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Item 1.01
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Entry into a Material Definitive Agreement.
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On July 25, 2018, Imperva, Inc., a Delaware
corporation (“Imperva” or the “Company”) and its wholly-owned subsidiary Pahlmeyer Acquisition Sub, Inc., a Delaware corporation (“Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with Prevoty, Inc., a Delaware corporation (“Prevoty”) and Fortis Advisors LLC, as the Securityholders’ Agent.
Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Prevoty (the “Merger”), and upon consummation of
the Merger, Merger Sub will cease to exist and Prevoty will become a wholly-owned subsidiary of Imperva. Upon consummation of the Merger and the other transactions contemplated by the Merger Agreement (the “Closing”), all outstanding
vested shares of Prevoty capital stock and vested options to purchase Prevoty capital stock will be cancelled in exchange for an aggregate of $140 million in cash, subject to potential working capital and other adjustments. Outstanding unvested
shares of Prevoty stock will be exchanged for an aggregate of approximately $0.6 million, subject to continued vesting. In addition, Imperva will assume unvested options to purchase Prevoty capital stock held by persons who will join Imperva as
service providers following the Closing and Imperva has agreed to file a Registration Statement on Form S-8 covering these unvested Prevoty options. Upon the Closing, Imperva also expects to grant restricted stock units under the Company’s
Amended and Restated 2015 Equity Inducement Plan to Prevoty employees valued at approximately $4.6 million based on the average closing price of the six trading days preceding July 24, 2018 of $56.35 per share.
The Merger Agreement contains customary representations and warranties by Imperva, Merger Sub and Prevoty. The Closing of the Merger is
subject to several closing conditions, including, among other things, (i) the accuracy, in all material respects, of the representations and warranties of the parties at the Closing, (ii) compliance in all material respects by the parties
with their respective covenants, (iii) 75% of all Prevoty employees and certain key employees and vice presidents accepting employment offers from Imperva and (iv) other customary closing conditions. The Merger is anticipated to close in the
third quarter of 2018 and either Imperva or Prevoty may terminate the Merger Agreement if the Closing has not occurred on or before October 23, 2018.
The Merger Agreement also contains customary covenants of Prevoty, including, among other things, covenants to conduct its business in the
ordinary course between the execution of the Merger Agreement and the Closing and not to engage in specified types of transactions during such period (including restrictions on solicitation of proposals with respect to alternative transactions).
Pursuant to the Merger Agreement, following the Closing, the Prevoty securityholders receiving a portion of the cash consideration have agreed to indemnify Imperva for certain losses related to breaches of representations or warranties and
covenants, among other things, and subject to limits specified in the Merger Agreement. As security for such indemnification obligations, the parties agreed that, at the Closing, an amount equal to $21 million in cash shall be deposited into an
escrow fund for a period of 18 months (subject to specified exceptions) as security for the indemnification obligations of the Prevoty securityholders.
The foregoing description of the Merger Agreement and the Merger is only a summary, does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference. The representations, warranties and covenants contained in the Merger Agreement are subject to qualifications and
limitations agreed to by the respective parties, including information contained in confidential schedules exchanged between the parties, were made only for the purposes of such agreement and as of specified dates and were solely for the benefit of
the parties to such agreement. A number of the representations and warranties have been made for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts and may be subject to a
contractual standard of materiality different from what might be viewed as material to investors. Investors are not third party beneficiaries under the Merger Agreement. Moreover, information concerning the subject matter of the representations and
warranties may change after the date of the Merger Agreement or the date of the Closing, which subsequent information may or may not be fully reflected in Imperva’s public disclosures. Accordingly, investors should not rely on the
representations and warranties as characterizations of the actual state of facts or condition of Prevoty, Imperva, or any of their respective subsidiaries or affiliates.
A copy of the press release issued by Imperva on July 26, 2018 concerning the Merger is filed herewith as Exhibit 99.1 and is
incorporated herein by reference