Recommended Cash Acquisition of Imagination Technologies Group PLC by CBFI Investment Limited

September 22, 2017

RECOMMENDED CASH ACQUISITION of Imagination Technologies Group PLC by CBFI Investment Limited a wholly-owned subsidiary of funds managed by Canyon Bridge Capital Partners, LLC

Summary

The boards of directors of Imagination Technologies Group PLC (“Imagination“) and CBFI Investment Limited, a newly incorporated company (“CBFI“), indirectly owned by Canyon Bridge Fund I, LP (“Canyon Bridge“), a fund managed by U.S. headquartered Canyon Bridge Capital Partners, LLC are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition by which the entire issued and to be issued ordinary share capital of Imagination will be acquired by CBFI (the “Acquisition“).
The Acquisition is to be effected by means of a court-sanctioned scheme of arrangement under the Companies Act.
Under the terms of the Acquisition, each Scheme Shareholder will be entitled to receive 182 pence in cash for each Imagination Share valuing Imagination’s existing issued and to be issued ordinary share capital at approximately £550 million.
The price of 182 pence per Imagination Share represents a premium of approximately:
- 41.6 per cent. to the Imagination share price on 22 September 2017 being the latest practicable dealing day before this Announcement of 128.5 pence per share;
- 47.4 per cent. to the Imagination share price on 21 June 2017 being the day immediately before the announcement by Imagination of the start of the Formal Sale Process, of 123.5 pence per share; and,
- 72.2 per cent. to the volume weighted average price of Imagination between the date of Imagination’s announcement regarding Apple Inc. on 3 April 2017 and 21 June 2017, being the day immediately before the announcement of the start of the Formal Sale Process, of 105.7 pence per share.
CBFI has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolution(s) to be proposed at the General Meeting and, if required, the MIPS General Meeting from each of those Imagination Directors who are beneficially entitled to Imagination Shares in respect of 68,387 Imagination Shares representing, in aggregate, approximately 0.02 per cent. of the existing issued ordinary share capital of Imagination in issue on 21 September 2017 (being the latest practicable date prior to this Announcement). CBFI has also received an irrevocable undertaking from Guy Millward, Imagination’s Chief Financial Officer, in respect of his share options.
Imagination has today separately announced that it has entered into an agreement with Tallwood MIPS, Inc., a company indirectly owned by Tallwood Venture Capital, with respect to the disposal of MIPS. Imagination and CBFI have agreed that the completion of the MIPS Disposal is a condition of the Acquisition.
Pursuant to the MIPS SPA, Tallwood will pay consideration of $65 million, subject to customary adjustments. $40 million is payable in cash on Completion, with a deferred consideration of $25 million payable six months after Completion. Completion is expected to occur in October 2017 and is conditional only upon (i) the approval of Imagination Shareholders by way of an ordinary resolution (to the extent required under Rule 21.1 of the Code) and (ii) the completion of the Reorganisation. The MIPS Disposal is not conditional upon the Acquisition becoming Effective. Following Completion, the cash proceeds will be used to reduce the Imagination Group’s debt, with the balance applied for general corporate purposes.
The Imagination Directors believe that the proposed acquisition provides Imagination Shareholders with a very good outcome and provides execution certainty at a time when the future of the business has been negatively impacted by the actions of Apple Inc.
The board of Imagination recognises the financial and commercial value Canyon Bridge will bring, given the latter’s operational expertise and significant experience in the semi- conductor sector. In addition, Canyon Bridge’s significant financial resources have the potential to significantly improve the balance sheet of Imagination, and thereby improve Imagination’s operational flexibility.
The Imagination Directors, who have been so advised by Rothschild as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable.
Accordingly, the Imagination Directors believe that the terms of the Acquisition are in the best interests of Imagination Shareholders as a whole and intend to recommend unanimously Imagination Shareholders to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting as those Imagination Directors who are beneficially entitled to Imagination Shares have each irrevocably undertaken to do in respect of their own Imagination Shares (representing approximately0.02 per cent. of the issued ordinary share capital of Imagination). In providing their advice, Rothschild has taken into account the commercial assessments of the Imagination Directors.
It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting, together with the Forms of Proxy, will be posted to Imagination Shareholders and (for information only) to participants in the Imagination Share Plans within 20 Business Days of the date of this Announcement and that the Scheme will become Effective in mid-November 2017,subject to the satisfaction of all relevant conditions, including the Conditions and certain further terms set out in Appendix 1 to this Announcement.
Commenting on the Acquisition, Ray Bingham, Partner of Canyon Bridge said:
“Imagination has a world-class management team and highly talented employees. With our backing and investment Imagination can continue to invest in developing its technology, attract and hire the best engineers, and acquire and service customers globally.This transaction is in line with Canyon Bridge’s strategy of providing equity and strategic capital to enable technology companies to reach their full growth potential by opening new markets through our collaborative investment approach.We are investing in UK talent and expertise in order to accelerate the expansion of Imagination, particularly into Asia, where its technology platform will lead the continued globalization of British-developed innovation.”
Commenting on the Acquisition, Andrew Heath, Chief Executive Officer of Imagination said:

“The proposed acquisition is a very good outcome for Imagination’s Shareholders which the Imagination directors are intending to recommend unanimously. Imagination has made excellent progress both operationally and financially over the last 18 months until Apple’s unsubstantiated assertions and the subsequent dispute forced us to change course.

The acquisition will ensure that Imagination – with its strong growth prospects – remains an independent IP licensing business, based in the UK, but operating around the world.

Imagination employs a large number of hugely talented individuals who have developed our market leading technology. They and the business as a whole will benefit from Canyon Bridge’s investment in Imagination as it moves to the next stage of its development.”

This summary should be read in conjunction with, and is subject to, the full text of the following announcement (including its Appendices). The Acquisition will be subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Scheme Document. Appendix 2 contains the sources and bases of certain information contained in this summary and the following announcement. Appendix 3 contains details of the irrevocable undertakings received by CBFI. Appendix

4 contains the definitions of certain terms used in this summary and the following announcement.

Important notices

Citigroup Global Markets Limited (“Citi“), which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for CBFI and Canyon Bridge in connection with the matters set out in this Announcement and for no one else and will not be responsible to anyone other than CBFI and Canyon Bridge for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this Announcement.

N. M. Rothschild & Sons Limited (“Rothschild“), which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Imagination and no one else in connection with the Acquisition and will not be responsible to anyone other than Imagination for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this Announcement.

Jefferies International Limited (“Jefferies“), which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Imagination and no one else in connection with the Acquisition and will not be responsible to anyone other than Imagination for providing the

protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this.

Further information

This Announcement is for information purposes only and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Imagination in any jurisdiction in contravention of applicable law. The Acquisition will be made solely by means of the Scheme Document or any document by which the Acquisition is made, which will contain the full terms and conditions of the Acquisition including details of how to vote in respect of the Acquisition. Any vote in respect of the Scheme or other response in relation to the Acquisition should be made only on the basis of the information contained in the Scheme Document. Imagination urges each Imagination Shareholder to read the Scheme Document when it becomes available because it will contain important information relating to the Acquisition.

Please be aware that addresses, electronic addresses and certain other information provided by Imagination Shareholders, persons with information rights and other relevant persons for the receipt of communications from Imagination may be provided to CBFI during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Overseas Shareholders

The release, publication or distribution of this Announcement in certain jurisdictions may be restricted by law and or regulation. Persons who are not resident in the United Kingdom or who are subject to the laws and regulations of other jurisdictions should inform themselves of, and observe, any applicable requirements. In particular, the ability of persons who are not resident in the United Kingdom to vote their Imagination Shares with respect to the Scheme at the Court Meeting, or to appoint another person as proxy to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This Announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside of England.

Unless otherwise determined by CBFI or required by the Code, and permitted by applicable law and regulation, the Acquisition will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Scheme by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and all documents relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise forward,

distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of the Acquisition to Imagination Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

The Acquisition shall be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.

Additional Information for US Investors

The Acquisition relates to the shares of an English company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. Neither the proxy solicitation rules nor the tender offer rules under the US Securities Exchange Act of 1934, as amended, will apply to the Acquisition. Moreover, the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom and under the Code to schemes of arrangement, which differ from the disclosure requirements of the US proxy solicitation rules and tender offer rules. Financial information included in this Announcement has been prepared, unless specifically stated otherwise, in accordance with accounting standards applicable in the UK and thus may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US.

The information contained in this document has neither been approved or disapproved by the US Securities and Exchange Commission or any US state securities commission. Neither the US Securities and Exchange Commission, nor any state securities commission, has passed upon the fairness or merits of the proposal described in, nor upon the accuracy or adequacy of the information contained in, this Announcement.

It may be difficult for US holders of Imagination Shares to enforce their rights and claims arising out of the US federal securities laws, since CBFI and Imagination are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. US holders of Imagination Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court’s judgement.

The receipt of cash pursuant to the Acquisition by a US holder as consideration for the transfer of its Scheme Shares pursuant to the Scheme will likely be a taxable transaction for United States federal income tax purposes and under applicable United States state and local, as well as foreign and other, tax laws. Each Imagination Shareholder is urged to consult his or her independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him or her.

prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.

Forward looking statements

This Announcement (including information incorporated by reference in this Announcement), oral statements made regarding the Acquisition, and other information published by CBFI and Imagination contain statements which are, or may be deemed to be, “forward-looking statements”. Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of CBFI and Imagination about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. The forward-looking statements contained in this Announcement include statements relating to the expected effects of the Acquisition on CBFI and Imagination, the expected timing and scope of the Acquisition and other statements other than historical facts. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words “targets”, “plans”, “believes”, “expects”, “aims”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “estimates”, “cost-saving”, “projects”, “goal”, “strategy”, “budget”, “forecast” or “might” or, words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of CBFI’s or Imagination’s operations resulting from the Acquisition; and (iii) the effects of government regulation on CBFI’s or Imagination’s business.

These forward looking statements are not guarantees of future financial performance. Except as expressly provided in this Announcement, they have not been reviewed by the auditors of CBFI or Imagination or their respective financial advisers. Such forward looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. These factors include the satisfaction of the Conditions, as well as additional factors, such as: fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen disasters or catastrophes; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such forward-looking statements should therefore be construed in the light of such factors. Neither CBFI nor Imagination, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements. All subsequent oral or written forward looking statements attributable to CBFI or Imagination or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. CBFI and Imagination disclaim any obligation to update or revise any forward looking or other statements

contained herein, whether as a result of new information, future events, or otherwise, other than in accordance with their legal and regulatory obligations.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

No profit forecasts or estimates

No statement in this Announcement is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per share for Imagination for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Imagination.

