company, and are, therefore, not included in the table below. Other than as set forth in the table below, no other individual who was a non-employee director or an executive officer of the Company since the beginning of fiscal year 2018 holds any unvested restricted shares.

(1) Restricted share awards granted to non-employee directors are issued annually for service on the Board and vest in equal amounts quarterly provided that the director still serves on the Board at the time of vesting. Each non-employee director has been granted restricted shares for the past and current fiscal years, 12,564 restricted shares for each of the four directors listed which will not have vested prior to the consummation of the Merger, and will be treated as fully vested and cancelled and paid for, upon the consummation of the Merger, pursuant to the terms of the Merger Agreement. None of these unvested restricted shares are included in the number of outstanding shares of Company Common Stock.

(2) This reflects 32,000 restricted shares held by Mr. Callahan which vest upon the volume weighted average price of the Company Common Stock reaching certain levels over a 30-day period, which may or may not occur prior to the consummation of the Merger, but will be cancelled and paid for, upon the consummation of the Merger, pursuant to the terms of the Merger Agreement. These unvested restricted shares are included in the number of outstanding shares of Company Common Stock.

(3) Reflects amounts payable to each of the persons listed upon the vesting and cancellation of their respective unvested restricted shares, upon consummation of the Merger, in consideration for payment of the per-share Merger Consideration of $12.12.

Severance Payments

The Company’s Chief Executive Officer, Chief Financial Officer and Chief Technology Officer (the “Executives”) are each party to an employment agreement that provides for severance payments and benefits in the event of a “qualifying termination” (defined below) and, with respect to Michael Jamieson and Lee Broad, a qualifying termination within 12 months following a change in control of the Company. For purposes of the employment agreements, consummation of the Merger will constitute a change of control of the Company within the meaning of such agreements. In the event of a qualifying termination under the terms of the Executive’s employment agreement, such Executive will be entitled to receive:

For purposes of the employment agreements, a “qualifying termination” means a termination of the Executive’s employment by the Company other than for “cause” or by the Executive for “good reason” (each, as defined below).

For purposes of the Executives’ employment agreements, “cause” is generally defined as:

For purposes of the Executives’ employment agreements, “good reason” is generally defined as:

New Management Arrangements

There are no new management arrangements contemplated.

Continuing Employee Benefits

The Merger Agreement provides that, for a 1-year period following the effective time of the Merger (or until the termination of employment of the relevant Company Employee, if sooner), KCS will (or will cause the Surviving Corporation to) provide to each employee of the Company or any of its subsidiaries employed immediately following the effective time of the Merger (collectively, the “Company Employees”) (i) substantially similar or greater in the aggregate base salary and target annual cash bonus opportunity (excluding cash long-term incentive and other broad-based equity-based incentive compensation) either (at KCS’s election in its sole discretion) (A) provided to such Company Employee immediately prior to the effective time of the Merger or (B) provided to similarly situated employees of KCS and its subsidiaries and (ii) other employee benefits (excluding deferred compensation, defined benefit and cash long-term incentive and equity or equity-based incentive opportunities and excluding any severance benefits and post termination or retiree health or welfare benefits (or, if earlier, the termination date of an applicable Company Employee)) that, with respect to each Company Employee, are substantially similar or greater in the aggregate to the benefits provided either (at KCS’s election, in its sole discretion) (A) to such Company Employee immediately prior to the effective time of the Merger under the Company’s employee benefit plans or (B) provided to similarly situated employees of KCS and its subsidiaries. Without limiting the foregoing, as of the effective time of the Merger, KCS shall, or shall cause the Surviving Corporation to, comply with the terms of all employment agreements covering Company Employees, as applicable.

The Surviving Corporation will provide each employee whose employment is involuntarily terminated other than for cause during the 1-year period immediately following the effective date of the Merger with severance benefits that are no less favorable than the severance benefits which such employee would have received with respect to such termination following the severance practices of the Company and the Company subsidiaries and employment agreements covering such employees.

Director and Officer Indemnification

For a more detailed description of the provisions of the Merger Agreement relating to director and officer indemnification, please see the section of this Information Statement entitled “The Merger Agreement—Indemnification.”

Quantification of Payments and Benefits

In accordance with Item 402(t) of Regulation S-K, the table below shows the compensation that is based on or relates to the Merger and could become payable to each of the named executive officers described on the Company’s most recent annual proxy statement, whom we refer to as “named executive officers.” In addition, although the SEC rules do not require that this table include compensation that could become payable to executive officers who are not named executive officers, we have included it in the table below so that quantification of the potential change in control payments to each of the Company’s current executive officers is presented in a uniform manner. The compensation in the table below is referred to as “golden parachute” compensation by the applicable SEC rules.

The table below summarizes the potential severance, accelerated vesting of unvested equity awards and other payments and benefits that each executive officer could be entitled to receive from the Company if the Merger is consummated and, with respect to severance payments and continued benefits, if the executive officer incurs a qualifying termination of employment within 1 year following the effective time of the Merger, as described above in “—Severance Payments.” The amounts indicated below are estimates based on multiple assumptions that may or may not actually occur. As a result, the actual amounts, if any, to be received by an executive officer may differ in material respects from the amounts set forth below.

For purposes of calculating the amounts set forth in the table below, we have assumed that (i) the Merger occurred on September 16, 2019, and each executive officer experienced a qualifying termination of employment on that date, (ii) the number of unvested restricted shares is based on awards held by each executive officer as of September 16, 2019, and (iii) the compensation and benefits provided are not reduced in order to avoid the “golden parachute” excise tax that may be imposed under Section 4999 of the Code. The calculations in this table are based on the Merger Consideration of $12.12 per share.

(1)     Severance payments of one times the annual salary payable to the named executive officers upon termination without cause or resignation for good reason, pursuant to the terms of each of their employment agreements as described in the section entitled “Severance Payments”. These amounts are double-trigger payments. For Mr. Broad, his severance assumes a GBP to USD conversion rate of 1.2445 as of September 16, 2019. All severance is payable as a lump sum or in equal monthly installments, by the Company, over a 12-month period after the date of termination of employment, at the Company’s discretion.

(2)     Reflects the amount payable by the Company, upon consummation of the Merger for 32,000 restricted shares held by Brian Callahan. This amount is a single-trigger payment.

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

The following discussion summarizes the material U.S. federal income tax consequences of the Merger to U.S. holders and non-U.S. holders (each defined below). This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code,” the U.S. Treasury Regulations promulgated thereunder and judicial and administrative rulings, all as in effect as of the date of this Information Statement and all of which are subject to change or varying interpretation, possibly with retroactive effect. Any such changes could affect the accuracy of the statements and conclusions set forth herein.

