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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
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CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event Reported): December 30, 2005
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BLUE COAT SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware 000-28139 91-1715963
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
420 North Mary Avenue
Sunnyvale, California 94085
(408) 220-2200
(Addresses, including zip code, and telephone numbers, including area code,
of principal executive offices)
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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 (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(C) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On December 30, 2005, Blue Coat Systems, Inc. ("Blue Coat") entered
into an Agreement and Plan of Merger and Reorganization (the "Merger Agreement")
with Permeo Technologies, Inc., a privately held Delaware corporation
("Permeo"), Pivot Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Blue Coat ("Merger Sub"), and Chris Pacitti, as Stockholders'
Representative. Pursuant to the terms of the Merger Agreement, Merger Sub will
merge with and into Permeo, with Permeo surviving as a wholly-owned subsidiary
of Blue Coat (the "Merger").
At the effective time of the Merger, each outstanding share of
Permeo Common Stock and Preferred Stock will be exchanged for a number of shares
of Blue Coat Common Stock and an amount of cash based on agreed upon stock
exchange ratios and cash exchange ratios. Each option to purchase Permeo Common
Stock (whether vested or unvested) will be assumed by Blue Coat and will be
exercisable for a number of shares of Blue Coat Common Stock at an exercise
price adjusted to reflect the cash and stock exchange ratios of the Permeo
Common Stock. The various different stock and cash exchange ratios will be based
on the average closing price of Blue Coat's Common Stock on the NASDAQ National
Market over the ten trading day period ending on and including the trading day
that is the third trading day prior to the closing date of the transaction (the
"Average Closing Price"), and are subject to adjustment for the different
factors described in Article 2 of the Merger Agreement.
The consideration in the Merger consists of (i) shares of Blue Coat
Common Stock, (ii) cash and (iii) a payment under Permeo's Liquidation Bonus
Plan. If the Average Closing Price is $45.72 (which represents the closing price
of Blue Coat Common Stock on Friday, December 30, 2005), the Aggregate Merger
Consideration (as defined in the Merger Agreement) for all of Permeo's
securities other than unvested stock options will be approximately $60,800,000,
subject to certain adjustments as provided in Article 2 of the Merger Agreement.
The Aggregate Merger Consideration will fluctuate based on changes in the
Average Closing Price. Unvested stock options are being assumed by Blue Coat in
the transaction; the value of unvested stock options is not included in the
$60,800,000 amount above. Transaction expenses are also not included in the
$60,800,000 amount above. Blue Coat expects to loan Permeo $1,000,000 before the
closing of the transaction; the loan will not reduce the Aggregate Merger
Consideration.
The number of shares of Blue Coat Common Stock to be issued in the
transaction (including shares reserve for issuance upon the exercise of vested
(but not unvested) stock options) will be 1,104,444, less the quotient obtained
by dividing twelve percent of the Aggregate Merger Consideration by the Average
Closing Price; provided, however, that the number of shares of Blue Coat Common
Stock to be issued in the transaction will be subject to adjustment if the
Average Closing Price is below $36.00 or above $54.00 as provided in Article 2
of the Merger Agreement. In no event will the number of shares of Blue Coat
Common Stock to be issued in the transaction exceed 1,900,000.
The amount of cash that Blue Coat will issue in the transaction will
be $10,300,000, provided, however, that the amount of cash to be issued in the
transaction will be subject to adjustment if the Average Closing Price is below
$36.00 or above $54.00 and as otherwise provided in Article 2 of the Merger
Agreement.
Permeo has a Liquidation Bonus Plan under which it has committed to
pay twelve percent (12%) of the aggregate merger consideration to certain
employees of Permeo. Blue Coat has agreed to assume these obligations and will
pay 58% of such obligation in Blue Coat Common Stock (which number is in
addition to the shares of Blue Coat Common Stock referred to above) and 42% of
such obligation in cash (which amounts are in addition to the $10,300,000
referred to in the previous paragraph).
The Merger is subject to several conditions, including the approval
of the transaction by Permeo's stockholders and other customary closing
conditions. The Merger is intended to qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended, and has been
approved by the boards of directors of Blue Coat and Permeo. Blue Coat expects
to close the Merger in about March 2006.
The Merger Agreement contains representations, warranties and
covenants of Blue Coat and Permeo. The representations, warranties and covenants
contained in the Merger Agreement were made only for purposes of such agreement
and as of specific dates, were solely for the benefit of the parties to such
agreement, and may be subject to limitations agreed upon by the contracting
parties, including being qualified by disclosures exchanged between the parties
in connection with the execution of the Merger Agreement. The representations
and warranties may have been made for the purposes of allocating contractual
risk between the parties to the Merger Agreement instead of establishing these
matters as facts, and may be subject to standards of materiality applicable to
the contracting parties that differ from those applicable to investors.
Investors are not third-party beneficiaries under the Merger Agreement and
should not rely on the representations, warranties or covenants or any
descriptions thereof as characterizations of the actual state of facts or
conditions of Permeo or Blue Coat or any of their respective subsidiaries.
The foregoing description of the Merger and the Merger Agreement
does not purport to be complete and is qualified in its entirety by reference to
the complete text of the Merger Agreement and the Blue Coat press release dated
January 3, 2006, attached hereto as Exhibits 2.1 and 99.1, respectively, and
incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) EXHIBITS.
2.1 Agreement and Plan of Merger and Reorganization, dated
December 30, 2005, by and among Blue Coat Systems, Inc.,
Permeo Technologies, Inc., Pivot Acquisition Corp. and Chris
Pacitti, as Stockholders' Representative.
99.1 Press Release, dated January 3, 2006.
SIGNATURES
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.
BLUE COAT SYSTEMS, INC.
DATE: January 3, 2006 By: /s/ Brian NeSmith
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Brian NeSmith
Chief Executive Officer (Principal
Executive Officer)
INDEX TO EXHIBITS
Exhibit Number Description
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2.1 Agreement and Plan of Merger and Reorganization, dated December
30, 2005, by and among Blue Coat Systems, Inc., Permeo
Technologies, Inc., Pivot Acquisition Corp. and Chris Pacitti,
as Stockholders' Representative.
99.1 Press Release, dated January 3, 2006.