Form DEFM14A CyrusOne Inc.

December 30, 2021 8:48 AM EST

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by a party other than the Registrant ☐
Filed by the Registrant ☒
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Under Rule 14a-12
CYRUSONE INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):

No fee required

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount previously paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing party:
(4)
Date Filed:

[MISSING IMAGE: lg_cyrusonenew-4c.jpg]
To our Stockholders:
You are cordially invited to attend a special meeting of stockholders of CyrusOne Inc., a Maryland corporation (the “Company” or “CyrusOne”), on February 1, 2022 at 9:30 a.m., Central Time (10:30 a.m., Eastern Time), in a virtual-only meeting format.
On November 14, 2021, the Company entered into an Agreement and Plan of Merger (the “merger agreement”) with Cavalry Parent L.P., a Delaware limited partnership (“Parent”), and Cavalry Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (“Merger Sub”), providing for, subject to the satisfaction or (to the extent permitted by law) waiver of specified conditions, the acquisition of the Company by Parent at a price of $90.50 in cash, without interest, per share of common stock, par value $0.01 per share (“common stock”), of CyrusOne Inc. Subject to the terms and conditions of the merger agreement, Merger Sub will be merged with and into the Company (the “merger”), with the Company surviving the merger as a wholly owned subsidiary of Parent (the “surviving corporation”). If the merger is consummated, you will be entitled to receive $90.50 in cash, without interest and less any applicable withholding taxes, in exchange for each share of common stock you own at the effective time of the merger.
The proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the merger agreement, the merger and the other transactions contemplated by the merger agreement. We encourage you to carefully read the accompanying proxy statement and the copy of the merger agreement attached as Annex A thereto.
The board of directors of the Company (the “Board”) has reviewed and considered the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Board unanimously (i) authorized and approved the execution, delivery and performance by the Company of the merger agreement and the consummation by the Company of the merger and the other transactions contemplated by the merger agreement, (ii) declared that the merger is advisable and in the best interests of the Company and of stockholders of the Company on substantially the terms and conditions set forth in the merger agreement, (iii) directed that the merger be submitted for consideration at the special meeting and (iv) recommended that the stockholders of the Company approve the merger.
At the special meeting, you will be asked to consider and vote on (i) a proposal to approve the merger in accordance with the terms of the merger agreement, the merger agreement and the other transactions contemplated by the merger agreement (the “merger proposal”), (ii) a proposal to approve, by advisory (non-binding) vote, the compensation that may be paid or become payable to the named executive officers of CyrusOne in connection with the consummation of the merger (the “advisory compensation proposal”) and (iii) a proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the special meeting to approve the merger proposal (the “adjournment proposal”). The Board recommends you vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal.
Your vote is important. Whether or not you plan to attend the virtual special meeting, we want to make sure your shares are represented at the meeting. You may cast your vote by submitting your proxy in advance of the virtual special meeting by internet, telephone or mail.
After reading the accompanying proxy statement, please authorize a proxy to vote your shares of common stock by internet or telephonically as described in the accompanying proxy statement, or, if you received a paper copy of the proxy card, by completing, dating, signing and returning your proxy card or vote your shares by attending and voting at the virtual special meeting. Instructions regarding the methods of authorizing your proxy are provided on the proxy card. If you hold common stock through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from them to vote your common stock. If you have any questions or need assistance voting, please contact our proxy solicitor, Okapi Partners, toll-free at 855-305-0857.
 

On behalf of the Board, thank you for your continued support.
By Order of the Board of Directors
Sincerely,
[MISSING IMAGE: sg_lynn-bw.jpg]
Lynn A. Wentworth
Chair of the Board
December 30, 2021
The merger has not been approved or disapproved by the Securities and Exchange Commission or any state securities commission. Neither the Securities and Exchange Commission nor any state securities commission has passed upon the merits or fairness of the merger or upon the adequacy or accuracy of the information contained in this document or the accompanying proxy statement. Any representation to the contrary is a criminal offense.
The accompanying proxy statement is dated December 30, 2021 and is first being mailed to CyrusOne stockholders on or about December 31, 2021.

 
[MISSING IMAGE: lg_cyrusonenew-4c.jpg]
2850 N. Harwood St., Suite 2200
Dallas, TX 75201
To our stockholders:
You are cordially invited to attend a special meeting of stockholders of CyrusOne Inc., a Maryland corporation, to be held on February 1, 2022 at 9:30 a.m., Central Time (10:30 a.m., Eastern Time), in a virtual-only meeting format. To access the virtual meeting, stockholders should visit https://meetnow.global/MTUZUCT. The special meeting is being held for the purpose of acting on the following matters:
Items of Business:
1.
To consider and vote on a proposal to approve the merger (the “merger”) of Cavalry Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (“Merger Sub”), with and into CyrusOne Inc., a Maryland corporation (the “Company” or “CyrusOne”), with the Company surviving the merger, in accordance with the terms of the Agreement and Plan of Merger, dated as of November 14, 2021 (the “merger agreement”), by and among Cavalry Parent L.P., a Delaware limited partnership (“Parent”), Merger Sub and the Company, the merger agreement and the other transactions contemplated by the merger agreement, which proposal we refer to as the “merger proposal”.
2.
To consider and vote on a proposal to approve, by advisory (non-binding) vote, the compensation that may be paid or become payable to our named executive officers in connection with the consummation of the merger, which proposal we refer to as the “advisory compensation proposal”.
3.
To consider and vote on a proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are insufficient votes at the special meeting to approve the merger proposal, which proposal we refer to as the “adjournment proposal”.
Record Date:
Only CyrusOne stockholders of record at the close of business on December 23, 2021 — the record date for the special meeting — will be entitled to notice of, and to vote at, the special meeting and any postponement or adjournment thereof.
General:
The merger proposal must be approved by the affirmative vote of the holders of common stock entitled to cast a majority of all the votes entitled to be cast on the matter. Assuming a quorum is present, if you fail to authorize a proxy to vote your shares of common stock or vote at the virtual special meeting, fail to instruct your broker on how to vote, or abstain from the merger proposal, it will have the same effect as a vote against the merger proposal. Accordingly, your vote is very important regardless of the number of shares of common stock that you own. Whether or not you plan to attend the virtual special meeting, we request that you vote your shares of common stock by either marking, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope or following the voting instructions on the enclosed proxy card to vote by telephone or through the internet. If you attend the virtual special meeting and you are a CyrusOne stockholder of record at the close of business on the record date, you may continue to have your shares of common stock voted as instructed in your proxy, or you may withdraw your proxy and vote your shares of common stock at the virtual special meeting. If you fail to authorize a proxy to vote your shares or to vote at the virtual special meeting, or fail to instruct your broker, bank or other nominee on how to vote, the effect will be that the shares of common stock that you own will not be counted for purposes of determining whether a quorum is present at the virtual special meeting and will have the same effect
 

 
as a vote “AGAINST” the merger proposal.
The approval of the advisory compensation proposal and the adjournment proposal each requires the affirmative vote of a majority of the votes cast on the proposal. Assuming a quorum is present, if you fail to authorize a proxy to vote your shares of common stock or vote at the virtual special meeting, or fail to instruct your broker on how to vote, it will have no effect on the outcome of these proposals. Abstentions will not be considered votes cast and therefore will have no effect on the outcome of the advisory compensation proposal or the adjournment proposal.
Any proxy may be revoked at any time prior to its exercise by delivery of a properly executed, later-dated proxy card, by authorizing your proxy or voting instructions by telephone or through the internet at a later date than your previously authorized proxy, by submitting a written revocation of your proxy to our Corporate Secretary, or by voting at the virtual special meeting. Attendance at the virtual special meeting alone will not be sufficient to revoke a previously authorized proxy.
For more information concerning the virtual special meeting, the merger agreement, the merger and the other transactions contemplated by the merger agreement, please review the accompanying proxy statement and the copy of the merger agreement attached as Annex A thereto.
As permitted by Maryland law, our charter provides that holders of common stock may not exercise any appraisal rights, dissenters’ rights or the rights of an objecting stockholder to receive the fair value of their shares in connection with a merger unless the board of directors of the Company (the “Board”), upon the affirmative vote of a majority of the Board, determines that such rights apply. The Board has made no such determination. In addition, because shares of our common stock are listed on the NASDAQ Global Select Market as of the record date for determining stockholders entitled to vote at the special meeting, our stockholders who object to the merger do not have any appraisal rights, dissenters’ rights or the rights of an objecting stockholder under the Maryland General Corporation Law in connection with the merger.
The Board has reviewed and considered the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Board unanimously (i) authorized and approved the execution, delivery and performance by the Company of the merger agreement and the consummation by the Company of the merger and the other transactions contemplated by the merger agreement, (ii) declared that the merger is advisable and in the best interests of the Company and of stockholders of the Company on substantially the terms and conditions set forth in the merger agreement, (iii) directed that the merger be submitted for consideration at the special meeting and (iv) recommended that the stockholders of the Company approve the merger.
Accordingly, the Board recommends a vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal.
Whether or not you plan to attend the virtual special meeting, we want to make sure your shares are represented at the meeting. You may cast your vote by authorizing your proxy in advance of the virtual special meeting by internet, telephone or mail.
By Order of the Board of Directors
Sincerely,
[MISSING IMAGE: sg_robert-bw.jpg]
Robert M. Jackson
Executive Vice President, General Counsel and Secretary
 

 
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CYRUSONE INC.
2850 N. Harwood Street, Suite 2200
Dallas, Texas 75201
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 1, 2022
PROXY STATEMENT
This proxy statement contains information relating to a special meeting of stockholders of CyrusOne Inc., a Maryland corporation (“CyrusOne”, the “Company”, “we”, “us” or “our”). All references to “Parent” refer to Cavalry Parent L.P., a Delaware limited partnership; all references to “Merger Sub” refer to Cavalry Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent; all references to “KKR” refer to Kohlberg Kravis Roberts & Co. L.P.; all references to the “KKR Funds” refer collectively to certain controlled investment vehicles through which KKR carries out its investment activities; all references to “GIP” refer to Global Infrastructure Management, LLC; and all references to the “GIP Funds” refer collectively to certain controlled investment vehicles through which GIP carries out its investment activities.
The special meeting will be held on February 1, 2022 at 9:30 a.m., Central Time (10:30 a.m., Eastern Time), in a virtual-only meeting format. We are furnishing this proxy statement to holders (“CyrusOne stockholders”) of common stock, par value $0.01 per share, of the Company (“common stock”) as part of the solicitation of proxies by the Company’s board of directors (the “Board”), for exercise at the special meeting and at any postponements or adjournments thereof. This proxy statement is dated December 30, 2021 and is first being mailed to CyrusOne stockholders on or about December 31, 2021.
 
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SUMMARY
This summary highlights selected information in this proxy statement and may not contain all of the information about the merger agreement, the merger or the other transactions contemplated by the merger agreement that is important to you. We have included page references in parentheses to direct you to more complete descriptions of the topics presented in this summary. You should carefully read this proxy statement in its entirety, including the annexes hereto and the other documents to which we have referred you, for a more complete understanding of the matters being considered at the special meeting, including, without limitation, the merger agreement attached as Annex A to this proxy statement. You may obtain, without charge, copies of documents incorporated by reference into this proxy statement by following the instructions under the section of this proxy statement entitled “Where You Can Find Additional Information” beginning on page 97.
The Parties
(page 22)
CyrusOne Inc.
The Company is a fully integrated, self-managed data center real estate investment trust (“REIT”) that owns, operates and develops enterprise-class, carrier-neutral, multi-tenant and single-tenant data center properties. The Company’s data centers are generally purpose-built facilities with redundant power and cooling. They are not network specific and enable customer connectivity to a range of telecommunication carriers. The Company provides mission-critical data center real estate assets that protect and ensure the continued operation of information technology infrastructure for approximately 1,000 customers in more than 50 high-performance data centers in 16 markets world-wide (11 cities in the U.S.; London, U.K.; Frankfurt, Germany; Amsterdam, The Netherlands; Dublin, The Republic of Ireland and Paris, France). The Company’s principal executive offices are located at 2850 N. Harwood, Suite 2200, Dallas, Texas 75201 and our telephone number is (972) 350-0060. Shares of the Company’s common stock are listed on the NASDAQ Global Select Market under the trading symbol “CONE”.
Parent
Parent is a Delaware limited partnership that will be controlled by funds affiliated with KKR and GIP that was formed solely for the purpose of entering into the merger agreement and related agreements and consummating the transactions contemplated thereby. Parent has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and related agreements. Upon the consummation of the transactions contemplated by the merger agreement and related agreements, the Company will be a wholly owned subsidiary of Parent.
The principal executive offices of Parent are c/o Kohlberg Kravis Roberts & Co. L.P., 30 Hudson Yards, New York, New York 10001 with a telephone number of (877) 610-4910 and c/o Global Infrastructure Management, LLC, 1345 Avenue of the Americas, 30th Floor, New York, NY 10105 with a telephone number of (212) 315-8100.
Merger Sub
Merger Sub is a Delaware limited liability company and a wholly owned subsidiary of Parent that was formed solely for the purpose of entering into the merger agreement and related agreements and consummating the transactions contemplated thereby. Merger Sub has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and related agreements. Upon the consummation of the merger, Merger Sub will merge with and into the Company, and Merger Sub will cease to exist.
The principal executive offices of Merger Sub are c/o Kohlberg Kravis Roberts & Co. L.P., 30 Hudson Yards, New York, New York 10001 with a telephone number of (877) 610-4910 and c/o Global Infrastructure Management, LLC, 1345 Avenue of the Americas, 30th Floor, New York, NY 10105 with a telephone number of (212) 315-8100.
 
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The Merger
(page 31)
On November 14, 2021, the Company entered into an Agreement and Plan of Merger (the “merger agreement”) with Parent and Merger Sub, providing for, subject to the satisfaction or (to the extent permitted by law) waiver of specified conditions, the acquisition of the Company by Parent at a price of $90.50 in cash, without interest, per share of common stock (the “merger consideration”). Subject to the terms and conditions of the merger agreement, Merger Sub will be merged with and into the Company (the “merger”), with the Company surviving the merger as a wholly owned subsidiary of Parent (the “surviving corporation”). A copy of the merger agreement is included as Annex A to this proxy statement.
If the merger is consummated, each share of common stock issued and outstanding immediately prior to the time the merger is consummated (the “effective time”) will be converted into the right to receive $90.50 in cash, without interest and less any applicable withholding taxes, other than shares of common stock held by (i) Parent or Merger Sub immediately prior to the effective time, which will be automatically canceled, and no payment will be made with respect therefor and (ii) any subsidiary of the Company or Parent (other than Merger Sub) immediately prior to the effective time, which will be, at the election of Parent, either (a) converted into shares of common stock of the surviving corporation or (b) canceled, and no payment will be made with respect therefor (collectively, “excluded shares”).
If the merger is consummated, Parent shall use its reasonable best efforts to cause the common stock to be delisted from the NASDAQ Global Select Market and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable following the effective time, and, accordingly, the common stock will no longer be publicly traded.
The Special Meeting
(page 24)
The special meeting of stockholders of the Company will be held on February 1, 2022 at 9:30 a.m., Central Time (10:30 a.m., Eastern Time), in a virtual-only meeting format. To access the virtual special meeting, you should visit https://meetnow.global/MTUZUCT. You will be required to enter a control number, included on your proxy card, voting instruction form or other notice that you may receive, which will allow you to participate in the virtual meeting and vote your shares of common stock if you are a CyrusOne stockholder as of the record date. Please see the section of this proxy statement entitled “The Special Meeting” for additional information on the special meeting, including how to vote your shares of common stock.
Stockholders Entitled to Vote; Vote Required to Approve the Merger Proposal
(page 24 and page 25)
Only CyrusOne stockholders of record at the close of business on December 23, 2021 — the record date for the special meeting — will be entitled to notice of, and to vote at, the special meeting and any postponement or adjournment thereof. As of the close of business on the record date, there were 129,555,316 shares of common stock outstanding and entitled to vote. Each CyrusOne stockholder is entitled to one vote per share of common stock held by such CyrusOne stockholder on the record date on each of the proposals presented in this proxy statement.
The approval of the merger proposal requires the affirmative vote of the holders of our common stock entitled to cast a majority of all the votes entitled to be cast on the matter (the “Company stockholder approval”). Under Maryland law and the merger agreement, the receipt of such required vote is a condition to the consummation of the merger. Approval of the advisory compensation proposal and the adjournment proposal is not a condition to the consummation of the merger. Note that you may vote to approve the merger proposal and vote not to approve the advisory compensation proposal or adjournment proposal and vice versa.
Background of the Merger
(page 31)
A description of the process we undertook that led to the proposed merger, including our discussions with KKR and GIP, is included in this proxy statement under “The Merger — Background of the Merger”.
 
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Recommendation of the Board
(page 41)
The Board has reviewed and considered the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Board unanimously (i) authorized and approved the execution, delivery and performance by the Company of the merger agreement and the consummation by the Company of the merger and the other transactions contemplated by the merger agreement, (ii) declared that the merger is advisable and in the best interests of the Company and of stockholders of the Company on substantially the terms and conditions set forth in the merger agreement, (iii) directed that the merger be submitted for consideration at the special meeting and (iv) recommended that the stockholders of the Company approve the merger. Accordingly, the Board recommends a vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal. For a discussion of the factors that the Board considered in determining to recommend the approval of the merger proposal, please see the section of this proxy statement entitled “The Merger — Reasons for the Merger” beginning on page 41.
Opinion of the Company’s Financial Advisor
(page 48)
Morgan Stanley was retained by the Company to act as its financial advisor in connection with a review of the Company’s strategic alternatives, including a potential sale of the Company. The Company selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation and its knowledge of the business and affairs of the Company. As part of this engagement, the Board requested that Morgan Stanley evaluate the fairness from a financial point of view of the merger consideration to be received by the holders of shares of common stock pursuant to the merger agreement. On November 14, 2021, Morgan Stanley rendered to the Board its oral opinion, which was subsequently confirmed by delivery of a written opinion, dated November 14, 2021, and that is attached to this proxy statement as Annex B, that, as of that date and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth therein, the merger consideration to be received by the holders of shares of common stock pursuant to the merger agreement was fair from a financial point of view to the holders of shares of common stock.
The full text of the written opinion of Morgan Stanley, dated November 14, 2021, is attached as Annex B to this proxy statement and is incorporated by reference into this proxy statement. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. CyrusOne stockholders are urged to, and should, read the opinion carefully and in its entirety. Morgan Stanley’s opinion is directed to the Board and addresses only the fairness, from a financial point of view to the holders of shares of common stock of the merger consideration to be received by the holders of shares of common stock pursuant to the merger agreement as of the date of the opinion. Morgan Stanley’s opinion does not address any other aspect of the transactions contemplated by the merger agreement and does not constitute an opinion or recommendation as to how any CyrusOne stockholder should vote at the special meeting. The summary of Morgan Stanley’s opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion.
For a description of the opinion that the Board received from Morgan Stanley, and for additional information, see the section entitled “The Merger — Opinion of the Company’s Financial Advisor” beginning on page 48.
Certain Effects of the Merger
(page 56)
If the merger is consummated, Merger Sub will be merged with and into the Company, with the Company surviving 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 direct, wholly owned subsidiary of Parent.
 
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If the merger is consummated, Parent shall use its reasonable best efforts to cause the common stock to be delisted from the NASDAQ Global Select Market and deregistered under the Exchange Act as soon as reasonably practicable following the effective time, and, accordingly, the common stock will no longer be publicly traded.
Effects on the Company if the Merger Is Not Consummated
(page 56)
In the event that the Company stockholder approval is not obtained or if the merger is not consummated for any other reason, CyrusOne stockholders will not receive any payment for their shares of common stock in connection with the merger. Instead, the Company will remain an independent public company, the common stock will continue to be listed and traded on the NASDAQ Global Select Market, the common stock will continue to be registered under the Exchange Act and CyrusOne stockholders will continue to own their shares of common stock and will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of the common stock.
Treatment of Company Equity Awards
(page 72)
As of the effective time:

each option to purchase shares of common stock (each, a “Company stock option”) outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, less the exercise price, multiplied by the number of shares subject to such Company stock option, but any Company stock option with an exercise price that is equal to or greater than the merger consideration will be canceled for no consideration;

each award of shares of common stock subject to forfeiture conditions (each, a “Company restricted share award”) outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of shares subject to such Company restricted share award, with the number of such shares subject to such Company restricted share award determined assuming the maximum level of achievement of any applicable performance criteria;

each restricted stock unit with respect to shares of common stock (each, a “Company RSU”) outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of shares subject to such Company RSU, plus the amount of any accrued but unpaid dividend equivalents, with the number of shares subject to such Company RSU determined assuming the maximum level of achievement of any applicable performance criteria; and

each class of partnership units of the Company Operating Partnership designated as “LTIP units” (each, an “LTIP unit award” and, collectively with the Company stock options, Company restricted share awards, and Company RSUs, the “Company equity awards”) outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of LTIP units subject to such LTIP unit award, plus the amount of any declared but unpaid distributions, with the number of LTIP units subject to such LTIP unit award determined assuming the maximum level of achievement of any applicable performance criteria.
With respect to Company equity awards granted prior to the date of the merger agreement or granted at any time to non-employee directors, the consideration described above will become vested and payable at the effective time, subject to any applicable withholding tax. With respect to Company equity awards granted following the date of the merger agreement (other than those granted to non-employee directors), the consideration described above will remain subject to any time-vesting criteria that applied to the applicable Company equity award, including with respect to any accelerated vesting terms upon a qualifying termination of employment. For company equity awards subject to performance criteria, the maximum level of performance is 200% or 300% of target performance, as applicable.
See “The Merger Agreement — Treatment of Company Equity Awards” beginning on page 72.
 
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Treatment of Interests in the Company Operating Partnership
(page 72)
Prior to the closing of the merger, CyrusOne LP, a Maryland limited partnership (the “Company Operating Partnership”), will redeem all issued and outstanding equity interests in the Company Operating Partnership other than partnership units held by the Company, CyrusOne GP, a Maryland statutory trust (“the Company General Partner”), or CyrusOne Holdings LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Company Holdings LLC”), and any LTIP units outstanding, which will be converted at the effective time as described above in “Treatment of Company Equity Awards”, in accordance with the limited partnership agreement of the Company Operating Partnership such that, immediately prior to the effective time, the Company Operating Partnership is a direct or indirect wholly owned subsidiary of the Company (but for any LTIP units outstanding).
Treatment of Employee Stock Purchase Plan
(page 72)
Following the date of the merger agreement: (i) with respect to any outstanding “Purchase Period(s)” (as defined in the CyrusOne 2014 Employee Stock Purchase Plan (the “Company ESPP”)) under the Company ESPP as of such date, no participant can increase the percentage amount of his or her payroll deduction election in effect for such Purchase Period(s) and no new participants can participate in such Purchase Period(s); (ii) no new Purchase Period will commence under the Company ESPP on or after such date; (iii) any Purchase Period under the Company ESPP that does not end prior to the effective time will terminate and a “Purchase Date” ​(as such term is defined in the Company ESPP) will occur immediately prior to the effective time with respect to such Purchase Period, in which case any shares of common stock purchased pursuant to such Purchase Period will be treated the same as all other shares of common stock in the merger; and (iv) immediately prior to, and subject to the occurrence of the effective time, the Company ESPP will terminate.
Interests of the Company’s Directors and Executive Officers in the Merger
(page 59)
The Company’s directors and executive officers have financial interests in the merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Board was aware of and considered these interests in reaching the determination to approve the execution, delivery and performance by the Company of the merger agreement and recommend that CyrusOne stockholders approve the merger proposal. These interests may include:

the treatment of Company equity awards provided for under the merger agreement (as described below in “The Merger — Treatment of Company Equity Awards”);

severance and other benefits in the case of certain qualifying terminations under the terms of an individual employment or severance agreement;

cash-based deal retention bonuses under a program established for the benefit of certain Company employees, including executive officers;

each participant (including each executive officer) in the Company’s annual bonus plan will be eligible for a pro-rated annual bonus for the year in which the effective time occurs if such participant is terminated prior to the date such bonuses are earned and he or she otherwise qualifies for severance; and

continued indemnification and insurance coverage under the merger agreement, the Company’s organizational documents and indemnification agreements the Company has entered into with each of its directors and executive officers.
These interests are described in more detail, and certain of them are quantified, in the section entitled “The Merger — Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 59 of this proxy statement.
 
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Security Ownership of Directors and Executive Officers
(page 92)
As of December 23, 2021, the directors and executive officers of the Company beneficially owned in the aggregate 461,973 shares of common stock, or approximately 0.4% of the outstanding shares of common stock as of December 23, 2021. We currently expect that each of these individuals will vote all of his or her shares in favor of each of the proposals to be presented at the special meeting.
Financing of the Merger
(page 57)
The merger is not conditioned on Parent’s receipt of any financing. Parent plans to fund the merger consideration with committed equity financing and debt financing, as described below.
The KKR Funds and the GIP Funds have committed to contribute, or cause to be contributed, to Parent an aggregate amount in cash equal to $7,047,217,376 (the “equity commitment”), subject to the terms and conditions set forth in the equity commitment letters provided by such funds to Parent, dated as of November 14, 2021 (the “equity commitment letters”), which will be used by Parent, together with the debt financing described below, solely to fund each such fund’s pro rata share of (i) the cash payments required under the merger agreement to be made by Parent in connection with the closing of the merger (the “closing obligations”) and (ii) the payment of Parent’s then-due fees and expenses related to the consummation of the transactions contemplated by the merger agreement (the “expense obligations” and, together with the closing obligations, the “obligations”). The equity commitment shall be reduced on a pro rata basis solely in the event Parent does not require all of the funds contemplated by the equity commitment to satisfy the obligations in full at the closing of the merger.
Additionally, Barclays Bank PLC (acting through such of its affiliates or branches as it deems appropriate, “Barclays”), Goldman Sachs Bank USA (acting through such of its affiliates or branches as it deems appropriate, “GS”), Wells Fargo Bank, N.A. (acting through such of its affiliates or branches as it deems appropriate, “Wells”) and Citigroup Global Markets Inc. (acting through such of its affiliates or branches as it deems appropriate, “Citi” and, together with Barclays, GS, Wells and any additional commitment party joining the committed debt financing, the “debt financing sources”) have committed to provide Parent, severally but not jointly, upon the terms and subject to the conditions set forth in the debt commitment letter (as defined below), debt financing in an aggregate amount of $12.0 billion, consisting of a U.S. short tenor loan facility in an aggregate principal amount of up to $4.0 billion, a U.S. balance sheet loan facility in an aggregate principal amount of up to $5.0 billion, an EU balance sheet loan facility in an aggregate principal amount of up to $1.5 billion in euros and a U.S. revolving loan facility in an aggregate principal amount of up to $1.5 billion (collectively, the “credit facilities”), which credit facilities may be used to consummate the merger, refinance existing debt, establish any required reserves under the applicable credit facilities and pay related fees, costs and expenses, to the extent that Parent does not obtain alternative financing, in lieu of such credit facilities, at or prior to the closing of the merger.
Guarantees
(see page 58)
Subject to the terms and conditions set forth in the limited guarantees made by the KKR Funds and the GIP Funds in favor of the Company, dated as of November 14, 2021 (the “guarantees”), the KKR Funds and the GIP Funds have guaranteed certain payment obligations of Parent under the merger agreement, subject to an aggregate cap of $409,250,000 for the KKR Funds and an aggregate cap of $409,250,000 for the GIP Funds, for payment of (i) the parent termination fee, (ii) reasonable and documented costs and expenses of the Company in connection with the successful enforcement of Parent’s payment obligations under clause (i) above and (iii) certain reasonable expense reimbursement and indemnification obligations of Parent to the Company pursuant to the merger agreement (collectively, the “guaranteed obligations”).
Conditions of the Merger
(page 87)
Each party’s obligation to consummate the merger is subject to the satisfaction or (to the extent permitted by law) waiver, on or prior to the closing date of the merger (the “closing date”), of the following conditions:
 
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no order, judgment, injunction, ruling, award, writ or decree of any governmental authority enacted, promulgated, issued, entered, amended or enforced by any governmental authority of competent jurisdiction or any applicable law in the United States or certain applicable jurisdictions shall be in effect enjoining, restraining or otherwise making illegal, preventing or prohibiting the consummation of the merger;

the waiting period applicable to the consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder (the “HSR Act”) as well as any timing agreement entered into in accordance with the terms of the merger agreement with any governmental authorities having jurisdiction with respect to the transactions contemplated by the merger agreement pursuant to applicable antitrust laws shall have expired or otherwise terminated and certain other consents, approvals or other clearances shall have been obtained;

the receipt of the Company stockholder approval;

subject to certain materiality and other qualifiers, the accuracy of the representations and warranties of the other party; and

performance in all material respects by the other party of its obligations under the merger agreement.
In addition, Parent’s and Merger Sub’s obligation to consummate the merger is also subject to receipt by the Company of an opinion from Cravath, Swaine & Moore LLP or other nationally recognized REIT counsel to the Company which concludes (subject to customary assumptions, qualifications and representations, including representations made by the Company and its subsidiaries in a tax representation letter provided by the Company) that, commencing with the Company’s taxable year ended December 31, 2013 and until the effective time, the Company has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT.
The consummation of the merger and the other transactions contemplated by the merger agreement is not conditioned upon Parent’s receipt of financing.
Each party may waive any of the conditions to its obligations to consummate the merger except where waiver is not permitted by law.
Regulatory Approvals in Connection with the Merger
(page 68)
The consummation of the merger is subject to review under the HSR Act. As described above in the section entitled “Conditions of the Merger”, the obligations of the parties to effect the merger are subject to, among other things, the waiting period (and any extension thereof) applicable to the merger under the HSR Act having been terminated or expired and the receipt of certain other regulatory approvals (as defined under the section entitled “The Merger — Regulatory Approvals in Connection with the Merger”). Both the Company and Parent filed their respective Notification and Report Forms with the FTC and the Antitrust Division of the DOJ on November 29, 2021. The waiting period applicable to the consummation of the merger under the HSR Act expired on December 29, 2021.
The merger agreement includes covenants obligating each of the parties to use reasonable best efforts to cause the closing conditions to be satisfied as promptly as reasonably practicable and to take certain actions to resolve objections under any applicable laws. In addition, to the extent necessary and advisable to obtain the required regulatory approvals, Parent has agreed to (i) execute settlements, undertakings, consent decrees, stipulations, public law contracts or other agreements with any governmental authority or any other person, group or entity, (ii) sell, divest or otherwise convey or hold separate particular assets or categories of assets or businesses of Parent and its subsidiaries, (iii) agree to sell, divest or otherwise convey or hold separate particular assets or categories of assets or businesses of the Company and its subsidiaries contemporaneously with or subsequent to the effective time, (iv) permit the Company to sell, divest or otherwise convey or hold separate particular assets or categories of assets or businesses of the Company or any of its subsidiaries prior to the effective time, (v) terminate existing contractual rights or relationships of the Company or Parent or their respective subsidiaries, (vi) terminate any joint venture or
 
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other arrangement, (vii) create any relationship, contractual right or obligation of the Company or Parent or their respective subsidiaries or (viii) effectuate any other change or restructuring of the Company or Parent or their respective subsidiaries. Parent is not, however, required to take such actions if they would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (as defined under the section entitled “The Merger — Material Adverse Effect”).
No Solicitation
(page 79)
The merger agreement generally restricts the Company’s ability to directly or indirectly solicit takeover proposals (as defined below under “The Merger Agreement — No Solicitation”) from third parties (including by furnishing non-public information), to participate in discussions or negotiations with third parties regarding any takeover proposal, to enter into agreements providing for or relating to any takeover proposal or to approve or recommend any takeover proposals. Under certain circumstances, however, and in compliance with certain obligations contained in the merger agreement, the Company is permitted to engage in negotiations with, and provide information to, third parties that have made an unsolicited takeover proposal upon the Board’s (or an authorized Board committee’s) determination in good faith, after consultation with financial advisors and outside legal counsel, that such takeover proposal constitutes or would reasonably be expected to lead to a superior proposal (as defined below under “The Merger Agreement — No Solicitation”).
Termination
(page 88)
The merger agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the effective time, whether before or after receipt of the Company stockholder approval, by the mutual written consent of the parties to the merger agreement.
Termination by either the Company or Parent
In addition, the Company, on the one hand, or Parent, on the other hand, may terminate the merger agreement and abandon the transactions contemplated thereby at any time prior to the effective time, whether before or after receipt of the Company stockholder approval, if:

the merger is not consummated by May 14, 2022 (the “outside date”), except (i) that if the marketing period has commenced but the effective time has not yet occurred, then the outside date shall automatically be extended to the date that is five business days following the then-scheduled end date of the marketing period (as described under “The Merger Agreement — Financing”) and (ii) that, if on the outside date any of the conditions set forth under the first (to the extent relating to a restraint in respect of any antitrust law or foreign investment law) and second bullet periods under “Conditions of the Merger” above are not satisfied but all other closing conditions have been satisfied or waived, then the outside date shall be automatically extended to November 14, 2022; provided, that this right to terminate the merger agreement shall not be available to any party if the failure of such party to perform or comply in any material respect with any of its obligations under the merger agreement has been the principal cause of the failure of the merger to be consummated on or before such date;

the condition set forth in the first bullet point under “Conditions of the Merger” above is not satisfied and the legal restraint giving rise to such non-satisfaction has become final and non-appealable, provided that the party seeking to terminate the merger agreement has complied with its obligations in all material respects to prevent the entry of and to remove such restraint; or

the Company stockholder approval is not obtained at the special meeting (including adjournments or postponements thereof).
Termination by Parent
Parent may also terminate the merger agreement and abandon the transactions contemplated thereby by written notice to the Company at any time prior to the effective time, whether before or after receipt of the Company stockholder approval, if:
 