Dealing disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule

8.3 of the Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified. You should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and hard copies

A copy of this Announcement and the documents required to be published by Rule 26 of the Code will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Canyon Bridge’s website at www.canyonbridge.com/#in-the-news and Imagination’s website at https://www.imgtec.com/sales-process/. For the avoidance of doubt, the contents of those websites are not incorporated into and do not form part of this Announcement.

You may request a hard copy of this Announcement by contacting Citigroup Global Markets Limited on +44 (0)207 986 4000. You may also request that all future documents, announcements and information to be sent to you in relation to the Acquisition should be in hard copy form.

Market Abuse regulation

This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (“MAR“). Market soundings (as defined in MAR) were taken in respect of a potential offer with the result that certain persons became aware of inside information (as defined in MAR) as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to Imagination and its securities.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

22 September 2017

RECOMMENDED CASH ACQUISITION of Imagination Technologies Group PLC by CBFI Investment Limited

a wholly-owned subsidiary of funds managed by Canyon Bridge Capital Partners, LLC

to be effected

by means of a Scheme of Arrangement under Part 26 of the Companies Act 2006

Introduction

The boards of directors of CBFI and Imagination are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition by which the entire issued and to be issued ordinary share capital of Imagination will be acquired by CBFI, a newly incorporated company indirectly owned by Canyon Bridge, a fund managed by

U.S. headquartered Canyon Bridge Capital Partners, LLC. It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.
The Acquisition

Under the terms of the Acquisition, which will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement and the full terms and conditions to be set out in the Scheme Document, Imagination Shareholders who are on the register of members of Imagination at the Scheme Record Time will be entitled to receive:

for each Imagination Share 182 pence in cash

The Acquisition values Imagination’s entire issued and to be issued share capital at approximately £550 million, calculated on the basis described in paragraph (a) of Appendix 2.

The price of 182 pence per Imagination Share represents a premium of approximately:
- 41.6 per cent. to the Imagination share price on 22 September 2017 being the latest practicable dealing day before this Announcement of 128.5 pence per share;
- 47.4 per cent. to the Imagination share price on 21 June 2017 being the day immediately before the announcement by Imagination of the start of the Formal Sale Process, of 123.5 pence per share; and,
- 72.2 per cent. to the volume weighted average price of Imagination between the date of Imagination’s announcement regarding Apple on 3 April 2017 and 21 June 2017, being the day immediately before the announcement of the start of the Formal Sale Process, of 105.7 pence per share.Subject to paragraph 13 below, if, after the date of this Announcement, any dividend and/or other distribution and/or other return of capital is announced, declared, made or paid or becomes payable in respect of the Imagination Shares, CBFI reserves the right to reduce the consideration payable under the terms of the Acquisition by an amount up to the amount of such dividend and/or distribution and/or return of capital so announced, declared, made, paid or payable.
Background to, and reasons for, the Acquisition

On 22 June 2017, Imagination announced that it had received interest from a number of parties for a potential acquisition of the whole Imagination Group and that, as a result, the Imagination Directors had decided to initiate a formal sale process for the Imagination Group. In that announcement, the Imagination Directors noted that they were engaged in preliminary discussions with potential bidders for the Imagination Group. The Imagination Directors also confirmed that the sales process for the MIPS and Ensigma operations were progressing well and that indicative proposals had been received for both businesses.

Canyon Bridge’s strategy is focused on providing equity and strategic capital to enable technology companies to reach their full growth potential.

Canyon Bridge has followed the development of Imagination for some time and believes that it is fundamentally a strong and stable business.

In particular, the board of CBFI intends to invest in Imagination’s research and development capabilities in the United Kingdom and believes that the Acquisition will deliver Imagination with the following benefits:

Ongoing Investment Capital into the Company

Provide a significant potential source of investment capital as Imagination seeks to maintain and advance its position in the semi-conductor industry and penetrate new end- markets, including opportunities in overseas markets.

Expand PowerVR and Ensigma Leadership

Enable PowerVR to develop its existing high quality technology with a view to increasing its market share in the existing markets of smartphone and tablet, set-top box, digital TV and automotive, and secondly, to generate further growth by driving artificial intelligence technologies into new opportunities in augmented and virtual reality and machine autonomy.

Enable Ensigma to seek to accelerate the adoption of its efficient, scalable, and flexible integrated communications IP across a range of growth markets including mobile and tablets, PC and peripherals, entertainment centres, consumer devices and wearables.

Supporting Growth through Partnership

Allow Imagination to leverage Canyon Bridge’s international network and experience in the semi-conductor industry and to seek to increase Imagination’s international reputation for technology leadership.
Background to and reasons for the recommendation

Fiscal year 2017 was a challenging year for Imagination, characterised by significant restructuring, the implementation of a refreshed strategy and a dispute with Imagination’s largest customer, Apple. During the year, Imagination executed the planned restructuring programme announced in February 2016, to return the business to profitability and positive cashflow.

Imagination announced and started implementation of the revised strategy focused on building IP solutions of real scale with customers across a wide range of markets, where Imagination can provide leading, differentiated offerings and build defendable positions. Imagination has made good progress on this strategy, by focusing investment in its core IP businesses: PowerVR, MIPS and Ensigma.

The strategy resonated well with customers and investors alike with progress demonstrated by strong results announced on 4 July 2017. Adjusted operating profit for continuing operations was up by approximately three times to £29.2 million (2016: £10.5 million) with cash generated by operations of £11.0 million despite the £13.7 million outflow from the loss making discontinued businesses.

The substantial progress made, however, has been overtaken by other external events. As announced on 3 April 2017, Apple informed Imagination that it expected that the chips in Apple products launched at some point in 2018 or early 2019 would not require Apple to pay Imagination royalties. To date, Apple has not shared any information to enable Imagination to verify its statement. Imagination invoked a contractual dispute resolution procedure under the licence agreement. Imagination does not accept Apple’s position and has reserved all of its rights.

However, the potential impact if Apple does not pay royalties on its new products led the Imagination Board to consider its options regarding the long-term financial future of the company. On 4 May 2017, Imagination announced its decision to explore a sale of the MIPS and Ensigma businesses to strengthen the balance sheet and concentrate resources on PowerVR. The sale process progressed well and indicative proposals were received for both businesses. The sale of MIPS to Tallwood has been announced separately today.

Against this background, Imagination also received interest from a number of parties for a potential acquisition of the whole of Imagination. Imagination therefore decided to initiate a Formal Sale Process for the Group, as announced on 22 June 2017, and conducted discussions with potential bidders.

Following negotiations with several parties as a part of the Formal Sale Process, Canyon Bridge emerged as the leading bidder for Imagination both in terms of the value and execution certainty, and the Imagination Board believes this option is the most attractive

for Imagination Shareholders compared to the alternative options available to the company.

Accordingly, the Imagination Board intends to recommend unanimously the Acquisition to Imagination Shareholders as set out in paragraph 5 below.
Recommendation

The Imagination Directors, who have been so advised by Rothschild as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable.

Accordingly, the Imagination Directors intend to recommend unanimously Imagination Shareholders to vote in favour of the Scheme at the Court Meeting and the resolution(s) to be proposed at the General Meeting and, if required, the MIPS General Meeting as those Imagination Directors who are beneficially entitled to Imagination Shares have each irrevocably undertaken to do in respect of their own Imagination Shares (representing approximately 0.02 per cent. of the issued ordinary share capital of Imagination). In providing advice to the Imagination Directors, Rothschild has taken into account the commercial assessments of the Imagination Directors.
Irrevocable Undertakings

CBFI has received irrevocable undertakings from each of the Imagination Directors who are beneficially entitled to Imagination Shares to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in respect of a total of 68,387 Imagination Shares, representing approximately 0.02 per cent. of the existing issued ordinary share capital of Imagination on 21 September 2017 (being the last practicable date prior to publication of this Announcement). The irrevocable undertakings given by those Imagination Directors will cease to be binding if, among other things, the Scheme lapses or is withdrawn.

These irrevocable undertakings also include an undertaking to vote in favour of the MIPS Disposal at the MIPS General Meeting (to the extent required under Rule 21.1 of the Code).

In total, therefore, CBFI has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in respect of 68,387 Imagination Shares representing approximately 0.02 per cent. of Imagination’s issued ordinary share capital.

Further details of these irrevocable undertakings are set out in Appendix 3 to this Announcement.
Information relating to CBFI and Canyon Bridge

CBFI

CBFI is a newly incorporated company under the laws of England and Wales for the purposes of the Acquisition and is owned indirectly by Canyon Bridge, whose general partner is U.S. headquartered Canyon Bridge Capital Partners, LLC and whose manager is Canyon Bridge Management Corp. CBFI has not traded since its date of incorporation,

and CBFI has not entered into any obligations, other than in connection with the Acquisition.

Canyon Bridge

Canyon Bridge is a global private equity investment fund which is headquartered in Palo Alto, California. It is focused on providing equity and strategic capital to enable technology companies, including those with a particular focus on the semi-conductor industry, to reach their full growth potential. Canyon Bridge combines a deep knowledge of the global technology industry with experience in financial markets to provide high quality investment expertise in creating and maximising value. Transactions undertaken by Canyon Bridge comprise the proposed, but subsequently terminated, acquisition of Lattice Semiconductor Corporation, and a minority investment of approximately $10 million in a US-based technology company.

Canyon Bridge seeks to invest in growth companies with strong platforms led by experienced management where Canyon Bridge can provide the capital and expertise to expand into growth markets globally, including through additional investments and accretive acquisitions.

Canyon Bridge currently has approximately US$1.5 billion of funds under management which has been committed by Canyon Bridge’s initial anchor limited partner, Yitai Capital Limited, a Chinese state-owned enterprise.
Information relating to Imagination

Imagination creates and licenses semiconductor processor IP (intellectual property) for graphics, video and vision processing, general purpose and embedded processing (CPU & MCU). Imagination’s customers use Imagination’s silicon IP to create the Systems on Chips (SoC) that power electronic devices. Imagination has built three strong brands around these processing blocks: PowerVR in graphics and multimedia; MIPS in processors; and Ensigma in connectivity.

PowerVR develops and licenses a range of multimedia IP, from graphics processing units (GPUs) to GPU compute for imaging and vision processing. Imagination’s PowerVR graphics technologies are licensed for use in various applications including smartphones, tablets, TV and console apps.

The MIPS family of CPU IP is a portfolio of low-power, high-performance 32/64-bit processor architectures and cores, ranging from the high-performance cores for high-end applications processors down to extremely small cores for deeply embedded microcontrollers.

