On April 3, 2019, Mr. Christopher Schaepe resigned from the Board, which resignation was not due to any disagreement with Aerohive or its executive management.
Thereafter on April 3, 2019, the Board held a meeting, which was attended by certain members of Aerohive’s executive management and representatives of Evercore and Wilson Sonsini. During the meeting, Mr. Flynn and Mr. John Ritchie, Aerohive’s Senior Vice President, Chief Financial Officer, and Chief Operating Officer, presented to the Board a summary of the preliminary review of Aerohive’s operating results for 1Q19. The Board then discussed such preliminary review and, in particular, the fact that such preliminary review indicated that Aerohive had underperformed its previously stated guidance for 1Q19 and the anticipated public announcement of the operating results for 1Q19. Following such discussion, Mr. Flynn updated the Board on his recent exchange with Mr. Meyercord and, after discussing the matter and again considering Aerohive’s preliminary review of its 1Q19 operating results, and after consulting with representatives of Evercore, the Board determined that Mr. Flynn should further engage with Mr. Meyercord regarding a potential strategic transaction between Aerohive and Extreme.
On April 4, 2019, Mr. Flynn sent an email to Mr. Meyercord indicating that Aerohive would be willing to make representatives of its management available for a preliminary meeting with Extreme but, before doing so, Extreme would have to enter into anon-disclosure agreement, and Mr. Flynn provided Mr. Meyercord with a form ofnon-disclosure agreement, which did not contain a standstill provision.
On April 8, 2019, Aerohive and Extreme entered into theNon-disclosure Agreement, which did not contain a standstill provision, and Extreme provided Aerohive an initial list of preliminary due diligence items it wanted to review during initial discussions.
From April 9, 2019 to April 18, 2019, Mr. Ritchie and Mr. Rémi Thomas, Extreme’s Chief Financial Officer, held multiple telephonic discussions to discuss certain financial matters related to Extreme’s potential acquisition of Aerohive.
On April 10, 2019, Mr. Flynn communicated to Mr. Meyercord that, after conducting its review of the results of its operations for 1Q19, Aerohive’s executive management determined that Aerohive’s operating results for 1Q19 underperformed Aerohive’s previously stated guidance.
On April 15, 2019, Aerohive publicly announced that its revenue for 1Q19 was expected to be approximately $33 million, which was below Aerohive’s previously stated guidance of between $36 million to $38 million; that, on a GAAP basis, Aerohive expected net loss per share for 1Q19 to be in the range of $0.15 to $0.16, compared with previously stated guidance of a net loss range of $0.08 to $0.10 per share; and that, on anon-GAAP basis, Aerohive expected net loss per share to be in the range of $0.09 to $0.10, compared with previously stated guidance of a net loss range of $0.01 to $0.03 per share.
On April 17, 2019, Aerohive and Extreme held anin-persondue-diligence meeting attended by Messrs. Flynn and Ritchie and Mr. Alan Amrod, Aerohive’s Senior Vice President, Product & Sales, and Mr. Meyercord and other members of Extreme’s management. During the meeting, the Aerohive representatives discussed, among other things, Aerohive’s product portfolio, marketing positioning,go-to-market strategy, and financial performance, and the attendees engaged in various related discussions.
Over the next several weeks, Aerohive and Extreme, and their respective representatives, engaged in general information exchanges, with particular focus with respect to Aerohive’s product roadmap and matters relevant to Extreme’s potential financing of the potential acquisition of Aerohive by Extreme.
On April 22, 2019, Mr. Meyercord communicated on behalf of Extreme to Mr. Flynn an oral indication of interest contemplating that Extreme would be willing to acquire Aerohive for up to $4.00 per share in cash, subject to confirmatory due diligence. In response, Mr. Flynn expressed an expectation that a substantially higher price would likely be needed to be proposed in order for the Board to be supportive of a potential transaction.
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