MKS Instruments, Inc., a Massachusetts corporation, and its newly formed, wholly owned subsidiary, EAS Equipment, Inc., a Delaware corporation, entered into an Agreement and Plan of Merger with Electro Scientific Industries, Inc., a Delaware corporation (ESI), providing for, subject to the terms and conditions of the Merger Agreement, the acquisition of ESI by the Company at a price of $30.00 per share in cash, without interest and subject to deduction for any required withholding tax, through the merger of Merger Sub into ESI, with ESI surviving the Merger as a wholly owned subsidiary of the Company.

Under the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of ESI common stock will be cancelled and automatically converted into the right to receive the Merger Consideration.

MKS will assume all outstanding ESI stock options, stock appreciation rights, and restricted stock units (including those subject to the achievement of performance goals, which performance goals will, in accordance with the terms of such awards, be measured on the closing date of the Merger and which, following the Merger, will remain subject to any applicable time-based vesting requirements and other conditions and limitations) granted under ESI’s 2004 Stock Incentive Plan.

In connection with the Merger Agreement, the Company entered into a debt commitment letter with Barclays Bank PLC, HSBC Bank USA, National Association and HSBC Securities (USA) Inc., pursuant to which, among other things, the Commitment Parties have committed to provide the Company with a new incremental term loan facility in the aggregate principal amount of up to $650,000,000 to finance, in part, the acquisition of ESI. The incremental term loan facility would be made available under the Company’s existing Term Loan Agreement, dated as of April 29, 2016, as amended, among the Company, the lenders from time to time party thereto, and Barclays Bank PLC, National Association, as administrative agent and collateral agent. 

In connection with the Commitment Letter, the Commitment Parties have also agreed to effectuate certain amendments to the Credit Agreement which, upon their effectiveness at closing, would make certain of the negative covenants and other provisions less restrictive and, therefore, provide the Company with additional flexibility. In addition, the Commitment Parties have committed under the Commitment Letter to provide the Company with a $100,000,000 asset-based revolving credit facility for working capital purposes, as needed, which would replace the Company’s existing asset-based revolving credit facility at closing. The Commitment Parties’ obligations under the Commitment Letter are subject to certain conditions, including consummation of the Merger in accordance with the Merger Agreement; the negotiation and execution of definitive documentation consistent with the Commitment Letter; delivery of certain pro forma and other financial information; subject to certain limitations, the absence of a material adverse effect on ESI; the accuracy of specified representations and warranties of ESI in the Merger Agreement and specified representations and warranties of the Company to be set forth in the definitive loan documents; and other customary closing conditions. Closing of the New ABL Facility, however, is not a condition to the funding of the new incremental term loan facility.

Completion of the Merger is subject to customary closing conditions,and the Company is entitled to receive a termination fee of $35,650,000 if the Merger Agreement is terminated by ESI under certain specified circumstances to accept an alternative acquisition proposal and in certain other circumstances.