Ensigma develops and licenses programmable and fixed function blocks to deliver a family of multi-standard connectivity platforms, offering performance as well as silicon efficiency.

For the financial year ended 30 April 2017, Imagination generated sales of £145.2 million from continuing operations and adjusted operating profit of £29.2 million.
Financing

The cash consideration payable by CBFI under the terms of the Acquisition will be funded by equity commitments. Canyon Bridge has obtained an irrevocable guarantee from Industrial and Commercial Bank of China (Asia) Limited to fund the Acquisition consideration, which it will call on as an alternative to drawing down equity commitments (the “Guarantee“).

Citigroup Global Markets Limited, lead financial adviser to CBFI, is satisfied that the resources available to CBFI are sufficient to satisfy in full the cash consideration payable to Imagination Shareholders under the terms of the Acquisition.
Management, employees and locations

CBFI recognises the quality of Imagination’s management team and employees generally and their importance to the future success of Imagination.

Imagination and CBFI have had preliminary discussions on future incentivisation arrangements for the management and employees of Imagination, excluding executive directors. Whilst the details of the arrangements will only be agreed after completion of the Acquisition, CBFI intends to offer incentive arrangements that are comparable to current arrangements.

CBFI has no plans to make any changes as regards the continuing employment of employees and management. CBFI has confirmed to the Imagination Board that, following the Scheme becoming Effective, the existing contractual and statutory employment rights of all the employees of the Imagination Group will continue to be safeguarded and their accrued rights to pensions benefits protected. CBFI’s plans do not involve any change to the conditions of employment of Imagination’s employees, management and those of its subsidiaries.

CBFI does not intend to change the principal locations of Imagination’s places of business, or redeploy any fixed assets of Imagination. CBFI intends to maintain Imagination’s current UK headquarters. CBFI intends to continue operating Imagination by leveraging Canyon Bridge’s investment, technology and business expertise and by working with Imagination’s management to further enhance Imagination’s position in the computer chip manufacturing industry and related services.

The Imagination Board welcomes CBFI’s intentions with respect to the future operations of the business, in particular, the intentions to safeguard the existing employment rights of Imagination employees on the Scheme becoming Effective and to work with Imagination’s management going forward with no change to Imagination’s principal locations.

Imagination and CBFI are supportive of the proposed sale of MIPS to Tallwood, announced today, and the Acquisition is conditional on completion of the MIPS Disposal.
Imagination Share Plans

The Acquisition will extend to any Imagination Shares which are unconditionally allotted, issued or transferred to satisfy the exercise of existing options or vesting of awards under the Imagination Share Plans prior to the Scheme Record Time (or such earlier date as CBFI may, subject to the Code or with the consent of the Panel, decide). The

Acquisition will not extend to Imagination Shares issued after the Scheme Record Time and, instead, any Imagination Shares issued after that time shall be automatically transferred to CBFI, or as it directs, on the basis set out in paragraph 13, on the same terms as the Acquisition.

CBFI will make appropriate proposals to the holders of options and awards to acquire Imagination Shares granted under the Imagination Share Plans in accordance with Rule

15 of the Code. Further details of these proposals will be set out in the Scheme Document. Full details of the effect of the Acquisition on participants’ rights under the Imagination Share Plans, and the actions they may take in respect of their options and awards, will be communicated to participants in separate letters to be sent to them following publication of the Scheme Document.
Offer-related Arrangements

Confidentiality Agreement

Canyon Bridge Capital Partners, LLC and Imagination have entered into a confidentiality agreement dated 30 May 2017 (the “Confidentiality Agreement“) pursuant to which each party has undertaken, amongst other things, to: (a) keep confidential information relating to the Acquisition and the other party and not to disclose it to third parties unless permitted by the terms of the Confidentiality Agreement; and (b) use the confidential information for the sole purpose of the potential Acquisition. With certain exceptions, the confidentiality obligations will expire two years from the date of the Confidentiality Agreement.

The Confidentiality Agreement also contains undertakings from Canyon Bridge Capital Partners, LLC that for a period of 12 months, subject to certain exceptions, Canyon Bridge Capital Partners, LLC or any of its group undertakings and certain other associated persons shall not, without the prior written consent of Imagination, acquire or offer to acquire any interest in shares or other securities of Imagination (which undertaking ceases as at the date of this Announcement) and that, for a period of 12 months from the date of the Confidentiality Agreement, Canyon Bridge Capital Partners, LLC shall not, without Imagination’s prior written consent, solicit certain employees, officers, or customers of Imagination, subject to customary carve-outs.

Cooperation Agreement

CBFI, Canyon Bridge and Imagination have entered into a cooperation agreement dated

22 September 2017 (the “Cooperation Agreement”), the key terms of which are summarised below.

The Cooperation Agreement sets out (among other things):
- the basis on which certain regulatory filings are to be addressed by the parties. It also contains certain provisions relating to the preparation of the Scheme Document and the implementation of the Acquisition, and specifies the circumstances in which CBFI is able to implement the Acquisition by way of an Offer;
- the agreement among CBFI, Canyon Bridge, and Imagination in respect of the implementation of certain matters relating to Imagination employees’ salary reviews, bonus arrangements and the treatment of awards and options under the Imagination Share Plans;
- the circumstances in which, and the basis on which, Imagination would declare a dividend or other distribution or return of capital for the benefit of the Imagination shareholders if and to the extent there is a Settlement (see paragraph 13 for more details);
- the circumstances in which the Cooperation Agreement may be terminated;
- the circumstances in which CBFI is required to make a payment to Imagination of£13,762,355 where a relevant authority shall have denied CBFI, or CBFI shall have failed to obtain, or not yet obtained, a consent or approval from such relevant authority and as a result:
  - CBFI invokes (and is permitted by the Panel to invoke) certain regulatory Conditions to the Acquisition so as to cause the Acquisition not to proceed, or to lapse or be withdrawn; or
  - any such regulatory Condition has not been satisfied or waived by CBFI by 11:59 p.m. on the Longstop Date; and
- the circumstances in which Imagination is required to make a payment of up to£5,504,943 to CBFI where the Acquisition lapses or is withdrawn or (with the consent of the Panel) is not made, and at any time before such lapse or withdrawal an independent third party announces a competing transaction or makes an approach to Imagination in respect of a competing transaction and such transaction subsequently completes, becomes effective or is declared or becomes unconditional in all respects.Joint Defence AgreementCanyon Bridge, Imagination and their respective external legal counsels have entered into a joint defence agreement dated 31 July 2017 (the “Joint Defence Agreement“), the purpose of which is to ensure that the exchange and disclosure of certain materials relating to the parties take place only between their respective external legal counsels and external experts, are ring-fenced and preserve the confidentiality of such materials and do not result in a waiver of privilege, right or immunity that might otherwise be available.
Apple Settlement

As noted in paragraph 4 above, Imagination remains in dispute with Apple.

If, before the expiry of the period described below, Imagination reaches a full and final financial settlement with Apple under certain parameters (a “Settlement“) with respect to the Apple Dispute, Imagination and CBFI have agreed that, subject to certain other conditions, Imagination would be entitled to announce and pay an interim dividend or other distribution or return of capital of up to 50% of any Excess Amount less any costs incurred by Imagination in effecting such payment (a “Settlement Return“) without there

being an adjustment to the terms of the Offer. For these purposes, the Excess Amount is the amount of any Settlement which exceeds the value in respect of Apple taken into account by Canyon Bridge and CBFI in determining the amount of the cash consideration to be payable under the Acquisition. The value of the Apple royalties taken into account by CBFI in determining the terms of the Offer and certain contractual parameters with respect to any settlement have been agreed between Imagination and CBFI, but are not being publicly disclosed in order to maintain confidentiality.

Any Settlement Return would be conditional upon (i) the Settlement being reached by the earlier of 60 days following publication of this Announcement and the date the Acquisition becomes Effective and (ii) receipt of the Settlement proceeds by Imagination within 90 days of such settlement being reached.

If the Settlement occurs on the terms set out in the preceding paragraph, but Imagination is unable to fully implement the Settlement Return prior to the Acquisition becoming Effective, CBFI and Canyon Bridge have agreed to use all reasonable endeavours from the Acquisition becoming Effective to ensure that Imagination takes such steps as may be reasonably necessary (if any) to implement or complete the implementation of the Settlement Return (subject to Imagination having sufficient distributable profits and subject to all applicable law).

Any Settlement Return would be made to those Imagination Shareholders on the register of members of Imagination at the Scheme Record Date.

The above paragraphs are a summary only and the full terms are set out in the Co- operation Agreement. Further details will be set out in the Scheme Document (when published).

Imagination Shareholders should note that there is no certainty that any settlement will be reached with Apple within such relevant period (as described above), or, if reached, as to the amount of other terms of any such settlement. Accordingly, there is no certainty that any Settlement Return will be implemented.

If a Settlement Return is made, CBFI has agreed to waive its right under the terms of the Acquisition to reduce the consideration payable under the Acquisition by an equivalent amount.
Structure of the Acquisition

It is intended that the Acquisition will be implemented by means of a Court-sanctioned scheme of arrangement between Imagination and the Scheme Shareholders, under Part 26 of the Companies Act. The Scheme is an arrangement between Imagination and the Scheme Shareholders. The procedure involves, among other things, an application by Imagination to the Court to sanction the Scheme, in consideration for which Scheme Shareholders will receive cash on the basis described in paragraph 2 above. The purpose of the Scheme is to provide for CBFI to become the owner of the entire issued and to be issued share capital of Imagination.