This discussion assumes that holders of Company Common Stock hold their shares as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to a holder of Company Common Stock in light of such holder’s particular circumstances, nor does it discuss the special considerations applicable to holders of Company Common Stock subject to special treatment under the U.S. federal income tax laws, such as, for example, financial institutions or broker-dealers, mutual funds, partnerships or other pass-through entities and their partners or members, tax-exempt organizations, retirement or other tax-deferred accounts, insurance companies, dealers in securities or foreign currencies, traders in securities who elect mark-to-market method of accounting, controlled foreign corporations, passive foreign investment companies, U.S. expatriates, holders who acquired their Company Common Stock through the exercise of options or otherwise as compensation, holders who hold their Company Common Stock as part of a hedge, straddle, constructive sale or conversion transaction, holders that do not vote in favor of the Merger and properly exercise appraisal rights under applicable law, U.S. holders whose functional currency is not the U.S. dollar, nonresident alien individuals present in the United States for 183 days or more in the taxable year of the Merger, and non-U.S. holders who own or have owned (directly, indirectly or constructively) 5% or more of the Company’s stock (by vote or value). This discussion does not address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, nor does it address any aspect of state, local, non-U.S., alternative minimum, estate, gift, generation skipping transfer, or other tax law that may be applicable to a holder.

We intend this discussion to provide only a general summary of the material U.S. federal income tax consequences of the Merger to holders of Company Common Stock. We do not intend it to be a complete analysis or description of all potential U.S. federal income tax consequences of the Merger. The U.S. federal income tax laws are complex and subject to varying interpretation. Accordingly, the Internal Revenue Service, which we refer to as the “IRS,” may not agree with the tax consequences described in this Information Statement, and there can be no assurance that such tax consequences will not be challenged by the IRS or that they would be sustained by a court if so challenged. We have not sought and do not intend to seek any ruling from the IRS or opinion of counsel as to the U.S. federal income tax consequences of the Merger.

All holders are urged to consult their own tax advisors to determine the particular tax consequences to them (including the application and effect of any state, local or non-U.S. income and other tax laws) of the receipt of cash in exchange for shares of Company Common Stock pursuant to the Merger.

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

whose status as a U.S. holder is not overridden by an applicable tax treaty. Conversely, a “non-U.S. holder” is a beneficial owner of Company Common Stock other than an entity (or other arrangement) treated as a partnership for U.S. federal income tax purposes or a U.S. holder. If any entity (or other arrangement) treated as a partnership for U.S. federal income tax purposes holds Company Common Stock, the tax treatment of a partner in the partnership generally will depend upon the tax status of the partner and the activities of the partnership. Any entity (or other arrangement) treated as a partnership for U.S. federal income tax purposes that holds Company Common Stock and the partners in such a partnership (as determined for U.S. federal income tax purposes) is urged to consult its own tax advisors about the U.S. federal income tax consequences and other tax consequences of the Merger.

U.S. Holders

The conversion of shares of Company Common Stock into cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder generally will recognize gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received pursuant to the Merger and such U.S. holder’s adjusted tax basis in the shares converted into cash pursuant to the Merger. Such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if the holder’s holding period for such shares exceeds 1 year as of the effective date of the Merger. Long-term capital gains for certain non-corporate U.S. holders, including individuals, are generally eligible for a reduced rate of federal income taxation. The deductibility of capital losses is subject to limitations. If a U.S. holder acquired different blocks of Company Common Stock at different times or at different prices, such U.S. holder must determine its tax basis, holding period, and gain or loss separately with respect to each block of Company Common Stock.

A U.S. holder may be subject to information reporting and backup withholding (at a rate of 24%) with respect to the cash received pursuant to the Merger. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules can be refunded or credited against a payee’s U.S. federal income tax liability, if any, provided that such U.S. holder furnishes the required information to the IRS in a timely manner. In general, a U.S. holder can avoid backup withholding if it properly executes under penalties of perjury an IRS Form W-9 or a substantially similar form on which it:

If a U.S. holder does not provide its correct taxpayer identification number and appropriate certifications on an IRS Form W-9 or a substantially similar form, it may be subject to penalties imposed by the IRS.

Non-U.S. Holders

Any gain recognized on the receipt of cash pursuant to the Merger by a non-U.S. holder generally will not be subject to U.S. federal income tax unless the gain is effectively connected with the conduct of a trade or business of such non-U.S. holder in the United States (and, if provided by an applicable income tax treaty, is attributable to a permanent establishment or fixed base such non-U.S. holder maintains in the United States). In such case, the non-U.S. holder generally will be subject to tax on such gain in the same manner as a U.S. holder. If such non-U.S. holder is a corporation, such corporation may be subject to a branch profits tax at the rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) or such corporation's "effectively connected earnings and profits" for the taxable year, subject to certain adjustments.

A non-U.S. holder will be subject to information reporting and, in certain circumstances, backup withholding will apply with respect to the cash received by such holder pursuant to the Merger, unless such non-U.S. holder certifies under penalties of perjury on an applicable IRS Form W-8 or a substantially similar form that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the holder is a United States person as defined under the Code) or such holder otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be refunded or credited against a non-U.S. holder’s U.S. federal income tax liability, if any, provided that such non-U.S. holder furnishes the required information to the IRS in a timely manner.

This discussion is provided for general information only and is not tax advice or a complete analysis or summary of all potential tax consequences relevant to holders of Company Common Stock. The U.S. federal income tax consequences described above are not intended to constitute a complete description of all tax consequences relating to the Merger. Because individual circumstances may differ, each holder of Company Common Stock should consult the holder’s tax advisor regarding the applicability of the rules discussed above to the holder and the particular tax effects to the holder of the Merger in light of such holder’s particular circumstances and the application of state, local, non-U.S. and other tax laws (or any U.S. federal tax laws other than those pertaining to income tax).

Dividends

The Company has never declared or paid cash dividends on shares of Company Common Stock. Under the terms of the Merger Agreement, during the period from the date of the Merger Agreement until the effective time of the Merger, unless consented to by KCS, the Company is prohibited from declaring, setting aside or paying any dividends on, or making any other distributions (whether in cash, stock or property) in respect of, any of its capital stock.

Regulatory Approvals

The Company and KCS also have determined that no U.S. or non-U.S. jurisdiction mandatory governmental approvals are required.

Delisting and Deregistration of the Company Common Stock

If the Merger is completed, the shares of Company Common Stock will be delisted from Nasdaq and deregistered under the Exchange Act, and shares of Company Common Stock will no longer be publicly traded.

THE MERGER AGREEMENT

The following summary of the material provisions of the Merger Agreement, and such summary and the description of the Merger Agreement elsewhere in this Information Statement, is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is included as Annex A to this Information Statement and is incorporated into this Information Statement by reference. We urge you to carefully read this entire Information Statement, including the annexes and the other documents to which we have referred you. You are urged to also review the section entitled “Where You Can Find Additional Information.”

The Merger Agreement has been included for your convenience to provide you with information regarding its terms and we recommend that you read it in its entirety. The Merger Agreement is not intended to be a source of factual, business or operational information about the Company, KCS or Merger Sub, and the following summary of the Merger Agreement and the copy thereof included as Annex A to this Information Statement is not intended to modify or supplement any factual disclosure about the Company in any documents it publicly files with the SEC. The Merger Agreement is a contractual document that establishes and governs the legal relations between the Company, KCS and Merger Sub, and allocates risks between the parties with respect to the Merger. The Merger Agreement contains representations and warranties made by KCS and Merger Sub, on the one hand, and the Company, on the other hand, that are qualified in several important respects, which you should consider as you read the Merger Agreement.

