UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
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☐ | Preliminary Proxy Statement | |
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☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material under §240.14a-12 |
CA, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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August 10, 2018
Dear CA, Inc. Stockholder:
On July 11, 2018, CA, Inc. (which we refer to as CA, we or us) entered into an Agreement and Plan of Merger (which we refer to as the merger agreement) with Broadcom Inc. (which we refer to as Broadcom) and Collie Acquisition Corp., a wholly owned subsidiary of Broadcom (which we refer to as Merger Sub), pursuant to which Broadcom will acquire CA in a merger transaction (which we refer to as the merger) if certain conditions to the merger are satisfied, including the affirmative vote of the holders of a majority of outstanding shares of CA common stock. We are calling a special meeting of CAs stockholders to be held on September 12, 2018, at 10:00 a.m., Eastern time, at the Warwick New York Hotel, located at 65 W 54th Street, New York, NY 10019, to enable CAs stockholders to vote on the merger agreement in order to satisfy this condition to the merger.
Upon completion of the merger, you will be entitled to receive $44.50 in cash, without interest, for each share of CA common stock that you hold as of immediately prior to the effective time of the merger (unless you properly exercise your appraisal rights under applicable law). This price represents a premium of approximately:
| 20% based on the closing price per share of $37.21 on July 11, 2018, the last trading day before the public announcement of the execution of the merger agreement; |
| 23% over the $36.30 volume weighted average trading price of CAs common stock during the 30-day period prior to the public announcement of the execution of the merger agreement; |
| 26% over the $35.33 volume weighted average trading price of CAs common stock during the 90-day period prior to the public announcement of the execution of the merger agreement; and |
| 19% over the highest price at which CAs common stock traded during the 10-year period prior to the public announcement of the execution of the merger agreement. |
At a meeting on July 11, 2018, the board of directors of CA (which we refer to as the CA board) unanimously determined that the merger agreement and merger are advisable, and fair to and in the best interests of CAs stockholders, and approved the merger agreement and the merger. The CA board unanimously recommends that you vote FOR the proposal described herein to adopt the merger agreement in order to satisfy a condition to the merger.
Your vote is very important. Whether or not you plan to attend the special meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope, or submit your proxy by telephone or the Internet. If you attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. The failure to vote your shares of CA common stock will have the same effect as a vote AGAINST the proposal to adopt the merger agreement. If your shares of CA common stock are held in street name by your bank, brokerage firm or other nominee, your bank, brokerage firm or other nominee will be unable to vote your shares of CA common stock without instructions from you. You should instruct your bank, brokerage firm or other nominee to vote your shares of CA common stock in accordance with the procedures provided by your bank, brokerage firm or other nominee. The failure to instruct your bank, brokerage firm or other nominee to vote your shares of CA common stock FOR the proposal to adopt the merger agreement will have the same effect as voting AGAINST the proposal to adopt the merger agreement.
We are also soliciting the approval of CA stockholders for two additional proposals to be considered at the special meeting. The first is a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement. The second is a proposal to approve certain compensation matters that we are required to submit for the approval, on an advisory basis, of CA stockholders at the special meeting under applicable law. However, because approval of such compensation matters is advisory in nature, it will not be binding upon CA, the CA board, the CA boards compensation committee or Broadcom. Further, some of the compensation plans and arrangements that are being submitted for stockholder approval are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, if the merger is completed, certain compensation plans and arrangements will or may become payable to CAs named executive officers in connection with the merger in accordance with the terms and conditions applicable to such compensation plans and arrangements regardless of the outcome of the vote on this compensation proposal.
The accompanying proxy statement provides you with detailed information about the merger, the merger agreement, the special meeting and the compensation related proposal described above. A copy of the merger agreement is attached as Annex A to the proxy statement. We encourage you to read the entire proxy statement and its annexes, including the merger agreement, carefully. You may also obtain additional information about CA from documents we have filed with the Securities and Exchange Commission.
If you have any questions or need assistance voting your shares of CA common stock, please contact our proxy solicitor:
MacKenzie Partners, Inc.
1407 Broadway
New York, NY 10018
Stockholders May Call:
(800) 322-2885 (toll-free from the U.S. or Canada);
(212) 929-5500 (from other locations)
Thank you in advance for your cooperation and continued support.
Sincerely,
Michael P. Gregoire
Chairman of the CA Board of Directors and
Chief Executive Officer
The proxy statement is dated August 10, 2018 and is first being mailed to CAs stockholders on or about August 10, 2018.
CA, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
CA, Inc. (which we refer to as CA, we or us) will hold a special meeting of stockholders on September 12, 2018 at 10:00 a.m., Eastern time, at the Warwick New York Hotel, located at 65 W 54th Street, New York, NY 10019, for the following purposes:
1. To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of July 11, 2018 (as it may be amended or modified from time to time, the merger agreement), by and among CA, Broadcom Inc., a Delaware corporation (Broadcom), and Collie Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Broadcom (Merger Sub), pursuant to which Merger Sub will be merged with and into CA (the merger) and CA will become a wholly owned subsidiary of Broadcom.
2. To approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.
3. To approve, on an advisory (non-binding) basis, specified compensation that will or may become payable to the named executive officers of CA in connection with the merger (the CA advisory proposal on specified compensation).
In accordance with our bylaws, the close of business on August 9, 2018 has been fixed as the record date for the determination of the stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. All stockholders of record are cordially invited to attend the special meeting in person.
Your vote is very important, regardless of the number of shares of CA common stock that you own. The merger cannot be completed unless the merger agreement is adopted by the affirmative vote of the holders of a majority of the outstanding shares of CA common stock entitled to vote thereon. Even if you plan to attend the special meeting in person, we request that you complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or submit your proxy by telephone or the Internet prior to the special meeting to ensure that your shares of CA common stock will be represented at the special meeting if you are unable to attend. If you fail to return your proxy card or fail to submit your proxy by phone or the Internet, your shares of CA common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote AGAINST the proposal to adopt the merger agreement.
If you are a stockholder of record, voting in person at the special meeting will revoke any proxy previously submitted. If you hold your shares of CA common stock through a bank, brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee in order to vote.
The CA board has unanimously determined that the merger agreement and merger are advisable, and fair to and in the best interests of CAs stockholders, and has unanimously approved in all respects the merger agreement and the other transactions contemplated by the merger agreement. The CA board made its determination after consultation with its legal and financial advisors and consideration of a number of factors. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement.
The CA board unanimously recommends that you vote:
| FOR the proposal to adopt the merger agreement |
| FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement |
| FOR the CA advisory proposal on specified compensation |
If you plan to attend the special meeting in person, please mark the designated box on the enclosed proxy card. Alternatively, if you utilize the Internet voting system, please indicate your plans to attend the special meeting when prompted to do so by the system. If you are a stockholder of record, you should bring the top half of the enclosed proxy card as your admission card and present the card upon entering the special meeting. If you are planning to attend the special meeting and your shares are held in street name by a bank, brokerage firm or other nominee, you should ask the bank, brokerage firm or other nominee for a legal proxy or bring your most recent account statement to the special meeting so that we can verify your ownership of CA common stock. Please note, however, that if your shares are held in street name and you do not bring a legal proxy from the record owner, you will be able to attend the special meeting, but you will not be able to vote at the special meeting.
The accompanying proxy statement provides a detailed description of the merger and the merger agreement. We urge you to read the accompanying proxy statement, including any documents incorporated by reference, and the annexes carefully and in their entirety. If you have any questions concerning the merger agreement, the merger or the proxy statement of which this notice forms a part, would like additional copies of the proxy statement or need help voting your shares of CA common stock, please contact CAs proxy solicitor:
MacKenzie Partners, Inc.
1407 Broadway
New York, NY 10018
Stockholders May Call:
(800) 322-2885 (toll-free from the U.S. or Canada);
(212) 929-5500 (from other locations)
CA stockholders who do not expect to attend the special meeting in person, but wish for their CA common stock to be voted on matters to be transacted at the special meeting, are urged to sign, date and mail the enclosed proxy in the accompanying envelope, to which no postage need be affixed if mailed in the United States. You also have the option of voting your shares by telephone or on the Internet. Voting instructions are printed on your proxy card. If you vote by telephone or Internet, you do not need to mail back your proxy. Voting promptly, regardless of the number of shares you hold, will aid CA in reducing the expense of additional proxy solicitation. The giving of such proxy does not affect your right to vote in person in the event you attend the meeting.
By Order of the CA Board of Directors,
Michael P. Gregoire
Chairman of the CA Board of Directors and
Chief Executive Officer
New York City, New York
August 10, 2018
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The following summary highlights selected information contained in this proxy statement but may not contain all the information that may be important to you. Accordingly, we encourage you to read carefully this entire proxy statement, its annexes and the documents referred to in this proxy statement. Each item in this summary includes a page reference directing you to a more complete description of that topic. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under the section of this proxy statement entitled Where You Can Find More Information, beginning on page 102.
Parties to the Merger (page 21)
CA, Inc. (which we refer to as CA, we or us) is a Delaware corporation headquartered in New York City. CA is a global leader of software solutions, including enterprise solutions and mainframe solutions, for businesses, government agencies and organizations of various types and sizes. Our solutions enable customers to plan, develop, automate, manage and secure applications across mobile, cloud, distributed and mainframe platforms. Our principal executive offices are located at 520 Madison Avenue, New York, New York 10022 and our telephone number is (800) 225-5224. For more information about CA, please visit our website at https://www.ca.com/us.html. Our website address is provided as an inactive textual reference only. The information contained on our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the SEC. See also the section of this proxy statement entitled Where You Can Find More Information, beginning on page 102. CA common stock is publicly traded on the NASDAQ Global Select Market (which we refer to as NASDAQ) under the symbol CA.
Broadcom Inc. (which we refer to as Broadcom) is a Delaware corporation headquartered in San Jose, California. Broadcom is a leading designer, developer and global supplier of a broad range of digital and analog semiconductor connectivity solutions. Broadcoms extensive product portfolio serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial & other. Applications for Broadcoms products in these end markets include: data center networking, home connectivity, set-top box, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and electronic displays. Broadcoms principal executive offices are located at 1320 Ridder Park Drive, San Jose, California 95131, and its telephone number is (408) 433-8000.
Collie Acquisition Corp. (which we refer to as Merger Sub) is a Delaware corporation that was formed by Broadcom solely for the purpose of entering into the merger agreement and completing the transactions contemplated by the merger agreement. Upon completion of the merger, Merger Sub will cease to exist.
In this proxy statement, we refer to the Agreement and Plan of Merger, dated July 11, 2018, as it may be amended or modified from time to time, among CA, Broadcom and Merger Sub, as the merger agreement, the merger of Merger Sub with and into CA as the merger, and each of CA, Broadcom and Merger Sub as a party.
Under the terms of the merger agreement, if the closing conditions in the merger agreement are satisfied (or waived if permissible to do so), Broadcom will acquire CA through the merger of Merger Sub with and into CA. As a result of this merger, each issued and outstanding share of CA common stock (other than shares (i) held in treasury by CA or owned by Broadcom or Merger Sub, (ii) owned by any wholly owned subsidiary of Broadcom or of CA and (iii) held by stockholders of CA who have properly and validly exercised, and not withdrawn or otherwise lost, their appraisal rights in accordance with the General Corporation Law of the State of Delaware (which we refer to as the DGCL)) will be converted into the right to receive $44.50 in cash, without interest
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(which we refer to as the merger consideration) and will thereafter cease to represent equity in CA. On July 11, 2018, the last trading day prior to the public announcement of the execution of the merger agreement, the closing price of CA common stock on NASDAQ was $37.21 per share. On August 9, 2018, the most recent practicable date before we commenced mailing this proxy statement to our stockholders, the closing price for CA common stock on NASDAQ was $43.36 per share. You are encouraged to obtain current market quotations for CA common stock in connection with voting your shares of CA common stock.
If the merger is completed, CA will become a wholly owned subsidiary of Broadcom and will cease to be an independent publicly traded company and CA common stock will be delisted from NASDAQ and deregistered under the Securities Exchange Act of 1934, as amended. This will make certain provisions of the Exchange Act, such as the requirement of furnishing a proxy in connection with shareholder meetings, no longer applicable to CA.
Material U.S. Federal Income Tax Consequences of the Merger (page 51)
The receipt of the $44.50 merger consideration in cash in exchange for shares of CA common stock pursuant to the merger will generally be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local and/or non-U.S. income or other tax laws. In general, for U.S. federal income tax purposes, a U.S. holder (as defined below in the section of this proxy statement entitled The Merger (Proposal 1) Material U.S. Federal Income Tax Consequences of the Merger beginning on page 51) who exchanges CA common stock for cash in the merger will recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received (determined before deduction of any applicable withholding taxes) with respect to such shares and the U.S. holders adjusted tax basis in such shares. You should consult your tax advisor for complete analysis of the U.S. federal, state, local and/or non-U.S. tax consequences of the merger that are applicable to you. See the section of this proxy statement entitled The Merger (Proposal 1) Material U.S. Federal Income Tax Consequences of the Merger beginning on page 51.
Financing of the Merger (page 42)
The merger is not conditioned upon any financing arrangements or contingencies. Broadcom has informed us that the total funds needed to complete the merger and pay all amounts due under the merger agreement at the completion of the merger, including amounts due to CAs stockholders and holders of equity awards under the merger agreement and amounts required to refinance certain indebtedness of CA or its subsidiaries and to pay fees, costs and expenses related to the foregoing, will be funded through Broadcoms cash on hand and new third party debt financing.
In connection with its entry into the merger agreement, Broadcom entered into a debt commitment letter with certain financial institutions pursuant to which such financial institutions have committed to provide, subject to the terms and conditions of the debt commitment letter, senior unsecured term facilities in aggregate principal amount of approximately $18 billion. The availability of the term facilities is conditioned on the consummation of the merger in accordance with the terms of the merger agreement (subject to certain customary exceptions and qualifications) and certain other customary conditions. We believe, but cannot assure you, that Broadcoms cash on hand, combined with the debt financing described in the debt commitment letter, will be sufficient to complete the merger.
Conditions to the Merger (page 76)
The respective obligations of CA, Broadcom and Merger Sub to consummate the merger are subject to the satisfaction (or waiver if permitted under the merger agreement) of customary conditions, including the adoption of the merger agreement by CAs stockholders by the affirmative vote of a majority of the outstanding shares of CA common stock, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act), and the receipt of approvals or clearances required under the antitrust laws of the European Union and Japan.
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The obligations of Broadcom and Merger Sub to consummate the merger are also subject to the absence of a CA material adverse effect (as defined in the section of this proxy statement entitled The Merger Agreement Representations and Warranties beginning on page 60) after the date of the merger agreement that is continuing, the accuracy of CA representations and warranties and compliance by CA with its obligations and agreements under the merger agreement, as described in the section of this proxy statement entitled The Merger Agreement Representations and Warranties beginning on page 60.
The merger agreement does not include a financing condition.
Under the terms of the merger agreement, Broadcom and CA are required to close the merger on the 3rd business day following the date on which the closing conditions to the merger are satisfied. However, if the closing date would occur either within 35 days of the end of Broadcoms fiscal year or within 15 days of the end of any of Broadcoms fiscal quarters, Broadcom may, upon written notice to CA, choose to defer the closing of the merger to the 1st business day of its next fiscal quarter (or to another date agreed to between CA and Broadcom). See the section of this proxy statement entitled The Merger Agreement When the Merger Becomes Effective beginning on page 56.
Recommendation of the CA Board of Directors (page 30)
After careful consideration of various factors described in the section of this proxy statement entitled The Merger (Proposal 1) Recommendation of the CA Board of Directors beginning on page 30, the CA board of directors (which we refer to as the CA board) unanimously (1) determined that the merger agreement and merger were advisable, and fair to and in the best interests of CAs stockholders, (2) approved the merger agreement and the other transactions contemplated thereby, (3) directed that a special meeting of CAs stockholders be held for the purposes of voting on the adoption of the merger agreement, and (4) recommended that CAs stockholders vote in favor of the adoption of the merger agreement.
In considering the recommendation of the CA board with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, yours. These interests include, among others, (i) the assumption of certain CA equity awards by Broadcom in connection with the merger, (ii) the cancellation of certain CA equity awards in exchange for specified cash payments in connection with the merger, (iii) the payment of severance benefits upon certain qualifying terminations of employment in connection with or following the merger, and (iv) the right to certain indemnification and insurance benefits pursuant to the terms of the merger agreement. The CA board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of CA. See the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger beginning on page 43.
The CA board unanimously recommends that you vote:
| FOR the proposal to adopt the merger agreement |
| FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement |
| FOR the CA advisory proposal on specified compensation |
Opinion of Qatalyst Partners LP (page 33)
We retained Qatalyst Partners LP (which we refer to as Qatalyst Partners) to act as our financial advisor in connection with a potential transaction involving CA, such as the merger. We selected Qatalyst Partners to act
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as our financial advisor based on its qualifications, expertise, reputation and knowledge of CAs business and the industry in which CA operates, as well as Qatalyst Partners prior experience representing leading software companies in similar transactions. At the meeting of the CA board on July 11, 2018, Qatalyst Partners rendered to the CA board its oral opinion, subsequently confirmed in writing, to the effect that, as of July 11, 2018, and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the $44.50 merger consideration in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the CA stockholders (other than Broadcom, CA and their respective affiliates), was fair, from a financial point of view, to such stockholders.
The full text of the opinion of Qatalyst Partners, dated as of July 11, 2018, is attached to this proxy statement as Annex B and is incorporated into this proxy statement by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. You should read the opinion carefully in its entirety.
Qatalyst Partners opinion was provided to the CA board and addressed only, as of the date of the opinion, the fairness, from a financial point of view, of the $44.50 merger consideration per share in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the CA stockholders (other than Broadcom, CA and their respective affiliates), to such stockholders. It does not address any other aspect of the merger. It does not constitute a recommendation to any stockholder of CA as to how to vote with respect to the merger or any other matter and does not in any manner address the price at which the shares of CA common stock will trade at any time.
For a description of the opinion that the CA board received from Qatalyst Partners, see The Merger (Proposal 1) Opinion of Qatalyst Partners LP beginning on page 33.
Interests of Certain Persons in the Merger (page 43)
When considering the recommendation of the CA board that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, those of our stockholders generally. These interests include, among others, (i) the assumption of certain CA equity awards by Broadcom in connection with the merger, (ii) the cancellation of certain CA equity awards in exchange for specified cash payments in connection with the merger, (iii) the payment of severance benefits upon certain qualifying terminations of employment in connection with or following the merger, and (iv) the right to certain indemnification and insurance benefits pursuant to the terms of the merger agreement. The CA board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of CA.
No-Solicitation of Competing Acquisition Proposals (page 63)
Under the terms of the merger agreement, we have agreed not to solicit, encourage or facilitate any competing acquisition proposals for CA, enter into discussions or negotiations with any third parties regarding any actual or potential competing acquisition proposals for CA or enter into any agreements with a third party regarding any actual or potential competing acquisition proposals for CA.
Notwithstanding the foregoing restrictions, if we receive an unsolicited competing acquisition proposal, prior to CA stockholders adopting the merger agreement at the special meeting, that the CA board determines to be superior to the merger or reasonably be expected to lead to a proposal that is superior to the merger, subject to certain conditions set forth in the merger agreement, we are permitted to engage in discussions and negotiations with the party that sent the competing acquisition proposal (and its representatives, advisors and debt financing
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sources) and furnish non-public information to that party (and its representatives, advisors and debt financing sources).
Under the terms of the merger agreement and subject to certain conditions set forth therein (including the payment of a $566 million termination fee), prior to CA stockholders adopting the merger agreement at the special meeting, we may terminate the merger agreement to accept a competing acquisition proposal that the CA board has determined to be superior to the merger from a financial point of view. See The Merger Agreement No Solicitation of Other Offers by CA beginning on page 63 and The Merger Agreement Change of Recommendation; Match Rights beginning on page 66.
Termination of Merger Agreement (page 77)
Among other customary circumstances, Broadcom or CA may terminate the merger agreement if:
| any governmental entity of competent jurisdiction has issued a final, non-appealable order, injunction, decree or ruling permanently restraining, enjoining or otherwise prohibiting the consummation of the merger; |
| the effective time of the merger has not occurred on or before January 11, 2019 (which we refer to as the outside date); however, (i) if, on the outside date, all of the conditions to the merger (other than those conditions relating to antitrust approvals or no injunction (to the extent the relevant injunction or order is in respect of, or any such law is, the HSR Act or any other antitrust law) and those conditions that by their nature are to be satisfied or waived on the closing date of the merger (if such conditions would be satisfied or validly waived were the closing of the merger to occur at such time)) shall have been satisfied or waived, then the outside date shall automatically be extended for a period of two months, and (ii) this right to terminate will not be available to any party whose action or failure to fulfill any obligation was a proximate cause of the failure of the effective time of the merger to occur prior to the outside date and such action or failure to act constitutes a material breach of the merger agreement; or |
| the special meeting (including any adjournments or postponements thereof) has concluded and the CA stockholders have not adopted the merger agreement by the affirmative vote of a majority of the outstanding shares of CA common stock. |
Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.
Only a stockholder of record may submit a demand for appraisal. To exercise appraisal rights, the stockholder of record must (1) submit a written demand for appraisal to CA before the vote is taken on the proposal to adopt the merger agreement; (2) not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement; (3) continue to hold the subject shares of CA common stock of record through the effective time of the merger; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of CA unless certain stock ownership conditions are satisfied by the stockholders seeking appraisal, as described further in the section of this proxy statement entitled Appraisal Rights beginning on page 94. The DGCL requirements for exercising appraisal rights are described in further detail in this proxy statement, and a copy of Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, is attached as Annex C to this proxy statement. If you hold your shares of CA common stock through a bank, broker or other nominee and you wish to
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exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee.
CA Advisory Proposal on Specified Compensation (page 93)
Section 14A of the Exchange Act, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires that we provide our stockholders with the opportunity to vote to approve, on an advisory, non-binding basis, the payment of certain compensation that will or may become payable to our named executive officers in connection with the merger, as disclosed in the section of this proxy statement entitled The Merger (Proposal 1) Specified Compensation That Will or May Become Payable to Our Named Executive Officers in Connection With the Merger beginning on page 48 of this proxy statement and the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger as relates to our named executive officers beginning on page 43 of this proxy statement.
We are asking our stockholders to indicate their approval of the various compensation that will or may become payable to our named executive officers in connection with the merger. These payments are set forth in the section of this proxy statement entitled The Merger (Proposal 1) Specified Compensation That Will or May Become Payable to Our Named Executive Officers in Connection With the Merger beginning on page 48 and the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger as relates to our named executive officers beginning on page 43 of this proxy statement.
Accordingly, we are seeking approval of the following resolution at the special meeting:
RESOLVED, that the stockholders of CA approve, on a non-binding, advisory basis, the compensation that will or may become payable to our named executive officers that is based on or otherwise relates to the merger as disclosed pursuant to Item 402(t) of Regulation S-K in the section of this proxy statement entitled The Merger (Proposal 1) Specified Compensation That Will or May Become Payable to Our Named Executive Officers in Connection With the Merger and the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger as it relates to our named executive officers.
Approval of the CA advisory proposal on specified compensation requires the affirmative vote of holders of a majority of the outstanding shares of CA common stock entitled to vote thereon present in person or represented by proxy at the special meeting.
The vote on this non-binding proposal regarding certain merger-related executive compensation arrangements is a vote separate and apart from the vote on the proposal to adopt the merger agreement and the proposal to adjourn the special meeting. Accordingly, you may vote FOR the proposal to adopt the merger agreement and the proposal to adjourn the special meeting and vote AGAINST or ABSTAIN for this non-binding proposal regarding certain merger-related executive compensation arrangements (and vice versa).
Since your vote is advisory, it will not be binding upon CA, the CA board, the CA boards compensation committee or Broadcom. Further, the underlying plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the advisory (non-binding) vote, if the merger is consummated, our named executive officers will be eligible to receive the compensation that is based on or otherwise relates to the merger in accordance with the terms and conditions applicable to those payments.
The CA board believes that the compensation that will or may become payable to our named executive officers in connection with the merger, as described in this proxy statement, is appropriate, and unanimously recommends that you vote FOR approval of the compensation that will or may become
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payable to our named executive officers in connection with the merger as described in this proxy statement.
Time, Place and Purpose of the Special Meeting (page 81)
This proxy statement is being furnished to CAs stockholders as part of the solicitation of proxies by the CA board for use at the special meeting to be held on September 12, 2018 at 10:00 a.m., Eastern time, at the Warwick New York Hotel, located at 65 W 54th Street, New York, NY 10019, or at any postponement or adjournment thereof.
At the special meeting, holders of the shares of common stock of CA will be asked to approve the proposals to:
(1) adopt the merger agreement
(2) adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement
(3) approve, on an advisory (non-binding) basis, specified compensation that will or may become payable to the named executive officers of CA in connection with the merger
Record Date and Quorum (page 81)
We have fixed the close of business on August 9, 2018, as the record date for the special meeting, and only holders of record of CA common stock as of the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of CA common stock as of the record date. As of the record date, there were 418,165,884 shares of CA common stock outstanding and entitled to vote. Each share of CA common stock entitles its holder to one vote on each matter properly brought before the special meeting. The holders of a majority of the aggregate voting power of the issued and outstanding shares of CA common stock entitled to vote thereat, present in person or represented by proxy, will constitute a quorum for the transaction of business at the special meeting.
Vote Required (page 82)
Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of CA common stock entitled to vote thereon.
Assuming a quorum is present, approval of the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement, requires the affirmative vote of holders of a majority of the voting power of the issued and outstanding shares of CA common stock present in person or represented by proxy at the special meeting and entitled to vote thereon.
Assuming a quorum is present, approval of the CA advisory proposal on specified compensation requires the affirmative vote of holders of a majority of the outstanding shares of CA common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. Because this vote is advisory in nature only, it will not be binding on CA, the CA board, the CA boards compensation committee or Broadcom. Approval of the CA advisory proposal on specified compensation is not a condition to completion of the merger, and failure to adopt the CA advisory proposal on specified compensation will have no effect on the vote to adopt the merger agreement and the transactions contemplated by the merger agreement. Accordingly, because we are contractually obligated to pay the compensation, the compensation will be payable, subject only to the conditions applicable thereto and any future amendments thereto, regardless of the outcome of the advisory (non-binding)
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vote. Additional information about this advisory (non-binding) vote is provided in the section of this proxy statement entitled CA Advisory Proposal on Specified Compensation (Proposal No. 3) beginning on page 93.
Voting Agreement (page 87)
Concurrently with the execution of the merger agreement, Broadcom and Merger Sub entered into a voting agreement with Careal Property Group AG, BigPoint Holding AG, Martin Haefner and Eva Maria Bucher-Haefner, who as of the date of the voting agreement, collectively beneficially owned 103,813,380 shares of CA common stock, or approximately 25% of the outstanding shares of CA common stock. The voting agreement generally requires these stockholders (i) not to transfer, sell, assign, gift, hedge, distribute, pledge or otherwise dispose of or enter into any derivative arrangement with respect to, or create or permit to exist any encumbrance on the shares of CA common stock beneficially owned by them; (ii) to be counted as present for purposes of determining quorum at any annual or special meeting of CA stockholders; (iii) to vote all shares of CA common stock beneficially owned by them in favor of adoption of the merger agreement, in favor of any proposal to adjourn or postpone any such meeting if there are not sufficient votes to adopt the merger agreement, and against any action, proposal agreement or transaction (including any alternative to the merger) involving CA that is intended, or would reasonably be expected to, postpone or prevent the consummation of the merger; and (iv) not to take any action that would have the effect of impairing these stockholders from performing their obligations under the voting agreement or that would, or would reasonably be expected to, have the effect of preventing, impairing or materially delaying the consummation of the merger or the other transactions contemplated by the merger agreement. For more information, see the section of this proxy statement entitled The Voting Agreement beginning on page 87.
Proxies and Revocation (page 84)
Any stockholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet, by returning the enclosed proxy card in the accompanying prepaid reply envelope or may vote in person by appearing at the special meeting.
If your shares of CA common stock are held in street name through a bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of CA common stock using the instructions provided by your bank, brokerage firm or other nominee. If you do not give instructions to your bank, brokerage firm or other nominee on how to vote your shares of CA common stock for any of the proposals described in this proxy statement, your bank, brokerage firm or nominee will not be entitled to vote your shares for you and a broker non-vote will occur for such proposal. Banks, brokerage firms and other nominees typically have discretionary voting authority with respect to routine matters; however, they typically do not have discretionary authority to vote on non-routine matters. We believe the proposals described in this proxy statement are non-routine matters. Accordingly, if you hold your shares of CA common stock through a bank, brokerage firm or other nominee and do not provide your bank, brokerage firm or other nominee with instructions on how to vote your shares of CA common stock on the proposal to adopt the merger agreement, your bank, brokerage firm or other nominee will generally not be permitted to vote your shares of CA common stock on the proposal to adopt the merger agreement.
If you fail to submit a proxy or vote in person at the special meeting, or do not provide your bank, brokerage firm or other nominee with voting instructions, as applicable, your shares of CA common stock will not be voted on the proposal to adopt the merger agreement, which will have the same effect as a vote AGAINST the proposal to adopt the merger agreement, but will not have an effect on approval of the proposal to adjourn the special meeting or the CA advisory proposal on specified compensation if a quorum is present. Abstentions will be counted for purposes of establishing if a quorum is present, but broker non-votes will not be counted for purposes of establishing if a quorum is present.
You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting at a later date through any of the methods available to you, by giving written notice of revocation to our Corporate Secretary, which must be filed with our Corporate Secretary by the time the special meeting begins, or by attending the special meeting and voting in person.
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING, THE MERGER AGREEMENT AND THE MERGER
The following questions and answers are intended to address briefly some commonly asked questions regarding the special meeting, the merger agreement and the merger. These questions and answers may not address all questions that may be important to you as a CA stockholder. Please refer to the Summary and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement, which you should read carefully and in their entirety. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under the section of this proxy statement entitled Where You Can Find More Information beginning on page 102.
Q: | What is the proposed transaction and what effects will it have on CA? |
A: | The proposed transaction is the acquisition of CA by Broadcom pursuant to the merger agreement. If the proposal to adopt the merger agreement is approved by our stockholders and the other closing conditions under the merger agreement have been satisfied or waived, Merger Sub will merge with and into CA, with CA being the surviving corporation in the merger. As a result of the merger, CA will become a wholly owned subsidiary of Broadcom and will no longer be a publicly held corporation, and you will no longer have any equity in CA. In addition, CA common stock will be delisted from NASDAQ and deregistered under the Exchange Act. This will make certain provisions of the Exchange Act, such as the requirement of furnishing a proxy in connection with shareholder meetings, no longer applicable to CA. |
Q: | What will I receive if the merger is completed? |
A: | Upon completion of the merger, you will be entitled to receive the $44.50 merger consideration in cash, without interest, for each share of CA common stock that you own immediately prior to the effective of the merger (as described in more detail in the section of this proxy statement entitled The Merger Agreement Merger Consideration Payable Pursuant to the Merger beginning on page 56), unless you have properly exercised, perfected and not validly withdrawn or otherwise lost your appraisal rights under the DGCL with respect to such shares, and certain other conditions under the DGCL are satisfied (as described in more detail in the section of this proxy statement entitled The Merger Agreement Dissenters Rights beginning on page 58). You will not own any shares of the capital stock in the surviving corporation. |
Q: | Am I entitled to appraisal rights under the DGCL? |
A: | If the merger is consummated, stockholders who do not vote in favor of the adoption of the merger agreement, who continuously hold such shares through the effective time of the merger, who have properly exercised, perfected and not withdrawn or otherwise lost their rights to appraisal of their shares and who meet certain other conditions and statutory requirements described under Section 262 of the DGCL will be entitled to seek appraisal of their shares in connection with the merger. This means that holders of shares of CA common stock may be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the fair value of the shares of CA common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) to be paid on the amount determined to be fair value from the effective time of the merger through the date of payment of the judgment, as determined by the court (subject, in the case of interest payments, to any voluntary cash payments made by CA pursuant to subsection (h) of Section 262 of the DGCL, as described in more detail in the section of this proxy statement entitled Appraisal Rights beginning on page 94). Stockholders who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. |
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The DGCL requirements for exercising appraisal rights are described in additional detail in this proxy statement, which description is qualified in its entirety by the relevant section of the DGCL regarding appraisal rights attached as Annex C to this proxy statement. |
Q: | How does the $44.50 merger consideration in cash compare to the market price of CA common stock prior to announcement of the merger? |
A: | The $44.50 merger consideration in cash represents a premium of approximately: 20% based on the closing price per share of $37.21 on July 11, 2018, the last trading day before the public announcement of the execution of the merger agreement; 23% over the $36.30 volume weighted average trading price of CAs common stock during the 30-day period prior to the public announcement of the execution of the merger agreement; 26% over the $35.33 volume weighted average trading price of CAs common stock during the 90-day period prior to the public announcement of the execution of the merger agreement; and 19% over the highest price at which CAs stock traded during the 10-year period prior to the public announcement of the execution of the merger agreement. |
Q: | After the merger is completed, how will I receive the cash for my shares? |
A: | How you receive payment of the merger consideration for your shares depends on how you hold your shares. The following paragraphs describe the different payment processes. In all cases, the amount of your payment will be without interest and will be reduced by any required tax withholding. |
Shares held at a bank, brokerage firm or other nominee, or street name shares: If your shares of CA common stock are held on your behalf by a bank, brokerage firm or other nominee, although each bank, brokerage firm or other nominee establishes its own procedures, we believe that payment for those shares will be deposited in your account with such bank, brokerage firm or other nominee.
Shares held in direct registration form at our transfer agent, Computershare Trust Company, N.A., or book entry shares: If you hold only book entry shares at Computershare Trust Company, N.A., a paying agent that will be designated by Broadcom (which we refer to as the paying agent) will mail you a check in the amount of the aggregate merger consideration for those shares.
Shares for which you have a stock certificate, or certificated shares: If you hold stock certificates representing shares of CA common stock, the paying agent will mail you a letter of transmittal that you must complete and return to the paying agent. Once the paying agent receives your properly completed letter of transmittal and stock certificate(s), the paying agent will mail you a check in the amount of the aggregate merger consideration for your certificated shares.
If you hold both book entry shares at Computershare Trust Company, N.A. and certificated shares, the paying agent will mail you a letter of transmittal that you must complete and return to the paying agent. Once the paying agent receives your properly completed letter of transmittal and stock certificate(s), the paying agent will mail you a check in the amount of the aggregate merger consideration for your certificated shares and for your book entry shares.
Q: | What will happen to my stock options, restricted stock units, performance stock units, restricted stock awards and deferred stock awards in connection with the merger? |
A: | At the effective time of the merger, each option to purchase shares of CA common stock (each referred to as a CA option) that is vested and outstanding immediately prior to the effective time of the merger will be cancelled and the holder of such CA option will be entitled to receive an amount in cash equal to (i) the number of shares of CA common stock subject to such CA option immediately prior to the effective time of the merger multiplied by (ii) the excess (if any) of the merger consideration over the per share exercise price applicable to such CA option, less applicable tax withholdings. |
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At the effective time of the merger, each CA option that is unvested and outstanding as of immediately prior to the effective time of the merger will be assumed and converted automatically into an option to purchase shares of Broadcom common stock (each such award, an adjusted option). Each adjusted option will be subject to the same terms and conditions applicable to the CA option, including vesting terms generally and those set forth on the CA disclosure letter, except that (i) the number of shares of Broadcom common stock subject to the adjusted option will equal the product obtained by multiplying (A) the number of shares of CA common stock subject to such CA option immediately prior to the effective time of the merger, by (B) the equity award exchange ratio (defined below), with any fractional share rounded down to the nearest whole share and (ii) the adjusted option will have an exercise price per share of Broadcom common stock equal to (A) the per share exercise price for shares of CA common stock subject to the corresponding CA option immediately prior to the effective time of the merger divided by (B) the equity award exchange ratio, rounded up to the nearest whole cent.
At the effective time of the merger, each deferred stock unit award (each, referred to as a CA DSU award) award that is outstanding immediately prior to the effective time of the merger and that is held by a non-employee director of CA will vest as of the effective time of the merger and will be cancelled, with the holder of such CA DSU award receiving, at the time or times elected by the applicable non-employee director, the merger consideration in respect of each share of CA common stock subject to such CA DSU award immediately prior to the effective time of the merger.
At the effective time of the merger, each CA restricted stock unit award (each, referred to as a CA RSU award) and each CA performance share or performance share unit award (each, referred to as a CA PSU award) that is outstanding immediately prior to the effective time of the merger will be assumed and converted automatically into a restricted stock unit award with respect to shares of Broadcom common stock (each such award, an adjusted RSU award). Each adjusted RSU award will be subject to the same terms and conditions applicable to the CA RSU award or CA PSU award, as applicable, including vesting terms generally and those set forth on the CA disclosure letter, except that (i) the number of shares of Broadcom common stock subject to the adjusted RSU award will equal the product obtained by multiplying (A) the total number of shares of CA common stock subject to the CA RSU award or CA PSU award, as applicable, immediately prior to the effective time of the merger, by (B) the equity award exchange ratio, with the result rounded up to the nearest whole share and (ii) any adjusted RSU award that replaces a CA PSU award will no longer be subject to any performance-based vesting conditions and will instead vest solely based on continued service following the merger. For purposes of the immediately preceding sentence, the number of shares of CA common stock subject to a CA PSU award immediately prior to the effective time of the merger will equal the number of shares that would vest or become eligible to vest as if performance had been achieved at target levels.
At the effective time of the merger, each award of restricted shares of CA common stock (each, referred to as a CA RS award) that is outstanding immediately prior to the effective time of the merger will be assumed and converted automatically into an award of restricted shares of Broadcom common stock (each such award, an adjusted RS award). Each adjusted RS award will be subject to the same terms and conditions applicable to the CA RS award, including vesting terms generally and those set forth on the CA disclosure letter, except that the number of shares of Broadcom common stock subject to the adjusted RS award will equal the product obtained by multiplying (i) the total number of shares of CA common stock subject to the CA RS award immediately prior to the effective time of the merger, by (ii) the equity award exchange ratio, with the result rounded up to the nearest whole share.
As used in this section, the equity award exchange ratio is the quotient obtained by dividing (1) the merger consideration, by (2) the volume weighted average closing sale price of one share of Broadcom common stock, as reported on NASDAQ for the 10 consecutive trading days ending on the trading day immediately preceding the effective time of the merger (as adjusted as appropriate to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications or similar events) rounded to four decimal places.
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Q: | What will happen to the 2012 Employee Stock Purchase Plan in the merger? |
A: | No new offering period under CAs 2012 Employee Stock Purchase Plan (the ESPP) will commence on or after the date of the merger agreement. With respect to any offering period underway on the date of the merger agreement, the last day of such offering period will be accelerated to a date before the closing date and the final settlement or purchase of shares under the ESPP will be made on that date in accordance with the terms of the ESPP. No employee who is not participating in the ESPP as of the date of the merger agreement will be permitted to commence participation in the ESPP on or after the date of the merger agreement and no participant may increase the percentage amount of his or her payroll deduction election under the ESPP from that in effect as of the date of the merger agreement. The ESPP will be terminated effective immediately prior to the effective time of the merger, subject to the consummation of the merger. All shares of CA common stock purchased under the ESPP that remain outstanding as of immediately prior to the effective time of the merger will be cancelled at the effective time of the merger and converted into the right to receive the merger consideration. |
Q: | What will be the consequences of the merger to CAs directors and executive officers? |
A: | A number of CAs directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of CAs stockholders generally. These interests include, among others, (i) the assumption of certain CA equity awards by Broadcom in connection with the merger, (ii) the cancellation of certain CA equity awards in exchange for specified cash payments in connection with the merger, (iii) the payment of severance benefits upon certain qualifying terminations of employment in connection with or following the merger, and (iv) the right to certain indemnification and insurance benefits pursuant to the terms of the merger agreement. |
For a description of these interests, see the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger beginning on page 43.
