On behalf of the Board of Directors and management of CA, Inc., you are cordially invited to our 2016 annual meeting of
stockholders. The meeting will be held on August 3, 2016 at 10:00 a.m. Eastern Daylight Time. Our annual meeting will be a virtual meeting held over the Internet. You will be able to attend the annual meeting and vote your shares
electronically during the live webcast of the meeting by visiting
www.virtualshareholdermeeting.com/CA2016
and entering the 16-digit control number provided in your proxy materials.
Additional details about the meeting, including the formal agenda, are contained in the accompanying Notice of Annual Meeting of Stockholders
and Proxy Statement. During the virtual meeting, there will be remarks from management and a period during which you will be able to submit questions. You may also submit questions in advance of the virtual meeting by visiting
www.theinvestornetwork.com/forum/ca
.
Whether or not you plan to attend the virtual meeting, please vote your shares by
following the instructions in the accompanying materials.
PROPOSAL 1 ELECTION OF DIRECTORS
On the recommendation of the Corporate Governance Committee, the Board of Directors has nominated the persons listed below for election as
directors at the annual meeting, each to serve until the next annual meeting and until his or her successor is duly elected and qualified. Each of the nominees is an incumbent director.
Gary J. Fernandes, who has been a member of the Board since 2003, will conclude his service as a director when his term expires at the annual
meeting pursuant to regular Board succession planning. Accordingly, the Board has authorized a reduction in its size from 12 members to 11 members, effective immediately prior to the election of directors at the annual meeting. The Board extends its
sincere gratitude to Mr. Fernandes for his many years of service. His service and leadership have provided tremendous value to shareholders, the Board and the Company. The Board wishes him well in his retirement.
Each of the nominees has confirmed to us that he or she expects to be able to continue to serve as a director until the end of his or her
term. If, however, at the time of the annual meeting, any of the nominees named below is not available to serve as a director (an event that the Board does not anticipate), all the proxies granted to vote in favor of that directors election
will be voted for the election of any other person or persons that the Board may nominate.
Our policy is that all directors and nominees
should attend our annual meetings of stockholders. Eleven of our 12 directors attended the 2015 annual meeting of stockholders.
Majority Voting
Under our majority voting standard for uncontested elections of directors, a director nominee will be elected only
if the number of votes cast for exceeds the number of votes against the directors election. In contested elections, the plurality voting standard will apply, under which the nominees receiving the most votes will be
elected regardless of whether those votes constitute a majority of the shares voted at the meeting. Under our Corporate Governance Principles, if a director does not receive more votes for than votes against at an annual
meeting of stockholders, generally the Board of Directors will have 90 days from the certification of the vote to accept or reject the individuals irrevocable resignation that all incumbent directors are required to submit before the mailing
of the Proxy Statement for the annual meeting.
Board Composition
The Board of Directors and the Corporate Governance Committee each strive to ensure that the Board is composed of engaged, independent
directors with diverse backgrounds, who are committed to representing the long-term interests of our stockholders. Our directors are expected to possess the highest personal and professional ethics, integrity and values. They must have an
inquisitive and objective perspective, practical wisdom and mature judgment, and be willing and able to devote sufficient time to fulfill their responsibilities to the Company and our stockholders.
Diversity
The
Board does not have a formal policy with respect to diversity. However, the Board and the Corporate Governance Committee each believe that it is essential that the Board members represent diverse viewpoints, with a broad array of experiences,
professions, skills, geographic representation and backgrounds that, when considered as a group, provide a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to the long-term interests of the Companys
stockholders.
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Board Renewal
The Board and the Corporate Governance Committee each believe it is important to have experienced directors with a deep understanding of the
Companys business as well as other directors who bring fresh perspectives to the Board. In their efforts to identify potential director candidates, the Board and the Corporate Governance Committee consider:
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the input from the Boards self-assessment process to identify the backgrounds and expertise that are desired; and
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the future needs of the Board in light of anticipated director retirements under our director tenure policies.
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As a means to ensure orderly Board succession, our director tenure policies (contained in our Corporate Governance Principles) require that:
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a director may serve only until the annual meeting after the directors 75th birthday; and
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the Corporate Governance Committee shall determine whether to recommend to the Board that any action be taken as a result of a directors retirement from his or her principal occupation or a material change in his
or her principal occupation or business association.
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The Boards ongoing assessment of its collective skills,
experience and expertise has resulted in the recruitment of three new independent directors since 2011.