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the Company shall have breached any of its representations or warranties or failed to perform or comply with any of its obligations or agreements set forth in the merger agreement, which breach or failure to perform or comply (A) would give rise to the failure of the conditions set forth in the first and second bullet points under “Conditions of the Merger” above and (B) is incapable of being cured or, if capable of being cured, has not been cured by the earlier of (x) 30 calendar days following receipt by the Company of written notice from Parent of such breach or failure to perform or comply and (y) the outside date, provided that Parent or Merger Sub is not then in material breach of any of their representations, warranties, obligations or agreements under the merger agreement; or

(A) the Board or a committee thereof shall have made an adverse recommendation change (as defined under the section entitled “The Merger Agreement — Change in Board Recommendation”), (B) the Board shall have failed to publicly recommend against any tender offer or exchange offer that constitutes a takeover proposal within ten business days or (C) the Board shall have failed to publicly reaffirm its recommendation to approve the merger within ten business days after receipt of a written request by Parent to provide such reaffirmation in response to a takeover proposal that has been publicly announced (or if the special meeting is scheduled to be held within ten business days of such request, promptly and in any event prior to the date of the special meeting).
Termination by the Company
The Company may also terminate the merger agreement and abandon the transactions contemplated thereby by written notice to the Company at any time prior to the effective time, whether before or after receipt of the Company stockholder approval (except as otherwise noted), if:

Parent or Merger Sub shall have breached any of its representations or warranties or failed to perform or comply with any of its obligations or agreements set forth in the merger agreement, which breach or failure to perform or comply (A) would give rise to the failure of the conditions set forth in the first and second bullet points under “Conditions of the Merger” above and (B) is incapable of being cured or, if capable of being cured, has not been cured by the earlier of (x) 30 calendar days following receipt by Parent of written notice from the Company of such breach or failure to perform or comply and (y) the outside date, provided that the Company is then not in material breach of any of its representations, warranties, obligations or agreements under the merger agreement;

prior to the receipt of the Company stockholder approval, in order to accept a superior proposal, which did not result, directly or indirectly, from a breach of the terms of the merger agreement with respect to no solicitation and the simultaneous execution of a company acquisition agreement (as defined below), and the Company pays or causes to be paid the applicable termination fee discussed in the section of this proxy statement entitled “The Merger Agreement — Termination Fees” beginning on page 89; or

(A) all of the closing conditions of Parent and Merger Sub have been satisfied or waived and the marketing period has ended, (B) the Company has confirmed by written notice that (1) all of the closing conditions of the Company have been satisfied or waived, (2) the merger is required to be consummated and (3) that the Company is ready, willing and able to consummate the merger and (C) Parent and Merger Sub fail to consummate the merger within three business days after the later of (x) receipt by Parent of the notice referred to in clause (B) and (y) the date the merger was required to be consummated.
Termination Fees
(page 89)
Termination Fee Payable by the Company
The Company has agreed to pay Parent a termination fee of $319.5 million, which we refer to as the “company termination fee”, if:

Parent terminates the merger agreement pursuant to the provision described in the second bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by Parent”;
 
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the Company terminates the merger agreement pursuant to the provision described in the second bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by the Company”; or

all of the following requirements are satisfied:

the Company or Parent terminates the merger agreement pursuant to the provisions described in the first or third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by either the Company or Parent” or Parent terminates the merger agreement pursuant to the provision described in the first bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by Parent”; and

(1) at the time of termination the Company shall not have been entitled to terminate the merger agreement pursuant to the provision described in the third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by the Company”, (2) a bona fide takeover proposal shall have been received by the Company or any person shall have publicly announced, publicly disclosed or otherwise publicly communicated an intention to make a takeover proposal (and, in the case of a termination pursuant to the provision described in the third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by either the Company or Parent” such takeover proposal intention shall have been made prior to the special meeting and not publicly withdrawn at least three business days prior to the special meeting) and (3) within 12 months after a termination referred to in the immediately preceding sub-bullet point the Company enters into a definitive agreement providing for the consummation of any takeover proposal or consummates any takeover proposal (with, for purposes of this clause (3), the references to “20%” in the definition of “takeover proposal” being deemed to be references to “50%”).
Termination Fee Payable by Parent
Parent has agreed to pay the Company a termination fee of $813.5 million, which we refer to as the “parent termination fee”, if the Company terminates the merger agreement pursuant to the provisions described in the first or third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by the Company” or in the event that Parent terminates the merger agreement pursuant to the provision described in the first bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by either the Company or Parent” and the Company was then entitled to terminate the merger agreement pursuant to the provisions described in the first or third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by the Company”.
No Dissenters’ Rights of Appraisal
(page 59)
As permitted under Maryland law, our charter provides that holders of common stock may not exercise any appraisal rights, dissenters’ rights or the rights of an objecting stockholder to receive the fair value of their shares in connection with a merger unless the Board, upon the affirmative vote of a majority of the Board, determines that such rights apply. The Board has made no such determination. In addition, because shares of our common stock are listed on the NASDAQ Global Select Market as of the record date for determining stockholders entitled to vote at the special meeting, our stockholders who object to the merger do not have any appraisal rights, dissenters’ rights or the rights of an objecting stockholder under the Maryland General Corporation Law in connection with the merger.
Material U.S. Federal Income Tax Consequences of the Merger
(page 65)
The receipt of cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. Generally, for U.S. federal income tax purposes, if you are a holder of common stock who is a U.S. holder (as defined below in the section of this proxy statement entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger”), you will recognize capital gain or loss equal to the difference
 
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between the amount of cash you receive in the merger and your adjusted tax basis in your shares of common stock converted into cash in the merger. If you are a holder of common stock who is a non-U.S. holder (as defined below in the section of this proxy statement entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger”), the merger will generally not be taxable to you under U.S. federal income tax laws unless you have certain connections to the United States or we are a USRPHC (as defined below in the section of this proxy statement entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger”) and certain other conditions are met.
You should read the section of this proxy statement entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 65 for a more complete discussion of the material U.S. federal income tax consequences of the merger. You should consult your own tax advisor for a full understanding of how the merger will affect your federal, state, local and/or non-U.S. taxes.
Current Price of Common Stock
(page 94)
On December 27, 2021, the latest practicable trading day before the filing of this proxy statement, the reported closing price for shares of common stock on the NASDAQ Global Select Market was $89.99. You are encouraged to obtain current market quotations for shares of common stock in connection with voting your common stock.
Additional Information
(page 97)
You can find more information about the Company in the periodic reports and other information we file with the U.S. Securities and Exchange Commission (the “SEC”). The information is available at the website maintained by the SEC at www.sec.gov.
 
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to briefly address some commonly asked questions regarding the special meeting and the merger. These questions and answers may not address all questions that may be important to you. You should read the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.
Q:
Why am I receiving this proxy statement?
A:
On November 14, 2021, the Company entered into the merger agreement with Parent and Merger Sub. Pursuant to the terms of the merger agreement, Merger Sub will be merged with and into the Company, with the Company surviving the merger as a wholly owned, direct subsidiary of Parent.
You are receiving this proxy statement in connection with the solicitation of proxies by the Board in favor of the merger proposal and the other matters to be voted on at the special meeting described below under “— What proposals will be considered at the special meeting?
Q:
As a holder of common stock, what will I receive in the merger?
A:
If the merger is consummated, you will be entitled to receive $90.50 in cash, without interest and less any applicable withholding taxes, for each share of common stock that you own immediately prior to the effective time.
The receipt of cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. Please see the section of this proxy statement entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 65 for a more detailed description of the United States federal income tax consequences of the merger. You should consult your own tax advisor for a full understanding of how the merger will affect your federal, state, local and/or non-U.S. taxes.
Q:
Will I receive any regular quarterly dividends with respect to the shares of common stock that I own?
A:
On October 27, 2021, the Company declared a regular quarterly dividend of $0.52 per share of common stock for the quarter ended December 31, 2021, which will be paid on January 7, 2022 to CyrusOne stockholders of record at the close of business on January 3, 2022. Pursuant to the terms of the merger agreement, during the pendency of the merger, the Company is permitted to pay regular quarterly dividends, at a quarterly rate not to exceed $0.52 per share of common stock, to CyrusOne stockholders. Dividends are declared and paid at the discretion of the Board. The Board may change the Company’s dividend policy at any time and there can be no assurance as to amount or timing of dividends in the future.
The Company is also permitted to authorize, declare and pay any special dividends to CyrusOne stockholders during the term of the merger agreement that, in the reasonable discretion of the Board, on the advice of legal counsel, are necessary or advisable to maintain our status as a REIT or to avoid the payment of income or excise tax or to preserve the tax status of any subsidiary (with any such special dividend resulting in a corresponding decrease to the merger consideration).
For more information, please see the section of this proxy statement entitled “The Merger — Dividends” beginning on page 67.
Q:
What will happen to outstanding Company equity awards in the merger?
A:
As of the effective time:

each Company stock option outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, less the exercise price, multiplied by the number of shares subject to such Company stock option, but any Company stock option with an exercise price that is equal to or greater than the merger consideration will be canceled for no consideration;

each Company restricted share award outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of shares subject to such
 
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Company restricted share award, with the number of such shares subject to such Company restricted share award determined assuming the maximum level of achievement of any applicable performance criteria;

each Company RSU outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of shares subject to such Company RSU, plus the amount of any accrued but unpaid dividend equivalents, with the number of shares subject to such Company RSU determined assuming the maximum level of achievement of any applicable performance criteria; and

each LTIP unit award outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of LTIP units subject to the LTIP unit award, plus the amount of any declared but unpaid distributions, in each case, with the number of LTIP units subject to such LTIP unit award determined assuming the maximum level of achievement of any applicable performance criteria.
With respect to Company equity awards granted prior to the date of the merger agreement or granted at any time to non-employee directors, the consideration described above will become vested and payable at the effective time, subject to any applicable withholding taxes. With respect to Company equity awards granted following the date of the merger agreement (other than those granted to non-employee directors), the consideration described above will remain subject to any time-vesting criteria that applied to the applicable Company equity award, including with respect to any accelerated vesting terms upon a qualifying termination of employment. For company equity awards subject to performance criteria, the maximum level of performance is 200% or 300% of target performance, as applicable.
See “The Merger Agreement — Treatment of Company Equity Awards” beginning on page 72.
Q:
What will happen to the Company ESPP?
A:
Following the date of the merger agreement: (i) with respect to any outstanding Purchase Period(s) under the Company ESPP as of such date, no participant can increase the percentage amount of his or her payroll deduction election in effect as of such date for such Purchase Period(s) and no new participants can participate in such Purchase Period(s); (ii) no new Purchase Period will commence under the Company ESPP on or after such date; (iii) any Purchase Period under the Company ESPP that does not end prior to the effective time will terminate and a Purchase Date will occur immediately prior to the effective time with respect to such Purchase Period, in which case any shares of common stock purchased pursuant to such Purchase Period will be treated the same as all other shares of common stock in the merger; and (iv) immediately prior to, and subject to the occurrence of the effective time, the Company ESPP will terminate.
Q:
When and where is the special meeting of our stockholders?
A:
The special meeting of stockholders of the Company will be held on February 1, 2022 at 9:30 a.m., Central Time (10:30 a.m., Eastern Time), in a virtual-only meeting format. To access the virtual special meeting, you should visit https://meetnow.global/MTUZUCT. You will be required to enter a control number, included on your proxy card, voting instruction form or other notice that you may receive, which will allow you to participate in the virtual meeting and vote your shares of common stock if you are a CyrusOne stockholder as of the record date.
Q:
Who is entitled to vote at the special meeting?
A:
Only CyrusOne stockholders of record at the close of business on December 23, 2021, the record date for the special meeting, will be entitled to notice of, and to vote at, the special meeting and any postponement or adjournment thereof. As of the close of business on the record date, there were 129,555,316 shares of common stock outstanding and entitled to vote. Each CyrusOne stockholder is entitled to one vote per share of common stock held by such CyrusOne stockholder on the record date on each of the proposals presented in this proxy statement.
If on December 23, 2021, you were a “record” holder of common stock (that is, if you held common stock in your own name in the stock register maintained by our transfer agent, Computershare Trust
 
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Company, N.A.), you are entitled to vote at the virtual special meeting or by proxy. Whether or not you intend to attend the virtual special meeting, we encourage you to authorize a proxy to vote now, online, by phone or by proxy card to ensure that your vote is counted.
If on December 23, 2021, you were the beneficial owner of common stock held in “street name” (that is, if you held common stock through your broker), then these materials are being forwarded to you by your broker. You may direct your broker how to vote your common stock by following the voting instructions on the form provided by your broker. If you hold any common stock through your broker and wish to attend the virtual special meeting, you may attend the virtual special meeting but may not be able to vote unless you first obtain a legal proxy issued in your name from your broker or other nominee. The cut-off time for submitting a legal proxy is January 27, 2022, three business days prior to the date of the special meeting, at 4:00 p.m., Central Time (5:00 p.m., Eastern Time).
Q:
What proposals will be considered at the special meeting?
A:
At the special meeting, CyrusOne stockholders will be asked to consider and vote on the following proposals:

a proposal to approve the merger in accordance with the terms of the merger agreement, the merger agreement and the other transactions contemplated by the merger agreement (the “merger proposal”);

a proposal to approve, by advisory (non-binding) vote, the compensation that may be paid or become payable to our named executive officers in connection with the consummation of the merger (the “advisory compensation proposal”); and

a proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are insufficient votes at the special meeting to approve the merger proposal (the “adjournment proposal”).
Q:
What constitutes a quorum for purposes of the special meeting?
A:
The presence in person or by proxy of our stockholders entitled to cast a majority of all of the votes entitled to be cast at the special meeting will constitute a quorum for purposes of the special meeting. Virtual attendance at the special meeting constitutes presence in person for quorum purposes at the special meeting. A quorum is necessary to transact business at the special meeting. Abstentions will be counted as shares present for the purposes of determining the presence of a quorum.
If a quorum is not present at the special meeting, the CyrusOne stockholders entitled to vote at the special meeting, present virtually or by proxy, may adjourn the special meeting. In addition, our bylaws permit the chair of the special meeting, acting in his or her own discretion and without any action by our stockholders, to adjourn the special meeting to a later date and time and at a place announced at the special meeting. In either case, the adjourned meeting may take place without further notice other than by an announcement made at the special meeting unless the adjournment is for more than 120 days after the original record date or if, after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the special meeting (subject to certain restrictions in the merger agreement, including that the special meeting generally may not be held, without Parent’s consent, on a date that is more than 30 days after the date on which the special meeting was originally scheduled). In the event that a quorum is not present at the special meeting, or if there are insufficient votes to approve the merger proposal at the time of the special meeting, we expect that the special meeting will be postponed or adjourned to solicit additional proxies.
Q:
What vote of our stockholders is required to approve each of the proposals?
A:
The approval of the merger proposal requires the affirmative vote of the holders of our common stock entitled to cast a majority of all the votes entitled to be cast on the matter. Under Maryland law and the merger agreement, the receipt of such required vote is a condition to the consummation of the merger. Note that you may vote to approve the merger proposal and vote not to approve the advisory compensation proposal or adjournment proposal and vice versa. Abstentions or failures to vote
 
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(including a failure to authorize a proxy to vote on a CyrusOne stockholder’s behalf) will have the same effect as a vote “AGAINST” the merger proposal.
The approval of the advisory compensation proposal requires the affirmative vote of a majority of the votes cast on such proposal at the special meeting. Assuming a quorum is present at the special meeting, abstentions or failures to vote (including a failure to authorize a proxy to vote on a CyrusOne stockholder’s behalf) will have no effect on the outcome of the advisory compensation proposal.
The approval of the adjournment proposal requires the affirmative vote of a majority of the votes cast on such proposal at the special meeting. Assuming a quorum is present at the special meeting, abstentions or failures to vote (including a failure to authorize a proxy to vote on a CyrusOne stockholder’s behalf) will have no effect on the outcome of the adjournment proposal. The Company does not intend to call a vote on this proposal if the merger proposal is approved at the special meeting.
Q:
How does the Board recommend that I vote?
A:
The Board recommends a vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal.
For a discussion of the factors that the Board considered in determining to recommend the approval of the merger proposal, please see the section of this proxy statement entitled “The Merger — Reasons for the Merger” beginning on page 41.
Q:
How do the Company’s directors and executive officers intend to vote?
A:
As of December 23, 2021, the directors and executive officers of the Company beneficially owned in the aggregate 461,973 shares of common stock, or approximately 0.4% of the outstanding shares of common stock as of December 23, 2021. Although none of the directors or executive officers is obligated to vote to approve the merger proposal, we currently expect that each of these individuals will vote all of his or her shares in favor of each of the proposals to be presented at the special meeting.
Q:
Do any of the Company’s directors or executive officers have any interests in the merger that are different from, or in addition to, my interests as a CyrusOne stockholder?
A:
In considering the proposals to be voted on at the special meeting, you should be aware that the Company’s directors and executive officers have financial interests in the merger that may be different from, or in addition to, your interests as a CyrusOne stockholder. The members of the Board were aware of and considered these interests in reaching the determination to approve the merger proposal and recommend that CyrusOne stockholders approve the merger proposal. These interests may include:

the treatment of Company equity awards provided for under the merger agreement (as described below in “The Merger — Treatment of Company Equity Awards”);

severance and other benefits in the case of certain qualifying terminations under the terms of an individual employment or severance agreement;

cash-based deal retention bonuses under a program established for the benefit of certain Company employees, including executive officers;

each participant (including each executive officer) in the Company’s annual bonus plan will be eligible for a pro-rated annual bonus for the year in which the effective time occurs if such participant is terminated prior to the date such bonuses are earned and he or she otherwise qualifies for severance; and

continued indemnification and insurance coverage under the merger agreement, the Company’s organizational documents and indemnification agreements the Company has entered into with each of its directors and executive officers.
These interests are described in more detail, and certain of them are quantified, in the section of this proxy statement entitled “The Merger — Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 59.
 
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Q:
What happens if I transfer my common stock before the special meeting?
A:
The record date for the special meeting is earlier than the date of the special meeting. If you own common stock on the record date but transfer your shares after the record date but prior to the special meeting, you will retain your right to vote such shares of common stock at the special meeting. However, the right to receive the merger consideration will pass to the person to whom you transferred your shares of common stock.
Q:
How do I vote if I am a CyrusOne stockholder of record?
A:
If you are a CyrusOne stockholder of record, you may vote in advance by authorizing a proxy for the special meeting via the internet, by telephone or by completing, signing, dating and mailing the enclosed proxy card in the envelope provided. In order to submit a vote by proxy via the internet or telephone, follow the applicable instructions shown on the proxy card mailed to you. You may also vote by attending the virtual special meeting and voting during the live webcast.
For more detailed instructions on how to vote using one of these methods, please see the section of this proxy statement entitled “The Special Meeting — Voting Procedures” beginning on page 26.
Whether or not you plan to attend the virtual special meeting, we urge you to vote now to ensure your vote is counted. You may still attend the virtual special meeting and vote during the live webcast if you have already voted by proxy.
Q:
What will happen if I abstain from voting or fail to vote on any of the proposals?
A:
The approval of the merger proposal requires the affirmative vote of the holders of our common stock entitled to cast a majority of all the votes entitled to be cast on the matter. If you fail to authorize a proxy to vote your shares or to vote at the virtual special meeting, or fail to instruct your broker, bank or other nominee on how to vote, the effect will be that the shares of common stock that you own will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the merger proposal.
The approval of the advisory compensation proposal and the adjournment proposal each requires the affirmative vote of a majority of the votes cast on the proposal. Assuming a quorum is present, if you fail to authorize a proxy to vote your shares or vote at the virtual special meeting, or fail to instruct your broker on how to vote, it will have no effect on the outcome of these proposals. Abstentions will not be considered votes cast and therefore will have no effect on the outcome of the advisory compensation proposal or the adjournment proposal.
Q:
Can I change my vote after I have delivered my proxy?
A:
Yes. For CyrusOne stockholders of record, any time after you have submitted a proxy card and before the proxy card is exercised, you may revoke or change your vote in one of three ways:

You may submit a new proxy card bearing a later date (which automatically revokes the earlier proxy or voting instructions) whether made on the internet, by telephone or by mail.

You may submit a written notice of revocation to the Company’s Corporate Secretary at 2850 N. Harwood St., Suite 2200, Dallas, TX 75201.

You may attend the virtual special meeting and vote during the live webcast. Attendance at the virtual special meeting will not, in itself, constitute revocation of a previously granted proxy.
Please note that if you want to revoke your proxy by sending a new proxy card or a written notice of revocation to the Company, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by the Company prior to the special meeting.
If you hold your shares in “street name”, you will need to revoke or resubmit your proxy through your broker and in accordance with its procedures. If your broker allows you to submit a proxy via the internet or by telephone, you may be able to change your vote by submitting a new proxy via the internet or by telephone (or by mail). In order to attend the virtual special meeting and vote during the webcast, you will need to obtain a proxy from your broker, the CyrusOne stockholder of record.
 
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Q:
What should I do if I receive more than one set of voting materials?
A:
You may receive more than one set of voting materials, including multiple copies of this proxy statement or multiple proxy or voting instruction cards. For example, if you hold your common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold common stock. Please submit each proxy and voting instruction card that you receive to ensure that all of your shares of common stock are voted.
Q:
If I hold my common stock in certificated form, should I send in my stock certificates now?
A:
No. Promptly after the effective time, and in any event not later than the fifth business day after the effective time, Parent will cause the paying agent to mail to each holder of common stock entitled to the merger consideration a letter of transmittal and instructions advising such CyrusOne stockholder how to surrender its common stock in exchange for the merger consideration. Each holder of common stock will be entitled to receive the merger consideration upon the surrender of such certificate for cancelation to the paying agent together with the associated letter of transmittal, duly completely and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required by the paying agent. You should not return your stock certificates with the enclosed proxy card, and you should not forward your stock certificates to the paying agent without a letter of transmittal. If you hold common stock in non-certificated book-entry form, you will not be required to deliver a stock certificate, and you will instead receive your cash payment after the paying agent receives the documents requested in the applicable instruction.
Q:
Am I entitled to exercise appraisal rights, dissenters’ rights or the rights of an objecting stockholder?
A:
No. As permitted by Maryland law, our charter provides that holders of common stock may not exercise any appraisal rights, dissenters’ rights or the rights of an objecting stockholder to receive the fair value of their shares in connection with a merger unless the Board, upon the affirmative vote of a majority of the Board, determines that such rights apply. The Board has made no such determination. In addition, because shares of our common stock are listed on the NASDAQ Global Select Market as of the record date for determining stockholders entitled to vote at the virtual special meeting, our stockholders who object to the merger do not have any appraisal rights, dissenters’ rights or the rights of an objecting stockholder under the Maryland General Corporation Law in connection with the merger.
Q:
When is the merger expected to be consummated?
A:
We currently expect to consummate the merger during the second quarter of 2022, subject to receipt of the Company stockholder approval and the required regulatory approvals and the satisfaction or waiver of the other conditions to the merger described in the merger agreement.
Q:
What effect will the merger have on the Company?
A:
If the merger is consummated, Merger Sub will be merged with and into the Company, and the Company will continue to exist following the merger as a wholly owned, direct subsidiary of Parent. If the merger is consummated, Parent shall use its reasonable best efforts to cause the common stock to be delisted from the NASDAQ Global Select Market and deregistered under the Exchange Act as soon as reasonably practicable following the effective time, and, accordingly, the common stock will no longer be publicly traded.
Q:
What happens if the merger is not consummated?
A:
In the event that the Company stockholder approval is not obtained or if the merger is not consummated for any other reason, CyrusOne stockholders will not receive any payment for their shares of common stock in connection with the merger. Instead, the Company will remain an independent public company, the common stock will continue to be listed and traded on the NASDAQ Global Select Market, the common stock will continue to be registered under the Exchange Act and the Company’s stockholders will continue to own their shares of common stock and will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of the common stock.
 
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Q:
What is householding and how does it affect me?
A:
The SEC has approved rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more CyrusOne stockholders sharing the same address by delivering a single proxy statement addressed to those CyrusOne stockholders. This process, which is commonly referred to as “householding”, potentially means extra convenience for CyrusOne stockholders and cost savings for companies.
Brokers with account holders who are CyrusOne stockholders of the Company may be “householding” proxy materials. A single proxy statement will be delivered to multiple CyrusOne stockholders sharing an address unless contrary instructions have been received from the affected CyrusOne stockholders. If you have received notice from your broker that they will be “householding” communications to your address, such “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement, please notify your broker and direct your written request to CyrusOne Inc., Attention: Investor Relations Department, 2850 N. Harwood St., Suite 2200, Dallas, TX 75201 or call 972-350-0060. CyrusOne stockholders who currently receive multiple copies of the proxy statement at their address and would like to request “householding” of their communications should contact their broker.
Q:
Who can help answer my questions?
A:
If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact Okapi Partners, which is acting as the Company’s proxy solicitation agent in connection with the merger, toll free at 855-305-0857. Brokers may call at 212-297-0720.
[MISSING IMAGE: lg_okapipartnersnew-4c.jpg]
1212 Avenue of the Americas, 24th Floor
New York, NY 10036
Banks and Brokerage Firms, Please Call: 212-297-0720
Shareholders and All Others Call Toll-Free: 855-305-0857
Email: [email protected]
 
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information included in this proxy statement, together with other statements and information publicly disseminated by CyrusOne, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. CyrusOne intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions.
In particular, statements pertaining to CyrusOne’s capital resources, portfolio performance, financial condition and results of operations contain certain forward-looking statements. Likewise, all of CyrusOne’s statements regarding anticipated growth in CyrusOne’s funds from operations and anticipated market conditions, demographics and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected.
The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: (i) CyrusOne’s proposed merger with Parent may not be completed in a timely manner or at all, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect CyrusOne or the expected benefits of the proposed merger or that the approval of CyrusOne’s stockholders is not obtained; (ii) the failure to realize the anticipated benefits of the proposed merger; (iii) the ability of Parent to obtain debt financing in connection with the proposed merger; (iv) the possibility that competing offers or acquisition proposals for CyrusOne will be made; (v) the possibility that any or all of the various conditions to the consummation of the merger may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); (vi) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger, including in circumstances which would require CyrusOne to pay a termination fee or other expenses; (vii) the effect of the announcement or pendency of the merger on CyrusOne’s ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or its operating results and business generally; (viii) risks related to diverting management’s attention from CyrusOne’s ongoing business operations; (ix) the risk that stockholder litigation in connection with the merger may result in significant costs of defense, indemnification and liability; (x) the potential widespread and highly uncertain impact of public health outbreaks, epidemics and pandemics, such as the COVID-19 pandemic; (xi) loss of key customers; (xii) indemnification and liability provisions as well as service level commitments in CyrusOne’s contracts with customers imposing significant costs on CyrusOne in the event of losses; (xiii) economic downturn, natural disaster or oversupply of data centers in the limited geographic areas that CyrusOne serves; (xiv) risks related to the development of CyrusOne’s properties, including, without limitation, obtaining applicable permits, power and connectivity and CyrusOne’s ability to successfully lease those properties; (xv) weakening in the fundamentals for data center real estate, including but not limited to, increased competition, falling market rents, decreases in or slowed growth of global data, e-commerce and demand for outsourcing of data storage and cloud-based applications; (xvi) loss of access to key third-party service providers and suppliers; (xvii) risks of loss of power or cooling which may interrupt CyrusOne’s services to its customers; (xviii) inability to identify and complete acquisitions and operate acquired properties; (xix) CyrusOne’s failure to obtain necessary outside financing on favorable terms, or at all; (xx) restrictions in the instruments governing CyrusOne’s indebtedness; (xxi) risks related to environmental, social and governance matters; (xxii) unknown or contingent liabilities related to CyrusOne’s acquisitions; (xxiii) significant competition in CyrusOne’s industry; (xxiv) recent turnover, or the further loss of, any of CyrusOne’s key personnel; (xxv) risks associated with real estate assets and the industry; (xxvi) failure to
 
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maintain CyrusOne’s status as a REIT or to comply with the highly technical and complex REIT provisions of the Code; (xxvii) REIT distribution requirements could adversely affect CyrusOne’s ability to execute its business plan; (xviii) insufficient cash available for distribution to stockholders; (xxix) future offerings of debt may adversely affect the market price of CyrusOne’s common stock; (xxx) increases in market interest rates will increase CyrusOne’s borrowing costs and may drive potential investors to seek higher dividend yields and reduce demand for CyrusOne’s common stock; (xxxi) market price and volume of stock could be volatile; (xxxii) risks related to regulatory changes impacting CyrusOne’s customers and demand for colocation space in particular geographies; (xxxiii) CyrusOne’s international activities, including those conducted as a result of land acquisitions and with respect to leased land and buildings, are subject to special risks different from those faced by CyrusOne in the United States; (xxxiv) the continuing uncertainty about the future relationship between the United Kingdom and the European Union following the United Kingdom’s withdrawal from the European Union; (xxxv) expanded and widened price increases in certain selective materials for data center development capital expenditures due to international trade negotiations; (xxxvi) a failure to comply with anti-corruption laws and regulations; (xxxvii) legislative or other actions relating to taxes; (xxxviii) any significant security breach or cyber-attack on CyrusOne or its key partners or customers; (xxxix) the ongoing trade conflict between the United States and the People’s Republic of China; (xl) increased operating costs and capital expenditures at CyrusOne’s facilities, including those resulting from higher utilization by CyrusOne’s customers, general market conditions and inflation, exceeding revenue growth; and (xli) other factors affecting the real estate and technology industries generally.
While forward-looking statements reflect CyrusOne’s good faith beliefs, they are not guarantees of future performance. For a further discussion of these and other factors that could impact CyrusOne’s future results, performance or transactions, see Part I, Item 1A. “Risk Factors” of CyrusOne’s Annual Report on Form 10-K for the year ended December 31, 2020, and CyrusOne’s other filings with the SEC. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We disclaim any obligation other than as required by law to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors or for new information, data or methods, future events or other changes.
 
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THE PARTIES
CyrusOne Inc.
The Company is a fully integrated, self-managed data center REIT that owns, operates and develops enterprise-class, carrier-neutral, multi-tenant and single-tenant data center properties. The Company’s data centers are generally purpose-built facilities with redundant power and cooling. They are not network specific and enable customer connectivity to a range of telecommunication carriers. The Company provides mission-critical data center real estate assets that protect and ensure the continued operation of information technology infrastructure for approximately 1,000 customers in more than 50 high-performance data centers in 16 markets world-wide (11 cities in the U.S.; London, U.K.; Frankfurt, Germany; Amsterdam, The Netherlands; Dublin, The Republic of Ireland and Paris, France).
The Company provides mission-critical data center real estate assets that protect and ensure the continued operation of information technology infrastructure for the Company’s customers. The Company provides twenty-four hours-a-day, seven-days-a-week security guard monitoring with customizable security features. The Company’s goal is to be the preferred global data center provider to hyperscale cloud companies and to the global Fortune 1000 enterprises. Currently, the Company’s customers include approximately 200 of the Fortune 1000 companies and nearly half of the Fortune 20 or private or foreign enterprises of equivalent size, together representing approximately 79% of the Company’s annualized rent as of December 31, 2020. The Company’s growth over the past 16 years has made the Company the third-largest data center provider in the U.S. based on the National Association of Real Estate Investment Trusts REITWatch report as of November 30, 2020.
The Company cultivates long-term strategic relationships with the Company’s customers and provide them with solutions for their data center facilities and IT infrastructure challenges. The Company provides high-quality colocation with robust connectivity and the flexibility for customers to scale for future growth. The Company’s offerings provide flexibility, reliability and security delivered through a tailored, customer service focused platform that is designed to foster long-term relationships. The Company focuses on technology and large cloud computing customers that are expanding their data needs rapidly in the public and private cloud environments to provide them with solutions that address their current and future needs. The Company’s facilities and construction design allow the Company to offer flexibility in density and power resiliency, and the opportunity for expansion as the Company customers’ needs grow. The Company’s network of 55 owned or leased data centers and investments with other colocation providers enable the Company to provide the Company’s customers with solutions in the United States and Europe. The platform enables high-performance, low-cost data transfer and accessibility for customers.
The Company’s principal executive offices are located at 2850 N. Harwood, Suite 2200, Dallas, Texas 75201 and the Company’s telephone number is (972) 350-0060. Shares of common stock are listed on the NASDAQ Global Select Market under the trading symbol “CONE”.
Parent
Parent is a Delaware limited partnership that will be controlled by funds affiliated with KKR and GIP that was formed solely for the purpose of entering into the merger agreement and related agreements and consummating the transactions contemplated thereby. Parent has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and related agreements. Upon the consummation of the transactions contemplated by the merger agreement and related agreements, the Company will be a wholly owned subsidiary of Parent.
The principal executive offices of Parent are c/o Kohlberg Kravis Roberts & Co. L.P., 30 Hudson Yards, New York, New York 10001 with a telephone number of (877) 610-4910 and c/o Global Infrastructure Management, LLC, 1345 Avenue of the Americas, 30th Floor, New York, NY 10105 with a telephone number of (212) 315-8100.
Merger Sub
Merger Sub is a Delaware limited liability company and a wholly owned subsidiary of Parent that was formed solely for the purpose of entering into the merger agreement and related agreements and
 
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consummating the transactions contemplated thereby. Merger Sub has not conducted any business operations other than in connection with the transactions contemplated by the merger agreement and related agreements. Upon the consummation of the merger, Merger Sub will merge with and into the Company, and Merger Sub will cease to exist.
The principal executive offices of Merger Sub are c/o Kohlberg Kravis Roberts & Co. L.P., 30 Hudson Yards, New York, New York 10001 with a telephone number of (877) 610-4910 and c/o Global Infrastructure Management, LLC, 1345 Avenue of the Americas, 30th Floor, New York, NY 10105 with a telephone number of (212) 315-8100.
 