Q: | Who will be the directors of CA if the merger is completed? |
A: | If the merger is completed, unless otherwise determined by Broadcom, the board of directors of the surviving corporation following the completion of the merger will be composed of the directors of Merger Sub immediately prior to the completion of the merger and all directors of CA immediately prior to the completion of the merger will cease to be directors of CA as of the time of the completion of the merger. |
Q: | How does the CA board recommend that I vote? |
A: | The CA board unanimously recommends that you vote FOR the proposal to adopt the merger agreement, FOR the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement, and FOR the CA advisory proposal on specified compensation. |
Q: | When do you expect the merger to be completed? |
A: | We are working toward completing the merger as quickly as possible, and we presently anticipate that the merger will be completed in the fourth calendar quarter of 2018, subject to the satisfaction or waiver of all closing conditions. However, the exact timing of the completion of the merger cannot be predicted. In order to complete the merger, our stockholders must adopt the merger agreement and the other closing conditions under the merger agreement must be satisfied or waived, as described in the section of this proxy statement entitled The Merger Agreement Conditions to the Merger beginning on page 76. |
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Q: | What governmental and regulatory approvals are required? |
A: | Under the terms of the merger agreement, the merger cannot be completed until the waiting period applicable to the merger under the HSR Act has expired or been terminated. Additionally, under the terms of the merger agreement, the merger cannot be completed until approvals or clearances required under the antitrust laws of the European Union and Japan have been obtained or are deemed to have been obtained. |
Q: | What happens if the merger is not completed? |
A: | If the merger agreement is not adopted by the stockholders of CA or if the merger is not completed for any other reason, the stockholders of CA will not receive any payment for their shares of CA common stock in connection with the merger. Instead, CA will remain an independent public company and CA common stock will continue to be listed and traded on NASDAQ. Under specified circumstances, CA may be required to pay to Broadcom the $566 million termination fee with respect to the termination of the merger agreement, as described under the section of this proxy statement entitled The Merger Agreement Termination Fee and Expenses beginning on page 78. |
Q: | Is the merger expected to be taxable to me? |
A: | Yes. The exchange of shares of CA common stock for cash pursuant to the merger will generally be a taxable transaction for U.S. federal income tax purposes, and may also be a taxable transaction under applicable state, local and/or non-U.S. income or other tax laws. In general, for U.S. federal income tax purposes, a U.S. holder (as defined below in the section of this proxy statement entitled The Merger (Proposal 1) Material U.S. Federal Income Tax Consequences of the Merger beginning on page 51) who exchanges CA common stock for cash in the merger will recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received (determined before deduction of any applicable withholding taxes) with respect to such shares and the U.S. holders adjusted tax basis in such shares. You should read the section of this proxy statement entitled The Merger (Proposal 1) Material U.S. Federal Income Tax Consequences of the Merger beginning on page 51 for a more complete discussion of the U.S. federal income tax consequences of the merger to U.S. holders. Because individual circumstances may differ, you should consult your tax advisor to determine the particular U.S. federal, state, local and/or non-U.S. tax consequences of the merger to you. |
Q: | Why am I receiving this proxy statement and proxy card or voting instruction form? |
A: | You are receiving this proxy statement and proxy card or voting instruction form because you owned shares of CA common stock as of the record date of August 9, 2018, which entitles you to receive notice of, and to vote at, the special meeting. This proxy statement describes matters on which we urge you to vote and is intended to assist you in deciding how to vote your shares of CA common stock with respect to such matters. |
Q: | When and where is the special meeting? |
A: | The special meeting of stockholders of CA will be held on September 12, 2018 at 10:00 a.m., Eastern time, at the Warwick New York Hotel, located at 65 W 54th Street, New York, NY 10019. |
Q: | What am I being asked to vote on at the special meeting? |
A: | You are being asked to consider and vote on (1) a proposal to adopt the merger agreement that provides for the acquisition of CA by Broadcom; (2) a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement; and (3) a proposal to approve, on an advisory (non-binding) basis, specified compensation that will or may become payable to the named executive officers of CA in connection with the merger. |
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Q: | What vote is required for CAs stockholders to approve the proposal to adopt the merger agreement? |
A: | The adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of CA common stock entitled to vote thereon. Because the affirmative vote required to approve the proposal to adopt the merger agreement is based upon the total number of outstanding shares of CA common stock, if you fail to submit a proxy or vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with voting instructions, as applicable, this will have the same effect as a vote AGAINST the proposal to adopt the merger agreement. |
Q: | What vote of CA stockholders is required to approve the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement? |
A: | Assuming a quorum exists, approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement, requires the affirmative vote of holders of a majority of the voting power of the issued and outstanding shares of CA common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. Abstaining will have the same effect as a vote AGAINST the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies. If you fail to submit a proxy or vote in person at the special meeting or if your shares of CA common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee on how to vote your shares of CA common stock, your shares of CA common stock will not be voted, but this will not have an effect on the proposal to adjourn the special meeting if a quorum is present. |
Q: | What vote is required for CAs stockholders to approve the CA advisory proposal on specified compensation? |
A: | Assuming a quorum exists, the adoption of the CA advisory proposal on specified compensation requires the affirmative vote of holders of a majority of the voting power of the issued and outstanding shares of CA common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. Abstaining will have the same effect as a vote AGAINST the CA advisory proposal on specified compensation. If you fail to submit a proxy or to vote in person at the special meeting or if your shares of CA common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee on how to vote your shares of CA common stock, your shares of CA common stock will not be voted, but this will not have an effect on the CA advisory proposal on specified compensation if a quorum is present. |
Q: | What will happen if CAs stockholders do not approve the CA advisory proposal on specified compensation? |
A: | The vote on the CA advisory proposal on specified compensation is a vote separate and apart from the vote to adopt the merger agreement. You may vote for this proposal and against adoption of the merger agreement, or vice versa. Because the vote on the CA advisory proposal on specified compensation is advisory only, it is not binding on CA, the CA board, the CA boards compensation committee or Broadcom. Approval of the CA advisory proposal on specified compensation is not a condition to completion of the merger and failure to adopt the CA advisory proposal on specified compensation will have no effect on the vote to adopt the merger agreement. Accordingly, because we are contractually obligated to pay the compensation, the compensation will be payable, subject only to the conditions applicable thereto and any future amendments thereto, regardless of the outcome of the advisory (non-binding) vote. |
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Q: | What is the difference between holding shares as a stockholder of record and as a beneficial owner? |
A: | If you hold your shares in an account at our transfer agent Computershare Trust Company, N.A. or have a CA stock certificate, you are considered, with respect to those shares of CA common stock, the stockholder of record. This proxy statement and your proxy card have been sent directly to you by CA. |
If your shares of CA common stock are held in street name through a bank, brokerage firm or other nominee, you are considered the beneficial owner of those shares of CA common stock. In that case, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote those shares of CA common stock by following their instructions for voting.
Q: | Who can vote at the special meeting? |
A: | All stockholders of record of CA common stock as of the close of business on August 9, 2018, the record date for the special meeting, are entitled to receive notice of, and to vote at, the special meeting. Each holder of CA common stock is entitled to cast one vote on each matter properly brought before the special meeting for each share of CA common stock that such holder owned as of the record date. If your shares of CA common stock are held through a bank, brokerage firm or other nominee, in order to vote those shares at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting. |
Q: | Who is entitled to attend the special meeting? |
A: | Please note that space limitations make it necessary to limit attendance at the special meeting to stockholders as of the record date (or their authorized representatives). If your shares of CA common stock are held through a bank, brokerage firm or other nominee, please bring to the special meeting your statement evidencing your beneficial ownership of CA common stock as of the record date. Please note that if your shares are held through a bank, brokerage firm or other nominee, even if you bring your statement evidencing your beneficial ownership of CA common stock as of the record date, you will not be able to vote your shares at the special meeting unless you provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting. All stockholders must also bring photo identification acceptable to us, such as a valid drivers license or passport. |
Q: | What is a quorum? |
A: | The holders of a majority of the voting power of the issued and outstanding shares of CA common stock entitled to vote thereat, present in person or represented by proxy, at the special meeting constitutes a quorum for the purposes of the special meeting. |
Q: | How do I vote? |
A: | If your shares of CA common stock are held through a bank, brokerage firm or other nominee, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the below choices are available to you. Please note that if your shares of CA common stock are held through a bank, brokerage firm or other nominee and you wish to vote those shares in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting. |
If you are a stockholder of record, you may vote your shares of CA common stock with respect to which you are the stockholder of record at the special meeting in any of the following ways:
| By Internet: You may submit a proxy over the Internet by following the instructions on the proxy card. Please have your proxy card in hand when you log onto the website. Internet voting facilities will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on September 11, 2018. |
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| By Telephone: You may submit a proxy by telephone (from U.S. and Canada only) using the toll-free number listed on the proxy card. Please have your proxy card in hand when you call. Telephone voting facilities will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on September 11, 2018. |
| By Mail: You may indicate your vote by marking, dating and signing your proxy card in accordance with the instructions on it and returning the bottom half of the card by mail in the pre-addressed reply envelope provided with the proxy materials. The proxy card must be received prior to commencement of the special meeting. |
| In Person: You may vote in person at the special meeting if you satisfy the admission requirements to the special meeting, as described in the Notice of Special Meeting of the Stockholders. Even if you plan to attend the special meeting, we encourage you to vote in advance by Internet, telephone or mail so that your vote will be counted in the event you later decide not to attend the special meeting. |
Q: | If my shares of CA common stock are held in street name by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee vote my shares of CA common stock for me? |
A: | Your bank, brokerage firm or other nominee will only be permitted to vote your shares of CA common stock if you instruct your bank, brokerage firm or other nominee how to vote. If your shares of CA common stock are held in street name through a bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of CA common stock using the instructions provided by your bank, brokerage firm or other nominee. If you do not give instructions to your bank, brokerage firm or other nominee on how to vote your shares of CA common stock for any of the proposals described in this proxy statement, your bank, brokerage firm or nominee will not be entitled to vote your shares for you and a broker non-vote will occur for such proposal. Banks, brokerage firms and other nominees typically have discretionary voting authority with respect to routine matters; however, they typically do not have discretionary authority to vote on non-routine matters. We believe the proposals described in this proxy statement are non-routine matters. Accordingly, if you hold your shares of CA common stock through a bank, brokerage firm or other nominee and do not provide your bank, brokerage firm or other nominee with instructions on how to vote your shares of CA common stock on the proposal to adopt the merger agreement, your bank, brokerage firm or other nominee will generally not be permitted to vote your shares of CA common stock on the proposal to adopt the merger agreement or the other proposals described in this proxy statement. |
You should follow the procedures provided by your bank, brokerage firm or other nominee regarding the voting of your shares of CA common stock. If you do not instruct your bank, brokerage firm or other nominee to vote your shares of CA common stock, your shares of CA common stock will not be counted for purposes of determining whether a quorum is present and will not be voted and the effect will be the same as a vote AGAINST the proposal to adopt the merger agreement, but this will not have an effect on the other two proposals if a quorum is present.
Q: | How can I change or revoke my vote? |
A: | You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you or by attending the special meeting and voting in person. |
Q: | What is a proxy? |
A: | A proxy is your legal designation of another person, referred to as a proxy, to vote your shares of CA common stock. The written document describing the matters to be considered and voted on at the special meeting is called a proxy statement. The document used to designate a proxy to vote your shares of CA |
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common stock is called a proxy card. We have designated each of Michael P. Gregoire, Chairman of the CA board and Chief Executive Officer of CA, Ava M. Hahn, Executive Vice President, General Counsel and Corporate Secretary of CA, and Kristen W. Prohl, Senior Vice President, Chief Corporate Counsel and Assistant Corporate Secretary of CA, individually, with full power of substitution and re-substitution, as proxies for the special meeting. |
Q: | If a stockholder gives a proxy, how are the shares of CA common stock voted? |
A: | Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares of CA common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of CA common stock should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting. |
If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted FOR the proposal to adopt the merger agreement, FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement and FOR the CA advisory proposal on specified compensation.
Q: | What do I do if I receive more than one proxy or set of voting instructions? |
A: | If you hold shares directly as a stockholder of record and as a beneficial owner through a bank, brokerage firm or other nominee, you may receive more than one proxy and/or set of voting instructions relating to the special meeting. |
These should each be voted and/or returned separately as described elsewhere in this proxy statement in order to ensure that all of your shares are voted.
Q: | What happens if I sell my shares of CA common stock before the special meeting? |
A: | The record date for stockholders entitled to vote at the special meeting is earlier than both the date of the special meeting and the date of the consummation of the merger. If you transfer your shares of CA common stock after the record date but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you transfer your shares and each of you notifies CA in writing of such special arrangements, you will retain your right to vote such shares at the special meeting, but will transfer the right to receive the merger consideration to the person to whom you transfer your shares. |
Q: | What do I need to do now? |
A: | We urge you to carefully read this proxy statement in its entirety, including its annexes, and to consider how the merger would affect you. Even if you plan to attend the special meeting, after carefully reading and considering the information contained in this proxy statement, please vote promptly to ensure that your shares are represented at the special meeting. If you are a stockholder of record, please vote your shares of CA common stock by (i) completing, signing, dating and returning the appropriate portion of the enclosed proxy card in the accompanying prepaid reply envelope, (ii) using the telephone number printed on your proxy card, or (iii) using the Internet voting instructions printed on your proxy card. If you decide to attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. If you are a beneficial owner of CA common stock, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. |
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Q: | Should I send in my stock certificates now? |
A: | No. If you are a record holder of certificated shares of CA common stock, you will be sent a letter of transmittal promptly after the completion of the merger, describing how you may exchange your shares of CA common stock for the merger consideration. Please do NOT return your stock certificate(s) with your proxy. |
Q: | How will I receive the merger consideration if I have lost my stock certificate? |
A: | If your stock certificate is lost, stolen or destroyed, you must deliver an affidavit and may be required by Broadcom or the surviving corporation to post a bond as indemnity against any claim that may be made with respect to such certificate prior to receiving the merger consideration, without interest, less any required tax withholding. |
Q: | Will a proxy solicitor be used? |
A: | We have engaged MacKenzie Partners, Inc. to assist in the solicitation of proxies and provide related advice and informational support for a services fee of $75,000 plus customary reimbursement of expenses. |
Q: | Who can help answer my other questions? |
A: | If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of CA common stock, or need additional copies of the proxy statement or the enclosed proxy card, please contact our proxy solicitor: |
MacKenzie Partners, Inc.
1407 Broadway
New York, NY 10018
Stockholders May Call:
(800) 322-2885 (toll-free from the U.S. or Canada);
(212) 929-5500 (from other locations)
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement, and the documents to which we refer you in this proxy statement, as well as information included in oral statements or other written statements made or to be made by us, contain statements that, in our opinion, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be typically identified by such words as may, will, should, would, expect, anticipate, plan, likely, believe, estimate, project, intend, potential, predict, aim, and other similar expressions among others, which appear in a number of places in this proxy statement (and the documents to which we refer you in this proxy statement) and include, but are not limited to, all statements relating directly or indirectly to the timing or likelihood of completing the merger to which this proxy statement relates, plans for future growth and other business development activities as well as capital expenditures, financing sources and the effects of regulation and competition and all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers. These forward-looking statements reflect the current analysis of existing information and are subject to various risks and uncertainties. As a result, caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, our actual results may differ materially from our expectations or projections.
The following factors, among others, could cause our actual results to differ materially from those described in these forward-looking statements:
| the risk that the conditions to the closing of the merger are not satisfied (including a failure of our stockholders to approve, on a timely basis or otherwise, the merger and the risk that regulatory approvals required for the merger are not obtained, on a timely basis or otherwise, or are obtained subject to conditions that are not anticipated); |
| the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement and risk that the circumstances of such termination could require us to pay Broadcom the $566 million termination fee; |
| Broadcoms failure to obtain the necessary debt financing set forth in the debt commitment letter entered into in connection with the merger, or to procure alternative financing, or the failure of any such financing, together with other capital resources, to be sufficient to complete the merger and the other transactions contemplated by the merger agreement; |
| litigation or other legal proceedings relating to the merger; |
| uncertainties as to the timing of the consummation of the merger and the ability of CA and Broadcom to consummate the merger; |
| risks that the proposed transaction disrupts the current plans and operations, and diverts the attention of management or employees, of CA or Broadcom; |
| the ability of CA to retain and hire key personnel; |
| the fact that under the terms of the merger agreement, we are unable to solicit other acquisition proposals during the pendency of the merger; |
| the impact of foreign currency exchange rate and interest rate fluctuations on our results; |
| the fact that the merger would be a taxable transaction to CAs stockholders for U.S. federal income tax purposes; |
| the risk that the tax consequences to the receipt of $44.50 merger consideration may change due to changes in tax law; |
| unknown liabilities; |
| unexpected costs, charges or expenses resulting from the merger; |
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| the fact that, if the merger is completed, stockholders will forgo the opportunity to realize the potential long-term value of the successful execution of CAs current strategy as an independent company; |
| risks that our stock price may decline significantly if the merger is not completed; |
| potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger; and |
| legislative, regulatory and economic developments. |
The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in CAs and Broadcoms respective most recent Annual Reports on Form 10-K and CAs and Broadcoms more recent other reports filed with the SEC. CA and Broadcom can give no assurance that the conditions to the merger will be satisfied. Except as required by applicable law, neither CA nor Broadcom undertakes any obligation to revise or update any forward-looking statement, or to make any other forward-looking or other statements, whether as a result of new information, future events or otherwise.
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CA is a Delaware corporation headquartered in New York City. CA is a global leader of software solutions, including enterprise solutions and mainframe solutions, for businesses, government agencies and organizations of various types and sizes. Our solutions enable customers to plan, develop, automate, manage and secure applications across mobile, cloud, distributed and mainframe platforms. Our principal executive offices are located at 520 Madison Avenue, New York, New York 10022 and our telephone number is (800) 225-5224. For more information about CA, please visit our website at https://www.ca.com/us.html. Our website address is provided as an inactive textual reference only. The information contained on our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the SEC. See also the section of this proxy statement entitled Where You Can Find More Information, beginning on page 102. CA common stock is publicly traded on NASDAQ under the symbol CA.
Broadcom is a Delaware corporation headquartered in San Jose, California. Broadcom is a leading designer, developer and global supplier of a broad range of digital and analog semiconductor connectivity solutions. Broadcoms extensive product portfolio serves four primary end markets: wired infrastructure, wireless communications, enterprise storage and industrial & other. Applications for Broadcoms products in these end markets include: data center networking, home connectivity, set-top box, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, factory automation, power generation and alternative energy systems, and electronic displays. Broadcoms principal executive offices are located at 1320 Ridder Park Drive, San Jose, California 95131, and its telephone number is (408) 433-8000.
Merger Sub is a Delaware corporation that was formed by Broadcom solely for the purpose of entering into the merger agreement and completing the transactions contemplated by the merger agreement. Upon completion of the merger, Merger Sub will cease to exist.
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This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this proxy statement as Annex A. You should read the entire merger agreement carefully as it is the legal document that governs the merger.
The merger agreement provides that, subject to the terms and conditions therein, Merger Sub will merge with and into CA. CA will be the surviving corporation in the merger and will continue to do business following the merger as a wholly owned subsidiary of Broadcom. As a result of the merger, CA will cease to be a publicly traded company. If the merger is completed, you will not own any shares of the capital stock of the surviving corporation.
In the merger, each issued and outstanding share of CA common stock (other than shares (i) owned or held in treasury by CA or owned by Broadcom or Merger Sub, (ii) owned by any wholly owned subsidiary of Broadcom or CA and (iii) held by stockholders of CA who have properly and validly exercised, and not withdrawn or otherwise lost, their appraisal rights in accordance with the DGCL) will be cancelled and automatically converted into the right to receive $44.50 in cash, without interest.
The following chronology summarizes the key events that culminated in the signing of the merger agreement. This chronology does not purport to catalogue every conversation among the CA board or the representatives of CA and Broadcom and other parties.
The CA board and our senior management team regularly evaluate CAs strategic direction and ongoing business plan with a view toward strengthening its business and enhancing stockholder value. As part of this evaluation, we have pursued a business strategy centered on maintaining our strong mainframe software business, while extending our expertise in devops, security and agile management on growing platforms including on-premise distributed, public and private clouds, and mobile. We have executed this strategy through a mix of organic software development and strategic acquisitions. Although we have been focused on growing CA as an independent company, the CA board and our management team have remained open to the possibility of a sale of CA or other strategic business transactions if they received a transaction proposal that presented a compelling opportunity for CAs stockholders.
In early December 2015, we received an unsolicited indication of interest from a large private equity sponsor (which we refer to as Sponsor A), expressing interest in acquiring CA for between $34.50 and $36.50 per share in cash. At that time CAs stock was trading at approximately $28.44 per share. On December 18, 2015, the CA board held a telephonic meeting, which was attended by senior management and representatives of CAs outside counsel, to discuss Sponsor As proposal on a preliminary basis and the need to engage a financial advisor to assist the CA board in evaluating Sponsor As proposal. During an executive session, the CA board discussed potential financial advisors, including Qatalyst Partners LP (which we refer to as Qatalyst Partners) based on their industry reputation and experience, as well as prior experience with the firm. After discussion, the CA board authorized management to contact Qatalyst Partners to make inquiries regarding their availability to help the CA board evaluate Sponsor As proposal.
On January 13, 2016, the CA board had a follow-up telephonic meeting, which was attended by senior management, representatives of Qatalyst Partners, and representatives of CAs outside counsel, to evaluate Sponsor As proposal. During the meeting, representatives of Qatalyst Partners offered preliminary observations on Sponsor A and its indication of interest, as well as on the potential engagement with Sponsor A. During an executive session without external advisors, the CA board discussed potential next steps, including the retention
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of Qatalyst Partners. After considering their qualifications, expertise, reputation and knowledge of CAs business and the industry in which CA operates, as well as Qatalyst Partners prior experience representing software companies in similar transactions, the CA board determined to engage Qatalyst Partners as its financial advisor with respect to a potential transaction regarding CA and to instruct Qatalyst Partners to respond verbally to Sponsor A on CAs behalf.
Subsequently, representatives of Qatalyst Partners had multiple conversations with representatives of Sponsor A. On February 4, 2016, the CA board held an in-person meeting in New York, which was attended by senior management, representatives of Qatalyst Partners, and representatives of CAs outside counsel, to review the status of discussions with Sponsor A. Due to, among other things, the lack of progress in discussions with Sponsor A and the worsening availability of credit to finance leveraged buyouts, the CA board decided to terminate discussions with Sponsor A.
In early April 2017, we received an unsolicited indication of interest from a large private equity sponsor (which we refer to as Sponsor B) expressing interest in acquiring CA at a valuation range of $38 to $40 per share in cash. At that time CAs stock was trading for approximately $31.65 per share. Shortly thereafter, the CA board held a telephonic meeting, which was attended by senior management, representatives of Qatalyst Partners, and representatives of CAs outside counsel, to evaluate Sponsor Bs proposal. After discussion, the CA board authorized senior management and representatives of Qatalyst Partners to engage in further discussions with Sponsor B to assess its willingness to consider a transaction price above the high end of its proposed price range.
After preliminary discussions in which Sponsor B suggested it might be willing to consider a transaction price above the high end of its initially proposed price range, the CA board, with the assistance of Qatalyst Partners, carefully considered the landscape of strategic parties and financial sponsors with the most likely strategic interest and financial ability to acquire a company as large as CA and regulatory considerations of such an acquisition. On the basis of this assessment, the CA board authorized representatives of Qatalyst Partners to contact five additional parties on behalf of CA to assess their respective interest in exploring an acquisition of CA, one of whom was a strategic party and four of whom were large financial sponsors, including Sponsor A. As a result of this strategic outreach, during late April 2017, we received an indication of interest from Sponsor A expressing interest in acquiring CA for between $39 to $41 per share in cash. At that time CAs stock was trading for approximately $32.85 per share. We did not receive an indication of interest in acquiring CA from any of the other parties that Qatalyst Partners contacted.
Members of our senior management team and representatives of Qatalyst Partners continued a dialogue with Sponsor A and Sponsor B throughout May 2017 to help each of them better understand CAs business and growth potential. In early June 2017, we received revised indications of interest from Sponsor A and Sponsor B expressing interest in acquiring CA for $40.25 and $38 per share in cash, respectively. At that time CAs stock was trading for approximately $31.77 per share. Shortly thereafter the CA board held two meetings, both of which were attended by members of senior management of CA and representatives of Qatalyst Partners and CAs outside counsel, to evaluate the revised proposals from Sponsor A and Sponsor B and review a financial presentation by Qatalyst Partners. Following the first meeting, representatives of Qatalyst Partners had several discussions with Sponsor B regarding its proposal, during which representatives of Sponsor B indicated that Sponsor B could not support a price higher than the price reflected in its most recent proposal. The CA board was informed of Sponsor Bs position at the second meeting. Before concluding the meeting, the CA board authorized senior management and representatives of Qatalyst Partners to continue discussions with Sponsor A and to initiate a due diligence process with Sponsor A and its representatives and advisors.
On June 20, 2017, news and media outlets began to report that CA was considering a potential sale to a large, diversified enterprise software company owned by a financial sponsor. The following day, CAs stock closed at $35.80 per share. Following these media reports, two additional financial sponsors and one additional strategic party contacted representatives of Qatalyst Partners or members of our senior management team to
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express interest in a potential acquisition of CA. Representatives of Qatalyst Partners engaged in preliminary discussions with each of these parties, requesting that each of them perform a preliminary evaluation of CA based on publicly available information and submit a preliminary indication of interest if they wished to engage in discussions with the company regarding a potential transaction. We did not receive a written indication of interest in acquiring CA from any of these parties.
For the remainder of June 2017 and throughout July 2017, we continued to engage in discussions with Sponsor A and its representatives and advisors concerning a potential transaction, and to support Sponsor As due diligence review of CA. During this period of time, legal counsel for CA and Sponsor A also conducted an evaluation of the regulatory and other aspects of a potential acquisition of CA by Sponsor A.
On July 23, 2017, representatives of Qatalyst Partners had a call with representatives of Sponsor A, during which representatives of Sponsor A indicated, among other things, that due to the potential regulatory and other aspects of an acquisition of CA by Sponsor A, the value at which they would be willing to acquire CA would be considerably below their prior indication of interest of $40.25.
On July 28, 2017, the CA board held a telephonic meeting, which was attended by members of senior management and representatives of Qatalyst Partners and CAs outside counsel, to discuss the status of negotiations with Sponsor A and the associated implications on the ability of CA to obtain a compelling price from Sponsor A. After discussion, the CA board decided to terminate discussions with Sponsor A.
On April 24, 2018, a representative of Broadcoms financial advisor contacted a representative of Qatalyst Partners to indicate that Broadcom was interested in meeting with representatives of CA to discuss a potential transaction. Later that same day, a representative of Qatalyst Partners spoke telephonically with Tom Krause, Broadcoms Chief Financial Officer, regarding Broadcoms interest in exploring a potential acquisition of CA. After these conversations, the representative of Qatalyst Partners contacted Mike Gregoire, CAs Chief Executive Officer, to convey Broadcoms interest. Mr. Gregoire observed that he would need to discuss the matter with the CA board and the next day, Mr. Gregoire informed the CA board of Broadcoms interest. In a series of discussions, Mr. Gregoire and other members of the CA board discussed the situation, including Broadcoms track record of successful acquisitions and its expressed interest in infrastructure software. The CA board observed that Broadcoms lack of competitive software offerings would simplify the regulatory aspects of a transaction with Broadcom. Mr. Gregoire and the other members of the CA board also discussed the customer and employee disruption caused by the prior public reports of sale discussions and all agreed that they did not wish to unnecessarily expose CA to similar disruption again. On the basis of these discussions, the CA board authorized Mr. Gregoire, Kieran McGrath, CAs Chief Financial Officer, and Jacob Lamm, CAs Head of Strategy and Corporate Development, to meet with Hock Tan, Broadcoms Chief Executive Officer, and Mr. Krause to provide a confidential overview of CAs business. At this time, the CA boards intent was to give Broadcom sufficient information regarding CA to determine whether Broadcom would be willing to make a compelling transaction proposal that could be negotiated without the business disruptions created by a protracted transaction process of the nature CA had conducted the previous year.
On May 8, 2018, Broadcom and CA entered into a customary confidentiality agreement pursuant to which the parties agreed to customary standstill provisions, which permitted Broadcom to convey confidential proposals to the CA board, did not contain restrictions on non-public requests for waivers of the standstill restrictions, and fell away in the event, among others, that CA entered into a definitive agreement regarding a sale of the company to another party.
On May 14, 2018, Messrs. Gregoire, McGrath and Lamm and Messrs. Tan and Krause met in New York, New York. Representatives of Qatalyst Partners also attended the meeting. During the meeting, Messrs. Gregoire, McGrath and Lamm gave a detailed presentation covering, among other things, CAs product portfolio, market positioning, go-to-market strategy, and financial performance. Later that same day, Messrs. Gregoire and McGrath had dinner with Messrs. Tan and Krause during which they further discussed CAs business, strategy
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and prospects. Messrs. Tan and Krause did not make any proposals to acquire CA throughout the day or during dinner, nor did they ask Messrs. Gregoire or McGrath to remain with CA if Broadcom acquired it or otherwise make any proposals regarding their respective roles, responsibilities or employment with CA upon an acquisition by Broadcom.
On May 17, 2018, a representative of Qatalyst Partners called Mr. Krause to follow-up on the May 14 meeting and inquire about Broadcoms interest in pursuing an acquisition of CA. During this conversation, Mr. Krause confirmed Broadcoms interest in acquiring CA and suggested Broadcom might deliver a non-binding indicative offer following CAs scheduled May 30, 2018 analyst day. Mr. Krause also indicated that there were certain business-related diligence items that Broadcom would like to assess before submitting any non-binding indicative offer. In several conversations between May 17, 2018 and May 24, 2018, CA and Qatalyst Partners responded to Broadcoms additional due diligence questions and requests.
On May 29, 2018, it was reported that BMC Software had entered into an agreement to be acquired by a large financial sponsor, generating some speculation about potential consolidation in the enterprise software sector in which CA operates. Prior to this report CAs stock was trading for approximately $35.56.
On June 2, 2018, a representative of Qatalyst Partners and Mr. Krause spoke by telephone and Mr. Krause indicated that Broadcom intended to submit a non-binding indicative offer for CA on Friday, June 8, 2018 that would likely propose an all-cash transaction. The representative of Qatalyst Partners and Mr. Krause discussed potential alternative structures, including the possibility of paying a portion of the transaction consideration in Broadcom stock if CA believed it was necessary to obtain the requisite support of CAs largest stockholders, Careal Holding AG and its affiliates (which we collectively refer to as the Careal parties).
On June 8, 2018, Mr. Krause called a representative of Qatalyst Partners and indicated that Broadcom intended to send CA a non-binding indicative offer to acquire CA for $41 per share in cash. During the call, the representative of Qatalyst Partners expressed his strong belief that the CA board was unlikely to be interested in a transaction at that price and encouraged Mr. Krause to increase the offer price.
Later that day, CA received a written non-binding indicative offer from Broadcom (which we refer to as the June 8 offer), in which Broadcom proposed to acquire CA for $42 per share in cash, subject to satisfactory completion of its confirmatory due diligence and negotiation of mutually acceptable definitive agreements for the transaction. The June 8 offer indicated that Broadcom would work expeditiously to complete its confirmatory due diligence and concurrently negotiate definitive agreements within a five-week period, and expressed Broadcoms belief that the proposed transaction could be consummated within 90 days. The June 8 offer emphasized that the transaction would not be subject to any financing contingencies and that Broadcom intended to obtain fully committed debt financing for the proposed transaction. Finally, the June 8 offer indicated that Broadcom expected that the Careal parties would fully support the proposed transaction and enter into customary support agreements in that regard.
On June 13, 2018, the CA board held a telephonic meeting, which was attended by members of our senior management team and representatives of Qatalyst Partners and Wilson Sonsini Goodrich & Rosati, CAs outside legal counsel (which we refer to as Wilson Sonsini), to evaluate the June 8 offer. After introductory remarks, at the CA boards request, a representative of Wilson Sonsini outlined the CA boards fiduciary duties with respect to its consideration of a potential sale of CA and described certain legal and process considerations that would likely be implicated by any potential sale of the company. At the CA boards request, Qatalyst Partners then provided an overview of the interactions with Broadcom leading to the June 8 offer and the terms of the June 8 offer itself. Qatalyst Partners noted that Mr. Krause had emphasized Broadcoms limited willingness to pay a higher price but that Broadcom was agreeable to expediting its confirmatory due diligence process in order to help mitigate distractions to CAs management team and disruptions to CAs business. Representatives of Qatalyst Partners noted that the June 8 offer expressed Broadcoms expectation that the Careal parties fully support the proposed transaction and enter into customary support agreements. Representatives of Qatalyst
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Partners reported in this regard that Broadcom was willing to consider paying a portion of the transaction price in Broadcom stock if the CA board determined that might be necessary to obtain the approval of the Careal parties. After discussion, the CA board concluded that an all-cash transaction was in the best interests of stockholders so it determined not to pursue a transaction involving stock consideration. Qatalyst Partners then reviewed a summary of the June 8 offer in comparison to its preliminary valuation of CA which included an illustrative overview of future CA stock prices based on various operating scenarios, including an increased capital return scenario. After Qatalyst Partners presentation, the CA board discussed potential responses to the June 8 offer, including the advantages and disadvantages of rejecting the June 8 offer without a specific counter-proposal and the advantages and disadvantages of providing a specific counter-proposal at various prices. The CA board also discussed various prices at which it might be supportive of a sale transaction. At the conclusion of this discussion, the CA board instructed representatives of Qatalyst Partners to inform Broadcom that the CA board would not support a transaction at a price of $42 per share and to seek a higher offer price from Broadcom.
The CA board next discussed the advisability of contacting other parties to assess their interest in a potential acquisition or other form of business combination with CA. In this regard, the CA board considered the fact that it had conducted a tailored outreach process in 2017, which had not led to any transaction proposals that the CA board could support. The CA board further observed that CA had been the subject of broad market speculation regarding a potential sale in 2017, which had generated multiple unsolicited inbound calls from potential buyers, none of whom delivered an actual proposal to acquire CA. The CA board also considered the fact that, subsequent to this tailored outreach process, CA had not materially exceeded its forecasted financial plan and, therefore, the CA board did not believe that any of the parties that had reviewed CA in 2017 would have an interest in acquiring the company at prices higher than those being discussed at that time, let alone the transaction prices being discussed with Broadcom. Finally, the CA board believed that any transaction process should be conducted relatively swiftly in order to avoid repeating (in potentially even more harmful ways) the management distraction and disruption to customer engagement and employee morale that occurred as a result of the 2017 strategic outreach process and the public rumors of a sale at that time. After thoroughly considering these and other factors, and after consulting with Qatalyst Partners, the CA board decided not to contact any other parties regarding a potential transaction with CA and to focus on negotiating the highest price possible with Broadcom. On advice of legal counsel, the CA board also instructed management, Qatalyst Partners and Wilson Sonsini to ensure that the definitive agreements for a transaction with Broadcom did not create unreasonable obstacles or deterrents to any third parties that might wish to make a competing offer to acquire CA.
Finally, with the assistance of Wilson Sonsini, the CA board considered whether any members of the CA board or management had interests in a potential sale transaction, or any actual or potential conflicts of interest in a transaction with Broadcom, that might jeopardize the integrity of negotiations with Broadcom, the CA boards consideration of a potential sale of CA or any other decisions the CA board was making in connection therewith (including those described in the preceding paragraph). In this regard, Mr. Gregoire confirmed that he had not discussed with representatives of Broadcom his potential role, responsibilities or employment with Broadcom if it acquired CA. The CA board acknowledged the interests of all directors and officers in a sale transaction, which are described in the section of this proxy statement below captioned The Merger Interests of Certain Persons in the Merger beginning on page 43, but did not otherwise identify any special interests in a potential sale transaction, or any actual or potential conflicts of interest in a transaction with Broadcom. The CA board nevertheless decided to have an executive session (without the participation of Mr. Gregoire or other members of the management team) during every CA board meeting at which the potential Broadcom transaction was considered in order to ensure that the outside directors had an opportunity to discuss the transaction amongst themselves.
On June 14, 2018, a representative of Qatalyst Partners called Mr. Krause to convey the CA boards response to the June 8 offer. The representative of Qatalyst Partners indicated that the CA board would not support a transaction at a price of $42 per share, but might support a transaction at a price of $47 per share if Broadcom would proceed quickly to avoid risks of leaks and disruption to the company. Mr. Krause did
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not immediately respond to the CA boards proposal, but on June 15, 2018, Mr. Krause called the representative of Qatalyst Partners to inform him that Broadcom would be sending a revised a non-binding indicative offer to acquire CA for $43.50 per share in cash. Later that same day, CA received a written non-binding indicative offer from Broadcom in which it proposed to acquire CA for $43.50 per share in cash (which we refer to as the June 15 offer). The June 15 offer reiterated that it was not subject to any financing contingency but was subject to satisfactory completion of Broadcoms due diligence review and negotiation of mutually acceptable definitive agreements for the transaction.
On June 18, 2018, the CA board held a telephonic meeting to consider the June 15 offer, which was attended by members of our senior management team and representatives of Qatalyst Partners and Wilson Sonsini. Mr. Gregoire began by generally describing the status of discussions with Broadcom and then a representative of Qatalyst Partners further discussed the interactions with Broadcom and outlined the June 15 offer and presented a summary of the June 15 offer in comparison to its preliminary valuation of CA. Qatalyst Partners observed that CAs stock price had been steadily increasing in recent weeks, likely in response to the recent public announcement of the sale of BMC Software and market speculation about potential consolidation in the enterprise software sector. After Qatalyst Partners discussion, the CA board discussed potential responses to the June 15 offer. At the conclusion of this discussion, the CA board instructed Qatalyst Partners to inform Broadcom that the CA board would not support a transaction at $43.50 per share and authorized representatives of Qatalyst Partners to negotiate with Broadcom in order to ascertain the highest price Broadcom would be willing to pay to acquire CA. After this discussion, the CA board revisited its earlier determination to focus its negotiations on Broadcom and forego calls to other parties. For the reasons described above, and again after consulting with Qatalyst Partners, the CA board reached the same conclusion. The outside directors then met in executive session and agreed to continue their support for the companys ongoing effort to negotiate a potential sale transaction with Broadcom.
Later on June 18, 2018, a representative of Qatalyst Partners called Mr. Krause and conveyed the CA boards response to the June 15 offer and emphasized that Broadcom would need to meaningfully increase its offer price in order for the CA board to support a sale transaction. The Qatalyst Partners representative also noted that Broadcom would need to allow CA to continue its quarterly dividend during the pendency of the transaction. After numerous discussions regarding such matters, Mr. Krause communicated to the representative of Qatalyst Partners that Broadcom would be willing to increase its offer price to $44.50 per share in cash and allow CA to continue to pay its quarterly dividend during the pendency of the transaction, but that this was Broadcoms best and final offer and was not subject to further negotiation. Later that day, CA received a written non-binding indicative offer from Broadcom in which it proposed to acquire CA for $44.50 per share in cash (which we refer to as the June 18 offer). The June 18 offer was subject to the same conditions as the June 15 offer, and also indicated that it was Broadcoms best and final offer.