Biographical
Information and Qualifications of Director Nominees
Set forth below are each nominees name, age, principal occupation for at
least the last five years and other biographical information, including the year in which each was first elected a director of the Company. In addition, the biographies discuss the particular experience, qualifications, attributes and skills of the
director that, in light of the Companys business and structure, led the Board to conclude that the individual should serve on the Board of the Company.
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JENS
ALDER
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Director since 2011
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Age 58
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Business Experience
Mr. Alder served as Chief Executive Officer of TDC A/S, Denmarks largest telecommunications provider, from 2006 to 2008. Prior to
that, Mr. Alder served as Chief Executive Officer of Swisscom Ltd., Switzerlands largest telecommunications provider, from 1999 to 2006 after serving as its Executive Vice President of Network Services and Wholesale from 1998 to 1999.
Current Directorships
Mr. Alder has served as Chairman of the Board of Sanitas Krankenversicherung, a privately held health insurance company based in
Switzerland, since 2009, Chairman of the Board of Goldbach Group AG, a publicly held electronic media company based in Switzerland, since 2013, and Chairman of the Board of Alpiq Holding AG, a publicly held energy services provider based in
Switzerland, since 2015.
Previous Directorships
Mr. Alder served as Chairman of the Board of RTX Telecom A/S, a publicly held telecommunications component and handset producer based in
Denmark, from 2010 to 2014, Chairman of the Board of Industrielle Werke Basel, the state-owned public utility of Basel, Switzerland, from 2010 to 2015, a director of Sunrise Communications AG, a privately held telecommunications company based in
Switzerland, from 2008 to 2010, a
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director of TA Management A/S, a privately held company supporting Danish banks restructuring distressed companies, from 2009 to 2010, a director of Copenhagen International School, an
international school in Denmark, from 2008 to 2010, a director of Neue Zürcher Zeitung AG, a publicly held Swiss newspaper, from 2010 to 2013, and a director of BG Consulting Engineers, a privately held civil engineering group with operations
in Switzerland, France and Algeria, from 2011 to 2015.
Qualifications
Mr. Alders qualifications include: international experience; extensive experience in the technology industry; leadership experience
at large, complex companies; and governance experience as a member or chair of boards of numerous companies.
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RAYMOND J. BROMARK
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Director since 2007
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Age 70
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Business Experience
Mr. Bromark is a retired Partner of PricewaterhouseCoopers, LLP (PwC), an international accounting and consulting firm. He
joined PwC in 1967 and became a Partner in 1980. He was Partner and Head of the Professional, Technical, Risk and Quality Group of PwC from 2000 to 2006, a Global Audit Partner from 1994 to 2000 and Deputy Vice Chairman, Auditing and Business
Advisory Services from 1990 to 1994. In addition, he served as a consultant to PwC from 2006 to 2007.
Current Directorships
Mr. Bromark has been a director of YRC Worldwide, Inc., a transportation service provider, since July 2011 and a director of
Tesoro Logistics GP, LLC, the general partner of Tesoro Logistics LP, an operator, developer and acquirer of crude oil, refined products and natural gas logistics assets, since March 2011. He chairs the audit/ethics committee of YRC Worldwide, Inc.
and also chairs the audit committee of Tesoro Logistics GP, LLC.
Previous Directorships
Mr. Bromark was a director of World Color Press, Inc., a provider of printing services, and chaired its audit committee, from 2009 to 2010
when the company merged into another company.
Other Experience
Mr. Bromark is a member of the American Institute of Certified Public Accountants (the AICPA) and in previous years has
participated as a member of the University of Delawares Weinberg Center for Corporate Governances Advisory Board. Mr. Bromark was PwCs representative on the AICPAs Center for Public Company Audit Firms Executive
Committee. He has also been a member of the Financial Accounting Standards Board Advisory Council, the Public Company Accounting Oversight Boards Standing Advisory Group, the AICPAs Special Committee on Financial Reporting, the
AICPAs SEC Practice Section Executive Committee and the AICPAs Ethics Executive Committee.
Qualifications
Mr. Bromarks qualifications include: extensive experience in accounting, auditing, financial reporting, and compliance and
regulatory matters; deep understanding of financial controls and familiarity with large public company audit clients; extensive experience in leadership positions at PwC; and public company governance experience as a member or chair of boards and
board committees of public companies.
