Item 3.02 Unregistered Sales of Equity Securities.
On May 28, 2019, FireEye, Inc., a Delaware corporation (the “
Company
”), Viking Merger Corporation, a Delaware corporation and a wholly owned subsidiary of the Company (“
Merger Sub I
”), and Viking Merger LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“
Merger Sub II
”), entered into an Agreement and Plan of Reorganization (the “
Definitive Agreement
”) with Verodin, Inc., a Delaware corporation (“
Verodin
”), and Shareholder Representative Services LLC as stockholder representative thereunder, pursuant to which Merger Sub I merged with and into Verodin (the “
Merger
”). Within forty-five days after the closing of the Merger (the “
Closing
”), as part of the same overall transaction, the surviving corporation from the Merger will be merged with and into Merger Sub II (which will be renamed Verodin, LLC pursuant to such merger).
Under the terms of the Definitive Agreement, the Company agreed to (i) pay the former security holders of Verodin merger consideration (the “
Merger Consideration
”) with an aggregate value equal to (A) approximately $254.4 million, consisting of approximately $129.6 million in cash less approximately $1.2 million in applicable exercise prices of vested Verodin stock options, and an aggregate of approximately 8.4 million shares of Company common stock, par value $0.0001 per share (“
Company Common Stock
”), valued at the volume weighted average closing price of Company Common Stock for the 10 trading days ending on and including the last trading day prior to the date of the Definitive Agreement, plus (B) cash in an amount equal to any Verodin net working capital at the Closing, not to exceed $15 million, and (ii) assume unvested Verodin stock options exercisable for an aggregate of approximately 2.0 million shares of Company Common Stock. The Company funded the cash portion of the Merger Consideration with the Company’s cash and cash equivalents.
Under the terms of the Definitive Agreement, at the Closing and as a result thereof:
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each share of capital stock of Verodin was cancelled and converted into the right to receive its pro rata portion of the cash and stock portions of the Merger Consideration, with the mixture of consideration consisting of approximately 50% cash and 50% stock in respect of shares of Verodin common stock, approximately 65% cash and 35% stock in respect of shares of Verodin Series Seed and Series A preferred stock, and approximately 18% cash and 82% stock in respect of shares of Verodin Series B preferred stock;
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each vested Verodin stock option was cancelled and converted into the right to receive cash in an amount equal to the pro rata portion of the Merger Consideration net of the applicable exercise prices and tax withholdings; and
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each unvested Verodin stock option was assumed by the Company, other than each unvested Verodin stock option held by a non-continuing employee, which was cancelled for no consideration.
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At the Closing as a result of the Merger, the Company issued to certain former security holders of Verodin a total of approximately 8.4 million shares of Company Common Stock. These shares of Company Common Stock were issued pursuant to exemptions from registration provided by Section 4(a)(2) and/or Regulation D of the Securities Act of 1933, as amended (the “
Securities Act
”). At the Closing, the Company also assumed unvested stock options to purchase approximately 2.0 million shares of Company Common Stock as described above, with a weighted average exercise price of approximately $3.02.
The Definitive Agreement contains customary representations, warranties and covenants of Verodin. The Definitive Agreement also contains customary indemnification provisions whereby the former stockholders of Verodin have agreed to indemnify, subject to certain caps and thresholds, the Company and affiliated parties for any liabilities and losses arising out of any inaccuracy in, or breaches of, the representations, warranties and covenants of Verodin in the Definitive Agreement, pre-closing taxes of Verodin, appraisal claims of former Verodin stockholders (if any) and certain other matters. Fifteen percent of the value of the Merger Consideration otherwise payable to former Verodin security holders pursuant to the Definitive Agreement, funded solely from the cash portion of the Merger Consideration, was placed in a third party escrow fund for eighteen months as security for the indemnification obligations of former Verodin stockholders under the Definitive Agreement; provided, however, on the terms and subject to the conditions set forth in the Definitive Agreement, a portion of the escrow fund will be released to the former stockholders of Verodin after the first anniversary of the Closing.
A copy of the Definitive Agreement is filed herewith as Exhibit 2.1. The foregoing description of the Definitive Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Definitive Agreement, which is incorporated herein by reference. The Definitive Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company or Verodin. In particular, the representations and warranties contained in the Definitive Agreement were made only for the purposes of the Definitive Agreement as of specific dates and were qualified by disclosures between the parties and a contractual standard of materiality that is different from those generally applicable to stockholders, among other limitations. The representations and warranties were made for the purposes of allocating contractual risk between the parties to the Definitive Agreement and should not be relied upon as a disclosure of factual information relating to the Company or Verodin.