On June 20, 2018, the CA board held a telephonic meeting to consider the June 18 offer, which was attended by members of our senior management team and representatives of Qatalyst Partners and Wilson Sonsini. After brief introductory matters, a representative of Qatalyst Partners described his recent discussions with representatives of Broadcom and then outlined the June 18 offer. The representative of Qatalyst Partners also reported Broadcom was willing to permit CA to continue to pay its quarterly dividend during the pendency of the transaction, and that Broadcom was proposing to conduct confirmatory due diligence and negotiate and finalize definitive agreements within approximately three weeks. The representative of Qatalyst Partners reported that Mr. Krause had reiterated that Broadcom expected the Careal parties to fully support the proposed transaction and enter into customary support agreements in this regard. Qatalyst Partners also referenced a summary of the June 18 offer in comparison to its preliminary valuation of CA. The CA board then discussed the June 18 offer and the proposed due diligence timeline. At the CA boards request, a representative of Wilson Sonsini revisited the fiduciary duties of the CA board with respect to a potential sale of CA, emphasizing the CA boards duty to act in a manner intended to obtain the highest price reasonably available for CAs stockholders if the CA board ultimately chose to authorize a sale transaction. In this regard, the CA board considered CAs stand-alone business opportunities, risks and overall prospects, Qatalyst Partners preliminary valuation of the company, the
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negotiation process with Broadcom and the CA boards decision to forgo a market check for the reasons previously discussed. After this discussion, the CA board had an executive session to further discuss the June 18 offer, and during this session decided to support Broadcoms June 18 offer and authorized the management team to continue supporting Broadcoms due diligence process and to commence negotiation of definitive agreements for the proposed transaction. Following the meeting, Qatalyst Partners was instructed to inform Broadcom of the CA boards decision.
Following the June 20, 2018 CA board meeting, a representative of Qatalyst Partners called Mr. Krause to inform him of the CA boards decision. Thereafter, CA, Broadcom and their respective representatives and financial and legal advisors, including Wilson Sonsini and Broadcoms outside legal counsel, Wachtell, Lipton, Rosen & Katz (which we refer to as Wachtell Lipton), participated in numerous due diligence meetings and information exchanges.
On June 26, 2018, representatives of Wachtell Lipton delivered to representatives of Wilson Sonsini a draft merger agreement and a draft transaction support agreement for review by the Careal parties. Over the course of the next two weeks, management and legal and financial advisors of Broadcom and CA negotiated the terms and conditions of the merger agreement, with particular focus on terms of the agreement that govern CAs right to consider (and under certain circumstances accept) unsolicited competing acquisition proposals, including the size of the termination fee that is payable as a condition to terminating the merger agreement to accept a superior acquisition proposal for CA.
On June 28, 2018, Mr. Gregoire contacted Martin Haefner, who is affiliated with the Careal parties, to ask Mr. Haefner to sign a confidentiality agreement so that Mr. Gregoire could discuss a confidential matter with him. The Careal parties hold approximately 25% of CAs stock and have been long time stockholders and supporters of the company. Shortly thereafter, the Careal parties signed a confidentiality agreement with CA.
On July 2 and July 3, 2018, representatives of CA and Broadcom and their respective financial advisors met in New York for additional in-person due diligence meetings.
On July 3, 2018, Arthur Weinbach, Chairman of the CA board, Mr. Gregoire and Mr. Haefner spoke by telephone and Messrs. Weinbach and Gregoire informed Mr. Haefner of the potential transaction with Broadcom. Messrs. Weinbach and Gregoire noted that Broadcoms proposals had reflected Broadcoms expectation that the Careal parties would support the transaction, and the draft merger agreement contemplated that the Careal parties would deliver an executed voting agreement concurrently with the execution of the merger agreement. Messrs. Weinbach and Gregoire explained the basis of the CA boards support for the proposed transaction and Messrs. Weinbach, Gregoire and Haefner discussed the proposed transaction and the interests of CAs stockholders generally. Mr. Haefner preliminarily indicated that he would likely be supportive of a transaction if the parties were able to agree on the terms of a transaction. Mr. Gregoire later provided Mr. Haefner with a draft voting agreement for the Careal parties review, as contemplated by the draft merger agreement.
On July 5, 2018, the CA board held a telephonic meeting to discuss the status of negotiations with Broadcom, which was attended by members of our senior management team and representatives of Qatalyst Partners and Wilson Sonsini. Mr. Gregoire began by describing the status of Broadcoms due diligence review. At the CA boards request, a representative of Wilson Sonsini then presented a summary of the material terms of the proposed merger agreement, highlighting key material terms of the agreement and issues that remained unresolved and subject to ongoing negotiation. After discussion of the unresolved issues, a representative of Wilson Sonsini again noted for the CA board that the draft merger agreement contemplated that the Careal parties would deliver an executed voting agreement concurrently with the execution of the merger agreement and that, based upon the conversation between Messrs. Weinbach, Gregoire and Haefner, it was likely that the Careal parties would be willing to enter into the contemplated voting agreement. In anticipation of the eventual execution and delivery of the voting agreement, the CA board approved entry into the voting agreement.
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Over the next days, counsel for the two parties, together with management from both parties, continued to negotiate the terms of the merger agreement, with particular focus on terms of the agreement that govern CAs right to consider (and under certain circumstances accept) unsolicited competing acquisition proposals, including the size of the termination fee that is payable as a condition to terminating the merger agreement to accept a superior acquisition proposal for CA.
On July 8, 2018, the CA board met in person in New York (with two directors participating by telephone) to discuss the status of negotiations with Broadcom. The meeting was attended by members of our senior management team and representatives of Qatalyst Partners and Wilson Sonsini. Mr. Gregoire reported on the status of Broadcoms due diligence review. Qatalyst Partners then presented a summary of the June 18 offer in comparison to its updated preliminary valuation of CA. At the conclusion of its presentation, Qatalyst Partners indicated that, based on the most recent draft of the merger agreement reviewed by Qatalyst Partners, it would be prepared to deliver its opinion, if and when the CA board requested that opinion, that the transaction price to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of CA stock, other than Broadcom, CA and their respective affiliates, is fair, from a financial point of view, to such holders. Wilson Sonsini then presented an update on the status of negotiations with Broadcom of the terms and conditions of the merger agreement, noting importantly that the parties continued to negotiate the termination fee that would be payable as a condition to terminating the merger agreement to accept a superior acquisition proposal.
On July 10, 2018, the parties finalized the terms of the merger agreement and agreed on a termination fee of $566 million (representing approximately 3% of the transaction equity value), subject to approval of the CA board and the board of directors of Broadcom. On July 11, 2018, representatives of Wachtell Lipton provided to Wilson Sonsini an updated draft of the voting agreement, reflecting the terms of the merger agreement that was negotiated by the parties.
On July 11, 2018, after the closing of trading of CA stock on NASDAQ, The Wall Street Journal published an article, reporting that Broadcom was nearing a deal to acquire CA.
Later on July 11, 2018, the CA board held a telephonic meeting to consider the adoption and approval of the merger agreement, which was attended by members of our senior management team and representatives of Qatalyst Partners and Wilson Sonsini. After brief introductory remarks, the CA board and representatives of Qatalyst Partners and Wilson Sonsini discussed the presentations that were made by each of Qatalyst Partners and Wilson Sonsini at the July 8 CA board meeting. A representative of Qatalyst Partners presented a summary of the June 18 offer in comparison to its valuation of CA, and a representative of Wilson Sonsini presented a summary of the material terms and conditions of the proposed merger agreement, including the fact that the parties had agreed upon a termination fee of $566 million, representing approximately 3% of the transaction equity value. At the CA boards request, Mr. Gregoire confirmed that neither he nor any of the members of the senior management team had any discussions with Broadcom regarding any employment, consulting or other similar roles with Broadcom following the proposed transaction. Thereafter, a representative of Qatalyst Partners rendered its oral opinion to the CA board, subsequently confirmed in writing, that as of that date and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth in its written opinion, the $44.50 per share merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of CA stock, other than Broadcom, CA and their respective affiliates, is fair, from a financial point of view, to such holders. For more information about Qatalyst Partners opinion, see the section of this proxy statement below captioned The Merger Opinion of Qatalyst Partners LP beginning on page 33.
Following such discussion and the receipt of Qatalyst Partners oral opinion, the CA board unanimously (1) determined that the terms of the merger agreement, including the merger, were advisable, and fair to and in the best interests of CAs stockholders, (2) approved the merger agreement, and (3) resolved to recommend that CAs stockholders adopt the merger agreement. After approval of the merger agreement by the CA board and
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Broadcoms board of directors, the merger agreement and the voting agreement were executed and delivered, and CA and Broadcom issued a press release announcing the entry into the merger agreement.
Recommendation of the CA Board of Directors
At a meeting held on July 11, 2016, the CA board unanimously (1) determined that the merger agreement and the merger are advisable, and fair to and in the best interests of the CA stockholders, (2) approved the merger agreement, the merger and the other transactions contemplated thereby, (3) directed that a special meeting of the CA stockholders be held for the purposes of voting on the adoption of the merger agreement, and (4) resolved to recommend that the CA stockholders vote in favor of the adoption of the merger agreement at the special meeting.
The CA board hereby unanimously recommends that, at the special meeting, the CA stockholders vote:
| FOR the proposal to adopt the merger agreement; |
| FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement; and |
| FOR the advisory proposal on specified compensation. |
In considering these recommendations, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, yours. The CA board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in making the foregoing recommendations. Please see the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger beginning on page 43 for additional information regarding these matters.
The CA Boards Reasons for Approving the Merger Agreement and Recommending that Stockholders Adopt the Merger Agreement
The CA board routinely and regularly evaluates CAs business strategy and prospects to ensure the company is addressing market trends and opportunities and seeking to build long term stockholder value. Beginning with the CA boards strategic outreach process in 2017 and continuing when CA was approached by Broadcom regarding a potential business combination transaction, the CA board conducted an extensive evaluation of CA and its business strategy, prospects and strategic alternatives, as well as its near-term and long-term valuation, in order to develop a comprehensive and fully informed view of, and position on, a potential sale of the company. Throughout its evaluation of the merger, the CA board consulted regularly with our senior management team, our financial advisor and our outside legal advisor. As part of its evaluation, the CA board determined that the following important factors suggested that the merger is in the best interests of the CA stockholders:
| The CA board believes that CA has a strong management team, a solid business strategy and strong prospects for earnings growth, all of which suggest optimism about the expected trading price of CAs stock price over the long term. However, the CA board believes the $44.50 per share merger consideration represents an opportunity for the CA stockholders to receive a premium price for the companys stock today relative to expected future trading prices of CAs stock if the company remains independent and without the execution risks, macro-economic risks and market risks inherent in CAs stand-alone business strategy as an independent company. In this regard, the CA board considered various risks to CAs business if it were to remain an independent company, including risks and uncertainties with respect to: |
| achieving CAs growth plans in light of the inherent risks in executing our stand-alone business plans, uncertainties regarding future business conditions in the enterprise software industry, |
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including the risks and uncertainties in the U.S. and global economies generally and risks and uncertainties in the enterprise software industry specifically; |
| whether the price of CA common stock would increase even if CA achieved its growth plans; |
| the specific risk factors in CAs business set forth in the companys Annual Report on Form 10-K for the fiscal year ended March 31, 2018 and subsequent reports filed with the SEC and the matters described under the section of this proxy statement entitled Cautionary Statement Concerning Forward-Looking Information, beginning on page 19; and |
| market conditions that could negatively affect the trading price of CAs common stock, including the fact that software stocks are currently trading at very high multiples in comparison to historical levels. |
| The $44.50 per share merger consideration compares favorably to estimates of the present value of CAs common stock derived from a discounted cash flow analysis of senior managements projections of the companys future earnings (which are summarized in the section of this proxy statement entitled The Merger Certain Financial Projections beginning on page 40). |
| The valuation of CA implied by the $44.50 per share merger consideration is generally a premium to the companys valuation implied by software company multiples and software transaction multiples. |
| The $44.50 per share merger consideration represents a significant premium over the market price at which CAs stock traded prior to the public announcement of the merger agreement and the merger, including an approximate premium of: |
| 20% over the $37.21 closing price of CAs stock on July 11, 2018, the last full trading day before the public announcement of the execution of the merger agreement; |
| 23% over the $36.30 volume weighted average trading price of CAs stock during the 30-day period prior to the public announcement of the execution of the merger agreement; |
| 26% over the $35.33 volume weighted average trading price of CAs stock during the 90-day period prior to the public announcement of the execution of the merger agreement and the merger; and |
| 19% over the highest price at which CAs stock traded during the 10-year period prior to the public announcement of the execution of the merger agreement. |
| The CA board received an oral opinion of Qatalyst Partners on July 11, 2018 (which was subsequently confirmed by the written opinion of Qatalyst Partners to the CA board dated July 11, 2018) to the effect that, as of the date of such opinion, and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth in such written opinion, the $44.50 per share merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of CA common stock, other than Broadcom, CA and their respective affiliates, was fair, from a financial point of view, to such holders, and Qatalyst Partners related financial analyses presented to the CA board in connection with the delivery of its oral opinion. You are urged to read Qatalyst Partners written opinion, which is set forth in its entirety in Annex B to this proxy statement, and the discussion of the opinion and Qatalyst Partners analyses in the section of this proxy statement entitled The Merger (Proposal 1) Opinion of Qatalyst Partners LP beginning on page 33. |
| The CA board believes the $44.50 per share merger consideration is the highest price Broadcom is willing to pay for CA because the $44.50 per share merger consideration was the result of thorough negotiations between the parties and their respective advisors and, at the culmination of those negotiations, Broadcom emphasized that the $44.50 per share merger consideration was its best and final offer price for CA. |
| The CA board does not believe that any other parties would have strategic interest in acquiring CA, the desire or ability to acquire CA at a higher price than the $44.50 per share merger consideration, or the legal ability to do so as a result of regulatory considerations. The CA board reached this conclusion |
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after carefully considering the current landscape of strategic parties and financial sponsors with the most likely strategic interest and financial ability to acquire a company as large as CA, in consultation with senior management, our financial advisor and our outside legal advisor on such matters. The CA board also considered the results of the extensive strategic outreach process it conducted in 2017 (which included outreach to one strategic party and four large financial sponsors and in-bound inquiries from one strategic party and two large financial sponsors), changes in the landscape of potential third party buyers since the completion of that process, CAs business and financial performance since the completion of that process, and the trading price of CAs stock since the completion of that process. |
| The CA board believes that the terms of the merger agreement give the CA board a high degree of confidence that the merger will be completed on the terms contemplated thereby, while also giving the CA board the flexibility to consider any legitimate and unsolicited competing acquisition proposals it might receive prior to receipt of stockholder approval of the merger agreement, including: |
| the limited and otherwise customary conditions to Broadcoms obligations to complete the merger, including the absence of a financing condition, which provide significant comfort that the merger will be consummated on a timely basis; |
| terms that enable CA to legally enforce Broadcoms obligations under the merger agreement, including its obligation to complete the merger upon satisfaction (and subject to) the conditions set forth in the merger agreement; |
| terms that enable CA, under certain circumstances and subject to certain conditions, to engage in discussions and negotiations with any third party from whom CA receives an unsolicited acquisition proposal that is superior to the merger from a financial point of view or can reasonably be expected to lead to a transaction that is superior to the merger from a financial point of view, and to provide confidential information to any such party in connection with such discussions and negotiations; and |
| terms that enable CA to terminate the merger agreement in order to accept a competing acquisition proposal that is superior to the merger from a financial point of view, under certain circumstances and subject to certain conditions, including paying Broadcom a fee of $566 million (equal to approximately 3% of the equity value of CA), which the CA board determined, with the assistance of its legal and financial advisors, was reasonable in light of, among other things, the benefits of the merger to the CA stockholders, the typical size of such fees in similar transactions and the belief that a fee of this size would not preclude or unreasonably restrict the emergence of alternative transaction proposals. |
| The CA board considered the fact that, under applicable Delaware law, the CA stockholders who do not vote in favor of the merger and otherwise comply with the requirements of Delaware law would have the right to pursue their appraisal rights under Delaware law if the merger is completed. |
The CA board also considered a variety of potentially negative factors in its deliberations concerning the merger agreement and the merger, including the following:
| the fact that the completion of the merger will preclude the CA stockholders from maintaining any ongoing equity interest in the company and, as such, the CA stockholders will not be able to participate directly in the companys future successes or benefit from any increases in the value of the company; |
| the fact that during the pendency of the merger, CA may not solicit, initiate or knowingly encourage or facilitate any competing acquisition proposals for the company, and CA may only engage in discussions and negotiations with a third party from whom CA receives an unsolicited acquisition proposal under certain circumstances; |
| the fact that completion of the merger is subject to some conditions that are outside CAs control, such as the approval of the CA stockholders and regulatory clearances in the US, the EU and Japan, and the |
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fact that the company (and the trading price of the companys stock) would likely be significantly and negatively impacted if the merger was not completed due to the failure of any of those conditions; |
| the potential risk of diverting management attention and resources from the operation of CAs business, including other strategic opportunities and operational matters, while working toward the completion of the merger; |
| the potential negative impact of the pendency of the merger on the companys business, including its relationships with employees, customers, resellers, global system integrators and other business partners; |
| significant restrictions in the merger agreement on CAs conduct of business prior to the completion of the merger, including on its ability to make capital expenditures under certain circumstances, enter certain material contracts, hire employees or change its employment practices; |
| the possibility that some key members of our senior management team might elect to resign prior to the completion of the merger; |
| the fact that some of CAs directors and executive officers may have interests in the merger that are different from, or in addition to, those of the CA stockholders generally (as more fully described in the section of this proxy statement entitled The Merger Interests of Certain Persons in the Merger beginning on page 43); and |
| the fact that the receipt of cash in exchange for shares of CA common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. |
The foregoing discussion of the information and factors considered by the CA board is not intended to be exhaustive, but describes the material factors considered by the CA board. In view of the variety of factors considered, the CA board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The CA board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The CA board based its recommendation on the totality of the information presented to it, including the input from CAs senior management and its outside legal and financial advisors.
In considering the recommendation of the CA board with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, yours. The CA board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of CA. See the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger beginning on page 43.
The CA board unanimously recommends that you vote FOR the proposal to adopt the merger agreement; FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement; and FOR the CA advisory proposal on specified compensation.
Opinion of Qatalyst Partners LP
We retained Qatalyst Partners to act as our financial advisor in connection with a potential transaction involving CA, such as the merger, and to evaluate whether the $44.50 merger consideration per share in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the CA stockholders (other than Broadcom, CA and their respective affiliates), was fair, from a financial point of view, to such stockholders. CA selected Qatalyst Partners to act as its financial advisor based on Qatalyst Partners qualifications, expertise, reputation and knowledge of CAs business and the industry in which CA operates, as
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well as Qatalyst Partners prior experience representing leading software companies in similar transactions. Qatalyst Partners provided its written consent to the reproduction of its opinion in this proxy statement. At the meeting of the CA board on July 11, 2018, Qatalyst Partners rendered to the CA board its oral opinion to the effect that, as of July 11, 2018, and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the $44.50 merger consideration per share in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the CA stockholders (other than Broadcom, CA and their respective affiliates), was fair, from a financial point of view, to such stockholders. Following the meeting, Qatalyst Partners delivered its written opinion, dated July 11, 2018, to the CA board.
The full text of the opinion of Qatalyst Partners, dated as of July 11, 2018, is attached to this proxy statement as Annex B and is incorporated into this proxy statement by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. You should read the opinion carefully in its entirety. Qatalyst Partners opinion was provided to the CA board and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of the $44.50 merger consideration per share in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the CA stockholders (other than Broadcom, CA and their respective affiliates), to such stockholders, and it does not address any other aspect of the merger. It does not constitute a recommendation to any CA stockholder as to how to vote with respect to the merger or any other matter and does not in any manner address the price at which CA common stock will trade at any time. The summary of Qatalyst Partners opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached to this proxy statement as Annex B.
For purposes of its opinion set forth herein, Qatalyst Partners reviewed the merger agreement, certain related documents and certain publicly available financial statements and other business and financial information of CA. Qatalyst Partners also reviewed certain forward-looking information relating to CA prepared by the management of CA, including financial projections and operating data of CA (which we refer to as CA projections) described in the section entitled The Merger (Proposal 1) Certain Financial Projections, beginning on page 40. Additionally, Qatalyst Partners discussed the past and current operations and financial condition and the prospects of CA with senior management of CA. Qatalyst Partners also reviewed the historical market prices and trading activity for CA common stock and compared the financial performance of CA and the prices and trading activity of CA common stock with that of certain other selected publicly-traded companies and their securities. In addition, Qatalyst Partners reviewed the financial terms, to the extent publicly available, of selected acquisition transactions and performed such other analyses, reviewed such other information and considered such other factors as Qatalyst Partners deemed appropriate.
In arriving at its opinion, Qatalyst Partners assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to, or discussed with, it by CA. With respect to CA projections, Qatalyst Partners was advised by the management of CA, and assumed, that CA projections have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of CA of the future financial performance of CA and other matters covered thereby. Qatalyst Partners also assumed that the merger would be consummated in accordance with the terms set forth in the merger agreement, without any modification, waiver or delay. In addition, Qatalyst Partners assumed that in connection with the receipt of all the necessary approvals of the proposed merger, no delays, limitations, conditions or restrictions would be imposed that could have an adverse effect on CA or the contemplated benefits expected to be derived in the proposed merger. Qatalyst Partners did not make any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of CA or its affiliates nor was it furnished with any such evaluation or appraisal. In addition, Qatalyst Partners relied, without independent verification, upon the assessment of the management of CA as to the existing and future technology and products of CA and the risks associated with such technology and products. In arriving at its opinion, Qatalyst Partners was not authorized to solicit, and did not solicit, interest from any party with respect to an acquisition, business combination or other extraordinary transaction involving CA. Qatalyst Partners opinion has
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been approved by its opinion committee in accordance with its customary practice. Qatalyst Partners opinion does not constitute a recommendation as to how to vote with respect to the merger or any other matter and does not in any manner address the price at which CA common stock will trade at any time.
Qatalyst Partners opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of its opinion. Events occurring after the date of its opinion may affect its opinion and the assumptions used in preparing it, and Qatalyst Partners did not assume any obligation to update, revise or reaffirm its opinion. Qatalyst Partners opinion did not address the underlying business decision of CA to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to CA. Qatalyst Partners opinion is limited to the fairness, from a financial point of view, of the $44.50 merger consideration per share in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the CA stockholders (other than Broadcom, CA and their respective affiliates), and Qatalyst Partners expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of the officers, directors or employees of CA or any of its affiliates, or any class of such persons, relative to such consideration at any time.
The following is a brief summary of the material analyses performed by Qatalyst Partners in connection with its opinion dated as of July 11, 2018. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Qatalyst Partners opinion. For purposes of its analyses, Qatalyst Partners utilized both the consensus of third-party research analysts estimates (which we refer to as the street case) and the CA projections. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and to more fully understand the financial analyses used by Qatalyst Partners, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Qatalyst Partners financial analyses.
Illustrative Discounted Cash Flow Analysis
Qatalyst Partners performed an illustrative discounted cash flow analysis, which is designed to imply a potential present value of per share values for CA common stock as of June 30, 2018 by:
| adding: |
(a) | the implied net present value of the estimated future unlevered free cash flows of CA, based on CA projections for the second through fourth quarters of fiscal year 2019 and for fiscal year 2020 through fiscal year 2023 (which unlevered free cash flows do not consider the effect of CAs estimated cash tax charges related to the adoption and implementation of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (which we refer to as ASC 606) and the repatriation of cash associated with the Tax Cuts and Jobs Act of 2017, as such estimated cash tax charges were separately valued, as described below) (which implied net present value was calculated using a range of discount rates of 8.0% to 10.0%, based on an estimated weighted average cost of capital for CA); |
(b) | the implied net present value of a corresponding terminal value of CA, calculated by multiplying CAs estimated net operating profit after tax (which we refer to as NOPAT) of approximately $1,480 million in fiscal year 2024, based on CA projections (assuming an effective tax rate of 22.0%, as provided by CA management), by a range of fully diluted enterprise value to next-twelve-months estimated NOPAT multiples of 10.0x to 15.0x, and discounted to present value using the same range of discount rates used in item (a) above; and |
(c) | the estimated cash balance of CA as of June 30, 2018 (excluding notional pooling), as provided by CAs management; |
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| subtracting: (i) the estimated debt outstanding of CA as of June 30, 2018, as provided by CAs management, and (ii) the implied net present value of CAs estimated cash tax charges related to the ASC 606 transition and related to the repatriation of cash associated with the Tax Cuts and Jobs Act of 2017 as of June 30, 2018, as provided by CAs management (which implied present value was calculated using the same range of discount rates used in item (a) above); |
| applying a dilution factor of approximately 3.7% to reflect the dilution to current CA stockholders over the projection period due to the effect of future issuances by CA of equity awards, as projected by CAs management; and |
| dividing the resulting amount by the number of fully diluted shares of CA common stock outstanding (calculated using the treasury stock method), which takes into account outstanding stock options, deferred stock units, performance share units, restricted stock units and restricted share awards of CA, as of July 6, 2018, as provided by CAs management. |
Based on the calculations set forth above, this analysis implied a range of values for CA common stock of approximately $34.96 to $49.02 per share.
Selected Companies Analysis
Qatalyst Partners compared selected financial information and public market multiples for CA with publicly available financial information and public market multiples for selected companies. The companies used in this comparison included those companies listed below, which were selected by Qatalyst Partners in its professional judgment based on multiple factors, including that they are publicly traded companies in similar lines of business to CA, have a similar business model, have similar financial performance or have other relevant or similar characteristics.
Based upon research analyst consensus estimates as of July 10, 2018 and using the closing prices as of July 10, 2018 (in each case, except as noted in the table below) for shares of the selected companies, Qatalyst Partners calculated, among other things, the implied fully diluted enterprise value divided by the estimated calendar year 2019 earnings before interest, taxes, depreciation and amortization (which we refer to as EBITDA, and which quotient we refer to as the CY2019E EBITDA Multiple), for each of the selected companies and the price per share divided by estimated calendar year 2019 non-GAAP earnings per share(which quotient we refer to as the CY2019E P/E Multiple) for each of the selected companies, as shown below:
Selected Companies |
CY2019E EBITDA Multiple |
CY2019E P/E |
||||||
Selected Large Cap Software Companies |
||||||||
International Business Machines Corporation |
8.5x | 10.0x | ||||||
Microsoft Corporation |
12.9x | 21.5x | ||||||
Oracle Corporation |
9.6x | 13.4x | ||||||
SAP SE |
13.8x | 20.9x | ||||||
Selected Mid Cap Software Companies |
||||||||
Check Point Software Technologies Ltd. |
12.3x | 17.2x | ||||||
Citrix Systems, Inc. |
16.4x | 18.4x | ||||||
Micro Focus International plc(1) |
8.9x | 8.3x | ||||||
OpenText Corporation |
12.0x | 13.2x | ||||||
Teradata Corporation |
11.9x | 24.7x | ||||||
VMware, Inc.(2) |
15.5x | 21.7x |
(1) | Micro Focus International plc research analyst consensus estimates are as of June 29, 2018, the last trading date prior to the announcement of Micro Focus International plcs $2.5 billion sale of its SUSE software business. |
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(2) | VMware, Inc. research analyst consensus estimates and closing price are as of June 29, 2018, the last trading date prior to the announcement of the $11 billion one-time special dividend in connection with Dell Technologies Inc.s transaction with respect to VMware, Inc. tracking stock. |
Based upon research analyst consensus estimates as of July 10, 2018 and using CAs closing price as of July 10, 2018, Qatalyst Partners calculated the CY2019E EBITDA Multiple and CY2019E P/E Multiple for CA, which are 9.4x and 13.1x, respectively.
Based on research analyst consensus estimates, Qatalyst Partners also calculated the implied fully diluted enterprise value divided by the estimated next-twelve-month EBITDA (which quotient we refer to as the NTM EBITDA Multiple) for CA, and the implied price per share divided by next-twelve-month non-GAAP earnings per share (which quotient we refer to as the NTM P/E Multiple) for CA, on each trading day for the period between January 2, 2014 and July 10, 2018. The calendar year average of such multiples for CA are shown below:
Year |
NTM EBITDA Multiple |
NTM P/E Multiple |
||||||
2014 |
7.2x | 12.1x | ||||||
2015 |
7.5x | 12.4x | ||||||
2016 |
8.2x | 12.6x | ||||||
2017 |
8.8x | 13.5x | ||||||
2018 (through July 10, 2018) |
9.0x | 13.1x |
Based on an analysis of the CY2019E EBITDA Multiples for the selected companies and CA, Qatalyst Partners selected a representative multiple range of 7.5x to 10.5x. Qatalyst Partners then applied these ranges to CAs estimated EBITDA for calendar year 2019, based on CA projections and based on the street case. Based on the calculations set forth above, then subtracting the net debt of CA as of March 31, 2018 (adjusted to exclude approximately $137 million of notional pooling and a June 2018 dividend of approximately $107 million from cash) and then dividing the resulting amount by the number of fully diluted shares of CA common stock outstanding, this analysis implied a range of values for CA common stock of approximately $31.35 to $43.43 per share based on CA projections for calendar year 2019, and $29.99 to $41.53 per share based on the street case for calendar year 2019.
Based on an analysis of the CY2019E P/E Multiples for the selected companies and CA, Qatalyst Partners selected a representative multiple range of 10.0x to 14.0x. Qatalyst Partners then applied these ranges to CAs estimated non-GAAP earnings per share for calendar year 2019, based on CA projections and based on the street case. Based on the calculations set forth above, this analysis implied a range of values for CA common stock of approximately $29.68 to $41.55 per share based on CA projections for calendar year 2019, and $28.40 to $39.76 per share based on the street case for calendar year 2019.
No company included in the selected companies analysis is identical to CA. In evaluating the selected companies, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Many of these matters are beyond the control of CA, such as the impact of competition on CAs business or the industry in general, industry growth and the absence of any material adverse change in CAs financial condition and prospects or the industry or in the financial markets in general. Mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected company data. Because of the unique circumstances of each of these companies and CA, Qatalyst Partners cautioned against placing undue reliance on this information.
Selected Transactions Analysis
Qatalyst Partners compared transaction multiples and selected financial information for three public software transactions greater than $2 billion in value. The transactions used in this comparison were selected by
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Qatalyst Partners in its professional judgment based on multiple factors, including that they are acquisitions of publicly traded companies in similar lines of business to CA, have a similar business model, have similar financial performance or have other relevant or similar characteristics.
For each of the selected transactions listed below, Qatalyst Partners reviewed, among other things, (a) the implied fully diluted enterprise value of the target company, based on the transaction price per share, as a multiple of research analyst consensus estimates of the next-twelve-months EBITDA of the target company (which we refer to as the NTM EBITDA Multiple) (b) the implied fully diluted enterprise value of the target company, based on the transaction price per share, as a multiple of research analyst consensus estimates of the next-twelve-months EBITDA, less capitalized software development costs, of the target company (which we refer to as the NTM EBITDA (less Capitalized Software) Multiple) and (c) the transaction price per share of the target company divided by the research analyst consensus next-twelve-months estimates of non-GAAP earnings per share (which we refer to as the NTM P/E Multiple).
Announcement Date |
Target |
Acquiror |
NTM EBITDA Multiple |
NTM EBITDA Multiple |
NTM P/E Multiple |
|||||||||||
09/02/2014 |
Compuware Corporation | Thoma Bravo, LLC | 9.8x | 10.8x | 19.4x | |||||||||||
05/06/2013 |
BMC Software, Inc. | Consortium of Private Equity Funds | 7.9x | 9.3x | 12.0x | |||||||||||
07/02/2012 |
Quest Software, Inc. | Dell Technologies Inc. | 10.9x | 10.9x | 16.2x |
Based on the analysis of the NTM EBITDA Multiples for the selected transactions, Qatalyst Partners selected a representative multiple range of 7.9x to 10.9x, which Qatalyst Partners applied to CAs next-twelve-months EBITDA (calculated for the twelve-month period ended on March 31, 2019) based on the street case, then subtracted the net debt of CA as of March 31, 2018 (adjusted to exclude approximately $137 million of notional pooling and a June 2018 dividend of approximately $107 million from cash) and then divided the resulting amount by the number of fully diluted shares of CA common stock outstanding. This analysis implied a range of values for CA common stock of approximately $31.57 to $42.80 per share.
Based on the analysis of the NTM EBITDA (less Capitalized Software) Multiples for the selected transactions, Qatalyst Partners selected a representative multiple range of 9.3x to 10.9x, which Qatalyst Partners applied to CAs estimated next-twelve-months EBITDA (calculated for the twelve-month period ending on March 31, 2019) based on the street case, then subtracted the net debt of CA as of March 31, 2018 (adjusted to exclude approximately $137 million of notional pooling and a June 2018 dividend of approximately $107 million from cash) and then divided the resulting amount by the number of fully diluted shares of CA common stock outstanding. This analysis implied a range of values for CA common stock of approximately $37.00 to $42.80 per share.
Based on the analysis of the NTM P/E Multiples for the selected transactions, Qatalyst Partners selected a representative multiple range of 12.0x to 19.4x, which Qatalyst Partners applied to CAs next-twelve-months non-GAAP earnings per share (calculated as the twelve-month period ending on March 31, 2019) based on the street case. This analysis implied a range of values for CA common stock of approximately $33.35 to $54.07 per share.
No target company in the selected transactions analysis is identical to CA, and no transaction utilized in the selected transactions analysis is identical to the merger. In evaluating the selected transactions, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond CAs control, such as the impact of competition on CAs business or the industry generally, industry growth and the absence of any material adverse
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change in CAs financial condition and prospects or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which CA and the merger are being compared. Because of the unique circumstances of each of these transactions and the merger, Qatalyst Partners cautioned against placing undue reliance on this information.
Miscellaneous
In connection with the review of the merger by the CA board, Qatalyst Partners performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving at its opinion, Qatalyst Partners considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Qatalyst Partners believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, Qatalyst Partners may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Qatalyst Partners view of the actual value of CA. In performing its analyses, Qatalyst Partners made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond CAs control. Any estimates contained in Qatalyst Partners analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.
Qatalyst Partners conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the $44.50 merger consideration per share in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the CA stockholders (other than Broadcom, CA and their respective affiliates), to such stockholders. This analysis does not purport to be an appraisal or to reflect the price at which CA common stock might actually trade at any time.
Qatalyst Partners opinion and its presentation to the CA board was one of many factors considered by the CA board in deciding to approve the merger agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the CA board with respect to the $44.50 merger consideration per share in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the CA stockholders (other than Broadcom, CA and their respective affiliates) or of whether the CA board would have been willing to agree to different consideration. The $44.50 merger consideration per share in cash payable in the merger was determined through arms-length negotiations between CA and Broadcom and was unanimously approved by the CA board. Qatalyst Partners provided advice to CA during these negotiations. Qatalyst Partners did not, however, recommend any specific consideration to CA or that any specific consideration constituted the only appropriate consideration for the merger.
Qatalyst Partners provides investment banking and other services to a wide range of entities and individuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst Partners may at any time hold long or short positions, and may trade or otherwise effect transactions in debt or equity securities or loans of CA, Broadcom or certain of their respective affiliates. During the two-year period prior to the date of Qatalyst Partners opinion, Qatalyst Partners provided financial advisory services to CA and Qatalyst Partners was paid fees for those services, which are described in the paragraph below. During the two-year period prior to the date of Qatalyst Partners opinion, no material relationship existed between Qatalyst Partners or any of its affiliates and Broadcom pursuant to which compensation was received by Qatalyst Partners or its affiliates. Qatalyst Partners and/or its affiliates may in the future provide investment banking and other financial services to CA or Broadcom and their respective affiliates for which Qatalyst Partners would expect to receive compensation.
Under the terms of its engagement, Qatalyst Partners provided CA with financial advisory services, including in connection with the merger, for which it will be paid approximately $80 million, $500,000 of which
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was paid following the execution of the engagement letter, $300,000 of which was paid in August 2017, $5 million of which was paid following the delivery of its opinion (which amount was payable regardless of the conclusion reached therein) and the remaining portion of which will be paid upon, and subject to, the consummation of the merger. CA has also agreed to reimburse Qatalyst Partners for its expenses incurred in performing its services, and to indemnify Qatalyst Partners and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling Qatalyst Partners or any of its affiliates against certain liabilities, including liabilities under the federal securities laws, and expenses related to or arising out of Qatalyst Partners engagement.
CA does not as a matter of course issue public projections as to future performance or earnings beyond the current fiscal year or issue public projections for extended periods due to the unpredictability of the underlying assumptions and estimates. Our management prepared the below CA projections for fiscal years 2019 through 2024. Our management provided the CA projections to the CA board and Qatalyst Partners, which the CA board authorized for Qatalyst Partners to rely on and use in performing its preliminary financial analyses (described in The Merger (Proposal 1) Opinion of Qatalyst Partners LP beginning on page 33). The CA board also approved a subset of the CA projections to be provided to Broadcom in connection with its due diligence review of CA.
The following is a summary of the CA projections prepared by management and provided to the CA board and Qatalyst Partners, and the subset of which was also provided to Broadcom:
Fiscal Year Ended March 31(1) |
||||||||||||||||||||||||||||
(in millions, except per share amounts) |
CY2019 | FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | |||||||||||||||||||||
Revenue |
$ | 4,399 | $ | 4,320 | * | $ | 4,426 | * | $ | 4,513 | * | $ | 4,609 | $ | 4,726 | $ | 4,845 | |||||||||||
EBITDA(2)(3) |
$ | 1,717 | $ | 1,667 | $ | 1,734 | $ | 1,782 | $ | 1,815 | $ | 1,871 | $ | 1,964 | ||||||||||||||
Non-GAAP Operating Income(2)(4) |
$ | 1,656 | $ | 1,606 | * | $ | 1,672 | * | $ | 1,720 | * | $ | 1,752 | $ | 1,808 | $ | 1,897 | |||||||||||
Non-GAAP Diluted Earnings Per Share(2)(5) |
$ | 2.97 | $ | 2.87 | $ | 3.00 | $ | 3.22 | $ | 3.32 | $ | 3.44 | |
* | Indicates the subset of the CA projections provided to Broadcom to assist with its due diligence review. |
(1) | Estimated financials shown at budget foreign exchange rates as of March 31, 2018. The CA projections assume organic growth rates (i.e., no acquisitions) and were prepared in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition. |
(2) | No internally developed software costs are capitalized in CAs consolidated financial statements for fiscal year 2016 through fiscal year 2018, and no such internally developed software costs are capitalized in the CA projections. |
(3) | EBITDA is a non-GAAP financial measure calculated by starting with Non-GAAP Operating Income and adding back depreciation. |
(4) | Non-GAAP Operating Income is a non-GAAP financial measure calculated to exclude purchased software amortization, other intangible amortization, internally developed software products amortization, share-based compensation and other (gain) expenses, net. |
(5) | Non-GAAP Diluted Earnings Per Share is a non-GAAP financial measure calculated to exclude purchased software amortization, other intangible amortization, internally developed software products amortization, share-based compensation, other (gain) expenses, net, tax effect of non-GAAP adjustment and non-GAAP effective tax rate adjustments. |
Fiscal Year Ended March 31(2) |
||||||||||||||||||||
(in millions, except per share amounts) |
Q2-Q4FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | |||||||||||||||
Unlevered Free Cash Flow(1) |
$ | 1,084 | $ | 1,499 | $ | 1,565 | $ | 1,582 | $ | 1,636 |
(1) | Unlevered Free Cash Flow is a non-GAAP financial measure calculated by starting with Non-GAAP Operating Income (as shown in the table above) and subtracting cash taxes paid, capital expenditures and |
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restructuring costs, and then adding back depreciation expense and decrease in net working capital. Unlevered Free Cash Flow does not consider the effect of CAs estimated cash tax charges related to the ASC 606 transition and related to the repatriation of cash associated with the Tax Cuts and Jobs Act of 2017. |
(2) | Estimated financials shown at budget foreign exchange rates as of March 31, 2018. |
A summary of the CA projections is included in this proxy statement solely to give CAs stockholders access to information that was made available to the CA board and Qatalyst Partners in connection CAs evaluation of Broadcoms acquisition proposal and portions of which were made available to Broadcom in connection with its due diligence review of CA. The CA projections were not prepared with a view toward public disclosure or complying with accounting principles generally accepted in the United States (which we refer to as GAAP). In addition, the CA projections were not prepared with a view toward complying with the guidelines established by the SEC or by the American Institute of Certified Public Accountants with respect to prospective financial information. The CA projections are not fact and should not be relied upon as being necessarily indicative of future results. Readers of this proxy statement are cautioned not to place undue reliance on the CA projections.