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MICHAEL P. GREGOIRE
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Director since 2013
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Age 50
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Business Experience
Mr. Gregoire has been Chief Executive Officer of the Company since January 2013. Previously, he served as President and Chief Executive
Officer of Taleo Corporation (Taleo), a provider of on-demand talent management software solutions, from March 2005 until Taleos acquisition by Oracle Corporation in April 2012. Mr. Gregoire served as a director of Taleo from
April 2005 to April 2012 and served as Taleos Chairman of the Board from May 2008 to April 2012. Mr. Gregoire served as Executive Vice President, Global Services and held various other senior management positions at PeopleSoft, Inc., an
enterprise software company, from May 2000 to January 2005. Mr. Gregoire served as Managing Director for global financial markets at Electronic Data Systems, Inc., a global technology services company, from 1996 to April 2000, and in various
other roles from 1988 to 1996.
Current Directorships
Mr. Gregoire has been a director of Automatic Data Processing, Inc., a provider of human capital management solutions to employers and
integrated computing solutions to vehicle dealers, since January 2014. Mr. Gregoire has been a director of NPower, a non-profit information technology services network, since September 2013.
Previous Directorships
As stated above, Mr. Gregoire served as a director of Taleo from April 2005 to April 2012 and served as Taleos Chairman of the Board
from May 2008 to April 2012. Mr. Gregoire served as a director of ShoreTel, Inc., a provider of business communication solutions, from November 2008 to January 2014. He chaired the compensation committee of ShoreTel, Inc. from July 2010 to
January 2014.
Other Experience
Mr. Gregoire has served on the Executive Council of TechNet, a national, bipartisan network of technology CEOs and senior executives that
promotes the growth of the innovation economy, since November 2014. Mr. Gregoire serves on the Business Roundtables Technology, Internet & Innovation Committee.
Qualifications
Mr. Gregoires qualifications include: extensive executive leadership experience with public companies in the software and services
sectors, including as Chief Executive Officer of the Company; extensive experience in the technology industry; and public company governance experience as a member of boards and a member and chair of board committees of public companies.
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ROHIT
KAPOOR
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Director since 2011
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Age 51
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Business Experience
Mr. Kapoor has been Vice Chairman and Chief Executive Officer of ExlService Holdings, Inc. (EXL Holdings), a provider of
outsourcing and transformation services, since April 2012 and has been a director of EXL Holdings since 2002. Mr. Kapoor co-founded ExlService.com, Inc. (EXL Inc.), a wholly owned subsidiary of EXL Holdings, in April 1999.
Mr. Kapoor served as EXL Holdings President and Chief Executive
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Officer from May 2008 to April 2012, its Chief Financial Officer from November 2002 to June 2005 and from August 2006 to March 2007, as its Chief Operating Officer from June 2007 to April 2008
and as President and Chief Financial Officer of EXL Inc. since August 2000. Prior to founding EXL Inc., Mr. Kapoor served as a business head of Deutsche Bank from July 1999 to July 2000. From 1991 to 2000, Mr. Kapoor served in various
capacities at Bank of America in the United States and Asia, including India.
Current Directorships
As stated above, Mr. Kapoor has been a director of EXL Holdings since 2002. Mr. Kapoor has been a director of the Tri-State chapter
of Pratham USA, an education non-profit organization, since March 2014.
Qualifications
Mr. Kapoors qualifications include: extensive leadership experience at a public company; extensive accounting experience;
international experience; entrepreneurial experience; governance experience as a member of the board of a public company; and a deep understanding of operational efficiencies.
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JEFFREY G. KATZ
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Director since 2015
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Age 60
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Business Experience
Jeffrey G. Katz served as Chief Executive Officer of Wize Commerce, Inc., a provider of online monetization and traffic acquisition technology
solutions, from 2010 to 2014. Prior to joining Wize Commerce, Mr. Katz served as President and Chief Executive Officer of LeapFrog Enterprises, Inc., a provider of digital educational entertainment solutions for children, from 2006 to 2010. In
addition, he served as the Executive Chairman of LeapFrog Enterprises from 2010 to 2011. Previously, Mr. Katz served as the Founding Chairman, President and Chief Executive Officer of Orbitz Worldwide, Inc., a global online travel company from
2000 to 2004. Mr. Katz also served as Chief Executive Officer of Swissair, formerly Switzerlands national airline, and held various leadership positions at American Airlines Group, Inc. (formerly AMR Corporation) and Lawrence Livermore
National Laboratory, a federal science research facility.
Current Directorships
Mr. Katz has served as a director of R.R. Donnelley & Sons Company, a digital and print communications business, since 2013.