The representations and warranties are qualified by certain information of the Company filed with the SEC prior to the date of the Merger Agreement as well as by a disclosure schedule that has been provided by the Company to KCS. Certain of the representations and warranties made by KCS and Merger Sub, on the one hand, and the Company, on the other hand, were also made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, and may have been used for the purpose of allocating risk between the parties to the Merger Agreement rather than as establishing matters as facts. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this Information Statement, may have changed since the date of the Merger Agreement, and subsequent developments or new information qualifying a representation or warranty may or may not be fully reflected in this Information Statement or the Company’s public disclosures. Accordingly, you should not rely on the representations and warranties as being accurate or complete or characterizations of the actual state of facts as of any specified date.

The Merger

At the effective time of the Merger, Merger Sub, a wholly owned indirect subsidiary of KCS, will be merged into the Company. The separate corporate existence of Merger Sub will cease and the Company will continue as the Surviving Corporation. As a result, the Company will become a wholly owned indirect subsidiary of KCS. Merger Sub was created solely for purposes of the Merger and has no material assets or operations of its own.

Closing and Effective Time of the Merger

The consummation of the Merger will take place as soon as practicable after, but in any event no later than the third business day after, the satisfaction or (if permissible under applicable law) waiver of all of the conditions described in the section below entitled “—Conditions to the Merger” (other than any condition that by its nature cannot be satisfied until the consummation of the Merger, but subject to the satisfaction or waiver of any such condition), unless the Company, KCS and Merger Sub agree to another time in writing.

The Merger will become effective at the time the certificate of merger is filed with the Secretary of State of the State of Delaware, or such later time as is specified in the certificate of merger and as is agreed to by the Company and KCS, which is referred to as the “effective time” of the Merger.

Consideration to be Received in the Merger

The Merger Agreement provides that, at the effective time of the Merger, each share of Company Common Stock issued and outstanding immediately prior to the effective time of the Merger (other than shares owned by the Company, any subsidiary of the Company, KCS, Merger Sub or any other subsidiary of KCS or shares with respect to which appraisal rights have been properly perfected and not withdrawn in accordance with Section 262) will be converted into the right to receive the Merger Consideration. All shares of Company Common Stock so converted will, at the effective time of the Merger, be cancelled, and each holder of such converted Company Common Stock will cease to have any rights with respect to such Company Common Stock, except for the right to receive the Merger Consideration.

Cancellation of Shares

Each share of Company Common Stock owned by the Company as treasury stock, or owned by the direct parent company of Merger Sub or Merger Sub, will be cancelled automatically, be extinguished and will cease to exist, and will not be entitled to any Merger Consideration. Each share of Company Common Stock owned by KCS or any direct or indirect subsidiary of KCS (other than the direct parent company of Merger Sub or Merger Sub), or any direct or indirect subsidiary of the Company, will be converted into shares of the Surviving Corporation.

Treatment of Equity-Based Awards

At the effective time of the Merger:

In addition, the Merger Agreement provides that the ESPPs will terminate upon the effective time of the Merger and, after the date of the Merger Agreement and prior to the effective time of the Merger, (i) each ESPP shall be suspended and no offering period shall be commenced after the date of the Merger Agreement unless the Merger is not consummated, (ii) each participant’s outstanding right to purchase shares under each ESPP shall terminate and (iii) all amounts allocated to each participant’s account under each ESPP, as of the date of the Merger Agreement, shall be returned in cash to each such participant.

Appraisal Rights

Notwithstanding anything in the Merger Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the effective time of the Merger and that are held by any person who has not voted in favor of the Merger or consented in writing to the Merger and who has perfected and not withdrawn a demand for appraisal in accordance with Section 262 in respect of such share shall not be converted into the right to receive the per share Merger Consideration, but instead will be cancelled and will represent the right to receive only those rights provided for under Section 262. However, if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262, then the right of such holder to receive those rights under Section 262 shall cease and such shares shall be deemed to have been converted as of the effective time into, and shall represent only the right to receive, the per share Merger Consideration, without any interest thereon.

The Company has agreed to serve prompt notice to KCS of any demands received by the Company for appraisal of any shares of Company Common Stock, and KCS will have the right to participate in and direct all negotiations and proceedings with respect to such demands. Prior to the effective time of the Merger, the Company will not, without the prior written consent of KCS, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.

Payment for Shares

Prior to completion of the Merger, KCS will designate a bank or trust company reasonably acceptable to the Company to act as paying agent for the payment of the Merger Consideration in respect of the Company Common Stock. At or prior to the completion of the Merger, KCS will deposit with the paying agent cash necessary to pay the Merger Consideration in respect of the Company Common Stock.

As soon as reasonably practicable after the effective time of the Merger, KCS will, or will cause the paying agent to, mail to all record holders of certificates representing Company Common Stock whose shares were converted into the right to receive the Merger Consideration, a letter of transmittal and instructions on how to surrender certificates representing such Company Common Stock in exchange for the Merger Consideration. The certificates can be surrendered to the paying agent or other person designated in the instructions until the first anniversary of the effective time of the Merger. Upon delivery of a properly completed letter of transmittal, duly executed and completed in accordance with the instructions thereto, and the surrender of Company Common Stock certificates on or before the first anniversary of the effective time of the Merger, KCS will, or will cause the paying agent to, pay the holder of such certificates, in exchange therefor, cash in an amount equal to the per share Merger Consideration multiplied by the number of shares of Company Common Stock represented by such certificate. If a stockholder holds shares of Company Common Stock in non-certificated book-entry form, such stockholder will not be required to deliver a stock certificate. Holders of Company Common Stock in non-certificated book-entry form will receive a cash payment of the aggregate amount of the per share Merger Consideration to which such stockholder is entitled following the effective time of the Merger.

Each certificate or book-entry share representing Company Common Stock that is surrendered will be cancelled. You should not send in your Company Common Stock Certificates until you receive a letter of transmittal with instructions.

Payment of the Merger Consideration may be made to a person other than the person in whose name a surrendered Company Common Stock certificate is registered if:

The Merger Consideration paid upon the surrender of certificates representing Company Common Stock in accordance with the Merger Agreement will be deemed to have been paid in full satisfaction of all rights pertaining to the Company Common Stock previously represented by such certificates. At the effective time of the Merger, the share transfer books of the Company will be closed and there will not be any further registration of transfers of any Company Common Stock thereafter on the records of the Company. If, after the effective time of the Merger, any certificates representing Company Common Stock are presented to the Surviving Corporation or the paying agent for any reason, they shall be canceled and exchanged as provided in the Merger Agreement.