The inclusion of the CA projections in this proxy statement should not be regarded as an indication that the CA board, Qatalyst Partners, any of their affiliates, or any other recipient of this information (including Broadcom) considered, or now considers, such projections to be a reliable prediction of future results or any actual future events. None of CA, Qatalyst Partners, Broadcom or any of their respective affiliates or any other person assumes any responsibility for the validity, reasonableness, accuracy or completeness of the CA projections included in this proxy statement.
The CA projections are forward-looking statements. For information on factors that may cause CAs future results to differ materially from the CA projections, see the section of this proxy statement entitled Cautionary Statement Concerning Forward-Looking Information, beginning on page 19. The CA projections were developed from historical financial statements and a series of CA managements assumptions and estimates related to future trends, including assumptions and estimates related to future business initiatives for which historical financial statements were not available, and did not give effect to any changes or expenses as a result of the merger or the other transactions contemplated by the merger agreement.
CAs future financial results may materially differ from those expressed in the CA projections due to numerous factors, including many that are beyond CAs ability to control or predict. We cannot assure you that any of the CA projections will be realized or that our future financial results will not materially vary from the CA projections. Furthermore, while presented with numerical specificity, the CA projections necessarily are based on numerous assumptions, many of which are beyond our control and difficult to predict, including with respect to industry performance, competitive factors, industry consolidation, general business, economic, regulatory, market and financial conditions, as well as matters specific to our business, including with respect to future business initiatives and changes to our business model for which we have no historical financial data, which assumptions may not prove to have been, or may no longer be, accurate. The CA projections do not take into account any circumstances or events occurring after the date they were prepared, including the July 11, 2018 public announcement of the merger and any of the transactions contemplated by the merger agreement or subsequent integration planning activities, and have not been updated since their respective dates of preparation. In addition, the CA projections do not take into account any adverse effects that may arise out of the termination of the merger agreement, and should not be viewed as accurate or continuing in that context.
The CA projections were estimated in the context of the business, economic, regulatory, market and financial conditions that existed at the time the CA projections were prepared, and the CA projections have not been updated to reflect revised prospects for our business, changes in general business, economic, regulatory, market and financial conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the CA projections were prepared. The CA projections cover multiple years, and such
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information by its nature becomes less reliable with each successive year. The CA projections should not be utilized as public guidance and will not be provided in the ordinary course of our business in the future.
The inclusion of the CA projections in this proxy statement should not be deemed an admission or representation by CA, Qatalyst Partners, Broadcom or any of their respective affiliates with respect to such projections or that the CA projections included in this proxy statement are viewed by CA, Qatalyst Partners, Broadcom or any of their respective affiliates as material information regarding CA. We in fact view the CA projections as non-material because of the inherent risks and uncertainties associated with such projections. The CA projections are not included in this proxy statement in order to induce any stockholder of CA to vote in favor of any proposal to be considered at the special meeting, but they are being included because such projections, or portions thereof, were provided to the CA board, Qatalyst Partners and/or Broadcom.
The information from the CA projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding CA contained in CAs public filings with the SEC. In light of the foregoing factors and the uncertainties inherent in the CA projections, CAs stockholders are cautioned not to place undue, if any, reliance on the CA projections included in this proxy statement, including in making a decision as to whether to vote in favor of any proposal to be considered at the special meeting.
None of CA, the CA board, its advisors (including, but not limited to, Qatalyst Partners), or any other person intends to, and each of them disclaims any obligations to, update or otherwise revise the CA projections to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the CA projections are shown to be in error or no longer appropriate, except as required by securities laws.
Non-GAAP Financial Measures
Non-GAAP Operating Income, Non-GAAP Diluted Earnings Per Share and Unlevered Free Cash Flow, each of which are referenced above, are non-GAAP financial measures. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. The calculations of non-GAAP financial measures reflected in the CA projections may differ from others in CAs industry and are not necessarily comparable with measures with similar titles used by other companies. CA strongly encourages you to review all of its financial statements and publicly filed reports in their entirety and to not rely on any single financial measure.
The merger is not conditioned upon any financing arrangements or contingencies. We anticipate that the total funds needed to complete the merger, including amounts due to CAs stockholders and holders of equity awards under the merger agreement and amounts required to refinance certain indebtedness of CA or its subsidiaries and to pay fees, costs and expenses related to the foregoing, will be funded through cash on hand of Broadcom and its subsidiaries and/or new third party debt financing.
In connection with its entry into the merger agreement, Broadcom entered into a debt commitment letter with certain financial institutions pursuant to which such financial institutions have committed to provide, subject to the terms and conditions of the debt commitment letter, senior unsecured term facilities in aggregate principal amount of $18 billion. The availability of the term facilities is conditioned on the consummation of the merger in accordance with the terms of the merger agreement (subject to certain customary exceptions and qualifications) and certain other customary conditions. We believe, but cannot assure you, that the cash on hand of Broadcom and its subsidiaries, combined with the debt financing described in the debt commitment letter, will be sufficient to complete the merger.
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Closing and Effective Time of Merger
Unless the parties otherwise agree in writing, the closing of the merger will occur on the third business day following the date on which all conditions to the merger set forth in the merger agreement (described under the section of this proxy statement entitled The Merger Agreement Conditions to the Merger beginning on page 76) have been satisfied, or, to the extent permitted by applicable law, waived (other than those conditions that by their nature are to be satisfied at the closing of the merger, but subject to the satisfaction or, to the extent permitted by applicable law, waiver, of such conditions at the closing of the merger). However, in the event that, pursuant to the terms described in the immediately preceding sentence, the closing of the merger would occur on a date that is within 35 days of the last day of Broadcoms fiscal year, or within 15 days of the last day of any other Broadcom fiscal quarter, Broadcom may irrevocably elect to defer the closing of the merger until the first business day of the immediately succeeding fiscal quarter, unless another date or time is agreed to in writing by CA and Broadcom, as described in the section of this proxy statement entitled The Merger Agreement When the Merger Becomes Effective beginning on page 56.
Payment of Merger Consideration and Surrender of Stock Certificates
If your shares of CA common stock are held on your behalf by a bank, brokerage firm or other nominee, although each bank, brokerage firm or other nominee establishes its own procedures, we believe that payment for those shares will be deposited in your account with such bank, brokerage firm or other nominee promptly after consummation of the merger. If you hold only book entry shares at Computershare Trust CA, N.A., we believe that the paying agent will mail you a check in the amount of the merger consideration for those shares approximately one week after consummation of the merger. If you hold CA stock certificates and the shares represented by that certificate have not been delivered to a government authority under unclaimed property, escheat or similar laws, the paying agent will mail you a letter of transmittal promptly after the consummation of the merger that you must complete and return to the paying agent. Once the paying agent receives your properly completed letter of transmittal and stock certificate(s), the paying agent will mail you a payment check in the amount of the aggregate merger consideration for your certificated shares and for your book entry shares, if any.
You should not return your stock certificates with the enclosed proxy card, and you should not forward your stock certificates to the paying agent without a letter of transmittal.
If you hold CA stock certificates, you will not be entitled to receive the merger consideration until you deliver a duly completed and executed letter of transmittal to the paying agent. You must also surrender your stock certificate or certificates to the paying agent. If you have lost a stock certificate or if it has been stolen or destroyed, then to receive your merger consideration with respect to the shares of CA common stock represented by that stock certificate, you will have to make an affidavit of the loss, theft or destruction of that stock certificate and, if required by Broadcom or the surviving corporation, post a bond as indemnity against any claim that may later be made with respect to such stock certificate. If ownership of your shares is not registered in the transfer records of CA, a check for any cash to be delivered will only be issued if the applicable letter of transmittal is accompanied by all documents reasonably required by CA to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable.
Interests of Certain Persons in the Merger
When considering the recommendation of the CA board that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, those of our stockholders generally. The CA board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of CA. In the discussion below, we have quantified payments and benefits on a pre-tax basis to our executive officers and to our non-employee directors. For the purposes of the agreements and plans described below, the completion of the transactions contemplated by the merger agreement will constitute a change in control and/or merger of CA, as applicable.
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Treatment of Equity Awards
Pursuant to CAs equity incentive plans and programs, certain CA equity awards, including options to purchase shares of CA common stock (each, referred to as a CA option), restricted stock unit awards (each, referred to as a CA RSU award), performance share or performance share unit awards (each, referred to as a CA PSU award), restricted shares awards (each, referred to as a CA RS award) held by its executive officers and deferred stock unit awards (each, referred to as a CA DSU award) held by its directors that are outstanding immediately prior to the closing of the merger will be converted into merger consideration or assumed by Broadcom at the effective time of the merger, as described in more detail in the section of the proxy statement entitled The Merger Agreement Treatment of Equity Awards beginning on page 56.
Our executive officers and non-employee directors as of August 3, 2018, held outstanding CA options to purchase an aggregate of 4,598,864 shares of CA common stock, CA DSU awards covering an aggregate of 647,385 shares of CA common stock, CA RSU awards covering an aggregate of 68,827 shares of CA common stock, CA PSU awards covering an aggregate of 1,211,437 shares of CA common stock (assuming achievement at target levels), and CA RS awards covering an aggregate of 297,444 shares of CA common stock.
Under the terms of CAs 2011 incentive plan, as amended on August 8, 2018 (which we refer to as the 2011 incentive plan), if the employment of a holder of a CA option, CA RSU award, CA PSU award or CA RS award (each, referred to as a CA equity award) that was issued prior to the date of the merger agreement is terminated without cause or, solely for participants who have an employment agreement with CA which defines good reason or who participate in CAs change in control severance policy as in effect immediately prior to the effective time of the merger (which we refer to as the CIC severance policy), for good reason, in either case, on or within the two-year period following the effective time of the merger, 100% of the then-unvested portion of any adjusted option, adjusted RSU award (as defined in the section of the proxy statement entitled The Merger Agreement Treatment of Equity Awards beginning on page 56), or adjusted RS award (as defined in the section of the proxy statement entitled The Merger Agreement Treatment of Equity Awards beginning on page 56) held by such holder will immediately vest, and to the extent applicable, become exercisable as of the date such holders employment is terminated.
For these purposes, cause means (a) if the holder has an effective employment agreement with CA or any of its subsidiaries, or participates in the CIC severance policy, in each case, immediately prior to the effective time of the merger, the definition used in such employment agreement or in the CIC severance policy as in effect on the effective time of the merger, and if there are cause definitions in both such employment agreement and the CIC severance policy, the definition in the CIC severance policy will control or (b) if the holder does not have an effective employment agreement or does not participate in the CIC severance policy, in either case, immediately prior to the effective time of the merger, termination for misconduct, poor performance, or violation of any CA policy or procedure. By way of example, for purposes of clause (b), termination for cause includes, but is not limited to: (1) dishonesty, including theft; (2) insubordination; (3) job abandonment; (4) willful refusal to perform the employees job; (5) violation of the terms of CAs Employment and Confidentiality Agreement; (6) violation of CAs policies on discrimination, unlawful harassment or substance abuse; (7) violation of CAs Work Rules; (8) violation of CAs Workplace Violence Policy; or (9) excessive absenteeism. Further, for these purposes, good reason has the meaning set forth in the 2011 incentive plan, except that, for the avoidance of doubt, with respect to Michael Gregoire, the definition of good reason under the employment agreement between CA and Michael Gregoire, dated December 10, 2012 (which we refer to as the Gregoire employment agreement), will control with respect to any and all of his CA options, CA RSU awards, CA RS awards or CA PSU awards (or, following the effective time of the merger, any adjusted option, adjusted RSU award, or adjusted RS award).
The following table shows, as of August 3, 2018, for each person who has been an executive officer since April 1, 2017, (i) the number and value of shares of CA common stock held (including any beneficial ownership), (ii) the number of shares of CA common stock subject to vested CA options held and the merger consideration due in respect of such options, (iii) the number of shares of CA common stock subject to unvested CA options to be assumed by Broadcom upon the completion of the merger and the value of such options,
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(iv) the number of shares of CA common stock subject to CA RSU awards and CA PSU awards (at target levels of performance) to be assumed by Broadcom upon the completion of the merger and the value of such awards, (v) the number of shares of CA common stock subject to CA RS awards to be assumed by Broadcom upon the completion of the merger and the value of such awards, and (vi) the total value of all unvested CA equity awards to be assumed by Broadcom upon the completion of the merger, in each case, calculated assuming the merger is consummated on August 3, 2018.
Executive |
Number of Shares Held(#) |
Value of Shares Held($)(1) |
Number of Shares Subject to Vested CA Options(#) |
Merger Consideration for Vested CA Options($)(2) |
Number of Shares Subject to Unvested CA Options to be Assumed(#) |
Value of Unvested CA Options to be Assumed ($)(2) |
Number of Shares Subject to CA RSU Awards and CA PSU Awards to be Assumed(#) |
Value of CA RSU Awards and CA PSU Awards to be Assumed ($)(1) |
Number of Shares Subject to CA RS Awards to be Assumed(#) |
Value of CA RS Awards to be Assumed ($)(1) |
Total
Value of Unvested CA Equity Awards to be Assumed($) (1)(2)(3)(5) | |||||||||||
Michael Gregoire | 275,468 | 12,258,326 | 1,989,362 | 33,395,845 | 826,476 | 9,189,329 | 570,882 | 25,404,249 | 127,914 | 5,692,173 | 40,285,751 | |||||||||||
Lauren Flaherty | 69,576 | 3,096,132 | 528,473 | 7,457,766 | 206,333 | 2,280,215 | 143,789 | 6,398,611 | 31,555 | 1,404,198 | 10,083,024 | |||||||||||
Ava Hahn | | | | | 70,294 | 648,111 | 64,069 | 2,851,071 | 11,337 | 504,497 | 4,003,679 | |||||||||||
Jacob Lamm | 45,682 | 2,032,849 | 55,032 | 724,966 | 82,088 | 914,861 | 56,659 | 2,521,326 | 12,699 | 565,106 | 4,001,293 | |||||||||||
Kieran McGrath | 32,612 | 1,451,234 | 34,783 | 446,926 | 151,869 | 1,645,247 | 97,023 | 4,317,524 | 28,198 | 1,254,811 | 7,217,582 | |||||||||||
Paul Pronsati | 41,252 | 1,835,714 | 95,489 | 1,284,725 | 89,817 | 1,001,488 | 62,157 | 2,765,987 | 13,893 | 618,239 | 4,385,714 | |||||||||||
Ayman Sayed | 41,491 | 1,846,350 | 13,858 | 140,659 | 228,467 | 2,585,855 | 171,861 | 7,647,815 | 35,029 | 1,558,791 | 11,792,461 | |||||||||||
Michael Bisignano(3) | 49,580(4) | 2,206,310 | | | | | 30,282(3) | 1,347,549 | | | 1,347,549 | |||||||||||
Adam Elster(5) | 3,205(4) | 142,623 | 56,768 | 719,617 | 240,381(6) | 2,660,528 | 83,542(5)(6) | 3,717,619 | 36,819(6) | 1,638,446 | 8,016,593(6) |
(1) | The value of each share of CA common stock held by the executive officer and estimated value of each share of CA common stock underlying CA equity awards held by the executive officer is based on the $44.50 merger consideration, and, in the case of CA options, reduced by the applicable per share exercise price. The actual number and values of the adjusted options, adjusted RSU awards and adjusted RS awards will be based on the equity award exchange ratio, which cannot be determined until trading closes on NASDAQ on the trading day immediately preceding the effective time of the merger. |
(2) | The estimated value of each CA option is equal to (i) the excess (if any) of $44.50 over the exercise price per share of the CA option, multiplied by (ii) the number of shares of CA common stock subject to the vested or unvested CA option, as applicable, as of August 3, 2018. |
(3) | Mr. Bisignano is no longer an executive officer of CA as of August 3, 2018 as his employment with CA terminated on May 31, 2018. In connection with his termination, Mr. Bisignano and CA entered into a separation agreement and general claims release signed March 12, 2018 (which we refer to as the Bisignano separation agreement). Pursuant to the terms of the Bisignano separation agreement, Mr. Bisignanos CA PSU awards remained outstanding following his termination date, and a pro-rated portion of such CA PSU awards may be earned based solely upon the attainment of performance goals. As noted in the section of the proxy statement entitled The Merger Agreement Treatment of Equity Awards beginning on page 56, CA PSU awards that are outstanding immediately prior to the effective time of the merger will be deemed achieved at target levels, meaning that upon the effective time of the merger, Mr. Bisignanos CA PSU awards will vest and be settled. The estimated value of his PSU awards reflected in the table above is equal to the number of pro-rated shares of CA common stock subject to his CA PSU awards (assuming target performance) multiplied by the $44.50 merger consideration. |
(4) | CA does not have share ownership information for these individuals as of August 3, 2018, as they are not currently executive officers. For Mr. Bisignano, this number represents the number of shares held as of May 26, 2017, as reflected in his most recent filed Form 4. For Mr. Elster, the share number represents the number of shares held as of June 11, 2018. |
(5) | Mr. Elster is no longer an executive officer of CA as of August 3, 2018. Mr. Elster ceased to serve as President, Global Field Operations as of May 3, 2018 and his employment with CA will end on August 17, 2018. Pursuant to the terms of the separation agreement and general claims release, signed June 21, 2018 (which we refer to as the Elster separation agreement), Mr. Elsters CA PSU awards will remain outstanding following his termination date, and a pro-rated portion of such CA PSU awards may be earned based solely upon the attainment of performance goals. As noted in the section of the proxy statement entitled The Merger Agreement Treatment of Equity Awards beginning on page 56, CA PSU awards that are outstanding immediately prior to the effective time of the merger will be deemed achieved at target levels, meaning that upon the effective time of the merger, Mr. Elsters CA PSU awards will vest and be settled. The estimated value of his PSU awards reflected in the table above is equal to the number of pro-rated shares of CA common stock subject to his CA PSU awards (assuming target performance) multiplied by the $44.50 merger consideration. |
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(6) | Upon Mr. Elsters termination of employment, any unvested CA equity awards (other than CA PSU awards) will terminate. Broadcom will not assume any of Mr. Elsters outstanding CA equity awards in connection with the merger. |
The following table shows as of August 3, 2018, for each person who has been a non-employee director since April 1, 2017 (except as noted below), (i) the number and value of shares of CA common stock held (including any beneficial ownership) and (ii) the number of shares of CA common stock subject to CA DSU awards held and the value of the merger consideration that he or she will receive for such awards upon completion of the merger, in each case, calculated assuming the merger is consummated on August 3, 2018. No non-employee director holds any CA equity awards other than CA DSU awards. The table does not show the holdings of Renato Zambonini, whose service as a director ceased upon his passing in August 2017, or the holdings of Nancy Altobello, who was elected to serve as a director at the 2018 annual meeting held on August 8, 2018. As of August 3, 2018, Ms. Altobello does not hold any shares of CA common stock or any shares of CA common stock subject to CA DSU awards.
Directors |
Number of Shares Held(#) |
Value of Shares Held($)(1) |
Number of Shares Subject to CA DSU awards(#) |
Merger Consideration for CA DSU awards($)(1) |
||||||||||||
Jens Alder |
| | 47,720 | 2,123,540 | ||||||||||||
Raymond Bromark |
1,000 | 44,500 | 74,968 | 3,336,076 | ||||||||||||
Jean Hobby |
| | 2,684 | 119,438 | ||||||||||||
Rohit Kapoor |
20,000 | 890,000 | 66,460 | 2,957,470 | ||||||||||||
Jeffrey Katz |
| | 23,362 | 1,039,609 | ||||||||||||
Kay Koplovitz |
| | 63,962 | 2,846,309 | ||||||||||||
Christopher Lofgren |
| | 92,796 | 4,129,422 | ||||||||||||
Richard Sulpizio |
| | 60,048 | 2,672,136 | ||||||||||||
Laura Unger(2) |
| | 79,851 | 3,553,370 | ||||||||||||
Arthur Weinbach(3) |
25,000 | 1,112,500 | 135,534 | 6,031,263 |
(1) | The value of each share of CA common stock held by the non-employee director and each share of CA common stock underlying CA DSU awards held by the non-employee director is based on the $44.50 merger consideration. |
(2) | Ms. Unger retired from the CA board at the 2018 annual meeting and did not stand for reelection. |
(3) | Mr. Weinbach, having reached the mandatory retirement age under CAs Corporate Governance Principles, retired from the CA board at the 2018 annual meeting and did not stand for reelection. |
CIC Severance Policy
We maintain the CIC severance policy, which was initially approved by the CA board in October 2004 and was most recently amended on August 8, 2018. Each of our current executive officers is a participant in the CIC severance policy and is eligible to receive certain severance benefits upon specified qualifying terminations of employment. Under the CIC severance policy, if within two years following a Change in Control (as defined in the CIC severance policy and which the merger constitutes), a participants employment is terminated other than for cause (as defined in the CIC severance policy) or by the participant for good reason (as defined in the CIC severance policy) or within six months prior to a Change in Control if such termination is at the request of a third party involved in the Change in Control, subject to the participants execution and non-revocation of a separation agreement and release, the participant is eligible to receive the following benefits, subject to the terms and conditions of the CIC severance policy:
| A lump sum cash payment equal to the result of multiplying (i) the sum of (A) the participants base salary, plus (B) the participants bonus amount (as defined in the CIC severance policy and described below) by (ii) a severance multiple (2.99 in the case of Messrs. Gregoire, McGrath and Sayed and 2.00 in the case of Mses. Flaherty and Hahn and Messrs. Lamm and Pronsati); |
| A lump sum cash payment equal to the participants target annual performance bonus, pro-rated for the number of days during the fiscal year the participant was employed; |
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| A lump sum cash payment equal to the participants target long-term performance bonus. Please note, however, that for purposes of this transaction, the Long-Term Performance Bonus consists of CA PSU awards which will be treated as described in The Merger Agreement Treatment of Equity Awards beginning on page 56; |
| A lump sum cash payment equal to CAs monthly premium cost of health care for participant and/or the participants family at the time of termination, multiplied by 18; |
| For a period of one-year following the termination date, CA will make outplacement services available to the participant in accordance with its policy in effect before the Change in Control (or if no such policy is in effect, the participant may choose a provider of outplacement services), with the total cost of such services not to exceed $10,000; and |
| If, on the termination date, the participant is working in a country other than the participants home country, and the participant wishes to relocate to the participants home country within one year following the termination date, CA will provide relocation benefits in accordance with CAs relocation program in effect immediately prior to the Change in Control (or if no such policy is in effect, CA will reimburse the participants relocation costs, not to exceed $75,000). |
For purposes of the CIC severance policy, bonus amount means the higher of (i) the participants target annual performance bonus for the fiscal year in which the termination date occurs (or, if the qualifying termination is on account of good reason pursuant to a reduction in the participants compensation or compensation opportunity, the participants target annual performance bonus for the prior fiscal year, if higher) or (ii) the average of the participants annual performance bonuses earned during the past three completed fiscal years of CA immediately preceding the termination date (annualized in the event the participant was not employed by CA (or its affiliates) for the whole of any such fiscal year).
The following table sets forth the benefits that each of our current executive officers will be eligible to receive upon a qualifying termination of employment under the CIC severance policy, assuming the merger and a qualifying termination of employment occurs on August 3, 2018. The amounts in the table do not take into account any possible reduction that might be required to avoid the excise tax in connection with Section 280G under Section 4999 of the Internal Revenue Code of 1986 (which we refer to as the Code). To the extent the payments and benefits shown below would constitute excess parachute payments for purposes of these tax code sections, pursuant to the terms of the CIC severance policy, as amended on August 8, 2018, or, in the case of Mr. Gregoire, pursuant to the terms of the Gregoire employment agreement, each executive officer may have his or her payments and benefits reduced, if such reduction would result in a greater net-after-tax amount to him or her after taking into account any excise tax imposed under Section 4999 of the Code and any applicable federal, state and local taxes. Messrs. Bisignano and Elster are not eligible to receive benefits under the CIC severance policy and instead have received or will receive severance pursuant to the terms of the Bisignano separation agreement and the Elster separation agreement, respectively. None of our current executives would be eligible to receive any relocation benefits as described above.
Executive Officers |
Cash Severance (Sum of base salary and bonus amount multiplied by severance multiple) ($) |
Pro-Rated Target Annual Bonus ($) |
Healthcare Premiums ($) |
Outplacement Services ($) |
Total ($) | |||||||||||||||
Michael Gregoire |
8,222,500 | 599,323 | 37,937 | 10,000 | 8,869,760 | |||||||||||||||
Lauren Flaherty |
2,500,000 | 214,044 | 37,974 | 10,000 | 2,762,018 | |||||||||||||||
Ava Hahn |
2,400,000 | 205,482 | 37,937 | 10,000 | 2,653,419 | |||||||||||||||
Jacob Lamm |
1,800,000 | 154,112 | 37,974 | 10,000 | 2,002,086 | |||||||||||||||
Kieran McGrath |
3,827,200 | 219,181 | 37,937 | 10,000 | 4,094,318 | |||||||||||||||
Paul Pronsati |
2,400,000 | 205,482 | 24,412 | 10,000 | 2,639,894 | |||||||||||||||
Ayman Sayed |
3,887,000 | 222,606 | 37,937 | 10,000 | 4,157,543 |
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Specified Compensation That Will or May Become Payable to Our Named Executive Officers in Connection With the Merger
In accordance with Item 402(t) of Regulation S-K, the table below sets forth the estimated amounts of compensation and benefits that each named executive officer of CA could receive that are based on or otherwise relate to the merger. These amounts have been calculated assuming the merger is consummated on August 3, 2018, and assuming each named executive officer experiences a qualifying termination of employment under the CIC severance policy as of that date, without taking into account any possible reduction that might be required to avoid the excise tax in connection with Section 280G under Section 4999 of the Code. To the extent the payments and benefits shown below would constitute excess parachute payments for purposes of these tax code sections pursuant to the terms of the CIC severance policy, as amended on August 8, 2018, or, in the case of Mr. Gregoire, pursuant to the terms of the Gregoire employment agreement, each named executive officer may have his or her payments and benefits reduced, if such reduction would result in a greater net-after-tax amount to him or her after taking into account any excise tax imposed under Section 4999 of the Code and any applicable federal, state and local taxes. The amounts shown do not reflect any taxes payable by the named executive officers. Please see the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger beginning on page 43 for further information about the applicable compensation and benefits.
Golden Parachute Compensation
Named Executive Officers |
Cash ($)(2) | Equity ($)(3)(4)(5) |
Pension / NQDC ($)(6) |
Perquisites / Benefits ($)(2)(7) |
Total ($) | |||||||||||||||
Michael Gregoire |
8,821,823 | 40,285,751 | | 47,937 | 49,155,511 | |||||||||||||||
Kieran McGrath |
4,046,381 | 7,217,582 | | 47,937 | 11,311,900 | |||||||||||||||
Ayman Sayed |
4,109,606 | 11,792,461 | 7,384 | 47,937 | 15,957,388 | |||||||||||||||
Lauren Flaherty |
2,714,044 | 10,083,024 | | 47,974 | 12,845,042 | |||||||||||||||
Adam Elster(1) |
| 3,717,619 | | | 3,717,619 |
(1) | Mr. Elster ceased to serve as President, Global Field Operations as of May 3, 2018 and his employment with CA will end on August 17, 2018. Mr. Elster will be eligible to receive certain severance benefits described in the Elster separation agreement. Mr. Elster is not eligible to participate in the CIC severance policy and except as noted in footnote 5 below, Mr. Elster will not receive any benefits based on or otherwise relating to the merger. |
(2) | Reflects the amount of double-trigger payments to which the named executive officer may become entitled under the CIC severance policy. The amounts become payable in the event that, within two years following a Change in Control (as defined in the CIC severance policy), either CA terminates the employment of the applicable named executive officer other than for cause or he or she resigns from his or her employment for good reason (as such terms are defined in the CIC severance policy) or within six months prior to a Change in Control if such termination is at the request of a third party involved in the Change in Control, subject to the participants execution and non-revocation of a separation agreement and release. Please see the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger beginning on page 43 for additional details. In addition, each of the named executive officers are subject to a non-compete for a period of months (18 months for Mr. Gregoire and 12 months for Messrs. McGrath and Sayed and Ms. Flaherty) following a termination of his or her employment. |
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In addition, reflects a lump-sum cash payment equal to the sum of (1) the result of multiplying (i) the sum of (A) the named executive officers base salary (as defined in the CIC severance policy), plus (B) the named executive officers bonus amount (as defined in the CIC severance policy and described above) by (ii) the named executive officers severance multiple, and (2) the named executive officers target annual performance bonus, pro-rated for the number of days during the fiscal year that elapsed during fiscal year 2019 through and including August 3, 2018, as follows:
Name |
Severance Multiple (#) |
Base Salary ($) |
Bonus Amount ($) |
Salary Severance and Bonus Amount Severance Total ($) |
Pro-Rated Performance Annual Bonus ($) |
Total ($) | ||||||||||||||||||
Michael Gregoire |
2.99 | 1,000,000 | 1,750,000 | 8,222,500 | 599,323 | 8,821,823 | ||||||||||||||||||
Kieran McGrath |
2.99 | 640,000 | 640,000 | 3,827,200 | 219,181 | 4,046,381 | ||||||||||||||||||
Ayman Sayed |
2.99 | 650,000 | 650,000 | 3,887,000 | 222,606 | 4,109,606 | ||||||||||||||||||
Lauren Flaherty |
2.00 | 625,000 | 625,000 | 2,500,000 | 214,044 | 2,714,044 |
(3) | The value of each share underlying each unvested CA equity award is equal to the $44.50 merger consideration, which, in the case of unvested CA options, is reduced by the exercise price per share of such CA options. The amounts do not represent neither the value of the awards for accounting purposes nor the amount, if any, that actually will be realized by the individual with respect to any awards. |
(4) | Mr. Elsters CA PSU awards will remain outstanding following his termination date, and pursuant to the Elster separation agreement, a pro-rated portion of such CA PSU awards would be earned based solely upon the attainment of performance goals. As noted above, pursuant to the terms of the merger agreement, CA PSU awards that are outstanding immediately prior to the effective time of the merger will be deemed achieved at target levels, meaning that upon the effective time of the merger, Mr. Elsters CA PSU awards will vest and be settled. The estimate set forth in the table above is equal to the number of pro-rated shares of CA common stock subject to CA PSU awards (assuming target performance) multiplied by the $44.50 merger consideration. Upon Mr. Elsters termination of employment, any unvested CA equity awards (other than CA PSU awards) will terminate. Broadcom will not assume any of Mr. Elsters outstanding CA equity awards in connection with the merger. |
(5) | Under the terms of the 2011 incentive plan, if the named executive officer is terminated without cause or for good reason, in either case, on or within the two-year period following the effective time of the merger, 100% of the then-unvested portion of any adjusted option, adjusted RSU award, or adjusted RS award held by such holder will immediately vest, and to the extent applicable, become exercisable as of the date such holders employment is terminated. |
The numbers in the table above reflect the value of the double-trigger vesting acceleration of unvested CA equity awards to which each named executive officer would be entitled under the terms of the 2011 incentive plan. The values reflect the number of unvested shares of CA common stock subject to each named executive officers outstanding CA equity awards. The number of shares of CA common stock subject to CA PSU awards included is equal to the number of shares of CA common stock that otherwise would become eligible to vest assuming target achievement of the applicable performance goals, as described in further detail in the sections of this proxy statement entitled The Merger Agreement Treatment of Equity Awards beginning on page 56 and The Merger (Proposal 1) Interests of Certain Persons in the Merger beginning on page 43.
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See footnotes 3 and 4 above for additional assumptions that also apply to the following table.
Named Executive Officer |
Number of Shares Subject to Unvested CA Options (#) |
Value of Unvested CA Options ($) |
Number of Shares Subject to CA RSU Awards (#) |
Value of Shares Subject to CA RSU Awards ($) |
Number of Shares Subject to CA PSU Awards (at Target Performance) (#) |
Value of Shares Subject to CA PSU Awards ($) |
Number of Shares Subject to CA RS Awards (#) |
Value of Shares Subject to CA RS Awards ($) |
Total Value ($) | |||||||||
Michael Gregoire |
826,476 | 9,189,329 | | | 570,882 | 25,404,249 | 127,914 | 5,692,173 | 40,285,751 | |||||||||
Kieran McGrath |
151,869 | 1,645,247 | 10,202 | 453,989 | 86,821 | 3,863,535 | 28,198 | 1,254,811 | 7,217,582 | |||||||||
Ayman Sayed |
228,467 | 2,585,855 | 28,569 | 1,271,321 | 143,292 | 6,376,494 | 35,029 | 1,558,791 | 11,792,461 | |||||||||
Lauren Flaherty |
206,333 | 2,280,215 | | | 143,789 | 6,398,611 | 31,555 | 1,404,198 | 10,083,024 | |||||||||
Adam Elster |
| | | | 83,542 | 3,717,619 | | | 3,717,619 |
(6) | CA sponsors a Restoration Plan and the CA, Inc. Excess Benefit Plan (which we refer to as together, the 401(k) supplemental plans). The 401(k) supplemental plans are unfunded plans that were created for the purpose of benefiting participants in the Savings Harvest Plan, CAs tax-qualified 401(k) plan, who are unable to receive a full allocation of employer contributions due to limitations imposed under the applicable tax rules. Pursuant to each of the 401(k) supplemental plans, CA has set up a notional account that is credited with an amount, if any, that would have been credited to the participants 401(k) plan account absent those tax limitations. In addition, CA credited these accounts with an interest-equivalent amount equal to the interest that would have been earned if the accounts had been invested in the money market fund investment alternative under CAs tax-qualified 401(k) plan. The amounts credited to the accounts under the 401(k) supplemental plans vest in accordance with the same schedule that employer contributions vest under the tax-qualified 401(k) plan, except that upon a change in control of CA (including the merger), the accounts become fully vested and payable. The amounts shown in the table equal the unvested portion of the named executive officers account that will fully vest and become payable upon the merger (a single-trigger benefit). |
(7) | Represents a lump-sum cash payment equal to (i) the product of (A) CAs monthly premium cost of health care for the named executive officer and/or the named executive officers family on the termination date, multiplied by (B) 18, plus (ii) the estimated cost of outplacement services for the named executive officer (not to exceed $10,000), as follows: |
Name |
Health Premiums ($) |
Outplacement Costs ($) |
Total ($) |
|||||||||
Michael Gregoire |
37,937 | 10,000 | 47,937 | |||||||||
Kieran McGrath |
37,937 | 10,000 | 47,937 | |||||||||
Ayman Sayed |
37,937 | 10,000 | 47,937 | |||||||||
Lauren Flaherty |
37,974 | 10,000 | 47,974 |
Arrangements with the Surviving Corporation
As of the date of this proxy statement, no members of CAs current management have entered into any agreement, arrangement or understanding with Broadcom, Merger Sub or their affiliates regarding employment with, or the right to invest or participate in the equity of, the surviving corporation, Broadcom or any of its affiliates. Although it is possible that certain members of CAs current management team will enter into arrangements with Broadcom or their affiliates regarding employment (and severance arrangements) with, and the right to purchase or participate in the equity of, Broadcom, as of the date of this proxy statement, no discussions have occurred between members of CA management and representatives of Broadcom or their affiliates regarding any such arrangements.
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Indemnification and Insurance
Please see the description of certain indemnification arrangements and the continuation of certain insurance arrangements for CAs directors and officers in the section of this proxy statement entitled The Merger Agreement Directors and Officers Indemnification and Insurance beginning on page 75 and the benefits provided to CA employees under the merger agreement in the section of this proxy statement entitled The Merger Agreement Employee Matters beginning on page 74.
Acquisition accounting will apply for this transaction.
Material U.S. Federal Income Tax Consequences of the Merger
The following is a general discussion of the material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) whose shares of CA common stock are converted into the right to receive cash pursuant to the merger. This discussion does not address U.S. federal income tax consequences with respect to holders other than U.S. holders. This discussion is based on the Code, the U.S. Treasury regulations promulgated under the Code, published rulings by the Internal Revenue Service (which we refer to as the IRS), and judicial authorities and administrative decisions, all as in effect as of the date of this proxy statement and all of which are subject to change or differing interpretations, possibly with retroactive effect. Any such changes or interpretations could affect the accuracy of the statements and conclusions set forth herein. This discussion is not binding on the IRS or a court, and there can be no assurance that the tax consequences described in this discussion will not be challenged by the IRS or that they would be sustained by a court if so challenged. No ruling has been or will be sought from the IRS, and no opinion of counsel has been or will be rendered as to the U.S. federal income tax consequences of the merger.
For purposes of this summary, the term U.S. holder means a beneficial owner of shares of CA common stock that is, for U.S. federal income tax purposes:
| an individual who is a citizen or resident of the United States; |
| a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia; |
| a trust that (i) is subject to the supervision of a court within the United States and the control of one or more U.S. persons or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or |
| an estate the income of which is subject to U.S. federal income tax regardless of its source. |
If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds CA common stock, the tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. A partner in a partnership holding CA common stock should consult the partners tax advisor regarding the U.S. federal income tax consequences of the merger to such partner.
This discussion applies only to U.S. holders who hold shares of CA common stock as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment), and does not address or consider all of the U.S. federal income tax consequences that may be applicable to U.S. holders of CA common stock in light of their particular circumstances. For instance, this summary does not address the alternative minimum tax or the tax consequences to U.S. holders who validly exercise dissenters rights under the DGCL. In addition, this summary does not address the U.S. federal income tax consequences of the merger to U.S. holders who are subject to special treatment under U.S. federal income tax rules, including, for example, banks and other
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financial institutions; insurance companies; securities dealers or broker-dealers; mutual funds; real estate investment trusts; traders in securities who elect to use the mark-to-market method of accounting; tax-exempt investors; retirement plans, individual retirement accounts or other tax-deferred accounts; S corporations; holders classified as partnerships or other flow-through entities under the Code (or investors in such partnerships or other flow-through entities); certain former citizens or long-term residents of the United States; holders who hold their shares of CA common stock as part of a hedge, straddle, conversion transaction, or other integrated investment; U.S. holders whose functional currency is not the U.S. dollar; holders who acquired their shares of CA common stock through the exercise of CA options or otherwise as compensation; holders who actually or constructively own (or owned at any time during the five-year period ending on the date of the disposition of such holders CA common stock pursuant to the merger) 5% or more of the outstanding shares of CA common stock; holders who actually or constructively own any interest in Broadcom; and holders who do not hold their shares of CA common stock as capital assets within the meaning of Section 1221 of the Code. In addition, this summary does not address the impact of the Medicare contribution tax on net investment income, the Foreign Account Tax Compliance Act of 2010 (including the Treasury Regulations promulgated thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith), any aspects of non-U.S., state, local, estate, gift, or other tax laws (or any U.S. federal tax laws other than those pertaining to income tax) that may be applicable to a particular holder in connection with the merger.
Further, this summary does not address any tax consequences of the merger to holders of CA options, CA RS awards, CA PSU awards, CA DSU awards or CA RSU awards. Such holders should consult their tax advisors regarding the tax consequences of the merger to them.
All stockholders should consult their own tax advisors to determine the particular tax consequences to them (including the application and effect of any state, local or non-U.S. income and other tax laws) of the merger.
A U.S. holders receipt of the merger consideration in exchange for shares of CA common stock will generally be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder whose shares of CA common stock are converted into the right to receive cash pursuant to the merger will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received (determined before deduction of any applicable withholding taxes) with respect to such shares and the U.S. holders adjusted tax basis in such shares. The amount of gain or loss must be determined separately for each block of shares (i.e., shares acquired at the same cost in a single transaction) surrendered by the U.S. holder in the merger. Such gain or loss will generally be long-term capital gain or loss if the U.S. holders holding period for such shares is more than 12 months at the effective time of the merger. Long-term capital gains recognized by individual and certain other non-corporate U.S. holders are generally taxed at preferential U.S. federal income tax rates. A U.S. holders ability to deduct capital losses may be limited.