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THE SPECIAL MEETING
We are furnishing this proxy statement to the holders of common stock as part of the solicitation of proxies by the Board for exercise at the special meeting and at any postponements or adjournments thereof.
Date, Time and Place
The special meeting of stockholders of the Company will be held on February 1, 2022 at 9:30 a.m., Central Time (10:30 a.m., Eastern Time), in a virtual-only meeting format. To access the virtual special meeting, you should visit https://meetnow.global/MTUZUCT. You will be required to enter a control number, included on your proxy card, voting instruction form or other notice that you may receive, which will allow you to participate in the virtual meeting and vote your shares of common stock if you are a CyrusOne stockholder as of the record date.
Purpose of the Special Meeting
The special meeting is being held for the following purposes:

to consider and vote on a proposal to approve the merger of Merger Sub with and into the Company in accordance with the terms of the Agreement and Plan of Merger, dated as of November 14, 2021, by and among the Company, Parent and Merger Sub, the merger agreement and the other transactions contemplated by the merger agreement;

to consider and vote on a proposal to approve, on a non-binding (advisory) basis, the compensation that may be paid or become payable to our named executive officers in connection with the consummation of the merger; and

to consider and vote on a proposal to approve any adjournment of the special meeting for the purpose of soliciting additional proxies if there are insufficient votes at the special meeting to approve the merger proposal.
A copy of the merger agreement is attached as Annex A to this proxy statement.
Recommendation of the Board
The Board has reviewed and considered the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. The Board unanimously (i) authorized and approved the execution, delivery and performance by the Company of the merger agreement and the consummation by the Company of the merger and the other transactions contemplated by the merger agreement, (ii) declared that the merger is advisable and in the best interests of the Company and of stockholders of the Company on substantially the terms and conditions set forth in the merger agreement, (iii) directed that the merger be submitted for consideration at the special meeting and (iv) recommended that the stockholders of the Company approve the merger. Accordingly, the Board recommends a vote “FOR” the merger proposal, “FOR” the advisory compensation proposal and “FOR” the adjournment proposal. For a discussion of the factors that the Board considered in determining to recommend the approval of the merger proposal, please see the section of this proxy statement entitled “The Merger — Reasons for the Merger” beginning on page 41.
Record Date and Stockholders Entitled to Vote
Only CyrusOne stockholders of record at the close of business on December 23, 2021, the record date for the special meeting, will be entitled to notice of, and to vote at, the special meeting and any postponement or adjournment thereof. As of the close of business on the record date, there were 129,555,316 shares of common stock outstanding and entitled to vote. Each CyrusOne stockholder is entitled to one vote per share of common stock held by such CyrusOne stockholder on the record date on each of the proposals presented in this proxy statement.
Quorum
The presence in person or by proxy of our stockholders entitled to cast a majority of all of the votes entitled to be cast at the special meeting will constitute a quorum for purposes of the special meeting. Virtual
 
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attendance at the special meeting constitutes presence in person for quorum purposes at the special meeting. A quorum is necessary to transact business at the special meeting. Abstentions will be counted as shares present for the purposes of determining the presence of a quorum.
If a quorum is not present at the special meeting, the CyrusOne stockholders entitled to vote at the special meeting, present virtually or by proxy, may adjourn the special meeting. In addition, our bylaws permit the chair of the special meeting, acting in his or her own discretion and without any action by our stockholders, to adjourn the special meeting to a later date and time and at a place announced at the special meeting. In either case, the adjourned meeting may take place without further notice other than by an announcement made at the special meeting unless the adjournment is for more than 120 days after the original record date or if, after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the special meeting (subject to certain restrictions in the merger agreement, including that the special meeting generally may not be held, without Parent’s consent, on a date that is more than 30 days after the date on which the special meeting was originally scheduled). In the event that a quorum is not present at the special meeting, or if there are insufficient votes to approve the merger proposal at the time of the special meeting, we expect that the special meeting will be postponed or adjourned to solicit additional proxies.
Vote Required
Approval of the Merger Proposal
The approval of the merger proposal requires the affirmative vote of the holders of our common stock entitled to cast a majority of all the votes entitled to be cast on the matter. Under Maryland law and the merger agreement, the receipt of such required vote is a condition to the consummation of the merger. Note that you may vote to approve the merger proposal and vote not to approve the advisory compensation proposal or adjournment proposal and vice versa.
Abstentions or failures to vote (including a failure to authorize a proxy to vote on a CyrusOne stockholder’s behalf) will have the same effect as a vote “AGAINST” the merger proposal.
Approval of the Advisory Compensation Proposal
The approval of the advisory compensation proposal requires the affirmative vote of a majority of the votes cast on such proposal at the special meeting. Assuming a quorum is present at the special meeting, abstentions or failures to vote (including a failure to authorize a proxy to vote on a CyrusOne stockholder’s behalf) will have no effect on the outcome of the advisory compensation proposal.
The vote on the advisory compensation proposal is a vote separate and apart from the vote to approve the merger proposal. Because the vote on the advisory compensation proposal is advisory only, it will not be binding on the Company, the Board, Parent or the surviving corporation. Accordingly, because the Company is contractually obligated to pay the compensation that may be paid or become payable to our named executive officers in connection with the consummation of the merger, if the merger is approved by our stockholders, such compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the vote on the advisory compensation proposal.
Approval of the Adjournment Proposal
The approval of the adjournment proposal requires the affirmative vote of a majority of the votes cast on such proposal at the special meeting. Assuming a quorum is present at the special meeting, abstentions or failures to vote (including a failure to authorize a proxy to vote on a CyrusOne stockholder’s behalf) will have no effect on the outcome of the adjournment proposal. The Company does not intend to call a vote on this proposal if the merger proposal is approved at the special meeting.
The vote on the adjournment proposal is a vote separate and apart from the vote to approve the merger proposal. Accordingly, you may vote to approve the merger proposal and vote not to approve the adjournment proposal and vice versa.
 
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Approval of the advisory compensation proposal and the adjournment proposal is not a condition to the consummation of the merger.
Voting Procedures
Whether or not you plan to attend the virtual special meeting and regardless of the number of shares of common stock you own, your careful consideration of, and vote on, the merger agreement is important and we encourage you to vote promptly. To ensure that your shares of common stock are voted at the special meeting, we recommend that you provide voting instructions promptly by proxy, even if you plan to attend the virtual special meeting, using one of the following three methods:

Vote via the Internet.   Go to www.envisionreports.com/CONE-SM. Login details are located in the shaded bar on the proxy card mailed to you.

Vote by Telephone.   Call toll free 1-800-652-VOTE (8683) within the USA, U.S. territories and Canada.

Vote by Proxy Card.   If you do not wish to vote by the internet or by telephone, please complete, sign, date and mail the enclosed proxy card in the envelope provided.
You may also vote by attending the virtual special meeting and voting during the live webcast.
If you hold your shares in “street name”, in other words your common stock is held in the name of your broker, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than from the Company. In order to vote, complete and mail the proxy card received from your broker to ensure that your vote is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker. To vote at the virtual special meeting, you must obtain a legal proxy from your broker. The cut-off time for submitting a legal proxy is January 27, 2022, three business days prior to the date of the special meeting, at 4:00 p.m., Central Time (5:00 p.m., Eastern Time). Follow the instructions from your broker included with these proxy materials or contact your broker to request a proxy form. The timing described in the instructions from your broker may differ from the timing described above. Without following those instructions, your common stock held in “street name” will not be voted, which will have the same effect as a vote “AGAINST” the merger proposal.
For additional questions about the merger, assistance in submitting proxies or voting, or to request additional copies of this proxy statement or the enclosed proxy card, please contact Okapi Partners, which is acting as the Company’s proxy solicitation agent in connection with the merger, toll free at 855-305-0857.
How Proxies Are Voted
If you complete and submit your proxy card or voting instructions, the persons named as proxies will follow your instructions. If you are a holder of record and you submit a proxy card or voting instructions but do not direct how to vote on each item, the persons named as proxies therein will vote in favor of the merger proposal, the advisory compensation proposal and the adjournment proposal.
Revocation of Proxies
For CyrusOne stockholders of record, any time after you have submitted a proxy card and before the proxy card is exercised, you may revoke or change your vote in one of three ways:

You may submit a new proxy card bearing a later date (which automatically revokes the earlier proxy or voting instructions) whether made on the internet, by telephone or by mail.

You may submit a written notice of revocation to the Company’s Corporate Secretary at 2850 N. Harwood St., Suite 2200, Dallas, TX 75201.

You may attend the virtual special meeting and vote during the live webcast. Attendance at the virtual special meeting will not, in itself, constitute revocation of a previously granted proxy.
Please note that if you want to revoke your proxy by sending a new proxy card or a written notice of revocation to the Company, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by the Company prior to the special meeting.
 
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If you hold your shares in “street name”, you will need to revoke or resubmit your proxy through your broker and in accordance with its procedures. If your broker allows you to submit a proxy via the internet or by telephone, you may be able to change your vote by submitting a new proxy via the internet or by telephone (or by mail). In order to attend the virtual special meeting and vote during the webcast, you will need to obtain a proxy from your broker, the CyrusOne stockholder of record.
Solicitation of Proxies
The Company will bear the cost of soliciting proxies, including the expense of preparing, printing and distributing this proxy statement. In addition to soliciting proxies by mail, telephone or electronic means, we may request brokers to solicit their customers and will, upon request, reimburse them for the reasonable, out-of-pocket costs of forwarding proxy materials in accordance with customary practice. We may also use the services of our directors, officers and other employees to solicit proxies, personally or by telephone, without additional compensation. In addition, the Company has retained Okapi Partners to solicit proxies at a total cost to the Company of approximately $25,000, plus reimbursement of customary expenses.
Postponements and Adjournments
Although it is not currently expected, the special meeting may be adjourned for the purpose of soliciting additional proxies. If a quorum is not present at the special meeting, the CyrusOne stockholders entitled to vote at the special meeting, present virtually or by proxy, may adjourn the special meeting. In addition, our bylaws permit the chair of the special meeting, acting in his or her own discretion and without any action by our stockholders, to adjourn the special meeting to a later date and time and at a place announced at the special meeting.
At any subsequent reconvening of the special meeting at which a quorum is present, any business may be transacted that might have been transacted at the special meeting, and all proxies will be voted in the same manner as they would have been voted at the original convening of the special meeting, except for any proxies that have been validly revoked or withdrawn prior to the reconvened meeting.
Any reconvened meeting will be held on a date not more than 120 days after the date on which the special meeting was originally scheduled without notice other than announcement at the special meeting (subject to certain restrictions in the merger agreement, including that the reconvened meeting generally may not be held, without Parent’s consent, on a date that is more than 30 days after the date on which the special meeting was originally scheduled). The date, time and place of the reconvened meeting shall be either (i) announced at the special meeting or (ii) provided at a future time through means announced at the special meeting.
Voting by Company Directors, Executive Officers and Principal Securityholders
As of December 23, 2021, the directors and executive officers of the Company beneficially owned in the aggregate 461,973 shares of common stock, or approximately 0.4% of the outstanding shares of common stock as of December 23, 2021. Although none of the directors or executive officers is obligated to vote to approve the merger proposal, we currently expect that each of these individuals will vote all of his or her shares in favor of each of the proposals to be presented at the special meeting.
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. For more information, please see the section of this proxy statement entitled “The Merger — Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 59.
Assistance
If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact Okapi Partners, which is acting as the Company’s proxy solicitation agent in connection with the merger, toll free at 855-305-0857. Brokers may call at 212-297-0720.
 
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PROPOSAL 1: MERGER PROPOSAL
We are asking holders of common stock to vote on a proposal to approve the merger of Merger Sub with and into the Company in accordance with the terms of the merger agreement, the merger agreement and the other transactions contemplated by the merger agreement. You are urged to carefully read this proxy statement in its entirety for more detailed information concerning the merger and the merger agreement, including the information set forth under the sections of this proxy statement captioned “The Merger” and “The Merger Agreement”. A copy of the merger agreement is attached as Annex A to this proxy statement. Approval of this proposal is a condition to the consummation of the merger. In the event this proposal is not approved, the merger cannot be consummated.
The Board recommends a vote “FOR” the approval of the merger proposal.
 
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PROPOSAL 2: ADVISORY COMPENSATION PROPOSAL
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 14a-21(c) under the Exchange Act, we are asking holders of common stock to approve, by advisory (non-binding) vote, the compensation that may be paid or become payable to our named executive officers in connection with the consummation of the merger. As required by those rules, the Company is asking holders of common stock to vote on the approval of the following resolution:
“RESOLVED, that the compensation that may be paid or become payable to the Company’s named executive officers in connection with the consummation of the merger, as disclosed in the table entitled “Potential Payments to Named Executive Officers”, including the associated narrative discussion, and the agreements, arrangements or understandings pursuant to which such compensation may be paid or become payable, are hereby APPROVED.”
The vote on executive compensation payable in connection with the consummation of the merger is a vote separate and apart from the vote to approve the merger proposal. Accordingly, you may vote to approve the merger proposal and vote not to approve such compensation and vice versa. Because the vote is advisory in nature only, it will not be binding on the Company or the Board; as the Company is contractually obligated to pay such compensation, such compensation will be paid or become payable, subject only to the conditions applicable thereto, if the merger is consummated and regardless of the outcome of the advisory vote.
The Board recommends a vote “FOR” the approval of the advisory compensation proposal.
 
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PROPOSAL 3: ADJOURNMENT PROPOSAL
The special meeting may be adjourned to another time and place to permit further solicitation of proxies, if necessary, to obtain additional votes to approve the merger proposal. The Company currently does not intend to propose adjournment of the special meeting if there are sufficient votes in favor of the merger proposal.
The Company is asking you to authorize the holder of any proxy solicited by the Board to vote in favor of any adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the merger proposal at the time of the special meeting.
The Board recommends a vote “FOR” the approval of the adjournment proposal.
 
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THE MERGER
Overview
The Company is seeking the approval by the holders of common stock of the merger, in accordance with the terms and subject to the conditions of the merger agreement the Company entered into on November 14, 2021 with Parent and Merger Sub. Under the terms of the merger agreement, subject to the satisfaction or (if permissible under applicable law) waiver of specified conditions, Merger Sub will be merged with and into the Company, with the Company surviving the merger as a direct, wholly owned subsidiary of Parent. The Board has unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement and recommends that holders of common stock vote to approve the merger proposal.
Background of the Merger
The following chronology summarizes the key meetings and events that led to the signing of the merger agreement. This chronology does not purport to catalogue every conversation of or among members of the Board, the Company’s management, the Company’s financial advisors or legal advisors, KKR, GIP or any other person.
The Board and Company management have, from time to time and in concert with financial and legal advisors, evaluated a range of financial and strategic opportunities, including potential acquisitions, divestitures, joint ventures, business combinations and other similar transactions, as well as the possibility of obtaining capital investments from third parties to fund the Company’s significant capital needs. These evaluations have focused on, among other things, the business environment facing data center operators, as well as conditions and trends in the industry, including consolidation, and included discussions as to whether the Company should continue to execute on its strategy as a stand-alone public company, pursue various transformative acquisitions or pursue a sale of all or a portion of the Company. As a result, since the Company’s initial public offering in 2013, representatives of the Company and its financial and legal advisors have from time to time engaged in discussions with representatives of other companies, and their financial and legal advisors, in, or interested in, the data center industry, as well as financial sponsors, including KKR and GIP, regarding such opportunities.
In mid-March and early-April 2019, the Company received two unsolicited letters from one of its competitors that we refer to as “Party A”, which included a non-binding proposal to acquire the Company in an all-stock transaction at an exchange ratio that implied a value of approximately $64.62 per share of common stock at the time of the second letter, subject to the completion of due diligence, the negotiation of definitive transaction agreements and several other conditions. The Board, together with Morgan Stanley & Co. LLC (“Morgan Stanley”), the Company’s financial advisor, and Cravath, Swaine & Moore LLP (“Cravath”), the Company’s legal advisor, carefully evaluated Party A’s proposal and began a formal process to further explore Party A’s proposal, to solicit proposals from other potential acquirors and to compare each of the Company’s strategic alternatives with its stand-alone plan.
Between April and mid-August 2019, the Company, with assistance from its financial and legal advisors, prepared a substantial electronic data room and a management presentation to facilitate potential acquirors’ due diligence, and contacted over 15 potential acquirors. As a result of these discussions, the Company executed non-disclosure agreements with 11 potential acquirors, including KKR, Party A, a financial sponsor with a significant infrastructure portfolio that we refer to as “Party B”, a financial sponsor with significant infrastructure and real estate portfolios that we refer to as “Party C”, a financial sponsor with significant infrastructure and real estate portfolios that we refer to as “Party D”, a financial sponsor with significant infrastructure and real estate portfolios that we refer to as “Party E”, a competitor that we refer to as “Party F” and four others, and the Company facilitated due diligence and engaged in discussions regarding a potential transaction with each of those 11 parties.
In July and August 2019, the Company received initial non-binding indications of interest to acquire the Company from (1) KKR, which was at that time joint-bidding with a financial sponsor that we refer to as “Party G”, (2) Party E and (3) Party A.
 
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In August and September 2019, the Company consented to a request from KKR and Party G to add Party B and a pension fund that we refer to as “Party H” to its joint-bidding consortium, and the Company consented to a request from Party E to joint-bid with a digital infrastructure fund that we refer to as “Party I”.
Also in August and September 2019, Bloomberg and several other media sources published a series of articles speculating about a potential sale of the Company.
On August 28, 2019, at the direction of the Company, Morgan Stanley sent a process letter to each of the potential acquirors in the process at that time, requesting a final bid by September 30, 2019. On September 10, 2019, Cravath provided to those potential acquirors a draft form of a merger agreement.
Between September 13, 2019 and September 24, 2019, Party C, Party A and the joint-bidding consortium consisting of Party E and Party I each affirmatively withdrew from the process, in each case, expressing a view that they were unlikely to be able to submit a bid at a valuation that would be attractive to the Company and its stockholders. On September 26, 2019, the joint-bidding consortium consisting of KKR, Party G, Party B and Party H indicated that it did not expect to be able to submit a bid by the deadline and that its bid, if any, would likely be lower than the then-current trading price of the common stock.
As of the final bid deadline on September 30, 2019, none of the potential bidders submitted a bid letter or any comments on the draft merger agreement. The Board determined that, while it would remain open to any potential strategic alternatives that enhance stockholder value, in the absence of any actionable bids following an extensive process, at that time, it was in the best interests of the Company and its stockholders to end the formal process of exploring a potential sale transaction and instead focus on executing its strategic plan as a stand-alone public company.
The Company regularly engages with its stockholders on a range of topics that are important to the Company and its stockholders. During the course of 2021, members of Company management and certain members of the Board had discussions with certain stockholders in which those stockholders encouraged the Company to explore whether a change-of-control transaction would be in the best interests of the Company and its stockholders.
In April 2021, the Company engaged DH Capital, LLC (“DH Capital”) to serve as financial advisor in connection with the potential divestiture of certain Company assets, including a potential sale of certain data centers in certain metropolitan areas.
In May 2021, Bruce W. Duncan, the Company’s then President and Chief Executive Officer, met with a senior executive of Party I at the request of the Party I senior executive. They primarily discussed industry trends and their respective businesses. At the end of the meeting, the Party I senior executive asked Mr. Duncan whether the Company had any unfulfilled capital needs or whether there were any other ways in which Party I may be able to work with the Company. Mr. Duncan indicated that the Company was focused on executing its strategic plan and that additional capital was not needed at that time.
On July 29, 2021, the Company separated with Mr. Duncan as the President and Chief Executive Officer of the Company, and he resigned from the Board, and David Ferdman, a director on the Board, was appointed Interim President and Chief Executive Officer.
On August 11, 2021, Party I submitted an unsolicited, preliminary, non-binding indication of interest letter to the Board proposing to acquire all of the outstanding shares of common stock at a price of $80.00 in cash per share, subject to the completion of due diligence, negotiation of definitive transaction documents, investment committee approval and other conditions. In its letter, Party I requested that the Company enter into a 30-day exclusivity agreement.
Also on August 11, 2021, Mr. Ferdman met with representatives of Party C to engage in preliminary discussions with respect to a potential joint venture relating to certain of the parties’ respective digital infrastructure assets located in Europe and Asia. Mr. Ferdman indicated to representatives of Party C that the Company was likely not interested in pursuing such a joint venture transaction with Party C at that time, and Mr. Ferdman inquired if Party C had interest in a more significant strategic transaction.
 
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On August 11 and 12, 2021, certain directors, together with members of Company management and representatives of Morgan Stanley and Cravath, met to discuss the proposal from Party I and the discussions with Party C.
On August 17, 2021, the Board, together with members of Company management and representatives of Morgan Stanley and Cravath, met to consider the proposal from Party I and the possibility of initiating a process to explore strategic alternatives with other parties. The Board considered the risks to the Company and its business inherent in a potential sale process, including: distraction in operating the business; potential market leaks and rumors; potential stock price volatility; potential disruption of existing customer relationships; potential loss of prospective customer deals in the pipeline; and potential challenges relating to employee retention. The Board further considered all of the information gathered during, and effects resulting from, the 2019 process described above. The Board also considered the relatively limited universe of potential acquirors that would have strategic interest in acquiring the Company and the financial ability to do so. Following these discussions, the Board determined that a review of the Company’s strategic alternatives, including a potential sale of the Company, was in the best interests of the Company and its stockholders, but that it would be necessary to manage discussions with any potential transaction counterparties in a manner that would minimize the potential negative impacts on the Company if a transaction did not occur, while also maximizing stockholder value in the event that a transaction did occur. The Board also concluded that, while Party I’s proposal was not sufficiently compelling to grant Party I exclusivity at that time, the Company would offer to sign a non-disclosure agreement with Party I to facilitate a limited period of due diligence to allow Party I an opportunity to further clarify and improve its proposal. The Board determined to defer any outreach to other new potential bidders until after receiving Party I’s updated proposal, recognizing that recent discussions with Party C were also ongoing. The Board also formed a working group of the Board (the “Committee”), composed of Lynn A. Wentworth, Chair of the Board, Alex Shumate, Lead Independent Director, Mr. Ferdman, Denise Olsen and William E. Sullivan, to meet regularly with the Company’s management and financial and legal advisors and further facilitate the Board’s day-to-day oversight of the process.
On August 18, 2021, the Board met, together with members of Company management, to consider various potential financial advisors, and the Board authorized the Company to engage Morgan Stanley and DH Capital.
On August 19, 2021, the Company formally engaged Morgan Stanley as financial advisor in connection with the exploration of strategic alternatives and the potential execution of one or more transactions in connection with such review, based on Morgan Stanley’s experience in similar transactions, including those in the data center industry, and familiarity with the Company.
Also on August 19, 2021, representatives of Party B initiated discussions with representatives of Morgan Stanley and indicated their interest in an acquisition of certain of the Company’s data center assets located in Europe. During the course of the discussions between representatives of Morgan Stanley and Party B, Party B did not indicate an interest in pursuing an acquisition of the entire Company.
Also on August 19, 2021, at the direction of the Company, representatives of Morgan Stanley shared a draft non-disclosure agreement with Party I, and notified Party I that, while the Company was not willing to grant exclusivity based on Party I’s current proposal, the Company would be willing to facilitate Party I’s due diligence for a period of 15 days with the expectation that Party I would need to submit an updated proposal in order to continue discussions beyond that time. Party I indicated that the Company’s proposed process and timeline were acceptable.
On August 20, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to review the recent discussions with Party I, Party B and Party C and to review the Company’s strategic plan, including its current five-year financial forecasts (the “Financial Forecasts”, as described further in the section entitled “— Financial Forecasts” beginning on page 45).
On August 24, 2021, the Company formally amended its engagement letter with DH Capital to include serving as a financial advisor in connection with the exploration of strategic alternatives and the potential execution of one or more transactions in connection with such review, based on DH Capital’s knowledge of
 
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the Company’s assets and the potential interaction between such review and any potential divestiture of certain data centers in certain metropolitan areas.
On August 26, 2021, the Company and Party I executed a non-disclosure agreement with a customary standstill provision that would automatically terminate upon the entry by the Company into a definitive acquisition agreement with a third party and other customary provisions. Following the execution of the non-disclosure agreement, Party I was provided access to an electronic data room (the “data room”) containing certain information and materials regarding the Company’s business, operations, financial condition, material contracts, real estate leases and other pertinent due diligence information.
Over the next several weeks, Party I and its advisors conducted a due diligence review of the Company, including reviewing documents provided by the Company in the data room. As part of this due diligence review, the Company, Party I and their respective representatives engaged in various discussions regarding the Company, its business, operations, activities and financial information.
Also on August 26, 2021, the Chief Executive Officer of Party C contacted Mr. Ferdman to plan a dinner for September 21, 2021 between Mr. Ferdman, the Chief Executive Officer of Party C and representatives of Morgan Stanley.
Also on August 26, 2021, Mr. Ferdman and Katherine Motlagh, the Executive Vice President and Chief Financial Officer of the Company, spoke to representatives of a financial sponsor that we refer to as “Party J”, which had requested a meeting and expressed interest in one or more potential transactions involving certain assets of the Company, including a site-level joint venture, or potentially a more significant strategic transaction. Mr. Ferdman and Ms. Motlagh indicated that Party J should reach out to Morgan Stanley if it had interest in pursuing a significant strategic transaction.
On August 27, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process.
On August 28, 2021, the Board met in two separate sessions to review the Company’s strategic plan, including the Financial Forecasts.
On September 1, 2021, at the Company’s direction, representatives of Morgan Stanley spoke with representatives of Party C and encouraged Party C to submit a preliminary non-binding indication of interest based on publicly available information at some point during the week of September 6, 2021; Party C indicated that it would plan to do so in advance of the dinner between the respective Chief Executive Officers of the Company and Party C scheduled for September 21, 2021.
On September 3, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process.
On September 10, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process.
On September 15, 2021, Party C indicated to representatives of Morgan Stanley that they were continuing to work on a preliminary proposal and that they expected to provide an offer to the Company on or prior to September 21, 2021.
On September 17, 2021, KKR and Party B notified representatives of Morgan Stanley that they intended to jointly submit an unsolicited, non-binding proposal to acquire the Company.
On September 18, 2021, KKR and Party B submitted a joint non-binding indication of interest to the Board proposing to acquire all of the outstanding shares of common stock at a price of $82.50 in cash per share of common stock.
On September 19, 2021, Party I indicated to representatives of Morgan Stanley that it was continuing to work on an updated proposal and it was having difficulty in increasing the amount of the $80.00 in cash per share initial offer in its August 11 letter.
Also on September 19, 2021, the Board met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to review various potential strategic alternatives, including,
 
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among others, obtaining additional debt financing, pursuing asset dispositions or acquisitions, pursuing certain joint venture transactions and selling the entire Company. The Board reviewed the terms of the letter from KKR and Party B, and representatives of Morgan Stanley provided updates on discussions with Party I and Party C. Representatives of Morgan Stanley also discussed its preliminary financial analyses on a potential valuation of the common stock based on the Financial Forecasts. DH Capital also presented on the effect certain potential substantial customer contracts may have on the future financial performance of the Company. The Board directed Company management and the Company’s financial and legal advisors to facilitate further due diligence with KKR and Party B pursuant to a non-disclosure agreement.
On September 20, 2021 and September 21, 2021, KKR and Party B, respectively, executed separate non-disclosure agreements with customary standstill provisions that would automatically terminate upon the entry by the Company into a definitive acquisition agreement with a third party and other customary provisions. Thereafter, KKR and Party B and their respective representatives were granted access to the data room.
During the week of September 20, 2021, representatives of Morgan Stanley periodically engaged with representatives of KKR and Party B, Party I and Party C to receive updates on the status of their respective due diligence processes. Party I confirmed that it was continuing to review the materials that were posted in the data room, and that it anticipated it would provide a revised acquisition proposal upon conclusion of its preliminary due diligence review, but an increase (if any) in the $80.00 in cash per share initial offer in its August 11 letter was likely to be minimal. Party C indicated that it was continuing to evaluate the merits of a proposed transaction on the basis of publicly available information. Mr. Ferdman and representatives of Morgan Stanley canceled the dinner with the Chief Executive Officer of Party C that had been previously scheduled for September 21, 2021 as Party C continued its evaluation of the Company.
On September 20, 2021, Party J indicated to a representative of Morgan Stanley that it was interested in certain Company assets for a site-level joint venture or outright purchase, and stated that it was also open to considering an acquisition of the Company.
On September 24, 2021, Party J and a representative of Morgan Stanley discussed the potential for an acquisition of the Company, but Party J stated that it needed to evaluate its financial capacity to effect any significant transaction. Party J did not subsequently reengage with Morgan Stanley or the Company.
Also on September 24, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process.
On September 25, 2021, representatives of Party I contacted Morgan Stanley to inform them that it had completed its preliminary due diligence and that, while Party I remained interested in acquiring the Company, it was reducing its proposed purchase price from $80.00 in cash per share of common stock to $77.00 in cash per share. In response, the Company revoked Party I’s access to the data room.
On September 28, 2021, market speculation regarding the Company’s ongoing review of strategic alternatives, including a potential sale of the Company, and the engagement of Morgan Stanley as financial advisor in connection with such review, was published in the financial press. As a result, a number of financial sponsors and potential strategic buyers reached out to Morgan Stanley and the Company over the course of the week, indicating their potential interest in conducting due diligence or exploring an acquisition of the Company or certain of its assets.
During the period beginning on September 28, 2021 and ending on October 1, 2021, representatives of 14 potential counterparties with varying levels of financial capabilities, consisting of infrastructure funds, strategic buyers, REITs and private equity firms, including Party A, reached out to Morgan Stanley to discuss a potential acquisition of the Company or certain of its assets. The Company and representatives of Morgan Stanley considered the inbound messages and evaluated the potential counterparties’ respective financial ability, the type of transaction proposed and other relevant factors. Based on those discussions and considerations and at the direction of the Company, representatives of Morgan Stanley had numerous discussions with potential counterparties and encouraged them to submit written proposals indicating their interest in a transaction, including a proposed purchase price and transaction structure. None of these potential counterparties ultimately submitted any written proposal to acquire the Company or any of its
 
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assets. Representatives of Party A verbally confirmed to representatives of Morgan Stanley that they were not interested in pursuing a potential acquisition of the Company.
On September 28, 2021, the Committee met with representatives of Morgan Stanley, DH Capital and Cravath and discussed whether to have Morgan Stanley contact other potential counterparties to gauge their interest in exploring a potential transaction with the Company. As part of this discussion, representatives of Morgan Stanley provided the Committee with its views as to the potential counterparties that would likely have both the interest and financial capability to acquire the Company. As part of the foregoing, representatives of Morgan Stanley identified certain infrastructure funds and private equity firms, as well as other third-party capital providers and potential transaction counterparties that had expressed interest in acquiring the Company during the 2019 process described above. At the conclusion of the meeting, the Committee authorized the Company’s management and Morgan Stanley to initiate contact with GIP, Party D, Party F and Party E regarding a potential transaction.
In the days following the Committee meeting on September 28, 2021, representatives of Morgan Stanley reached out to those four additional potential counterparties to solicit their interest in submitting a bid to acquire the Company. Representatives of Party D and Party F expressed preliminary interest in re-exploring a potential transaction, but were reluctant to submit an indication of interest letter based only on publicly available information; accordingly, on October 3, 2021, at the direction of the Company, representatives of Morgan Stanley provided separate draft non-disclosure agreements to Party D and Party F. Over the course of the following days, the Company and Party D and their respective representatives negotiated a form of non-disclosure agreement, but Party D ultimately declined to execute the non-disclosure agreement and did not submit a written acquisition proposal. Party F ultimately declined to provide comments on, or execute, the non-disclosure agreement, and did not submit a written acquisition proposal. On September 30, 2021, representatives of Party E and GIP each separately suggested that they may have interest in exploring a potential transaction.
On September 30, 2021, members of Company management and representatives of KKR and Party B participated in an in-person management presentation, during which the parties and their representatives engaged in various discussions regarding the Company, its business, operations, activities and financial information.
On October 1, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process.
On October 5, 2021, Party C submitted a preliminary non-binding indication of interest to the Board, proposing to acquire all of the outstanding shares of common stock at a price of $82.00 in cash per share. In its letter, Party C requested that the Company negotiate with it on an exclusive basis.
Also on October 5, 2021, KKR and Party B jointly submitted a second non-binding indication of interest to the Board, reaffirming the terms and conditions of their proposal dated September 18, 2021, including reaffirming their proposed acquisition price of $82.50 in cash per share of common stock.
Later that day on October 5, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath. Representatives from Morgan Stanley summarized the proposal received from Party C and the joint proposal received from KKR and Party B. After a discussion regarding the process and potential alternatives, the Board instructed Company management and the Company’s advisors to continue discussions with KKR and Party B and Party C, including facilitating further due diligence and providing a draft merger agreement (subject, in the case of Party C, to the execution of a non-disclosure agreement).
On October 6, 2021, representatives of Morgan Stanley provided to Party C a draft non-disclosure agreement. Party C noted that in order for Party C to continue its due diligence review of the Company and undertake negotiations with respect to definitive transaction documentation, it would require full expense reimbursement by the Company in the event that the Company and Party C did not execute definitive transaction documentation.
On October 7, 2021, the Company’s draft merger agreement was made available by Cravath to KKR and Party B.
 
