| Item 1.01 | Entry into a Material Definitive Agreement. |
Merger Agreement
On August 2,
2022, Ping Identity Holding Corp., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger
(the “Merger Agreement”) with Project Polaris Holdings, LP, a Delaware limited partnership (“Parent”),
and Project Polaris Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”).
Parent and Merger Sub are affiliates of Thoma Bravo Fund XV, L.P., a Delaware limited partnership (the “Fund”), and
private equity fund managed by Thoma Bravo, L.P. Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company,
with the Company surviving as a wholly owned subsidiary of Parent (the “Merger”).
Effect on Capital Stock
Upon the terms and subject
to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), (i) each
share of common stock, par value $0.001 per share, of the Company (“Company Common Stock”) that is issued and outstanding
as of immediately prior to the Effective Time (other than any shares of Company Common Stock that are held by the Company as treasury
stock or owned by Parent, Merger Sub or any other subsidiaries thereof, or any shares of Company Common Stock as to which appraisal rights
have been properly exercised in accordance with Delaware law), will be automatically cancelled, extinguished and converted into the right
to receive $28.50, without interest thereon (the “Per Share Price”), and (ii) each share of Company Common Stock
that is held by the Company as treasury stock or owned by Parent, Merger Sub or any other subsidiaries thereof, in each case, as of immediately
prior to the Effective Time, will be automatically cancelled and extinguished without any conversion thereof or consideration paid therefor.
Representations and Warranties and Covenants
The Company, Parent and
Merger Sub have each made customary representations, warranties and covenants in the Merger Agreement. Among other things, (i) the
Company has agreed, subject to certain exceptions, to use commercially reasonable efforts to conduct its business in all material respects
in the ordinary course of business and preserve intact in all material respects its significant commercial relationships with third parties,
from the date of the Merger Agreement until the earlier of the Effective Time or the termination of the Merger Agreement in accordance
with its terms, and not to take certain actions prior to the Effective Time without the prior written consent of Parent (not to be unreasonably
withheld, conditioned or delayed) and (ii) from the date of the Merger Agreement until the earlier of the Effective Time or the termination
of the Merger Agreement in accordance with its terms, the Company agreed not to solicit or engage in discussions or negotiations regarding
any alternative business combination transaction.
Treatment of Company
Equity Awards and Company Employee Stock Purchase Plan (“Company ESPP”)
Each
Company stock option that is outstanding as of immediately prior to the Effective Time with an exercise price per share less than the
Per Share Price, whether vested or unvested (a “Company Option”), will, at the Effective Time, be automatically cancelled
and converted into the right to receive an amount in cash (without interest and subject to applicable withholding taxes) equal to the
product of (i) the number of shares of Company Common Stock subject to such Company Option as of immediately prior to the Effective
Time and (ii) the excess, if any, of the Per Share Price over the per share exercise price of such Company Option.
Each
Company Option with an exercise price per share equal to or greater than the Per Share Price will be cancelled automatically at
the Effective Time for no consideration.
Each award of restricted
stock units (“RSUs”) of the Company that is outstanding as of immediately prior to the Effective Time or that vests
in accordance with its terms as a result of the consummation of the transactions contemplated by the Merger Agreement (the “Transactions”)
(a “Vested Company RSU”) will automatically, at the Effective Time, be cancelled and converted into the right to receive
an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Per Share Price
and (ii) the total number of shares of Company Common Stock subject to such Vested Company RSU as of immediately prior to the Effective
Time.
Each award of Company
RSUs that is outstanding as of immediately prior to the Effective Time that is not a Vested Company RSU (an “Unvested Company
RSU”) will automatically, at the Effective Time, be cancelled and converted into and will become the right to receive an amount
in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Per Share Price and (ii) the
total number of shares of Company Common Stock subject to such Unvested Company RSU as of immediately prior to the Effective Time (the
“Cash Replacement Company RSU Amounts”), which Cash Replacement Company RSU Amounts will, subject to the holder’s
continued service through the applicable vesting dates, generally vest and be payable at the same time as the Company RSUs for which the
Cash Replacement Company RSU Amounts were exchanged would have vested and been payable pursuant to its terms.