Backup Withholding and Information Reporting
A U.S. holder may be subject to backup withholding on all payments to which such U.S. holder is entitled in connection with the merger, unless the U.S. holder provides its correct taxpayer identification number and complies with applicable certification procedures or otherwise establishes an exemption from backup withholding. In addition, if the paying agent is not provided with a U.S. holders correct taxpayer identification number or other adequate basis for exemption, the U.S. holder may be subject to certain penalties imposed by the IRS. Each U.S. holder should complete and sign the IRS Form W-9 included as part of the letter of transmittal and timely return it to the paying agent in order to avoid backup withholding, unless an exemption applies and is established in a manner satisfactory to the paying agent.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will generally be allowable as a refund or credit against a holders U.S. federal income tax liability, provided that certain required information is timely furnished to the IRS.
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Payments made pursuant to the merger will also be subject to information reporting unless an exemption applies.
This summary is provided for general information only and is not tax advice or a complete analysis or discussion of all potential tax consequences relevant to stockholders. The U.S. federal income tax consequences described above are not intended to constitute a complete description of all tax consequences relating to the merger. Because individual circumstances may differ, each stockholder should consult the stockholders tax advisor regarding the applicability of the rules discussed above to the stockholder and the particular tax effects to the stockholder of the merger in light of such stockholders particular circumstances and the application of state, local, foreign, estate, gift and other tax laws (or any U.S. federal tax laws other than those pertaining to income tax).
Regulatory Approvals and Notices
Under the HSR Act, the merger cannot be completed until each of CA and Broadcom files a notification and report form with the Federal Trade Commission (which we refer to as the FTC) and the Antitrust Division of the Department of Justice (which we refer to as the DOJ) and the applicable waiting period has expired or been terminated. The parties each filed a notification and report form with the FTC and the DOJ on July 24, 2018. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30 calendar day waiting period following the parties filing of their respective HSR Act notification forms or the early termination of that waiting period.
At any time before or after consummation of the merger, notwithstanding the termination of the waiting period under the HSR Act, the DOJ or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger. At any time before or after the completion of the merger, and notwithstanding the termination of the waiting period under the HSR Act, any state could take such action under the antitrust laws as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the completion of the merger. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.
Additionally, under the merger agreement, the merger cannot be completed until any affirmative approval or clearance required under the antitrust laws of the European Union and Japan have been obtained or are deemed to have been obtained. The parties must observe mandatory waiting periods and/or obtain the necessary approvals, clearances or consents in each of these required foreign jurisdictions before completing the merger. The parties will file merger notifications with the appropriate regulators in each of these required foreign jurisdictions as promptly as practicable and work cooperatively toward expedited regulatory clearances.
There can be no assurance that all of the regulatory clearances and approvals as described above will be sought or obtained and, if obtained, there can be no assurance as to the timing of any approvals, the ability of the parties to obtain the approvals on satisfactory terms or the absence of any litigation challenging such approvals. There can also be no assurance that the DOJ, the FTC, the antitrust authorities of the European Union and Japan or any other governmental entity or any private party will not attempt to challenge the merger and, if such a challenge is made, there can be no assurance as to its result.
On July 11, 2018, in connection with the transactions contemplated by the merger agreement, CA entered into Amendment No. 1 (which we refer to as the rights agreement amendment) to the Stockholder Protection Rights Agreement (which we refer to as the rights agreement), dated as of November 30, 2015, by and between CA and Computershare Trust Company, N.A., a federally chartered trust company, as rights agent. The rights agreement amendment provides, among other things, that the rights agreement will not apply to the merger or any of the other transactions contemplated by the merger agreement or the voting agreement and, subject to the occurrence of the effective time of the merger, will terminate immediately prior to the effective time of the merger.
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The foregoing summary of the rights agreement amendment and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the rights agreement amendment attached hereto as Annex D and incorporated herein by reference.
Litigation Relating to the Merger
On August 3, 2018, a purported stockholder of CA commenced a putative class action lawsuit captioned Harvey v. CA, Inc., et al. against CA, the CA board, Broadcom and Merger Sub in the United States District Court for the Southern District of New York. On August 9, 2018, another putative class action lawsuit captioned Vladimir Gusinsky Rev. Trust v. CA, Inc., et al. was filed against CA and the CA board in the United States District Court for the District of Delaware. The complaints allege violations of Sections 14(a) and 20(a) of the Exchange Act arising out of CAs preliminary proxy statement filed with the SEC on July 24, 2018 (which we refer to as the preliminary proxy statement) relating to the merger. The complaints assert that the preliminary proxy statement contains incomplete and misleading information regarding CAs financial projections and the financial analysis performed by Qatalyst Partners, CAs financial advisor, as well as, for the Harvey complaint, the sales process. Plaintiffs seek to enjoin the defendants from consummating the merger, or, if the merger is consummated, rescission and/or damages. The plaintiffs also seek costs and fees. The defendants believe the complaints are without merit.
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This section describes the material terms of the merger agreement. The description in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Annex A and is incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We encourage you to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about us. Such information can be found elsewhere in this proxy statement and in the public filings we make with the SEC, as described in the section of this proxy statement entitled Where You Can Find More Information beginning on page 102.
Explanatory Note Regarding the Merger Agreement
The following summary of the merger agreement, and the copy of the merger agreement attached hereto as Annex A to this proxy statement, are intended to provide information regarding the terms of the merger agreement and are not intended to modify or supplement any factual disclosures about CA or Broadcom in its public reports filed with the SEC. In particular, the merger agreement and the related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to CA or Broadcom or any of their respective subsidiaries or affiliates. The merger agreement contains representations and warranties by the parties which were made only for purposes of that agreement and as of specified dates. The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the merger agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures 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. In addition, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in CAs or Broadcoms public disclosures. Moreover, the description of the merger agreement below does not purport to describe all of the terms of such agreement, and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached hereto as Annex A and is incorporated herein by reference.
Additional information about CA may be found elsewhere in this proxy statement and in CAs other public filings. See Where You Can Find More Information, beginning on page 102.
The merger agreement provides that, upon the terms and subject to the conditions set forth in the merger agreement and in accordance with the DGCL, Merger Sub will be merged with and into CA, whereupon the separate existence of Merger Sub will cease and CA will continue as the surviving corporation and a wholly owned subsidiary of Broadcom.
Following the effective time of the merger, the officers of Merger Sub immediately prior to the effective time of the merger will be the officers of the surviving corporation unless otherwise determined by Broadcom prior to the effective time of the merger, and the board of directors of Merger Sub will be the directors of the surviving corporation.
Subject to Broadcoms and the surviving corporations commitments with respect to indemnification of CAs current and former directors and officers, at the effective time of the merger, the certificate of incorporation and the bylaws of Merger Sub as in effect immediately prior to the effective time of the merger will be the certificate of incorporation and bylaws of the surviving corporation until amended in accordance with their terms and applicable law (except that the name of the surviving corporation will be CA, Inc.).
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Following the consummation of the merger, CA common stock will be delisted from NASDAQ and deregistered under the Exchange Act and will cease to be publicly traded.
When the Merger Becomes Effective
Unless the parties otherwise agree in writing, the closing of the merger will occur on the third business day following the date on which all conditions to the merger set forth in the merger agreement have been satisfied, or, to the extent permitted by applicable law, waived (other than those conditions that by their nature at to be satisfied at the closing of the merger, but subject to the satisfaction or, to the extent permitted by applicable law, waiver, of such conditions at the closing of the merger).
However, in the event that, pursuant to the terms described in the immediately preceding paragraph, the closing of the merger would occur on a date that is within 35 days of the last day of Broadcoms fiscal year, or within 15 days of the last day of any other Broadcom fiscal quarter, Broadcom may irrevocably elect to defer the closing of the merger until the first business day of the immediately succeeding fiscal quarter, unless another date or time is agreed to in writing by CA and Broadcom. Upon making such written election, (x) each of the conditions to the obligations of Broadcom and Merger Sub to consummate the merger (related to accuracy of CAs representations and warranties, compliance with covenants and absence of a material adverse effect) will be deemed to have been irrevocably fulfilled, other than with respect to a willful breach by CA occurring after the date of delivery of such written election, (y) Broadcom will be deemed to have irrevocably waived its right to terminate the merger agreement as a result of CAs breach, failure to perform or violation of covenants or agreements under the merger agreement or the inaccuracy of any of the representations and warranties of CA in the merger agreement, other than with respect to a willful breach by CA occurring after the date of delivery of such written election, and (z) until the fifth business day of the immediately succeeding fiscal quarter, neither Broadcom nor CA will have the right to terminate the merger agreement as a result of the effective time of the merger not having occurred prior to the outside date.
Merger Consideration Payable Pursuant to the Merger
In the merger, except as provided below, each issued and outstanding share of CA common stock immediately prior to the effective time of the merger will be cancelled and automatically converted into the right to receive $44.50 in cash, without interest (which we refer to as the merger consideration).
In the merger, shares of CA common stock that immediately prior to the effective time of the merger are owned or held in treasury by CA or owned by Broadcom or Merger Sub will remain issued or issued and outstanding (as applicable) and will, as of the effective time of the merger, represent one share of common stock of the surviving corporation, and no consideration will be delivered in connection with the merger with respect to such shares. Shares of CA common stock that are owned by any direct or indirect wholly owned subsidiary of Broadcom or CA will be converted into shares of common stock of the surviving corporation such that the ownership percentage of any such subsidiary in the surviving corporation will equal the ownership percentage of such subsidiary in CA immediately prior to the effective time of the merger.
At the effective time of the merger, each CA option that is vested and outstanding immediately prior to the effective time of the merger will be cancelled and the holder of such CA option will be entitled to receive an amount in cash equal to (i) the number of shares of CA common stock subject to such CA option immediately prior to the effective time of the merger multiplied by (ii) the excess (if any) of the merger consideration over the per share exercise price applicable to such CA option, less applicable tax withholdings.
At the effective time of the merger, each CA option that is unvested and outstanding as of immediately prior to the effective time of the merger will be assumed and converted automatically into an option to purchase shares
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of Broadcom common stock (each such award, an adjusted option). Each adjusted option will be subject to the same terms and conditions applicable to the CA option, except that (i) the number of shares of Broadcom common stock subject to the adjusted option will equal the product obtained by multiplying (A) the number of shares of CA common stock subject to such CA option immediately prior to the effective time of the merger, by (B) the equity award exchange ratio (defined below), with any fractional share rounded down to the nearest whole share and (ii) the adjusted option will have an exercise price per share of Broadcom common stock equal to (A) the per share exercise price for shares of CA common stock subject to the corresponding CA option immediately prior to the effective time of the merger divided by (B) the equity award exchange ratio, rounded up to the nearest whole cent.
At the effective time of the merger, each CA DSU award that is outstanding immediately prior to the effective time of the merger and that is held by a non-employee director of CA will vest as of the effective time of the merger and will be cancelled, with the holder of such CA DSU award receiving, at the time or times elected by the applicable non-employee director, the merger consideration in respect of each share of CA common stock subject to such CA DSU award immediately prior to the effective time of the merger.
At the effective time of the merger, each CA RSU award and each CA PSU award that is outstanding immediately prior to the effective time of the merger will be assumed and converted automatically into a restricted stock unit award with respect to shares of Broadcom common stock (each such award, an adjusted RSU award). Each adjusted RSU award will be subject to the same terms and conditions applicable to CA RSU award or CA PSU award, as applicable, except that (i) the number of shares of Broadcom common stock subject to the adjusted RSU award will equal the product obtained by multiplying (A) the total number of shares of CA common stock subject to the CA RSU award or CA PSU award, as applicable, immediately prior to the effective time of the merger, by (B) the equity award exchange ratio, with the result rounded up to the nearest whole share and (ii) any adjusted RSU award that replaces a CA PSU award will no longer be subject to any performance-based vesting conditions and will instead vest solely based on continued service following the merger. For purposes of the immediately preceding sentence, the number of shares of CA common stock subject to a CA PSU award immediately prior to the effective time of the merger will equal the number of shares that would vest or become eligible to vest as if performance had been achieved at target levels.
At the effective time of the merger, each CA RS award that is outstanding immediately prior to the effective time of the merger will be assumed and converted automatically into an award of restricted shares of Broadcom common stock (each such award, an adjusted RS award). Each adjusted RS award will be subject to the same terms and conditions applicable to CA RS award, except that the number of shares of Broadcom common stock subject to the adjusted RS award will equal the product obtained by multiplying (i) the total number of shares of CA common stock subject to CA RS award immediately prior to the effective time of the merger, by (ii) the equity award exchange ratio, with the result rounded up to the nearest whole share.
At the effective time of the merger, each restricted share of CA common stock that is outstanding immediately prior to the effective time of the merger and underlying a CA RS award will be cancelled without the payment of any consideration therefor.
Under the terms of CAs 2011 incentive plan, as amended on August 8, 2018 (the 2011 incentive plan), if the employment of a holder of a CA equity award that is issued prior to the date of the merger agreement is terminated without cause or, solely for participants who have an employment agreement with CA which defines good reason or who participate in CAs change in control severance policy as in effect immediately prior to the effective time of the merger (the CIC severance policy), for good reason, in either case, on or within the two-year period following the effective time of the merger, 100% of the then-unvested portion of any adjusted option, adjusted RSU award, or adjusted RS award held by such holder shall immediately vest, and to the extent applicable, become exercisable as of the date such holders employment is terminated.
As used in this section, the equity award exchange ratio is the quotient obtained by dividing (1) the merger consideration, by (2) the volume weighted average closing sale price of one share of Broadcom common
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stock, as reported on NASDAQ for the 10 consecutive trading days ending on the trading day immediately preceding the effective time of the merger (as adjusted as appropriate to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications or similar events) rounded to four decimal places.
Treatment of Purchase Rights under the 2012 Employee Stock Purchase Plan
No new offering period under CAs 2012 Employee Stock Purchase Plan (the ESPP) will commence on or after the date of the merger agreement. With respect to any offering period underway on the date of the merger agreement, the last day of such offering period will be accelerated to a date before the closing date and the final settlement or purchase of shares under the ESPP will be made on that date in accordance with the terms of the ESPP. No employee who is not participating in the ESPP as of the date of the merger agreement will be permitted to commence participation in the ESPP on or after the date of the merger agreement and no participant may increase the percentage amount of his or her payroll deduction election under the ESPP from that in effect as of the date of the merger agreement. The ESPP will be terminated effective immediately prior to the effective time of the merger, subject to the consummation of the merger. All shares of CA common stock purchased under the ESPP that remain outstanding as of immediately prior to the effective time of the merger will be cancelled at the effective time of the merger and converted into the right to receive the merger consideration.
Sale and Purchase of Treasury Shares
Immediately prior to, and subject to the occurrence of, the effective time of the merger, CA will issue and sell to Broadcom, and Broadcom will purchase, all of the shares of CA common stock that were repurchased by CA pursuant to its repurchase agreement with Careal Property Group AG, dated as of November 17, 2015 (which we refer to as the repurchase agreement), and that are held in treasury by CA, for the $44.50 merger consideration per share, payable in either cash or promissory note at Broadcoms election (which we refer to as the treasury shares purchase).
Shares of CA common stock that are issued and outstanding immediately prior to the effective time of the merger and held by a holder who is entitled to appraisal rights under Section 262 of the DGCL, and who did not vote in favor of the adoption of the merger agreement (or consent thereto in writing) and who has properly exercised appraisal rights with respect to such shares in accordance with Section 262 of the DGCL, will not be converted into the right to receive the merger consideration but instead such holder will be entitled to receive such consideration as determined in accordance with Section 262 of the DGCL. In the event that after the effective time of the merger any such stockholder fails to perfect, withdraws or otherwise loses his or her right to appraisal under Section 262 of the DGCL or a court of competent jurisdiction determines that such holder is not entitled to the relief provided by Section 262 of the DGCL, then the shares held by such stockholder will be converted into and represent only the right to receive the merger consideration, without interest. CA has agreed to give Broadcom prompt notice of any demands CA receives for appraisal of shares of CA common stock, and Broadcom will have the opportunity to participate in and direct all negotiations and proceedings with respect to such demands. Prior to the effective time of the merger, CA has agreed not to make any payment with respect to, or settle or compromise, any such demands, or agree to do any of the foregoing, in each case without the prior written consent of Broadcom.
Exchange and Payment Procedures
Prior to the effective time of the merger, Broadcom will designate a paying agent reasonably acceptable to CA to handle the exchange of shares of CA common stock for the merger consideration. At or immediately after the effective time of the merger, Broadcom will deposit with the paying agent all of the cash sufficient to pay the aggregate merger consideration. Pending distribution of the cash deposited with the paying agent, such cash will be held for the sole benefit of holders of shares of CA common stock issued and outstanding immediately prior to the effective time of the merger and that were converted into the right to receive the merger consideration.
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How you receive payment of the merger consideration for your shares depends on how you hold your shares of CA common stock. The following paragraphs describe the different payment processes. In all cases, the amount of your payment will be without interest and will be reduced by any required tax withholding.
Shares held at a bank, brokerage firm or other nominee, or street name shares: If your shares of CA common stock are held on your behalf by a bank, brokerage firm or other nominee, although each bank, brokerage firm or other nominee establishes its own procedures, we believe that payment for those shares will be deposited in your account with such bank, brokerage firm or other nominee.
Shares held in direct registration form at our transfer agent, Computershare Trust Company, N.A., or book entry shares: If you hold only book entry shares at Computershare Trust Company, N.A., the paying agent will mail you a check in the amount of the aggregate merger consideration for those shares.
Shares for which you have a stock certificate, or certificated shares: If you hold stock certificates representing shares of CA common stock, the paying agent will mail you a letter of transmittal that you must complete and return to the paying agent. Once the paying agent receives your properly completed letter of transmittal and stock certificate(s), the paying agent will mail you a check in the amount of the aggregate merger consideration for your certificated shares.
If you hold both book entry shares at Computershare Trust Company, N.A. and certificated shares, the paying agent will mail you a letter of transmittal that you must complete and return to the paying agent. Once the paying agent receives your properly completed letter of transmittal and stock certificate(s), the paying agent will mail you a check in the amount of the aggregate merger consideration for your certificated shares and for your book entry shares.
CA stockholders should NOT return stock certificates with the enclosed proxy card, and CA stockholders should NOT forward stock certificates to the paying agent without a letter of transmittal.
After the effective time of the merger, shares of CA common stock will no longer be outstanding and will cease to exist, and each certificate that previously represented shares of CA common stock or book entry shares outstanding at the effective time will represent only the right to receive the merger consideration as described above.
At any time following the first anniversary of the effective time of the merger, Broadcom will be entitled to require the paying agent to deliver to it any funds (including any interest received with respect thereto) remaining in the payment fund that have not been disbursed, or for which disbursement is pending subject only to the paying agents routine administrative procedures, to holders of shares of CA common stock, and thereafter such holders will be entitled to look only to Broadcom (subject to abandoned property, escheat or similar laws) as general creditors thereof with respect to the merger consideration payable upon due surrender of their certificates or book entry shares and compliance with the procedures described above and in the merger agreement, without any interest thereon.
At the effective time of the merger, our stock transfer books will be closed and there will be no further registration of transfers of CA common stock. If, after the effective time of the merger, certificates are presented to the surviving corporation for transfer, such certificates will be cancelled and exchanged for payment of the merger consideration.
If payment of the merger consideration is to be made to a person other than the person in whose name the surrendered certificate is registered, it will be a condition precedent of payment that (x) the certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and (y) the person requesting such payment shall have paid any transfer and other similar taxes required by reason of the payment of the merger consideration to a person other than the registered holder of the certificate surrendered or shall
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have established to the satisfaction of Broadcom that such tax either has been paid or is not required to be paid. Payment of the merger consideration with respect to book entry shares will only be made to the person in whose name such book entry shares are registered.
No interest will be paid or will accrue on any cash payable upon surrender of any CA common stock certificate or book entry share.
In the event that any CA common stock certificates have been lost, stolen or destroyed, the paying agent will issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof and, if required by Broadcom, an indemnity bond, the merger consideration payable in respect of such shares subject to the other provisions of the merger agreement.
CA, Broadcom, Merger Sub, the surviving corporation and the paying agent will each be entitled to deduct and withhold any amounts required to be withheld or deducted under applicable tax law from the amounts that would otherwise be payable under the terms of the merger agreement, and any such deducted or withheld amounts that are timely paid to the relevant governmental entity will be treated as having been paid to the person in respect of whom such amounts were deducted and withheld.
Representations and Warranties
The merger agreement contains customary representations and warranties of the parties. These include representations and warranties of CA with respect to:
| organization and qualification; |
| subsidiaries; |
| capitalization; |
| voting trusts or agreements; |
| corporate authority; |
| due execution, delivery and enforceability of the merger agreement; |
| required consents and approvals; |
| no violations; |
| SEC filings; |
| financial statements; |
| internal controls and procedures; |
| the absence of undisclosed liabilities; |
| absence of certain changes or events; |
| compliance with applicable laws; |
| permits; |
| employee benefit plans; |
| labor matters; |
| tax matters; |
| litigation and orders; |
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| intellectual property; |
| privacy and data protection; |
| real property and assets; |
| material contracts; |
| environmental matters; |
| customers, suppliers and resellers; |
| insurance; |
| information supplied for SEC filings; |
| opinion of the financial advisor to CA; |
| takeover statutes; |
| the rights agreement and amendments thereto; |
| related party transactions; and |
| finders and brokers. |
The merger agreement also contains customary representations and warranties of Broadcom and Merger Sub, including among other things:
| organization and qualification; |
| corporate authority; |
| due execution, delivery and enforceability of the merger agreement; |
| required consents and approvals; |
| no violations; |
| litigation and orders; |
| information supplied for SEC filings; |
| financing and sufficiency of funds; |
| finders and brokers; |
| ownership of shares of CA common stock; and |
| activity of Merger Sub. |
The representations and warranties made by CA contained in the merger agreement are generally qualified by material adverse effect, as defined in the merger agreement and described below. The representations and warranties contained in the merger agreement will expire at the effective time of the merger. The representations, warranties and covenants made by CA in the merger agreement are qualified by information contained in the confidential disclosure schedules delivered to Broadcom in connection with the execution of the merger agreement and by certain filings that CA has made with the SEC prior to the date of the merger agreement. Stockholders are not third-party beneficiaries of these representations, warranties and covenants under the merger agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of CA or any of its affiliates or of Broadcom or any of its affiliates.
A material adverse effect with respect to CA, means any change, effect, development, circumstance, condition, fact, state of facts, event or occurrence that, individually or in the aggregate, has had or would
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reasonably be expected to have a material adverse effect on the financial condition, business, assets, liabilities or results of operations of CA and its subsidiaries, taken as a whole, except that no such change, effect, development, circumstance, condition, fact, state of facts, event or occurrence to the extent resulting or arising from any of the following will be deemed to constitute a material adverse effect or will be taken into account when determining whether a material adverse effect exists or has occurred or is reasonably expected to exist or occur:
(a) | any changes in general U.S. or global economic conditions, including any changes affecting financial, credit, foreign exchange or capital market conditions; |
(b) | any changes in general conditions in any industry or industries in which CA and its subsidiaries operate; |
(c) | any changes in general political conditions; |
(d) | any changes after the date of the merger agreement in GAAP or any other accounting standards or principles or the interpretation of the foregoing; |
(e) | any changes after the date of the merger agreement in applicable law or the interpretation thereof; |
(f) | any failure by CA to meet any internal or published projections, estimates or expectations of CAs revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by CA to meet its internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (except that the facts or occurrences giving rise or contributing to such failure that are not otherwise excluded from the definition of a material adverse effect may be taken into account for the purpose of determining whether a material adverse effect exists or has occurred or is reasonably expected to exist or occur); |
(g) | any changes in geopolitical conditions, acts of terrorism or sabotage, war (whether or not declared), the commencement, continuation or escalation of a war, acts of armed hostility, weather conditions, natural disasters or other force majeure events, including any material worsening of such conditions threatened or existing as of the date of the merger agreement; |
(h) | the execution and delivery of the merger agreement or the consummation of the transactions contemplated by the merger agreement, or the public announcement of the merger agreement or the transactions contemplated by the merger agreement, including any litigation arising out of or relating to the merger agreement or the transactions contemplated by the merger agreement, the identity of Broadcom, departures of officers or employees, changes in relationships with suppliers or customers or other business relations, in each case only to the extent resulting from the execution and delivery of the merger agreement or the consummation of the transactions contemplated by the merger agreement, or the public announcement of the merger agreement or the transactions contemplated by the merger agreement (except that this clause (h) will not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of the merger agreement or the consummation of the transactions contemplated by the merger agreement or to address the consequences of litigation); |
(i) | any action or failure to take any action which action or failure to act is requested in writing by Broadcom or any action expressly required by, or the failure to take any action expressly prohibited by, the terms of the merger agreement (other than with respect to certain covenants relating to CAs conduct of business pending the merger); |
(j) | any change in the price or trading volume of shares of CA common stock or any other publicly traded securities of CA or its subsidiaries in and of itself (except that the facts or occurrences giving rise or contributing to such change that are not otherwise excluded from the definition of a material adverse effect may be taken into account for the purpose of determining whether a material adverse effect exists or has occurred or is reasonably expected to exist or occur); and |
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(k) | any reduction in the credit rating of CA or its subsidiaries in and of itself (except that the facts or occurrences giving rise or contributing to such reduction that are not otherwise excluded from the definition of a material adverse effect may be taken into account for the purpose of determining whether a material adverse effect exists or has occurred or is reasonably expected to exist or occur); |
however, with respect to the exceptions in clauses (a), (b), (c), (d), (e) and (g), if such change, effect, development, circumstance, condition, fact, state of facts, event or occurrence has had a disproportionate adverse impact on CA or any of its subsidiaries relative to other companies operating in the industry or industries in which CA and its subsidiaries operate, then the incremental disproportionate adverse impact of such change, effect, development, circumstance, condition, fact, state of facts, event or occurrence will be taken into account for the purpose of determining whether a material adverse effect exists or has occurred or is reasonably expected to exist or occur.
No Solicitation of Other Offers by CA
Under the terms of the merger agreement, subject to certain exceptions described below, CA has agreed that, from the date of the merger agreement until the earlier of the effective time of the merger or the date (if any) the merger agreement is validly terminated, CA will not, the CA board (including any committee thereof) and CAs officers will not, and CA will cause its other controlled affiliates not to, and CA will cause its and their other respective directors, officers, employees and other representatives not to, directly or indirectly:
(a) | solicit, initiate or knowingly encourage or facilitate (including by way of providing information or taking any other action) any inquiry, proposal or offer, or the making, submission or announcement of any inquiry, proposal or offer, in each case which constitutes or could be reasonably expected to lead to an acquisition proposal (as defined below); |
(b) | participate in any negotiations regarding, or furnish to any person any non-public information relating to CA or any subsidiary of CA in connection with, an actual or potential acquisition proposal, other than solely to state that CA and its representatives are prohibited under the merger agreement from engaging in any such discussions or negotiations; |
(c) | adopt, approve, endorse or recommend, or publicly propose to adopt, approve, endorse or recommend, any acquisition proposal; |
(d) | withdraw, change, amend, modify or qualify, or otherwise publicly propose to withdraw, change, amend, modify or qualify, in a manner adverse to Broadcom, the CA boards recommendation that CA stockholders vote to adopt the merger agreement; |
(e) | if an acquisition proposal has been publicly disclosed, fail to publicly recommend against any such acquisition proposal within ten business days after Broadcoms written request that CA do so (or subsequently withdraw, change, amend, modify or qualify, or publicly propose to do so, in a manner adverse to Broadcom, such rejection of such acquisition proposal) and reaffirm the CA boards recommendation that CA stockholders vote to adopt the merger agreement within such ten business day period (or, with respect to any acquisition proposals or material amendments, revisions or changes to the terms of any such previously publicly disclosed acquisition proposal that are publicly disclosed within the last ten business days prior to the then-scheduled CA stockholders meeting, fail to take the actions referred to in this clause (e), with references to the applicable ten business day period being replaced with three business days); |
(f) | fail to include the CA boards recommendation that CA stockholders vote to adopt the merger agreement in this proxy statement; |
(g) | approve, or authorize, or cause or permit CA or any CA subsidiary to enter into, any merger agreement, acquisition agreement, reorganization agreement, letter of intent, memorandum of understanding, agreement in principle, option agreement, joint venture agreement, partnership agreement or similar |
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agreement or document relating to, or any other agreement or commitment providing for, any acquisition proposal (other than certain confidentiality agreements); or |
(h) | commit or agree to do any of the foregoing. |
We refer to the actions set forth in clauses (c), (d), (e), (f), (g) and (h) (to the extent related to the foregoing clauses (c), (d), (e), (f) or (g)) above as a change of recommendation.
In addition, under the merger agreement, CA has agreed that:
| CA, the CA board (including any committee thereof) and CAs officers will, and CA will cause its other controlled affiliates to, and CA will cause its and their other respective directors, officers, employees and other representatives to, immediately cease any and all existing solicitation, discussions or negotiations with any persons, or provision of any non-public information to any persons, with respect to any inquiry, proposal or offer that constitutes, or could reasonably be expected to lead to, an acquisition proposal; |
| CA will promptly (and in any event within three business days following the date of the merger agreement, (x) request that each person (other than Broadcom) that previously executed a confidentiality agreement with CA in connection with its consideration of an acquisition proposal or a potential acquisition proposal within the three years prior to the date of the merger agreement promptly destroy or return to CA all non-public information furnished by CA or any of its representatives to such person or any of its representatives in accordance with the terms of such confidentiality agreement, unless such a request had been made by or on behalf of CA prior to the date of the merger agreement, and (y) terminate access to any physical or electronic data rooms relating to a possible acquisition proposal by any such person and its representatives. |
Under the merger agreement, CA must enforce, and not waive, terminate or modify without Broadcoms prior written consent, any confidentiality, standstill or similar provision in any confidentiality, standstill or other agreement; however, if the CA board determines in good faith after consultation with CAs outside legal counsel that the failure to waive a particular standstill provision, or other provision with similar effect, would reasonably be expected to be a breach of the directors fiduciary duties under applicable law, CA may, with prior written notice to Broadcom, waive such standstill provision, or other provision with similar effect, solely to the extent necessary to permit the applicable person (if it has not been solicited in violation of the non-solicitation provisions of the merger agreement) to make, on a confidential basis to the CA board, an acquisition proposal, conditioned upon such person agreeing to disclosure of such acquisition proposal to Broadcom, in each case as contemplated by the merger agreement.
Except with respect to Broadcom, the merger agreement and the transactions contemplated by the merger agreement, unless and until the merger agreement has been validly terminated, CA will not terminate (or permit the termination of), waive or amend the rights agreement, redeem any rights under the rights agreement, or take any action with respect to, or make any determination under, the rights agreement that would interfere with Broadcom and Merger Sub consummating the transactions contemplated by the merger agreement.
Notwithstanding the prohibitions described above, if CA receives, prior to the CA stockholders adopting the merger agreement, a bona fide written acquisition proposal that did not result from a breach of CAs non-solicitation obligations, CA is permitted to furnish non-public information to such person, its representatives and debt financing sources, and engage in discussions or negotiations with such person and its representatives and debt financing sources, in each case with respect to the acquisition proposal, as long as prior to taking such action:
| the CA board determines in good faith, after consulting with CAs outside legal counsel and financial advisors, that such proposal constitutes, or could reasonably be expected to lead to, a superior proposal; |
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| the CA board determines in good faith, after consulting with CAs outside legal counsel, that the failure to take such action would reasonably be expected to be a breach of the directors fiduciary duties under applicable law; and |
| prior to providing any such non-public information, (x) the person making the acquisition proposal enters into a confidentiality agreement that contains terms that are no less favorable in the aggregate to CA than those contained in the confidentiality agreement between Broadcom and CA (it being understood that the confidentiality agreement is not required to include a standstill provision) and that does not in any way restrict CA or its representatives from complying with its disclosure obligations under the merger agreement), and (y) CA also provides Broadcom, prior to or substantially concurrently with the time such information is provided or made available to such person or its representatives, any non-public information furnished to such other person or its representatives that was not previously furnished to Broadcom. |
Under the merger agreement, CA is obligated to notify Broadcom promptly (and in any event within 24 hours) of any receipt by any director or officer of CA or by any of CAs controlled affiliates or its or their respective representatives of any acquisition proposal or any proposals or inquiries that could reasonably be expected to lead to an acquisition proposal, or any inquiry or request for non-public information relating to CA or any CA subsidiary by any person who has made or could reasonably be expected to make any acquisition proposal. The notice must include the identity of the person making the acquisition proposal, inquiry or request, and the material terms and conditions of any such proposal or offer or the nature of the information requested pursuant to any such inquiry or request, including unredacted copies of all written requests, proposals or offers (including any proposed agreements received by CA) or, if such acquisition proposal is not in writing, a reasonably detailed written description of the material terms and conditions thereof. CA also must keep Broadcom reasonably informed on a prompt and timely basis of the status and material terms (including any amendments or proposed amendments to such material terms) of any such acquisition proposal or potential acquisition proposal, and as to the nature of any information requested of CA with respect thereto. CA also must promptly provide (and in any event within the earlier of 48 hours and one business day) Broadcom with any material non-public information concerning CA provided to any other person in connection with any acquisition proposal that was not previously provided to Broadcom. Without limiting the foregoing, CA must promptly (and in any event within 24 hours after such determination) inform Broadcom in writing if CA determines to begin providing information or to engage in discussions or negotiations concerning an acquisition proposal to the extent otherwise permitted by the merger agreement. CA has agreed that it will not, directly or indirectly, enter into any agreement with any person which directly or indirectly prohibits CA from providing any information to Broadcom in accordance with, or otherwise complying with, the obligations of CA described in this paragraph.
Unless the merger agreement has been validly terminated, CA is obligated not to take any action to exempt any person other than Broadcom or Merger Sub from the restrictions on any business combinations contained in any applicable takeover statute or in CAs certificate of incorporation or bylaws, or otherwise cause such restrictions not to apply.
An acquisition proposal for purposes of the merger agreement means any offer, proposal or indication of interest from any person or group (as defined in Section 13(d) of the Exchange Act), other than a proposal or offer by Broadcom or a subsidiary of Broadcom, at any time relating to any transaction or series of related transactions (other than the transactions contemplated by the merger agreement) involving:
| any acquisition or purchase by any person, directly or indirectly, of more than 15% of any class of outstanding CA voting or equity securities (whether by voting power or number of shares); |
| any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in any person or group beneficially owning more than 15% of any class of outstanding CA voting or equity securities (whether by voting power or number of shares); |
| any merger, consolidation, share exchange, business combination, joint venture, recapitalization, reorganization or other similar transaction, in each case involving CA and any other person or group, |
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pursuant to which the CA stockholders immediately prior to such transaction hold less than 85% of the equity interests in the surviving or resulting entity of such transaction (whether by voting power or number of shares); or |
| any sale, lease, exchange, transfer or other disposition to any person or group of more than 15% of the consolidated assets of CA and its subsidiaries (measured by fair market value). |
A superior proposal for purposes of the merger agreement means a bona fide, written acquisition proposal by a third party which the CA board determines in good faith (after consultation with CAs outside legal counsel and financial advisors) to be more favorable to CAs stockholders from a financial point of view than the merger, taking into account all relevant factors (including all the terms and conditions of such proposal or offer (including the transaction consideration, conditionality, timing, certainty of financing and/or regulatory approvals and likelihood of consummation) and the merger agreement (and any changes to the terms of the merger agreement proposed by Broadcom in response to any acquisition proposal)). When determining whether an offer constitutes a superior proposal, references in the term acquisition proposal to 15% or 85% will be replaced with references to 80% and 20%, respectively.
Change of Recommendation; Match Rights
The merger agreement requires the CA board to recommend that CA stockholders vote to adopt the merger agreement and not make a change of recommendation as described above. Notwithstanding the foregoing, prior to the CA stockholders adopting the merger agreement:
| the CA board may make certain types of a change of recommendation in response to an intervening event (as defined below) if the CA board has determined in good faith, after consultation with CAs outside legal counsel, that the failure to take such action would reasonably be expected to be a breach of the directors fiduciary duties under applicable law; or |
| the CA board may make a change of recommendation and cause CA to terminate the merger agreement in order to enter into a definitive agreement providing for an acquisition proposal that did not result from a breach of CAs non-solicitation obligations (subject to payment by CA to Broadcom of the termination fee described under Termination Fee and Expenses) which the CA board has determined in good faith after consultation with CAs outside legal counsel and financial advisors is a superior proposal, but only if the CA board has determined in good faith after consultation with CAs outside legal counsel, that the failure to take such action would reasonably be expected to be a breach of the directors fiduciary duties under applicable law. |
Prior to making a change of recommendation for any reason set forth above, CA must provide Broadcom four business days prior written notice advising Broadcom that it intends to make a change of recommendation. The notice must specify in reasonable detail the reasons for such change of recommendation due to an intervening event (as defined below), or the material terms and conditions of the acquisition proposal (including a copy of any proposed definitive agreement) for any change of recommendation due to a superior proposal. In each case, CA must cause its representatives (including executive officers) to negotiate in good faith (to the extent Broadcom desires to negotiate) any proposal by Broadcom to amend the merger agreement in a manner that would eliminate the need for the CA board to make a change of recommendation, and the CA board must make all of the required determinations regarding its fiduciary duties again at the end of such four business day negotiation period (after in good faith taking into account the amendments to the merger agreement proposed by Broadcom). With respect to any change of recommendation in response to a superior proposal, if there is any material amendment, revision or change to the terms of the then-existing superior proposal (including any revision to the amount, form or mix of consideration proposed to be received by CAs stockholders as a result of such superior proposal), CA must again comply with the obligations described in this paragraph, except that references to the applicable four business day period will be replaced with two business days.
An intervening event for purposes of the merger agreement is any event, change or development first occurring or arising after the date of the merger agreement that is material to CA and its subsidiaries, taken as a
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whole, and was not known by or reasonably foreseeable to the CA board as of the date of the merger agreement, except that in no event will the following events, changes or developments constitute an intervening event: (a) the receipt, existence or terms of an acquisition proposal or any matter relating thereto or consequence thereof, (b) changes in the market price or trading volume of shares of CA common stock or any other securities of CA, Broadcom or their respective subsidiaries, or any change in credit rating or the fact that CA meets or exceeds internal or published estimates, projections, forecasts or predictions for any period (except that the facts or occurrences giving rise or contributing to such changes may be taken into account to the extent not otherwise excluded), (c) changes in general economic, political or financial conditions or markets (including changes in interest rates, exchange rates, stock, bond and/or debt prices), or (d) changes in GAAP, other applicable accounting rules or applicable law or, in any such case, changes in the interpretation thereof.
Nothing in the merger agreement prohibits CA or the CA board from disclosing to CAs stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or making any stop, look and listen communication to CAs stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act, or any similar statement in response to any publicly disclosed acquisition proposal, so long as any such stop, look and listen statement, or any such similar statement, also includes an express reaffirmation of the CA boards recommendation that CA stockholders vote to adopt the merger agreement.