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On October 8, 2021, Party C executed a non-disclosure agreement, which contained a customary standstill provision that would automatically terminate upon the entry by the Company into a definitive acquisition agreement with a third party and other customary provisions, but did not include any expense reimbursement requested by Party C. Later that day on October 8, 2021, Party C was granted access to the data room, and also received the Company’s draft merger agreement.
Throughout the remainder of October 2021, the Company’s management team uploaded to the data room additional confirmatory due diligence information regarding the Company and responded, including through its advisors and via telephonic diligence sessions, to due diligence requests by each of KKR and Party B and Party C and their respective advisors. Throughout this time, the Committee received frequent updates from, and had frequent discussions with, the Company’s management team, and representatives of Morgan Stanley, DH Capital and Cravath, and kept the other directors not on the Committee apprised of material developments in the process.
On October 14, 2021, members of Company management team and representatives of Party C participated in an in-person management presentation, during which the parties and their representatives engaged in various discussions regarding the Company, its business, operations, activities and financial information.
On October 15, 2021, Kirkland & Ellis LLP (“Kirkland”), legal counsel to KKR and Party B, sent a revised draft of the merger agreement to Cravath. This version of the merger agreement included a “no-shop” provision restricting the Company from soliciting alternative transactions between execution of the merger agreement and closing of the merger; it proposed a “Company termination fee” equal to 3.5% of the equity value of the Company, payable by the Company in the event the merger agreement were terminated under certain circumstances relating to a change in the Board’s recommendation or a superior proposal; it also proposed a “reverse termination fee” equal to 3.5% of the equity value of the Company, payable by the acquiror under certain circumstances relating to a failure by the acquiror to close the transaction.
On October 16, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process.
On October 21, 2021, Party E submitted to the Board a non-binding indication of interest proposing to acquire all of the outstanding shares of common stock for a price between $82.00 and $85.00 in cash per share of common stock. Party E indicated that it would need an additional four to six weeks to conduct due diligence and negotiate definitive transaction documentation. Representatives of Morgan Stanley and Cravath discussed Party E’s letter with the Committee and members of Company management. The Committee instructed the Company’s management and advisors to provide Party E with a draft non-disclosure agreement and facilitate further due diligence and discussions with Party E.
Later that day on October 21, 2021, representatives of Morgan Stanley provided to Party E a draft non-disclosure agreement, which contained a customary standstill provision that would automatically terminate upon the entry by the Company into a definitive acquisition agreement with a third party and other customary provisions.
Also on October 21, 2021, Cravath sent a revised draft of the merger agreement on behalf of the Company to Kirkland. This version of the merger agreement contained a “no-shop” provision, a Company termination fee equal to 2.5% of the equity value of the Company and a reverse termination fee equal to 7.5% of the equity value of the Company.
On October 23, 2021, representatives of Party B indicated to Morgan Stanley that Party B would no longer be able to support the previously proposed purchase price of $82.50 in cash per share of common stock, that Party B was withdrawing from the bidding process and that the joint proposals from KKR and Party B dated September 18, 2021 and October 5, 2021 were retracted.
Also on October 23, 2021, representatives of Party C submitted to the Board a revised non-binding indication of interest affirming Party C’s interest in consummating an acquisition of the Company, and indicating that Party C would be in a position to complete due diligence and negotiation of a definitive acquisition agreement by early November. The letter indicated an increase in Party C’s proposed acquisition price to $85.00 in cash per share of common stock, and was accompanied by a revised draft merger
 
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agreement and letters from financing sources indicating that they were highly confident they would be able to provide customary financing commitments in connection with the execution of a definitive merger agreement. The revised merger agreement proposed a “go-shop” provision that would permit the Company to solicit alternative proposals for a period of 30 days after execution of the merger agreement; it contained a bifurcated Company termination fee of 1.0% of the equity value of the Company in the event of a termination to enter into a superior proposal received during the go-shop period and 3.5% of the equity value of the Company in all other circumstances; and it contained a reverse termination fee equal to 7.0% of the Company’s equity value. Representatives of Party C also reiterated its requests for exclusivity and for expense reimbursement by the Company in the event that the Company and Party C were unable to execute definitive transaction documentation.
On October 24, 2021, representatives of Party C provided Morgan Stanley a proposed framework for its expense reimbursement, and indicated that such framework, in lieu of a commitment by the Company to negotiate exclusively with Party C, would be necessary for Party C to continue pursuing a potential acquisition of the Company.
Later on October 24, 2021, the Board met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath and discussed Party C’s October 23, 2021 bid package, including its requests for exclusivity and/or expense reimbursement. The Board also discussed the parameters of an expense reimbursement agreement for Party C that would be acceptable, and directed the Company’s management and financial and legal advisors to begin negotiations on such an expense reimbursement agreement.
On October 25, 2021, representatives of KKR held a call with representatives of Morgan Stanley, during which KKR requested the Company’s consent to partner with GIP as a co-bidder.
Also on October 25, 2021, representatives of Cravath provided GIP with a draft non-disclosure agreement, containing a customary standstill provision that would automatically terminate upon the entry by the Company into a definitive acquisition agreement with a third party and other customary provisions, which was executed on October 26, 2021, after which time GIP was granted access to the data room.
On October 27, 2021, KKR submitted a non-binding indication of interest letter confirming its continued interest in consummating an acquisition of the Company on the terms and subject to the conditions set forth in the indication of interest letter dated October 5, 2021 from KKR and Party B, including a purchase price of at least $82.50 in cash per share of common stock.
Also on October 27, 2021, Cravath sent a revised draft of the merger agreement on behalf of the Company to Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), outside legal counsel to Party C. This version of the merger agreement contained a “go-shop” provision, a Company termination fee equal to 1.0% of the equity value of the Company during the go-shop period and 2.5% of the equity value of the Company thereafter and a reverse termination fee equal to 8.5% of the equity value of the Company.
On October 29, 2021, Party C shared a proposed draft expense reimbursement agreement with representatives of Morgan Stanley. Representatives of Morgan Stanley indicated that the Company and its advisors would review the draft expense reimbursement agreement.
Also on October 29, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath and discussed KKR’s request to partner with GIP, in light of Party B’s withdrawal from the process. Following these discussions, the Board directed representatives of Morgan Stanley to permit KKR and GIP to partner with each other as joint-bidders (the “KKR/GIP Consortium”), subject to GIP’s entry into a non-disclosure agreement.
On October 30, 2021, the Company and Party E executed a non-disclosure agreement with a customary standstill provision that would automatically terminate upon the entry by the Company into a definitive acquisition agreement with a third party and other customary provisions. Following the execution of the non-disclosure agreement, Party E was provided access to the data room.
Throughout the first week of November 2021, the Company, with the assistance of its financial and legal advisors, continued discussions with and made significant progress in discussing the proposed terms of
 
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the merger agreement and other transaction documents and addressing due diligence requests from each of the KKR/GIP Consortium and Party C in parallel. Throughout this time, members of the Committee received frequent updates from, and had frequent discussions with, the Company’s management and representatives of Morgan Stanley, DH Capital and Cravath, and separately kept the other directors not on the Committee apprised of material developments in the process.
On November 2, 2021, members of Company management held two separate in-person management presentations: one meeting with representatives of GIP and one meeting with representatives of Party E. During their respective meetings, the Company and each of GIP and Party E and their respective representatives engaged in various discussions regarding the Company, its business, operations, activities and financial information.
On November 5, 2021, representatives of the Company distributed a revised draft expense reimbursement agreement to Party C.
Also on November 5, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath. During the meeting, representatives of Morgan Stanley provided an overview of recent interactions with the KKR/GIP Consortium, Party C and Party E, noting that the KKR/GIP Consortium and Party C each appeared to be expending significantly more time and resources in pursuit of a potential acquisition of the Company than Party E. Following discussion with members of Company management and financial and legal advisors, the Committee directed the Company’s advisors to notify each of the KKR/GIP Consortium and Party C that the Company expected final proposals and near-final transaction documentation by November 12, 2021, with a potential announcement of a transaction by the morning of November 15, 2021. The Committee also directed the Company’s advisors to request a revised bid from Party E by November 12, 2021. Following the meeting, representatives of Morgan Stanley notified representatives of each of the KKR/GIP Consortium and Party C of the Company’s proposed transaction timeline and representatives of Morgan Stanley also requested that Party E submit a revised bid on the same timeline.
On November 9, 2021, Skadden sent a revised draft of a transaction agreement on behalf of Party C to Cravath, which included certain substantial changes to the initially contemplated transaction structure, including introducing certain required pre-closing restructurings and asset sales with a special dividend that would reduce the back-end merger consideration. This transaction agreement contained a “no-shop” provision in lieu of a “go-shop” provision, a Company termination fee equal to 3.5% of the equity value of the Company and a reverse termination fee equal to 7.0% of the equity value of the Company. During the course of the next several days, Cravath and Morgan Stanley discussed with Skadden and representatives of Party C, respectively, various aspects of the proposed transaction structure and other provisions of the draft agreement.
On November 10, 2021, Kirkland sent a revised draft of the merger agreement on behalf of the KKR/GIP Consortium to Cravath. This version of the merger agreement contained a “no-shop” provision, a Company termination fee equal to 3.5% of the equity value of the Company and a reverse termination fee equal to 3.5% of the equity value of the Company.
On November 11, 2021, the Board met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process.
Also on November 11, 2021, Skadden sent a revised draft of the merger agreement on behalf of Party C to Cravath. This version substantially reversed the transaction structure changes that Party C introduced on November 9, 2021, and it contained a “no-shop” provision, a Company termination fee equal to 3.25% of the equity value of the Company and a reverse termination fee equal to 7.0% of the equity value of the Company. Over the course of the following days, the Company, with the assistance of Cravath, and Party C, with the assistance of Skadden, negotiated the terms of the merger agreement and related documentation.
Also on November 11, 2021, Party C sent a revised draft of the expense reimbursement agreement to representatives of Morgan Stanley, and indicated to representatives of Morgan Stanley that Party C’s proposed purchase price was currently still $85.00 in cash per share of common stock.
 
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In the morning of November 12, 2021, the Board met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process. Following discussion, the Board affirmed the proposed transaction timeline and directed Company management and the Company’s advisors to continue negotiations with a view towards receiving and evaluating final proposals no later than November 14, 2021.
Later that day on November 12, 2021, the KKR/GIP Consortium submitted a non-binding proposal to the Board proposing to acquire all of the outstanding shares of common stock of the Company at a price of $84.00 in cash per share of common stock. Over the course of the following days, the Company, with the assistance of Cravath, and the KKR/GIP Consortium, with the assistance of Kirkland, negotiated the terms of the merger agreement and related documentation.
Also on November 12, 2021, representatives of Party E submitted to Morgan Stanley a revised non-binding indication of interest stating Party E’s interest in pursuing an acquisition of the Company, and indicating that Party E would be in a position to complete due diligence and negotiation of a definitive acquisition agreement over the course of the following four weeks. The revised indication of interest included a proposed acquisition price of $85.00 in cash per share of common stock, and was accompanied by letters from financing sources indicating that they were highly confident they would be able to provide customary financing commitments in connection with the execution of a definitive merger agreement.
Also on November 12, 2021, various media sources reported market speculation regarding an imminent agreement to sell the Company within days, including reported speculation regarding the status of negotiations between the Company and certain specific potential transaction counterparties.
On November 13, 2021, the Committee met with members of Company management and representatives of Morgan Stanley, DH Capital and Cravath to discuss the process.
Also on November 13, 2021, the Company and Party C executed an expense reimbursement agreement that provided that the Company would reimburse Party C for a portion of its out-of-pocket expenses, capped at a maximum of $7.5 million payable by the Company, incurred in pursuing an acquisition of the Company in the event that, on or prior to November 14, 2021, Party C delivered to the Company a proposed definitive version of a merger agreement containing a purchase price of at least $85.00 in cash per share of common stock and other specified terms, along with debt and equity commitment letters in an aggregate amount sufficient to consummate the acquisition and a customary limited guarantee, and within a specified time period the Company entered into a definitive agreement providing for the acquisition of the Company with an alternative bidder instead of Party C.
During the course of November 13 and 14, 2021, financial and legal advisors of the Company continued discussions in order to finalize the merger agreement and other transaction documents with financial and legal advisors of each of the KKR/GIP Consortium and Party C, in parallel.
Early in the morning of November 14, 2021, representatives of Morgan Stanley separately notified each of the KKR/GIP Consortium and Party C that the Company expected to receive best and final purchase price proposals that day.
In the afternoon of November 14, 2021, each of the KKR/GIP Consortium and Party C submitted written best and final proposals to acquire the Company. The KKR/GIP Consortium proposal contained a purchase price of $90.50 in cash per share of common stock. Party C’s proposal contained a purchase price of $86.00 in cash per share of common stock.
In the evening of November 14, 2021, the Board met with members of Company management and representatives of each of Morgan Stanley, DH Capital, Cravath and Venable LLP, the Company’s legal advisor on matters of Maryland law (“Venable”). Members of Company management and DH Capital presented to the Board updates on the status of certain commercial transactions. Representatives of Cravath and Venable delivered remarks regarding the Board’s statutory duties and other relevant legal considerations for a Maryland corporation in the context of a review of a potential sale transaction. Representatives of Morgan Stanley reviewed for the Board the terms of the most recent proposals from the KKR/GIP Consortium, Party C and Party E. Representatives of Morgan Stanley also reviewed with the Board its financial analyses of the proposed merger consideration and rendered to the Board its oral opinion, which
 
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was subsequently confirmed by delivery of a written opinion, dated November 14, 2021, and that is attached to this proxy statement as Annex B, that, as of that date and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth therein, the merger consideration to be received by the holders of shares of common stock pursuant to the merger agreement with the KKR/GIP Consortium was fair from a financial point of view to the holders of shares of common stock. Representatives of Cravath delivered a legal presentation outlining the terms of the near-final draft of the merger agreement with the KKR/GIP Consortium and the near-final draft of the merger agreement with Party C, and the near-final committed debt and equity financing documentation with each of the KKR/GIP Consortium and Party C, and discussed the draft resolutions under consideration by the Board.
After discussion and consideration of a variety of factors, including those described in “— Reasons for the Merger” beginning on page 41, the Board determined to proceed with the proposal from the KKR/GIP Consortium and unanimously (i) authorized and approved the execution, delivery and performance by the Company of the merger agreement, the merger and the other transactions contemplated by the merger agreement, (ii) declared that the merger is advisable and in the best interests of the Company and stockholders of the Company on substantially the terms and conditions set forth in the merger agreement, (iii) directed that the merger be submitted for consideration at the special meeting and (iv) recommended that the stockholders of the Company approve the merger.
Following the meeting of the Board, representatives of Morgan Stanley notified representatives of the KKR/GIP Consortium that the Board had adopted resolutions approving the form of merger agreement, and notified representatives of Party C and Party E that the Company would not be proceeding with a transaction with either of them.
Shortly thereafter, the Company and the KKR/GIP Consortium finalized and executed the merger agreement and the other ancillary documentation related to the merger.
The following morning, on November 15, 2021, the Company, KKR and GIP issued a joint press release announcing the execution of the merger agreement and the proposed terms of the merger.
Recommendation of the Board
At the special meeting of the Board on November 14, 2021, after consideration, including of the material factors described in the section below entitled “— Reasons for the Merger”, and detailed discussions with the Company’s management and its legal and financial advisors, at such meeting and prior meetings of the Board, the Board unanimously:

authorized and approved the execution, delivery and performance by the Company of the merger agreement and the consummation by the Company of the merger and the other transactions contemplated by the merger agreement;

declared that the merger is advisable and in the best interests of the Company and of stockholders of the Company on substantially the terms and conditions set forth in the merger agreement;

directed that the merger be submitted for consideration at the special meeting; and

recommended that the stockholders of the Company approve the merger.
Reasons for the Merger
As described above in the section entitled “— Background of the Merger”, prior to and in reaching its unanimous determination to authorize and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, declare the merger advisable and in the best interests of the Company and stockholders of the Company and recommend that the Company’s stockholders approve the merger, the Board consulted with and received the advice of its financial advisors and outside legal counsel, discussed certain issues with the Company’s management and considered a variety of factors weighing positively in favor of the merger, the merger agreement and the transactions contemplated thereby, including the following material factors:
 
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the $90.50 per share price of common stock to be paid in cash, which was in excess of the all-time highest closing price for shares of common stock on any day since the date of the Company’s initial public offering in January 2013, and which represented a premium of approximately:

25% over the unaffected closing stock price on September 27, 2021, the last full trading day prior to published market speculation regarding a potential sale of the Company; and

6% over the closing stock price on November 12, 2021, the last trading day prior to the date when the merger agreement was executed;

the Board’s understanding of the Company’s business, operations, financial condition, earnings, prospects, competitive position and the nature of the industry in which the Company competes;

the Board’s understanding of the risks and uncertainties in the industry in which the Company competes, and the risks that the Company would face if it continued to operate on a stand-alone public company basis, including:

risks relating to the fundamentals for data center real estate and the real estate industry, including, but not limited to, increased competition, falling market rents and decreases in or slowed growth of global data, e-commerce and demand for outsourcing of data storage and cloud-based applications;

risks relating to the operation of the Company, including, but not limited to, economic downturn, natural disaster or oversupply of data centers in the geographic areas that the Company serves, significant competition in the data center industry, a loss of key customers, a loss of access to key third-party service providers and suppliers, a loss of power or cooling which may interrupt the Company’s services to its customers, increased operating costs and capital expenditures at the Company’s facilities, including those resulting from higher utilization by customers, unknown or contingent liabilities related to the Company’s historical acquisitions of property or other assets and the inability to identify or complete acquisitions of additional properties or other assets;

risks relating to financing of the Company, particularly in light of its capital expenditure requirements, including, but not limited to, the failure to obtain necessary outside financing on favorable terms, or at all, restrictions in the instruments governing the Company’s indebtedness, increases in market interest rates, volatility in the market price and volume of common stock and potential negative impacts resulting from incurring excessive leverage;

risks relating to the Company’s development of properties, obtaining applicable permits, power and connectivity and the Company’s ability to successfully lease those properties;

risks relating to compliance with existing and future applicable laws and regulations;

risks relating to the Company’s qualification as a REIT (including distributional requirements and compliance with technical requirements of the Code); and

other risks and uncertainties, including the risk factors set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and on Form 10-Q for the fiscal quarters ended March 31, 2021, June 20, 2021 and September 30, 2021;

the Company’s recent turnover of executives and other key personnel;

the Board’s determination that other alternatives to a sale of the entire Company, including entering into financing transactions, divesting certain assets and pursuing joint ventures or acquisitions, which alternatives the Board evaluated with the assistance of the Company’s advisors, did not represent an attractive alternative to a sale of the entire Company in light of, among other factors, the potential risks, rewards and uncertainties associated with those alternatives;

the fact that the consideration to be paid by KKR and GIP is all cash, which provides certainty, immediate value and liquidity to holders of common stock, especially when viewed against any internal or external risks and uncertainties associated with the Company’s stand-alone strategy, immediately upon the closing of the merger;

the ability of the Board to continue to declare and pay regular quarterly cash dividends to the Company’s stockholders for the entire period between signing and closing of the merger at a quarterly
 
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rate of $0.52 per share of common stock in accordance with the merger agreement without a reduction in the merger consideration to be paid by KKR and GIP to the Company’s stockholders, as more fully described below in the section entitled “— Dividends”;

the possibility that an infrastructure fund or other private financial sponsor might be able to realize more value from the business than a public company buyer and thereby pay a higher price to acquire the Company, including the ability to absorb near-term dilution from capital expenditures in favor of longer-term growth and to fund developments without having to rely on the volatility of equity capital markets;

the Company management’s presentation to the Board of its views and analyses, conducted with the assistance of the Company’s financial advisors, regarding the financial and strategic effects of signing certain substantial customer contracts in the fourth quarter of 2021, including its views regarding the Company’s opportunities and constraints affecting future capacity and that such contracts generally represented a pull-forward of capacity that was previously expected to be realized in 2022 or 2023, rather than an increase of aggregate expected capacity reflected in the Financial Forecasts;

the fact that certain stockholders of the Company had encouraged the Company to consider whether a change-of-control transaction would be in the best interests of the Company and the stockholders of the Company, as described above in the section entitled “— Background of the Merger”;

the financial analyses reviewed and discussed with the Board by representatives of Morgan Stanley and DH Capital as well as the oral opinion of Morgan Stanley rendered to the Board, which was subsequently confirmed by delivery of a written opinion, dated November 14, 2021, and that is attached to this proxy statement as Annex B, that, as of that date and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth therein, the merger consideration to be received by the holders of shares of common stock pursuant to the merger agreement was fair from a financial point of view to the holders of shares of common stock, which is more fully described below in the section entitled “— Opinion of the Company’s Financial Advisor”;

the Board’s assessment, taking into account the foregoing factors, of the Company’s value on a stand-alone basis relative to the $90.50 per share of common stock to be paid in cash in connection with the merger, and the possibility that the trading price of shares of common stock would not reach and sustain such price, or that doing so could take a considerable period of time;

the Board’s process for soliciting and responding to offers from the third parties that were believed to be the most willing and able to pay the highest price for the Company, which included providing such parties with an opportunity to conduct due diligence and conduct management sessions with members of the Company’s management, as described above in the section entitled “— Background of the Merger”;

the course and history of competitive arm’s-length negotiations with numerous third parties which, among other things, resulted in an increase in the merger consideration to $90.50 per share of common stock from an initial bid of $80.00 per share from Party I on August 11, 2021 and an initial bid of $82.50 per share from the initial KKR consortium on September 18, 2021, as described above in the section entitled “— Background of the Merger”;

the Board’s belief that, based on discussions with the KKR/GIP Consortium and other potential counterparties, the final proposal submitted by the KKR/GIP Consortium represented the best and final offer and the highest price per share of common stock that the KKR/GIP Consortium or any other potential counterparty would be willing to pay, and any request for a further price increase or solicitation of additional bids from other third parties would have created a meaningful risk that the KKR/GIP Consortium might determine not to enter into the transaction and to terminate negotiations, in which event stockholders of the Company would lose the opportunity to obtain the proposed $90.50 per share of common stock in cash being offered;

the successful track record that KKR and GIP have developed in acquiring other companies and the consolidated financial strength and industry expertise of the KKR/GIP Consortium;
 
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the fact that the merger is not subject to a financing condition, that the KKR/GIP Consortium obtained committed debt financing for the merger from reputable financing sources, and that each of the KKR Funds and the GIP Funds have committed to make available and provide to Parent, pursuant to the equity commitment letters, the full amount in cash necessary, along with the committed debt financing, to fund the aggregate merger consideration;

the fact that the KKR Funds and GIP Funds have provided certain guarantees in favor of the Company as described below in the section entitled “— Financing of the Merger”;

the provisions of the merger agreement that permit the Company, in response to certain unsolicited takeover proposals, to furnish information to and conduct negotiations with third parties under certain circumstances and, under certain conditions, to accept a superior proposal, and the Company’s corresponding right to terminate the merger agreement (subject to the payment to Parent of the Company termination fee of $319.5 million) in order to enter into a definitive agreement providing for the consummation of such superior proposal;

the provisions of the merger agreement that permit the Board to withhold, withdraw, modify or qualify its recommendation that our stockholders vote to approve the merger and the other transactions contemplated by the merger agreement under certain circumstances, subject to payment to Parent of the Company termination fee of $319.5 million if Parent elects to terminate the merger agreement in such circumstances;

the high probability that the merger would be consummated based on, among other things, KKR’s and GIP’s independent respective abilities to complete large acquisition transactions, their extensive respective experience in the real estate industry, the absence of a financing contingency and the $813.5 million Parent termination fee, payable to the Company if the merger agreement is terminated in certain circumstances, which payment is guaranteed by the KKR Funds and the GIP Funds, pursuant to the guarantees delivered by them;

the terms and conditions of the merger agreement, which were reviewed by the Board with the Company’s outside legal counsel and financial advisors, and the fact that such terms were the product of arm’s-length negotiations between the parties;

the fact that resolutions approving the merger were unanimously approved by the Board, which is comprised of a majority of independent directors who are not affiliated with the Company and are not employees of the Company or any of its subsidiaries; and

the fact that the merger would be subject to the approval of our stockholders, and our stockholders would be free to reject the merger by voting against the merger.
In the course of its deliberations, the Board also considered a variety of risks and other countervailing factors related to the merger agreement and the merger, including the following material factors:

the potential upside in the Company’s stand-alone strategic plan;

the financial and strategic effect of certain substantial customer contract bookings executed in the fourth quarter of 2021, including related analyses presented to the Board by the Company’s management and financial advisors;

the possibility that the merger might not be consummated in a timely manner or at all due to a failure of certain conditions, including with respect to the required approval of the transaction by the required regulatory authorities;

the risks and costs to the Company if the merger does not close in a timely manner or at all, including the potential negative impact on the Company’s ability to retain key employees, the diversion of management and employee attention and the potential disruptive effect on the Company’s day-to-day operations and the Company’s relationships with customers, suppliers and other third parties;

the fact that holders of common stock will have no ongoing equity interest in the surviving corporation following the merger, meaning that the holders of common stock will not (by virtue of their holding common stock) participate in the Company’s potential future earnings or growth;
 
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the restrictions on the conduct of the Company’s business prior to the consummation of the merger, which may delay or prevent the Company from undertaking business opportunities that may arise or any other action that it might otherwise take with respect to the operations and strategy of the Company;

the risk that the parties may incur significant costs and material delays resulting from seeking regulatory approvals and other clearances, consents and approvals necessary for consummation of the merger;

the provisions of the merger agreement that restrict the Company’s ability to solicit or participate in discussions or negotiations regarding alternative business combination transactions, subject to specified exceptions, and that require the Company to negotiate with Parent (if Parent desires to negotiate) prior to the Company being able to terminate the merger agreement to accept a superior proposal;

the possibility that the Company’s obligation to pay the Company termination fee of $319.5 million to Parent upon the termination of the merger agreement under certain circumstances could discourage other potential acquirors from making an alternative proposal to acquire the Company;

the significant costs involved in connection with negotiating the merger agreement and consummating the merger, and the fact that if the merger is not consummated, the Company may be required to bear such costs;

the risk of litigation in connection with the execution of the merger agreement and the consummation of the merger and the other transactions contemplated therein;

the fact that, under Maryland law, the Company’s stockholders are not entitled to appraisal rights, dissenters’ rights or similar rights in connection with the merger; and

the fact that an all-cash transaction would be taxable to the holders of common stock that are U.S. holders for U.S. federal income tax purposes.
In addition, the Board was aware of and considered the fact that the Company’s executive officers have financial interests in the merger that may be different from, or in addition to, those of the Company’s stockholders generally, including those interests that are a result of employment and compensation arrangements with the Company, as described more fully below in the section entitled “— Interests of the Company’s Directors and Executive Officers in the Merger”.
The foregoing discussion of the factors considered by the Board is not intended to be exhaustive, but rather includes the material factors considered by the Board. The Board unanimously reached the conclusion to authorize and approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, declare the merger advisable and in the best interests of the Company and stockholders of the Company and recommend that the Company’s stockholders approve the merger in light of the factors described above and other factors that the Board believed were appropriate. In view of the wide variety of factors considered by the Board in connection with its evaluation of the merger and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Board. Rather, the Board made its recommendation based on the totality of the information available to the Board, including discussions with, and questioning of, the Company’s management and its financial and legal advisors. In considering the factors discussed above, individual members of the Board may have given different weights to different factors.
This explanation of the Board’s reasons for its recommendations and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors described in the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 20.
Financial Forecasts
Other than annual guidance — including the guidance included in the Company’s press release dated February 17, 2021 and the updates of such guidance in the Company’s press releases dated April 28, 2021,
 
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July 28, 2021 and October 28, 2021 (the “2021 earnings guidance”), with respect to total revenues, capital expenditures and certain other performance measures, which guidance the Company presents as a range — the Company does not, as a matter of course, publicly disclose forecasts as to future performance, earnings or other results due to the unpredictability of the underlying assumptions and estimates. However, the Company has included in this proxy statement certain financial forecasts of the Company that, to the extent described herein, were furnished to the Board, the Company’s financial advisors, KKR, GIP and certain other parties potentially interested in a transaction with the Company, in connection with the discussions concerning the proposed merger.
These Financial Forecasts (as defined below) were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements or generally accepted accounting principles in the United States (“GAAP”). A summary of this information is presented below.
While the Financial Forecasts were prepared in good faith, no assurances can be made regarding future events and the estimates and assumptions underlying these financial forecasts involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industries in which the Company operates, and the risk and uncertainties described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 20, all of which are difficult to predict and many of which are outside the control of the Company and, upon consummation of the merger, will be beyond the control of KKR or GIP and the surviving corporation. The Company’s stockholders are urged to review the Company’s SEC filings for a description of risk factors with respect to the Company’s business. There can be no assurance that the underlying assumptions will prove to be accurate or that the projected results will be realized. Actual results likely will differ, and may differ materially, from those reflected in the Financial Forecasts, whether or not the merger is consummated. The inclusion in this proxy statement of the Financial Forecasts below should not be regarded as an indication that the Company, KKR and GIP, their respective boards of directors or their respective financial advisors considered, or now consider, these forecasts to be a reliable predictor of future results. The Financial Forecasts are not fact, and neither they nor any underlying assumptions should be relied upon as being indicative of future results. Readers of this proxy statement are cautioned not to place reliance on this information. The Financial Forecasts assume that the Company would continue to operate as a standalone company and do not reflect any impact of the merger.
The Financial Forecasts include certain non-GAAP financial measures, including Net Operating Income, Adjusted EBITDA and Normalized FFO (in each case, as defined below). The Company’s management included forecasts of Net Operating Income in the Financial Forecasts because it is a financial measure commonly used in the REIT industry, as a supplemental performance measure; when compared period over period, it captures trends in occupancy rates, rental rates and operating expenses. The Company’s management also believes that, as a widely recognized measure of the performance of REITs, Net Operating Income is used by investors as a basis to evaluate REITs. The Company’s management included forecasts of Adjusted EBITDA in the Financial Forecasts because the Company’s management believes that Adjusted EBITDA can be used by investors as a basis to compare the Company’s operating performance with that of other companies. The Company’s management included forecasts of Normalized FFO in the Financial Forecasts because the Company’s management believes that it is a financial measure commonly used in the REIT industry, as a supplemental performance measure; when compared period over period, this measure captures trends in occupancy rates, rental rates and operating expenses. The Company’s management also believes that, as a widely recognized measure of the performance of REITs, Normalized FFO is used by investors as a basis to evaluate REITs.
Investors should also note that these non-GAAP financial measures presented in this proxy statement are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. Investors should also note that these non-GAAP financial measures presented in this proxy statement have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors.
 
