Maxwell expects to capitalize on synergies between the two companies that will accelerate top-line growth and earnings, increase the innovation rate, and create an expanded and strengthened product portfolio.

With a strengthened sales channel, increased R&D capabilities, and improved manufacturing efficiencies, Maxwell will be able to deliver more products, faster into target markets thereby benefitting customers and other technology adopters. Key benefits of the transaction include:

• Expanded and solidified opportunity in Wind, Automotive, and Industrial Markets. In wind pitch control, the transaction creates a leading-edge product portfolio including a full range of competitive small cell and large cell offerings. With respect to the automotive market, the acquisition brings pre-existing design wins and revenue in back-up power and extends Maxwell’s reach in the market. Moreover, small cell-based product solutions also broaden opportunities in the rapidly growing industrials market. Nesscap already has a solid position in this market with a strong base in Europe, which adds revenue diversity and creates further opportunities for growth.

• Accelerated innovation and product time to market with an expanded portfolio. Emerging from strong customer traction and product launches by both companies in 2016, the combination increases scale and leverages R&D to deliver additional new, differentiated products faster. The enhanced R&D team, along with a strengthened global sales channel, accelerates product, technology, and cost innovations into key markets.

• Improved small-cell competitiveness through cost structure improvement. Margin expansion is anticipated from economy of scale and materials cost savings, a streamlined supply chain, and gains in operational efficiency from combined manufacturing.

• Accretive growth with positive financials and product/customer synergies. The transaction is expected to be immediately accretive to Maxwell’s non-GAAP earnings per share following close, which is anticipated to be in Q2 of 2017, and Maxwell expects the Nesscap business to deliver positive adjusted EBITDA in 2017.

The transaction. The purchase price will be paid by the issuance of approximately 4.6 million Maxwell shares, subject to a 10% upward or downward adjustment based on the average closing price of Maxwell shares for the 10 consecutive trading days ending two days prior to closing.

Each of Maxwell’s and Nesscap’s board of directors has unanimously approved the Transaction. In approving the Transaction, Nesscap’s Board of Directors has received a verbal fairness opinion from its financial advisor, Paradigm Capital Inc., stating that the consideration to be received by Nesscap is fair from a financial point of view to Nesscap and it expects to receive the written fairness opinion in connection with the mailing of a circular to its shareholders.

Based on recent share price ranges and subject to the payment by Nesscap of outstanding indebtedness owed by Nesscap to I2BF Energy Limited (I2BF) and Arbat Capital Group Ltd. (Arbat) in an aggregate principal amount of $4.5 million (plus accrued and unpaid interest) and of certain other outstanding liabilities, Nesscap shareholders and debt holders are expected to own approximately 12% of Maxwell’s total outstanding common shares following completion of the Transaction.

As part of the Arrangement, Maxwell entered into a principal shareholders agreement with I2BF and Arbat, which together own approximately 80% of the common shares of Nesscap, and will represent approximately 10% of the ownership of Maxwell following closing, subject to any adjustment based on Maxwell’s share price as set forth above.

Pursuant to the terms of the principal shareholders agreement, Maxwell has agreed to appoint a representative of I2BF and Arbat to Maxwell’s Board of Directors, which such representative shall initially be Ilya Golubovich. Such appointment is subject to the closing of the Transaction and is intended to be no later than one business day following Maxwell’s 2017 Annual Meeting of Shareholders.

In order to become effective, the Transaction must be approved by two-thirds of Nesscap shareholders. In addition, I2BF and Arbat are both a related party to the Company, as such term is defined in Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions (“MI 61-101”). Therefore, the Arrangement will also be conditional upon the approval of a simple majority of the Nesscap shareholders, excluding I2BF and Arbat.

Nesscap has relied on the exemption from the valuation requirements of MI 61-101 contained in section 4.4(1)(a). Upon completion of the Arrangement, it is expected that Nesscap will voluntarily dissolve pursuant to Section 237(a) of the Business Corporations Act (Ontario).

It is expected that a special meeting of Nesscap Shareholders to approve the arrangement and the dissolution will be held in the second quarter of 2017.