The Scheme is subject to the Conditions and certain further terms set out in Appendix 1 to this Announcement and to the full terms and conditions to be set out in the Scheme

Document, and will only become Effective if, among other things, the following events occur on or before the Longstop Date:
- completion of the MIPS Disposal;
- a resolution to approve the Scheme is passed by a majority in number of the Scheme Shareholders present and voting (and entitled to vote) at the Court Meeting, either in person or by proxy, representing 75 per cent. or more in value of the Scheme Shares held by those Scheme Shareholders;
- the Special Resolution necessary to implement the Scheme is passed at the General Meeting of Imagination (which will require the approval of Imagination Shareholders representing at least 75 per cent. of the votes cast at the General Meeting);
- following the Court Meeting and General Meeting, the Scheme is sanctioned by the Court (with or without modification, on terms agreed by CBFI and Imagination); and
- an office copy of the Scheme Court Order is delivered to the Registrar of Companies, whereupon the Scheme will become Effective.Upon the Scheme becoming Effective: (i) it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting and the General Meeting (and if they attended and voted, whether or not they voted in favour); and (ii) share certificates in respect of Imagination Shares will cease to be of value and should be destroyed and entitlements to Imagination Shares held within the CREST system will be cancelled.Any Imagination Shares issued before the Scheme Record Time will be subject to the terms of the Scheme. The Special Resolution will, amongst other matters, provide that the Articles be amended to incorporate provisions requiring any Imagination Shares issued after the Scheme Record Time (other than to CBFI and/or its nominees) to be automatically transferred to CBFI on the same terms as the Acquisition (other than terms as to timings and formalities). The provisions of the Articles (as amended) will avoid any person (other than CBFI and its nominees) holding shares in the capital of Imagination after the Effective Date.The Scheme shall lapse if the Scheme does not become Effective by the Longstop Date, provided however that the deadline for the Scheme to become Effective may be extended by agreement between CBFI and Imagination, with the consent of the Court or Panel, if required.The Scheme Document will include full details of the Scheme, together with notices of the Court Meeting and the General Meeting. The Scheme Document will also contain the expected timetable for the Acquisition, and will specify the necessary actions to be taken by Imagination Shareholders. The Scheme Document together with Forms of Proxy will be posted to Imagination Shareholders and, for information only, to persons with information rights and to holders of options and awards granted under the Imagination Share Plans as soon as practicable. Subject, among other things, to the satisfaction or waiver of the Conditions, it is expected that the Scheme will become Effective by mid- November.CBFI reserves the right, subject to the terms of the Cooperation Agreement and subject (if required) to the consent of the Panel, to implement the Acquisition by way of a Takeover Offer for the entire issued and to be issued share capital of Imagination as an alternative to the Scheme and to make appropriate amendments to the terms of the Acquisition arising from the change from the Scheme to a Takeover Offer including, if the Panel so agrees, an acceptance condition set at up to 90 per cent. of the shares to which such offer relates or such lesser percentage, being more than 50 per cent., as CBFI may decide), so far as applicable, as those which would apply to the Scheme.
  If the Acquisition is effected by way of a Takeover Offer, there can be no certainty as to the level of the acceptance condition, or of CBFI’s willingness to waive or lower such acceptance condition. If such Takeover Offer becomes or is declared unconditional in all respects, where:
- acceptances are received from Imagination Shareholders such that, together with any other Imagination Shares unconditionally acquired, owned or controlled by CBFI, CBFI will hold at least 75 per cent. of the voting rights attaching to the Imagination Shares, CBFI intends to request that the then appointed Imagination Directors (subject to their fiduciary duties) will apply to the London Stock Exchange and the UK Listing Authority respectively to cancel trading in Imagination Shares on the London Stock Exchange’s market for listed securities and cancel the listing of the Imagination Shares on the Official List, which cancellations would eliminate the liquidity of Imagination Shares for any remaining Imagination Shareholders; and
- CBFI receives acceptances under the Takeover Offer in respect of, or otherwise acquires, 90 per cent. or more of the Imagination Shares to which the Takeover Offer relates by nominal value and voting rights attaching to such shares, CBFI intends to exercise its rights pursuant to sections 974 to 991 of the Companies Act to acquire compulsorily the remaining Imagination Shares in respect of which the Takeover Offer has not been accepted on the same terms as the Takeover Offer.The availability of any such Takeover Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions.Such persons should inform themselves about and observe any applicable requirements.
The Scheme Court Hearing and the General Meeting

The Acquisition (including the Scheme) will be put to Imagination Shareholders at the Scheme Court Hearing and the General Meeting, which are expected to be held in October. Notices to convene the Scheme Court Hearing (subject to the consent of the Court) and the General Meeting will be included in the Scheme Document.

The purpose of the Scheme Court Hearing is to seek the approval of the Imagination Shareholders for the Scheme and certain related matters.

The purpose of the General Meeting is to consider and, if thought fit, pass the Special Resolution which will, among other matters, provide that the Articles be amended to incorporate provisions requiring any Imagination Shares issued after the Scheme Record Time (other than to CBFI and/or its nominees) to be automatically transferred to CBFI, or

as it shall direct, on the same terms as the Acquisition (other than terms as to timings and formalities). The provisions of the Articles (as amended) will avoid any person other than CBFI and its nominees holding shares in the capital of Imagination after the Effective Date.
MIPS Disposal

Imagination has today separately announced that it has entered into an agreement with Tallwood, a company indirectly owned by Tallwood Venture Capital, with respect to the disposal of MIPS for $65 million, subject to customary adjustments. $40 million is payable in cash on Completion, with a deferred consideration of $25 million payable six months after Completion. Completion of the MIPS Disposal is subject to (i) the approval of Imagination Shareholders by way of an ordinary resolution at the MIPS General Meeting (to the extent required under Rule 21.1 of the Code) and (ii) the completion of the Reorganisation. The MIPS Disposal is not conditional on the Acquisition becoming Effective. However, the Acquisition is conditional on completion of the MIPS Disposal occurring. The MIPS Disposal is expected to be complete in October 2017. Imagination and CBFI have agreed that completion of the MIPS Disposal is a condition to the Acquisition.
Anti-trust approvals and notifications

The Acquisition is conditional on all notifications and filings under the HSR Act having been made in connection with the Acquisition on any aspect of the Acquisition and all waiting periods (including extension thereof) having expired or been terminated.
Delisting and re-registration

It is intended that dealings in Imagination Shares will be suspended at 5.00 p.m. London time on the Business Day prior to the Effective Date. It is further intended that an application will be made to the UK Listing Authority for the cancellation of the listing of the Imagination Shares on the Official List and to the London Stock Exchange for the cancellation of trading in Imagination Shares on the London Stock Exchange’s main market for listed securities, with effect as of or shortly following the Effective Date.

It is also intended that, following the Scheme becoming Effective, Imagination will be re- registered as a private company under the relevant provisions of the Companies Act.
Disclosure of interests in Imagination relevant securities

Except for the irrevocable undertakings referred to in paragraph 6 above, as at close of business on 21 September 2017 (being the latest practicable date prior to the date of this Announcement), neither CBFI, nor any of the directors of CBFI or any member of the CBFI Group, nor, so far as the directors of CBFI are aware, any person acting in concert with CBFI for the purposes of the Acquisition had any interest in, right to subscribe for, or had borrowed or lent any Imagination Shares or securities convertible or exchangeable into Imagination Shares, nor did any such person have any short position (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to take delivery, or any dealing arrangement of the kind referred to in Note 11 of the definition of acting in concert in the Code, in relation to Imagination

Shares or in relation to any securities convertible or exchangeable into Imagination Shares.

In the interests of secrecy prior to this Announcement, CBFI has not made any enquiries in respect of the matters referred to in this paragraph of certain parties who may be deemed under the Code to be acting in concert with CBFI for the purposes of the Scheme. Enquiries of such parties will be made as soon as practicable following the date of this Announcement and CBFI confirms that further disclosure in accordance with Rule 8.1(a) and Note 2(a)(i) on Rule 8 of the Code will be made as soon as possible, if required.
Overseas Shareholders

The availability of the Acquisition and the distribution of this Announcement to Imagination Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. Imagination Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay.

This Announcement does not constitute an offer for sale for any securities or an offer or an invitation to purchase any securities. Imagination Shareholders are advised to read carefully the Scheme Document and related Forms of Proxy once these have been dispatched.
Documents published on website

Copies of the following documents will, by no later than 12 noon (London time) on 25 September 2017, be published on Imagination’s website at https://www.imgtec.com/sales-process/ and the Canyon Bridge’s website at www.canyonbridge.com/#in-the-news until the end of the Offer Period relating to the Acquisition:
- this Announcement;
- the irrevocable undertakings referred to in paragraph 6 above;
- the Guarantee referred to in paragraph 9 above;
- the Confidentiality Agreement referred to in paragraph 12 above;
- the Joint Defence Agreement referred to in paragraph 12; and
- the Cooperation Agreement referred to in paragraph 12 above.
General

The Acquisition will be subject to the Conditions and certain further terms set out in Appendix 1 and the further terms and conditions set out in the Scheme Document when issued.

The Scheme will be governed by English law and will be subject to the jurisdiction of the courts of England and Wales. The Scheme will be subject to the applicable requirements of the Code, the Panel, the Listing Rules, the London Stock Exchange and the FCA.

The bases and sources of certain financial information contained in this Announcement are set out in Appendix 2. Certain terms used in this Announcement are defined in Appendix 4.

Rothschild has given and has not withdrawn its written consent to the issue of this Announcement with the inclusion of references to its name in the form and context in which they appear herein.

Citigroup Global Markets Limited has given and has not withdrawn its written consent to the issue of this Announcement with the inclusion of references to its name in the form and context in which they appear herein.

Enquiries

Imagination Technologies Group PLC +44 (0) 1923 260 511 Andrew Heath, Chief Executive Officer

Guy Millward, Chief Financial Officer

Citigroup Global Markets Limited +44 (0) 20 7986 4000

(Financial adviser and broker to CBFI and Canyon Bridge)

David Locala Jan Skarbek Luke Spells

Robert Redshaw (Corporate Broking) David Locala

Newgate Communications +44 (0) 20 7680 6550

(PR adviser to CBFI and Canyon Bridge)

Simon Gentry Alistair Kellie Zoë Pocock

Rothschild +44 (0) 20 7280 5000

(Lead financial adviser and sole Rule 3 adviser to Imagination)

Ravi Gupta Warner Mandel Yuri Shakhmin Pietro Franchi

Jefferies International +44 (0) 20 7029 8000

(Financial adviser and corporate broker to Imagination)

Nick Adams Daniel Aharoni David Watkins

Instinctif Partners +44 (0) 20 7457 2020

(PR adviser to Imagination PLC)

Adrian Duffield Kay Larsen Chantal Woolcock

Important notices

N. M. Rothschild & Sons Limited (“Rothschild“), which is authorised by the FCA in the United Kingdom, is acting exclusively for Imagination and no one else in connection with the Acquisition and will not be responsible to anyone other than Imagination for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this.

Jefferies International Limited (“Jefferies“), which is authorised by the FCA in the United Kingdom, is acting exclusively for Imagination and no one else in connection with the Acquisition and will not be responsible to anyone other than Imagination for providing the protections afforded to its clients or for providing advice in relation to the Acquisition or any other matters referred to in this.