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Because of the non-standardized definitions, the non-GAAP financial measures may be calculated differently from, and will not be directly comparable to, similarly titled measures used by the Company’s competitors and other REITs, or any similarly titled measures used by KKR or GIP.
Due to the inherent limitations of non-GAAP financial measures, investors should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. The footnotes to the tables below provide certain supplemental information with respect to the calculation of these non-GAAP financial measures. All of the financial forecasts summarized in this section were prepared by the Company’s management. Neither Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm, nor any other independent registered public accounting firm nor any other person has examined, compiled or otherwise performed any procedures with respect to the prospective financial information contained in these financial forecasts and, accordingly, neither Deloitte nor any other independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered public accounting firm assumes any responsibility for the prospective financial information. The Deloitte reports incorporated by reference in this proxy statement relate to the historical financial information of the Company. Those reports do not extend to the Financial Forecasts and should not be read to do so.
The non-GAAP financial measures included in the Financial Forecasts were relied upon by Morgan Stanley for its financial analysis in connection with the preparation of its opinion and by the Board for its consideration of the merger. Financial measures provided to a financial advisor in connection with a business combination transaction are not subject to SEC rules regarding disclosures of non-GAAP financial measures, and reconciliations of non-GAAP financial measures were not provided to, nor relied upon by, Morgan Stanley or by the Board. In addition, none of KKR, GIP or the other potentially interested parties that received the Financial Forecasts were provided with any such reconciliation. Accordingly, we have not provided a reconciliation of the financial measures in this proxy statement.
By including in this proxy statement the Financial Forecasts below, none of the Company, KKR, GIP or any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of the Company compared to the information contained in the Financial Forecasts. Accordingly, the Financial Forecasts should not be construed as financial guidance, nor relied upon as such, and the Financial Forecasts may differ in important respects from the 2021 earnings guidance, which are presented as a range and which the Company’s management prepared based on a different set of assumptions. The inclusion of the Financial Forecasts in this proxy statement does not constitute an admission or representation by the Company that the information contained therein is material. The Financial Forecasts summarized in this section reflected the opinions, estimates and judgments of the Company’s management at the time they were prepared and have not been updated to reflect any changes since such Financial Forecasts were prepared. None of the Company, KKR, GIP or, after consummation of the merger, the surviving corporation, undertakes any obligation, except as required by law, to update or otherwise revise the Financial Forecasts to reflect circumstances existing since their preparation, changes in general economic or industry conditions or the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error.
The following table sets forth a summary of the financial projections made available to the Board, the Company’s financial advisors and certain parties potentially interested in a transaction with the Company, including KKR and GIP (the “Financial Forecasts”); the summary of the Financial Forecasts is not included in this proxy statement to induce any CyrusOne stockholder to vote in favor of the approval of the merger proposal or any other proposals to be voted on at the special meeting:
($ millions)
Fiscal Year ending December 31,
2021E
2022E
2023E
2024E
2025E
Revenue
$ 1,124 $ 1,285 $ 1,455 $ 1,615 $ 1,799
Net Operating Income(1)
$ 667 $ 754 $ 855 $ 947 $ 1,052
Adjusted EBITDA(2)
$ 582 $ 667 $ 765 $ 855 $ 958
Normalized FFO(3)
$ 491 $ 564 $ 646 $ 717 $ 801
 
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($ millions)
Fiscal Year ending December 31,
2021E
2022E
2023E
2024E
2025E
Capital Expenditures
$ (1,070) $ (1,623) $ (1,478) $ (1,235) $ (1,294)
(1)
“Net Operating Income” is defined as net income (loss), adjusted for sales and marketing expenses, general and administrative expenses, depreciation and amortization expenses, transaction, acquisition, integration and other related expenses, interest expense, net, (gain) loss on marketable equity investment, loss on early extinguishment of debt, impairment loss on real estate, foreign currency and derivative gains, net, other expense, income tax (benefit) expense and other items as appropriate.
(2)
“Adjusted EBITDA” is defined as net income (loss) as defined by GAAP adjusted for interest expense, net, income tax (benefit) expense, depreciation and amortization, transaction, acquisition, integration and other related expenses, legal claim costs, stock-based compensation expense, severance and management transition costs, loss on early extinguishment of debt, new accounting standards and regulatory compliance and the related system implementation costs, (gain) loss on marketable equity investment, impairment loss on real estate, foreign currency and derivative gains, net, other expense and other items as appropriate.
(3)
“Normalized FFO” is defined as net income (loss) computed in accordance with GAAP before real estate depreciation and amortization and impairment loss on real estate plus loss on early extinguishment of debt; (gain) loss on marketable equity investment; foreign currency and derivative gains, net; new accounting standards and regulatory compliance and the related system implementation costs; amortization of trade names; transaction, acquisition, integration and other related expenses; severance and management transition costs; legal claim costs and other items as appropriate.
Opinion of the Company’s Financial Advisor
Morgan Stanley was retained by the Company to act as its financial advisor in connection with a review of the Company’s strategic alternatives, including a potential sale of the Company. The Company selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation and its knowledge of the business and affairs of the Company. As part of this engagement, the Board requested that Morgan Stanley evaluate the fairness from a financial point of view of the merger consideration to be received by the holders of shares of common stock pursuant to the merger agreement. On November 14, 2021, Morgan Stanley rendered to the Board its oral opinion, which was subsequently confirmed by delivery of a written opinion, dated November 14, 2021, and that is attached to this proxy statement as Annex B, that, as of that date and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth therein, the merger consideration to be received by the holders of shares of common stock pursuant to the merger agreement was fair from a financial point of view to the holders of shares of common stock.
The full text of the written opinion of Morgan Stanley, dated November 14, 2021, is attached as Annex B to this proxy statement and is incorporated by reference into this proxy statement. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion. CyrusOne stockholders are urged to, and should, read the opinion carefully and in its entirety. Morgan Stanley’s opinion is directed to the Board and addresses only the fairness, from a financial point of view to the holders of shares of common stock of the merger consideration to be received by the holders of shares of common stock pursuant to the merger agreement as of the date of the opinion. Morgan Stanley’s opinion does not address any other aspect of the transactions contemplated by the merger agreement and does not constitute an opinion or recommendation as to how any CyrusOne stockholder should vote at the special meeting. The summary of Morgan Stanley’s opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion.
For purposes of rendering its opinion, Morgan Stanley, among other things:

reviewed certain publicly available financial statements and other business and financial information of the Company;
 
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reviewed certain internal financial statements and other business, financial and operating data concerning the Company prepared by the management of the Company;

reviewed certain financial projections prepared by the management of the Company as further described in the section of this proxy statement entitled “— Financial Forecasts” beginning on page 45;

discussed the past and current operations and financial condition and the prospects of the Company with senior executives of the Company;

reviewed the reported prices and trading activity for shares of common stock;

compared the financial performance of the Company and the prices and trading activity of shares of common stock with that of certain other publicly traded companies comparable with the Company and their securities;

reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

participated in certain discussions among representatives of the Company and Parent and certain parties and their financial and legal advisors;

reviewed (i) the merger agreement and (ii) the draft commitment letters from Barclays Bank PLC, Goldman Sachs Bank USA, Wells Fargo Bank, N.A. and Citigroup Global Markets Inc. substantially in the form of the drafts dated November 14, 2021 and the draft commitment letters from the KKR Funds and the GIP Funds, substantially in the form of the drafts dated November 14, 2021 and certain related documents; and

performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.
In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to it by the Company and Parent, and formed a substantial basis for its opinion.
With respect to the Financial Forecasts, Morgan Stanley assumed that such forecasts were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company of the future financial performance of the Company. In addition, Morgan Stanley assumed that the merger would be consummated in accordance with the terms set forth in the merger agreement without any waiver, amendment or delay of any terms or conditions, including, among other things, that Parent would obtain financing in accordance with the terms set forth in the commitment letters, and that the definitive merger agreement would not differ in any material respect from the draft thereof furnished to Morgan Stanley. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed merger, no delays, limitations, conditions or restrictions would be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed merger. Morgan Stanley did not express any view on, and its opinion did not address, any other term or aspect of the merger agreement or the transactions contemplated thereby (other than the merger consideration to the extent expressly specified in the opinion) or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection therewith, including, without limitation, any terms, aspects or implications of any related transactions. Morgan Stanley’s opinion did not address the relative merits of the transactions contemplated by the merger agreement as compared to any other alternative business transaction or other business or financial strategies that might be available to the Company, nor did it address the underlying business decision of the Company to enter into the merger agreement or proceed with the transactions contemplated by the merger agreement. Morgan Stanley is not a legal, tax, or regulatory advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of the Company and its legal, tax and regulatory advisors with respect to legal, tax and regulatory matters. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of the Company’s officers, directors or employees, or any class of such persons, relative to the merger consideration to be received by the holders of shares of common stock in the merger. Morgan Stanley was advised by the Company that the Company has operated in conformity with the requirements for
 
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qualification as a REIT for U.S. federal income tax purposes since its formation as a REIT and Morgan Stanley assumed that the merger would not adversely affect such status or operations of the Company. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of the Company, and was not furnished with any such valuations or appraisals. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Morgan Stanley as of November 14, 2021. Events occurring after such date may affect Morgan Stanley’s opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.
Summary of Financial Analyses of Morgan Stanley
The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter to the Board dated November 14, 2021. The following summary is not a complete description of the opinion or the financial analyses performed and factors considered by Morgan Stanley in connection with Morgan Stanley’s opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses.
Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole. Assessing any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley’s opinion. Furthermore, mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using the data referred to below.
In performing the financial analyses summarized below and arriving at its opinion, Morgan Stanley used and relied upon the Financial Forecasts, as described in greater detail in the section of this proxy statement entitled “— Financial Forecasts” beginning on page 45, and certain financial forecasts based on Wall Street research.
Discounted Cash Flow Analysis
Morgan Stanley performed a discounted cash flow analysis on the Company, which is designed to provide an implied value of a company by calculating the present value of the estimated future unlevered free cash flows and the terminal value of the company. Morgan Stanley calculated a range of per share equity values as of September 30, 2021 for the shares of common stock. Morgan Stanley used estimates from the Financial Forecasts for purposes of its discounted cash flow analysis, as more fully described below.
Morgan Stanley first calculated the estimated unlevered free cash flows for the stub period of the fiscal year 2021 and fiscal years 2022 through 2024 (the “Unlevered Free Cash Flow”), which it calculated by deducting from Adjusted EBITDA for each such fiscal year (as set forth in greater detail in the section of this proxy statement entitled “— Financial Forecasts”) stock-based compensation expense, net working capital and net capital expenditures and making certain further investment adjustments (including for certain categories of cash and bonus compensation, income tax benefit, professional fees, other income and special items). The estimates of Unlevered Free Cash Flow were based on the Financial Forecasts (prorated in the case of the stub fiscal year 2021), and were as follows:
($ millions)
Fiscal Year ending December 31,
2021E
2022E
2023E
2024E
Unlevered Free Cash Flow
$ (43)(1) $ (1,026) $ (800) $ (471)
(1)
For the period from September 30, 2021 through December 31, 2021.
Morgan Stanley also calculated a range of implied terminal enterprise values of the Company as of December 31, 2024 by applying a range of implied exit multiples of 19.0x to 21.0x to the forecasted Adjusted EBITDA of the Company for the twelve months ending December 31, 2025 with a midpoint of 20.0x at
 
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exit. The range of multiples was selected, based on Morgan Stanley’s professional judgment and experience with respect to valuations of these types of businesses, using the historical trading performance of the Company relative to select public peers.
Morgan Stanley then discounted the estimated Unlevered Free Cash Flow and range of estimated terminal values derived to present value as of September 30, 2021, using rates based on Morgan Stanley’s judgment of the estimated range of the Company’s weighted average cost of capital of 5.6% to 6.4%, to derive ranges of implied enterprise values for the Company. From the ranges of implied enterprise values, Morgan Stanley then deducted the Company’s net debt of approximately $2.96 billion as of September 30, 2021, and added the value of certain equity investments of the Company of approximately $30 million as of September 30, 2021, to arrive at a range of enterprise values for the Company, and subsequently derive a range of implied equity value in respect of the fully diluted share count as of September 30, 2021.
This analysis indicated an implied per share equity value reference range for shares of common stock of $74.99-$89.71 (as compared to the proposed merger consideration of $90.50 per share of common stock).
Trading Performance
Morgan Stanley reviewed the historical trading range of shares of common stock for the 12-month period ending September 27, 2021 (the last full trading day prior to published market speculation regarding a potential sale of the Company). Morgan Stanley noted that the low and high closing prices for shares of common stock during such period were $61.64, on March 4, 2021, and $82.69, on June 10, 2021, respectively, per share.
Analysts’ Price Target Analysis
Morgan Stanley reviewed publicly available price targets for shares of common stock prepared and published by over 20 equity research analysts. The range of undiscounted analyst price targets for shares of common stock was $70.00 to $90.00, with a median price target of $80.50 per share of common stock, as of September 27, 2021, to which Morgan Stanley applied a discount using cost of equity of 7.4% based on the average of (a) the capital asset pricing based cost of equity using a risk premium assumption of 6.0% and applicable predicted beta according to MSCI’s Barra’s Risk Models and (b) the median broker reported cost of equity of 7.5%, resulting in a discounted price target range of $65.99 to $84.84, with a median price target of $74.94 per share of common stock and a mean price target of $74.43 per share of common stock, in each case, based on Capital IQ.
The public market trading price targets published by securities research analysts do not necessarily reflect current market trading prices for shares of common stock. All estimates are subject to uncertainties, including, but not limited to, the future financial performance of the Company and future financial market conditions.
Net Asset Value
Morgan Stanley reviewed publicly available net asset value (“NAV”) estimates for shares of common stock published by those equity research analysts which published publicly available price targets for shares of common stock. As of September 27, 2021, the range of NAV estimates per share of common stock ranged from $59.00 to $92.60, with a median NAV estimate of $68.26 per share of common stock and a mean NAV estimate of $68.69 per share of common stock, in each case based on Capital IQ.
Comparative Public Trading Multiples Analysis
Morgan Stanley performed a public trading multiples analysis, which is designed to provide an implied trading value of a company by comparing it to selected companies with similar characteristics to the company. Morgan Stanley compared certain financial information of the Company with publicly available information for the selected companies.
Morgan Stanley selected these companies based on its professional judgment and because they are data center companies with business characteristics that, for purposes of its analysis, Morgan Stanley considered similar to the business characteristics of the Company.
 
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The selected companies consisted of:

Digital Realty Trust, Inc. (DLR);

Equinix, Inc. (EQIX);

CoreSite Realty Corporation (COR); and

Switch Inc. (SWCH).
Market data for the selected companies was based on closing prices as of November 5, 2021. Balance sheet data for the selected companies was as of the quarter ended September 30, 2021.
For purposes of this analysis, for each of the selected companies and the Company, Morgan Stanley calculated:

the aggregate value for each such company (obtained by calculating the sum of equity market capitalization of such company plus the net debt of such company and other applicable adjustments such as adjustments for preferred stock and minority interests) as a multiple of its estimated calendar year 2022 EBITDA (based on Capital IQ consensus estimates) (referred to as “AV / 2022E EBITDA”); and

the price per share for each such company a multiple of its estimated calendar year 2022 funds from operations per share (based on Capital IQ consensus estimates) (referred to as “P / 2022E FFO”).
Based on the analysis of the relevant metrics for each of the selected companies (excluding Equinix, Inc. from the selected company averages given the difference in its scale and business mix), Morgan Stanley adjusted the peer multiple range based on the Company’s historical discount to peers and applied the relevant adjusted multiples to the relevant 2022 metric based on the estimates prepared by Company management and described in further detail in the section of this proxy statement entitled “— Financial Forecasts” beginning on page 45 to determine the implied price per share of common stock. For the Company, Morgan Stanley calculated the same ratios, using both the estimates prepared by Company management and described in further detail in the section of this proxy statement entitled “— Financial Forecasts” beginning on page 45 and consensus estimates from Capital IQ as of September 27, 2021.
The results of its analysis were as follows:
Valuation Methodology
Selected
Company
Average
Applied Multiple
Implied Price Per Share of
Common Stock
Low
High
Low
High
AV / 2022E EBITDA
24.4x
19.0x
21.0x
$ 74.40 $ 84.58
P / 2022E FFO
24.1x
16.0x
20.0x
$ 67.89 $ 84.86
No company in the public trading multiples analysis is identical to the Company. In evaluating the selected companies, Morgan Stanley made judgments and assumptions with regard to general business, economic and market conditions affecting the selected companies and other matters (many of which are beyond the control of the Company), as well as differences in the selected companies’ financial, business and operating characteristics. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments regarding many factors that could affect the relative values of the selected companies and the multiples derived from the selected companies. Mathematical analysis, such as determining the mean or median, is not in itself a meaningful method of using the data of the selected companies.
Precedent Transaction Analysis
Morgan Stanley performed a precedent transactions analysis on the Company, which is designed to imply a value of a company based on publicly available financial terms and premiums of selected transactions.
Precedent Premiums Paid Analysis
Using publicly available information, Morgan Stanley reviewed the terms of selected public company precedent transactions announced from October 23, 2013 to June 7, 2021, in which the targets were REITs
 
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or digital infrastructure companies and the aggregate value of such transactions exceeded $8 billion. All transactions that Morgan Stanley found that satisfied the foregoing criteria were included in the premiums paid analysis.
Digital Infrastructure Precedents
Transaction Announcement Date
Acquiror
Target
June 7, 2021 Blackstone REIT Operating Partnership; The Blackstone Group Inc. QTS Realty Trust, Inc.
October 29, 2019 Digital Realty Trust, Inc. InterXion Holding N.V.
May 8, 2019 Digital Colony Partners / EQT Infrastructure IV Fund Zayo Group Holdings, Inc.
REIT Precedents
Transaction Announcement Date
Acquiror
Target
April 29, 2021 Realty Income Corporation VEREIT, Inc.
October 27, 2019 Prologis, L.P. Liberty Property Trust
July 31, 2018 Brookfield Asset Management Inc. Forest City Realty Trust, Inc.
April 29, 2018 Prologis, Inc. DCT Industrial Trust Inc.
November 13, 2017
Brookfield Property Partners L.P.
GGP Inc. (nka: Brookfield Property REIT Inc.)
November 8, 2015 Weyerhaeuser Company Plum Creek Timber Co. Inc.
October 8, 2015 Blackstone Real Estate Advisors; Blackstone Real Estate Partners VIII, L.P. BioMed Realty Trust Inc.
October 23, 2013 American Realty Capital Properties, Inc. (nka: VEREIT, Inc.) Cole Real Estate Investments, Inc.
Morgan Stanley calculated the premiums paid in these transactions over the applicable unaffected stock price of the acquired company (i.e., the percentage by which the price that the acquiring entity paid for the shares of the target exceeded the unaffected market price of such shares), by comparing the publicly announced purchase price to the volume-weighted average price for the ten trading days ending five trading days prior to the announcement of such precedent transactions (or the unaffected date, if applicable). Morgan Stanley noted that the mean of the premiums paid in the digital infrastructure transaction precedents was 17.7%. Morgan Stanley noted that the mean of the premiums paid in the REIT transaction precedents was 20.5%.
Based on the results of this analysis and the premiums paid in precedent transactions as outlined above, Morgan Stanley applied a premium range of 14.0% to 28.5% based on the observed low and high end of the range of premiums paid in such precedent transactions, respectively, to the closing price of shares of common stock on September 27, 2021, the last full trading day prior to published market speculation regarding a potential sale of the Company, of $72.57. This analysis indicated an implied per share equity value reference range for common stock of $82.73 to $93.25.
Precedent Data Center Transactions Analysis
Morgan Stanley compared publicly available statistics for certain precedent transactions involving data center operators, selected based on Morgan Stanley’s professional judgment and experience, between January 1, 2015 and November 14, 2021. Morgan Stanley selected such comparable transactions because it determined, upon the application of its professional judgment and experience, that they shared certain characteristics with the merger. The following is a list of the transactions reviewed:
 
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Selected Transactions (Acquiror / Target)
Blackstone REIT Operating Partnership; The Blackstone Group Inc. / QTS Realty Trust, Inc.
EQT Infrastructure IV Fund / EdgeConneX, Inc.
Macquarie Asia Infrastructure Fund 2 / AirTrunk Operating Pty Ltd
Digital Realty Trust, Inc. / InterXion Holding N.V.
Digital Realty Trust, Inc., Brookfield Infrastructure / Ascenty LLC
Digital Realty Trust, Inc. / DuPont Fabros Technology, Inc.
Equinix, Inc. / 29 Data Centers owned by Verizon Communications Inc.
BC Partners, Longview Asset Management and Medina Capital / Data Centers and Colocation Business of CenturyLink, Inc.
Equinix, Inc. / Telecity Group plc
For each selected precedent transaction, where such information was available, Morgan Stanley reviewed transaction values and calculated the total enterprise value implied for each target company (based on the consideration paid or proposed to be paid in the selected transaction), as a multiple of the target company’s (A) last 12 months (“LTM,” for the prior 12-month period, measured from the transaction announcement date, for which publicly available information was available) Adjusted EBITDA and (B) next 12 months (“NTM,” estimated for the next 12-month period measured from the transaction announcement date) Adjusted EBITDA. Financial data of the selected precedent transactions were based on Capital IQ consensus estimates, public filings and other publicly available information.
From these transactions, Morgan Stanley noted an average NTM EBITDA multiple of 20.7x and an average LTM EBITDA multiple of 19.9x. Morgan Stanley, based on its professional judgment and experience, identified the following three precedent transactions as being most relevant to the transactions contemplated by the merger agreement:
Selected Transactions (Acquiror / Target)
Blackstone REIT Operating Partnership; The Blackstone Group Inc. / QTS Realty Trust, Inc.
Digital Realty Trust, Inc. / InterXion Holding N.V.
Digital Realty Trust, Inc. / DuPont Fabros Technology, Inc.
Applying the LTM EBITDA multiple from those transactions to the Company’s LTM Adjusted EBITDA indicated an implied per share equity value reference range for common stock of $77.29 to $97.04.
No company or transaction utilized in the precedent transaction analysis is identical to the Company or the merger. In evaluating the precedent transactions, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond the control of the Company. These include, among other things, the impact of competition on the Company’s business and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of the Company and the industry, and in the financial markets in general, which could affect the public trading value of the companies and the aggregate value and equity value of the transactions to which they are being compared. The fact that certain points in the range of implied present value per share of common stock derived from the valuation of precedent transactions were less than or greater than the merger consideration is not necessarily dispositive to Morgan Stanley’s analysis of the merger consideration, but one of many factors Morgan Stanley considered.
General
In connection with the review of the merger for the Board, Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley believes that selecting any portion of its analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley may have given
 
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various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley’s view of the actual value of shares of common stock. In performing its analyses, Morgan Stanley made numerous assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters which are beyond the control of the Company. Any estimates contained in Morgan Stanley’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.
Morgan Stanley conducted the analyses described above solely as part of its analysis of the fairness from a financial point of view to the holders of shares of common stock of the consideration to be received by holders of shares of common stock pursuant to the merger agreement, and in connection with the delivery of its oral opinion, and its subsequent written opinion, to the Board. These analyses do not purport to be appraisals or to reflect the prices at which shares of common stock might actually trade.
The consideration to be received by holders of shares of common stock pursuant to the merger agreement was determined through arm’s-length negotiations between the Company and Parent (and including other parties as described in greater detail in the section of this proxy statement entitled “—Background of the Merger” beginning on page 31) and was approved by the Board. Morgan Stanley provided advice to the Board during these negotiations but did not, however, recommend any specific consideration to the Board, nor did Morgan Stanley opine that any specific consideration to be received by CyrusOne stockholders constituted the only appropriate consideration for the merger.
Morgan Stanley’s opinion and its presentation to the Board was one of many factors taken into consideration by the Board when it unanimously (i) authorized and approved the execution, delivery and performance by the Company of the merger agreement and the consummation by the Company of the merger and the other transactions contemplated by the merger agreement, (ii) declared that the merger is advisable and in the best interests of the Company and of stockholders of the Company on substantially the terms and conditions set forth in the merger agreement, (iii) directed that the merger be submitted for consideration at the special meeting and (iv) recommended that the stockholders of the Company approve the merger (as described in greater detail in the section of this proxy statement entitled “— Reasons for the Merger” beginning on page 41). Consequently, the analyses as described above should not be viewed as determinative of the opinion of the Board with respect to the merger consideration or whether the Board would have been willing to agree to a different form or amount of consideration.
Morgan Stanley’s opinion was approved by a committee of Morgan Stanley investment banking and other professionals in accordance with its customary practice. Morgan Stanley expressed no opinion or recommendation as to how any stockholder of the Company should vote at the stockholders meeting to be held in connection with the merger.
Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Its securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for their own account or the accounts of its customers, in debt or equity securities or loans of Parent, the Company, KKR, GIP, any of their respective affiliates or any other company, or any currency or commodity, that may be involved in this transaction, or any related derivative instrument.
Under the terms of its engagement letter, Morgan Stanley provided the Company with financial advisory services and the Board with a financial opinion, and the Company has agreed to pay Morgan Stanley an aggregate fee equal to approximately $68 million, $6 million of which was payable upon the earlier of the Company entering into a definitive agreement with respect to the merger and Morgan Stanley’s rendering of its opinion, and approximately $62 million of which is payable upon the closing of the merger. The Company has also agreed to reimburse Morgan Stanley for certain of its expenses, including the fees of outside counsel and other professional advisors, incurred in performing its services. In addition, the Company has agreed to indemnify Morgan Stanley and its affiliates, their respective directors, officers, agents
 
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and employees and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses, including certain liabilities under the federal securities laws, related to or arising out of Morgan Stanley’s engagement.
In the two years prior to the date of its opinion, Morgan Stanley and its affiliates have provided financing services for the Company and financial advisory and financing services to Parent and its affiliates, including affiliates of KKR and GIP, and have received fees in connection with such services. Morgan Stanley and its affiliates may also seek to provide financial advisory and financing services to the Company, Parent and their respective affiliates, including affiliates of KKR and GIP, in the future and would expect to receive fees for the rendering of these services.
Certain Effects of the Merger
If the Company stockholder approval is obtained, the other conditions to the closing of the merger are either satisfied or (to the extent permitted by law) waived and the merger is consummated, 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 direct, wholly owned subsidiary of Parent.
At the effective time, each share of common stock issued and outstanding immediately prior to the effective time (other than excluded shares) will be canceled and converted into the right to receive $90.50 in cash, without interest and less any applicable withholding taxes. Following the merger, all of the common stock will be beneficially owned by Parent, and none of the current holders of common stock will, by virtue of the merger, have any ownership interest in, or be a stockholder of, the Company, the surviving corporation or Parent. As a result, the current holders of common stock will no longer benefit from any increase in the value, nor will they bear the risk of any decrease in the value, of the Company. Following the merger, Parent will benefit from any increase in the Company’s value and also will bear the risk of any decrease in the Company’s value.
Please see the section of this proxy statement entitled “The Merger Agreement — Consideration to be Received in the Merger” beginning on page 71.
For information regarding the effects of the merger on the Company’s outstanding equity awards, please see the section below entitled “— Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 59 and the section of this proxy statement entitled “The Merger Agreement — Treatment of Company Equity Awards” beginning on page 72.
Shares of common stock are currently registered under the Exchange Act and listed on the NASDAQ Global Select Market under the trading symbol “CONE”. Following the consummation of the merger, shares of common stock will no longer be traded on the NASDAQ Global Select Market or any other public market. In addition, the registration of common stock under the Exchange Act is expected to be terminated, and, upon such termination, the Company will no longer be required to file periodic and other reports with the SEC with respect to the common stock.
Effects on the Company if the Merger Is Not Consummated
In the event that the Company stockholder approval is not obtained or if the merger is not consummated for any other reason, CyrusOne stockholders will not receive any payment for their shares of common stock in connection with the merger. Instead, the Company will remain an independent public company, the common stock will continue to be listed and traded on the NASDAQ Global Select Market, the common stock will continue to be registered under the Exchange Act and the Company’s stockholders will continue to own their shares of common stock and will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of the common stock.
If the merger is not consummated, there is no assurance as to the effect of these risks and opportunities on the future value of your common stock, including the risk that the market price of common stock may decline to the extent that the current market price of the common stock reflects a market assumption that the merger will be consummated. If the merger is not consummated, there is no assurance that any other transaction acceptable to the Company will be offered or that the business, operations, financial condition,
 
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earnings or prospects of the Company will not be adversely impacted. Pursuant to the merger agreement, under certain circumstances the Company is permitted to terminate the merger agreement in order to enter into an alternative transaction. Please see the section of this proxy statement entitled “The Merger Agreement — Termination of the Merger Agreement” beginning on page 88.
Under certain circumstances, if the merger is not consummated, the Company may be obligated to pay to Parent a $319.5 million termination fee. Please see the section of this proxy statement entitled “The Merger Agreement — Termination Fees” beginning on page 89.
Financing of the Merger
We anticipate that the total funds available to KKR and GIP to consummate the merger (which includes the funds that will be used to pay the aggregate merger consideration, repay or refinance any indebtedness to be repaid or refinanced by the Company and its subsidiaries pursuant to the merger agreement and pay all fees, costs and expenses required to be paid by Parent or Merger Sub at or prior to the closing of the merger in connection with the transactions contemplated by the merger agreement) will be approximately $7.047 billion of equity financing pursuant to the equity commitment letters and an aggregate amount of $12.0 billion of debt financing. KKR and GIP do not anticipate seeking or requiring additional sources of funding in order to consummate the merger. Parent has received the equity commitment for the equity financing from the KKR Funds and the GIP Funds as described below in the section entitled “— Equity Financing” and debt commitments for the debt financing from the debt financing sources as described below in the section entitled “— Debt Financing”.
The consummation of the merger is not conditioned on Parent’s receipt of any financing.
Equity Financing
Pursuant to the equity commitment letters, the KKR Funds and the GIP Funds have committed to contribute or cause to be contributed to Parent an aggregate amount in cash equal to $7,047,217,376 solely to fund the obligations.
Funding of the equity commitment is subject to the terms, conditions and limitations set forth in the equity commitment letters, which include: (i) with respect to the closing obligations, the simultaneous or immediately subsequent consummation of the closing of the merger and the receipt by Parent of the proceeds of the contemplated debt financing in accordance with the terms thereof and (ii) with respect to the expense obligations, such expense obligations becoming due and payable.
The obligation of the KKR Funds and the GIP Funds to fund the equity financing will terminate automatically and immediately upon the earliest to occur of (i) the consummation of the closing of the merger, (ii) the valid termination of the merger agreement in accordance with its terms, (iii) any payment being made under or in connection with the guarantees, (iv) the payment in full of the obligations, (v) 18 months after the date of execution of the equity commitment letters and (vi) the filing or commencement by the Company or any of its affiliates, or any person acting on their behalf, any action asserting (a) any claim for payment or performance under or in respect of the merger agreement, the applicable equity commitment letter, the guarantees or transactions contemplated thereby against the KKR Funds, the GIP Funds, Parent, Merger Sub and/or certain related parties or (b) any other theory or liability or seeks any remedies against such persons (in the case of each of clause (a) and clause (b), other than (1) claims by the Company against a guarantor under the applicable guarantee, (2) claims by the Company against Parent or Merger Sub under the merger agreement, (3) claims by the Company to cause Parent to specifically enforce a guarantor’s obligations under the applicable equity commitment letter to which such guarantor is party and (4) claims by the Company against KKR or GIP under the applicable non-disclosure agreement, other than, with respect to clause (v), any action by the Company or any of its affiliates seeking specific performance of Parent’s obligation to fund the equity commitment in accordance with the terms of the merger agreement.
Pursuant to the terms and conditions of the merger agreement, Parent shall (and shall cause its affiliates to) use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be
 