Any portion of the exchange fund that remains undistributed as of the 1 year anniversary of the closing date of the Merger will be delivered to KCS, upon demand, and any former holder of Company Common Stock entitled to payment of Merger Consideration who has not complied with the exchange provisions in the Merger Agreement will thereafter look only to KCS for payment of its claim for Merger Consideration.

The parties have agreed that the paying agent will invest any cash included in the exchange fund as directed by KCS. Any interest and other income resulting from such investments will be paid to KCS. In no event will such investment or any such payment of interest or income delay the receipt by former holders of Company Common Stock of the Merger Consideration or otherwise impair such holders’ rights under the Merger Agreement. To the extent that there are any losses with respect to any investments of the exchange fund, or the exchange fund diminishes for any reason below the level required for the paying agent to promptly pay the Merger Consideration to all holders of the Company Common Stock certificates or book-entry shares of Company Common Stock, KCS shall, or shall cause the Surviving Corporation to, promptly replace or restore the cash in the exchange fund so as to ensure that the exchange fund is at all times maintained at a level sufficient for the paying agent to make such payments.

If any Company Common Stock certificate has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Company Common Stock certificate to be lost, stolen or destroyed and, if required by KCS, the posting by such person of a bond in such reasonable and customary amount as KCS may direct as indemnity against any claim that may be made against it with respect to such Company Common Stock certificate, the paying agent will deliver in exchange for such lost, stolen or destroyed Company Common Stock certificate, the per share Merger Consideration.

Pursuant to the Merger Agreement, each of the Surviving Corporation, KCS, the Company and the paying agent will be entitled to deduct and withhold from any payment to be made pursuant to the Merger Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code or under any provision of state, local or foreign tax law. Amounts so withheld and paid over to the appropriate taxing authority will be treated for all purposes of the Merger Agreement as having been paid to the person in respect of which such deduction or withholding was made.

Representations and Warranties

The Merger Agreement contains a number of representations and warranties made by the Company, including representations and warranties relating to:

The Merger Agreement also contains a number of representations and warranties made by KCS and Merger Sub, including representations and warranties relating to:

Significant portions of the representations and warranties of each of the Company, KCS and Merger Sub are qualified as to “materiality,” “material adverse effect” or similar qualifications.

Under the Merger Agreement, a “Company Material Adverse Effect” means any fact, circumstance, development, change or effect that, individually or in the aggregate, (i) is, or would reasonably be expected to be, materially adverse to the operations, condition (financial or otherwise), results of operations, assets, liabilities or business of the Company or any of the Company’s subsidiaries or (ii) would prevent, materially delay or materially impair the ability of the Company or any of the Company’s subsidiaries to consummate or perform its obligations under the Merger Agreement or the other transaction documents related thereto on a timely basis; provided that with respect to the preceding clause (i), a “Company Material Adverse Effect” will not be deemed to have occurred to the extent the relevant fact, circumstance, development, change or effect arises or results after the date of the Merger Agreement and is from (A) the announcement or disclosure of the Merger Agreement, the Merger or the other transactions contemplated by the Merger Agreement, not made in breach of the terms of the Merger Agreement in each case other than for purposes of any representation or warranty concerning no conflicts and required filings and consents, (B) general economic or political conditions or changes that affect the industry generally in which the Company or any of the Company’s subsidiaries operates, (C) military action or any act of terrorism involving the United States, (D) changes in accounting requirements or principles required by GAAP, or (E) the failure of the Company or any the Company’s subsidiaries to meet or achieve the results set forth in any projection, estimate, forecast or plan (it being acknowledged that the underlying cause of such failure may constitute a “Company Material Adverse Effect”), in the case of each of the foregoing clauses (B) and (C), solely to the extent that it does not, and would not reasonably be expected to have, a materially disproportionate adverse effect on the Company or any of the Company’s subsidiaries relative to other participants in the industries in which Company and the Company’s subsidiaries operate.

Operating Covenants

The Company has agreed, with certain exceptions, that during the period from the date of the Merger Agreement until the effective time of the Merger, the Company and its subsidiaries will conduct their business in the ordinary course in all material respects, will use reasonable best efforts to preserve intact their present business organization and will use commercially reasonable efforts preserve their present relationships with customers, suppliers, licensors, licensees, distributors and others having material business dealings with such party.

The Company has also agreed, with certain exceptions, that during the period from the date of the Merger Agreement until the effective time of the Merger, neither the Company nor any of its subsidiaries will:

Action by Stockholder Consent

Immediately after the execution of the Merger Agreement and in lieu of calling a meeting of the Company’s stockholders, the Company submitted a form of irrevocable written consent adopting the Merger Agreement to the Principal Stockholders. If such Stockholder Consent had not been delivered by the Principal Stockholders to the corporate secretary of the Company, and if a copy of such executed Stockholder Consent had not been delivered to KCS, in each case, by the day immediately following the execution of the Merger Agreement, KCS would have had the right to terminate the Merger Agreement. Such right terminated upon the delivery of the Stockholder Consent.

Following the execution of the Merger Agreement, the Stockholder Consent adopting the Merger Agreement was delivered to the corporate secretary of the Company by the Principal Stockholders, which on such date owned shares of Company Common Stock representing approximately 50.58% of the voting power of all outstanding shares of Company Common Stock, and a copy of the Stockholder Consent was delivered to KCS. No further approval of the stockholders of the Company is required to adopt the Merger Agreement. As a result, the Company has not solicited and will not be soliciting your vote for the adoption of the Merger Agreement and does not intend to call a meeting of stockholders for purposes of voting on the adoption of the Merger Agreement.

No Solicitation; Board Recommendation

In the Merger Agreement, the Company agreed to, and to cause its subsidiaries and its and their representatives to, immediately terminate any direct or indirect solicitation, knowing encouragement, discussions or negotiations with any person that may be ongoing with respect to any acquisition proposal. We also agreed to:

Additionally, we have agreed on behalf of the Company and our subsidiaries not to terminate, waive, amend or modify any provision of any existing standstill or confidentiality agreement to which the Company, or any of our subsidiaries is a party; provided, however, that we may grant a waiver of, and shall not be obligated to enforce, any such provision if the our Board (or any committee thereof) has determined in good faith, following consultation with outside legal counsel, that the failure to grant such waiver would reasonably be expected to constitute a breach of its fiduciary duties under applicable law.

The Merger Agreement also provides that, except as otherwise specifically permitted therein, during the period between the date of the Merger Agreement and the termination of the Merger Agreement, if applicable, neither the Company, the Company’s subsidiaries, nor any of their respective representatives shall, directly or indirectly:

The Merger Agreement provides that, notwithstanding the restrictions described therein, at any time prior to the obtaining of the stockholder approval (which has already been obtained), the Company could:

Any violation of the restrictions on the Company set forth in the non-solicitation provision by any representative of the Company or any of the Company’s subsidiaries acting with the authority of the Company or any of its subsidiaries would be a breach of the non-solicitation provision by the Company.