Each award of performance-based
restricted stock units of the Company (“Company PSUs”) that is outstanding and vested as of immediately prior to the
Effective Time or that vests in accordance with its terms as a result of the consummation of the Transactions (including any Company PSUs
for which the applicable vesting condition is met prior to or as a result of the consummation of the Transactions) (a “Vested
Company PSU”) will automatically, at the Effective Time, be cancelled and converted into the right to receive an amount in cash
(without interest and subject to applicable withholding taxes) equal to the product of (i) the Per Share Price and (ii) the
total number of shares of Company Common Stock subject to such Vested Company PSU as of immediately prior to the Effective Time.
Each
award of Company PSUs that is outstanding as of immediately prior to the Effective Time that is not a Vested Company PSU (an “Unvested
Company PSU”) will automatically, at the Effective Time, be cancelled and converted into and will become the right to receive
an amount in cash (without interest and subject to applicable withholding taxes) equal to the product of (i) the Per Share
Price and (ii) the total number of shares of Company Common Stock subject to such Unvested Company PSU immediately prior to the Effective
Time with any performance metrics deemed achieved at target levels of performance (the “Cash Replacement Company PSU Amounts”).
All Cash Replacement Company PSU Amounts will, subject to the holder’s continued service through the applicable vesting dates, generally
vest and be payable at the same time as the Company PSUs for which the Cash Replacement Company PSU Amounts were exchanged would have
vested and been payable pursuant to its terms.
As
soon as practicable following August 2, 2022, the Company will ensure that (i) except
for the offering period in effect as of such date, no new offering periods will be authorized or commenced under the Company ESPP, (ii) no
new participants will commence participation in the Company ESPP, (iii) no participant will be permitted to increase such participant’s
payroll deduction election or contribution rates, and (iv) each purchase right outstanding under the Company ESPP as of August 2,
2022 will be exercised no later than three business days prior to the Effective Time, with participants’ accumulated contributions
used to purchase shares of Company Common Stock in accordance with the terms of the Company ESPP on such final exercise date and with
the Company ESPP to be terminated effective as of immediately prior to the Effective Time. All shares of Company Common Stock purchased
on the final exercise date under the Company ESPP will be cancelled at the Effective Time and converted into the right to receive the
Per Share Price.
Closing Conditions
The
closing of the Merger (the “Closing”) is conditioned on certain conditions, including (i) the adoption of the
Merger Agreement by the holders of a majority of the outstanding Company Common Stock, (ii) the expiration or termination of any
applicable waiting periods under the Hart-Scott-Rodino Act, (iii) certain other approvals and clearances by government authorities,
and (iv) other customary conditions for a transaction of this type, such as the absence of any legal restraint prohibiting
the consummation of the Transactions and the absence of any Company Material Adverse Effect (as defined in the Merger Agreement).
Termination Rights
The
Merger Agreement contains certain customary termination rights for the Company and Parent, including (i) if the Merger is not consummated
by 11:59 p.m., New York City time, on March 2, 2023 (subject to an extension until August 2, 2023 under certain circumstances
for the purpose of obtaining certain regulatory approvals, in either case, the “Termination Date”), which may be extended
to February 2, 2024 in certain circumstances, (ii) if the required approval by a majority of the Company’s stockholders
is not obtained, (iii) if the other party breaches its representations, warranties or covenants in a manner that would cause the
conditions to the Closing set forth in the Merger Agreement to not be satisfied and fails to cure such breach, or (iv) if any judgment,
law or order prohibiting the Merger or the Transactions has become final and non-appealable. In addition, (x) subject to
compliance with certain terms of the Merger Agreement, the Merger Agreement may be terminated by the Company (prior to obtaining the required
Company stockholder approval) in order to enter into a definitive agreement providing for a superior proposal, (y) the Merger Agreement
may be terminated by the Company (A) if all conditions of Parent and Merger Sub to consummate the Closing are satisfied or waived,
(B) Parent fails to consummate the Merger three business days after the first date on which it is required to consummate the Closing
pursuant to the Merger Agreement and (C) the Company has irrevocably confirmed to Parent in writing that it is prepared to consummate
the Closing and (z) the Merger Agreement may be terminated by Parent if the Company’s board of directors changes its recommendation.