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done, all things necessary, proper or advisable to consummate and obtain the equity financing on the terms and subject only to the conditions set forth in the equity commitment letters.
The Company is an express beneficiary of the right granted to Parent to specific performance under the equity commitment letters and is entitled to enforce Parent’s rights to specific performance of the KKR Funds and the GIP Funds to fund all or any portion of their respective equity financing obligations under the equity commitment letters, subject to the terms thereof, if the Company is entitled to specific performance of Parent’s obligation to cause the equity commitment to be funded pursuant to the merger agreement.
Debt Financing
In connection with entering into the merger agreement, Parent received a debt commitment letter, dated November 14, 2021 (the “debt commitment letter” and, together with the equity commitment letters, the “commitment letters”), from the debt financing sources. Pursuant to the debt commitment letter, the debt financing sources have committed to provide, severally but not jointly, the credit facilities.
The commitments of the debt financing sources under the debt commitment letter are subject to the satisfaction (or waiver by the applicable debt financing sources) of certain conditions precedent, including, without limitation:

the merger shall have been prior to or, substantially concurrently with the initial borrowing under the credit facilities shall be, consummated in all material respects in accordance with the terms of the merger agreement, without giving effect to certain material amendments or waivers absent the consent of the applicable debt financing sources;

since September 30, 2021, there has not been any Material Adverse Effect;

prior to or substantially simultaneously with the initial borrowing under the credit facilities, the refinancing of certain existing Company indebtedness shall be consummated;

the consummation of the equity financing shall have been made, or substantially concurrently with the borrowings under the credit facilities shall be made;

all documents and instruments required to create or perfect the security interests contemplated under the credit facilities shall be fully executed and delivered by the applicable parties and, if applicable, in proper form for filing; and

other customary conditions precedent set forth in the debt commitment letter.
The commitments under the debt commitment letter terminate automatically on the earliest to occur of: (i) prior to the consummation of the merger, the termination of the merger agreement by Parent (or Parent’s affiliates) in accordance with its terms (other than with respect to provisions therein that expressly survive termination), (ii) 11:59 p.m., New York City time, on the date that is five business days after the Outside Date (as defined in the merger agreement as of November 14, 2021, without giving effect to any extension of the Outside Date pursuant to Section 8.08 of the merger agreement) and (iii) the consummation of the merger without the funding of the credit facilities.
Guarantees
Subject to the terms and conditions set forth in the guarantees, the KKR Funds and the GIP Funds have guaranteed certain payment obligations of Parent under the merger agreement, subject to an aggregate cap of $409,250,000 for the KKR Funds and an aggregate cap of $409,250,000 for the GIP Funds for payment of the guaranteed obligations.
Each guarantee is irrevocable, and will not terminate until the earliest to occur of (i) the consummation of the merger in accordance with the terms of the merger agreement, (ii) 90 days following the valid termination of the merger agreement unless by such date the Company has delivered a notice with respect to the guaranteed obligations, in which case the applicable guarantee will automatically terminate when such claim is resolved or otherwise finally satisfied, (iii) the receipt by the Company of payment in respect of the guaranteed obligations and (iv) 18 months after the date of execution of the respective guarantee unless
 
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by such date an unresolved claim has been made in writing seeking to enforce the payment of the applicable guaranteed obligations, in which case the applicable guarantee will automatically terminate when such claim is resolved and any guaranteed obligations determined or agreed to be owed are finally satisfied.
No Dissenters’ Rights of Appraisal
As permitted under Maryland law, our charter provides that holders of common stock may not exercise any appraisal rights, dissenters’ rights or the rights of an objecting stockholder to receive the fair value of their shares in connection with a merger unless the Board, upon the affirmative vote of a majority of the Board, determines that such rights apply. The Board has made no such determination. In addition, because shares of our common stock are listed on the NASDAQ Global Select Market as of the record date for determining CyrusOne stockholders entitled to vote at the virtual special meeting, our stockholders who object to the merger do not have any appraisal rights, dissenters’ rights or the rights of an objecting stockholder under the Maryland General Corporation Law in connection with the merger.
Interests of the Company’s Directors and Executive Officers in the Merger
The Company’s directors and executive officers have financial interests in the merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The members of the Board were aware of and considered these interests in reaching the determination to approve the merger proposal and recommend that CyrusOne stockholders approve the merger proposal.
The Company’s executive officers for purposes of the discussion below are David Ferdman (Interim President and Chief Executive Officer), Katherine Motlagh (Executive Vice President and Chief Financial Officer), John Hatem (Executive Vice President and Chief Operating Officer) and Robert Jackson (Executive Vice President, General Counsel & Secretary). In accordance with SEC rules, this discussion also covers former executive officers of the Company who served as executive officers at any time since January 1, 2020, which consist of Bruce Duncan (former President and Chief Executive Officer), Gary Wojtaszek (former President and Chief Executive Officer), Venkatesh Durvasula (former Interim President and Chief Executive Officer), Diane Morefield (former Executive Vice President and Chief Financial Officer) and Kevin Timmons (former Executive Vice President and Chief Technology Officer) (collectively, the “Former Executive Officers”). In addition, in accordance with SEC rules, this disclosure is required to cover Michael A. Klayko, who served as a director of the Company in fiscal year 2020, but since he no longer serves as a director of the Company, and to the Company’s knowledge does not have any interests in the merger that are different from those of a stockholder, he has been omitted from the disclosure below.
Treatment of Company Equity Awards
For information regarding beneficial ownership of shares of common stock, which generally excludes the Company equity awards described below, other than Company restricted share awards, by each of the Company’s directors and executive officers and all of such directors and executive officers as a group, please see the section entitled “Security Ownership of Certain Beneficial Owners and Management”, beginning on page 92. Each of the Company’s directors and executive officers and each of the Former Executive Officers will be entitled to receive, for each share of common stock he or she holds, the same per share merger consideration in cash in the same manner as other CyrusOne stockholders.
As described further in the section entitled “The Merger Agreement — Treatment of Company Equity Awards” beginning on page 72, each Company equity award outstanding immediately prior to the effective time will be converted into the merger consideration for each share of common stock subject to such Company equity award, less the exercise price in the case of Company stock options, and assuming the achievement of all applicable performance criteria at the maximum level, plus the amount of any accrued dividend equivalents with respect to any restricted stock unit that remain unpaid as of the effective time. In the case of Company equity awards granted prior to the date of the merger agreement or granted to non-employee directors at any time, such amounts will vest and become payable at the effective time. In the case of Company equity awards granted after the date of the merger agreement (other than awards granted to non-employee directors), such amounts will remain subject to any time-vesting criteria that applied to the applicable Company equity award, including with respect to any accelerated vesting terms upon a qualifying
 
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termination of employment. For company equity awards subject to performance criteria, the maximum level of performance is 200% or 300% of target performance, as applicable.
The following table sets forth the value of the Company equity awards held by each of the Company’s directors, executive officers and Former Executive Officers as of December 23, 2021, the latest practicable date to determine such amounts before the filing of this proxy statement, and the cash amounts payable (on a pre-tax basis) in respect thereof in connection with the merger. The values in the table below have been determined assuming that (i) all Company equity awards are valued based on the merger consideration of $90.50 per share, (ii) all Company equity awards subject to performance criteria have such criteria satisfied at the maximum levels, (iii) the merger closes on June 30, 2022, which is the assumed closing date only for purposes of this compensation-related disclosure and (iv) the individuals included in the table below do not receive any additional grants of Company equity awards or forfeit any Company equity awards prior to June 30, 2022; however, such values do reflect the expected vesting of Company equity awards prior to such date. The values below also do not reflect any awards that were accelerated and vested in accordance with the 280G mitigation actions described below. No director or executive officer holds Company stock options or Company restricted shares.
Name(1)
Company
RSUs(2)($)
LTIP Units(2)
($)
Total ($)
Executive Officers
David Ferdman
Katherine Motlagh
2,994,374 2,994,374
John Hatem
3,293,476 3,293,476
Robert Jackson
1,964,574 2,694,638 4,659,212
Former Executive Officers(3)
7,056,014 2,555,901 9,611,915
(1)
All Company equity awards held by non-employee directors are scheduled to vest no later than June 10, 2022, and therefore no value has been included for these purposes. Based on the Company equity awards outstanding as of December 23, 2021 and the other assumptions described above, Ms. Wentworth and Messrs. Shumate, Gamble and Sullivan each hold Company restricted share awards valued at $184,349, Ms. Olsen holds Company LTIP unit awards valued at $184,349 and Mr. Nielsen holds Company LTIP unit awards valued at $331,864.
(2)
In the case of Company equity awards subject to performance criteria, reflects achievement of such criteria at the maximum level.
(3)
Reflects Company equity awards held by Former Executive Officers as a group.
Treatment of Company ESPP
Following the date of the merger agreement: (i) with respect to any outstanding Purchase Period(s) under the Company ESPP as of such date, no participant can increase the percentage amount of his or her payroll deduction election in effect as of such date for such Purchase Period(s) and no new participants can participate in such Purchase Period(s); (ii) no new Purchase Period will commence under the Company ESPP on or after such date; (iii) any Purchase Period under the Company ESPP that does not end prior to the effective time will terminate and a Purchase Date will occur immediately prior to the effective time with respect to such Purchase Period, in which case any shares of common stock purchased pursuant to such Purchase Period will be treated the same as all other shares of common stock in the merger; and (iv) immediately prior to, and subject to the occurrence of the effective time, the Company ESPP will terminate. To the extent the Company’s executive officers participate in the Company ESPP, they will be treated in the same manner described above.
Severance Entitlements
Employment Agreement with Mr. Ferdman
Mr. Ferdman is currently subject to an employment agreement with a term that ends on January 29, 2022 (the “Ferdman Term Date”) and that provides that, if his employment is terminated without “Cause”
 
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or Mr. Ferdman resigns for “Good Reason” ​(each, as defined in Mr. Ferdman’s employment agreement) at any time, he will be eligible to receive, subject to Mr. Ferdman’s execution of a release of claims in favor of the Company, (i) full vesting of his Company restricted share award granted to him in his capacity as an employee and (ii) provided that Mr. Ferdman provides transition services to the Company through the Ferdman Term Date, the base salary and annual bonus that Mr. Ferdman would have otherwise earned through the Ferdman Term Date if his employment had not terminated. In addition, if Mr. Ferdman’s employment is terminated for any other reason, other than for Cause, he will be entitled to a pro-rated portion of any annual bonus he would have otherwise earned through the Ferdman Term Date if his employment had not terminated.
Mr. Ferdman’s employment agreement does not provide for any enhanced payments or benefits in connection with a change in control of the Company such as the merger, but his Company restricted share award agreement provides that, in the event that any payment or benefit payable to Mr. Ferdman would constitute a parachute payment within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then Mr. Ferdman will either receive all such payments and benefits in full or such payments and benefits will be reduced to the greatest amount that does not trigger the excise tax pursuant to Section 4999 of the Code, whichever results in the greater after-tax amount for Mr. Ferdman (a “280G best-net cutback”).
Severance Agreements with Ms. Motlagh and Mr. Hatem and Employment Agreement with Mr. Jackson
Ms. Motlagh and Messrs. Jackson and Hatem are each party to an individual agreement with the Company that provides that if the applicable executive’s employment is terminated without “Cause” or he or she resigns for “Good Reason” ​(in the case of Ms. Motlagh and Mr. Hatem) or as a result of a “Constructive Termination” ​(in the case of Mr. Jackson) (each, as defined in the applicable agreement), in each case, during the one-year period beginning on a “change in control” of the Company, which will include the consummation of the merger, he or she will be eligible to receive, subject to his or her execution of a release of claims in favor of the Company: (i) a cash lump sum payment equal to two times the sum of the executive’s base salary and annual target bonus, increased by an amount equal to the interest that would be earned on such amounts over a 60-day period, based on an annual interest rate of 3.5%; (ii) accelerated vesting of all time-based equity awards; (iii) continued health benefits for one year (or less, if the executive becomes eligible for another group health plan), with the Company to pay or reimburse any costs in excess of the current active employee rate; and (iv) an additional cash payment sufficient to purchase comparable life insurance coverage for one year. All of the executive agreements provide for a 280G best-net cutback.
The severance payments and benefits described above are generally subject to the applicable executive’s compliance with his or her obligations under any restrictive covenant agreement entered into with the Company, which generally provide for one-year post-termination restrictions on competing with the Company, accepting employment with customers or vendors or soliciting the Company’s employees or customers, and requires the executive to generally not disclose the Company’s confidential information at any time.
Arrangements with KKR or GIP
As of the date of this proxy statement, none of the Company’s directors or executive officers has entered into any agreement, arrangement or understanding with KKR, GIP, Parent or any of their affiliates regarding employment, or providing for any compensation or benefits, following the effective time, and the merger is not conditioned upon any such agreement, arrangement or understanding being entered into.
Retention Bonuses
The Company has established a cash-based deal retention bonus program for the benefit of certain Company employees in accordance with the terms of the merger agreement. Pursuant to the program, Messrs. Ferdman, Hatem and Jackson and Ms. Motlagh received deal retention bonuses in an amount equal to $4,000,000, $1,000,000, $1,000,000 and $500,000, respectively. In the case of Mr. Ferdman, the size of his deal retention bonus is reflective, in part, of the fact that the significant majority of his equity awards were scheduled to vest in December 2021 and January 2022. Fifty percent of each bonus is payable upon the closing of the merger and the remaining fifty percent will become payable 90 days following the closing of
 
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the merger, subject to continued employment through the relevant payment date, although payment of the second installment will also be made upon a termination that would otherwise entitle the recipient to severance compensation.
Continuing Employee Benefits
The merger agreement provides for certain customary protections regarding the compensation and benefits of employees of the Company, including the Company’s executive officers, during their employment with the Company and its affiliates following the effective time for a period of up to one year. These provisions are described in more detail in the section entitled “The Merger Agreement — Employee Benefits Matters” beginning on page 86.
Treatment of Annual Bonuses
The merger agreement provides that Parent will pay an annual bonus to each Continuing Employee who is otherwise eligible to receive an annual bonus for the performance year in which the effective time occurs at the same time that such bonuses are paid in the ordinary course of business (the “Closing Year Bonus”). In the event an employee’s, including an executive officer’s, employment is terminated under circumstances that would qualify him or her to receive severance, such employee will receive a pro-rated Closing Year Bonus based on the greater of (i) the amount such employee would be entitled in connection with the applicable severance arrangement and (ii) his or her target annual bonus, except that, if the termination occurs during the second half of the Company’s fiscal year, the amount under clause (ii) will be equal to the projected actual annual cash bonus he or she would have received for such fiscal year based on accruals for bonuses in the Company’s financial statements, if greater.
Section 280G Mitigation Actions
As described above, all executive officers are subject to a 280G best-net cutback. Based on a preliminary analysis conducted after entering into the merger agreement, Messrs. Ferdman, Hatem and Jackson and Ms. Motlagh would each potentially trigger, absent any mitigating actions, the adverse tax consequences imposed by Section 280G of the Code in connection with the merger, which consist of a 20% excise tax on certain payments that may be received by the executives, significantly reducing their retentive value to the Company, and the possibility that the Company may lose the benefit of a tax deduction with respect to such payments. Therefore, to mitigate the expected impact of Section 280G of the Code, and to preserve the retentive value of the executives’ equity and other compensation, as well as the ability of the Company to potentially claim a tax deduction in respect of such payments, the following actions were approved in accordance with the terms of the merger agreement, effective as of December 20, 2021, in order to increase each executive’s threshold for triggering Section 280G of the Code:

accelerating the payment of a portion of each executive officer’s annual bonus for the 2021 performance year that otherwise would be paid in early 2022 ($1,200,000 for Mr. Ferdman, $600,000 for Ms. Motlagh, $540,000 for Mr. Hatem and $474,000 for Mr. Jackson);

accelerating the payment of certain time-vesting restricted shares and RSUs for all executive officers other than Mr. Hatem (who does not hold any such awards), which were either scheduled to vest in approximately two months or represent a small portion of future equity vestings ($3,177,247 for Mr. Ferdman, $1,049,236 for Ms. Motlagh and $401,632 for Mr. Jackson, in each case, based on the closing price for shares of common stock on December 20, 2021 of $89.51); and

for Mr. Jackson only, accelerating the payment of performance-vesting RSUs scheduled to vest in February 2022 ($1,365,207, based on the closing price for shares of common stock on December 20, 2021 of $89.51).
Where compensation subject to performance conditions was accelerated, the acceleration was based on an assumed level of performance that the Company determined was substantially certain to be achieved. If actual performance would have resulted in a greater amount being earned, the executive will be entitled to a true-up once actual performance is determined. All the foregoing actions were made subject to a clawback in favor of the Company, whereby the executive will be required to reimburse the Company if it is subsequently
 
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determined that the amounts accelerated would not have been earned (i.e., due to the failure to satisfy any service- or, if applicable, performance-based vesting criteria).
Director and Officer Indemnification
Pursuant to the terms of the merger agreement, members of the Board and executive officers of the Company will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies following the merger. For a more detailed description of the provisions of the merger agreement relating to director and officer indemnification, please see the section of this proxy statement entitled “The Merger Agreement — Indemnification” beginning on page 86.
Quantification of Payments and Benefits
In accordance with Item 402(t) of Regulation S-K, the table below sets forth for each of the Company’s named executive officers estimates of the amounts of compensation that are based on or otherwise relate to the merger for which payment is not conditioned upon a termination or resignation of such executive officer (i.e., on a “single-trigger” basis) or in the event of a qualifying termination of employment following the merger (i.e., on a “double-trigger” basis). The holders of shares of common stock are being asked to approve, on a non-binding, advisory basis, such compensation. Because the vote to approve such compensation is advisory only, it will not be binding on either the Company, the Board or Parent. Accordingly, if the merger proposal is approved by the holders of shares of common stock and the merger is consummated, the compensation will be payable regardless of the outcome of the vote to approve such compensation, subject only to the conditions applicable thereto, which are described in the footnotes to the tables below and above under “— Interests of the Company’s Directors and Executive Officers in the Merger”.
The potential payments in the tables below are quantified in accordance with Item 402(t) of Regulation S-K. The estimated values are based on (i) an assumption that the merger is consummated on June 30, 2022, (ii) the per share merger consideration of $90.50, (iii) the named executive officers’ salary and target bonus amounts as in effect as of the date of this proxy statement, (iv) the number of unvested Company equity awards held by the named executive officers as of December 23, 2021 (in particular, the amounts below exclude awards that vested as a result of the 280G mitigation actions described above), the latest practicable date to determine such amounts before the filing of this proxy statement, less any awards expected to vest in the ordinary course prior to June 30, 2022, and assuming no additional grants or forfeitures of Company equity awards prior to June 30, 2022, and (v) an assumption that each named executive officer experiences a termination of employment immediately following the consummation of the merger under circumstances that entitle such named executive officer to receive severance (i.e., a termination without “Cause” or resignation for “Good Reason”). As such, the amounts indicated below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement, and do not reflect certain compensation actions that may occur before consummation of the merger. As a result, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.
The amounts shown below do not attempt to quantify any reduction that may be required as a result of a 280G best-net cutback, which all named executive officers are subject to; therefore, actual payments to the named executive officers may be less than the amounts indicated below.
Potential Payments to Named Executive Officers
Name(1)
Cash ($)(2)
Equity ($)(3)
Perquisites /
Benefits ($)(4)
Total ($)
David Ferdman
4,000,000 4,000,000
Katherine Motlagh
2,759,485 2,994,374 26,099 5,779,958
John Hatem
3,033,537 3,293,476 24,464 6,351,477
Robert Jackson
2,784,993 4,659,212 25,689 7,469,894
(1)
In connection with their terminations of employment with the Company, each of Messrs. Duncan and
 
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Wojtaszek and Ms. Morefield retained a portion of their Company equity awards that are subject to performance vesting criteria, with vesting subject to the satisfaction of such performance criteria. Based on the assumptions above, the estimated value of such Company equity awards is $9,611,915 in the aggregate. Such individuals will not receive any other severance or enhanced benefits in connection with the merger as a result of their status as a former executive officer of the Company. Mr. Durvasula does not hold any unvested Company equity awards, and therefore will not receive any severance or enhanced benefits in connection with the merger as a result of his status as a former executive officer of the Company.
(2)
The amounts shown in this column represent the estimated value of (i) cash lump sum severance payments that would be provided to the named executive officer upon a termination of employment by the Company without “Cause” or by the named executive officer for “Good Reason” or as a result of a “Constructive Termination”, in each case, within one year following the closing of the merger (as described in the section entitled “— Severance Entitlements”), (ii) a pro-rated Closing Year Bonus (as described in the section entitled “— Treatment of Annual Bonuses”), which is assumed to be paid based on target performance and (iii) a cash-based deal retention bonus (as described in the section entitled “—Retention Bonuses”). Other than Mr. Ferdman, the value of cash severance for each named executive officer consists of two times the sum of his or her base salary and target bonus amount, increased by the interest, based on a rate of 3.5%, that would be payable over a 60-day period. Half of each named executive officer’s cash-based deal retention bonus is “single-trigger” as such amounts will be payable on the effective time regardless of whether or not the executive’s employment is terminated. Each named executive officer’s cash severance payments, Closing Year Bonus and the second half of the cash-based retention bonus are “double-trigger”, as such payments will not be payable solely as a result of the occurrence of the effective time. In the case of the cash severance and Closing Year Bonus, such amounts will only be payable in the event of a qualifying termination of employment, subject to the terms and conditions described in the section entitled “— Severance Entitlements”. In the case of the second half of the cash-based retention bonuses, such amounts will be payable 90 days following the Closing or upon an earlier termination that would otherwise entitle the recipient to severance compensation, as described in the section entitled “— Retention Bonuses”. Although Mr. Ferdman’s employment agreement provides for certain severance payments as described above in the section entitled “— Employment Agreement with Mr. Ferdman”, under the current terms of his employment agreement, Mr. Ferdman would not be entitled to any severance if his employment is terminated for any reason on or following January 29, 2022. Set forth below are the separate values for the cash severance payments, pro-rated Closing Year Bonuses and deal retention bonuses reflected in the table above.
Name
Severance ($)
Pro-Rata Bonus ($)
Deal Retention
Bonus ($)
Total ($)
David Ferdman
4,000,000 4,000,000
Katherine Motlagh
2,011,540 247,945 500,000 2,759,485
John Hatem
1,810,386 223,151 1,000,000 3,033,537
Robert Jackson
1,589,117 195,877 1,000,000 2,784,993
(3)
The amounts shown in this column represent the estimated aggregate value of the named executive officers’ unvested Company equity awards. As described in the sections entitled “The Merger — Interests of the Company’s Directors and Executive Officers in the Merger — Treatment of Company Equity Awards” and “The Merger — Treatment of Company Equity Awards,” at the effective time, each Company equity award will be canceled in exchange for the right to receive the merger consideration with respect to each share of common stock subject to the Company equity award, less the exercise price in the case of Company stock options, and with the number of shares of common stock subject to any awards subject to performance-criteria determined based on achievement of such criteria at the maximum level, with such amounts in respect of Company equity awards granted prior to the date of the merger agreement payable at the effective time. Such amounts in respect of Company equity awards granted after the date of the merger agreement will remain subject to any time-vesting criteria that applied to the applicable Company equity award, including with respect to any accelerated vesting terms upon a qualifying termination of employment. As of the date of this proxy statement, all Company equity awards held by named executive officers were granted prior to the date of the merger agreement and no awards are assumed to have been granted following the date of the merger agreement, and
 
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therefore the amounts shown in this column are “single-trigger” as such payments will be payable on the effective time regardless of whether or not the executive’s employment is terminated. No values are shown for Mr. Ferdman because, based on the assumptions above, all of his currently outstanding Company equity awards will vest in full prior to the date on which the effective time is assumed to occur. A breakdown of the amounts shown above by award type is provided in the sections entitled “The Merger — Interests of the Company’s Directors and Executive Officers in the Merger — Treatment of Company Equity Awards”. Set forth below are the separate values for the Company equity awards subject to (i) time based vesting conditions only and (ii) time-and performance-based vesting conditions.
Name
Time-Based
Vesting ($)
Performance-Based
Vesting ($)
Total ($)
Katherine Motlagh
260,369 2,734,005 2,994,374
John Hatem
286,342 3,007,134 3,293,476
Robert Jackson
234,305 4,424,907 4,659,212
(4)
The amounts shown in this column represent an estimate of the value of the continued health and life insurance benefits that would be provided to an executive following a termination of employment by the Company without “Cause” or by the named executive officer for “Good Reason” or as a result of a “Constructive Termination”, in each case, within one year following the closing of the merger, as described more fully in the section entitled “— Severance Entitlements”. Such benefits are “double-trigger”, as they will only be provided in the event of a qualifying termination of employment, subject to the terms and conditions described in the section entitled “— Severance Entitlements”.
Material U.S. Federal Income Tax Consequences of the Merger
The following discussion summarizes the material U.S. federal income tax consequences to holders with respect to the disposition of common stock pursuant to the merger. It is not intended to be a complete analysis or description of all potential U.S. federal income tax consequences of the merger and does not address consequences to holders of LTIP units or Company equity awards. This discussion is based upon the provisions of the Code 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. The Internal Revenue Service may not agree with the tax consequences described in this discussion.
This discussion assumes that holders of 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 common stock in light of such holder’s particular circumstances, nor does it discuss the special considerations applicable to holders of 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 non-U.S. 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 shares of common stock through the exercise of stock options or otherwise as compensation, holders subject to the alternative minimum tax, holders who hold their shares of common stock as part of a hedge, straddle, constructive sale or conversion transaction, U.S. holders (as defined below) whose functional currency is not the U.S. dollar, accrual method holders who prepare an “applicable financial statement” ​(as defined in Section 451 of the Code) and holders who own or have owned (directly, indirectly or constructively) 10% or more of the common stock (by vote or value) outstanding. In addition, this discussion does not address any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction or U.S. federal non-income tax consequences (e.g., the federal estate or gift tax or the application of the Medicare tax on net investment income under Section 1411 of the Code).
If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds common stock, the tax treatment of a partner in such partnership generally will depend on the status of the partner and activities of the partnership. If you are a partner of a partnership holding common stock, you should consult your own tax advisor.
 
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All holders should consult their own tax advisor 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 common stock pursuant to the merger.
For purposes of this discussion, the term “U.S. holder” means a beneficial owner of common stock, that is, for U.S. federal income tax purposes:

an individual citizen or resident of the United States;

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

a trust if (1) its administration is subject to the primary supervision of a court within the United States and one or more U.S. persons, within the meaning of Section 7701(a)(30) of the Code, have the authority to control all substantial decisions of the trust or (2) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes; or

an estate, the income of which is subject to U.S. federal income tax regardless of its source.
A “non-U.S. holder” is a beneficial owner (other than a partnership or an entity classified as a partnership for U.S. federal income tax purposes) of common stock that is not a U.S. holder.
U.S. Holders
The receipt of 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 of common stock 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 one year as of the 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 U.S. federal income taxation. A U.S. holder who has held shares of our common stock for less than six months at the time of the merger, taking into account certain holding period rules and who recognizes a loss on the exchange of such shares of common stock in the merger will be treated as recognizing a long-term capital loss to the extent of any capital gain dividends received from us, or such holder’s share of any designated retained capital gains, with respect to such shares. The deductibility of capital losses is subject to limitations. If a U.S. holder acquired different blocks of 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 common stock.
A U.S. holder may, under certain circumstances, be subject to information reporting and backup withholding (at a rate of 24%) with respect to the cash received pursuant to the merger, unless such holder properly establishes an exemption or provides its correct tax identification number and otherwise complies with the applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules can be refunded or credited against a U.S. holder’s U.S. federal income tax liability, if any; provided that such U.S. holder furnishes the required information to the Internal Revenue Service in a timely manner.
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 a U.S. trade or business of such non-U.S. holder (and, if required by an applicable income tax treaty, is also attributable to a permanent establishment or, in the case of an individual, a fixed base in the United States maintained by such non-U.S. holder), in which case the non-U.S. holder generally will be subject to tax on such gain in the same manner as a U.S. holder and, if the non-U.S. holder is a non-U.S. corporation, such corporation may be subject
 
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to branch profits tax at the rate of 30% on the effectively connected gain (or such lower rate as may be specified by an applicable income tax treaty);

the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of the merger and certain other conditions are met, in which case the non-U.S. holder generally will be subject to tax at a 30% rate (or a lower applicable income tax treaty rate) on any gain derived from the disposition of the common stock pursuant to the merger (other than gain effectively connected with a U.S. trade or business), which may be offset by U.S. source capital losses; or

the Company stock constitutes a “United States real property interest” ​(“USRPI”) for U.S. federal income tax purposes under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”).
If our shares of common stock constitute a USRPI under FIRPTA, a non-U.S. holder would be subject to U.S. federal income tax on any gain or loss recognized on the receipt of cash in exchange for such shares of common stock in the merger on a net basis at applicable U.S. graduated rates in the same manner as a U.S. holder, and such cash consideration may also be subject to the U.S. federal withholding tax under FIRPTA at a rate of 15%. A non-U.S. holder’s shares of common stock generally will not constitute a USRPI, and gain recognized by a non-U.S. holder upon receipt of cash in exchange for our shares of common stock pursuant to the merger generally will not be subject to U.S. federal income or U.S. federal withholding tax under FIRPTA, if: (1) we are a “domestically controlled REIT”, defined generally as a REIT in which, at all times during a specified testing period, less than 50% in value of the shares was held directly or indirectly by non-U.S. persons; or (2) our shares of common stock are “regularly traded” ​(within the meaning of applicable U.S. Treasury Regulations) on an established securities market at the effective time (and the non-U.S. holder holds 10% or less of the total fair market value of such class of shares at all times during the shorter of (x) the five year period ending with the effective date of the merger and (y) the non-U.S. holder’s holding period for the shares). We believe we are, and we expect to be at the effective time, a “domestically controlled REIT”, but no assurances can be given that we are or will remain a domestically controlled REIT. In addition, we believe that our shares of common stock are, and will be at the effective time, regularly traded on an established securities market (within the meaning of the applicable Treasury Regulation).
Non-U.S. holders who hold, or have held during specified periods, directly, indirectly, or constructively, more than 10% of our outstanding shares of common stock generally are subject to special rules under FIRPTA. Such non-U.S. holders may be subject to tax on any gain recognized on the receipt of cash in exchange for their shares of common stock pursuant to the merger, and withholding agents may withhold on such cash consideration. Non-U.S. holders should consult their own tax advisors regarding the application of the foregoing rules in light of their particular facts and circumstances, the procedures for claiming treaty benefits or otherwise establishing an exemption from U.S. withholding tax with respect to any portion of the cash consideration payable to them pursuant to the merger.
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 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 Internal Revenue Service in a timely manner.
Dividends
The Company has historically declared and paid a cash dividend each quarter. On October 27, 2021, the Company declared a regular quarterly dividend of $0.52 per share of common stock for the quarter ended December 31, 2021, which will be paid on January 7, 2022 to CyrusOne stockholders of record at the close of business on January 3, 2022. Pursuant to the terms of the merger agreement, the Company and the Company Operating Partnership are prohibited from authorizing, declaring, setting aside for payment or paying any dividends on, or making any other distributions (whether in cash, stock or property or any combination thereof) in respect of, any of their capital stock, partnership interests or other equity or
 
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voting interests, other than (1) regular quarterly cash dividends payable by the Company at a quarterly rate not to exceed $0.52 per share of common stock, provided that the record date with respect to any such quarterly dividends shall be consistent with historical record dates from fiscal year 2021 (or the next business day if such record date is not a business day), (2) dividends and distributions by a non-wholly owned subsidiary in accordance with the requirements of the organizational documents of such subsidiary and (3) accrual and payment of dividend equivalents with respect to awards under the Company’s existing stock plan or other equity compensation plan.
The Company is also permitted to authorize, declare and pay any special dividends to CyrusOne stockholders during the term of the merger agreement that, in the reasonable discretion of the Board, on the advice of legal counsel, are necessary or advisable to maintain our status as a REIT or to avoid the payment of income or excise tax or to preserve the tax status of any subsidiary (with any such special dividend resulting in a corresponding decrease to the merger consideration).
Dividends are declared and paid at the discretion of the Board. The Board may change the Company’s dividend policy at any time and there can be no assurance as to amount or timing of dividends in the future.
Regulatory Approvals in Connection with the Merger
The parties intend to, and are obligated to use their reasonable best efforts to, take or cause to be taken all actions necessary, proper or advisable to cause the closing conditions to be met, including making all required filings as promptly as practicable. The management of each of the Company and Parent currently believe that the necessary regulatory approvals can be obtained by the end of the second quarter of 2022; however, there can be no assurances that such approvals will be obtained in accordance with this timing or at all.
HSR Act
Consummation of the merger is subject to the requirements of the HSR Act and the rules promulgated by the Federal Trade Commission (“FTC”), which prevent transactions such as the merger from being consummated until (i) certain information and materials are furnished to the Department of Justice (“DOJ”) and the FTC and (ii) the applicable waiting period is terminated early or expires. The FTC and DOJ have currently suspended the practice of granting early termination under the HSR Act. Both the Company and Parent filed their respective Notification and Report Forms with the FTC and the Antitrust Division of the DOJ on November 29, 2021. The waiting period applicable to the consummation of the merger under the HSR Act expired on December 29, 2021.
Non-U.S. Regulatory Approvals
Consummation of the merger is also subject to receipt of certain additional consents, approvals or other clearances, consisting of receipt of (i) a clearance decision by the Federal Republic of Germany represented by the German Federal Ministry for Economic Affairs and Energy in accordance with Section 58a(1) of the Foreign Trade and Payment Ordinance of the Federal Republic of Germany (the “AWV”) or the expiration of the period set forth in Section 58a(2) of the AWV; (ii) a clearance decision by the European Commission in accordance with Article 6(1)(b) of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the “Merger Regulation”) or there having been a deemed clearance under Article 10(6) of the Merger Regulation; (iii) a clearance decision by the State Administration of Market Regulation in accordance with Article 25 of the Anti-Monopoly Law of the People’s Republic of China; (iv) a clearance decision by the Korean Fair Trade Commission pursuant to Article 7 (Restriction on Business Combination), Paragraph (1) of the Monopoly Regulation and Fair Trade Law; (v) a clearance decision by the Turkish Competition Authority (Rekabat Kurumu) within the context of the Communiqué No.2010/4 on Mergers and Acquisitions Requiring the Approval Of The Competition Board and article 7 of the Law No.4054 (as amended); (vi) a clearance decision by the Costa Rican Commission to Promote Competition pursuant to Article 97 of the Strengthening of the Competition Authorities of Costa Rica Act, Nº 9736; (vii) following the commencement of section 13 of the National Security and Investment Act 2021 (United Kingdom) (the “NSIA”), approval (or a notification or final notification that no further action will be taken) by the U.K. Secretary of State pursuant to the NSIA; and (viii) an approval by the French Ministry of the Economy under articles L. 151-3 1 et seq. and articles R. 153-1
 
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et seq. of the French Monetary and Financial Code (Code monétaire et financier) as amended from time to time (collectively, the “other regulatory approvals”).
Additional Approvals
In addition, the parties expect to submit a change of control application to the Federal Communications Commission (“FCC”) for certain licenses held by the Company. The consummation of the merger is not conditioned upon the receipt of an approval from the FCC.
The Company and Parent also intend to make all required filings under the Exchange Act relating to the merger and obtain all other approvals and consents that may be necessary to give effect to the merger.
Delisting and Deregistration of the Common Stock
If the merger is consummated, Parent shall use its reasonable best efforts to cause the common stock to be delisted from the NASDAQ Global Select Market and deregistered under the Exchange Act as soon as reasonably practicable following the effective time, and, accordingly, the common stock will no longer be publicly traded.
 