We also agreed to promptly (and in any event within 1 calendar day) advise KCS of any acquisition proposal or any inquiry with respect to or that would reasonably be expected to lead to any acquisition proposal and the identity of the person making any such acquisition proposal or inquiry and the material terms thereof. We further agreed to keep KCS reasonably informed of the status of any such acquisition proposal or inquiry (including promptly informing KCS of any change to the material terms thereof). We also agreed to promptly, and in any event within 1 calendar day, following a determination by our Board (or any committee thereof), after consultation with outside legal counsel, that an acquisition proposal is a superior proposal or that an intervening event has occurred, notify KCS of such determination.

Under the terms of the Merger Agreement and except as expressly permitted thereunder, none of the Company, any of the Company subsidiaries, nor the Board (or any committee thereof) could:

At any time prior to the stockholder approval (which has already been obtained), and so long as the Company was not in breach of the non-solicitation provisions under the Merger Agreement, the Board could make an Adverse Recommendation Change (with certain exceptions in the event an intervening event), if (i) the Company received an unsolicited written acquisition proposal that had not been withdrawn and that did not result from a breach of the non-solicitation provisions under the Merger Agreement, and the Board determined in good faith (after consultation with its legal and financial advisors) that such proposal was a superior proposal and determined in good faith (after consultation with legal counsel) that its failure to take such actions would constitute a breach of its fiduciary duties under applicable law (and in such case could terminate the Merger Agreement by written notice to KCS of such termination), or (ii) an intervening event occurred and as a result thereof the Board determined in good faith (after consultation with outside legal counsel) that the failure to effect such an Adverse Recommendation Change would have constituted a breach of its fiduciary duties under applicable law.

Notwithstanding the immediately preceding paragraph:

An “acquisition proposal” as used herein means any bona fide written proposal or offer from any person or “group” (as defined in or under Section 13(d) of the Exchange Act) of persons (other than KCS, Merger Sub or their respective Affiliates) (an “Acquisition Group”) that is not subject to diligence (or, if subject to the completion of due diligence, the Board (or an authorized committee thereof) has reasonably determined that such diligence would reasonably be expected to be completed prior to the effective time of the Merger and, after completion of diligence, such proposal or offer would reasonably be expected to constitute a superior proposal for a transaction or series of related transactions (other than the transactions contemplated by the Merger Agreement) involving: (i) the purchase or other acquisition by any person or Acquisition Group, directly or indirectly, of more than 20% of the outstanding shares of equity securities of the Company, or any tender offer or exchange offer by any person or Acquisition Group, directly or indirectly that, if consummated in accordance with its terms, would result in such person or Acquisition Group, directly or indirectly beneficially owning, directly or indirectly, more than 20% of the outstanding shares of equity securities of the Company; (ii) a merger, consolidation, share exchange, reorganization, partnership, joint venture, business combination or other similar transaction involving the Company pursuant to which the stockholders of the Company immediately preceding such transaction hold less than 80% of the equity interests or voting equity interests in the surviving or resulting entity of such transaction; (iii) a sale, transfer, acquisition, or disposition, directly or indirectly, of more than 20% of the consolidated assets of the Company and the Company’s subsidiaries, taken as a whole (whether measured by the fair market value thereof or based on the revenue generation of, or net income related to, such assets); or (iv) a liquidation, dissolution or other winding up of the Company.

A “superior proposal” as used herein means any bona fide acquisition proposal that includes a proposed purchase agreement with respect thereto or confirms in writing that any purchase agreement in connection therewith will be on substantially the same terms as the Merger Agreement that is not withdrawn and is not subject to any diligence that is made by a third party after the date of the Merger Agreement, which acquisition proposal did not result from a breach of the Company’s non-solicitation obligation, (i) that would result in a third party acquiring, directly or indirectly, (A) 100% of the voting power of the equity securities of the Company, (B) assets that generate 100% of the consolidated total revenues or operating income of the Company and the Company’s subsidiaries, taken as a whole, or (C) assets that constitute 100% of the consolidated total assets of the Company and the Company’s subsidiaries, taken as a whole (other than cash or de minimis assets), (ii) is on terms which the Board determines (after consultation with its financial advisors and Sullivan and/or any other outside legal counsel chosen by the Company) to be more favorable from a financial point of view to the holders of shares of Company Common Stock than the Merger and the other transactions contemplated by the Merger Agreement, taking into account all the terms and conditions of such proposal and the Merger Agreement (including any proposal by KCS to amend the terms of the Merger Agreement) and the financial, financing, conditionality, timing, regulatory, legal and other aspects of such proposal (including the financing, which must be fully committed) and the person making the proposal, and (iii) that the Board determines (after consultation with its financial advisors and Sullivan and/or other outside legal counsel) is reasonably likely (and at least as likely as the Merger) to be consummated in accordance with its terms in a reasonable period of time (as compared to the Merger and the other transactions contemplated by the Merger Agreement), taking into account all the financial, financing, conditionality, timing, regulatory, legal and other aspects of such proposal (including certainty of closing, certainty of financing and the identity of the person making the acquisition proposal of such proposal. An acquisition proposal that (A) contains a financing or funding condition, restricts in any way or conditions the ability of the Company to seek specific performance to cause the transactions contemplated thereby to be consummated on receipt of funds or compliance with financing commitments from any person or otherwise may not be consummated without the receipt of funds from any person other than the person(s) making the acquisition proposal or its or their respective affiliates, or (B) offers a price per share less than the Merger Consideration (as amended) will, in each case, be deemed not to be a superior proposal.

The rights of the Company to engage in negotiations and the rights of the Board to make an Adverse Recommendation Change and/or terminate the Merger Agreement ceased upon the receipt by the corporate secretary of the Company of the Stockholder Consent constituting the stockholder approval on August 30, 2019.

Reasonable Best Efforts and Certain Pre-Closing Obligations

The Merger Agreement requires the parties to use reasonable best efforts to take, or cause to be taken, all actions, and do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, as promptly as practicable, the Merger and the other transactions contemplated by the Merger Agreement, including:

The Company and the Board shall (i) take all action necessary to ensure that no state takeover statute or similar statute or regulation is or becomes applicable to any transaction contemplated by the Merger or the Merger Agreement and (ii) if any state takeover statute or similar statute or regulation becomes applicable to any transaction contemplated by the Merger or the Merger Agreement, take all action necessary to ensure that the transactions contemplated by the Merger Agreement and the Merger may be consummated as promptly as practicable on the terms contemplated by the Merger Agreement and the Merger and otherwise to minimize the effect of such statute or regulation on the transactions contemplated by the Merger Agreement and the Merger.

Access to Information; Confidentiality

Subject to the confidentiality agreement between KCS and the Company and applicable law relating to the sharing of information, we have agreed to provide, and cause our subsidiaries to provide, to KCS and its representatives reasonable access during normal business hours during the period prior to the effective time of the Merger to all of our and our subsidiaries’ respective properties, books and records and contracts. During such period, we have also agreed to furnish, and cause our subsidiaries to furnish, as promptly as reasonably practicable, to KCS all information concerning our and our subsidiaries’ respective business, properties and personnel as KCS may reasonably request.