Further information

This Announcement is for information purposes only and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Imagination in any jurisdiction in contravention of applicable law. The Acquisition will be made solely by means of the Scheme Document or any document by which the Acquisition is made, which will contain the full terms and conditions of the Acquisition including details of how to vote in respect of the Acquisition. Any vote in respect of the Scheme or other response in relation to the Acquisition should be made only on the basis on the information contained in the Scheme Document. Imagination urges each Imagination Shareholder to read the Scheme Document when it becomes available because it will contain important information relating to the Acquisition.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Overseas Shareholders

The release, publication or distribution of this Announcement in certain jurisdictions may be restricted by law and/or regulation. Persons who are not resident in the United Kingdom or who are subject to the laws and regulations of other jurisdictions should inform themselves of, and observe, any applicable requirements. In particular, the ability of persons who are not resident in the United Kingdom to vote their Imagination Shares with respect to the Scheme at the Court Meeting, or to appoint another person as proxy to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such restrictions by any person. This Announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside of England.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

The Acquisition shall be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.

Additional Information for US Investors

the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom and under the Code to schemes of arrangement, which differ from the disclosure requirements of the US proxy solicitation rules and tender offer rules. Financial information included in this Announcement has been prepared, unless specifically stated otherwise, in accordance with accounting standards applicable in the UK and thus may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the US.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US Exchange Act, CBFI or its nominees, or its brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, Imagination Shares outside of the US, other than pursuant to the Acquisition, until the date on which the Acquisition becomes Effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com.

Forward looking statements

to the expected effects of the Acquisition on CBFI and Imagination, the expected timing and scope of the Acquisition and other statements other than historical facts. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words “targets”, “plans”, “believes”, “expects”, “aims”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “estimates”, “cost-saving”, “projects”, “goal”, “strategy”, “budget”, “forecast” or “might” or, words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of CBFI’s or Imagination’s operations resulting from the Acquisition; and (iii) the effects of government regulation on CBFI’s or Imagination’s business.

Rounding

No profit forecasts or estimates

Dealing disclosure requirements

(ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Publication on website and hard copies

A copy of this Announcement and the documents required to be published by Rule 26 of the Code will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Canyon Bridge’s website at www.canyonbridge.com/#in-the-news and Imagination’s website at https://www.imgtec.com/sales-process /. For the avoidance of doubt, the contents of those websites are not incorporated into and do not form part of this Announcement.

Market Abuse regulation

This Announcement contains inside information for the purposes of Article 7 of MAR. Market soundings (as defined in MAR) were taken in respect of a potential offer with the result that certain persons became aware of inside information (as defined in MAR) as permitted by MAR. this inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to Imagination and its securities.

