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Item 1.01
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Entry into a Material Definitive Agreement.
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On July 11, 2020, Hewlett Packard Enterprise Company, a Delaware corporation (“HPE”), entered into a definitive Agreement and Plan of Merger, dated as of July 11, 2020 (the “Merger Agreement”), by and among HPE, Santorini Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of HPE (“Merger Sub”), Silver Peak Systems, Inc., a Delaware corporation (“Silver Peak”), and certain other parties thereto. The Merger Agreement provides that, subject to the terms and conditions set forth therein, Merger Sub will merge with and into Silver Peak (the “Merger”), with Silver Peak surviving the Merger and becoming a wholly owned subsidiary of HPE (the “Surviving Corporation”).
Pursuant to and subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common and preferred stock, par value $0.0005 per share, of Silver Peak (“Silver Peak Capital Stock”) (excluding any dissenting shares or shares of Silver Peak Capital Stock that are owned by Silver Peak as treasury stock), each vested Silver Peak option (other than certain vested Silver Peak options that will be subjected to new vesting conditions (“Holdback Options”)) and each Silver Peak warrant, in each case, issued and outstanding immediately prior to the Effective Time, shall be extinguished and cancelled and automatically converted into a right to receive a portion of the Total Consideration as defined in the Merger Agreement. The Total Consideration is approximately $925 million and is adjusted on a customary cash-free and debt-free basis. Additionally, any unvested, unexpired and unexercised Silver Peak options held by a Continuing Employee (excluding performance-based options, which will not vest and will be forfeited pursuant to their terms as a result of the Merger), Holdback Options and certain restricted stock units to be granted to recently or newly hired employees, will, at the Effective Time, automatically convert into and become options and restricted stock unit with respect to HPE common stock, respectively. HPE has also coordinated for Silver Peak to issue certain restricted stock units prior to the Effective Time under Silver Peak’s equity plan (the “Retention RSUs”). At the Effective Time, and subject to the terms and conditions in the Merger Agreement, each Retention RSU held by a Continuing Employee, as defined in the Merger Agreement, shall generally be converted into and became a restricted stock unit with respect to HPE common stock subject to vesting requirements over a three-year period.
Pursuant to and subject to the terms and conditions of the Merger Agreement, Silver Peak has agreed to various customary covenants and agreements, including, among other things, (i) to carry on its business in the ordinary course during the period between the execution of the Merger Agreement and the consummation of the Merger; (ii) not to withhold or withdraw the recommendation of the board of directors of Silver Peak that its stockholders vote or deliver consents in favor of the Merger Agreement and the Merger; (iii) not to solicit alternative acquisition proposals; and (iv) to use its reasonable best efforts to consummate the Merger. The Merger Agreement also contains customary representations, warranties and covenants of each of Silver Peak, HPE and Merger Sub.
The obligations of HPE and Merger Sub, on the one hand, and Silver Peak, on the other hand, to effect the Merger are subject to the satisfaction or waiver of certain conditions, including: (i) the approval of the Merger Agreement and the Merger by Silver Peak’s stockholders; (ii) the absence of injunctions or other legal restraints preventing the consummation of the Merger; (iii) the expiration or termination of the relevant waiting period under the Hart-Scott-Rodino Act and the Austrian Cartel Act; (iv) the accuracy of the other party’s representations and warranties, subject to specified materiality qualifications; (v) compliance by the other party with its covenants in the Merger Agreement in all material respects; and (vi) in the case of the obligations of HPE and Merger Sub to effect the Merger, the absence of a Material Adverse Effect (as defined in the Merger Agreement) with respect to Silver Peak. The Merger Agreement also contains customary indemnification provisions and provides that $75 million of the Total Consideration will be held in escrow as partial security for the benefit of HPE (on behalf of itself or any other Indemnified Person, as defined in the Merger Agreement) with respect to the indemnification obligations of the Converting Holders (as defined in the Merger Agreement).
The Merger Agreement contains certain customary termination rights for both HPE and Silver Peak, including, among others, permitting the Merger Agreement to be terminated by either HPE or Silver Peak upon the failure of the Closing to have occurred on or before the date that is 180 days following the date of the Merger Agreement, subject to extension by either HPE or Silver Peak for up to 90 days if all of the conditions to the Merger, other than the conditions relating to regulatory approvals, have been satisfied as of that date.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the actual terms of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and incorporated herein by reference. The Merger Agreement has been included to provide investors with information regarding its terms and is not intended to provide any financial or other factual information about HPE, Silver Peak or Merger Sub. In particular, the representations, warranties and covenants contained in the Merger Agreement (i) were made only for purposes of that agreement and as of specific dates, (ii) were made solely for the benefit of the parties to the Merger Agreement, (iii) may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement rather than establishing those matters as facts; and (iv) may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by HPE or Silver Peak. Accordingly, investors should read the representations and warranties in the Merger Agreement not in isolation but only in conjunction with the other information about HPE and its subsidiaries that HPE includes in reports, statements and other filings it makes with the U.S. Securities and Exchange Commission (the “SEC”).