XCRA Xcerra Corp. (delisted)

Item 1.01 Entry into a Material Definitive Agreement.

Agreement and Plan of Merger

On April 7, 2017, Xcerra Corporation, a Massachusetts corporation (“Xcerra” or the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Unic Capital Management Co., Ltd., a Chinese company (“Parent”), and China Integrated Circuit Industry Investment Fund Co., Ltd., a Chinese company (“Sponsor”), providing for the merger of a wholly owned subsidiary of Parent (“Merger Sub”) with and into Xcerra (the “Merger”), with Xcerra surviving the Merger as a wholly owned subsidiary of Parent (the “Surviving Corporation”). The Merger Agreement was unanimously approved by Xcerra’s Board of Directors (the “Board”).

Pursuant to the terms and subject to the conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Xcerra’s common stock, par value $0.05 per share (the “Company Common Stock”), that is outstanding immediately prior to the Effective Time (excluding any shares owned by Xcerra, Parent or Merger Sub or any direct or indirect wholly owned subsidiary of Parent or Merger Sub (which will be cancelled) and any shares with respect to which appraisal rights have been properly exercised under Massachusetts law) will be cancelled and automatically converted into the right to receive $10.25 in cash, without interest (the “Merger Consideration”).

Immediately prior to the Effective Time, each Company restricted stock unit that is outstanding and either (A) vests at the Effective Time or (B) is held by a non-employee member of the Board (each a “Vested RSU”) shall be cancelled and terminated as of the Effective Time and the holder thereof shall receive an amount in cash (without interest) equal to the product obtained by multiplying (x) the aggregate number of shares of Company Common Stock represented by such Company restricted stock unit immediately prior to the Effective Time by (y) the Merger Consideration (the “Restricted Stock Unit Consideration”). The Company shall pay each holder of a Vested RSU the Restricted Stock Unit Consideration on either (i) the first regulatory scheduled payroll date after the closing of the Merger or (ii) if such payroll date is scheduled for payment prior to the fifth business day after the closing of the Merger, the second regularly scheduled payroll date after the closing of the Merger.

Each Company restricted stock unit that is outstanding and unvested as of the Effective Time and not described in the immediately preceding sentence (each, an “Unvested RSU”) shall be converted into the right to receive an amount in cash (without interest) equal to the product obtained by multiplying (x) the aggregate number of shares of Company Common stock represented by such Unvested RSU immediately prior to the Effective Time by (y) the Merger Consideration (the “Unvested RSU Consideration”). The Unvested RSU Consideration will be subject to the same vesting terms and conditions applicable to the Unvested RSU immediately prior to the Effective Time, including the same vesting restrictions and continued service requirements, and payment of the Unvested RSU Consideration shall be made on the vesting dates applicable to the Unvested RSU immediately prior to the Effective Time.

Effective immediately prior to the Effective Time, the performance-based vesting of each Company restricted stock unit that remains outstanding as of immediately prior to the Effective Time (each, a “Performance-Based RSU”) shall be accelerated in full with all performance conditions being deemed achieved at 100% and each such Performance-Based RSU shall be converted into the right to receive an amount in cash equal to the product obtained by multiplying (x) the aggregate number of shares of Company Common Stock represented by such Performance-Based RSU immediately prior to the Effective Time by (y) the Merger Consideration (the “Performance-Based RSU Consideration”). The Performance-Based RSU Consideration will be subject to the same time-based vesting terms and conditions applicable to the Performance-Based RSU immediately prior to the Effective Time and shall be paid on the time-based vesting dates applicable to such Performance-Based RSU immediately prior to the Effective Time.

Concurrently with the execution of the Merger Agreement, Parent has delivered to the Company (i) an equity commitment letter (the “Equity Commitment Letter”) issued to Parent by Sponsor, pursuant to which, subject to the conditions contained in the Equity Commitment Letter, Sponsor commits to subscribe for equity securities of Parent with an aggregate purchase price of RMB1.5 billion (equivalent to approximately $217 million based on the prevailing exchange rate as of April 7, 2017) and (ii) a debt commitment letter (the “Debt Commitment Letter”) issued to Parent by Sino IC Leasing Co., Ltd. (“Lender”) pursuant to which Lender has committed to loan to Parent the lesser of (A) RMB2.76 billion (equivalent to approximately $400 million based on the prevailing exchange rate as of April 7, 2017) and (B) the difference of (1) the RMB equivalent of the aggregate payment obligations of Parent under the Merger Agreement less (2) RMB1.5 billion. The obligations of Sponsor and Lender to provide the financing under the Equity Commitment Letter and Debt Commitment Letter, respectively, are subject to the satisfaction or waiver at the closing of the Merger of each of the conditions set forth in Section 7.1 and Section 7.2 of the Merger Agreement.