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THE MERGER AGREEMENT
Explanatory Note Regarding the Merger Agreement
The following summarizes the material provisions of the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We recommend that you read the merger agreement attached to this proxy statement as Annex A carefully and in its entirety, as the rights and obligations of the parties are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement.
The merger agreement is included with this proxy statement only to provide you with information regarding the terms of the merger agreement and not to provide you with any other factual information regarding the Company, Parent, Merger Sub or their respective subsidiaries, affiliates or businesses. The merger agreement contains representations and warranties by each of the parties to the merger agreement. These representations and warranties have been made solely for the benefit of the other parties to the merger agreement and:

have been made only for purposes of the merger agreement;

have been qualified by certain documents filed with, or furnished to, the SEC by the Company, from and after January 1, 2019 and prior to the date of the merger agreement;

have been qualified by confidential disclosures made by the Company or Parent and Merger Sub, as applicable, in connection with the merger agreement;

are subject to materiality qualifications contained in the merger agreement that may differ from what may be viewed as material by investors;

were made only as of the date of the merger agreement or such other date as is specified in the merger agreement; and

have been included in the merger agreement for the purpose of allocating risk between the Company, on the one hand, and Parent and Merger Sub, on the other hand, rather than establishing matters as facts.
You should not rely on the representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Parent, Merger Sub or any of their respective subsidiaries, affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Accordingly, the representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference into this proxy statement. The Company will provide additional disclosure in its public reports of any material information necessary to provide CyrusOne stockholders with a materially complete understanding of the disclosures relating to the merger agreement. See “Where You Can Find Additional Information” beginning on page 97 of this proxy statement.
The summary of the material terms of the merger agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A and which we incorporate by reference into this proxy statement.
Effects of the Merger
The merger agreement provides for the merger of Merger Sub with and into the Company at the effective time. The Company will be the surviving corporation in the merger and will become a wholly owned, direct subsidiary of Parent. Following the consummation of the merger, all of the common stock will be beneficially owned by Parent, and none of the current holders of common stock will, by virtue of the merger, have any ownership interest in, or be a stockholder of, the Company, the surviving corporation or Parent.
 
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Closing and Effective Time of the Merger
Unless the parties agree otherwise, the closing of the merger will take place at 10:00 a.m. (New York City time) on the third business day after all conditions to the consummation of the merger have been satisfied or (to the extent permitted by law) waived, provided that if the marketing period (as described under “— Financing”) has not ended at the time of such satisfaction or waiver, then the closing shall occur instead at the on the earliest of (a) any business day during the marketing period as may be specified by Parent on no less than three business days’ prior written notice to the Company, (b) the third business Day after the final day of the marketing period or (c) such other date, time or place as agreed to in writing by Parent and the Company.
The merger will be effective upon the later of the time that the articles of merger are accepted for record by the State Department of Assessments and Taxation of Maryland or a merger certificate is filed with and accepted for record by the Secretary of State of the State of Delaware unless the parties agree to a later time for the effectiveness of the merger prior to the filing of such articles of merger and certificate of merger and so specify that time in the articles of merger and the certificate of merger.
At the effective time, the charter and bylaws of the Company, as in effect immediately prior to the effective time, will be amended and restated to be in the form of the charter and bylaws attached as Exhibit A and Exhibit B to the merger agreement, respectively, and as so amended and restated will be the charter and bylaws of the surviving corporation until as thereafter amended in accordance with their terms or by applicable law (in each case, in compliance with the requirements of the merger agreement).
The Company and Parent currently expect to consummate the merger during the second quarter of 2022, subject to receipt of the Company stockholder approval and the required regulatory approvals and the satisfaction or waiver of the other conditions to the merger described in the merger agreement. For additional information, please see the section of this proxy statement entitled “The Merger — Regulatory Approvals in Connection with the Merger” beginning on page 68.
Consideration To Be Received in the Merger
The merger agreement provides that, at the effective time, each share of common stock issued and outstanding immediately prior to the effective time (other than excluded shares) will be converted into the right to receive $90.50 in cash, without interest and less any applicable withholding taxes. Following the effective time, each holder of common stock will cease to have any rights with respect to such common stock, except for the right to receive the merger consideration therefor.
If, between November 14, 2021 and the effective time, the number of shares of outstanding common stock changes into a different number of shares or a different class, by reason of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into common stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change, then the merger consideration and any other amounts payable pursuant to the merger agreement will be appropriately adjusted to reflect such event.
Excluded Shares
Each share of common stock outstanding and held by Parent or Merger Sub immediately prior to the effective time will be automatically canceled, and no payment will be made with respect therefor. Each share of common stock outstanding and held by any subsidiary of the Company or Parent (other than Merger Sub) immediately prior to the effective time will be, at the election of Parent, either (i) converted into shares of common stock of the surviving corporation or (ii) canceled, and no payment will be made with respect therefor.
 
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Treatment of Company Equity Awards
As of the effective time:

each Company stock option outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, less the exercise price, multiplied by the number of shares subject to such Company stock option, but any Company stock option with an exercise price that is equal to or greater than the merger consideration will be canceled for no consideration;

each Company restricted share award outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of shares subject to such Company restricted share award, with the number of such shares subject to such Company restricted share award determined assuming the maximum level of achievement of any applicable performance criteria;

each Company RSU outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of shares subject to such Company RSU, plus the amount of any accrued but unpaid dividend equivalents, with the number of shares of common stock subject to such Company RSU determined assuming the maximum level of achievement of any applicable performance criteria; and

each LTIP unit award outstanding immediately prior to the effective time will be canceled in exchange for the merger consideration, multiplied by the number of LTIP units subject to the LTIP unit award, plus the amount of any declared but unpaid distributions, in each case, with the number of LTIP units subject to such LTIP unit award determined assuming the maximum level of achievement of any applicable performance criteria.
With respect to Company equity awards granted prior to the date of the merger agreement or granted at any time to non-employee directors, the consideration described above will become vested and payable at the effective time, subject to any applicable withholding taxes. With respect to Company equity awards granted following the date of the merger agreement (other than those granted to non-employee directors), the consideration described above will remain subject to any time-vesting criteria that applied to the applicable Company equity award, including with respect to any accelerated vesting terms upon a qualifying termination of employment. For company equity awards subject to performance criteria, the maximum level of performance is 200% or 300% of target performance, as applicable.
Treatment of Company ESPP
Following the date of the merger agreement: (i) with respect to any outstanding Purchase Period(s) under the Company ESPP as of such date, no participant can increase the percentage amount of his or her payroll deduction election in effect as of such date for such Purchase Period(s) and no new participants can participate in such Purchase Period(s); (ii) no new Purchase Period will commence under the Company ESPP on or after such date; (iii) any Purchase Period under the Company ESPP that does not end prior to the effective time will terminate and a Purchase Date will occur immediately prior to the effective time with respect to such Purchase Period, in which case any shares of common stock purchased pursuant to such Purchase Period will be treated the same as all other shares of common stock in the merger; and (iv) immediately prior to, and subject to the occurrence of the effective time, the Company ESPP will terminate.
Treatment of Interests in the Company Operating Partnership
Prior to the closing of the merger, the Company Operating Partnership will redeem all issued and outstanding equity interests in the Company Operating Partnership other than partnership units held by the Company, the Company General Partner or Company Holdings LLC and any LTIP units outstanding, which will be converted at the effective time as described above, in accordance with the limited partnership agreement of the Company Operating Partnership such that, immediately prior to the effective time, the Company Operating Partnership is a direct or indirect wholly owned subsidiary of the Company (but for any LTIP units outstanding). As of the date of this proxy statement, there were no issued and outstanding
 
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partnership units of the Company Operating Partnership, other than partnership units held by the Company, the Company General Partner or Company Holdings LLC.
Payment for Stock
Parent will appoint a paying agent reasonably acceptable to the Company to make payment of the merger consideration as contemplated by the merger agreement. At or prior to the effective time, Parent will cause to be deposited with the paying agent funds sufficient to pay the aggregate merger consideration.
From and after the effective time, there will be no further registration of transfers on the stock transfer books of the surviving corporation of shares of common stock that were outstanding immediately prior to the effective time. If, after the effective time, any stock certificates formerly representing common stock (or common stock held in book-entry form) are presented to the surviving corporation for any reason, they will be canceled and exchanged pursuant to and in accordance with the merger agreement.
Promptly after the effective time, and in any event not later than the fifth business day after the effective time, Parent and the surviving corporation will cause the paying agent to mail to each CyrusOne stockholder of record entitled to the merger consideration a letter of transmittal and instructions advising such CyrusOne stockholder how to surrender its common stock in exchange for the merger consideration. Each holder of common stock will be entitled to receive the merger consideration upon surrender of a certificate or non-certificated shares in book-entry form that formerly represented shares of common stock, in each case together with the associated letter of transmittal, duly completely and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required by the paying agent. Interest will not be paid or accrue in respect of any of the merger consideration, and the amount of any merger consideration paid to holders of common stock may be reduced by the amount of applicable withholding taxes. HOLDERS OF COMMON STOCK SHOULD NOT FORWARD THEIR STOCK CERTIFICATES TO THE PAYING AGENT WITHOUT A LETTER OF TRANSMITTAL AND SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.
The transmittal instructions will tell holders of common stock what to do if they have lost a certificate or if a certificate has been stolen or destroyed. A holder of common stock will have to provide an affidavit to that fact and, if required by Parent, post a bond in such reasonable amount as Parent directs as indemnity against any claim that may be made against it with respect to such certificate, upon which the paying agent shall issue the merger consideration to be paid in respect of the shares of common stock represented by such lost, stolen or destroyed certificate.
Representations and Warranties
The merger agreement contains representations and warranties that the Company, on the one hand, and Parent and Merger Sub, on the other hand, have made to one another, which are qualified (i) by confidential disclosures made by the Company or Parent and Merger Sub, as applicable, (ii) in many cases by materiality or Material Adverse Effect standards and (iii) with respect to the disclosures made by the Company, by certain documents filed with, or furnished to, the SEC by the Company, from and after January 1, 2019 and prior to the date of the merger agreement.
A “Material Adverse Effect” with respect to the Company and its subsidiaries is defined in the merger agreement to mean any effect, change, circumstance, development, event or occurrence that, individually or in the aggregate has had or would be reasonably expected to have a material adverse effect on the business, assets, results of operations or financial condition of the Company and its subsidiaries taken as a whole; provided that, no effect, change, circumstance, development, event or occurrence arising out of, or resulting from, the following, shall constitute or be taken into account in determining whether a Material Adverse Effect has occurred, is continuing or would reasonably be expected to occur: any effect, change, event or occurrence (A) generally affecting (1) the industry in which the Company and its subsidiaries operate or (2) the economy, credit, financial, capital or commodity markets, in the United States or elsewhere in the world, including changes in interest or exchange rates, monetary policy or inflation, or (B) to the extent arising out of, resulting from or attributable to (1) changes in law or in GAAP, or any changes in the interpretation or enforcement of any of the foregoing, or any changes in general legal, regulatory, political or social conditions, (2) the negotiation, execution, announcement or performance of the merger agreement
 
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or the consummation of the transactions contemplated by the merger agreement (other than for purposes of any representation or warranty contained in Sections 3.03(d) and 3.04 of the merger agreement and condition to closing the merger as it relates to such representation or warranty), including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, landlords, distributors, partners, employees or regulators, or any shareholder litigation arising from the merger agreement or the transactions contemplated thereby, (3) acts of war (whether or not declared), military activity, sabotage, civil disobedience, social unrest, protests or terrorism (including cyberattacks, cyber-intrusions or other cybersecurity breaches, provided that the Company is not in breach of any representation or warranty contained in Section 3.13(e) of the merger agreement), or any escalation or worsening of any such acts of war (whether or not declared), military activity, sabotage, civil disobedience, social unrest, protests or terrorism (including cyberattacks, cyber-intrusions or other cybersecurity breaches, provided that the Company is not in breach of any representation or warranty contained in Section 3.13(e) of the merger agreement), (4) public health conditions (including any illness, epidemic, pandemic or disease outbreak, including COVID-19), or any actions taken to comply with laws, directives or guidelines with respect to COVID-19 or other restrictions to the extent relating to, or arising out of, any illness, epidemic, pandemic or disease outbreak or other public health condition or any worsening thereof, earthquakes, fires, floods, hurricanes, tornados or other natural disasters, weather-related events, casualty events, or other force majeure events, (5) any action taken by the Company or its subsidiaries that is expressly required by the merger agreement (other than Section 5.01(a) of the merger agreement) or with Parent’s prior written consent or at Parent’s written request, or the failure to take any action by the Company or its subsidiaries if that action is expressly prohibited by the merger agreement; provided that the Company shall have made a written request to Parent to take such action and Parent shall have denied such request, (6) any change in the Company’s credit ratings, (7) any decline in the market price, or change in trading volume, of any securities of the Company or (8) any failure to meet any internal or public projections, forecasts, guidance, estimates, milestones, budgets or internal or published financial or operating predictions of revenue, earnings, cash flow or cash position (it being understood that the exceptions in clauses (6), (7) and (8) shall not prevent or otherwise affect a determination that the underlying cause of any such change, decline or failure referred to therein (if not otherwise falling within any of the exceptions provided by clause (A) and clauses (B)(1) through (8) hereof) is a Material Adverse Effect); provided further, however, that any effect, change, circumstance, development, event or occurrence referred to in clause (A) or clause (B)(1), (3) or (4) may be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect to the extent such effect, change, circumstance, development, event or occurrence has a disproportionate adverse effect on the Company and its subsidiaries, taken as a whole, as compared to other companies operating in the industry in which the Company and its subsidiaries operate (in which case the incremental disproportionate impact or impacts may be taken into account in determining whether there has been, or would reasonably expected to be, a Material Adverse Effect).
A “Material Adverse Effect” with respect to Parent and Merger Sub is defined in the merger agreement to mean any effect, change, circumstance, development, event or occurrence that would prevent or materially delay, interfere with, hinder or impair the consummation by Parent or Merger Sub of any of the transactions contemplated by the merger agreement in accordance with the terms thereof.
The representations and warranties made by the Company relate to, among other topics, the following:

the organization, valid existence, good standing, qualification to do business and power and authority to carry on the businesses of each of the Company and each subsidiary;

the capital structure and indebtedness of, and the absence of restrictions or encumbrances with respect to the Company, its subsidiaries and its joint ventures;

the power and authority to execute and deliver the merger agreement, and, subject to the approval of the CyrusOne stockholders, to consummate the transactions contemplated by the merger agreement, and the absence of conflicts with, or violations of, laws or organizational documents and the absence of any consents under, conflicts with or defaults under contracts to which the Company or its subsidiaries is a party, in each case as a result of executing, delivering and performing under or consummating the transactions contemplated by, the merger agreement;

approvals of, filings with, or notices to, governmental entities required in connection with entering into, performing under or consummating the transactions contemplated by the merger agreement;
 
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the accuracy of SEC documents filed or furnished by the Company since January 1, 2019, financial statements contained in those filings (including undisclosed liabilities) and the information supplied by the Company in this proxy statement, and the existence of internal controls and disclosure controls and procedures;

the absence of liabilities required to be recorded on a balance sheet under GAAP or of any material adverse effect since September 30, 2021;

the absence of certain legal proceedings;

compliance with laws, including certain anti-corruption laws, and possession of all permits necessary for the Company and its subsidiaries to lawfully conduct their business;

certain tax matters;

certain employee benefits matters;

certain labor matters;

certain environmental matters relating to the Company and its subsidiaries;

intellectual property used by, owned by or licensed by the Company and its subsidiaries;

the absence of anti-takeover provisions;

real property owned and leased by the Company and its subsidiaries; pre-stabilized properties, development properties, eminent domain proceedings, outstanding claims and rent rolls;

material contracts of the Company and its subsidiaries, performance thereunder and the absence of any breach of or default under the terms of any material contract;

the sufficiency of existing insurance policies of the Company and its subsidiaries;

receipt of an opinion from the Company’s financial advisor;

broker’s, finder’s, financial advisor’s or similar fees payable in connection with the merger; and

the status of the Company and its subsidiaries under the Investment Company Act of 1940.
The representations and warranties made by Parent and Merger Sub relate to, among other topics, the following:

the organization, valid existence, good standing, qualification to do business and power and authority to carry on their respective businesses;

the power and authority to execute and deliver the merger agreement and to consummate the transactions contemplated by the merger agreement, and the absence of conflicts with, or violations of, laws or organizational documents and the absence of any consents under, conflicts with or defaults under contracts to which Parent or Merger Subsidiary is a party, in each case as a result of executing, delivering and performing under or consummating the transactions contemplated by, the merger agreement;

approvals of, filings with, or notices to, governmental entities required in connection with entering into, performing under or consummating the transactions contemplated by the merger agreement;

the capital structure of Merger Sub as a direct wholly owned subsidiary of Parent, and the lack of prior business activities of Merger Sub;

the equity and debt commitment letters made available by Parent to the Company (including the enforceability thereof) and, assuming that the funding is provided in accordance with such commitment letters, Parent will have sufficient cash on hand to consummate the transactions contemplated by the merger agreement and satisfy all of its payment obligations under the merger agreement;

the guarantees made available by affiliates of Parent to the Company (including the enforceability thereof);

the solvency of the surviving corporation immediately following the effective time and after giving effect to all of the transactions contemplated by the merger agreement;
 
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absence of certain arrangements with the Company management, the Board or any beneficial owner of common stock;

broker’s, finder’s, financial advisor’s or similar fees payable in connection with the merger;

the accuracy of the information supplied by them in this proxy statement;

the absence of certain legal proceedings;

the absence of ownership of common stock; and

their status as a non-“foreign person” under Section 721 of the Defense Production Act of 1950, as amended, including all implementing regulations thereof.
The representations and warranties of each of the parties to the merger agreement will expire upon the effective time.
Covenants Regarding Conduct of Business by the Company Pending the Effective Time
The Company has undertaken certain covenants in the merger agreement restricting the conduct of business of the Company and its subsidiaries between the date of the merger agreement and the effective time. The Company has agreed to, and cause each of its subsidiaries to, use commercially reasonable efforts to (a) carry on their respective businesses in all material respects in the ordinary course; (b) preserve its and their business organizations substantially intact; (c) preserve their goodwill and relationships with existing significant customers, suppliers, landlords, power providers and significant business counterparties substantially intact, in each case, consistent with past practice; (d) retain the services of their respective current officers and key employees; and (e) preserve its and their assets and properties in good repair and condition (ordinary wear and tear excepted), in each case subject to (i) actions required by law, legal judgment or a governmental authority or (ii) actions taken to comply with laws, directives or guidelines with respect to COVID-19 (“COVID-19 Measures”) or other commercially reasonable actions that the Company in good faith deems necessary or advisable in response to COVID-19 Measures (subject to prior consultation with Parent if reasonably practicable). In addition, the Company has agreed to various specific restrictions relating to the conduct of its business between the date of the merger agreement and the effective time.
The Company has agreed that, unless Parent consents in writing (which consent may not be unreasonably withheld, delayed or conditioned) or as otherwise permitted or contemplated by the merger agreement, it will not, and will not permit its subsidiaries to, do the following, in each case subject to certain exceptions set forth in the merger agreement or qualified by confidential disclosures delivered by the Company in connection with the merger agreement:

other than transactions among the Company and wholly owned subsidiaries, authorize for issuance, issue, sell or grant any shares of its capital stock, partnership interests or other equity or voting interests (including any convertible securities or other equity or voting interests, or any equity equivalents), other than certain actions provided for under the terms of Company equity awards;

other than transactions among the Company and wholly owned subsidiaries, redeem, purchase or otherwise acquire, directly or indirectly, any of its or its subsidiaries’ outstanding shares of capital stock, partnership interests or other equity or voting interests, or any equity equivalents of a subsidiary, other than certain actions provided for under the terms of Company equity awards;

in the case of the Company or the Company Operating Partnership, authorize, establish a record date for, declare, set aside for payment or pay any dividend on, or make any other distribution in respect of (in each case, whether in cash, shares or property or any combination thereof), any shares of its capital stock, partnership interests or other equity or voting interests (other than (1) declaring and paying quarterly cash dividends at a quarterly rate not to exceed $0.52 per share of common stock, (2) with respect to any subsidiary of the Company which is not wholly owned, declaring and paying dividends or distributions in accordance with the requirements of the organizational documents of such subsidiary and (3) continuing to accrue and pay dividend equivalents with respect to awards under the Company stock plan or other equity compensation plan entered into after November 14, 2021 not in violation of the merger agreement);
 
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split, combine, subdivide or reclassify any shares of its capital stock, partnership interests or other equity or voting interests, except for any such transaction by a wholly owned subsidiary, which remains a wholly owned subsidiary after consummation of such transaction;

commence any new Purchase Periods under the Company ESPP;

enter into any contract with respect to the voting or registration of any capital stock, partnership interests or equity or voting interest of the Company or any of its subsidiaries;

incur or assume any indebtedness for borrowed money, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company and its wholly owned subsidiaries, guarantee any such aforementioned indebtedness or any debt securities of another person, group or entity, or enter into any “keep well” or other agreement to maintain any financial statement condition of another person, group or entity, other than (1) intercompany indebtedness among the Company and its wholly owned subsidiaries, (2) letters of credit, bank guarantees, security or performance bonds or similar credit support instruments, overdraft facilities or cash management programs, in each case issued, made or entered into in the ordinary course of business, (3) indebtedness incurred under the current credit agreement (including any increase of commitments pursuant to the accordion feature and any borrowings thereunder) of the Company or other existing arrangements (including in respect of letters of credit) in the ordinary course of business, (4) indebtedness incurred in connection with the development or construction of any development property or the lease-up of any pre-stabilized property, (5) indebtedness incurred in connection with the refinancing of any indebtedness existing on the date of the credit agreement or permitted to be incurred, assumed or otherwise entered into hereunder and (6) other indebtedness in an aggregate principal amount not to exceed the aggregate amount necessary to fund the Company’s capital expenditure budget (taking into account the Company’s cash on hand and indebtedness incurred pursuant to clauses (1) through (5)) and that is not secured by owned real property or any real property lease; provided that the aggregate amount of indebtedness incurred pursuant to clauses (1) through (6) shall not exceed the amount necessary to fund the Company’s capital expenditure budget provided to Parent;

enter into any swap or hedging transaction or other derivative agreements, other than interest rate swaps in the ordinary course of business;

make any loans, capital contributions or advances to any person, group or entity other than (1) to the Company or any wholly owned subsidiary or (2) pursuant to permitted capital expenditures;

amend, waive, consent to or modify any provision under the current credit agreement of the Company or other existing arrangements for indebtedness for borrowed money in a way that would make such provision more restrictive on the Company or subsidiary party thereto;

sell, transfer, assign, dispose of or lease to any person, group or entity, in a single transaction or series of related transactions, any of its properties or assets, except (A) dispositions of inventory, sales or leases of equipment and dispositions of obsolete, surplus or worn out assets in the ordinary course or assets that are no longer used or useful, (B) transfers among the Company and its wholly owned subsidiaries, (C) sales, dispositions, leases and subleases of real property in the ordinary course of business, including expirations or lease surrenders at the end of their stated term, or (D) entry into, and performance of obligations under, customer contracts and related purchase or service orders thereunder in the ordinary course of business on terms that are consistent with past practice;

make or authorize capital expenditures for property, plant and equipment, except, subject to the limitations set forth in the Company’s capital funding framework as agreed between the Company and Parent, expenditures (A) that are consistent with the Company’s capital expenditure budget provided to Parent, (B) reasonably required in the event of an emergency, disaster, catastrophe or other similar emergency condition to protect life, employee safety, property or the environment or comply with public health requirements applicable thereto or (C) required by, or needed to satisfy obligations pursuant to, the express terms of any lease;

make any acquisition of the capital stock or other interests in any other person, group or entity or, except in the ordinary course of business, a material portion of the assets of any other person, group or entity, subject to an aggregate consideration cap of $10 million;
 
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except as required pursuant to the terms of any compensation or benefit plan, program, agreement or arrangement, (A) except in the ordinary course of business for employees who are not executive officers, grant any increase in compensation or fringe benefits; (B) grant any equity awards or any increase in severance, incentive, change in control, retention or termination pay (other than any increase that results from a permitted increase under clause (A) above), (C) establish, adopt, enter into, terminate or materially modify or amend any compensation or benefit plan, program, agreement or arrangement, or (D) take any action to accelerate any rights, payments or benefits payable or to become payable to any director, officer or employee;

hire or engage, other than to replace a departed employee, or terminate (other than for cause or due to death or disability) the employment of any employee at the level of Senior Vice President or above;

modify, extend, terminate or enter into any collective bargaining agreement or recognize or certify any labor union as the bargaining representative for any employee;

make any material change to any financial accounting policies or financial accounting procedures that would materially affect the consolidated assets, liabilities or results of operations, except as may be required as a result of a change in law or in GAAP or statutory or regulatory accounting rules or interpretations with respect thereto or any governmental entity or quasi-governmental entity;

amend the organizational documents of the Company, the Company Operating Partnership or any other subsidiary;

take any action with respect to any recapitalization, reorganization, merger, consolidation, liquidation, dissolution or winding up of the Company or any subsidiary or alter, through merger, liquidation, dissolution, reorganization, restructuring or otherwise, the corporate structure or ownership of any joint venture;

grant any lien on any of material assets other than (A) to secure permitted indebtedness or (B) to the Company or to a wholly owned subsidiary;

settle or compromise any pending or threatened action against the Company or any of its subsidiaries (or for which the Company or any of its subsidiaries would be financially responsible), whether or not commenced prior to the date of the merger agreement, other than settlements (A) in which the Company or its subsidiary is named as a nominal defendant, (B) in the ordinary course of business, (C) providing solely for payment of amounts less than $5,000,000 in cash individually, or $10,000,000 in cash in the aggregate (net of any amount covered by insurance) or (D) reflected or reserved against in the balance sheet (or the notes thereto) of the Company as of September 30, 2021 for an amount not materially in excess of the amount so reflected or reserved, provided that no settlement may involve any material injunctive or equitable relief or impose material restrictions on the business activities of the Company and its subsidiaries, taken as a whole, without the consent of Parent (not to be unreasonably withheld, conditioned or delayed);

make certain material tax changes;

take any action that would reasonably be likely to cause the Company to fail to qualify as a REIT or become liable any material taxes in connection with such failure;

modify, amend, renew, extend or waive or grant any release of any rights under any material contract, other than in the ordinary course of business on terms that are not adverse in any material respect to the Company and its subsidiaries, taken as a whole, or cancel or terminate, in whole or in part, any material contract;

modify, amend, renew, extend or waive or grant any release of any rights under any lease pursuant to which the Company or its subsidiaries is a lessee, other than in the ordinary course of business on terms that are not adverse in any material respect to the Company and its subsidiaries, taken as a whole;

fail to maintain insurance coverage in all material respects substantially comparable to existing insurance coverage, or fail to replace or renew material insurance policies to the extent commercially reasonable in the Company’s business judgment in light of prevailing conditions in the insurance market;
 
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change any posted privacy policy in a materially adverse manner to the rights or obligations of the Company or its subsidiaries or materially diminish the standards of data and system security used for any material IT systems;

initiate or consent to any material zoning reclassification of any real property or any material change to any approved site plan, special use permit or other land use entitlement in a manner that would materially inhibit the Company’s ability to develop or use such real property for data center operations or amend, modify, terminate or allow to lapse any material permit necessary for the lawful conduct of the Company’s business as conducted on November 14, 2021;

enter into any primary or base customer contract associated with more than one piece of owned or leased real property, renew or extend any primary or base customer contract associated with more than one piece of owned or leased real property or amend any primary or base customer contract to cause such customer contract to be associated with more than one piece of owned or leased real property; or

authorize any of, or commit or agree, in writing or otherwise, to take any of the foregoing actions.
In addition, unless an adverse recommendation change (as defined below) has occurred, the Company shall consult with Parent before issuing any public statement with respect to the merger and obtain prior written consent to issue any public statement other than any public statement which is consistent with the press release regarding the merger jointly issued by Parent and the Company on November 15, 2021, or in connection with any dispute between the parties regarding the merger, the merger agreement or the transactions contemplated thereby.
No Solicitation
The Company has agreed that, from the time of the execution of the merger agreement until the effective time (or, if earlier, when the merger agreement is terminated in accordance with its terms), the Company shall and shall cause each of its subsidiaries and its and their respective officers and directors to, and instruct and use its reasonable best efforts to cause its and each of its subsidiaries other representatives to, not:

initiate, solicit, knowingly encourage or knowingly facilitate (including by way of furnishing non-public information relating to the Company or any of its subsidiaries) the submission of a takeover proposal (as defined below) or any inquiries or discussion regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover proposal, in each case, by any person, group or entity;

engage in, continue or otherwise participate in any discussions or negotiations with respect to, relating to or in furtherance of a takeover proposal or any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover proposal;

furnish to any other person, group or entity (or any of their representatives) any non-public information regarding, or afford any person, group or entity access to, the business, operations, assets, books, records or personnel of the Company or its subsidiaries in connection with, or for the purpose of, facilitating or encouraging the making of a takeover proposal or in response to any takeover proposal or any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a takeover proposal;

approve, endorse or recommend any takeover proposal or submit a takeover proposal for the approval of the CyrusOne stockholders;

enter into any contract, letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement (1) providing for or relating to a takeover proposal or (2) requiring the Company to abandon, terminate or fail to consummate the transactions contemplated by the merger agreement; or

propose, resolve, authorize or commit to do any of the foregoing
A “takeover proposal” means any inquiry, proposal or offer from any person, group or entity relating to, in a single transaction or series of related transactions, any direct or indirect:
 
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acquisition of 20% or more of the consolidated assets of the Company and its subsidiaries, taken as a whole (based on the book-value basis (including indebtedness secured solely by such assets)), including through the acquisition of one or more subsidiaries of the Company owning such assets, or to which 20% or more of the Company’s revenues or earnings on a consolidated basis are attributable;

acquisition of 20% or more of the voting power of the Company or 20% or more of the equity interests or general partner interests in the Company Operating Partnership (or options, rights or warrants to purchase, or securities convertible into, such interests);

tender offer or exchange offer that if consummated would result in any person, group or entity (or their equityholders) beneficially owning 20% or more of any class of equity security of the Company or the Company Operating Partnership;

merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution, spin-off, joint venture or similar transaction involving the Company or the Company Operating Partnership pursuant to which any person, group or entity (or the equityholders of any person, group or entity) would acquire, directly or indirectly, 20% or more of the consolidated assets of the Company and its subsidiaries, taken as a whole (based on the fair market value thereof, as determined in good faith by the Board or any duly authorized committee thereof) or to which 20% or more of the Company’s net revenues or earnings on a consolidated basis are attributable or 20% or more of the aggregate voting power of the Company or the Company Operating Partnership or of the surviving entity in a merger, consolidation, share exchange or other business combination involving the Company or the Company Operating Partnership or the resulting direct or indirect parent of the Company or the Company Operating Partnership or such surviving entity; or

any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing.
Notwithstanding the restrictions set forth above, if at any time on or after the date of execution of the merger agreement and prior to obtaining the Company stockholder approval, the Company or any of its representatives receives a bona fide takeover proposal, which takeover proposal did not result, directly or indirectly, from any breach of the terms of the merger agreement relating to no solicitations, (i) the Company and its representatives may contact such person, group or entity making the takeover proposal or its or their representatives and financing sources solely to (A) clarify the terms and conditions thereof or to request that any takeover proposal made orally be made in writing so as to determine whether such takeover proposal constitutes or would reasonably be expected to lead to a superior proposal or (B) notify such person, group or entity or its or their representatives and financing sources of the relevant provisions of the merger agreement and (ii) if the Board or any duly authorized committee thereof determines in good faith, after consultation with its financial advisors and outside legal counsel, that such takeover proposal constitutes or would reasonably be expected to lead to a superior proposal, then the Company may:

enter into an acceptable confidentiality agreement with the person or group of persons making the takeover proposal and furnish pursuant to an acceptable confidentiality agreement information (including non-public information) with respect to the Company and its subsidiaries to the person, group or entity that has made such takeover proposal and its or their respective representatives and financing sources; and

subject to compliance with the applicable terms of the merger agreement, engage in or otherwise participate in discussions or negotiations with the person, group or entity making such bona fide takeover proposal and its or their representatives and financing sources and otherwise cooperate with or assist or participate in, or facilitate any such discussions or negotiations.
An “acceptable confidentiality agreement” means (i) any confidentiality agreement entered into by the Company after the date of the merger agreement that contains confidentiality provisions that are not materially less favorable in the aggregate to the Company than those contained in the more restrictive of the confidentiality agreements entered into with KKR and GIP, except that such confidentiality agreement need not include explicit or implicit standstill provisions or otherwise restrict the making of or amendment or modification to takeover proposals (subject to certain limitations), or (ii) any confidentiality agreement
 
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entered into prior to the date of the merger agreement, it being understood that the Company, in its sole discretion, shall be entitled to waive or release any preexisting explicit or implicit standstill provisions or similar agreements with any person or group of persons to the extent necessary to allow for a confidential takeover proposal to be made to the Board so long as the Company promptly (and in any event within one business day thereafter) notifies Parent thereof (including the identity of such counterparty) after granting any such waiver or release and the Board determines prior to the grant of such waiver or release in good faith, after consultation with outside legal counsel to the Company, that the failure of the Board to take such action would reasonably be expected to be inconsistent with the directors’ duties under applicable law.
A “superior proposal” means any bona fide written takeover proposal made by a third party on terms that the Board or any duly authorized committee thereof has determined in its good faith judgment and after consultation with the Company’s outside legal counsel and financial advisors (i) would, if consummated, be more favorable to the CyrusOne stockholders from a financial point of view than the transactions contemplated by the merger agreement (including after giving effect to any adjustment to the terms thereof proposed in writing by Parent) and (ii) is reasonably capable of being consummated in accordance with its terms, taking into account (A) all legal, regulatory, financial, financing, and other aspects of such takeover proposal (including, the sources of and terms of financing, market conditions, the form of consideration, and the timing of and conditions to closing) and (B) the likelihood and timing of consummation; provided that for purposes of the definition of “superior proposal”, the references to “20%” in the definition of takeover proposal shall be deemed to be references to “50%”.
The merger agreement requires that the Company promptly, and in any event, within 48 hours of receipt, notify Parent of (i) any takeover proposal or inquiry, proposal or offer that constitutes or could reasonably be expected to lead to a takeover proposal and disclose the material terms and conditions of any such takeover proposal or inquiry, proposal or offer, as applicable, and the identity of the person, entity or group making such takeover proposal or inquiry, proposal or offer, as applicable, and provide a copy of any such written takeover proposal or inquiry, proposal or offer, as applicable, made in writing or (ii) a request to furnish non-public information regarding the Company or any of its subsidiaries by any third party that informs the Company that it is considering making, or has made, a takeover proposal or any inquiry, proposal or offer from a person, entity or group seeking to have discussions or negotiations with the Company regarding a takeover proposal.
With respect to any takeover proposal, or any inquiry, proposal or offer that constitutes or could reasonably be expected to lead to a takeover proposal described in the immediately preceding paragraph, the Company shall keep Parent reasonably informed of any material developments with respect to any such takeover proposal (including any material changes thereto) or inquiry, proposal or offer, as applicable, on a reasonably current basis (and in any event within 48 hours), including by providing a copy of all written proposals or offers thereto.
Change in Board Recommendation
The Board has agreed that neither it, nor any committee thereof, will, directly or indirectly:

(A) withdraw, withhold (or modify or qualify in a manner adverse to Parent), or publicly propose to withdraw, withhold (or modify or qualify in a manner adverse to Parent), its recommendation to CyrusOne stockholders that they approve the merger, (B) recommend the approval or adoption of, or approve or adopt, or publicly propose to recommend, approve or adopt, any takeover proposal, (C) fail to include its recommendation to CyrusOne stockholders that they to approve the merger in this proxy statement, (D) publicly declare advisable or publicly propose to enter into a takeover proposal or (E) agree or resolve to take any actions set forth in the foregoing clauses (A) through (D) (any such action, an “adverse recommendation change”); or

execute or enter into (or cause or permit the Company or any of its subsidiaries to execute or enter into) any contract, letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement providing for or relating to a takeover proposal (other than any acceptable confidentiality agreement) (each, a “company acquisition agreement”).
 