KCS will and will cause its affiliates and representatives to keep confidential any non-public information received from the Company, its affiliates or representatives, directly or indirectly, in accordance with the confidentiality agreement between the Company and KCS.

Indemnification

Under the Merger Agreement, after the effective time of the Merger, all rights to exculpation, indemnification and reimbursement and advancement of expenses, and all limitations on liability, existing in favor of any current or former officer or member of the board of directors (or comparable governing body) of the Company and/or any of the Company’s subsidiaries (in each case, when acting in such capacity) (collectively, the “Company Indemnitees”), as provided in the certificate of incorporation, bylaws or other organizational documents of the Company or any of the Company’s subsidiaries, and/or in any agreements or arrangements of the Company or any of the Company’s subsidiaries set forth in the disclosure schedules to the Merger Agreement providing for similar rights and limitations in favor of any of the Company Indemnitees, in any such case as in effect as of immediately prior to the date of the Merger Agreement, will survive the consummation of Merger and the other the transactions contemplated by the Merger Agreement and continue in full force and effect, and the Surviving Corporation and each of its subsidiaries will honor all such rights and limitations after the effective time of the Merger in accordance with their terms. All such rights of exculpation, indemnification and reimbursement and advancement of expenses, and all such limitations on liability, will not be terminated or modified in such a manner as to adversely affect any Company Indemnitee without the consent of such affected Company Indemnitee.

The parties have further agreed that at the effective time of the Merger, KCS shall, or shall cause the Surviving Corporation and its subsidiaries to, obtain, maintain and fully pay for irrevocable “tail” officers’ and directors’ liability insurance and fiduciary liability insurance policies naming the each Company Indemnitee as a direct beneficiary, with a claims period of at least 6 years after the consummation of the Merger, in respect of acts or omissions occurring on or prior to the effective time of the Merger. Such insurance policies are required to contain terms with respect to coverage and to be in an amount not less favorable than the officers’ and directors’ liability insurance and fiduciary liability insurance policies maintained by the Company and the Company’s subsidiaries as in effect on the date of the Merger Agreement. The Surviving Corporation is not required to pay an aggregate premium in excess of 300% of the amount paid by the Company for coverage for its last full fiscal year. If the aggregate premiums of such insurance coverage exceed 300% of such coverage amount, then the Surviving Corporation will be obligated to obtain a policy with the greatest coverage available for a cost not exceeding 300% of such coverage amount from an insurance carrier with the same or better credit rating as the Company’s directors’ and officers’ liability insurance carrier.

The Merger Agreement also provides that if KCS, the Surviving Corporation, any subsidiary of the Surviving Corporation, or any of their respective successors or assigns, (i) consolidates with or merges into another entity, and shall not be the survivor of any such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any other person, then such successor is required to assume all of the indemnification obligations described herein.

Employee Benefits Matters

The Merger Agreement provides that for a 1-year period commencing at the effective time of the Merger (or until the termination of employment of the relevant Company Employee, if sooner), KCS will (or will cause the Surviving Corporation to) provide to each Company Employee (i) substantially similar or greater in the aggregate base salary and target annual cash bonus opportunity (excluding cash long-term incentive and other broad-based equity-based incentive compensation) either (at KCS’s election in its sole discretion) (A) provided to such Company Employee immediately prior to the effective time of the Merger or (B) provided to similarly situated employees of KCS and its subsidiaries and (ii) other employee benefits (excluding deferred compensation, defined benefit and cash long-term incentive and equity or equity-based incentive opportunities and excluding any severance benefits and post termination or retiree health or welfare benefits (or, if earlier, the termination date of an applicable Company Employee)) that, with respect to each Company Employee, are substantially similar or greater in the aggregate to the benefits provided either (at KCS’s election in its sole discretion) (A) to such Company Employee immediately prior to the effective time of the Merger under the Company’s employee benefit plans or (B) provided to similarly situated employees of KCS and its subsidiaries. Without limiting the foregoing, as of the effective time of the Merger, KCS shall, or shall cause the Surviving Corporation to, comply with the terms of all employment agreements covering Company Employees, as applicable.

The Surviving Corporation will provide each employee whose employment is involuntarily terminated other than for cause during the 1-year period immediately following the Closing Date with severance benefits that are no less favorable than the severance benefits which such employee would have received with respect to such termination following the severance practices of the Company and the Company subsidiaries and employment agreements covering such employees.

Additional Agreements

The Merger Agreement contains additional agreements between us and KCS relating to, among other things:

Conditions to the Merger

The obligation of each party to the Merger Agreement to effect the Merger is subject to the satisfaction or waiver (if permissible under applicable law), on or prior to the consummation of the Merger, of the following conditions:

The obligation of KCS and Merger Sub to effect the Merger is further subject to the satisfaction, or waiver by KCS and Merger Sub (if permissible under applicable law), on or prior to the closing date of the Merger, of the following conditions:

The obligation of the Company to effect the Merger is further subject to the satisfaction, or waiver by the Company (if permissible under applicable law), on or prior to the closing date of the Merger, of the following conditions:

The consummation of the Merger is not conditioned upon KCS’s receipt of financing.

The Company and KCS can provide no assurance that all of the conditions precedent to the Merger will be satisfied or waived by the party permitted to do so.

Termination

The Merger Agreement may be terminated at any time prior to the consummation of the Merger by the mutual written consent of KCS and the Company.

In addition, the Merger Agreement may be terminated by either KCS or the Company, if:

The Merger Agreement also may be terminated by KCS if the Company has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the Merger Agreement, which breach or failure to perform (i) individually or in the aggregate, would result in the failure to satisfy the conditions to the obligations of KCS and Merger Sub to consummate the Merger and (ii) is not cured, or is incapable of being cured, by the Company within the earlier of (x) 20 business days after the Company’s receipt of written notice of such breach or failure to perform from KCS and stating its intention to terminate the Merger Agreement and (y) the business day immediately prior to the Outside Date; provided that KCS and Merger Sub are not in material breach of any of their respective obligations under the Merger Agreement such that the Company would be entitled to terminate the Merger Agreement (the “Company Breach Termination Right”).

The Merger Agreement also may be terminated by the Company if:

The Merger Agreement also provides that:

However, each of these termination provisions expired upon delivery of the Stockholder Consent to the corporate secretary of the Company on August 30, 2019, which constituted receipt of the stockholder approval (as described above under “—Required Approval of the Merger; Record Date; Action by Stockholder Consent”).

Termination Fee

KCS will be, subject to certain additional conditions set forth in the Merger Agreement, required to pay the Company a reverse termination fee of $8.4 million if the Merger Agreement is terminated:

The Company will be required to pay KCS (or its designee) a termination fee of $3.1 million if the Merger Agreement is terminated:

The Merger Agreement also provides that the Company would have been required to pay KCS (or its designee) a termination fee of $3.1 million if the Merger Agreement was terminated:

However, because the stockholder approval has been received, the ability of the Board to make and authorize the Company to pursue and negotiate a superior proposal, or make an Adverse Recommendation Change, has lapsed.