The closing of the Merger is subject to the adoption of the Merger Agreement by the affirmative vote of holders of two-thirds of the outstanding shares of Company Common Stock (the “Company Stockholder Approval”). The obligations of the parties to consummate the Merger are also subject to the satisfaction (or waiver, if applicable) of various customary conditions, including (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) filings and approvals with or by certain governmental authorities, including governmental authorities in the People’s Republic of China (“PRC”) and Taiwan, (iii) review and clearance by the Committee on Foreign Investment in the United States, (iv) the absence of certain governmental orders prohibiting the Merger, (v) the accuracy of the representations and warranties of each party contained in the Merger Agreement (subject to certain materiality qualifications) and (vi) each party’s compliance with or performance of the covenants and agreements in the Merger Agreement in all material respects.

The Company has made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants (i) to carry on its business in the ordinary course consistent with past practice during the period between the execution of the Merger Agreement and the closing of the Merger, (ii) not to engage in specified types of transactions or take certain actions during the interim period unless consented to in writing by Parent, (iii) to convene and hold a meeting of its stockholders for the purpose of obtaining the Company Stockholder Approval and (iv) subject to certain exceptions, not to withhold or withdraw (or qualify or modify in a manner adverse to Parent) the recommendation of the Board that the Company’s stockholders adopt the Merger Agreement. The Company is also subject to customary restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals, with customary exceptions for alternative acquisition proposals that the Board determines either constitute or would reasonably be expected to lead to a Superior Proposal; provided , however , that the Merger Agreement contains a go-shop provision that allows the Company and its representatives to solicit alternative acquisition proposals and share non-public information with third parties for the purpose of soliciting alternative acquisition proposals, in each case, during the 35-day period commencing upon execution of the Merger Agreement and ending on May 12, 2017 (the “Go-Shop Period”) and subject to compliance with certain qualifications and notice and information rights of Parent.

The Merger Agreement contains certain termination rights for the Company and Parent. Upon termination of the Merger Agreement under specified circumstances, including in connection with the Company’s entry into a definitive agreement providing for the consummation of a Superior Proposal as permitted under the Merger Agreement, the Company will be required to pay Parent a termination fee of $22.8 million (the “Company Termination Fee”); provided , that the Company Termination Fee payable by the Company for termination of the Merger Agreement to enter into a definitive agreement with respect to an acquisition proposal received during the Go-Shop Period shall be $14.25 million.

The Merger Agreement also provides that, upon termination of the Merger Agreement under specified circumstances, Parent will be required to pay the Company a termination fee of $22.8 million (the “Parent Termination Fee”). The Parent Termination Fee will become payable from Parent to the Company if the Merger Agreement is terminated by the Company in the event that (i) Parent breaches its representations and warranties or covenants such that the applicable closing condition regarding representations and warranties or performance of covenants would not be satisfied (subject to specified cure rights), (ii) all of Parent’s conditions to closing are satisfied or waived and Parent has failed to consummate the Merger, (iii) the Merger is not consummated by the Termination Date (as defined in the Merger Agreement) and, at such time, all conditions to the Merger have been satisfied other than those resulting from any failure to obtain certain required approvals from governmental authorities in the PRC or (iv) any governmental authority in the PRC shall have enacted, issued or promulgated any law or order making the Merger illegal or otherwise preventing the consummation of the Merger; provided , that the Parent Termination Fee payable by Parent as a result of termination of the Merger Agreement under the circumstances described in clauses (iii) and (iv) is equal to $14.25 million. Pursuant to the Merger Agreement, on or before April 12, 2017, Parent shall deliver to the Company a letter of guarantee (the “Letter of Guarantee”) from the Bank of Beijing Co., Ltd. (the “Bank of Beijing”) in favor of Test Solutions (Suzhou) Co., Ltd., a wholly owned subsidiary of the Company (“Test Solutions”), pursuant to which, upon the termination of the Merger Agreement in circumstances requiring the payment of the Parent Termination Fee, and upon delivery of written instructions to the Bank of Beijing in accordance with the terms of the Letter of Guarantee, the Bank of Beijing will pay to Test Solutions RMB98,315,025 (equivalent to approximately $14.25 million based on the prevailing exchange rate as of April 7, 2017) in satisfaction, or partial satisfaction, as applicable, of the Parent Termination Fee.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of the Merger Agreement, a copy of which is filed hereto as Exhibit 2.1 and is incorporated into this report by reference in its entirety. The Merger Agreement has been attached as an exhibit to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company or Parent or any of their respective subsidiaries or affiliates. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement were made solely for the benefit of the parties to the Merger Agreement, were made only for purposes of the Merger Agreement, and are qualified by information in a confidential disclosure letter provided by the Company to Parent in connection with the signing of the Merger Agreement. This confidential disclosure letter contains information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purposes of allocating risk between the Company and Parent rather than establishing matters of fact. Accordingly, the representations and warranties in the Merger Agreement should not be relied on as a characterization of the actual state of facts about the Company or Parent or any of their respective subsidiaries.