Appendix 1

Conditions and Certain Further Terms of the Scheme and the Acquisition

Conditions to the Scheme and Acquisition
1. The Acquisition will be conditional upon the Scheme becoming unconditional and becoming Effective, subject to the provisions of the Code, by no later than the Longstop Date.
  Scheme approval
2. The Scheme will be conditional upon:
  1. (i) approval of the Scheme by a majority in number of the Scheme Shareholders present and voting, either in person or by proxy, representing three-quarters or more in value of the Scheme Shares held by those Scheme Shareholders at the Court Meeting, and (ii) the Court Meeting being held on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course, or such later date (if any) as CBFI and Imagination may agree and the Court may allow;
  2. (i) all resolutions in connection with or required to approve and implement the Scheme as set out in the notice of the General Meeting (including, without limitation, the Special Resolution) being duly passed by the requisite majority at the General Meeting, and (ii) the General Meeting being held on or before the 22nd day after the expected date of the General Meeting as set out in the Scheme Document in due course (or such later date as may be agreed by CBFI and Imagination);
  3. (i) the sanction of the Scheme by the Court without modification or with modification on terms acceptable to CBFI and Imagination and the delivery of an office copy of the Scheme Court Order to the Registrar of Companies and (ii) the Scheme Court Hearing being held on or before the 22nd day after the expected date of the Scheme Court Hearing as set out in the Scheme Document (or such later date as may be agreed by CBFI and Imagination).In addition, CBFI and Imagination have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme Effective will not be taken unless such conditions (as amended, if appropriate) have been satisfied or, where relevant, waived:
    Antitrust approvals and clearances
3. All notifications and filings under the HSR Act shall have been made in connection with the Acquisition on any aspect of the Acquisition and all applicable waiting periods (including extension thereof) shall have expired or be terminated. In addition, there shall be no agreement, judgment, order, or government action in effect in relation to any United States Antitrust Law that would prevent consummation of the Acquisition;
  MIPS Disposal
4. Completion of the MIPS Disposal pursuant to the MIPS SPA having occurred;
  Other notifications, waiting periods and Authorisations
5. Other than in respect of Condition 3, all necessary notifications, filings or applications having been made in connection with the Acquisition and all necessary waiting periods (including any extensions thereof) under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any relevant jurisdiction having been complied with in each case in respect of the Acquisition and all Authorisations necessary or appropriate in any relevant jurisdiction for or in respect of the Acquisition and, except pursuant to Chapter 3 of Part 28 of the Companies Act, the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, Imagination or any other member of the Wider Imagination Group by any member of the Wider CBFI Group having been obtained in terms and in a form reasonably satisfactory to CBFI from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any persons or bodies with whom any member of the Wider Imagination Group or the Wider CBFI Group has entered into contractual arrangements, and all such Authorisations necessary to carry on the business of any member of the Wider Imagination Group in any jurisdiction having been obtained, in each case, where the consequence of a failure to make such notification or filing or to wait for the expiry, lapse or termination of any such waiting or other time period, or to comply with such obligation or obtain such Authorisation would be unlawful in any relevant jurisdiction or have a material adverse effect on the Wider Imagination Group or any member of the Wider CBFI Group or the ability of CBFI to effect the Acquisition or in the context of the Acquisition, and all such Authorisations remaining in full force and effect at the time at which the Acquisition becomes Effective or otherwise wholly unconditional and there being no notice of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;
6. Other than in respect of the MIPS Disposal, except with the consent or the agreement of CBFI, no resolution of Imagination Shareholders in relation to any acquisition or disposal of assets or shares (or the equivalent thereof) in any undertaking or undertakings (or in relation to any merger, demerger, consolidation, reconstruction, amalgamation or scheme) being passed at a meeting of Imagination Shareholders other than in relation to and as necessary to implement the Acquisition or the Scheme and, save as Disclosed, other than with the consent or the agreement of CBFI, no member of the Wider Imagination Group having taken (or agreed or proposed to take) any action that requires, or would require, the consent of the Panel or the approval of Imagination Shareholders in accordance with, or as contemplated by, Rule 21.1 of the Code, save for any action that has been consented to by the Panel prior to the date of this Announcement that does not need the approval of Imagination Shareholders;
  General regulatory
7. Other than in respect of Condition 3, no antitrust regulator or Third Party having given notice of a decision or proposal to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference including the cancellation or amendment of any export licence (and in each case, not having withdrawn the same), or having required any action to be taken or otherwise having done anything or taken any steps, or having enacted or made or proposed to enact or make any statute, regulation, decision, order or change to published practice (and, in each case, not having withdrawnthe same) and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to:
  1. require, prevent, delay the divestiture or alter the terms envisaged for such divestiture by any member of the Wider CBFI Group or by any member of the Wider Imagination Group of all or any part of its businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof) to an extent which is material in the context of the Wider Imagination Group taken as a whole or the Wider CBFI Group, or in the context of the Acquisition;
  2. except pursuant to Chapter 3 of Part 28 of the Companies Act, require any member of the Wider CBFI Group or the Wider Imagination Group to acquire or offer to acquire a number of any shares, other securities (or the equivalent) or interest in any member of the Wider Imagination Group or any asset owned by any third party (other than in the implementation of the Acquisition), which is material in the context of the Wider Imagination Group or the Wider CBFI Group, in either case, taken as a whole;
  3. impose any limitation on, or result in a delay in, the ability of any member of the Wider CBFI Group directly or indirectly to acquire, hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Imagination or on the ability of any member of the Wider Imagination Group or any member of the Wider CBFI Group directly or indirectly to hold or exercise effectively all or any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise voting or management control over, any member of the Wider Imagination Group, to an extent which is material in the context of the Wider Imagination Group or the Wider CBFI Group taken as a whole or in the context of the Acquisition (as the case may be);
  4. except as Disclosed before that date, otherwise affect any or all of the business, assets, prospects or profits of any member of the Wider Imagination Group or the Wider CBFI Group, in a manner which is adverse to and material in the context of the Wider Imagination Group taken as a whole or of the obligations of any members of the Wider CBFI Group taken as a whole or in the context of the Acquisition;
  5. result in any member of the Wider Imagination Group ceasing to be able to carry on business under any name under which it presently carries on business to an extent which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition (as the case may be);
  6. make the Acquisition, or any aspect of the Acquisition, its implementation or the acquisition of any shares or other securities in, or control or management of, Imagination by any member of the Wider CBFI Group void, unenforceable and/or illegal under the laws of any relevant jurisdiction, or otherwise directly or indirectly materially prevent or prohibit, restrict, restrain, or delay or otherwise materially interfere with the implementation of, or impose additional materially adverse conditions or obligations with respect to, or otherwise materially challenge, impede, interfere or require material amendment of the Acquisition or theacquisition of any shares or other securities in, or control or management of, Imagination by any member of the Wider CBFI Group;
  7. require, prevent or materially delay a divestiture by any member of the Wider CBFI Group of any shares or other securities (or the equivalent) in any member of the Wider Imagination Group or any member of the Wider CBFI Group; or
  8. impose any limitation on the ability of any member of the Wider CBFI Group or any member of the Wider Imagination Group to conduct, integrate or co- ordinate all or any part of its business with all or any part of the business of any other member of the Wider CBFI Group and/or the Wider Imagination Group in a manner which is materially adverse to the Wider Imagination Group taken as a whole or the Wider CBFI Group taken as a whole or in the context of the Acquisition (as the case may be),and all applicable waiting and other time periods (including any extensions thereof) during which any such antitrust regulator or Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any relevant jurisdiction in respect of the Acquisition or the acquisition of any Imagination Shares or of management or voting control of Imagination or any member of the Wider Imagination Group or otherwise intervene having expired, lapsed or been terminated;
    Certain matters arising as a result of any arrangement, agreement, etc.
8. except as Disclosed, there being no provision of any arrangement, agreement, lease, licence, franchise, permit or other instrument to which any member of the Wider Imagination Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject or any event or circumstance which, as a consequence of the Acquisition or the acquisition or the proposed acquisition by any member of the Wider CBFI Group of any shares or other securities in Imagination or because of a change in the control or management of any member of the Wider Imagination Group or otherwise, could or might reasonably be expected to result in, in each case to an extent which is material in the context of the Wider Imagination Group taken as a whole or material in the context of the Acquisition:
  1. any monies borrowed by, or any other indebtedness, actual or contingent, of, or any grant available to, any member of the Wider Imagination Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;
  2. the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Imagination Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen) becoming enforceable or being enforced;
  3. any assets of any such member being disposed of or charged or ceasing to be available to any such member, or any right arising under which any asset couldbe required to be disposed of or charged or could cease to be available to any such member other than in the ordinary course of business;
  4. other than in respect of Condition3 and Condition 5, any obligation to obtain or acquire any licence, permission, approval, clearance, permit, notice, consent, authorisation, waiver, grant, concession, agreement, certificate, exemption order or registration from any Third Party;
  5. any liability of any member of the Wider Imagination Group to make any severance, termination, bonus or other payment to any of its directors or other officers;
  6. any arrangement, agreement, licence, permit, lease, franchise or instrument, or the rights, liabilities, obligations, interests or business of any member of the Wider Imagination Group thereunder, or the interests or business of any member of the Wider Imagination Group in or with any other person or body or firm or company (or any arrangement or arrangement relating to any such interests or business) being or becoming capable of being terminated, or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;
  7. any member of the Wider Imagination Group ceasing to be able to carry on business under any name under which it presently carries on business;
  8. the creation or acceleration of any liability to taxation or an adverse effect on the tax position of any member of the Wider Imagination Group;
  9. the value of, or the financial or trading position of, any member of the Wider Imagination Group being prejudiced or adversely affected; or
  10. the creation or acceleration of any liability (actual or contingent and including without limitation for taxation) by any member of the Wider Imagination Group or for which any such member may be responsible other than trade creditors or other liabilities incurred in the ordinary course of business,and no event having occurred which, under any provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider Imagination Group is a party or by or to which any such member or any of its assets are bound, entitled or subject, would or might result in any of the events or circumstances as are referred to in Conditions 8(a) to (j), in each case, to an extent which is or would be material in the context of the Wider Imagination Group as a whole or in the context of the Acquisition;
9. except as Disclosed, no member of the Wider Imagination Group having entered into, varied, authorised or terminated any agreement, contract, transaction, arrangement or commitment, which:
  1. is other than in the ordinary course of business;
  2. would be restrictive on the business of any member of the Wider Imagination Group or the Wider CBFI Group or which is or could involve obligations which would or might reasonably be expected to be so restrictive; or
  3. is of a long term, onerous or unusual nature or magnitude or which could reasonably be expected to involve an obligation of such nature or magnitude;
  4. resulted in any asset or profit sharing agreement,and which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition;
    Certain events occurring since 30 April 2017
10. except as Disclosed, no member of the Wider Imagination Group having since 30 April 2017:
  1. issued, proposed or agreed to issue, or authorised or announced its intention to authorise or propose the issue, of, additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of Imagination Shares, other than, where relevant, as between Imagination and wholly owned subsidiaries of Imagination or between the wholly owned subsidiaries of Imagination) or redeemed, purchased or reduced any part of its share capital, and other than (i) options or awards granted under; or (ii) shares transferred from treasury or shares issued upon the exercise of any options or vesting of awards granted under, in either case, the Imagination Share Plans;
  2. recommended, declared, paid or made, or proposed to declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than dividends (or other distributions, whether payable in cash or otherwise) lawfully paid or made by any wholly owned subsidiary of Imagination to Imagination or any of its wholly owned subsidiaries;
  3. save as between Imagination and its wholly-owned subsidiaries or between such wholly-owned subsidiaries, effected, authorised, proposed or announced its intention to propose any change in its share or loan capital (or equivalent thereof);
  4. purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or made any other change to any part of its share capital;
  5. sold or transferred or agreed to sell or transfer any Imagination Shares held by Imagination as treasury shares except for the issue or transfer out of treasury of Imagination Shares on the exercise of employee share options or vesting of employee share awards;
  6. proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by the Wider Imagination Group;
  7. save as between Imagination and its wholly-owned subsidiaries or between such wholly-owned subsidiaries, or pursuant to the Acquisition, implemented, effected, authorised, proposed or announced its intention to propose, any merger,demerger, reconstruction, arrangement, amalgamation, commitment or scheme or any acquisition or disposal or transfer of assets, shares (other than in the ordinary course of business) or loan capital (or the equivalent thereof) or any right, title or interest in any assets, shares or loan capital (or the equivalent thereof), or mortgaged, charged or encumbered any assets or shares or any right, title or interest in any assets or shares (other than in the ordinary course of business) or authorised the same or entered into, varied or terminated or authorised, proposed or announced its intention to enter into, vary, terminate or authorise any agreement, arrangement, contract, transaction or commitment (other than in the ordinary course of business and whether in respect of capital expenditure or otherwise) which is of a loss-making, long term or unusual or onerous nature or magnitude, or which involves or could involve an obligation of such a nature or magnitude, in each case which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition (whether in respect of capital expenditure or otherwise);
  8. issued, authorised or proposed the issue of or made any change in or to any debentures, or (other than in the ordinary course of business or except as between Imagination and its wholly-owned subsidiaries or as between such wholly-owned subsidiaries) incurred or increased any indebtedness or liability, actual or contingent, which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition;
  9. been unable or admitted that it is unable to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business or proposed or entered into any composition or voluntary arrangement with its creditors (or any class of them) or the filing at court of documentation in order to obtain a moratorium prior to a voluntary arrangement or, by reason of actual or anticipated financial difficulties, commenced negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness;
  10. made, or announced any proposal to make, any change or addition to any retirement, death or disability benefit or any other employment-related benefit (including, but not limited to, bonuses, retention arrangements or share incentive schemes or other benefit relating to the employment or termination of employment of any employee of the Wider Imagination Group) of or in respect of any of its directors, employees, former directors or former employees, which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition;
  11. save as between Imagination and its wholly-owned subsidiaries or as between such wholly-owned subsidiaries, granted any lease or third party rights in respect of any of the leasehold or freehold property owned or occupied by it or transferred or otherwise disposed of any such property;
  12. entered into or varied or made any offer (which remains open for acceptance) to enter into or vary the terms of any service agreement, commitment or arrangement with any director or senior executive of Imagination or any director or senior executive of the Wider Imagination Group, which is material in the context of the Wider Imagination Group or in the context of the Acquisition;
  13. taken any action which results in the creation or acceleration of any tax liability of or an adverse effect on the tax position of any member of the Wider Imagination Group, which is material in the context of the Wider Imagination Group, or in the context of the Acquisition;
  14. taken or proposed any corporate action or had any steps taken or had any legal proceedings started or threatened against it for its winding-up (voluntary or otherwise), dissolution, striking-off or reorganisation or for the appointment of a receiver, administrator (including the filing of any administration application, notice of intention to appoint an administrator or notice of appointment of an administrator), administrative receiver, trustee or similar officer of all or any material part of its assets or revenues or for any analogous proceedings or steps in any jurisdiction or for the appointment of any analogous person in any jurisdiction;
  15. made any amendment to its memorandum or articles of association;
  16. waived, compromised or settled any claim or authorised any such waiver or compromise, save in the ordinary course of business, which is material in the context of the Wider Imagination Group taken as a whole or material in the context of the Acquisition;
  17. taken, entered into or had started or threatened against it in a jurisdiction outside England and Wales any form of insolvency proceeding or event similar or analogous to any of the events referred to in Conditions 10(i) and (n) above; or
  18. agreed to enter into or entered into an agreement or arrangement or commitment or passed any resolution or announced any intention or made any offer (which remains open to acceptance) with respect to any of the transactions, matters or events referred to in this Condition 10;
    No adverse change, litigation, regulatory enquiry or similar
11. Since 30 April 2017, except as Disclosed, there having been:
  1. no adverse change and no circumstance having arisen which would or might reasonably be expected to result in any adverse change in, the business, assets, financial or trading position or profits or prospects or operational performance of any member of the Wider Imagination Group which is material in the context of the Wider Imagination Group taken as a whole or is material in the context of the Acquisition;
  2. no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against or in respect of any member of the Wider Imagination Group or to which any member of the Wider Imagination Group is or may become a party (whether as claimant, defendant or otherwise) having been threatened, announced, instituted or remaining outstanding by, against or in respect of, any member of the Wider Imagination Group, in each case which is or might reasonably be expected to be material in the context of the Wider Imagination Group, taken as a whole or in the context of the Acquisition;
  3. save as a result of the Acquisition, no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Imagination Group having been threatened, announced or instituted or remaining outstanding by, against or in respect of any member of the Wider Imagination Group, in each case which might reasonably be expected to have a material adverse effect on the Wider Imagination Group taken as a whole or is material in the context of the Acquisition;
  4. no contingent or other liability having arisen or increased which is reasonably likely to affect adversely the business, assets, financial or trading position or profits or prospects of any member of the Wider Imagination Group to an extent which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition;
  5. no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Imagination Group which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which might reasonably be expected to have a material adverse effect on the Wider Imagination Group taken as a whole or is material in the context of the Acquisition;
    No discovery of certain matters regarding information, liabilities and environmental issues
12. except as Disclosed, CBFI not having discovered:
  1. that any financial, business or other information concerning the Wider Imagination Group publicly announced prior to the date of this Announcement or disclosed at any time to any member of the Wider CBFI Group by or on behalf of any member of the Wider Imagination Group prior to the date of this Announcement is misleading, contains a misrepresentation of any fact, or omits to state a fact necessary to make that information not misleading, in any such case which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition;
  2. any member of the Wider Imagination Group is subject to any liability, contingent or otherwise, which is not disclosed in the annual reports and accounts of Imagination for the financial year ended 30 April 2017 and which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition;
  3. any past or present member, director, officer or employee of the Wider Imagination Group has not complied with all applicable legislation, regulations or any Authorisations relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human or animal health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any material liability, including any penalty for non-compliance (whether actual or contingent) on the part of any member of the Wider Imagination Group;
  4. that there has been a disposal, discharge, spillage, accumulation, release, leak, emission or the migration, production, supply, treatment, storage, transport or use of any waste or hazardous substance or any substance likely to impair the environment (including any property) or harm human or animal health which (whether or not giving rise to non-compliance with any law or regulation), would be likely to give rise to any liability on the part of any member of the Wider Imagination Group, in each case to an extent which is material in the context of the Wider Imagination Group or in the context of the Acquisition;
  5. that there is or is reasonably likely to be any obligation or liability (whether actual or contingent) or requirement to make good, remediate, repair, reinstate or clean up any property, asset or any controlled waters currently or previously owned, occupied, operated or made use of or controlled by any past or present member of the Wider Imagination Group, or in which any such member may have or previously have had or be deemed to have had an interest, under any environmental legislation, common law, regulation, notice, circular, Authorisation or order of any Third Party in any jurisdiction or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto, in each case, to an extent which is material in the context of the Wider Imagination Group or in the context of the Acquisition; or
  6. that circumstances exist (whether as a result of making the Acquisition or otherwise) which would be reasonably likely to lead to any Third Party instituting (or whereby any member of the Wider Imagination Group would be likely to be required to institute) an environmental audit or take any steps which would in any such case be reasonably likely to result in any actual or contingent liability to improve or install new plant or equipment or to make good, repair, reinstate or clean up any property of any description or any asset now or previously owned, occupied or made use of by any past or present member of the Wider Imagination Group (or on its behalf) or by any person for which a member of the Wider Imagination Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest, which is material in the context of the Wider Imagination Group taken as a whole or in the context of the Acquisition;
    Anti-corruption and criminal property
13. except as Disclosed, CBFI not having discovered:
  1. any past or present member, director, officer or employee of the Wider Imagination Group or any person that performs or has performed services for or on behalf of any such company is or has (at the time of such person’s employment or performance of services) engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010, asamended or the US Foreign Corrupt Practices Act 1977, as amended or any other anti‑corruption legislation applicable to the Wider Imagination Group;
  2. any past or present member of the Wider Imagination Group has engaged in any activity or business with, or made any investments in, or made any payments to any government, entity or individual covered by any of the economic sanctions administered by the United Nations or the European Union (or any of theirrespective member states) or the United States Office of Foreign Assets Control or any other governments or supranational body or authority in any jurisdiction;
  3. any asset of any member of the Wider Imagination Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition); or
  4. that any past or present member, director, officer or employee of the of Wider Imagination Group has, at any time during the course of such person’s employment with, or performances of services for or on behalf of any member of the Wider Imagination Group engaged in any business with or made any investments in, or made any payments, funds or assets available, to or received any funds or assets from: (i) any government, entity or individual in respect of which US or European Union persons, or persons operating in those territories, are prohibited from engaging in activities or doing business, or from receiving or making available funds or economic resources, by US or European Union laws or regulations, including the economic sanctions administered by the United States Office of Foreign Assets Control or HM Treasury & Customs; or (ii) any government, entity or individual named by any of the economic sanctions of the United Nations or the European Union or any of their respective member states, in each case to an extent which is material in the context of the Wider Imagination Group as a whole.
Waiver and invocation of the Conditions
1. The Scheme will not become Effective unless the Conditions have been fulfilled or (if capable of waiver) waived or, where appropriate, have been determined by CBFI to be or remain satisfied by no later than the Longstop Date.
2. Subject to the requirements of the Panel, CBFI reserves the right to waive (in its sole discretion) in whole or in part all or any of the Conditions, except for Conditions A.2(a)(i), A.2(b)(i) and A.2(c)(i) which cannot be waived.
3. If any of the deadlines in Conditions A2(a)(ii), A.2(b)(ii) or A.2(c)(ii) are not met, CBFI shall make an announcement by 8.00 a.m. on the Business Day following such deadline confirming whether it has invoked or waived the relevant Condition or agreed with Imagination to extend the deadline in relation to the relevant Condition.
4. The Acquisition will lapse if there is a Phase 2 CMA Reference in respect of the Acquisition on or before the later of the Court Meeting and the General Meeting. In such event, Imagination will not be bound by the terms of the Scheme.
5. The Acquisition will lapse if the European Commission either initiates proceedings under Article 6(1)(c) of Council Regulation (EC) 139/2004 or makes a referral to a competent authority of the United Kingdom under Article 9(1) of that Regulation in respect of the Acquisition and there is a subsequent Phase 2 CMA Reference, in either case before the later of the Court Meeting and the General Meeting. In such event, Imagination will not be bound by the terms of the Scheme.
6. If the Panel requires CBFI to make an offer or offers for any Imagination Shares under the provisions of Rule 9 of the Code, CBFI may make such alterations to the Conditions as are necessary to comply with the provisions of that Rule.
7. Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.
8. Under Rule 13.5 of the Code, CBFI may not invoke a condition of the Scheme so as to cause the Scheme not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition are of material significance to CBFI in the context of the Acquisition. Whether or not such condition can be invoked would be determined by the Panel. The conditions contained in Conditions 1 and 2 of Part A are not subject to this provision of the Code.
9. CBFI shall not be under any obligation to waive (if capable of waiver), to determine, to be or remain satisfied or to treat as fulfilled any of the Conditions (to the extent capable of waiver), by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.
Certain further terms of the Acquisition
1. Imagination Shares will be acquired by CBFI fully paid and free from all liens, equitable interests, options, charges, encumbrances, rights of pre-emption and other third party rights and interests of any nature whatsoever and together with all rights attaching to them as at the date of this Announcement or subsequently attaching or accruing to them, including voting rights and the right to receive and retain, in full, all dividends and other distributions (if any) declared, made, paid or payable, or any other return of capital made, on or after the date of this Announcement.
2. If, on or after the date of this Announcement, any dividend and/or other distribution (other than in respect of a Settlement Return) and/or other return of capital is declared, made or paid or becomes payable in respect of the Imagination Shares, CBFI reserves the right (without prejudice to any right of CBFI, with the consent of the Panel, to invoke Conditions 10(b) or 10(d) in Part A above, to reduce the consideration payable under the terms of the Acquisition for the Imagination Shares by an amount up to the amount of such dividend and/or distribution and/or return of capital, in which case any reference in this Announcement or in the Scheme Document to the consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced. To the extent that any such dividend and/or distribution and/or other return of capital is declared, made or paid or is payable prior to the Scheme Court Hearing and it is: (i) transferred pursuant to the Acquisition on a basis which entitles CBFI to receive the dividend or distribution and to retain it; or (ii) cancelled, the consideration payable under the terms of the Acquisition will not be subject to change in accordance with this paragraph. Any exercise by CBFI of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the Acquisition.
3. CBFI reserves the right to elect (with the consent of the Panel, if required, and subject to the terms of the Cooperation Agreement) to implement the Acquisition by way of a Takeover Offer, in its absolute discretion. In such event, the acquisition will be implemented on substantially the same terms, so far as applicable, subject to appropriate amendments, including (without limitation) an acceptance condition set at 90 per cent. (or such lesser percentage, being more than 50 per cent., as CBFI may decideor the Panel may require) of the shares to which such offer relates, so far as applicable, as those which would apply to the Scheme.
4. The Acquisition will be subject, inter alia, to the Conditions and certain further terms which are set out in this Appendix 1 and those terms which will be set out in the Scheme Document and such further terms as may be required to comply with the Listing Rules and the provisions of the Code.
5. The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction. Any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements. Further information in relation to Overseas Shareholders will be contained in the Scheme Document.
6. The Acquisition is not being made, directly or indirectly, in, into or from, or by use of the mails of, or by any means of instrumentality (including, but not limited to, facsimile, e- mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of, any jurisdiction where to do so would violate the laws of that jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or facility or from within any such jurisdiction.
7. CBFI reserves the right for any other member of the Wider CBFI Group from time to time to implement the Acquisition, with the consent of Imagination, and, if required, the Panel.
8. This Announcement and any rights or liabilities arising hereunder, the Acquisition, the Scheme, and any proxies will be governed by English law and be subject to the jurisdiction of the courts of England and Wales. The Scheme will be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the FCA.
  Appendix 2 Bases and Sources
  1. The value attributed to the existing issued and to be issued ordinary share capital of Imagination is based upon the 286,143,781 Imagination Shares in issue on 21 September 2017, being the latest practicable date prior to this Announcement, and the 16,325,564 Imagination Shares which may be issued on or after the date of this Announcement on the exercise of options or vesting of awards under the Imagination Share Plans.
  2. References to percentages of Imagination Shares (before completion of the Acquisition) are based on the current undiluted number of Imagination Shares in issue referred to in paragraph (a) above.
  3. Unless otherwise stated, the financial information on Imagination is extracted (without material adjustment) from Imagination’s Annual Report and Accounts for the year ended 30 April 2017 and from the announcement of Imagination’s preliminary results for the year ended 30 April 2017.
  4. Volume weighted average closing prices are derived from Bloomberg.
  5. Unless otherwise stated, all market prices of the Imagination Shares referred to in this Announcement are the closing middle market quotations as derived from the Daily Official List.
  6. Certain figures included in this Announcement have been subject to rounding adjustments.