Any termination fee or reverse termination fee will be paid in a timely manner as specified in the Merger Agreement.

Effect of Termination

If the Merger Agreement is terminated by us or KCS in accordance with its terms, the Merger Agreement will become void and of no effect, without any liability or obligation on the part of KCS or Merger Sub, on the one hand, or the Company, on the other hand, other than certain specified sections of the Merger Agreement, including, but not limited to, those related to confidentiality and the termination fee, which will survive the termination.

Amendment; Extension; Waiver

Subject to the requirements of applicable law, the Merger Agreement may be amended by the parties thereto except that after the receipt of the stockholder approval, there shall be made no amendment to the Merger Agreement that by law requires further approval by the stockholders of the Company without such approval having been obtained and no amendment shall be made to the Merger Agreement after the effective time of the Merger.

At any time prior to the effective time of the Merger, any party to the Merger Agreement may (i) extend the time for the performance of any of the obligations or other acts of the other parties to the Merger Agreement, (ii) waive any inaccuracies in the representations and warranties by the other party contained in the Merger Agreement or in any document delivered pursuant thereto, and (iii) subject to the requirements of applicable law, waive compliance by the other party with any of the agreements or conditions contained in the Merger Agreement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of the Company Common Stock as of September 26, 2019 by (a) each stockholder who is known to us to own beneficially 5% or more of the outstanding Company Common Stock; (b) all directors; (c) all executive officers; and (d) all executive officers and directors as a group. Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their shares of Company Common Stock, except to the extent that authority is shared by spouses under applicable law and (ii) record and beneficial ownership with respect to their shares of Company Common Stock. Unless otherwise identified, the address of our directors and officers is c/o MAM Software Group, Inc., Two Valley Square, Suite 220, 512 Township Line Road, Blue Bell, PA 19422.

APPRAISAL RIGHTS

Under the DGCL, you have the right to demand appraisal of, and receive payment in cash for the “fair value” of, your shares of Company Common Stock, as determined by the Court, together with interest, if any, but exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Court, in lieu of the consideration you would otherwise be entitled to pursuant to the Merger Agreement. These rights are known as appraisal rights. Stockholders electing to exercise appraisal rights must comply precisely with the requirements of Section 262 in order to demand and perfect their rights. Strict compliance with the statutory procedures is required to demand and perfect appraisal rights under Delaware law.

The following is intended as a brief summary of the material provisions of the Delaware statutory procedures required to be followed by the Company’s stockholders in order to demand and perfect appraisal rights. All references in this summary to a “stockholder” are to the record holder of shares of Company Common Stock unless otherwise indicated.

THIS SUMMARY, HOWEVER, IS NOT A COMPLETE STATEMENT OF ALL APPLICABLE REQUIREMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECTION 262, A COPY OF WHICH IS INCLUDED AS ANNEX C TO THIS INFORMATION STATEMENT. FAILURE TO FOLLOW PRECISELY ANY OF THE STATUTORY PROCEDURES SET FORTH IN SECTION 262 MAY RESULT IN THE LOSS OF YOUR APPRAISAL RIGHTS. MOREOVER, DUE TO THE COMPLEXITY OF THE PROCEDURES FOR EXERCISING THE RIGHT TO DEMAND APPRAISAL, STOCKHOLDERS WHO ARE CONSIDERING EXERCISING SUCH RIGHTS ARE URGED TO SEEK THE ADVICE OF LEGAL COUNSEL. THIS SUMMARY DOES NOT CONSTITUTE ANY LEGAL OR OTHER ADVICE, NOR DOES IT CONSTITUTE A RECOMMENDATION THAT YOU EXERCISE YOUR RIGHTS TO DEMAND APPRAISAL UNDER SECTION 262.

Under Section 262, any stockholder who has not voted in favor of, or consented to, the adoption of the Merger, who continuously holds his, her or its shares of Company Common Stock through the effective date of the Merger and who otherwise complies with the requirements of Section 262, will be entitled to an appraisal of the “fair value” of such shares as determined by the Court.

Under Section 262, where a merger is adopted by stockholders by written consent in lieu of a meeting of stockholders, either the constituent corporation before the effective date of the Merger or the surviving or resulting corporation after the merger, within 10 days after the effective date of the Merger, must notify each stockholder of the constituent corporation entitled to appraisal rights of the merger and that appraisal rights are available. This Information Statement constitutes notice to holders of Company Common Stock concerning the availability of appraisal rights under Section 262.

Holders of shares of Company Common Stock who desire to exercise their appraisal rights must demand in writing an appraisal of such shares no later than 20 days after the mailing of this Information Statement, which 20^th day is October 20, 2019. All demands for appraisal pursuant to Section 262 should be addressed to MAM Software Group, Inc., Attention: Chief Financial Officer, Two Valley Square, Suite 220, 512 Township Line Road, Blue Bell, PA 19422. A demand for appraisal must be executed by or for the stockholder of record and must reasonably inform the Company of the identity of the stockholder of record and that such stockholder intends thereby to demand appraisal of the Company Common Stock.

Only a stockholder of record of Company Common Stock is entitled to demand appraisal rights for the shares of Company Common Stock registered in that holder’s name. Accordingly, to be effective, a demand for appraisal by a stockholder of shares of Company Common Stock (a) must be made by, or in the name of, the record stockholder, fully and correctly, as the stockholder’s name appears on the stockholder’s stock certificate(s) or in the transfer agent’s records, in the case of uncertificated shares, (b) should specify the stockholder’s mailing address and the number of shares registered in the stockholder’s name, and (c) must state that the person intends thereby to demand appraisal of the stockholder’s shares in connection with the Merger. If the shares of Company Common Stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, the demand must be executed by the fiduciary in such capacity. If the shares are owned of record by more than 1 person, as in a joint tenancy or tenancy in common, the demand should be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in exercising the demand, he is acting as agent for the record owner or owners. If a stockholder holds shares of Company Common Stock through a broker who in turn holds the shares through a central securities depository nominee, a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record holder.

A record holder, such as a broker, fiduciary, depositary or other nominee, who holds shares of Company Common Stock as a nominee for others, may exercise appraisal rights with respect to the shares held for all or less than all beneficial owners of shares as to which such person is the record holder. In such case, the written demand should set forth the number of shares covered by the demand. Where the number of shares is not expressly stated, the demand will be presumed to cover all shares of Company Common Stock outstanding in the name of such record holder.

A person having a beneficial interest in Company Common Stock held of record in the name of another person, such as a broker, depositary or other nominee, must act promptly to cause the record holder to follow the procedures set forth in Section 262 in a timely manner to perfect any appraisal rights. If you hold your shares of Company Common Stock through a bank, brokerage firm, trust or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm, trust or the other nominee to determine the appropriate procedures for the making of a demand for appraisal by the bank, brokerage firm, trust or the other nominee. 