Conduct of Business Before Completion of the Merger
The merger agreement provides for certain restrictions on CAs and its subsidiaries activities until the earlier of the effective time of the merger or the date (if any) the merger agreement is validly terminated. In general, except as specifically permitted or required by the merger agreement, as required by applicable law or as consented to in writing by Broadcom (which may not be unreasonably withheld, conditioned or delayed), subject to specified exceptions set forth in the merger agreement and the confidential schedules thereto, each of CA and its subsidiaries is required to conduct its business in all material respects in the ordinary course of business consistent with past practice and use commercially reasonable efforts to preserve intact its and their present business organizations, goodwill and ongoing business, keep available the services of its and their present officers and other key employees and preserve its and their present relationships with customers, suppliers, vendors, licensors, licensees, governmental entities, employees and other persons with whom it and they have material business relations. In addition, except as specifically permitted or required by the merger agreement, as required by applicable law or as consented to in writing by Broadcom (which may not be unreasonably withheld, conditioned or delayed), subject to specified exceptions set forth in the merger agreement and the confidential schedules thereto, CA must not and must not permit any of its subsidiaries to, directly or indirectly:
| amend, modify, waive, rescind or otherwise change CAs or any of its subsidiaries certificate of incorporation, bylaws or equivalent organizational documents; |
| authorize, declare, set aside, make or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock or other equity interests (whether in cash, assets, shares or other securities of CA or any of its subsidiaries), except for dividends and distributions paid or made by a wholly owned CA subsidiary to CA or another wholly owned CA subsidiary in the ordinary course of business consistent with past practice and regular quarterly cash dividends payable by CA in respect of shares of CA common stock in an amount not exceeding $0.255 per share in any fiscal quarter and with declaration date(s), record date(s) and payments date(s) consistent with past practice; |
| enter into any agreement and arrangement with respect to voting or registration, or file any registration statement with the SEC with respect to any, of its capital stock or other equity interests or any other securities; |
| split, combine, subdivide, reduce or reclassify any of its capital stock or other equity interests, or redeem, purchase or otherwise acquire any of its capital stock or other equity interests (other than repurchases of shares of CA common stock in satisfaction of applicable tax withholdings or the exercise price upon the exercise or vesting of any CA equity award), or issue or authorize the issuance |
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of any of its capital stock or other equity interests or any other securities in respect of, in lieu of or in substitution for, shares of its capital stock or other equity interests or any rights, warrants, or options to acquire any such shares of capital stock or other equity interests, except for any such transaction involving only wholly owned subsidiaries of CA in the ordinary course of business consistent with past practice; |
| issue, deliver, grant, sell, dispose of or encumber, or authorize the issuance, delivery, grant, sale, disposition or encumbrance of, any shares in the capital stock, voting securities or other equity interest in CA or any of its subsidiaries or any securities convertible into or exchangeable or exercisable for any such shares, voting securities or equity interest, or any rights, warrants or options to acquire any such shares, voting securities or equity interest or any phantom stock, phantom stock rights, stock appreciation rights or stock based performance units; |
| take any action to cause to be exercisable or vested any otherwise unexercisable or unvested CA equity award under any existing CA equity plan, other than (a) issuances of shares of CA common stock in respect of any exercise of CA options outstanding as of the date of the merger agreement or the vesting or settlement of CA equity awards outstanding as of the date of the merger agreement, in all cases in accordance with their respective terms, (b) the issuances of shares of CA common stock pursuant to the terms of the ESPP in respect of the current offering period thereunder, or (c) transactions solely between CA and its wholly owned subsidiaries or between such wholly owned subsidiaries in the ordinary course of business consistent with past practice; |
| except as required by any CA benefit plan in existence as of the date of the merger agreement and made available to Broadcom prior to the date of the merger agreement, (a) increase the compensation or benefits payable or to become payable to any directors, executive officers or employees; (b) grant to any directors, executive officers or employees any increase in severance or termination pay; (c) pay or award, or commit to pay or award, any bonuses, retention or incentive compensation to any of its directors, executive officers or employees; (d) establish, adopt, enter into, amend or terminate any collective bargaining agreement or CA benefit plan, other than offer letters with new hire employees entered into in the ordinary course of business consistent with past practice that do not violate other operating restrictions described herein; (e) take any action to amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any CA benefit plan; (f) terminate the employment of any employee at the level of vice president or above, other than for cause; (g) hire any new employees at the level of vice president or above; or (h) provide any funding for any rabbi trust or similar arrangement; |
| acquire (including by merger, consolidation or acquisition of stock or assets or any other means) or authorize or announce an intention to so acquire, or enter into any agreements providing for any acquisitions of, any equity interests in or all or a material portion of the assets of any person or any business or division thereof, or otherwise engage in any mergers, consolidations, business combinations or acquisitions of material assets, except for transactions solely between CA and its wholly owned subsidiaries or between such wholly owned subsidiaries in the ordinary course of business consistent with past practice, acquisitions of supplies or equipment in the ordinary course of business consistent with past practice or with respect to the acquisition of material assets, certain permitted capital expenditures; |
| liquidate, dissolve, restructure, recapitalize or effect any other reorganization (including any restructuring, recapitalization, or reorganization between or among any of CA and/or its subsidiaries), or adopt any plan or resolution providing for any of the foregoing; |
| make any loans, advances or capital contributions to, or investments in, any other person, except for (a) loans, advances or capital contributions solely among CA and its wholly owned subsidiaries or solely among CAs wholly owned subsidiaries in the ordinary course of business consistent with past practice, in each case that do not involve the transfer of funds between the United States of America and another jurisdiction; (b) advances for reimbursable employee expenses in the ordinary course of |
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business consistent with past practice; (c) extensions of credit to customers in the ordinary course of business consistent with past practice; and (d) pursuant to mandatory capital contribution obligations of any investment fund or joint venture entity to which CA or any of its subsidiaries are parties as of the date of the merger agreement (which contracts providing for any such mandatory contribution have been made available to Broadcom prior to the date of the merger agreement), so long as neither CA nor any of its subsidiaries nor any of their respective representatives have caused or directed such mandatory capital contribution; |
| sell, lease, license, assign, transfer, exchange, swap or otherwise dispose of, or subject to any lien (other than certain permitted liens), any of its properties, rights or assets (including shares in the capital of CA or its subsidiaries), except (a) dispositions of used, obsolete, damaged, worn-out or surplus equipment or property no longer necessary in the conduct of the business or other immaterial equipment or property, in each case, in the ordinary course of business consistent with past practice; (b) leases or subleases of real property or interests therein not used for the conduct of CAs or its subsidiaries business, as currently conducted, in each case in the ordinary course of business consistent with past practice; (c) non-exclusive licenses or other non-exclusive grants of rights in, to or under CAs intellectual property in the ordinary course of business consistent with past practice; (d) amendments and modifications, in each case, to existing exclusive, limited distribution rights for CA products made or entered into in the ordinary course of business consistent with past practice; (e) pursuant to the exercise of creditor rights under CAs revolving credit agreement or term loan agreement or other contract providing for outstanding indebtedness in each case in effect on the date of the merger agreement and made available to Broadcom prior to the date of the merger agreement (so long as CA and its subsidiaries have used reasonable best efforts to exhaust all other avenues of relief); and (f) pursuant to transactions solely between CA and a wholly owned CA subsidiary or solely between wholly owned CA subsidiaries in the ordinary course of business consistent with past practice; |
| allow to lapse, or abandon, including by failure to pay the required fees in any jurisdiction, any registered CA intellectual property, except as would have occurred in the ordinary course of business consistent with past practice; |
| terminate or materially amend or modify any written policies or procedures with respect to the use or distribution by CA or any CA subsidiaries of any open source software; |
| enter into or become bound by, or amend, modify, terminate or waive any contract related to the acquisition or disposition or granting of any license with respect to intellectual property rights, other than amendments, modifications, terminations or waivers in the ordinary course of business consistent with past practice, or otherwise encumber any intellectual property rights (including by the granting of any covenants, including any covenant not to sue or covenant not to assert), other than the non-exclusive license of intellectual property in the ordinary course of business consistent with past practice and amendments and modifications, in each case, to existing exclusive, limited distribution rights for CA products made or entered into in the ordinary course of business consistent with past practice; |
| enter into certain types of material contracts or materially modify, materially amend, extend or terminate certain types of material contracts, or, waive, release or assign any material rights or claims thereunder; in certain cases, other than in the ordinary course of business consistent with past practice (and in the case of waiver or release of material rights and claims, so long as such waiver or release is not material to CA and its subsidiaries, taken as whole); |
| modify, amend or terminate, or waive or release or assign any rights under any material government bid or submit any new government bid that would have been considered a material government bid if it were submitted prior to the date of the merger agreement, other than in the ordinary course of business consistent with past practice; |
| make any capital expenditure, enter into agreements or arrangements providing for capital expenditure or otherwise commit to do so, except for capital expenditures contemplated by and consistent with the |
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annual capital budget approved by the CA board prior to the date of the merger agreement and set forth on a schedule delivered to Broadcom in connection with entry into the merger agreement, or capital expenditures not to exceed $1,000,000 in the aggregate incurred in the ordinary course of business consistent with past practice; |
| compromise or settle any claim, litigation, investigation or proceeding, other than the compromise or settlement of claims, litigations, investigations or proceedings that (i) (a) is for an amount (in excess of insurance proceeds) for each such compromise or settlement that is, individually, less than $3,000,000 and for all such compromises or settlements that is, in the aggregate, less than $10,000,000; (b) does not impose any injunctive relief on CA or any of the its subsidiaries (other than insignificant non-monetary restrictions that are customary and ancillary to the monetary relief granted) and does not involve the admission of wrongdoing by CA, any CA subsidiary or any of their respective officers or directors; (c) does not provide for the license of any CA intellectual property to a third-party that did not otherwise already license such CA intellectual property; and (d) does not relate to claims, litigations, investigations or proceedings brought by governmental entities, other than solely in their capacities as customers of CAs or its subsidiaries products and services, or (ii) is in respect of a tax audit, claim, litigation, investigation, or other proceeding that is otherwise covered by a separate interim operating covenant; |
| make any material change in financial accounting policies, practices, principles or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, in each case except as required by GAAP, international financial reporting standards or other recognized accounting standards or principles in non-U.S. jurisdictions applicable to CA subsidiaries, or applicable law; |
| amend or modify any privacy statement of CA or any CA subsidiary in any material respect except as required by applicable law; |
| enter into any collective bargaining agreement or any material agreement with any labor organization, works council, trade union, labor association or other employee representative, except as required by applicable law; |
| implement any plant closings or employee layoffs that do not comply with the Worker Adjustment and Retraining Notification Act of 1988, as amended; |
| make, change or revoke any material tax election, adopt or change any tax accounting period or material method of tax accounting, amend any material tax return, settle or compromise any material liability for taxes or any tax audit, claim or other proceeding relating to a material amount of taxes, enter into any closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law), surrender any right to claim a material refund of taxes, request any material ruling from any governmental entity with respect to taxes, or, except in the ordinary course of business consistent with past practice, agree to an extension or waiver of the statute of limitations with respect to a material amount of taxes; |
| redeem, repurchase, prepay, defease, incur, assume, endorse, guarantee or otherwise become liable for or modify in any material respects the terms of any indebtedness, or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise), or repay CAs 2.875% senior notes due 2018, except for (a) the repayment at maturity of CAs 2.875% senior notes due 2018 using cash on hand; (b) the incurrence of any indebtedness solely among CA and its wholly owned subsidiaries or solely among its wholly owned subsidiaries; (c) guarantees by CA of the indebtedness of wholly owned subsidiaries or guarantees by wholly owned subsidiaries of the indebtedness of CA or any other wholly owned subsidiary, incurred prior to the date of the merger agreement or otherwise in compliance with the limitations described in this paragraph; (d) the incurrence of indebtedness consisting of revolving loans borrowed under CAs revolving credit agreement as in effect as of the date of the merger agreement not in excess of an aggregate amount |
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equal to $5,000,000; provided that such indebtedness will not be incurred, nor the proceeds therefrom applied, to finance the repayment in whole or in part of CAs 2.875% senior notes due 2018; (e) the incurrence of other indebtedness not to exceed, at any time outstanding, an aggregate amount equal to $5,000,000, subject to certain conditions under the merger agreement; (f) certain indebtedness in respect of financial guaranties, letters of credit, letters of guaranty, surety bonds or in respect of bankers acceptances incurred in the ordinary course of business consistent with past practice; (g) indebtedness in connection with cash pooling agreements in effect as of the date of the merger agreement, which agreements have been provided to Broadcom prior to the date of the merger agreement, and other cash pooling agreements entered into after the date of the merger agreement in the ordinary course of business and consistent with past practice, subject to certain conditions under the merger agreement; and (h) certain indebtedness in connection with cash flow and balance sheet foreign exchange hedging of intercompany transactions in the ordinary course of business consistent with past practice and for non-speculative purposes; |
| enter into any transactions or contracts with any affiliates or other person that would be required to be disclosed by CA under Item 404 of Regulation S-K of the SEC, or any person who beneficially owns, directly or indirectly, more than 5% of the outstanding shares of CA common stock; |
| cancel any of CAs material insurance policies or fail to pay the premiums on CAs material insurance policies such that such failure causes a cancellation of such policy, other than in the ordinary course of business consistent with past practice, or fail to use commercially reasonable efforts to maintain in the ordinary course CAs insurance policies; |
| enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee) for annual rent payments above $500,000; |
| materially modify or amend or exercise any right to renew any lease or sublease of real property, or waive any term or condition thereof or grant any consents thereunder, grant or otherwise create or consent to the creation of any easement, covenant, restriction, assessment or charge affecting any real property leased by CA, or any interest therein or part thereof (other than certain permitted liens), commit any waste or nuisance on any such property or make any material changes in the construction or condition of any such property, in each case other than in the ordinary course of business consistent with past practice; |
| voluntarily terminate or materially modify or waive in any material respect any material right under any material permit; |
| adopt or otherwise implement any stockholder rights plan, poison-pill or other comparable agreement or amend, modify or waive any provision under the rights agreement; |
| fail to comply in any material respect with the repurchase agreement; or |
| agree or authorize, in writing or otherwise, to take any of the foregoing actions. |
The merger agreement provides that from the date of the merger agreement until the earlier of the effective time of the merger or the date (if any) the merger agreement is validly terminated, to the extent permitted by applicable law, CA and its subsidiaries will give Broadcom and its representatives reasonable access during normal business hours and upon reasonable advance notice to CAs and its subsidiaries offices, properties, contracts, personnel, books and records, and will furnish as promptly as practicable to Broadcom all information concerning CAs business, properties and personnel as Broadcom reasonably requests (including information for the purposes of transition and integration planning). However, CA is not required to provide access to or disclose information that may not be disclosed pursuant to certain contractual or legal restrictions or that is subject to attorney-client, attorney work product or other legal privilege, in each case subject to certain exceptions and requirements to make substitute arrangements.
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The merger agreement provides that Broadcom and CA will establish a transition and integration planning team, which will discuss and plan for a transition and integration planning process concerning the combination of the operations of Broadcom, CA and their respective subsidiaries after the closing of the merger, and will meet from time to time as reasonably requested by Broadcoms chief executive officer.
Under the merger agreement, prior to the effective time of the merger, CA and its subsidiaries will, and will use their reasonable best efforts to cause their representatives to, provide all customary cooperation and all customary financial information, in each case, that is reasonably requested by Broadcom or Merger Sub in connection with any financing obtained by Broadcom or Merger Sub for the purpose of financing the transactions contemplated by the merger agreement or any transaction undertaken in connection therewith, subject to certain limitations set forth in the merger agreement
In addition, the merger agreement provides that CA will, and will cause its subsidiaries to, deliver all notices and take all other actions reasonably requested by Broadcom that are required to facilitate in accordance with the terms thereof the termination of all commitments outstanding under CAs revolving credit facility and term loan facility, the repayment in full of all obligations, if any, outstanding thereunder, the release of all liens, if any, securing such obligations, and the release of guarantees in connection therewith on the closing date as of the effective time of the merger, subject to certain limitations set forth in the merger agreement. The merger agreement also provides that upon written request of Broadcom, CA will, and will cause its subsidiaries to, execute and deliver, or cause to be executed and delivered, in each case, to the trustee under the applicable indenture at or prior to the effective time of the merger, such documents or instruments required to comply with certain requirements of the indenture applicable to each series of CAs outstanding senior notes in connection with the merger, and (ii) provide all assistance reasonably requested by Broadcom in connection with obtaining the execution of such instruments by the other parties required to execute such instruments and take any other actions reasonably requested by Broadcom that are customary or necessary in connection therewith, subject to certain limitations set forth in the merger agreement.
Efforts to Obtain Regulatory Approvals
Under the merger agreement, Broadcom and CA are required to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the transactions contemplated by the merger agreement as soon as practicable, including:
| preparing and filing or otherwise providing, in consultation with the other party and as promptly as practicable and advisable, all documentation to effect all necessary applications, notices, petitions, filings, and other documents and to obtain as promptly as practicable all waiting period expirations or terminations, consents, clearances, waivers, licenses, orders, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any governmental entity in order to consummate the transactions contemplated by the merger agreement as promptly as practicable after the date of the merger agreement; and |
| taking all steps as may be necessary, subject to the limitations in the merger agreement, to obtain all such waiting period expirations or terminations, consents, clearances, waivers, licenses, registrations, permits, authorizations, orders and approvals as promptly as practicable after the date of the merger agreement. |
In furtherance and not in limitation of the obligations described in the previous paragraph, the merger agreement requires Broadcom and CA to:
| make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by the merger agreement as promptly as practicable, and in any event |
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within ten business days after the date of the merger agreement (unless a later date is mutually agreed between the parties), and to supply as promptly as practicable and advisable any additional information and documentary materials that may be requested pursuant to the HSR Act and to take all other actions necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable; |
| make an appropriate filing with the European Commission with respect to the transactions contemplated by the merger agreement as promptly as practicable after the date of the merger agreement, and to supply as promptly as practicable and advisable any additional information and documentary materials that may be requested by the European Commission pursuant to antitrust laws, and, subject to the terms and conditions of the merger agreement, to take all other actions necessary to cause the expiration or termination of the applicable waiting periods or obtain consents under such antitrust laws; and |
| make all other necessary filings as promptly as practicable, and supply as promptly as practicable and advisable any additional information and documentary materials that may be requested under any other antitrust, competition or trade regulation laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition (which we refer to as antitrust laws). |
Notwithstanding the foregoing, none of Broadcom, Merger Sub or any of their respective subsidiaries is required to, and CA may not and may not permit any of its subsidiaries to, without the prior written consent of Broadcom, become subject to, consent to or offer or agree to, or otherwise take any action with respect to, any requirement, condition, limitation, understanding, agreement or order to (a) sell, license, assign, transfer, divest, hold separate or otherwise dispose of any assets, business or portion of business of CA, Broadcom or their respective subsidiaries, (b) conduct, restrict, operate, invest or otherwise change the assets, the business or portion of the business of CA, Broadcom or their respective subsidiaries in any manner or (c) impose any restriction, requirement or limitation on the operation of the business or portion of the business of CA, Broadcom or their respective subsidiaries. However, if requested by Broadcom, CA or its subsidiaries will become subject to, consent to or offer or agree to, or otherwise take any action with respect to, any such requirement, condition, limitation, understanding, agreement or order, so long as such requirement, condition, limitation, understanding, agreement or order is only binding on CA or its subsidiaries in the event the merger is completed.
Under the merger agreement, Broadcom and CA also agree to:
| cooperate in all respects and consult with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party in connection with the HSR Act or other antitrust laws; |
| promptly inform the other party of any communication with the DOJ, the FTC or any other governmental entity, by promptly providing copies to the other party of any such written communications, and of any material communication received or given in connection with any proceeding by a private party; and |
| permit the other party to review in advance any communication that it gives to, and consult with each other in advance of any meeting, substantive telephone call or conference with, the DOJ, the FTC or any other applicable governmental entity, or, in connection with any proceeding by a private party, with any other person, and to the extent permitted by the DOJ, the FTC or other applicable governmental entity or other person, give the other party the opportunity to attend and participate in any in-person meetings, substantive telephone calls or conferences with the DOJ, the FTC or any other governmental entity or other person. |
Without limiting Broadcoms cooperation obligations described in this subsection, Broadcom and CA have agreed that Broadcom will control the ultimate strategy for securing approvals and expiration of relevant waiting periods under antitrust laws.
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The merger agreement contains additional agreements of Broadcom, Merger Sub and CA relating to, among other things:
| the filing of this proxy statement with the SEC (and cooperation in response to any comments from the SEC in respect to this proxy statement); |
| the calling, giving notice of, convening and holding the special meeting not later than 30 days following the expiration of the 10-day waiting period provided under Rule 14a-6(a) promulgated under the Exchange Act or the date on which CA learns the SEC has no further comments on this proxy statement; |
| the coordination of press releases and other public announcements or filings relating to the transactions contemplated by the merger agreement; |
| anti-takeover statutes or regulations that become applicable to the merger agreement, the voting agreement or the transactions contemplated by the merger agreement; |
| Broadcoms taking all action necessary to cause Merger Sub to perform its obligations under the merger agreement; |
| the notification of certain matters and the settlement of any litigation in connection with the merger agreement; |
| actions to cause the disposition of equity securities of CA held by each individual who is a director or officer of CA pursuant to the transactions contemplated by the merger agreement to be exempt pursuant to Rule 16b-3 promulgated under the Exchange Act; |
| the resignation of each member of the CA board; and |
| the de-listing of CA shares from the NASDAQ and deregistration under the Exchange Act. |
For a 12-month period commencing at the effective time of the merger, Broadcom will provide, or will cause the surviving corporation to provide, to each employee of CA or its subsidiaries who continues to be employed by Broadcom, the surviving corporation or any subsidiaries (which we refer to as a continuing employee), (i) at least the same wage rate or base salary as in effect for such continuing employee immediately prior to the effective time of the merger, (ii) target incentive compensation opportunities (including cash and equity compensation) and health and welfare benefits (excluding severance) that are no less favorable, in the aggregate, than as in effect for such continuing employee immediately prior to the effective time of the merger, and (iii) severance benefits that are no less favorable than the severance benefits for which such continuing employee was eligible under the CA benefit plans in effect as of the date of the merger agreement.
For all purposes (including purposes of vesting, eligibility to participate and level of benefits) under the employee benefit plans of Broadcom and its subsidiaries providing benefits to any continuing employees after the effective time of the merger (which we refer to as the new plans), each continuing employee will, subject to applicable law and applicable tax qualification requirements, be credited with his or her years of service with CA and its subsidiaries and their respective predecessors before the effective time of the merger (including, for avoidance of doubt, any service credit provided by CA or its subsidiaries to such continuing employee in connection with acquisitions occurring prior to the effective time of the merger); provided that the foregoing will not apply with respect to benefit accrual under any defined benefit pension plan or to the extent that its application would result in a duplication of benefits. In addition, and without limiting the generality of the foregoing, (i) each continuing employee will be immediately eligible to participate, without any waiting time, in any and all new plans to the extent that coverage under such new plan is of the same type as CA benefit plan in which such continuing employee participated immediately before the effective time of the merger (which we
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refer to as, collectively, the old plans), and (ii) (A) for purposes of each new plan providing medical, dental, pharmaceutical or vision benefits to any continuing employee, Broadcom or its subsidiaries will use its commercially reasonable efforts to cause all pre-existing condition exclusions and actively-at-work requirements of such new plan to be waived for such continuing employee and his or her covered dependents and (B) Broadcom and its subsidiaries will use commercially reasonable efforts to cause any eligible expenses incurred by such continuing employee and his or her covered dependents during the portion of the plan year of the old plan ending on the date such employees participation in the corresponding new plan begins to be taken into account under such new plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such new plan.
Broadcom may direct CA to terminate its 401(k) plan(s) as of the day immediately preceding the effective time, upon written notice by Broadcom at least 20 days prior to the effective time. In such event, Broadcom will allow continuing employees to participate in Broadcoms 401(k) plan and transfer their account balances to Broadcoms 401(k) plan.
CA may grant cash-based retention awards to any employee that is not subject to the reporting requirements of Section 16(a) of the Exchange Act or in a position senior to an employee subject to such reporting requirements, in such amounts determined by CA and approved by Broadcom (the retention bonuses). The retention bonuses are payable on the earlier of (i) the twelve month anniversary of the effective date of the merger, subject to an employees continued employment through such date, and (ii) the date of an employees termination without cause on or following the effective date of the merger. No individual retention bonus may exceed six months of an employees base salary as then in effect, and the retention bonuses in the aggregate may not exceed $20,000,000.
Directors and Officers Indemnification and Insurance
Under the merger agreement, for a period of six years after the effective time of the merger, the surviving corporation must, and Broadcom must cause the surviving corporation to, indemnify and hold harmless, to the fullest extent permitted by applicable law and the organizational documents of CA or its subsidiaries, or any indemnification agreements in existence as of the date of the merger agreement that were provided to Broadcom prior to the date of the merger agreement, each current and former director and officer of CA and its subsidiaries against any costs and expenses in connection with any actual or threatened claims in respect of acts or omissions occurring or alleged to have occurred at or prior to the effective time of the merger, whether asserted or claimed prior to, at or after the effective time of the merger, in connection with such person serving as an officer, director, employee or other fiduciary of CA, any of its subsidiaries or any other person if such service was at the request or for the benefit of CA or any of its subsidiaries.
In addition, for a period of six years following the effective time of the merger, Broadcom is required to maintain in effect the provisions in the organizational documents of CA and any indemnification agreements in existence as of the date of the merger agreement that were provided to Broadcom (except to the extent such agreement provides for an earlier termination) regarding elimination of liability, indemnification of officers, directors and employees and advancement of expenses that are in existence as of the date of the merger agreement.
At or prior to the effective time of the merger, CA is required to purchase a directors and officers liability insurance and fiduciary liability insurance tail insurance policy for a period of six years after the effective time of the merger with respect to matters arising at or prior to the effective time of the merger, with a one-time cost not in excess of 250% of the last aggregate annual premium paid by CA for its directors and officers liability insurance and fiduciary liability insurance prior to the date of the merger agreement, and if the cost of such tail insurance policy would otherwise exceed such amount, CA may purchase as much coverage as reasonably practicable for such amount.
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The respective obligations of each party to effect the merger are subject to the satisfaction or waiver of the following conditions:
| CA stockholders having adopted the merger agreement. |
| no governmental entity of competent jurisdiction having (i) enacted, issued or promulgated any law that is in effect as of immediately prior to the effective time of the merger or (ii) issued or granted any order or injunction (whether temporary, preliminary or permanent) that is in effect, in each case which has the effect of restraining or enjoining or otherwise prohibiting the consummation of the merger. |
| any waiting period (and extensions thereof) applicable to the merger under the HSR Act having expired or having been terminated and any other required approvals, consents or clearances under the antitrust laws of Japan and the European Union having been obtained. |
The obligations of Broadcom and Merger Sub to effect the merger are subject to the satisfaction or waiver of the following additional conditions:
| (i) the representations and warranties of CA set forth in the merger agreement regarding organization, capitalization of subsidiaries, voting debt, voting trusts or agreements, authority, opinion of financial advisor, takeover statutes, the rights agreement and amendments thereto, certain related party transactions and finders and brokers being true and correct in all material respects, (ii) the representations and warranties of CA set forth in the merger agreement regarding CAs capitalization being true and correct other than for de minimis inaccuracies, (iii) the representations and warranties of CA set forth in the merger agreement regarding changes, events or effects that have or would reasonably be expected to have, individually or in the aggregate a material adverse effect on CA being true and correct in all respects and (iv) all other representations and warranties of CA set forth in the merger agreement (without giving effect to any materiality or material adverse effect qualifications contained therein) being true and correct, except in the case of this clause (iv), for such failure to be true and correct that would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on CA, in the case of each of clauses (i) through (iv), as of the date of the merger agreement and as of the closing of the merger as though made on and as of the closing of the merger (except representations and warranties that by their terms speak specifically as of another date, in which case as of such date); |
| CA having performed and complied with in all material respects the obligations, covenants and agreements required to be performed or complied with by it under the merger agreement at or prior to the closing of the merger; |
| no material adverse effect on CA having occurred since the date of the merger agreement that is continuing; |
| Broadcom and Merger Sub having received from CA a certificate, dated as of the date of the closing of the merger and signed by CAs chief executive officer or chief financial officer, certifying to the effect that the conditions set forth in the foregoing three bullets have been satisfied; and |
| Broadcoms purchase of certain CA treasury shares having been consummated in accordance with the merger agreement. |
The obligations of CA to effect the merger are subject to the satisfaction or waiver of the following additional conditions:
| the representations and warranties of Broadcom and Merger Sub set forth in the merger agreement (without giving effect to any qualification as to materiality contained therein) being true and correct as of the date of the merger agreement and as of the closing of the merger as if made on and as of the closing of the merger (except representations and warranties that by their terms speak specifically as of |
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another date, in which case as of such date), except where any failures of any such representations and warranties to be so true and correct (without giving effect to any qualification as to materiality contained therein) have not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Broadcom or Merger Sub to consummate the transactions contemplated by the merger agreement prior to the outside date (as defined below); |
| Broadcom and Merger Sub having performed and complied with in all material respects the obligations, covenants and agreements required to be performed or complied with by them under the merger agreement at or prior to the closing of the merger; and |
| CA having received from Broadcom and Merger Sub a certificate, dated as of the date of the closing of the merger and signed by Broadcoms chief executive officer or chief financial officer, certifying to the effect that the conditions set forth in the foregoing two bullets have been satisfied. |
Termination of the Merger Agreement
Termination by Broadcom or CA
The merger agreement may be terminated at any time before the effective time of the merger:
| by mutual written consent of Broadcom and CA; or |
| by either Broadcom or CA, if: |
| any governmental entity of competent jurisdiction has issued a final, non-appealable order, injunction, decree or ruling permanently restraining, enjoining or otherwise prohibiting the consummation of the merger; |
| the effective time of the merger has not occurred on or before January 11, 2019 (which we refer to as the outside date); however, (i) if, on the outside date, all of the conditions to the merger (other than those conditions relating to antitrust approvals or no injunction (to the extent the relevant injunction or order is in respect of, or any such law is, the HSR Act or any other antitrust law) and those conditions that by their nature are to be satisfied or waived on the closing date of the merger (if such conditions would be satisfied or validly waived were the closing of the merger to occur at such time)) shall have been satisfied or waived, then the outside date shall automatically be extended for a period of two months, and (ii) this right to terminate will not be available to any party whose action or failure to fulfill any obligation was a proximate cause of the failure of the effective time of the merger to occur prior to the outside date and such action or failure to act constitutes a material breach of the merger agreement; or |
| the special meeting (including any adjournments or postponements thereof) has concluded and the CA stockholders have not adopted the merger agreement. |
Termination by CA
The merger agreement may be terminated at any time before the effective time of the merger by CA if:
| prior to CA stockholders adopting the merger agreement, the CA board effects a change of recommendation with respect to a superior proposal and CA substantially concurrently enters into a definitive agreement providing for such superior proposal, as long as (a) CA has complied with its obligations described under No Solicitation of Other Offers by CA and Change of Recommendation; Match Rights and (b) immediately prior to or substantially concurrently with (and as a condition to) such termination, CA pays to Broadcom the $566 million termination fee described below; or |
| (a) Broadcom and/or Merger Sub has breached, failed to perform or violated their respective covenants or agreements under the merger agreement or any of the representations and warranties of Broadcom or Merger Sub in the merger agreement have become inaccurate; (b) such breach, failure to perform, |
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violation or inaccuracy would result in the failure of the related conditions to CAs obligations to close the merger to be satisfied and is incapable of being cured by the outside date or, if capable of being cured by the outside date, is not cured before the earlier of the business day immediately prior to the outside date and the 30th calendar day following receipt of written notice from CA of such breach, failure to perform, violation or inaccuracy; and (c) CA is not then in material breach of the merger agreement. |
Termination by Broadcom
The merger agreement may be terminated at any time before the effective time of the merger by Broadcom if:
| Prior to the CA stockholders adopting the merger agreement, the CA board has effected a change of recommendation or CA has materially breached its obligations described under No Solicitation of Other Offers by CA or Change of Recommendation; Match Rights; or |
| (a) CA has breached, failed to perform or violated its covenants or agreements under the merger agreement or any of the representations and warranties of CA in the merger agreement have become inaccurate; (b) such breach, failure to perform, violation or inaccuracy would result in the failure of the related conditions to Broadcoms obligation to close the merger to be satisfied and is incapable of being cured by the outside date or, if capable of being cured by the outside date, is not cured before the earlier of the business day immediately prior to the outside date and the 30th calendar day following receipt of written notice from Broadcom or Merger Sub of such breach, failure to perform, violation or inaccuracy; and (c) neither Broadcom nor Merger Sub are then in material breach of the merger agreement. |
Expenses
Except as otherwise expressly provided in the merger agreement (including the termination fee described below), all costs and expenses incurred in connection with the merger agreement and the transactions contemplated thereby will be paid by the party incurring the cost or expense.
Termination Fee
The merger agreement provides that CA will pay Broadcom a termination fee of $566 million if:
| (a) Broadcom or CA terminates the merger agreement because the special meeting (including any adjournments or postponements thereof) has concluded and the CA stockholders have not adopted the merger agreement, (b) after the date of the merger agreement and prior to the date of such termination, an acquisition proposal is publicly disclosed (whether by CA or a third party) and not publicly withdrawn at least three business days prior to the special meeting, and (c) within twelve months of such termination, an acquisition proposal is consummated or a definitive agreement providing for an acquisition proposal is entered into; |
| (a) after the date of the merger agreement and prior to termination of the merger agreement, an acquisition proposal is made to the CA board or management or becomes publicly disclosed (whether by CA or a third party) and not publicly withdrawn at least three business days prior to such termination; (b) (i) Broadcom or CA terminates the merger agreement due to the effective time of the merger not having occurred on or prior to the outside date or (ii) Broadcom terminates the merger agreement due to (x) CAs breach of or failure to perform or comply with, one or more of its covenants or agreements under the merger agreement following the making of such acquisition proposal or (y) CAs material breach of its obligations under the merger agreement described under No |
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Solicitation of Other Offers by CA or Change of Recommendation; Match Rights; and (c) within twelve months of such termination, an acquisition proposal is consummated or a definitive agreement providing for an acquisition proposal is entered into; |
| Broadcom terminates the merger agreement because the CA board has effected a change of recommendation or CA has willfully and materially breached its obligations described under No Solicitation of Other Offers by CA or Change of Recommendation; Match Rights; or |
| CA terminates the merger agreement in order to enter into a definitive agreement providing for a superior proposal. |
When determining whether CA will pay Broadcom a termination fee, the term acquisition proposal has the meaning assigned to such term as described under No Solicitation of Other Offers by CA, except that all references to 15% and 85% will be replaced with references to 50%.
In no event will CA be obligated to pay the termination fee on more than one occasion. In the event that the termination fee is received by Broadcom, none of CA, any of its subsidiaries, any of their respective former, current or future officers, directors, partners, stockholders, managers, members, affiliates or agents will have any further liability or obligation relating to or arising out of the merger agreement or the transactions contemplated by the merger agreement, except for fraud or willful breach of the merger agreement.
In the event of termination of the merger agreement in accordance with the terms of the merger agreement, the merger agreement will become void (except that provisions relating to the effect of termination, payment of the termination fee and certain other miscellaneous provisions, together with the confidentiality agreement between CA and Broadcom, will survive any such termination), and there will be no liability on the part of any of the parties, except that no party will be relieved of liability for any fraud or willful breach of the merger agreement prior to such termination.
Other than in respect of certain actions against the parties providing financing to Broadcom or Merger Sub in connection with the transactions contemplated by the merger agreement (which actions will be governed by the laws of the State of New York), the merger agreement is governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to conflicts of laws principles that would result in the application of the law of any other state.
Amendments, Enforcements and Remedies, Extensions and Waivers
Amendments
Subject to applicable law and the terms of the merger agreement, the merger agreement may be amended by the parties at any time.
Enforcements and Remedies
Under the merger agreement, the parties have agreed that, prior to the termination of the merger agreement, each party will be entitled to:
| an injunction or injunctions to prevent or remedy any breaches or threatened breaches of the merger agreement; |
| a decree or order of specific performance specifically enforcing the terms and provisions of the merger agreement; and |
| any further equitable relief. |
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Extensions and Waivers
Under the merger agreement, at any time prior to the effective time of the merger, any party may:
| extend the time for the performance of any of the obligations or other acts of the other parties; |
| waive any inaccuracies in the representations and warranties of the other parties; and |
| waive compliance by the other parties with any of the agreements or conditions for the benefit of such party. |
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Time, Place and Purpose of the Special Meeting
This proxy statement is being furnished to CAs stockholders as part of the solicitation of proxies by the CA board for use at the special meeting to be held on September 12, 2018, at 10:00 a.m., Eastern time, at the Warwick New York Hotel, located at 65 W 54th Street, New York, NY 10019, or at any postponement or adjournment thereof. At the special meeting, holders of CA common stock will be asked to approve the proposal to adopt the merger agreement, to approve the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement and to approve the CA advisory proposal on specified compensation.
Our stockholders must approve the proposal to adopt the merger agreement in order for the merger to occur. If our stockholders fail to approve the proposal to adopt the merger agreement, the merger will not occur. A copy of the merger agreement is attached as Annex A to this proxy statement, and we encourage you to read it carefully in its entirety.
Recommendation of the CA Board of Directors
After careful consideration of various factors described in the section of this proxy statement entitled The Merger (Proposal 1) Recommendation of the CA Board of Directors, beginning on page 30, the CA board unanimously (1) determined that the merger agreement and merger were advisable, and fair to and in the best interests of CAs stockholders, (2) approved the merger agreement and the other transactions contemplated thereby, (3) directed that a special meeting of CAs stockholders be held for the purposes of voting on the adoption of the merger agreement, and (4) recommended that CAs stockholders vote in favor of the adoption of the merger agreement.
In considering the recommendation of the CA board with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, yours. The CA board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of CA. See the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger beginning on page 43.
The CA board unanimously recommends that you vote FOR the proposal to adopt the merger agreement; FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement; and FOR the CA advisory proposal on specified compensation.
We have fixed the close of business on August 9, 2018, as the record date for the special meeting, and only holders of record of CA common stock as of the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of CA common stock as of the record date. As of the record date, there were 418,165,884 shares of CA common stock outstanding and entitled to vote. Each share of CA common stock entitles its holder to one vote on each matter properly coming before the special meeting.
The holders of a majority of the voting power of the issued and outstanding shares of CA common stock entitled to vote thereat, present in person or represented by proxy, will constitute a quorum for the transaction of business at the special meeting. Shares of CA common stock for which a stockholder directs an abstention from voting will be counted for purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum. A quorum is necessary to transact business at the special meeting. Once a
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share of CA common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will have to be established. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed. The CA board also reserves the right to postpone the special meeting to the extent permitted or required by the terms of the merger agreement.
If your shares of CA common stock are registered directly in your name with our transfer agent, Computershare Trust CA, N.A., you are considered the stockholder of record with respect to those shares and you may attend the special meeting by presenting a photo identification acceptable to us, such as a valid drivers license or passport.
If your shares are held in an account at a bank, broker, or other similar organization, then you are the beneficial owner of shares held in street name, and you may also attend the special meeting by presenting a photo identification acceptable to us, such as a valid drivers license or passport. However, you may not vote your shares in person at the special meeting unless you follow your broker or banks procedures for obtaining a legal proxy and then present that legal proxy for verification at the special meeting.
Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of CA common stock entitled to vote thereon. With respect to this proposal, you may vote FOR, AGAINST or ABSTAIN. Abstentions will not be counted as votes cast in favor of the proposal to adopt the merger agreement, but will count for the purpose of determining whether a quorum is present. Broker non-votes will not be counted as votes cast in favor of the proposal to adopt the merger agreement and will not count for the purpose of determining whether a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, it will have the same effect as a vote AGAINST the proposal to adopt the merger agreement. Abstentions and broker non-votes will have the effect of a vote AGAINST the proposal to adopt the merger agreement.
Assuming a quorum is present, approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement, requires the affirmative vote of holders of a majority of the voting power of the issued and outstanding shares of CA common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. With respect to this proposal, you may vote FOR, AGAINST or ABSTAIN. For purposes of this proposal, abstentions will be counted in tabulating the votes cast and will have the same effect as a vote AGAINST the proposal. Broker non-votes will not be counted in tabulating the votes cast and will not have an effect on the proposal to adjourn the special meeting if a quorum is present. If you fail to submit a proxy or vote in person at the special meeting, the shares of CA common stock not voted will not be counted in respect of, and will not have an effect on, the proposal to adjourn the special meeting if a quorum is present.