Appendix 3

Details of Irrevocable Undertakings

The following holders of Imagination Shares have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting in relation to the following Imagination Shares and in favour of any shareholders’ resolution to approve the MIPS Disposal:

Name Number of Imagination Shares

Percentage of issued ordinary share capital of Imagination

Andrew Heath 58,387 (1) 0.02%

Guy Millward 0 (2) 0.00%

Kate Rock 10,000 0.00%

Andrew Heath holds unvested options in respect of 1,500,479 Imagination Shares under the Imagination Long Term Incentive Plan
Guy Millward holds unvested options in respect of 577,011 Imagination Shares under the Imagination Long Term Incentive Plan

The irrevocable undertakings given by the above listed Imagination Directors will cease to be binding if:

the Scheme Document is not sent to Imagination Shareholders within 28 days (or such longer period as Imagination, CBFI and the Panel may agree) after the date of this Announcement, and, within five business days of the end of such period, CBFI has not publicly confirmed that it intends to implement the Offer by way of a Takeover Offer;
the Scheme lapses or is withdrawn in accordance with its terms and at or before the time of such lapse or withdrawal, CBFI has not publicly confirmed that it intends to implement the Offer by way of a Takeover Offer; or
the Scheme has not become effective by the Longstop Date (or such later time or date as agreed between CBFI and Imagination, with the approval of the Court and/or the Panel if required).

Appendix 4 Definitions

The following definitions apply throughout this Announcement unless the context requires otherwise.

“£”, “Sterling”, “pence” or “p” the lawful currency of the UK

“Acquisition” the direct or indirect acquisition of the entire issued and to be issued share capital of Imagination by CBFI (other than Imagination Shares already held by CBFI, if any) to be implemented by way of the Scheme (or, if CBFI so elects and with, if required, the consent of the Panel, a Takeover Offer) and, where the context requires, any subsequent revisions, variation, extension or renewal thereof

“Announcement” this announcement made pursuant to Rule 2.7 of the Code

“Apple” means Apple Inc.