Prior to the Merger or within 10 days after the effective date of the Merger, we must provide notice of the effective time of the Merger to all of our stockholders entitled to appraisal rights. If such notice is sent more than 20 days after the sending of this Information Statement, we will only send it to stockholders who are entitled to appraisal rights and who have demanded appraisal in accordance with Section 262. This Information Statement constitutes such notice to the holders of shares of Company Common Stock and Section 262 is attached to this information statement as Annex C. Any stockholder who wishes to exercise such appraisal rights or who wishes to preserve his, her or its right to do so should review the following discussion and Annex C carefully, because failure to timely and properly comply with the procedures specified will result in the loss of appraisal rights under the DGCL.

Within 120 days after the effective date of the Merger, any stockholder who has satisfied the requirements of Section 262 may deliver to us a written demand for a statement listing the aggregate number of shares not voted in favor of the adoption of the Merger Agreement and with respect to which demands for appraisal have been received and not withdrawn and the aggregate number of holders of such shares. The Surviving Corporation must mail any such written statement to the stockholder within ten (10) days after the stockholders’ request is received by us or within ten (10) days after the latest date for delivery of a demand for appraisal under Section 262, whichever is later. Notwithstanding the requirement that only a stockholder of record may make a demand for appraisal, a person who is the beneficial owner of shares held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition for appraisal with the Court or request from the Surviving Corporation such written statement.

Within 120 days after the effective date of the Merger, either the Surviving Corporation or any stockholder who has complied with the required conditions of Section 262 and who is otherwise entitled to appraisal rights may file a petition (with a copy thereof served upon the Surviving Corporation in the case of a petition filed by a stockholder) in the Court demanding a determination of the “fair value” of the shares of Company Common Stock of all stockholders entitled to appraisal rights and who have complied with the requirements of Section 262. We have no obligation, and no present intention, to file such a petition. If no petition is filed, appraisal rights will be lost for all stockholders who had previously demanded appraisal of their shares. Accordingly, it is the obligation of the holders of Company Common Stock to initiate all necessary action to demand and perfect their appraisal rights, and to file any petitions in the Court relating to an appraisal, in respect of such shares of Company Common Stock within the time prescribed in Section 262.

Upon the filing of a petition for appraisal by a stockholder in accordance with Section 262, service of a copy must be provided to us. Within 20 days after service, we must file in the office of the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by us. The Delaware Register in Chancery, if so ordered by the Court, will give notice of the time and place fixed for the hearing of such petition by registered or certified mail to us and to the stockholders shown on the list at the addresses therein stated, and notice will also be given by publishing a notice at least 1 week before the day of the hearing in a newspaper of general circulation published in the City of Wilmington, Delaware, or such publication as the Court deems advisable. The forms of the notices by mail and by publication must be approved by the Court, and the costs thereof will be borne by us. The Court may require the stockholders who have demanded an appraisal for their shares (and who hold stock represented by certificates) to submit their stock certificates to the Delaware Register in Chancery for notation of the pendency of the appraisal proceedings, and the Court may dismiss the proceedings as to any stockholder that fails to comply with such direction.

If a petition for an appraisal is filed in a timely fashion, after a hearing on the petition, the Court will determine which stockholders are entitled to appraisal rights and will appraise the shares owned by these stockholders, determining the “fair value” of such shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with a fair rate of interest to be paid, if any, upon the amount determined to be the “fair value”. When the “fair value” is so determined, the Court will direct the payment by the Surviving Corporation of such value, with interest thereon to be paid in accordance with Section 262 and as the Court so determines, to the stockholders entitled thereto, upon the surrender to the Surviving Corporation by such stockholders of such shares of Company Common Stock. Unless the Court, in its discretion, determines otherwise for good cause shown, interest from the effective date of the Merger through the date on which the judgment is paid shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the Merger and the date of payment of the judgment.

In determining the “fair value” of shares, the Court will take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court has stated that such factors include “market value, asset value, dividends, earning prospects, the nature of the enterprise and any other facts which were known or which could be ascertained as of the date of the Merger and which throw any light on future prospects of the merged corporation.” In Weinberger, the Delaware Supreme Court stated, among other things, that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered in an appraisal proceeding and that “[f]air price obviously requires consideration of all relevant factors involving the company.” Section 262 provides that “fair value” is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court construed Section 262 to mean that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the Merger and not the product of speculation, may be considered.”

The Company’s stockholders considering seeking appraisal of their shares should be aware that the “fair value” of their shares determined under Section 262 could be more than, the same as or less than the consideration they would have received pursuant to the Merger Agreement if they had not sought appraisal of their shares and that opinions of investment banking firms as to the fairness of the Merger Consideration, from a financial point of view, payable in a sale transaction, such as the Merger, are not necessarily opinions as to, and do not otherwise address, the “fair value” of the shares to be determined by the Court under Section 262. Moreover, the Company does not anticipate offering more than the Merger Consideration to any stockholder exercising appraisal rights and reserves the right to assert, in any appraisal proceeding, that, for purposes of Section 262, the “fair value” of a share of the Company Common Stock is less than the Merger Consideration. The costs of the appraisal proceeding may be determined by the Court and assessed against the parties as the Court deems equitable under the circumstances. However, costs do not include attorney and expert witness fees. Upon application of a stockholder seeking appraisal, the Court may order that all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all shares entitled to appraisal. In the absence of an assessment, each party must bear his, her or its own expenses.

Any stockholder who has duly demanded appraisal in compliance with Section 262 will not, after the effective time of the Merger, be entitled to vote for any purpose the shares subject to appraisal or to receive payment of dividends or other distributions on such shares, except for dividends or distributions payable to stockholders of record at a date prior to the effective time of the Merger.

At any time within 60 days after the effective date of the Merger, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party will have the right to withdraw his, her or its demand for appraisal and to accept the terms offered in the Merger Agreement by delivering a written withdrawal of such demand to the Surviving Corporation. After this 60-day period, a stockholder may withdraw his, her or its demand for appraisal and receive payment for his, her or its shares as provided in the Merger Agreement only with our consent. If no petition for appraisal is filed with the Court within 120 days after the effective date of the Merger, stockholders’ rights to appraisal (if available) will cease. Inasmuch as we have no obligation or present intention to file such a petition, any stockholder who desires a petition to be filed is advised to file it on a timely basis. No petition timely filed in the Court demanding appraisal may be dismissed as to any stockholder without the approval of the Court, which approval may be conditioned upon such terms as the Court deems just, except that this provision will not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms of the Merger within 60 days after the effective date of the Merger.

Failure by any stockholder to comply strictly with all of the procedures set forth in Section 262 (a copy of which is included as Annex C to this Information Statement) will result in loss of the stockholder’s appraisal rights. If you properly demand appraisal of your shares of Company Common Stock under Section 262 and you fail to perfect, or effectively withdraw or lose, your right to appraisal, as provided in the DGCL, your shares of Company Common Stock will be converted into the right to receive the Merger Consideration if the Merger is completed.

If you are considering whether to demand appraisal of the “fair value” of your shares of Company Common Stock, you are urged to consult your own legal counsel. To the extent there are any inconsistencies between the foregoing summary and Section 262, Section 262 will govern.