Assuming a quorum is present, approval of the CA advisory proposal on specified compensation requires the affirmative vote of holders of a majority of the voting power of the issued and outstanding shares of CA common stock present in person or represented by proxy at the special meeting and entitled to vote thereon. With respect to this proposal, you may vote FOR, AGAINST or ABSTAIN. For purposes of this proposal, abstentions will be counted in tabulating the votes cast and will have the same effect as a vote AGAINST the proposal. Broker non-votes will not be counted in tabulating the votes cast and will not have an effect on the CA advisory proposal on specified compensation if a quorum is present. If you fail to submit a proxy or vote in person at the special meeting, the shares of CA common stock not voted will not be counted in respect of, and will not have an effect on, the CA advisory proposal on specified compensation if a quorum is present.
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If you are a stockholder of record, this proxy statement and proxy card have been sent directly to you by CA. If your shares are held in street name in an account with a bank, brokerage firm or other nominee, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee. As the beneficial owner of CA common stock, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting.
Stockholders can vote over the Internet or by telephone. You can also vote your shares by completing and returning the appropriate portion of the enclosed proxy card or, if you hold shares in street name, a voting instruction form. If Internet and telephone voting are available to you, you can find voting instructions in the materials sent to you. The Internet and telephone voting facilities will close at 11:59 p.m. Eastern time on September 11, 2018. Please be aware that if you vote over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible.
You can revoke your proxy (including any Internet or telephone vote) at any time before it is exercised by timely delivery of a properly executed, later-dated proxy or by voting in person at the special meeting.
How you vote will in no way limit your right to vote at the meeting if you later decide to attend in person. However, if your shares are held in street name, you must obtain a legal proxy, executed in your favor, from your brokerage firm or other holder of record, to be able to vote at the meeting.
All shares entitled to vote and represented by your properly completed proxy received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions.
If you choose to vote by mailing the appropriate portion of the enclosed proxy card, your proxy card must be received before the special meeting begins. Please do not send in your stock certificates with your proxy card. If and when the merger is completed, if you are a record holder of certificated shares of CA common stock, a separate letter of transmittal and instructions for use in effecting the surrender of stock certificates will be mailed to you that will enable you to receive the merger consideration in exchange for your stock certificates.
If you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, or your proxies, will vote your shares of CA common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of CA common stock should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.
If you properly sign your proxy card but do not mark the boxes showing how your shares of CA common stock should be voted on a matter, the shares of CA common stock represented by your properly signed proxy will be voted FOR the proposal to adopt the merger agreement, FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement and FOR the CA advisory proposal on specified compensation.
If you have any questions or need assistance voting your shares, please call MacKenzie Partners, Inc., CAs proxy solicitor, toll-free at (800) 322-2885 from the U.S. or Canada, or (212) 929-5500 from other locations.
It is important that you vote your shares of CA common stock promptly. Whether or not you plan to attend the special meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope, or submit your proxy by telephone or the Internet. Stockholders who attend the special meeting may revoke their proxies by voting in person.
Shares Held by CAs Directors and Executive Officers
As of August 9, 2018, the record date, the directors and executive officers of CA owned and were entitled to vote, in the aggregate, 787,706 shares of CA common stock, representing approximately 0.2% of the outstanding
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shares of CA common stock on the record date. The directors and executive officers have informed CA that they currently intend to vote all of their shares of CA common stock FOR the proposal to adopt the merger agreement, FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement and FOR the CA advisory proposal on specified compensation.
Any stockholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet, or by returning the appropriate portion of the enclosed proxy card in the accompanying prepaid reply envelope, or may vote in person by appearing at the special meeting. If your shares of CA common stock are held in street name through a bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of CA common stock using the instructions provided by your bank, brokerage firm or other nominee. If you do not give instructions to your bank, brokerage firm or other nominee on how to vote your shares of CA common stock for any of the proposals described in this proxy statement, your bank, brokerage firm or nominee will not be entitled to vote your shares for you and a broker non-vote will occur for such proposal. Banks, brokerage firms and other nominees typically have discretionary voting authority with respect to routine matters; however, they typically do not have discretionary authority to vote on non-routine matters. We believe the proposals described in this proxy statement are non-routine matters. Accordingly, if you hold your shares of CA common stock through a bank, brokerage firm or other nominee and do not provide your bank, brokerage firm or other nominee with instructions on how to vote your shares of CA common stock on the proposal to adopt the merger agreement, your bank, brokerage firm or other nominee will not be permitted to vote your shares of CA common stock on the proposal to adopt the merger agreement or any of the other proposals described in this proxy statement.
If you fail to submit a proxy or to vote in person at the special meeting, or do not provide your bank, brokerage firm or other nominee with voting instructions, as applicable, your shares of CA common stock will not be voted on the proposal to adopt the merger agreement, which will have the same effect as a vote AGAINST the proposal to adopt the merger agreement, but will not have an effect on approval of the proposal to adjourn the special meeting or the CA advisory proposal on specified compensation if a quorum is present.
You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting at a later date through any of the methods available to you or by attending the special meeting and voting in person. If your shares of CA common stock are held in street name by your bank, brokerage firm or other nominee, please follow the instructions you receive from your bank, brokerage firm or other nominee to change your vote.
Adjournments and Postponements
Although it is not currently expected, the special meeting may be adjourned or postponed, including for the purpose of soliciting additional proxies as described in this proxy statement under the heading Authority to Adjourn the Special Meeting (Proposal No. 2), if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement or if a quorum is not present at the special meeting. Other than an announcement to be made at the special meeting of the time, date and place of an adjourned meeting, an adjournment generally may be made without notice. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow CAs stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting that was adjourned or postponed. The CA board also reserves the right to postpone the special meeting to the extent permitted or required by the terms of the merger agreement.
Anticipated Date of Completion of the Merger
We are working toward completing the merger as soon as possible. Assuming timely satisfaction of necessary closing conditions, including regulatory approvals and the approval by our stockholders of the proposal
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to adopt the merger agreement, we presently anticipate that the merger will be completed in the fourth calendar quarter of 2018.
Rights of Stockholders Who Seek Appraisal
If the merger is consummated, CA stockholders who properly perfect appraisal of their shares, who do not vote in favor of the adoption of the merger agreement, who continuously hold such shares through the effective time of the merger, who meet certain other conditions and statutory requirements described herein and who do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL. This means that such stockholders will be entitled to seek appraisal of their shares by the Delaware Court of Chancery and to receive payment in cash of the fair value of their shares of CA common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with (unless the Court of Chancery in its discretion determines otherwise for good cause shown) interest to be paid on the amount determined to be fair value from the effective time of the merger through the date of payment of the judgment, as determined by the court (subject, in the case of interest payments, to any voluntary cash payments made by CA pursuant to subsection (h) of Section 262 of the DGCL, as described in more detail in the section of this proxy statement entitled Appraisal Rights beginning on page 94), so long as they comply with the procedures, and subject to the conditions, set forth in Section 262 of the DGCL. Due to the complexity of the appraisal process, stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.
Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.
Only a stockholder of record may submit a demand for appraisal. To exercise appraisal rights under Section 262 of the DGCL, the stockholder of record must (1) submit a written demand for appraisal to CA before the vote is taken on the proposal to adopt the merger agreement; (2) not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement; (3) continue to hold the subject shares of CA common stock of record through the effective time of the merger and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of CA unless certain stock ownership conditions are satisfied by the stockholders seeking appraisal, as described further in the section of this proxy statement entitled Appraisal Rights beginning on page 94. The DGCL requirements for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, a copy of which is attached as Annex C to this proxy statement. If you hold your shares of CA common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee.
Solicitation of Proxies; Payment of Solicitation Expenses
We have engaged MacKenzie Partners, Inc. to assist in the solicitation of proxies and provide related advice and informational support for a services fee of $75,000, plus customary reimbursement of expenses. We have also agreed to indemnify MacKenzie Partners, Inc. against losses arising out of its provision of these services on our behalf. In addition, CA may also reimburse brokers, banks and other custodians, nominees and fiduciaries representing beneficial owners of shares of CA common stock for their expenses in forwarding soliciting materials to beneficial owners of CA common stock and in obtaining voting instructions from those owners. Directors, officers and employees of ours may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
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We use a practice approved by the SEC called householding. Under this practice, stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials receive only one copy of our proxy materials at that address, unless one or more of those stockholders has notified us that they wish to receive individual copies. If you would like to receive a separate copy of this proxy statement, please contact MacKenzie Partners, Inc. by telephone at (800) 322-2885 (toll-free from the U.S. or Canada) or (212) 929-5500 (from other locations). Each stockholder who participates in householding will continue to be able to access or receive a separate proxy card.
If you share an address with another CA stockholder and would like to start or stop householding for your account, please contact our Investor Relations Department at 1-800-225-5224.
Allowing us to household materials or electing to view them over the Internet will help us save on the cost of printing and distributing those materials and reduce the impact on the environment.
Questions and Additional Information
If you have more questions about the merger, the special meeting or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact our proxy solicitor:
MacKenzie Partners, Inc.
1407 Broadway
New York, NY 10018
Stockholders May Call:
(800) 322-2885 (toll-free from the U.S. or Canada);
(212) 929-5500 (from other locations)
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The following summary describes the material provisions of the voting agreement. The descriptions of the voting agreement in this summary and elsewhere in this proxy statement are not complete and are qualified in their entirety by reference to the voting agreement, a copy of which is attached to this proxy statement as Annex D and incorporated into this proxy statement by reference. We encourage you to read the voting agreement carefully and in its entirety because this summary may not contain all the information about the voting agreement that is important to you. The rights and obligations of the parties to the voting agreement are governed by the express terms of the voting agreement and not by this summary or any other information contained in this proxy statement.
Concurrently with the execution of the merger agreement, Broadcom and Merger Sub entered into a voting agreement with Careal Property Group AG, BigPoint Holding AG, Martin Haefner and Eva Maria Bucher-Haefner, who as of the date of the voting agreement, collectively beneficially owned 103,813,380 shares of CA common stock, or approximately 25% of the outstanding shares of CA common stock. The voting agreement generally requires these stockholders (i) not to transfer, sell, assign, gift, hedge, distribute, pledge or otherwise dispose of or enter into any derivative arrangement with respect to, or create or permit to exist any encumbrance on the shares of CA common stock beneficially owned by them; (ii) to be counted as present for purposes of determining quorum at any annual or special meeting of CA stockholders; (iii) to vote all shares of CA common stock beneficially owned by them in favor of adoption of the merger agreement, in favor of any proposal to adjourn or postpone any such meeting if there are not sufficient votes to adopt the merger agreement, and against any action, proposal agreement or transaction (including any alternative to the merger) involving CA that is intended, or would reasonably be expected to, postpone or prevent the consummation of the merger; and (iv) not to take any action that would have the effect of impairing these stockholders from performing their obligations under the voting agreement or that would, or would reasonably be expected to, have the effect of preventing, impairing or materially delaying the consummation of the merger or the other transactions contemplated by the merger agreement.
Under the voting agreement, each stockholder agreed to irrevocably appoint Broadcom as its attorney and proxy to the full extent of such stockholders voting rights with respect to all shares of CA common stock beneficially owned by such stockholder to vote, and to execute written consents with respect to, all shares of CA common stock beneficially owned by such stockholder with respect to the matters described in the previous paragraph. Each such stockholder also agreed not to exercise, and to forever and irrevocably waive, any appraisal rights or dissenters rights pursuant to Section 262 of the DGCL or otherwise in respect of the shares of CA common stock shares beneficially owned by such stockholder that may arise in connection with the merger.
The voting agreement terminates upon the valid termination of the merger agreement.
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MARKET PRICE DATA AND DIVIDEND INFORMATION
CA common stock trades on NASDAQ under the symbol CA. The following table sets forth, for the fiscal quarters indicated, the quarterly high and low sales prices of CA common stock on NASDAQ:
Common Stock Price ($) |
||||||||
High | Low | |||||||
Fiscal Year Ended March 31, 2017 |
||||||||
First Quarter |
33.58 | 29.34 | ||||||
Second Quarter |
34.99 | 31.33 | ||||||
Third Quarter |
33.40 | 30.01 | ||||||
Fourth Quarter |
33.45 | 30.62 | ||||||
Fiscal Year Ended March 31, 2018 |
||||||||
First Quarter |
36.54 | 30.92 | ||||||
Second Quarter |
35.18 | 30.45 | ||||||
Third Quarter |
34.41 | 31.45 | ||||||
Fourth Quarter |
37.25 | 32.47 | ||||||
Fiscal Year Ending March 31, 2019 |
||||||||
First Quarter |
37.35 | 32.45 | ||||||
Second Quarter (through August 9, 2018) |
44.25 | 35.48 |
On July 11, 2018, the last trading day prior to the public announcement of the execution of the merger agreement, the closing price of CA common stock on NASDAQ was $37.21 per share. On August 9, 2018, the most recent practicable date before we commenced mailing this proxy statement to our stockholders, the closing price for CA common stock on NASDAQ was $43.36 per share. You are encouraged to obtain current market quotations for CA common stock in connection with voting your shares of CA common stock.
We have paid cash dividends each year since July 1990. During each of fiscal 2018 and 2017, we paid quarterly cash dividends of $0.255 per share. Under the terms of the merger agreement, we are permitted to continue to pay regular quarterly cash dividends with respect to CA common stock in an amount not exceeding $0.255 per share in any fiscal quarter and with declaration date(s), record date(s) and payments date(s) consistent with past practice.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of August 3, 2018 with respect to beneficial ownership of shares of CA common stock for (1) each person known to beneficially own more than 5% of the outstanding shares of CA common stock, (2) each of our directors and nominees for election as directors, (3) each of our named executive officers, and (4) all of our directors, nominees and executive officers as a group. The table also sets forth separately the number of shares of CA common stock underlying CA DSU awards held by our directors as of August 3, 2018. Percentage of beneficial ownership is based on 418,171,637 shares of CA common stock outstanding as of August 3, 2018. Unless otherwise indicated, the address for the following stockholders is c/o CA, Inc., 520 Madison Avenue, New York, New York 10022.
Beneficial Ownership |
||||||||||||||||
Name of Beneficial Owner |
Number of Shares Beneficially Owned(1)(2) |
Exercisable CA Options(3) |
Percent of Class |
Number of Shares Underlying CA DSU Awards or CA RSU Awards(4) |
||||||||||||
Holders of More Than 5%: |
||||||||||||||||
Careal Property Group AG(5) |
103,813,380 | | 24.83 | % | | |||||||||||
The Vanguard Group(6) |
32,908,897 | | 7.87 | % | | |||||||||||
The Bank of New York Mellon Corporation(7) |
29,887,481 | | 7.15 | % | | |||||||||||
BlackRock, Inc.(8) |
21,770,382 | | 5.21 | % | | |||||||||||
Directors and Nominees: |
||||||||||||||||
Jens Alder |
| | * | 47,720 | ||||||||||||
Nancy A. Altobello |
| | * | | ||||||||||||
Raymond J. Bromark |
1,000 | | * | 74,968 | ||||||||||||
Michael P. Gregoire |
403,382 | 1,989,362 | * | | ||||||||||||
Jean M. Hobby |
| | * | 2,684 | ||||||||||||
Rohit Kapoor |
20,000 | | * | 66,460 | ||||||||||||
Jeffrey G. Katz |
| | * | 23,362 | ||||||||||||
Kay Koplovitz |
| | * | 63,962 | ||||||||||||
Christopher B. Lofgren |
| | * | 92,796 | ||||||||||||
Richard Sulpizio |
| | * | 60,048 | ||||||||||||
Laura S. Unger |
| | * | 79,851 | ||||||||||||
Arthur F. Weinbach |
25,000 | | * | 135,534 | ||||||||||||
Named Executive Officers (Non-Directors): |
||||||||||||||||
Adam Elster(9) |
37,155 | 13,449 | * | | ||||||||||||
Lauren P. Flaherty |
102,275 | 541,922 | * | | ||||||||||||
Kieran J. McGrath(10) |
66,648 | 34,783 | * | 5,101 | ||||||||||||
Ayman Sayed |
105,201 | 32,142 | * | | ||||||||||||
All Directors, Nominees |
888,035 | 2,762,179 | * | 682,542 |
* | Represents less than 1% of CA common stock outstanding. |
(1) | Except as indicated below, all persons have represented to us that they exercise sole voting power and sole investment power with respect to their shares. |
(2) | The amounts shown in this column include the following shares of CA RS awards that are currently unvested and subject to tax withholding and over which the respective beneficial owner holds sole voting |
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power but no investment power: Mr. Elster, 36,819; Ms. Flaherty, 31,555; Mr. Gregoire, 127,914; Mr. McGrath, 28,198; Mr. Sayed, 35,029; and all directors, nominees and executive officers as a group, 297,444. The amounts shown in this column include the following CA RSU awards that will vest within 60 days after August 3, 2018, subject to tax withholding: Mr. McGrath, 5,101; Mr. Sayed, 28,569; and all directors, nominees and executive officers as a group, 33,670. The amounts shown in this column include the following shares of CA common stock that are owned jointly with a spouse and over which the respective beneficial owner holds shared voting power and shared investment power: Mr. Kapoor, 20,000, and all directors, nominees and executive officers as a group, 20,000. |
(3) | Includes shares of CA common stock that may be acquired within 60 days after August 3, 2018 upon the exercise of CA options. |
(4) | Under our prior and current compensation plans for non-employee directors, directors have received a portion of their fees in the form of CA DSU awards. In January immediately following termination of service, a director receives shares of CA common stock in an amount equal to the number of CA DSU awards accrued in the directors deferred compensation account. Although the CA DSU awards are derivative equity securities owned by the directors, the CA DSU awards are not included in the column headed Number of Shares Beneficially Owned because the directors do not currently have the right to dispose of or to vote the underlying shares of CA common stock. The amounts shown in this column do not include CA RSU awards that will vest within 60 days after August 3, 2018. |
(5) | Information (including information in this footnote) is based solely on the Schedule 13D/A filed jointly with the SEC on December 2, 2015 by Careal Holding AG, now known as Careal Property Group AG (Careal), Martin Haefner, Eva Maria Bucher-Haefner and BigPoint Holding AG (BigPoint) and the Statements of Changes in Beneficial Ownership on Forms 4 filed with the SEC on June 1, 2016 by Mr. Haefner and on May 17, 2018 by Careal, except for Percent of Class and the beneficial ownership percentages in this footnote, which have been calculated based on the number of shares of CA common stock outstanding as of August 3, 2018. Careal is a holding company of which 50% of the shares are owned by Mr. Haefner and 50% of the shares are owned by Ms. Bucher-Haefner. BigPoint is a holding company for certain of Mr. Haefners investments and is wholly owned by him. Careal has sole voting and dispositive power over 65,513,380 shares (representing 15.67% of class). Mr. Haefner has sole voting power over the 38,300,000 shares held by BigPoint and shared voting and dispositive power over the 65,513,380 shares held by Careal, for a total of 103,813,380 shares beneficially owned by Mr. Haefner (representing 24.82% of class). Ms. Bucher-Haefner has shared voting and dispositive power over the 65,513,380 shares held by Careal (representing 15.67% of class). BigPoint has sole voting and dispositive power over 38,300,000 shares (representing 9.16% of class). The principal place of business of each of Careal, Mr. Haefner, Ms. Bucher-Haefner and BigPoint is Utoquai 49, 8008 Zurich, Switzerland. |
(6) | Information (including information contained in this footnote) is based solely on the Schedule 13G filed with the SEC on February 8, 2018 except for Percent of Class, which has been calculated based on the number of shares of CA common stock outstanding as of August 3, 2018, with respect to beneficial ownership of 32,908,897 shares by The Vanguard Group. The Vanguard Group has sole voting power over 435,934 shares, sole dispositive power over 32,401,608 shares, shared voting power over 84,823 shares and shared dispositive power over 507,289 shares, for a total of 32,908,897 shares (representing 7.87% of class). The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
(7) | Information (including information contained in this footnote) is based solely on Amendment No.1 to Schedule 13G filed jointly with the SEC on February 7, 2018, except for Percent of Class, which has been calculated based on the number of shares of CA common stock outstanding as of August 3, 2018, with respect to beneficial ownership of 29,887,481 shares by The Bank of New York Mellon Corporation, BNY Mellon IHC, LLC, MBC Investments Corporation, BNY Investment Management (Jersey) Limited, BNY Investment Management (Europe) Limited, BNY Investment Management Europe Holdings limited, BNY Mellon International Asset Management Group Limited, Newton Management Limited, and Newton Investment Management Limited (collectively, The BNY Mellon Group). The Bank of New York |
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Mellon Corporation has sole voting power over 26,774,703 shares, sole dispositive power over 28,660,012 shares, shared dispositive power over 1,227,017 shares, and no shared voting power over any shares, for a total of 29,887,481 shares (representing 7.15% of class); BNY Mellon IHC, LLC has sole voting power over 25,269,598 shares (representing 6.04% of class), sole dispositive power over 27,038,358 shares (representing 6.47% of class), shared dispositive power over 1,226,455 shares (representing 0.29% of class), and no shared voting power over any shares; MBC Investments Corporation has sole voting power over 25,269,598 shares (representing 6.04% of class), sole dispositive power over 27,038,358 shares (representing 6.47% of class), shared dispositive power over 1,226,455 shares (representing 0.29% of class), and no shared voting power over any shares; BNY Investment Management (Jersey) Limited has sole voting power over 22,571,733 shares (representing 5.40% of class), sole dispositive power over 25,127,853 shares (representing 6.01% of class), shared dispositive power over 1,191,866 shares (representing 0.29% of class), and no shared voting power over any shares; BNY Investment Management (Europe) Limited has sole voting power over 22,571,733 shares (representing 5.40% of class), sole dispositive power over 25,127,853 shares (representing 6.01% of class), shared dispositive power over 1,191,866 shares (representing 0.29% of class), and no shared voting power over any shares; BNY Mellon Investment Management Europe Holdings limited has sole voting power over 22,571,733 shares (representing 5.40% of class), sole dispositive power over 25,127,853 shares (representing 6.01% of class), shared dispositive power over 1,191,866 shares (representing 0.29% of class), and no shared voting power over any shares; BNY Mellon International Asset Management Group Limited has sole voting power over 22,571,733 shares (representing 5.40% of class), sole dispositive power over 25,127,853 shares (representing 6.01% of class), shared dispositive power over 1,191,866 shares (representing 0.29% of class), and no shared voting power over any shares; Newton Management Limited has sole voting power over 22,571,733 shares (representing 5.40% of class), sole dispositive power over 25,127,853 shares (representing 6.01% of class), shared dispositive power over 1,191,866 shares (representing 0.29% of class), and no shared voting power over any shares; and Newton Investment Management Limited has sole voting power over 21,944,514 shares (representing 5.25% of class), sole dispositive power over 24,500,634 shares (representing 5.86% of class), and no shared dispositive power or shared voting power over any shares. The principal business address of the BNY Mellon Group is 225 Liberty Street, New York, New York 10286. |
(8) | Information (including information contained in this footnote) is based solely on the Schedule 13G filed with the SEC on February 8, 2018 except for Percent of Class, which has been calculated based on the number of shares of CA common stock outstanding as of August 3, 2018, with respect to beneficial ownership of 21,770,382 shares by BlackRock, Inc. BlackRock, Inc. has sole voting power over 19,000,385 shares and sole dispositive power over 21,770,382 shares, and does not have shared voting or shared dispositive power over any shares, for a total of 21,770,382 shares (representing 5.21% of class. The principal business address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
(9) | Mr. Elster ceased to serve as President, Global Field Operations as of May 3, 2018 and his employment with CA will end on August 17, 2018. |
(10) | As of August 3, 2018, Mr. McGrath holds 5,101 CA RSU awards that are not included in the column headed Number of Shares Beneficially Owned because Mr. McGrath does not currently, and will not within 60 days after August 3, 2018, have the right to dispose of or vote the underlying shares of CA common stock. |
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AUTHORITY TO ADJOURN THE SPECIAL MEETING (PROPOSAL NO. 2)
We may ask our stockholders to vote on a proposal to authorize the CA board, in its discretion, to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement. The approval of this proposal requires the affirmative vote of the holders of a majority of the voting power of the issued and outstanding shares of CA common stock entitled to vote thereon present in person or represented by proxy.
The CA board unanimously recommends that you vote FOR any proposal to authorize the CA board, in its discretion, to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.
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CA ADVISORY PROPOSAL ON SPECIFIED COMPENSATION (PROPOSAL NO. 3)
Section 14A of the Exchange Act, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires that we provide our stockholders with the opportunity to vote to approve, on an advisory, non-binding basis, the payment of certain compensation that will or may become payable to our named executive officers in connection with the merger, as disclosed in the section of this proxy statement entitled The Merger (Proposal 1) Specified Compensation That Will or May Become Payable to Our Named Executive Officers in Connection With the Merger beginning on page 48 of this proxy statement and the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger as relates to our named executive officers beginning on page 43 of this proxy statement.
We are asking our stockholders to indicate their approval of the various compensation that will or may become payable to our named executive officers in connection with the merger. These payments are set forth in the section of this proxy statement entitled The Merger (Proposal 1) Specified Compensation That Will or May Become Payable to Our Named Executive Officers in Connection With the Merger beginning on page 48 and the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger as relates to our named executive officers beginning on page 43 of this proxy statement.
Accordingly we are seeking approval of the following resolution at the special meeting:
RESOLVED, that the stockholders of CA approve, on a non-binding, advisory basis, the compensation that will or may become payable to our named executive officers that is based on or otherwise relates to the merger as disclosed pursuant to Item 402(t) of Regulation S-K in the section of this proxy statement entitled The Merger (Proposal 1) Specified Compensation That Will or May Become Payable to Our Named Executive Officers in Connection With the Merger and the section of this proxy statement entitled The Merger (Proposal 1) Interests of Certain Persons in the Merger as relates to our named executive officers.
Approval of the CA advisory proposal on specified compensation requires the affirmative vote of holders of a majority of the voting power of the issued and outstanding shares of CA common stock entitled to vote thereon present in person or represented by proxy at the special meeting.
The vote on this non-binding proposal regarding certain merger-related executive compensation arrangements is a vote separate and apart from the vote on the proposal to adopt the merger agreement and the proposal to adjourn the special meeting. Accordingly, you may vote FOR the proposal to adopt the merger agreement and the proposal to adjourn the special meeting and vote AGAINST or ABSTAIN for this non-binding proposal regarding certain merger-related executive compensation arrangements (and vice versa).
Since your vote is advisory, it will not be binding upon CA, the CA board, the CA boards compensation committee or Broadcom. Further, the underlying plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the advisory (non-binding) vote, if the merger is consummated, our named executive officers will be eligible to receive the compensation that is based on or otherwise relates to the merger in accordance with the terms and conditions applicable to those payments.
The CA board believes that the compensation that will or may become payable to our named executive officers in connection with the merger, as described in this proxy statement, is appropriate, and unanimously recommends that you vote FOR approval of the compensation that will or may become payable to our named executive officers in connection with the merger as described in this proxy statement.
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If the merger is consummated, CAs stockholders who do not vote in favor of the adoption of the merger agreement, who properly demand an appraisal of their shares, who continuously hold such shares through the effective time of the merger, who otherwise comply with the procedures of Section 262 of the DGCL (including with respect to certain aggregate ownership requirements) and who do not withdraw their demands or otherwise lose their rights to appraisal will, subject to the conditions thereof, be entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL (Section 262). Unless the context requires otherwise, all references in Section 262 and in this summary to a stockholder or to a holder of shares are to a record holder of CA common stock.
The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, which is attached to this proxy statement as Annex C and incorporated into this proxy statement by reference. The following summary does not constitute any legal or other advice and does not constitute a recommendation that the CA stockholders exercise their appraisal rights under Section 262. Only a holder of record of shares of CA common stock is entitled to demand appraisal of the shares registered in that holders name. A person having a beneficial interest in shares of common stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to demand an appraisal of such holders shares. If you hold your shares of CA common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee to ensure that appraisal rights are exercised. Stockholders should carefully review the full text of Section 262 of the DGCL as well as the information discussed below.
Under Section 262, if the merger is completed, holders of record of shares of CA common stock who (1) submit a written demand for appraisal of such stockholders shares to CA prior to the vote on the adoption of the merger agreement; (2) do not vote in favor of the adoption of the merger agreement; (3) continuously are the record holders of such shares through the effective time of the merger; and (4) otherwise comply with the procedures and satisfy certain ownership thresholds set forth in Section 262 may be entitled to have their shares of CA common stock appraised by the Delaware Court of Chancery and to receive payment in cash of the fair value of the shares of CA common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid on the amount determined to be fair value as determined by the Delaware Court of Chancery. However, after an appraisal petition has been filed, the Delaware Court of Chancery will dismiss appraisal proceedings as to all CA stockholders who asserted appraisal rights unless (a) the total number of shares of CA common stock for which appraisal rights have been pursued and perfected exceeds 1% of the outstanding shares of CA common stock as measured in accordance with subsection (g) of Section 262 or (b) the value of the merger consideration in respect of such shares exceeds $1 million (ownership thresholds). Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the effective time of the merger through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period; provided, however, that if at any time before the Delaware Court of Chancery enters judgment in the appraisal proceeding, the surviving corporation pays to each stockholder entitled to appraisal an amount in cash, interest will accrue after the time of such payment only on the amount that equals the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Court of Chancery and (2) any interest accrued prior to the time of such voluntary payment, unless paid at such time. The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.
Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders of record as of the record date for notice of such meeting that appraisal rights are available and include in the notice a copy of Section 262. This proxy statement constitutes CAs notice to stockholders that appraisal rights are available in
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connection with the merger, and the full text of Section 262 is attached to this proxy statement as Annex C. In connection with the merger, any holder of shares of CA common stock who wishes to exercise appraisal rights, or who wishes to preserve such holders right to do so, should review Annex C carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner may result in the loss of appraisal rights under the DGCL. A stockholder who loses his, her or its appraisal rights will be entitled to receive the merger consideration without interest, less any required tax withholding. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of CA common stock, CA believes that if a stockholder considers exercising such rights, that stockholder should seek the advice of legal counsel.
Stockholders wishing to exercise the right to seek an appraisal of their shares of CA common stock must do ALL of the following:
| the stockholder must not vote in favor of the proposal to adopt the merger agreement; |
| the stockholder must deliver to CA a written demand for appraisal before the vote on the merger agreement at the special meeting; |
| the stockholder must continuously hold the shares from the date of making the demand through the effective time of the merger (a stockholder will lose appraisal rights if the stockholder transfers the shares before the effective time of the merger); and |
| a stockholder (or any person who is the beneficial owner of shares of CA common stock held either in a voting trust or by a nominee on behalf of such person) or the surviving corporation must file a petition in the Delaware Court of Chancery demanding a determination of the value of the stock of all such stockholders within 120 days after the effective time of the merger. The surviving corporation is under no obligation to file any petition and has no intention of doing so. |
In addition, one of the ownership thresholds must be met by the stockholders wishing to exercise the right to seek an appraisal of their shares of CA common stock.
Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement, abstain or not vote his, her or its shares.
Filing Written Demand
A stockholder wishing to exercise appraisal rights must deliver to CA, before the vote on the adoption of the merger agreement at the special meeting at which the proposal to adopt the merger agreement will be submitted to the stockholders, a written demand for the appraisal of such stockholders shares, and that stockholder must not vote, in person or by proxy, in favor of the adoption of the merger agreement. A vote in favor of the adoption of the merger agreement, in person at the special meeting or by proxy (whether by mail or via the Internet or telephone), will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously filed written demands for appraisal. A stockholder exercising appraisal rights must hold the shares of record on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective time of the merger. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, and it will constitute a waiver of the stockholders right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the merger agreement or abstain from voting on the adoption of the merger agreement. Neither voting against the adoption of the merger agreement nor abstaining from voting or failing to vote on the proposal to adopt the merger agreement will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the adoption of the merger agreement. A proxy or vote against the adoption of the merger agreement will not constitute a demand. A stockholders failure to make the written
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demand prior to the taking of the vote on the adoption of the merger agreement at the special meeting will constitute a waiver of appraisal rights.
Only a holder of record of shares of CA common stock is entitled to demand appraisal rights for the shares registered in that holders name. A demand for appraisal in respect of shares of CA common stock should be executed by or on behalf of the holder of record, and must reasonably inform CA of the identity of the holder and state that the stockholder intends thereby to demand an appraisal of such stockholders shares. If the shares are owned of record in a fiduciary or representative capacity, such as by a trustee, guardian or custodian, such demand must be executed by or on behalf of the record owner, and if such shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners.
STOCKHOLDERS WHO HOLD THEIR SHARES IN STREET NAME BY A BROKER, BANK, TRUST OR OTHER NOMINEE AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BANK, BROKER, TRUST OR OTHER NOMINEES, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKER, TRUST OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKER, TRUST OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.
All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:
CA, Inc.
520 Madison Avenue
New York, New York 10022
Attention: Corporate Secretary
At any time within 60 days after the effective date of the merger, any holder of shares of CA common stock may withdraw his, her or its demand for appraisal and accept the merger consideration, without interest, by delivering to CA, as the surviving corporation, a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the effective time of the merger will require written approval of the surviving corporation. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that this shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholders demand for appraisal and to accept the merger consideration within 60 days after the effective time of the merger. If CA, as the surviving corporation, does not approve a request to withdraw a demand for appraisal when that approval is required, or, except with respect to any stockholder who withdraws such stockholders demand in accordance with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding with respect to a stockholder, the stockholder will be entitled to receive only the appraised value determined in any such appraisal proceeding, which value could be less than, equal to or more than the merger consideration being offered pursuant to the merger agreement.
Notice by the Surviving Corporation
If the merger is completed, within ten days after the effective time of the merger, the surviving corporation will notify each record holder of shares of CA common stock who has properly made a written demand for
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appraisal pursuant to Section 262, and who has not voted in favor of the adoption of the merger agreement, that the merger has become effective and the effective date thereof.
Filing a Petition for Appraisal
Within 120 days after the effective time of the merger, but not thereafter, the surviving corporation or any holder of shares of CA common stock who has complied with Section 262 and is entitled to appraisal rights under Section 262 (or the beneficial owner of such shares) may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the surviving corporation in the case of a petition filed by a stockholder, demanding a determination of the fair value of the shares held by all dissenting stockholders entitled to appraisal. The surviving corporation is under no obligation, and has no present intention, to file a petition, and stockholders should not assume that the surviving corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of CA common stock. Accordingly, any holders of shares of CA common stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of CA common stock within the time and in the manner prescribed in Section 262. The failure of a holder of CA common stock to file such a petition within the period specified in Section 262 could nullify the stockholders previous written demand for an appraisal of such stockholders shares.
Within 120 days after the effective time of the merger, any holder of shares of CA common stock who has complied with the requirements for an appraisal of such holders shares pursuant to Section 262 will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in favor of the adoption of the merger agreement and with respect to which CA has received demands for appraisal, and the aggregate number of holders of such shares. The surviving corporation must mail this statement to the requesting stockholder within ten days after receipt by the surviving corporation of the written request for such a statement or within ten days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares of CA common stock held either in a voting trust or by a nominee on behalf of such person may, in such persons own name, file a petition seeking appraisal or request from the surviving corporation the foregoing statements. As noted above, however, the demand for appraisal can only be made by a stockholder of record.
If a petition for an appraisal is duly filed by a holder of shares of CA common stock and a copy thereof is served upon the surviving corporation, the surviving corporation will then be obligated within 20 days after such service to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached. The Delaware Court of Chancery may order that notice of the time and place fixed for the hearing of such petition be given to the surviving corporation, and all of the stockholders shown on the verified list at the addresses stated therein. Any such notice shall also be given by one or more publications at least one week before the day of the hearing in a newspaper of general circulation published in the City of Wilmington, Delaware or any other publication which the Delaware Court of Chancery deems advisable. The costs of any such notice shall be borne by the surviving corporation.
After notice to dissenting stockholders as required by the Court, at the hearing on such petition, the Delaware Court of Chancery will determine the stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded appraisal for their shares to submit their stock certificates, if such shares are represented by certificates, to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to such stockholder.
The Delaware Court of Chancery will dismiss appraisal proceedings as to all CA stockholders who assert appraisal rights unless (a) the total number of shares for which appraisal rights have been pursued and perfected
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exceeds 1% of the outstanding shares of CA common stock as measured in accordance with subsection (g) of Section 262 or (b) the value of the merger consideration in respect of the shares for which appraisal rights have been pursued and perfected exceeds $1 million.
Determination of Fair Value
After the Delaware Court of Chancery determines the holders of CA common stock entitled to appraisal, and that at least one of the ownership thresholds above has been satisfied in respect of the CA stockholders seeking appraisal rights, the appraisal proceeding will be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the fair value of the shares of CA common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court should be considered, and that [f]air price obviously requires consideration of all relevant factors involving the value of a company. The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be exclusive of any element of value arising from the accomplishment or expectation of the merger. In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a narrow exclusion [that] does not encompass known elements of value, but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.
Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. The surviving corporation has the right, at any time prior to the Delaware Court of Chancerys entry of judgment in the proceedings, to make a voluntary cash payment to each stockholder seeking appraisal. If the surviving corporation makes a voluntary cash payment pursuant to subsection (h) of Section 262, interest will accrue thereafter only on the sum of (i) the difference, if any, between the amount paid by the surviving corporation in such voluntary cash payment and the fair value of the shares as determined by the Delaware Court of Chancery and (ii) interest accrued before such voluntary cash payment, unless paid at such time.
Stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and may not in any manner address, fair value under Section 262. Although CA believes that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration. Neither CA nor Broadcom anticipates offering more than the merger consideration to any stockholder exercising appraisal rights, and each of CA and Broadcom reserves the right to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262, the fair value of a share of CA common stock is less than the merger consideration. If a petition for appraisal is not timely filed, or if neither of the ownership thresholds above has been satisfied in
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respect of the CA stockholders seeking appraisal rights, then the right to an appraisal will cease. The costs of the appraisal proceedings (which do not include attorneys fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a stockholder, the Delaware Court of Chancery may also order that all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to an appraisal. In the absence of such determination or assessment, each party bears its own expenses.
If any stockholder who demands appraisal of his, her or its shares of CA common stock under Section 262 fails to perfect, or loses or validly withdraws, such holders right to appraisal, the stockholders shares of CA common stock will be deemed to have been converted at the effective time of the merger into the right to receive the merger consideration as provided in the merger agreement. A stockholder will fail to perfect, or effectively lose such holders right to appraisal if no petition for appraisal is filed within 120 days after the effective time of the merger, if neither of the ownership thresholds above has been satisfied in respect of the CA stockholders seeking appraisal rights or if the stockholder delivers to the surviving corporation a written withdrawal of such holders demand for appraisal and an acceptance of the merger consideration as provided in the merger agreement in accordance with Section 262.
From and after the effective time of the merger, no stockholder who has demanded appraisal rights in compliance with Section 262 will be entitled to vote such shares of CA common stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger); provided, however, that if no petition for an appraisal is filed within the time provided in Section 262, if neither of the ownership thresholds above has been satisfied in respect of the CA stockholders seeking appraisal rights or if such stockholder delivers to the surviving corporation a written withdrawal of such stockholders demand for an appraisal and an acceptance of the merger, either within 60 days after the effective date of the merger or thereafter with the written approval of the surviving corporation, then the right of such stockholder to an appraisal will cease. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however, that the foregoing shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger within 60 days after the effective date of the merger.
Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of a stockholders statutory appraisal rights. In that event, you will be entitled to receive the merger consideration for your dissenting shares in accordance with the merger agreement, without interest. Consequently, any stockholder wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.