“Apple Dispute” means the assertion by Apple to Imagination that no royalties will be payable by Apple to Imagination in relation to New Licensed Chip Products pursuant to the current licence and royalty agreement between Apple and Imagination

“Articles” articles of association of Imagination from time to time

“Authorisations” regulatory authorisations, orders, recognitions, grants, consents, clearances, confirmations, certificates, licences, permissions or approvals, in each case, of a Third Party

“Business Day” a day (other than Saturdays, Sundays and public holidays) on which banks are open for business in London, United Kingdom

“Canyon Bridge” Canyon Bridge Fund I, LP

“CBFI” CBFI Investment Limited, a company incorporated in England and Wales with company number 10968614

“CBFI Directors” the directors of Imagination as at the date of this Announcement

“CBFI Group” CBFI and its subsidiary undertakings, and where the context permits, each of them

“CMA Phase 2 Reference” a reference, pursuant to sections 22 or 33 of the

Enterprise Act 2002, of the Acquisition or any part of it to the Chair of the Competition and Markets Authority for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013

“Code” the City Code on Takeovers and Mergers

“Companies Act” the Companies Act 2006, as amended from time to time

“Completion” completion of the MIPS Disposal

“Conditions” the conditions to the implementation of the Acquisition (including the Scheme) as set out in Appendix 1 to this Announcement and to be set out in the Scheme Document

“Confidentiality Agreement” the confidentiality agreement entered into by

Imagination and CBFI on 30 May 2017

“Cooperation Agreement” the cooperation agreement entered into by

Imagination, CBFI and Canyon Bridge on 22 September 2017

“Court” the High Court of Justice of England and Wales

“Court Meeting” the meeting(s) of the Scheme Shareholders to be convened by order of the Court pursuant to section 896 of the Companies Act, notice of which will be set out in the Scheme Document, for the purpose of approving the Scheme (with or without amendment), including any adjournment thereof

“CREST” the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755)) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in such Regulations) in accordance with which securities may be held and transferred in uncertificated form

“Daily Official List” the daily official list of the UK Listing Authority “Dealing Disclosure” an announcement pursuant to Rule 8 of the Code

containing details of dealings in interests in relevant securities of a party to an offer

“Disclosed” the information fairly disclosed by, or on behalf of Imagination, (i) in the annual report and accounts of Imagination for the financial year ended 30 April 2017; (ii) in this Announcement, or in any other announcement to a Regulatory Information Service by, or on behalf of Imagination prior to the

publication of this Announcement; (iii) in any of the documents, papers or written information made available in the data rooms maintained by Merrill entitled “Hydrogen VDR” relating to the Acquisition on or before the Business Day which is two Business Days before the date of this Announcement; or (iv) to Canyon Bridge and/or its professional advisers during diligence meetings and calls with Imagination’s management in relation to the Acquisition and reduced in writing and delivered to Canyon Bridge prior to the date of this Announcement by being placed in the Project Hydrogen data room; and (v) in the MIPS SPA

“Effective” in the context of the Acquisition: (i) if the Acquisition is implemented by way of a Scheme, the Scheme having become effective in accordance with its terms; or (ii) if the Acquisition is implemented by way of a Takeover Offer, the Takeover Offer has become or been declared unconditional in all respects in accordance with the requirements of the Code

“Effective Date” the date upon which the Scheme becomes effective in accordance with its terms

“Employees” the employees (including the executive directors) of the Imagination Group

“Excluded Shares” any Scheme Shares beneficially owned by CBFI

or any parent or subsidiary undertaking (as defined in the Companies Act) of CBFI

“FCA” the United Kingdom Financial Conduct Authority “Formal Sale Process” means the formal sale process announced by

Imagination on 22 June 2017

“Forms of Proxy” the form of proxy in connection with each of the Court Meeting and the General Meeting, which shall accompany the Scheme Document

“General Meeting” the general meeting of Imagination to be

convened in connection with the Scheme, notice of which will be set out in the Scheme Document, including any adjournment thereof

“Guarantee” has the meaning given to it in paragraph 9 of this Announcement

“HSR Act” the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended and the regulations

promulgated thereunder

“Imagination” Imagination Technologies Group PLC

“Imagination Board” the board of directors of Imagination

“Imagination Directors” the directors of Imagination as at the date of this Announcement

“Imagination Group” Imagination and its subsidiary undertakings, and

where the context permits, each of them

“Imagination Shareholders” the registered holders of Imagination Shares from

time to time

“Imagination Share Plans” the (i) Imagination Employee Share Plan and the

Imagination 2016 Employee Share Plan (ii) the Imagination 2013 Long Term Incentive Plan and

(iii) the Imagination Share Incentive Plan, in each case as amended from time to time

“Imagination Shares” ordinary shares of £1.00 each in the capital of

Imagination

“Joint Defence Agreement” the Joint Defence Agreement entered into by

Imagination and Canyon Bridge on 31 July 2017

“Listing Rules” the rules and regulations made by the FCA in its capacity as the UK Listing Authority under the Financial Services and Markets Act 2000, and contained in the UK Listing Authority’s publication of the same name

“Longstop Date” 5.00pm London time on 22 July 2018, or such later date (if any) as CBFI and Imagination may agree and (if required) the Panel and the Court may allow

“London Stock Exchange” London Stock Exchange plc

“MAR” Article 7 of EU Regulation 596/2014

“MIPS Disposal” the disposal by Imagination of the MIPS division of its business pursuant to the terms and conditions contained in the MIPS SPA, to Tallwood, and any other transactions contemplated by the MIPS SPA, including the Reorganisation

“MIPS General Meeting” the general meeting of Imagination to be

convened if required pursuant to Rule 21.1 of the Code in connection with the MIPS Disposal, including any adjournment therof

“MIPS SPA” the stock purchase agreement dated 22 September 2017 between Imagination and

Tallwood

“Offer Period” has the meaning given to it in the Code

“Official List” the official list of the London Stock Exchange “Opening Position Disclosure” an announcement containing details of interests or

short position in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position

“Overseas Shareholders” Imagination Shareholders who are resident in,

ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom

“Panel” the Panel on Takeovers and Mergers

“Registrar of Companies” the Registrar of Companies in England and Wales

“Regulatory Information Service”

any information service authorised from time to time by the FCA for the purpose of disseminating regulatory announcements

“Reorganisation” the transfer of certain entities, assets and Employees among Imagination’s subsidiaries, on the terms and conditions set out in the MIPS SPA, with the express purpose of separating all assets, liabilities and Employees belonging to the MIPS division from the remaining assets of Imagination so that the worldwide MIPS business will be transferred to Tallwood upon completion of the MIPS Disposal;

“Restricted Jurisdiction” any jurisdiction where the relevant action would

constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which CBFI or Imagination regards as unduly onerous

“Rothschild” N. M. Rothschild & Sons Limited

“Scheme” the scheme of arrangement proposed to be made under Part 26 of the Companies Act between Imagination and the Scheme Shareholders, with or subject to any modification, addition or condition approved or imposed by the Court and agreed to by Imagination and CBFI

“Scheme Court Hearing” the hearing of the Court to sanction the Scheme “Scheme Court Order” the order of the Court sanctioning the Scheme

under Part 26 of the Companies Act

“Scheme Document” the document to be sent to (among others)

Imagination Shareholders containing and setting out, among other things, the full terms and conditions of the Scheme and containing the notices convening the Court Meeting and General Meeting

“Scheme Record Time” the time and date specified in the Scheme

Document, expected to be 6.00 p.m. on the Business Day immediately after the Scheme Court Hearing

“Scheme Shareholders” holders of Scheme Shares “Scheme Shares” Imagination Shares:

in issue as at the date of the Scheme Document;
(if any) issued after the date of the Scheme Document and prior to the Scheme Voting Record Time; and
(if any) issued on or after the Scheme Voting Record Time and before the Scheme Record Time, either on terms that the original or any subsequent holders thereof shall be bound by the Scheme or in respect of which the holders thereof shall have agreed in writing to be bound by the Scheme,

but in each case other than the Excluded Shares “Scheme Voting Record Time” the time and date specified in the Scheme

Document by reference to which entitlement to vote on the Scheme will be determined

“Settlement” has the meaning given to it in paragraph 13Appendix 1A.13

“Settlement Return” has the meaning given to it in paragraph 13 “Significant Interest” in relation to an undertaking, a direct or indirect

interest of 10 per cent. or more of the total voting rights conferred by the equity share capital (as defined in section 548 of the Companies Act) of such undertaking

“Special Resolution” the special resolution to be proposed by

Imagination at the General Meeting in connection with, among other things, the approval of the

Scheme, the alteration of Imagination’s articles of association, the registration of Imagination as a private company following the Scheme becoming Effective, and such other matters as may be necessary to implement the Scheme and the delisting of the Imagination Shares

“Takeover Offer” a takeover offer within the meaning of Part 28 of the Companies Act

“Tallwood” Tallwood MIPS, Inc., a company indirectly owned by Tallwood Venture Capital

“Third Party” any central bank, ministry, government or governmental, quasi-governmental (including the European Union), national, state, municipal or local government (including any subdivisoin, court, administrative agency or commission or other authority thereof), supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, authority, court, trade agency, association, institution, professional or environmental body, employee representative body or bodies responsible for the review and/or approval of mergers, acquisitions, concentrations, joint ventures or any other similar matter or any other body or person whatsoever (including any national or supranational anti-trust or merger control authority, any sectoral ministry or regulator and any foreign investment review body), in any relevant jurisdiction

“UK” or “United Kingdom” the United Kingdom of Great Britain and Northern Ireland

“United States of America”, “United States” or “US” the United States of America, its territories and possessions, any state of the United States and the District of Columbia

“United States Antitrust Law” the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, or any other United States federal or state law that is designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade

“UK Listing Authority” the FCA acting in its capacity as the competent authority for listing under the Financial Services and Markets Act 2000

“US Exchange Act” the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder

“Wider CBFI Group” CBFI, Canyon Bridge and Canyon Bridge Capital Partners, LLC and their respective associated undertakings and any other body corporate, partnership, joint venture or person in which CBFI, Canyon Bridge, Canyon Bridge Capital Partners, LLC and such undertakings (aggregating their interests) have a Significant Interest

“Wider Imagination Group” Imagination and associated undertakings and any other body corporate, partnership, joint venture or person in which Imagination and all such undertakings (aggregating their interests) have a Significant Interest

For the purposes of this Announcement, “subsidiary”, “subsidiary undertaking”, “undertaking”, “associated undertaking” have the meanings given by the Companies Act.

References to an enactment include references to that enactment as amended, replaced, consolidated or re-enacted by or under any other enactment before or after the date of this Announcement. All references to time in this Announcement are to London time unless otherwise stated.

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