Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On September 7,
2016, Apigee Corporation (the
Company
, or
Apigee
) entered into an Agreement and Plan of Merger (the
Merger Agreement
) with Google Inc. (
Parent
, or
Google
)
and Areopagus Inc., a wholly owned subsidiary of Parent (
Merger Sub
), providing for the merger of Merger Sub with and into the Company (the
Merger
), with the Company surviving the Merger as a wholly owned
subsidiary of Parent, subject to the terms and conditions set forth therein. Capitalized terms not otherwise defined have the meaning set forth in the Merger Agreement.
At the Effective Time of the Merger, each share of common stock, par value $0.001 per share, of the Company (such shares, collectively, the
Shares
) outstanding immediately prior to the Effective Time (excluding (i) each Share that is owned by Parent, Merger Sub or the Company, or by any of their respective direct or indirect wholly owned subsidiaries, in each
case immediately prior to the Effective Time and (ii) Shares subject to validly exercised appraisal rights) will be cancelled and extinguished and automatically converted into the right to receive $17.40 in cash per Share, without interest,
less applicable taxes (the
Merger Consideration
).
Pursuant to the terms of the Merger Agreement, at the Effective Time
outstanding Company Options will be treated as follows: (i) each Company Option with a per Share exercise price that is equal to or exceeds the Merger Consideration will be cancelled at the Effective Time for no consideration; (ii) each
vested Company Option and each unvested Company Option held by a non-employee member of the Company board of directors or a service provider who is not an active employee of the Company or its Subsidiaries (each, together, a
Vested Company
Option
) will be cancelled and converted into the right to receive an amount in cash, without interest, equal to the product of (x) the excess of (1) the Merger Consideration over (2) the per Share exercise price of such
Vested Company Option and (y) the total number of Shares issuable upon the exercise in full of such Vested Company Option, less applicable taxes; and (iii) each Company Option that is not a Vested Company Option (an
Unvested
Company Option
) will be assumed and converted into the right to receive an amount in cash, without interest, equal to the product of (x) the excess of (1) the Merger Consideration over (2) the exercise price per Share of
such Unvested Company Option and (y) the total number of Shares issuable upon the exercise in full of such Unvested Company Option, which cash award will otherwise be subject to the same terms and conditions applicable to such Unvested Company
Option, including vesting terms.
Pursuant to the terms of the Merger Agreement, at the Effective Time outstanding Restricted Stock Units
will be treated as follows: (i) each unvested Restricted Stock Unit held by an active employee of the Company or its Subsidiaries immediately prior to the Effective Time will be assumed and converted into an Alphabet Stock Unit to acquire
Alphabet Class C Capital Stock in respect of that number of shares of Alphabet Class C Capital Stock equal to the product of (1) the number of shares of Company Common Stock underlying such Restricted Stock Unit and (2) the Stock Award
Exchange Ratio, and will otherwise be subject to the same terms and conditions applicable to the Restricted Stock Unit, including vesting terms; (ii) each Restricted Stock Unit held by any non-employee member of the Company board of directors
or any consultant or independent contractor to the Company or its Subsidiaries which is outstanding immediately prior to the Effective Time shall vest and be settled in shares of Company Common Stock and each such share of Company Common Stock be
cancelled and extinguished and automatically converted into the right to receive the cash Merger Consideration; and (iii) each Restricted Stock Unit held by an individual who is a former employee of the Company or its Subsidiaries immediately
prior to the Effective Time will be cancelled and converted into the right to receive an amount in cash, without interest, equal to the product of (x) the Merger Consideration and (y) the total number of Shares subject to such award of
Restricted Stock Units, less applicable taxes.
The Company board of directors has (i) determined that the Merger Agreement and the
Merger are fair to and in the best interests of the Company and its stockholders; (ii) approved the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby; and (iii) resolved to recommend
adoption of the Merger Agreement by the stockholders of the Company, who will be asked to vote on the adoption of the Merger Agreement at a meeting that will be held on a date to be announced.
Consummation of the Merger is subject to customary closing conditions, including, without
limitation, (i) approval of the Merger Agreement by holders of a majority of the outstanding Shares entitled to vote on the Merger; (ii) the absence of certain legal impediments; and (iii) antitrust regulatory approval pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the antitrust laws of certain other jurisdictions, and the expiration or termination of the respective waiting periods required in connection with such required antitrust approvals.
The Company has made customary representations and warranties in the Merger Agreement and has agreed to customary covenants regarding the
operation of its business prior to the Effective Time and to convene and hold a meeting of its stockholders for the purpose of obtaining stockholder approval.
The Company is not permitted to solicit, initiate or knowingly facilitate or knowingly encourage a third-party acquisition proposal or to
participate or engage in discussions or negotiations with third parties regarding any alternative acquisition proposal. Notwithstanding this limitation, Apigee may under certain circumstances provide information to and participate in discussions or
negotiations with third parties with respect to an unsolicited acquisition proposal that the Company board of directors has determined is or is reasonably likely to lead to a Superior Proposal, subject to certain restrictions and limitations. The
Company board of directors may change its recommendation to Apigee stockholders (subject to Googles right to terminate the Merger Agreement following such change in recommendation) in response to a Superior Proposal or an Intervening Event if,
among other things, the Company board of directors provides prior notice of its intention to do so to Google and determines in good faith that the failure to take such action would be inconsistent with the Company board of directors members
fiduciary duties under applicable law, after taking into account any counter-offer or proposal by Google, if any.
The Merger Agreement
contains certain termination rights for both Apigee and Google and further provides that Apigee must pay Google a termination fee of $21,750,000 in cash upon termination of the Merger Agreement under specified circumstances, including if the Company
terminates the agreement in favor of a Superior Proposal. Under certain other circumstances related to a failure to obtain required antitrust clearances prior to the termination date (as defined in, and subject to extensions pursuant to, the Merger
Agreement) or if the transaction is enjoined or prohibited on the basis of antitrust laws, and subject to certain other conditions, the Merger Agreement provides for Google to pay to Apigee a termination fee of $46,600,000 in cash upon termination
of the Merger Agreement.
The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to
be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement, which is attached as Exhibit 2.1 and is incorporated herein by reference.
The representations, warranties and covenants contained in the Merger Agreement were made solely for the benefit of the parties to the Merger
Agreement and (i) are not intended to be a source of financial, business or operational information about Parent, Merger Sub, the Company or their respective subsidiaries or affiliates and should not be treated as categorical statements of
fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified in the Merger Agreement by disclosures that were made to the other party in connection with the
negotiation of the Merger Agreement; (iii) may apply contractual standards of materiality that are different from the standards of materiality under applicable securities laws; and (iv) were made only as of the date
of the Merger Agreement or such other date or dates as may be specified in the Merger Agreement. Investors and security holders should not rely on the representations, warranties and covenants or any description thereof as characterizations of the
actual state of facts or condition of Parent, Merger Sub, the Company or their respective subsidiaries or affiliates.
Voting Agreement
Simultaneously with the execution and delivery of the Merger Agreement, entities affiliated with Bay Partners, entities affiliated with Norwest
Venture Partners, entities affiliated with Third Point Partners and the Companys directors and executive officers who held Shares in the Company, entered into voting agreements with Parent (the
Voting Agreements
), pursuant
to which each party has agreed, among other things, in his, her or its capacity as a stockholder to vote his, her or its Shares: (i) in favor of the approval of the Merger Agreement and the approval of the transactions contemplated thereby,
including the Merger; (ii) against any acquisition
proposal, or any other transaction, proposal, agreement or action made in opposition to adoption of the Merger Agreement; and (iii) against any other action, agreement or transaction, that
is intended to impede, interfere with, delay, postpone, discourage or adversely affect the Merger or any of the other transactions contemplated by the Merger Agreement or the performance by such stockholder of his, her or its obligations under the
Voting Agreement.
Notwithstanding the foregoing, if the Company board of directors has effected (and not withdrawn) a Company Board
Recommendation Change, then (i) each party to the Voting Agreements shall only be required to collectively vote an aggregate number of Shares equal to thirty-five percent (35%) of the total voting power of the outstanding capital stock of
the Company as of the record date for such meeting; and (ii) the number of Shares subject to the Voting Agreements in excess of that percentage shall be reduced on a pro rata basis in accordance with the number of votes each such party is
entitled to cast, and such party, in his, her, or its sole discretion, will be entitled to vote all of his, her or its remaining Shares in any manner such party chooses.
Apigee stockholders subject to the Voting Agreement collectively currently own approximately 48% of the outstanding shares of Apigee common
stock. The Voting Agreement terminates automatically, among other things, upon the termination of the Merger Agreement, including if the Company terminates the agreement in favor of a Superior Proposal.
Transaction Bonus
In connection with
entering into the Merger Agreement, the compensation committee of the Company board of directors recommended, and the Company board of directors approved, the payment of transaction bonuses (a
Transaction Bonus
) to each of the
Companys named executive officers in the following amounts: Chet Kapoor: $500,000, Tim Wan: $70,000, and Shankar Ramaswamy: $60,000. Each Transaction Bonus will be paid, less applicable withholding, upon the closing of the Merger, subject to
the individuals continued employment with the Company through such date.