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DELISTING AND DEREGISTRATION OF CA COMMON STOCK
If the merger is completed, CA common stock will be delisted from NASDAQ and deregistered under the Exchange Act. This will make certain provisions of the Exchange Act, such as the requirement of furnishing a proxy in connection with shareholder meetings, no longer applicable to CA.
CONDUCT OF OUR BUSINESS IF THE MERGER IS NOT COMPLETED
In the event that the merger agreement is not adopted by our stockholders or if the merger is not completed for any other reason, our stockholders would not receive any consideration from Broadcom or Merger Sub for their shares of CA common stock. Instead, we would remain an independent public company, CA common stock would continue to be listed and traded on NASDAQ, we would continue to file periodic reports with the SEC, and our stockholders would continue to be subject to the same risks and opportunities as they currently are subject to with respect to their ownership of CA common stock. If the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of our common stock, including the risk that the market price of CA common stock may decline to the extent that the current market price of our common stock reflects a market assumption that the merger will be completed. If the merger is not completed, our business could be disrupted, including our ability to retain and hire key personnel, potential adverse reactions or changes to our business relationships and uncertainty surrounding our future plans and prospects.
Pursuant to the merger agreement, under certain circumstances, we are permitted to terminate the merger agreement and to accept a superior offer. See the section of this proxy statement entitled The Merger Agreement Termination of the Merger Agreement beginning on page 77.
Pursuant to the merger agreement, under certain circumstances, if the merger is not completed, we may be obligated to pay Broadcom a $566 million termination fee. See the section of this proxy statement entitled the Merger Agreement Termination Fee and Expenses beginning on page 78.
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Other Matters for Action at the Special Meeting
As of the date of this proxy statement, the CA board knows of no other matters that will be presented for consideration at the special meeting other than as described in this proxy statement.
We will be holding our scheduled annual meeting on August 8, 2018 at 10:00 AM Eastern time. Pursuant to Rule 14a-8 under the Exchange Act, stockholder proposals that would have been eligible for inclusion in our 2018 proxy statement relating to the annual meeting must have submitted, along with proof of ownership of our stock in accordance with Rule 14a-8(b)(2), to our principal executive offices, in care of our Corporate Secretary. Failure to deliver a proposal by one of these means may result in it not being deemed timely received. In order to be included in our proxy materials for our 2018 annual meeting, we must have received stockholder proposals prepared in accordance with the proxy rules on or before February 22, 2018. Once the merger is consummated, we will no longer have public stockholders and there will be no public participation in any future meetings of CA stockholders.
Under our bylaws, director nominations and other business may be brought at the annual meeting only by or at the direction of the CA board or by a stockholder entitled to vote who has delivered notice to us containing certain information specified in the bylaws (1) not less than 90 days nor more than 120 days prior to the anniversary date of the preceding years annual meeting, or (2) if the meeting date is changed by more than 30 days from such anniversary date, not later than the close of business on the tenth day following the date that notice of such meeting is mailed or made public, whichever is earlier. Accordingly, the notice for nominating directors at, or bringing other business before, the 2018 annual meeting must have been submitted no earlier than April 11, 2018 and no later than May 11, 2018 (unless the date of the meeting is changed by more than 30 days). A copy of the full text of the bylaws provisions discussed above may be obtained by writing to the Corporate Secretary at CA, Inc., 520 Madison Avenue, New York, New York 10022. If the stockholder does not also comply with the requirements of Rule 14a-4 under the Exchange Act, we may exercise discretionary voting authority under proxies we solicit to vote in accordance with our best judgment on any such nomination or other business submitted by a stockholder
Our bylaws require that certain information, acknowledgments, representations and/or undertakings with respect to the proposal or the nominee, as applicable, and the stockholder making the proposal or the nomination be set forth in or provided with the notice. You can obtain a copy of the full text of the bylaw provisions by writing to writing to the Corporate Secretary at CA, Inc., 520 Madison Avenue, New York, New York 10022. Our bylaws have been publicly filed with the SEC.
If a stockholder fails to meet these deadlines and fails to satisfy the requirements of Rule 14a-4 under the Exchange Act, CA may exercise discretionary voting authority under proxies it solicits to vote on any such proposal as it determines appropriate. Further, CA reserves the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above and other applicable requirements.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public at the SEC website at www.sec.gov. You also may obtain free copies of the documents we file with the SEC, including this proxy statement, by going to the Investor Relations page of our corporate website at https://investor.ca.com/. Our website address is provided as an inactive textual reference only. The information provided on our website, other than copies of the documents listed below that have been filed with the SEC, is not part of this proxy statement, and therefore is not incorporated herein by reference.
Statements contained in this proxy statement, or in any document incorporated by reference in this proxy statement, regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC. The SEC allows us to incorporate by reference into this proxy statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this proxy statement, and later information that we file with the SEC will update and supersede that information. We incorporate by reference the documents listed below and any documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement and before the date of the special meeting.
| Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (filed with the SEC on May 9, 2018); |
| Current Report on Form 8-K filed with the SEC on July 12, 2018; |
| Definitive Proxy Statement for our 2018 Annual Meeting filed with the SEC on June 29, 2018; and |
| Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (filed with the SEC on August 7, 2018). |
Information furnished under Item 2.02 or Item 7.01 of any Current Report on Form 8-K, including related exhibits, is not and will not be incorporated by reference into this proxy statement.
Any person, including any beneficial owner of CA common stock, to whom this proxy statement is delivered may request copies of proxy statements and any of the documents incorporated by reference in this document or other information concerning us, without charge, by written request directed to the Attn: Investor Relations Department, 520 Madison Avenue, New York, New York 10022 or from our proxy solicitor, MacKenzie Partners, Inc., at 1407 Broadway, New York, NY 10018, or from the SEC through the SEC website at the address provided above. Documents incorporated by reference are available without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into those documents.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES OF CA COMMON STOCK AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED AUGUST 10, 2018. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | A-43 | |||||
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ARTICLE VIII CONDITIONS TO CONSUMMATION OF THE MERGER | A-66 | |||||
Section 8.1. |
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Section 8.2. |
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Section 8.3. |
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ARTICLE IX TERMINATION | A-68 | |||||
Section 9.1. |
Termination | A-68 | ||||
Section 9.2. |
Effect of Termination | A-69 | ||||
ARTICLE X MISCELLANEOUS | A-70 | |||||
Section 10.1. |
Amendment and Modification; Waiver | A-70 | ||||
Section 10.2. |
Non-Survival of Representations and Warranties | A-71 | ||||
Section 10.3. |
Expenses | A-71 | ||||
Section 10.4. |
Notices | A-71 | ||||
Section 10.5. |
Interpretation | A-72 |
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Section 10.6. |
Counterparts | A-72 | ||||
Section 10.7. |
Entire Agreement; Third-Party Beneficiaries | A-72 | ||||
Section 10.8. |
Severability | A-72 | ||||
Section 10.9. |
Governing Law; Jurisdiction | A-73 | ||||
Section 10.10. |
Waiver of Jury Trial | A-73 | ||||
Section 10.11. |
Assignment | A-73 | ||||
Section 10.12. |
Enforcement; Remedies | A-73 | ||||
Section 10.13. |
Certain Financing Provisions | A-74 |
Annex A | Form of Voting Agreement | |||
Annex B | Form of Promissory Note |
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this Agreement), dated as of July 11, 2018, is by and among Broadcom Inc., a Delaware corporation (Parent), Collie Acquisition Corp., a Delaware corporation and a wholly owned direct or indirect subsidiary of Parent (Merger Sub), and CA, Inc., a Delaware corporation (the Company). All capitalized terms used in this Agreement shall have the meanings ascribed to such terms in Article I or as otherwise defined elsewhere in this Agreement, unless the context clearly provides otherwise. Parent, Merger Sub and the Company are each sometimes referred to herein as a Party and collectively, as the Parties.
RECITALS
WHEREAS, it is proposed that the Parties effect the acquisition of the Company by Parent through the merger of Merger Sub with and into the Company, with the Company being the surviving entity (the Merger);
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition to the willingness of Parent and Merger Sub to enter into this Agreement, certain Persons are entering into a Voting Agreement with Parent and Merger Sub, in the form attached as Annex A hereto (the Voting Agreement);
WHEREAS, in connection with the Merger, each share of common stock, $0.10 par value per share, of the Company (Company Common Stock) issued and outstanding immediately prior to the Effective Time (other than any Remaining Shares, Converted Shares, Dissenting Shares or Company Restricted Shares) shall be automatically converted into the right to receive the Merger Consideration upon the terms and conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the DGCL);
WHEREAS, the board of directors of the Company (the Company Board of Directors) unanimously (i) determined that the terms of this Agreement and the transactions contemplated hereby (the Transactions), including the Merger, are fair to, and in the best interests of, the Company and its stockholders (the Company Stockholders), (ii) determined that it is in the best interests of the Company and the Company Stockholders and declared it advisable to enter into this Agreement, (iii) approved the execution and delivery by the Company of this Agreement, the performance by the Company of its covenants and agreements contained herein and the consummation of the Merger and the other Transactions upon the terms and subject to the conditions contained herein and (iv) resolved to recommend that the Company Stockholders vote to adopt this Agreement (the Company Board Recommendation);
WHEREAS, the board of directors of each of Parent and Merger Sub, and the sole stockholder of Merger Sub, have approved this Agreement and determined that this Agreement and the Transactions, including the Merger, are advisable and fair to, and in the best interests of, Parent and Merger Sub and their respective stockholder(s); and
WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also prescribe various terms of and conditions to the Merger.
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NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:
CERTAIN DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the term:
Acceptable Confidentiality Agreement means a confidentiality agreement entered into after the date hereof that contains terms that (i) are no less favorable in the aggregate to the Company than those contained in the Confidentiality Agreement (it being understood that such confidentiality agreement need not contain a standstill provision) and (ii) do not in any way restrict the Company or its Representatives from complying with its disclosure obligations under this Agreement.
Acquisition Proposal means any offer, proposal or indication of interest from a Person (as such term is used in Section 6.3) (other than a proposal or offer by Parent or any Parent Subsidiary) at any time relating to any transaction or series of related transactions (other than the Transactions) involving: (a) any acquisition or purchase by any Person, directly or indirectly, of more than fifteen percent (15%) of any class of outstanding voting or equity securities of the Company (whether by voting power or number of shares), or any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in any Person beneficially owning more than fifteen percent (15%) of any class of outstanding voting or equity securities of the Company (whether by voting power or number of shares), (b) any merger, consolidation, share exchange, business combination, joint venture, recapitalization, reorganization or other similar transaction involving the Company and a Person pursuant to which the stockholders of the Company immediately preceding such transaction hold less than eighty-five percent (85%) of the equity interests in the surviving or resulting entity of such transaction (whether by voting power or number of shares) or (c) any sale, lease, exchange, transfer or other disposition to a Person of more than fifteen percent (15%) of the consolidated assets of the Company and the Company Subsidiaries (measured by the fair market value thereof).
Anti-Corruption Law means any Law related to combating bribery and corruption, including the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions, the UN Convention Against Corruption and any implementing legislation promulgated pursuant to such Conventions, the Foreign Corrupt Practices Act of 1977 and the UK Bribery Act 2010.
Antitrust Laws means any applicable supranational, national, federal, state, county, local or foreign antitrust, competition or trade regulation Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition, including the HSR Act, the Sherman Act, the Clayton Act and the Federal Trade Commission Act, in each case, as amended, and other similar laws regulating antitrust, competition or restraint of trade of any jurisdiction other than the United States.
business days means any day, other than a Saturday, Sunday and any day which is a legal holiday under the Laws of the State of California or New York or is a day on which banking institutions located in such States are authorized or required by applicable Law or other governmental action to close.
Code means the Internal Revenue Code of 1986, as amended.
Company Benefit Plan means each employee benefit plan (as defined in Section 3(3) of ERISA), whether or not subject to ERISA, and each bonus, stock, stock option or other equity-based compensation
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arrangement or plan, incentive, deferred compensation, retirement or supplemental retirement, severance, employment, change-in-control, retention, collective bargaining, profit sharing, pension, vacation, cafeteria, dependent care, medical care, employee assistance program, education or tuition assistance programs, and each insurance and other similar fringe or employee benefit plan, program or arrangement, in each case, for the benefit of current employees, directors or consultants (or any dependent or beneficiary thereof) of the Company or any Company Subsidiary or any of their ERISA Affiliates or with respect to which the Company or any Company Subsidiary has or may have any obligation or liability (whether actual or contingent).
Company Bylaws means the bylaws of the Company as in effect on the date hereof.
Company Certificate means the Restated Certificate of Incorporation of the Company as in effect on the date hereof.
Company Credit Agreements means each of the Company Revolving Credit Agreement and the Company Term Loan Agreement.
Company DSU Award means each deferred stock unit award covering shares of Company Common Stock and granted by the Company.
Company Equity Awards means the Company Options, Company DSU Awards, Company PSU Awards, Company RSU Awards and Company RS Awards.
Company Equity Plans means the Companys (i) 2002 Incentive Plan, (ii) 2007 Incentive Plan, (iii) 2011 Incentive Plan, (iv) 2003 Compensation Plan for Non-Employee Directors, and (v) 2012 Compensation Plan for Non-Employee Directors.
Company ESPP means the Companys 2012 Employee Stock Purchase Plan.
Company Governing Documents means the Company Bylaws and the Company Certificate.
Company Government Bid means any quotation, offer, bid or proposal made by the Company that, if accepted, would result in a Company Government Contract.
Company Government Contract means a Contract between the Company or a Company Subsidiary and any Governmental Entity, any prime contractor of a Governmental Entity in its capacity as a prime contractor or any higher-tier subcontractor with respect to any such Contract.
Company Intellectual Property means all Company Intellectual Property Rights and Company Technology.
Company Intellectual Property Rights means all Intellectual Property Rights owned by (or claimed to be owned by), filed in the name of or exclusively licensed to the Company or any Company Subsidiary.
Company Material Adverse Effect means any Effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the financial condition, business, assets, liabilities or results of operations of the Company and the Company Subsidiaries, taken as a whole; provided, however, that no Effects to the extent resulting or arising from the following shall be deemed to constitute a Company Material Adverse Effect or shall be taken into account when determining whether a Company Material Adverse Effect exists or has occurred or is reasonably expected to exist or occur: (a) any changes in general United States or global economic conditions, including any changes affecting financial, credit, foreign exchange or capital market conditions, (b) any changes in general conditions in any industry or industries in which the Company and the Company Subsidiaries operate, (c) any changes in general political conditions, (d) any changes
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after the date hereof in GAAP or any other accounting standards or principles or the interpretation of the foregoing, (e) any changes after the date hereof in applicable Law or the interpretation thereof, (f) any failure by the Company to meet any internal or published projections, estimates or expectations of the Companys revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by the Company to meet its internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (it being understood that the facts or occurrences giving rise or contributing to such failure that are not otherwise excluded from this definition of a Company Material Adverse Effect may be taken into account for the purpose of determining whether a Company Material Adverse Effect exists or has occurred or is reasonably expected to exist or occur), (g) any changes in geopolitical conditions, acts of terrorism or sabotage, war (whether or not declared), the commencement, continuation or escalation of a war, acts of armed hostility, weather conditions, natural disasters or other force majeure events, including any material worsening of such conditions threatened or existing as of the date hereof, (h) the execution and delivery of this Agreement or the consummation of the Transactions, or the public announcement of this Agreement or the Transactions, including any litigation arising out of or relating to this Agreement or the Transactions, the identity of Parent, departures of officers or employees, changes in relationships with suppliers or customers or other business relations, in each case only to the extent resulting from the execution and delivery of this Agreement or the consummation of the Transactions, or the public announcement of this Agreement or the Transactions (provided that this clause (h) shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address the consequences resulting from the execution and delivery of this Agreement or the consummation of the Transactions or to address the consequences of litigation), (i) any action or failure to take any action which action or failure to act is requested in writing by Parent or any action expressly required by, or the failure to take any action expressly prohibited by, the terms of this Agreement (other than Section 6.1(a)), (j) any change in the price or trading volume of shares of Company Common Stock or any other publicly traded securities of the Company or any Company Subsidiary in and of itself (it being understood and agreed that the facts and circumstances giving rise to such change that are not otherwise excluded from the definition of a Company Material Adverse Effect may be taken into account for the purpose of determining whether a Company Material Adverse Effect exists or has occurred or is reasonably expected to exist or occur), and (k) any reduction in the credit rating of the Company or any of the Company Subsidiaries in and of itself (it being understood and agreed that the facts and circumstances giving rise to such reduction that are not otherwise excluded from the definition of a Company Material Adverse Effect may be taken into account for the purpose of determining whether a Company Material Adverse Effect exists or has occurred or is reasonably expected to exist or occur); provided that with respect to the exceptions set forth in clauses (a), (b), (c), (d), (e) and (g), if such Effect has had a disproportionate adverse impact on the Company or any Company Subsidiary relative to other companies operating in the industry or industries in which the Company and the Company Subsidiaries operate, then the incremental disproportionate adverse impact of such Effect shall be taken into account for the purpose of determining whether a Company Material Adverse Effect exists or has occurred or is reasonably expected to exist or occur.
Company Option means each option to purchase Company Common Stock granted by the Company that is outstanding and unexercised immediately prior to the Effective Time.
Company Products means any and all products and services, including Software as a service (SaaS), that are or have been in the two (2) years prior to the date of this Agreement marketed, offered, sold, licensed, provided or distributed by the Company or any Company Subsidiary.
Company PSU Award means each performance share or performance share unit award covering shares of Company Common Stock and granted by the Company.
Company Registered Intellectual Property means Registered Intellectual Property filed in the name of, applied for by or subject to a valid obligation of assignment to the Company or any Company Subsidiary, whether wholly or jointly owned (or claimed to be owned).
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Company Restricted Shares means the restricted shares of Company Common Stock underlying any Company RS Award.
Company Revolving Credit Agreement means that certain Amended and Restated Credit Agreement, dated June 27, 2017, among the Company, the lenders and other parties from time to time party thereto, and Citibank, N.A., as administrative agent.
Company RS Award means each award of restricted shares of Company Common Stock granted by the Company.
Company RSU Award means each restricted stock unit award covering shares of Company Common Stock and granted by the Company.
Company Subsidiaries means the Subsidiaries of the Company.
Company Technology means all Technology in respect of which the Intellectual Property Rights are Company Intellectual Property Rights.
Company Term Loan Agreement means that certain Amended and Restated Term Loan Agreement, dated as of April 20, 2018, among the Company, the lenders and other parties from time to time party thereto, and Bank of America, N.A., as administrative agent.
Confidentiality Agreement means the Confidentiality Agreement, dated May 8, 2018, between Parent and the Company, as may be amended.
Contract means any written or oral agreement, contract, subcontract, settlement agreement, lease, sublease, instrument, permit, concession, franchise, binding understanding, note, option, bond, mortgage, indenture, trust document, loan or credit agreement, license, sublicense, insurance policy or other legally binding commitment or undertaking of any nature.
Controlled Group Liability means any and all liabilities (i) under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, (iv) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, and (v) under corresponding or similar provisions of foreign laws or regulations, other than such liabilities that arise solely out of, or relate solely to, plans directly sponsored by the Company and the Company Subsidiaries.
Effect means any change, effect, development, circumstance, condition, fact, state of facts, event or occurrence.
Environmental Law means any and all applicable Laws which (a) regulate or relate to the protection or clean-up of the environment; the use, treatment, storage, transportation, handling, disposal or release of Hazardous Substances, the preservation or protection of waterways, groundwater, drinking water, air, wildlife, plants or other natural resources, or the protection of public or occupational health and safety (as it relates to exposure to Hazardous Substances) or (b) impose liability or responsibility with respect to any of the foregoing, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), or any other Law of similar effect.
Equity Award Exchange Ratio means the quotient obtained by dividing (i) the Merger Consideration by (ii) the Parent Trading Price, rounded to four (4) decimal places.
ERISA means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated and rulings issued thereunder.
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ERISA Affiliate means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same controlled group as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
Exchange Act means the United States Securities Exchange Act of 1934, as amended.
Export Controls means all applicable export and re-export control Laws and regulations, including the Export Administration Regulations maintained by the U.S. Department of Commerce, trade and economic sanctions maintained by OFAC and the International Traffic in Arms Regulations maintained by the U.S. Department of State and any applicable anti-boycott compliance regulations.
Financing Entities shall have the meaning set forth in the definition of Financing Parties.
Financing Parties means the entities that have committed to provide or arrange or otherwise entered into agreements in connection with the Financing, or to purchase securities from or place securities or arrange or provide loans for Parent as part of the Financing, including the parties to any applicable commitment letter, engagement letter, joinder agreements, indentures or credit agreements relating thereto (the Financing Entities) and their respective affiliates and their and their respective affiliates officers, directors, employees, agents and Representatives and their respective successors and assigns; provided that neither Parent nor any affiliate of Parent shall be a Financing Party.
GDPR means Regulation (EU) 2016/679 (General Data Protection Regulation) of the European Parliament and of the Council on the protection of natural persons with regard to the processing of personal data and on the free movement of such data as currently in effect and as may be amended from time to time.
Governmental Entity means (a) any supranational, national, federal, state, county, municipal, local, or foreign government or any entity exercising executive, legislative, judicial, regulatory, taxing, or administrative functions of or pertaining to government, (b) any public international governmental organization or (c) any agency, division, bureau, department, committee, or other political subdivision of any government, entity or organization described in the foregoing clauses (a) or (b) of this definition (including patent and trademark offices and self-regulatory organizations).
Hazardous Substances means any pollutant, chemical, substance and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical, chemical compound, hazardous substance, material or waste, whether solid, liquid or gas, that is subject to regulation, control or remediation under any Environmental Laws, including any quantity of petroleum product or byproduct, solvent, flammable or explosive material, radioactive material, asbestos, lead paint, polychlorinated biphenyls (or PCBs), dioxins, dibenzofurans, heavy metals, radon gas, mold, mold spores and mycotoxins.
HIPAA shall have the meaning set forth in the definition of Information Privacy and Security Laws.
HSR Act means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Import Restrictions means all applicable U.S. and foreign import Laws, including Title 19 of the U.S. Code and Title 19 of the Code of Federal Regulations.
Indebtedness means, with respect to any Person, at a particular time, without duplication, (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes or similar instruments, (c) all Indebtedness of others secured by any Lien on owned or acquired property, whether or not the Indebtedness secured thereby has been assumed, (d) all guarantees (or any other arrangement having the economic effect of a guarantee) of Indebtedness of others, (e) all capital lease obligations and all synthetic lease
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obligations, (f) all obligations, contingent or otherwise, of such Person as an account party in respect of financial guaranties, letters of credit, letters of guaranty, surety bonds and other similar instruments, (g) all securitization transactions, (h) all obligations representing the deferred and unpaid purchase price of property (other than trade payables incurred in the ordinary course of business), (i) all obligations, contingent or otherwise, in respect of bankers acceptances and (j) net cash payment obligations of such Person under swaps, options, derivatives and other hedging agreements or arrangements that will be payable upon termination thereof (assuming they were terminated on the date of determination).
Information Privacy and Security Laws means any applicable Law or directive issued by a Governmental Entity, all binding guidance issued by any Governmental Entity thereunder and any applicable self-regulatory guidelines that the Company or a Company Subsidiary is obligated to comply with under any Law or Contract, in each case governing: (a) the privacy, protection, or security of Protected Information, including as relevant to the collection, storage, processing, transfer, sharing and destruction of Protected Information or (b) online behavioral advertising, tracking technologies, call or electronic monitoring or recording, or any outbound calling and text messaging, telemarketing and email marketing. Without limiting the foregoing, Information Privacy and Security Laws includes the following, in each case as applicable: the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, the Childrens Online Privacy Protection Act, the Computer Fraud and Abuse Act, the Electronic Communications Privacy Act, the Fair Credit Reporting Act, PCI DSS, the Fair and Accurate Credit Reporting Act, the Health Insurance Portability and Accountability Act of 1996, as amended and supplemented by the Health Information Technology for Economic and Clinical Health Act of the American Recovery and Reinvestment Act of 2009 (together, HIPAA), the Gramm-Leach-Bliley Act, state data security laws, state social security number protection laws, state data breach notification laws, state consumer protection laws, the GDPR (and any European Union member states laws and regulations implementing it), the Canadian Personal Information Protection and Electronic Documents Act, Indias Information Technology Act, Japans Act on the Protection of Personal Information, Hong Kongs Personal Data (Privacy) Ordinance, and Australias Privacy Amendment (Private Sector) Act 2000, as amended by the Privacy Amendment (Enhancing Privacy Protection) Act 2012, and other applicable data protection laws of the jurisdictions in which the Company or the Company Subsidiaries operate their respective businesses.
Intellectual Property means Technology and Intellectual Property Rights.
Intellectual Property Rights means any or all of the following and all statutory and/or common law rights throughout the world in, arising out of, or associated therewith: (i) all United States and foreign patents and utility models and applications therefor and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations in part thereof, and equivalent or similar rights anywhere in the world in inventions and discoveries including without limitation invention disclosures (Patents); (ii) all trade secret rights and other rights in know-how and confidential or proprietary information or in information that derives independent economic value, actual or potential, from not being known to other Persons (Trade Secrets); (iii) all copyrights, copyright registrations and applications therefor and all other rights corresponding thereto throughout the world (Copyrights); (iv) all industrial designs and any registrations and applications therefor throughout the world; (v) mask works, mask work registrations and applications therefor, and all other rights corresponding thereto throughout the world; (vi) all rights in World Wide Web addresses and domain names and applications and registrations therefor; (vii) all Trademarks; and (viii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.
Knowledge means, as the case may be, the actual knowledge of (a) Hock Tan and/or Thomas H. Krause, Jr. with respect to Parent or Merger Sub or (b) Mike Gregoire, Kieran McGrath, Otto Berkes, Ava Hahn, Jacob Lamm, Paul Pronsati, and/or Ayman Sayed with respect to the Company, in each case after reasonable inquiry.
Law means any law (including common law), statute, requirement, code, rule, regulation, order, ordinance, judgment or decree or other pronouncement of any Governmental Entity.
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Lien means any lien, pledge, hypothecation, mortgage, deed of trust, security interest, encumbrance, covenant, charge, claim, option, right of first refusal, easement, right of way, encroachment, occupancy right, preemptive right, community property interest or restriction of any similar nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, or any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset), whether voluntarily incurred or arising by operation of Law, but excluding restrictions on transfer arising under applicable securities laws.
Multiemployer Plan means any multiemployer plan within the meaning of Section 3(37) of ERISA or any plan that has two (2) or more contributing sponsors at least two (2) of whom are not under common control within the meaning of Section 4063 of ERISA.
NASDAQ means the NASDAQ Global Select Market.
Non-Scheduled Licenses means: (a) Contracts with customers and potential customers for the evaluation, sale, license, support or service of Company Products in the ordinary course of business consistent with past practice (other than Material Customer Agreements, Material Supplier Agreements or Material Reseller Agreements), where the only licenses or other rights granted by the Company or its Subsidiaries are non-exclusive rights granted in connection with the customers use of the Company Products, (b) standard form Contracts granting the Company or a Company Subsidiary non-exclusive rights to use off-the-shelf Technology made generally available on commercially reasonable terms (including Technology made generally available on commercially reasonable terms on a SaaS, PaaS, or IaaS or similar basis, Software made generally available on commercially reasonable terms through retail stores or distribution networks, and Software that is pre-installed as a standard part of hardware purchased by the Company or any Company Subsidiary, where such hardware is generally available on commercially reasonable terms), (c) Open Source Licenses, (d) confidentiality agreements (where the only licenses or other rights granted by the Company or its Subsidiaries are non-exclusive rights granted in connection with the examination and evaluation of confidential information) entered into in the ordinary course of business consistent with past practice, (e) Contracts with consultants, contractors or vendors where the only licenses or other rights granted by the Company or its Subsidiaries are non-exclusive rights granted for the purpose of the counterpartys provision of products or services to the Company or its Subsidiaries and that are customary for the product or service provided, (f) Contracts with Parent or a Parent Subsidiary as a counterparty, (g) intellectual property assignment and confidentiality agreements with employees substantially in the form of the Companys or its Subsidiaries then-current form of agreement, and (h) agreements with suppliers (other than Material Supplier Agreements) and agreements with systems integrators or value-added resellers (other than Material Reseller Agreements), in each case of this clause (h) that (i) are entered into in the ordinary course of business consistent with past practice and (ii) are not material to the conduct of the business of the Company and the Company Subsidiaries, taken as a whole.
Open Source License means any license that is approved by the Open Source Initiative and listed at http://www.opensource.org/licenses, and any similar license for free, publicly available or open source software, including the GNU General Public License, the Lesser GNU General Public License, the Apache License, the BSD License, Mozilla Public License (MPL), the MIT License or any other license that includes similar terms.
Open Source Software means any Software that is subject to or licensed, provided, or distributed under any Open Source License.
Parent Common Stock means common stock, par value $0.001 per share, of Parent.
Parent Subsidiaries means the Subsidiaries of Parent.
Parent Trading Price means the volume weighted average closing sale price of one (1) share of Parent Common Stock, as reported on NASDAQ for the ten (10) consecutive trading days ending on the trading day immediately preceding the Effective Time (as adjusted as appropriate to reflect any stock splits, stock dividends, combinations, reorganizations, reclassifications or similar events).
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PCI DSS means the Payment Card Industry Data Security Standard, issued by the Payment Card Industry Security Standards Council, as revised from time to time.
Permitted Liens means any (i) Lien for Taxes or governmental assessments, charges or claims of payment not yet delinquent or that is being contested in good faith by appropriate proceedings, (ii) Lien which is a carriers, warehousemens, mechanics, materialmens, repairmens or other similar Lien arising in the ordinary course of business consistent with past practice, (iii) Lien that is specifically disclosed in the Company SEC Documents as of the date hereof as securing indebtedness or liabilities reflected in the most recent consolidated balance sheet of the Company or the notes thereto included in Company SEC Documents as of the date hereof, (iv) Lien which is a statutory or common law Lien to secure landlords, lessors or renters under leases or rental agreements, (v) Lien which is imposed on the underlying fee or other interest in real property subject to a real property lease, (vi) Lien that arises as a result of a non-exclusive license or other non-exclusive grant of rights in the ordinary course of business consistent with past practice under Intellectual Property Rights, or (vii) with respect to real property, any irregularities, zoning and land use covenants and conditions, easements, rights-of-way, non-monetary encumbrances and minor title defects, in each case, that would not, individually or in the aggregate, reasonably be expected to materially impair the operation of the Companys business at such real property, as presently conducted, or materially detract from the value of the real property.
Person means a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Entity or other entity or organization.
Personal Data means any and all information that can reasonably be used to identify an individual natural person, or that relates to an identified person, including name, physical address, telephone number, email address, financial account number, passwords or PINs, device identifier or unique identification number, government-issued identifier (including Social Security number and drivers license number), medical, health or insurance information, gender, date of birth, educational or employment information, religious or political views or affiliations and marital or other status (to the extent any of these data elements can reasonably be associated with an individual natural person or is linked to any such data element that can reasonably be associated with an individual natural person). Personal Data also includes any information not listed above if such information is defined as personal data, personally identifiable information, individually identifiable health information, protected health information or personal information under any applicable Law and is regulated by such Law.
Privacy Statements means, collectively, all of the Companys and the Company Subsidiaries publicly posted privacy policies (including if posted on the Companys or the Company Subsidiaries products and services) regarding the collection, use, disclosure, transfer, storage, maintenance, retention, deletion, disposal, modification or processing of Protected Information.
Proceedings means all actions, suits, claims, hearings, arbitrations, litigations, mediations, grievances, audits, investigations, examinations or other proceedings, in each case, by or before any Governmental Entity.
Protected Information means (a) Personal Data, (b) any information that is governed, regulated or protected by one or more Information Privacy and Security Laws, or (c) any information that is covered by the PCI DSS.
Registered Intellectual Property means all applications, registrations and filings for Intellectual Property Rights that have been registered, filed, certified or otherwise perfected or recorded with or by any state, government or other public or quasi-public legal authority anywhere in the world, including the USPTO or United States Copyright Office, including issued Patents and Patent applications, registered Trademarks and Trademark applications, registered Copyrights and Copyright applications, and domain name registrations and applications.
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Representatives means, when used with respect to any Person, the directors, officers, employees, consultants, financial advisors, accountants, legal counsel, investment bankers and other agents, advisors and representatives of such Person and its Subsidiaries.
Repurchase Agreement means the Share Repurchase Agreement, dated as of November 17, 2015, between the Company and Careal Property Group AG (formerly known as Careal Holding AG).
Rights Agreement means the Stockholder Protection Rights Agreement, dated as of November 30, 2015, between the Company and Computershare Trust Company, N.A., as Rights Agent.
SEC means the United States Securities and Exchange Commission.
Securities Act means the United States Securities Act of 1933, as amended.
Software means any and all computer programs, including any and all software implementations of algorithms, models and methodologies, whether in Source Code, object code or other form.
Source Code means computer Software, in form other than object code or machine readable form, including related programmer comments and annotations, help text, data and data structures, instructions and procedural, object-oriented and other code comprising such Software, in each case, which may be printed out or displayed in human readable form.
Subsidiary means with respect to any Person, any corporation, limited liability company, partnership or other organization, whether incorporated or unincorporated, of which (a) at least a majority of the outstanding shares of capital stock of, or other equity interests, having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation, limited liability company, partnership or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, or (b) with respect to a partnership, such Person or any other Subsidiary of such Person is a general partner of such partnership.
Superior Proposal means a bona fide, written Acquisition Proposal (with references in the definition thereof to fifteen percent (15%) and eighty-five percent (85%) being deemed to be replaced with references to eighty percent (80%) and twenty percent (20%), respectively) by a third party, which the Company Board of Directors determines in good faith after consultation with the Companys outside legal and financial advisors to be more favorable to the Company Stockholders from a financial point of view than the Merger, taking into account all relevant factors (including all the terms and conditions of such proposal or offer (including the transaction consideration, conditionality, timing, certainty of financing and/or regulatory approvals and likelihood of consummation) and this Agreement (and any changes to the terms of this Agreement proposed by Parent pursuant to Section 6.3)).
Takeover Statute means any business combination, control share acquisition, fair price, moratorium or other takeover or anti-takeover statute or similar Law, including Section 203 of the DGCL.
Tax or Taxes means any and all U.S. federal, state, local and non-U.S. taxes, customs, assessments, levies, duties, tariffs, imposts and other similar charges and fees imposed by any Governmental Entity, including, without limitation, any income (whether on or based upon net income, gross income, earnings or profits, or otherwise), franchise, excess, windfall or other profits, inventory, gross receipts, capital gains, net proceeds, property, sales, use, business, net worth, goods and services, capital stock, wealth, welfare, license, fuel, natural resources, production, payroll, employment, social security, workers compensation, unemployment compensation, excise, occupancy, severance, gift, estate, recording, non-resident or other withholding, ad valorem, turnover, lease, user, stamp, transfer, value-added, occupation, premium, environmental, disability, real
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property, personal property, registration, alternative or add-on minimum, base erosion minimum, or estimated tax, including any interest, penalty, additions to tax and any additional amounts imposed with respect thereto, whether disputed or not.
Tax Return means any report, return, certificate, claim for refund, election, estimated Tax filing or declaration filed or required to be filed with any Governmental Entity with respect to Taxes, including any schedule or attachment thereto, and including any amendments thereof.
Technology means all (a) published and unpublished works of authorship, including audiovisual works, collective works, designs, Software, compilations, databases, derivative works, literary works, logos, marks, maskworks, and sound recordings; (b) inventions and discoveries, including articles of manufacture, business methods, compositions of matter, improvements, machines, methods, and processes and new uses for any of the preceding items (whether or not patentable); (c) information and materials that are not generally known, whether tangible or intangible, including algorithms, application program interfaces, business or technical information, concepts, customer lists, data collections, diagrams, formulae, ideas, know-how, metadata, methods, network configurations and architectures, processes, programs, protocols, prototypes, schematics, specifications, systems, techniques and trade secrets; and (d) all other forms of technology and technical and other information, and tangible and electronic embodiments thereof, regardless of form.
Trademarks means all trademarks, service marks, trade names, service names, trade dress, logos, and other identifiers of the source or origin of goods and services, and all statutory, federal, common law, and rights provided by international treaties or conventions, in any of the foregoing.
Treasury Regulations means the U.S. Treasury regulations promulgated under the Code.
Treasury Shares means all of the shares of Company Common Stock that were repurchased by the Company pursuant to the Repurchase Agreement and that are held in treasury by the Company at any time on or following the date hereof and prior to the termination of this Agreement (including any such shares that were previously issued or reserved for issuance but subsequently forfeited or otherwise returned to the Company).
Section 1.2. Terms Defined Elsewhere. The following terms are defined elsewhere in this Agreement:
401(k) Termination Date | Section 7.7(c) | |
Adjusted Option | Section 3.4(b) | |
Adjusted RS Award | Section 3.4(e) | |
Adjusted RSU Award | Section 3.4(d) | |
Agreement | Preamble | |
Base Amount | Section 7.4(c) | |
Book-Entry Shares | Section 3.2(b)(ii) | |
Certificate of Merger | Section 2.3 | |
Certificates | Section 3.2(b)(i) | |
Change of Recommendation | Section 6.3(a) | |
Closing | Section 2.2 | |
Closing Date | Section 2.2 | |
Company | Preamble | |
Company Acquisition Agreement | Section 6.3(a) | |
Company Board of Directors | Recitals | |
Company Board Recommendation | Recitals | |
Company Capitalization Date | Section 4.2(a) | |
Company Common Stock | Recitals | |
Company Disclosure Letter | Article IV | |
Company Notes | Section 7.14(b) |
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Company Permits | Section 4.9(b) | |
Company Preferred Stock | Section 4.2(a) | |
Company SEC Documents | Section 4.5(a) | |
Company Stockholder Approval | Section 4.3(a) | |
Company Stockholders | Recitals | |
Company Stockholders Meeting | Section 7.12(b) | |
Continuing Employees | Section 7.7(a) | |
Converted Shares | Section 3.1(b) | |
Copyrights | Section 1.1 | |
Credit Facility Terminations | Section 7.14(a) | |
Current ESPP Offering Period | Section 3.4(f) | |
Debt Commitment Letter | Section 5.6(a) | |
DGCL | Recitals | |
Dissenting Shares | Section 3.3(a) | |
DOJ | Section 7.2(b) | |
Effective Time | Section 2.3 | |
Enforceability Limitations | Section 4.3(b) | |
Financing | Section 5.6(a) | |
Financing Entities | Section 1.1 | |
FTC | Section 7.2(b) | |
GAAP | Section 4.5(b) | |
HIPAA | Section 1.1 | |
Indemnified Parties | Section 7.4(a) | |
Indenture | Section 7.14(b) | |
Integration Committee | Section 7.1(c) | |
Integration Plan | Section 7.1(c) | |
Intervening Event | Section 6.3(d) | |
IP Contracts | Section 4.14(h) | |
Material Contracts | Section 4.17(a) | |
Material Customer | Section 4.19(a) | |
Material Customer Agreement | Section 4.19(a) | |
Material Government Bid | Section 4.17(c) | |
Material Reseller | Section 4.19(c) | |
Material Reseller Agreement | Section 4.19(c) | |
Material Supplier | Section 4.19(b) | |
Material Supplier Agreement | Section 4.19(b) | |
Merger | Recitals | |
Merger Consideration | Section 3.1(a) | |
Merger Sub | Preamble | |
Merger Sub Shares | Section 3.1(c) | |
New Plans | Section 7.7(b) | |
OFAC | Section 4.9(e) | |
Old Plans | Section 7.7(b) | |
Outside Date | Section 9.1(d) | |
Owned Real Property | Section 4.16(a) | |
Parent | Preamble | |
Parent Governing Documents | Section 5.1 | |
Parties | Preamble | |
Party | Preamble | |
Patents | Section 1.1 | |
Paying Agent | Section 3.2(a) | |
Payment Fund | Section 3.2(a) |
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Payoff Letter | Section 7.14(a) | |