Termination Fee
If (i) the Merger
Agreement is validly terminated by (x) Parent or the Company, if the Merger has not occurred by the Termination Date (provided
that all conditions to Closing, other than approval of the Merger by a majority of the Company’s stockholders, have been satisfied
or waived at the Termination Date), (y) Parent or the Company, if the Company fails to obtain the required approval of the Merger
by a majority of the Company’s stockholders or (z) Parent, due to the Company’s uncured breach of its representations,
warranties and covenants set forth in the Merger Agreement, (ii) prior to such termination, a third party publicly announces and
does not withdraw a proposal for an alternative control transaction with the Company, and (iii) within one year following such termination,
the Company enters into a definitive agreement providing for an alternative control transaction, the Company will be required to pay Parent
a termination fee equal to $78,000,000 (the “Company Termination Fee”). The Company is also required to pay the Company
Termination Fee if (i) Parent terminates the Merger Agreement because the board of directors of the Company changes its recommendation
regarding the Merger or (ii) if, prior to obtaining the required approval by a majority of the Company’s stockholders, the
Company terminates the Merger Agreement to enter into a definitive agreement providing for an alternative control transaction the board
of directors of the Company deems to be superior to the Transactions, and the Company has not materially breached its non-solicitation
covenant with respect to such superior proposal. If the Merger Agreement is validly terminated and the Company Termination Fee is payable
by the Company to Parent in accordance with its terms, then, in addition to the Company Termination Fee, the Company will be required
to pay to Parent an amount equal to the sum of all Parent’s and Merger Sub’s documented and reasonable out-of-pocket expenses
in connection with the Merger, such amount not to exceed $1,500,000.
The foregoing description
of the Merger Agreement and the Transactions is only a summary, 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 to this report and incorporated
by reference herein. The Merger Agreement and the above description have been included to provide investors and security holders with
information regarding the terms of the Merger Agreement. They are not intended to provide any other factual information about the Company
or Parent. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of that agreement
and as of specific dates; were solely for the benefit of the parties to the Merger Agreement; and may be subject to limitations agreed
upon by the parties, including being qualified by confidential disclosures made by each contracting party to the other for the purposes
of allocating contractual risk between them. Investors should be aware that the representations, warranties and covenants or any description
thereof may not reflect the actual state of facts or condition of the Company or Parent. Moreover, information concerning the subject
matter of the representations, warranties and covenants may change after the date of the Merger Agreement. Further, investors should read
the Merger Agreement not in isolation, but only in conjunction with the other information that the respective companies include in reports,
statements and other filings they make with the U.S. Securities and Exchange Commission (the “SEC”).
Financing Commitment
Parent and Merger Sub
have secured committed financing which is subject to customary terms and conditions, consisting of equity financing from the Fund, the
aggregate proceeds of which will be sufficient for Parent to pay the aggregate merger consideration and all related fees and expenses
of the Company, Parent and Merger Sub (including in connection with the Equity Financing). Parent has committed to use its reasonable
best efforts to obtain the financing on the terms and conditions described in the commitment letter entered into with the Fund.
The Fund has provided
a limited guarantee in favor of the Company to guarantee, subject to certain limitations, the payment of reasonable out-of-pocket fees,
cost and expenses incurred by the Company in connection with any suit contemplated by, and solely to the extent reimbursable under the
Merger Agreement, and any monetary damages (subject to a cap of $193,500,000).
Voting Agreement
In
connection with the consummation of the transactions contemplated by the Merger Agreement, certain stockholders of the Company have executed
a voting agreement (the “Voting Agreement”) in favor of Parent concurrently with the execution of the Merger
Agreement, pursuant to which such stockholders have agreed, among other things, to vote all shares of Company Common Stock owned by them,
collectively constituting approximately 9.7% of the Company’s outstanding common stock, in favor of the approval and adoption of
the Merger Agreement.
The foregoing description
of the Voting Agreement is only a summary, does not purport to be complete and is subject to, and qualified in its entirety by reference
to, the full text of the Voting Agreement, which is attached as Exhibit 10.1 to this report and incorporated by reference herein.