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Notwithstanding the foregoing, at any time prior to obtaining the Company stockholder approval, the Board, or any duly authorized committee thereof, may:

make an adverse recommendation change if an intervening event has occurred, and the Board or any duly authorized committee thereof has determined in good faith, after consultation with its financial advisors and outside legal counsel, that the failure to take such action would be inconsistent with the directors’ duties under applicable law (taking into account all adjustments to the terms of the merger agreement that have been offered by Parent pursuant to Section 5.02 of the merger agreement); or

in response to a bona fide takeover proposal after November 14, 2021, which did not result, directly or indirectly, from a breach of the merger agreement that the Board or any duly authorized committee thereof has determined in good faith, after consultation with its financial advisors and outside legal counsel, constitutes a superior proposal (taking into account all adjustments to the terms of the merger agreement that have been offered by Parent pursuant to Section 5.02 of the merger agreement), effect an adverse recommendation change or, subject to compliance with the merger agreement, terminate the merger agreement if the Board or any duly authorized committee thereof has determined in good faith, after consultation with its financial advisors and outside legal counsel that the failure to do so would be inconsistent with the directors’ duties under applicable law.
Prior to taking any of the actions set forth in the immediately preceding paragraph,

the Company must give Parent at least three business days’ prior written notice of its intention to make an adverse recommendation change or terminate the merger agreement, as applicable (which notice shall, if applicable, (x) specify the basis for such adverse recommendation change, (y) specify the intervening event or the identity of the party making such superior proposal and the material terms and conditions thereof and (z) a copy of the most current version of the proposed agreement under which such superior proposal is to be consummated and any other material documents and material correspondence in respect of such superior proposal);

after providing such notice and prior to effecting such adverse recommendation change or taking such action, the Company must have negotiated, and has caused its representatives to negotiate, in good faith with Parent during such notice period, to the extent Parent wishes to negotiate, to enable Parent to propose in writing a binding offer to effect revisions to the terms of the merger agreement, the commitment letters and the guarantees in response to such intervening event or superior proposal, as applicable; and

following the end of such notice period, the Board or any duly authorized committee thereof must have considered in good faith any changes to the merger agreement, the commitment letters and the guarantees in a manner that would form the basis for such binding offer if accepted by the Company, and must have determined, after consultation with outside legal counsel and financial advisors, that the failure to make an adverse recommendation change or to terminate the merger agreement, as applicable, would reasonably be expected to be inconsistent with the directors’ duties under applicable law even if such changes were to be given effect and, in the case of a superior proposal, that such superior proposal would continue to constitute a superior proposal if such changes were to be given effect;
provided, that in the event of any material modifications to such intervening event with respect to the bullets above under the sentence pertaining to actions the Board, or any committee thereof, may take at any time prior to obtaining the Company stockholder approval, in the event of any change in price or material revision or material amendment to the terms of any such superior proposal, the Company shall be required to deliver a new written notice to Parent, and the notice period will recommence for two business days.
An “intervening event” means any material event, change, effect, condition, development, fact or circumstance with respect to the Company and its subsidiaries, taken as a whole, that occurred or arose after the date of the merger agreement, which (i) was neither known by, nor reasonably foreseeable (with respect to magnitude or material consequences) by the Board as of the date of the merger agreement and (ii) first becomes known to or by the Board prior to the receipt of the Company stockholder approval; provided that none of the following shall constitute an intervening event: (A) the Company or any of its subsidiaries meeting or exceeding any internal or public projection, budget, forecast, estimate or prediction
 
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in respect of revenues, earnings or other financial or operating metrics for any period (it being understood that the underlying facts or occurrences may be considered an intervening event to the extent otherwise satisfying the terms of this definition), (B) any change in and of itself in the market price, credit rating or trading volume of shares of common stock on the NASDAQ Global Select Market or any change affecting the ratings or the ratings outlook for the Company or any of its subsidiaries (it being understood that the underlying facts or occurrences may be considered an intervening event to the extent otherwise satisfying the terms of this definition) or (C) the receipt, existence of or terms of a takeover proposal or any inquiry, proposal or offer that constitutes, or could reasonably be excepted to lead to, a takeover proposal, or any matter relating thereto or consequence thereof.
Efforts to Obtain the Company Stockholder Approval
Notwithstanding any adverse recommendation change, the Company has agreed to hold its special meeting as soon as reasonably practicable and to use its reasonable best efforts reasonable efforts to obtain the Company stockholder approval and to take certain actions in connection therewith (including hiring a proxy solicitor). The Board declared that the merger is advisable and in the best interests of the Company and of stockholders of the Company on substantially the terms and conditions set forth in the merger agreement and adopted resolutions directing that the merger be submitted to the CyrusOne stockholders for consideration at the special meeting.
Reasonable Best Efforts
The parties have agreed to each use, and to cause their respective subsidiaries to use, reasonable best efforts (other than in respect of antitrust approvals and certain other regulatory approvals, which are discussed further below) to:

take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with the other parties to the merger agreement in doing, all things necessary, proper or advisable to cause the closing conditions to be satisfied as promptly as reasonably practicable, and to consummate in the most expeditious manner reasonably practicable the transactions contemplated by the merger agreement, including preparing and filing promptly and fully all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents;

obtain all approvals, consents, registrations, waivers, permits, authorizations, orders and other confirmations from any governmental authority or third party necessary, proper or advisable to consummate the transactions contemplated by the merger agreement;

execute and deliver any additional instruments any party to the merger agreement reasonably determines is necessary or proper to consummate the transactions contemplated thereby; and

defend or contest in good faith any action brought by a third party (excluding any governmental authority) challenging or otherwise impeding or delaying the consummation of the transactions contemplated by the merger agreement;
Additionally, the parties have each agreed to use their reasonable best efforts to:

take all action necessary to ensure that no “business combination”, “control share acquisition”, “fair price”, “moratorium” or other anti-takeover laws become applicable to the transactions contemplated by the merger agreement; and

take all action necessary to ensure that the transactions contemplated by the merger agreement are consummated as promptly as reasonably practicable on the terms contemplated by the merger agreement and otherwise lawfully minimize the effect of any such anti-takeover law that may become applicable to the transactions contemplated by the merger agreement.
Each of the parties to the merger agreement has agreed to:

make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by the merger agreement as promptly as reasonably
 
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practicable following the date of the merger agreement, and in any event within 10 business days following the date of the merger agreement (which filings were submitted on November 29, 2021);

make, or cause to be made, all appropriate filings required with respect to the other regulatory approvals as promptly as reasonably practicable following the date of the merger agreement;

supply as promptly as reasonably practicable any additional information and documentary material that may be requested by the FTC or the DOJ or any other governmental authority pursuant to antitrust laws or in connection with the other regulatory approvals and to promptly take any and all steps so as to enable the parties to the merger agreement to consummate the transactions contemplated by the merger agreement as promptly as reasonably practicable;

promptly take all actions necessary and advisable to secure the expiration or termination of any applicable waiting period under the HSR Act or any other antitrust law, obtain the other regulatory approvals and resolve any objections asserted with respect to the transactions contemplated by the merger agreement under the Federal Trade Commission Act or any other applicable law raised by any governmental authority (in each case, entering into agreements or stipulating to the entry of any judgment by, the appropriate governmental authority, provided that any such action shall be conditioned upon the closing of the merger agreement), including:

executing settlements, undertakings, consent decrees, stipulations, public law contracts or other agreements with any governmental authority or with any other person, group or entity;

selling, divesting or otherwise conveying or holding separate particular assets or categories of assets or businesses of Parent and its subsidiaries;

agreeing to sell, divest or otherwise convey or hold separate any particular assets or categories of assets or businesses of the Company and its subsidiaries contemporaneously with or subsequent to the effective time;

permitting the Company to sell, divest or otherwise convey or hold separate any of the particular assets or categories of assets or businesses of the Company and its subsidiaries prior to the effective time;

terminating existing relationships, contractual rights or obligations of the Company or Parent or their respective subsidiaries;

terminating any joint venture or other arrangement;

creating any relationship, contractual right or obligation of the Company or Parent or their respective subsidiaries; or

effectuating any other change or restructuring of the Company or Parent or their respective subsidiaries;
provided, that no party to the merger agreement is required to take any such actions described above to the extent that such actions would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

defend through litigation any claim asserted in court by any person, group or entity (including any governmental authority) to prevent or have vacated or terminated, any restraint that would prevent the closing of the merger; and

in the case of Parent, respond to and seek to resolve as promptly as reasonably practicable any objection asserted by any governmental authority with respect to the transactions contemplated by the merger agreement.
 
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Financing
Marketing Period
Under the merger agreement, the Company has agreed to allow Parent a period of 15 consecutive business days to market the debt financing. The marketing period commences upon the date Parent has received certain required financial information (provided, that such period will not be deemed to have commenced until all of the conditions to closing other than those which, by the terms are to be satisfied at the closing, have been satisfied). The marketing period shall end on any earlier date on which the debt financing has been obtained.
Efforts
The merger agreement provides that each of Parent and Merger Sub will use, and will cause their affiliates to use, reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and obtain the equity financing and debt financing on the terms and subject only to the conditions (including the market flex provisions) set forth in the equity commitment letter and debt commitment letters, including using reasonable best efforts to:

maintain in effect and comply with the commitment letters;

negotiate and enter into definitive agreements with respect to committed financing on the terms and subject only to the conditions (including the market flex provisions) set forth in the debt commitment letters (or on terms not materially less favorable to Parent or Merger Sub than the terms and conditions (including market flex provisions) set forth in the debt commitment letter;

satisfy or obtain a waiver of on a timely basis all conditions applicable to Parent in the financing letters and the definitive agreements related thereto (including in respect of any affiliates of Parent);

consummate the financing at or prior to the closing of the merger, including using its (and causing its affiliates to use) reasonable best efforts to cause the lenders and the other entities committing to fund the financing to fund such financing at the closing of the merger;

enforce its rights under the commitment letters and any definitive agreements relating to the financing of the merger; and

comply with its covenants and other obligations under the commitment letters and the definitive agreements relating to the financing of the merger.
Parent and Merger Sub may not, without the prior written consent of the Company, agree to or permit any termination of or amendment or modification to be made to, or grant any waiver of any provision under, the financing documents or the definitive agreements relating to the financing of the merger if such termination, amendment, modification or waiver would (A) (1) reduce (or could have the effect of reducing) the aggregate amount of the financing (including by increasing the amount of fees to be paid or original issue discount) or (2) reduce the amount of debt financing unless, in each case, (I) the equity financing is increased by a corresponding amount no later than the date of such termination, amendment, modification or waiver and, after giving effect thereto, certain representations and warranties in the merger agreement shall be true and correct, or (II) such reduction is undertaken in connection with a purchase price reduction under the merger agreement in accordance with the debt commitment letter and the remaining commitments under the debt commitment letter (when combined with the equity financing) are sufficient to satisfy Parent’s obligations contemplated by the merger agreement, (B) impose new or additional conditions precedent to the availability of the financing or otherwise expand, amend or modify any of the conditions to the financing, or otherwise expand, amend or modify any other provision of the financing documents in a manner that could reasonably be expected to delay or prevent or make less likely to occur the funding of the financing (or satisfaction of the conditions to the financing) on the closing date or (C) adversely impact the ability of Parent, Merger Sub or the Company, as applicable, to enforce its rights against other parties to the financing documents.
Prior to the closing date, the Company has agreed to use its reasonable best efforts to provide to Parent and Merger Sub such reasonable cooperation as is customary and reasonably requested by Parent, in each
 
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case at Parent’s sole expense, as more fully set forth in the merger agreement, in connection with the arrangement of any debt financing, including providing reasonably requested cooperation in connection with the repayment or defeasance of any existing indebtedness of the Company or any of its subsidiaries.
Parent and Merger Sub obtaining financing, including any alternative financing, is not a condition to the consummation of the merger.
Indemnification
Parent has agreed to cause the surviving corporation to assume all obligations of the Company and its subsidiaries to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the effective time now existing in favor of the current or former directors or officers of the Company and its subsidiaries upon the effective time. Prior to the effective time, the Company will purchase a “tail” directors’ and officers’ liability insurance policy for a period of six years for the Company and its subsidiaries and their respective current and former directors and officers who are currently covered by the directors’ and officers’ liability insurance coverage currently maintained by the Company or its subsidiaries.
Employee Benefits Matters
The merger agreement provides that for a period of one year following the effective time, (or, if earlier, the termination date of the applicable employee), Parent will provide each employee of the Company as of immediately prior to the effective time (each, a “Continuing Employee”) with (i) a base salary or wage rate, as applicable, and target short- and long-term incentive opportunities that are no less favorable, in each case, than those in effect immediately prior to the effective time, (ii) severance benefits that are no less favorable than those that would have been provided to such Continuing Employee under the applicable severance plans and arrangements as in effect immediately prior to the effective time and (iii) other employee benefit plans and arrangements (other than base salary, wage rate, short- and long-term incentive opportunities, severance benefits, defined benefit pension or post- termination or retiree health or welfare benefits) that are substantially comparable in the aggregate to those provided to such Continuing Employee immediately prior to the effective time; provided that, in lieu of providing equity or equity- related incentives, Parent may instead satisfy such obligations by providing the cash equivalent thereof. Notwithstanding anything in the merger agreement to the contrary, the terms and conditions of employment for any Continuing Employee covered by a collective bargaining, works council or other similar agreement will continue to be governed by such agreement in accordance with its terms.
Parent will honor in accordance with their terms all of the Company’s compensation and benefit plans, programs, agreements and arrangements in effect at the effective time (subject to any rights to terminate, amend or modify such plans, programs, agreements or arrangements in accordance with their terms, but after giving effect to any provisions relating to a “change in control” or “change of control” ​(or term of similar import)). Parent has acknowledged in the merger agreement that the merger will constitute a “change in control” or “change of control” ​(or other term of similar import) for purposes of the Company’s compensation and benefit plans, programs, agreements and arrangements.
The merger agreement provides that Parent will pay the Closing Year Bonus to each Continuing Employee who is otherwise eligible to receive such Closing Year Bonus, with the Closing Year Bonuses (i) based on the bonus plan and targets in effect immediately prior to the effective time, (ii) determined reasonably and in good faith in the ordinary course of business and (iii) paid at the same time that annual bonuses are typically paid. In the event a Continuing Employee’s employment is terminated under circumstances that would qualify him or her to receive severance, such Continuing Employee will receive a pro-rated Closing Year Bonus equal to the greater of (A) the amount such employee would be entitled in connection with the applicable severance arrangement and (B) his or her target annual bonus, except that, if the termination occurs during the second half of the Company’s fiscal year, the amount under clause (B) will be equal to the projected actual annual cash bonus he or she would have received for such fiscal year based on accruals for bonuses in the Company’s financial statements, if greater.
In addition, the Company has agreed that, prior to making any broad-based communication or written communications (including website postings) pertaining to employment, compensation or benefit matters
 
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that are affected by the transactions contemplated by merger agreement, the Company will provide Parent with a copy of the intended communication, Parent will have a reasonable period of time to review and comment on the communication, and the Company will consider such comments in good faith.
Additional Agreements
The merger agreement contains certain other additional agreements between the Company, Parent and Merger Sub relating to, among other things:

access to certain information and notifications during the period prior to the effective time;

notifying the other party of the receipt of certain communications from any governmental entity in connection with the transactions contemplated by the merger agreement or from any person, group or entity alleging that consent of such person, group or entity with respect to the transactions contemplated by the merger agreement is or may be required in connection with the transactions contemplated by the merger agreement, or the occurrence of certain events;

cooperation between the Company and Parent in connection with the defense or settlement of any stockholder litigation relating to the merger;

Parent and Merger Sub not expending funds other than in connection with the merger and the payment of related expenses;

Parent not declaring, setting aside, making or paying any dividend or other distribution;

Parent voting any common stock in favor of the approval of the merger;

the delisting of the Company’s common stock; and

cooperation between the Company and Parent in the preparation of this proxy statement.
Conditions of the Merger
The respective obligations of the parties to consummate the merger are subject to the satisfaction or waiver of the following conditions:

the absence of any order, judgment, injunction, ruling, award, writ or decree of any governmental authority enacted, promulgated, issued, entered, amended or enforced by any governmental authority of competent jurisdiction or any applicable law in the United States or certain applicable jurisdictions shall be in effect enjoining, restraining or otherwise making illegal, preventing or prohibiting the consummation of the merger;

the waiting period applicable to the consummation of the merger under the HSR Act as well as any timing agreement entered into in accordance with the terms of the merger agreement with any governmental authorities having jurisdiction with respect to the transactions contemplated by the merger agreement pursuant to applicable antitrust laws shall have expired or otherwise terminated and certain other consents, approvals or other clearances shall have been obtained; and

the receipt of the Company stockholder approval.
The obligation of Parent and Merger Sub to consummate the merger is subject to the satisfaction or waiver of the following additional conditions:

the representations and warranties of the Company being true and correct to the extent specified in the merger agreement (subject to certain materiality qualifications);

the Company having complied with or performed, in all material respects, all obligations required to be complied with or performed by it under the merger agreement; and

the receipt by the Company of an opinion from Cravath, Swaine & Moore LLP or other nationally recognized REIT counsel to the Company substantially in the form attached as Exhibit C to the merger agreement, which concludes (subject to customary assumptions, qualifications and representations, including representations made by the Company and its subsidiaries in a tax representation letter provided by the Company) that, commencing with the Company’s taxable year
 
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ended December 31, 2013 and until the effective time, the Company has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT.
The obligation of the Company to consummate the merger is subject to the satisfaction or waiver of the following additional conditions:

the representations and warranties of Parent and Merger Sub being true and correct to the extent specified in the merger agreement (subject to certain materiality qualifications); and

Parent and Merger Sub having complied with or performed, in all material respects, all obligations required to be complied with or performed by them under the merger agreement.
Termination of the Merger Agreement
The merger agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the effective time, whether before or after receipt of the Company stockholder approval, by the mutual written consent of the parties to the merger agreement.
Termination by either the Company or Parent
In addition, the Company, on the one hand, or Parent, on the other hand, may terminate the merger agreement and abandon the transactions contemplated thereby at any time prior to the effective time, whether before or after receipt of the Company stockholder approval, if:

the merger is not consummated by May 14, 2022, except (i) that if the marketing period has commenced but the effective time has not yet occurred, then the outside date shall automatically be extended to the date that is five business days following the then-scheduled end date of the marketing period and (ii) that, if on the outside date any of the conditions set forth under the first (to the extent relating to a restraint in respect of any antitrust law or foreign investment law) and second bullet periods under “Conditions of the Merger” above are not satisfied but all other closing conditions have been satisfied or waived, then the outside date shall be automatically extended to November 14, 2022; provided, that this right to terminate the merger agreement shall not be available to any party if the failure of such party to perform or comply in any material respect with any of its obligations under the merger agreement has been the principal cause of the failure of the merger to be consummated on or before such date;

the condition set forth in the first bullet point under “Conditions of the Merger” above is not satisfied and the legal restraint giving rise to such non-satisfaction has become final and non-appealable, provided that the party seeking to terminate the merger agreement has complied with its obligations in all material respects to prevent the entry of and to remove such restraint; or

the Company stockholder approval is not obtained at the special meeting (including adjournments or postponements thereof).
Termination by Parent
Parent may also terminate the merger agreement and abandon the transactions contemplated thereby by written notice to the Company at any time prior to the effective time, whether before or after receipt of the Company stockholder approval, if:

the Company shall have breached any of its representations or warranties or failed to perform or comply with any of its obligations or agreements set forth in the merger agreement, which breach or failure to perform or comply (A) would give rise to the failure of the conditions set forth in the first and second bullet points under “Conditions of the Merger” above and (B) is incapable of being cured or, if capable of being cured, has not been cured by the earlier of (x) 30 calendar days following receipt by the Company of written notice from Parent of such breach or failure to perform or comply and (y) the outside date, provided that Parent or Merger Sub are not then in material breach of any of their representations, warranties, obligations or agreements under the merger agreement; or
 
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(A) the Board or a committee thereof shall have made an adverse recommendation change, (B) the Board shall have failed to publicly recommend against any tender offer or exchange offer that constitutes a takeover proposal within ten business days, after the commencement of such tender offer or exchange offer or (C) the Board shall have failed to publicly reaffirm its recommendation to approve the merger within ten business days after receipt of a written request by Parent to provide such reaffirmation in response to a takeover proposal that has been publicly announced (or if the special meeting is scheduled to be held within ten business days of such request, promptly and in any event prior to the date of the special meeting).
Termination by the Company
The Company may also terminate the merger agreement and abandon the transactions contemplated thereby by written notice to the Company at any time prior to the effective time, whether before or after receipt of the Company stockholder approval (except as otherwise noted), if:

Parent or Merger Sub shall have breached any of its representations or warranties or failed to perform or comply with any of its obligations or agreements set forth in the merger agreement, which breach or failure to perform or comply (A) would give rise to the failure of the conditions set forth in the first and second bullet points under “Conditions of the Merger” above and (B) is incapable of being cured or, if capable of being cured, has not been cured by the earlier of (x) 30 calendar days following receipt by Parent of written notice from the Company of such breach or failure to perform or comply and (y) the outside date, provided that the Company is then not in material breach of any of its representations, warranties, obligations or agreements under the merger agreement;

prior to the receipt of the Company stockholder approval, in order to accept a superior proposal, which did not result, directly or indirectly, from a breach of the terms of the merger agreement with respect to no solicitation and the simultaneous execution of a company acquisition agreement, and the Company pays or causes to be paid the applicable termination fee discussed in the section of this proxy statement entitled “The Merger Agreement — Termination Fees” beginning on page 89; or

(A) all of the closing conditions of Parent and Merger Sub have been satisfied or waived and the marketing period has ended, (B) the Company has confirmed by written notice that (1) all of the closing conditions of the Company have been satisfied or waived, (2) the merger is required to be consummated and (3) that the Company is ready, willing and able to consummate the merger and (C) Parent and Merger Sub fail to consummate the merger within three business days after the later of (x) receipt by Parent of the notice referred to in clause (B) and (y) the date the merger was required to be consummated.
Termination Fees
Termination Fee Payable by the Company
The Company has agreed to pay Parent a termination fee of $319.5 million, which we refer to as the “company termination fee”, if:

Parent terminates the merger agreement pursuant to the provision described in the second bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by Parent”;

the Company terminates the merger agreement pursuant to the provision described in the second bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by the Company”; or

all of the following requirements are satisfied:

the Company or Parent terminates the merger agreement pursuant to the provisions described in the first or third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by either the Company or Parent” or Parent terminates the merger agreement pursuant to the provision described in the first bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by Parent”; and
 
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(1) at the time of termination the Company shall not have been entitled to terminate the merger agreement pursuant to the provision described in the third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by the Company”, (2) a bona fide takeover proposal (whether or not conditional) shall have been received by the Company or any person shall have publicly announced, publicly disclosed or otherwise publicly communicated an intention to make a takeover proposal (and, in the case of a termination pursuant to the provision described in the third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by either the Company or Parent” such takeover proposal intention shall have been made prior to the special meeting and not publicly withdrawn at least three business days prior to the special meeting) and (3) within 12 months after a termination referred to in the immediately preceding sub-bullet point the Company enters into a definitive agreement providing for the consummation of any takeover proposal or consummates any takeover proposal (with, for purposes of this clause (3), the references to “20%” in the definition of “takeover proposal” being deemed to be references to “50%”).
Termination Fee Payable by Parent
Parent has agreed to pay the Company a termination fee of $813.5 million, which we refer to as the “parent termination fee”, if the Company terminates the merger agreement pursuant to the provisions described in the first or third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by the Company” or in the event that Parent terminates the merger agreement pursuant to the provision described in the first bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by either the Company or Parent” and the Company was then entitled to terminate the merger agreement pursuant to the provisions described in the first or third bullet point under “The Merger Agreement — Termination of the Merger Agreement — Termination by the Company”.
In the event the merger agreement is validly terminated and a termination fee is paid under the circumstances for which such fee is payable pursuant to the merger agreement, payment of the applicable termination fee will be the sole and exclusive monetary damages remedy available to the payee in respect of any and all losses incurred as a result of the failure of the transactions contemplated by the merger agreement to be consummated and, upon payment of such applicable termination fee in such circumstances, none of the payor and its related parties will have any further liability or obligation relating to or arising out of the merger agreement, the merger or the other transactions contemplated by the merger agreement.
Fees and Expenses
Whether or not the transactions contemplated by the merger agreement are consummated, all fees and expenses incurred in connection with the merger, the merger agreement and the transactions contemplated thereby will be paid by the party incurring or required to incur such fees or expenses. For a description of certain fees and expenses incurred by the parties in connection with this proxy statement, see the section titled “The Special Meeting — Solicitation of Proxies” beginning on page 27.
Withholding Taxes
Parent, the surviving corporation or any of its affiliates, Merger Sub and the paying agent will be entitled to deduct and withhold from the merger consideration payable to any holder of common stock and any other amounts payable pursuant to the merger agreement the amounts that may be required to be withheld under any applicable tax law. Amounts withheld and paid over to the applicable governmental entity will be treated for all purposes of the merger as having been paid to the persons from whom such amounts were withheld.
Amendment
The merger agreement may be amended, modified or supplemented by the parties at any time before or after the receipt of the Company stockholder approval, provided that (i) after the receipt of the Company
 
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stockholder approval there may not be any amendment of the merger agreement for which applicable law requires further approval by the Company stockholders without such approval having first been obtained; and (ii) that certain provisions of the merger agreement may not be amended in a manner materially adverse to any debt financing source without the prior written consent of such debt financing source.
Extension; Waiver
At any time prior to the effective time, the parties may: (i) waive any inaccuracies in the representations and warranties of the other party, (ii) extend the time for the performance of any of the obligations or acts of the other party or (iii) subject to the requirements of applicable law, waive compliance by the other party with any of the agreements contained in the merger agreement applicable to such party or, except as otherwise provided therein, waive any of such party’s conditions; provided, however, that after the receipt of the Company stockholder approval there may not be any extension or waiver of the merger agreement for which applicable law requires further approval by the Company stockholders without such approval having first been obtained.
Governing Law
The merger agreement will be governed by, and construed in accordance with, the laws of the State of Maryland applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of laws principles. Each party has agreed that any interpretation of the commitment letters (other than certain exceptions set forth in the merger agreement) will be governed by, and construed in accordance with, the laws of the State of New York.
Specific Enforcement
The parties agreed that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of the merger agreement was not performed in accordance with its specific terms or is otherwise breached, including if the parties fail to take any action required of them to consummate the merger agreement, the merger and the other transactions contemplated by the merger agreement.
Subject to certain limitations, the parties acknowledged and agreed that the parties are entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of the merger agreement and that the right of specific enforcement is an integral part of the merger and the other transactions contemplated by the merger agreement and without that right neither the Company nor Parent would have entered into the merger agreement. The parties agreed not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law.
 
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of common stock as of December 23, 2021 by (i) each person or group who is known by the Company to be a beneficial owner of 5% or more of common stock, (ii) each director of the Company, (iii) each of the Company’s executive officers and (iv) all directors and executive officers of the Company as a group.
Beneficial ownership of common stock is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as indicated by footnote, the Company believes based on the information provided to the Company that each person and entity named in the table has sole voting and investment power with respect to all of the shares of common stock shown as beneficially owned by such person or entity. Applicable percentage of beneficial ownership is based on 129,555,316 shares of common stock outstanding on December 23, 2021. Shares of common stock subject to company equity awards currently exercisable or that will be settled or exercisable within 60 days after December 23, 2021 are deemed to be outstanding and beneficially owned by the person holding the company equity awards for the purpose of computing the percentage of beneficial ownership of that person and any group of which that person is a member, but are not deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person.
Unless otherwise indicated, the address of each named person is c/o CyrusOne Inc., 2850 N Harwood Street, Suite 2200, Dallas, Texas 75201.
Beneficial Ownership of Holders of 5% or More of Common Stock, Directors and Executive Officers:
Name of Beneficial Owner
Number of Shares of
Common Stock
Beneficially Owned
Percent of
Common Stock
Holders of 5% or more of Common Stock: