Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange
Act of 1934 (17 CFR §240.12b-2).
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Item 1.01
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Entry into a Material Definitive Agreement.
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On February 6, 2020, Forescout Technologies,
Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with Ferrari Group Holdings, L.P., a Delaware limited partnership (“Parent”), and Ferrari Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides that, subject to
the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”),
with the Company surviving the Merger and becoming a wholly owned subsidiary of Parent (the “Surviving Corporation”).
The Board of Directors of the Company (the
“Board”) unanimously determined that the transactions contemplated by the Merger Agreement, including the Merger, are
in the best interests of the Company and its stockholders and approved the Merger Agreement and the transactions contemplated by
the Merger Agreement and unanimously resolved to recommend that the Company’s stockholders vote to adopt and approve the
Merger Agreement and the Merger.
Under the Merger Agreement, at the effective
time of the Merger, each issued and outstanding share of the Company common stock (other than shares (i) held by the Company as
treasury stock, (ii) owned by Parent or Merger Sub, (iii) owned by any direct or indirect wholly owned subsidiary of Parent or
Merger Sub or (iv) held by stockholders who have neither voted in favor of the adoption of the Merger Agreement nor consented
thereto in writing and properly and validly exercised their statutory rights of appraisal under Delaware law) will be cancelled
and extinguished and automatically converted into the right to receive cash in an amount equal to $33.00, without interest
(the “Per Share Price”).
With
respect to the Company’s stock-based equity awards, at the effective time of the Merger, (1) each outstanding
stock-based award, to the extent then vested, will be cancelled and converted into and will become a right to receive an
amount in cash, without interest, equal to the product obtained by multiplying (i) the Per Share Price (less the purchase
price per share, if any, of such stock-based award) by (ii) the total number of shares of the Company’s common stock
then subject to the then-vested portion of such stock-based award; and (2) each outstanding stock-based award, to the extent
not then vested, will be continued and will thereafter confer on the holder of such stock-based award the right to receive an
amount, without interest, equal to the product obtained by multiplying (i) the Per Share Price (less the purchase price per
share, if any, of such stock-based award) by (ii) the total number of shares of common stock then subject to the
then-unvested portion of such stock-based award, which amount will be paid, at Parent’s election, either in cash or in
stock of the Surviving Corporation or a parent corporation thereof, and will be payable on the same vesting schedule, and
subject to the same terms and conditions, as the unvested portion of the stock-based award to which it relates. However, the number of shares of the Company’s common stock subject to the unvested portion of any stock-based award with
performance-based vesting with respect to a performance period that ended prior to the effective time of the Merger will be
continued as described in the preceding sentence based on the portion of the then unvested portion of such stock-based award actually earned based on performance, or as specified in the Merger Agreement.
With respect to the Company’s stock
options, at the effective time of the Merger each outstanding and unexercised Company option that is not fully vested in accordance
with its terms, will fully vest and, together with all fully-vested options, will be cancelled and converted into the right to
receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the excess, if any, of the Per Share
Price less the exercise price per share of such option, by (ii) the total number of shares of Company common stock then issuable
upon exercise in full of such option. Any option for which the exercise price per share is equal to or greater
than the Per Share Price will be cancelled without any cash payment being made in respect thereof.
Consummation of the Merger is subject
to the satisfaction or waiver of customary closing conditions, including (1) approval of the Merger Agreement by the
Company’s stockholders; (2) the absence of any law or order restraining,
enjoining or otherwise prohibiting the Merger; and (3) the expiration or termination of the waiting period under the
United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and clearance under the antitrust laws of
certain non-United States jurisdictions.
Pursuant to the terms of a
“go-shop” provision in the Merger Agreement, during the period beginning on the date of the Merger Agreement and
ending at 12:01 a.m. on March 8, 2020 (such date, the “No-Shop Period Start Date”), the Company may (1) initiate, solicit, propose, induce or encourage any alternative
acquisition proposals from third parties; (2) provide nonpublic information to such third parties; and (3) participate in
discussions and negotiations with such third parties regarding alternative acquisition proposals. Beginning on the No-Shop
Period Start Date, the Company will become subject to customary “no-shop” restrictions on its ability, except as
permitted by the Merger Agreement, to solicit, initiate, propose or induce the making or knowingly encourage alternative
acquisition proposals from third parties and to provide nonpublic information to, or participate in, discussions or
negotiations with third parties regarding alternative acquisition proposals.
The Company has made customary representations,
warranties and covenants in the Merger Agreement. Each of Parent and Merger Sub has also made customary representations, warranties
and covenants in the Merger Agreement.
The Merger Agreement contains certain
termination rights for the Company and Parent. Upon termination of the Merger Agreement under specified circumstances, the
Company will be required to pay Parent a termination fee of $55,832,270. Specifically, if the Merger Agreement is terminated
by (1) Parent, if the Board changes its recommendation with respect to the Merger, (2) Parent, if the Company breaches or
fails to perform, in accordance with the Merger Agreement, in any material respect its obligations under the alternative
acquisition solicitation provisions in the Merger Agreement, or (3) the Company, if the Board authorizes the acceptance of a
superior proposal and such proposal was not solicited in breach of the alternative acquisition solicitation provisions in the
Merger Agreement, then, in each case, the termination fee will be payable by the Company to Parent upon termination. However,
under certain circumstances as described in the Merger Agreement, if the Company terminates the Merger Agreement to enter
into a superior proposal with an Excluded Party (as such term is defined in the Merger Agreement), then the amount of the
termination fee payable to Parent will be $37,221,513. The termination fee will also be payable in certain circumstances if
(1) the Merger Agreement is terminated because the Merger is not completed by June 6, 2020 (subject to extension to August 6,
2020, under certain circumstances as set forth in the Merger Agreement), the Company’s failure to obtain the required
approval of its stockholders or because of a material breach of the Company’s representations, warranties or covenants
in a manner that would cause the related closing conditions to not be satisfied, (2) prior to such termination (but after the
date of the Merger Agreement) a proposal, generally speaking, to acquire at least 50% of the Company’s stock or assets
is publicly announced or disclosed by a third party and (3) the Company subsequently consummates, or enters into a definitive
agreement providing for, a transaction involving the acquisition of at least 50% of its stock or assets within one year of
such termination.
Upon termination of the Merger
Agreement under other specified circumstances, Parent will be required to pay the Company a termination fee of $111,664,539.
Specifically, if the Merger Agreement is terminated by the Company if (1) Parent fails to consummate the Merger as required
pursuant to, and in the circumstances specified in, the Merger Agreement, or (2) Parent or Merger Sub’s material breach
of its representations, warranties or covenants in a manner that would cause the related closing conditions to not be
satisfied, then, in each case, the termination fee will be payable by Parent to the Company upon termination. Certain funds
managed or advised by Advent International Corporation (“Advent”) have provided the Company with a limited
guarantee in favor of the Company (the “Limited Guarantee”). The Limited Guarantee guarantees, among other
things, the payment of the termination fee payable by Parent, subject to the conditions set forth in the Limited
Guarantee.
The Merger Agreement also provides
that the Company, on one hand, or Parent and Merger Sub, on the other hand, may specifically enforce the obligations under
the Merger Agreement, except that the Company may only cause Parent to consummate the Merger, and Advent to provide the
equity financing, if certain conditions are satisfied, including the funding or availability of the debt financing.
In
addition to the foregoing termination rights, and subject to certain limitations, each of the Company or Parent may terminate
the Merger Agreement if the Merger is not consummated by June 6, 2020 (subject to extension to August 6, 2020, under
certain circumstances as set forth in the Merger Agreement).
Pursuant to an equity commitment
letter dated February 6, 2020, certain funds managed or advised by Advent have committed to provide Parent, on the terms and subject to the conditions set forth in the equity commitment letter, at
the effective time of the Merger, with an aggregate equity contribution of up to $1,341 million.
The foregoing description of the Merger
Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed as Exhibit
2.1, and is incorporated into this report by reference.
The Merger Agreement contains representations
and warranties by each of Parent, Merger Sub and the Company. These representations and warranties were made solely for the benefit
of the parties to the Merger Agreement and:
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may have been qualified in the Merger Agreement by disclosures that were made to the other party in the disclosure letter
to the Merger Agreement;
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may apply contractual standards of “materiality” that are different from “materiality” under applicable
securities laws; and
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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.
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Press Release
On February 6,
2020, the Company issued a press release announcing the entry into the Merger Agreement. A copy of the press release is attached
as Exhibit 99.1 andis incorporated by reference.
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Item 9.01
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Financial Statements and Exhibits.
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SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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ForeScout Technologies, Inc.
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Date: February 7, 2020
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By:
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/s/ Darren J. Milliken
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Name:
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Darren J. Milliken
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Title:
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Senior Vice President, General Counsel, Corporate Secretary
and Chief Compliance Officer
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