Previous Directorships
Mr. Katz served as a director of Digital River, Inc., a provider of online commerce, payments and marketing solutions, from 2014 to 2015,
LeapFrog Enterprises from 2005 to 2011, Northwest Airlines Corporation from 2005 to 2008 and Orbitz from 2000 to 2004.
Qualifications
Mr. Katzs qualifications include: extensive executive leadership experience at large, complex companies; extensive experience in the
technology industry; international experience; and governance experience as a member or chair of boards and board committees of public companies.
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KAY
KOPLOVITZ
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Director since 2008
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Age 71
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Business Experience
Ms. Koplovitz has been Chairman and Chief Executive Officer of Koplovitz & Co., LLC, a media and investment firm, since 1998. She
is a founder of USA Network, an international cable television programming company, and served as its Chairman and Chief Executive Officer from 1977 to 1998. Ms. Koplovitz launched the Sci-Fi Channel (currently Syfy) in 1992. In 2001,
Ms. Koplovitz co-founded Boldcap Ventures, a venture capital fund focused on investing in early to mid-stage companies, primarily in the healthcare and technology sectors, of which she is a governing board member. In 2016, Ms. Koplovitz
co-founded the Springboard Fund to invest in companies in technology and life science led by women.
Current Directorships
Ms. Koplovitz serves on the boards of Time Inc., a media and publishing company, Ion Media Networks, Inc., a privately held
television and media company, The Paley Center for Media (formerly the Museum of Television and Radio) (where she has emeritus status), and the International Tennis Hall of Fame, and as Chairman of Springboard Enterprises, a non-profit organization
that supports emerging growth ventures led by women.
Previous Directorships
Ms. Koplovitz was a director of General Reinsurance Corporation, a property/casualty and life/health reinsurance company, from 1990 to
1998, was a director of Nabisco, a manufacturer of cookies and snacks, from 1992 to 2000, served as a director and member of the governance committee of Oracle Corporation, a database software and middleware company, from 1998 to 2001, was a
director of Instinet Group, Inc., an electronic brokerage services provider, from 2001 to 2007, served as Chairman of Joy Berry Enterprises, Inc., a privately held publisher of childrens books, from 2008 to 2013, was a director of Kate
Spade & Company (formerly Fifth & Pacific Companies, Inc. and Liz Claiborne, Inc.), a designer and marketer of fashion apparel and accessories, from 1992 to 2015, where she also served as non-executive Chairman of the Board from
2007 to 2013, and, as stated above, served as Chairman of USA Network from 1977 to 1998.
Other Experience
Ms. Koplovitz is a member of the Board of Visitors, College of Letters and Science at the University of Wisconsin-Madison.
Qualifications
Ms. Koplovitzs qualifications include: extensive executive leadership experience at a large, complex company; entrepreneurial
experience; extensive marketing and sales experience; technology experience; venture capital investment experience; and public company governance experience as a member or chair of boards and board committees of public companies.
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CHRISTOPHER B. LOFGREN
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Director since 2005
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Age 57
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Business Experience
Mr. Lofgren has been President, Chief Executive Officer and a director of Schneider National, Inc. (Schneider National), a
provider of transportation and logistics services, since 2002. He served as Chief Operating Officer of Schneider National from 2001 to 2002, Chief Executive Officer of Schneider Logistics, a subsidiary of Schneider National, from 2000 to 2001, Chief
Information Officer of Schneider National from 1996
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to 2000, and Vice President, Engineering and Systems Development of Schneider National from 1994 to 1996. Prior to joining Schneider National, Mr. Lofgren held several positions at Symantec
Corp., a security, storage and systems management solutions company, including Interim General Manager, Director of Engineering and Senior Engineer Manager. Prior to Symantec, Mr. Lofgren was a Senior Staff Engineer with Motorola, Inc., a
telecommunications company.
Current Directorships
As stated above, Mr. Lofgren serves as a director of Schneider National. In addition, Mr. Lofgren currently serves on the board of
directors of the U.S. Chamber of Commerce and the American Transportation Research Institute, a research trust affiliated with the American Trucking Associations.
Previous Directorships
Mr. Lofgren served as a director of the American Trucking Associations from 2005 to 2013.
Other Experience
Mr. Lofgren currently serves on the Advisory Board of Junior Achievement of Wisconsin in Brown County. He was inducted into the National
Academy of Engineering in 2009.
Qualifications
Mr. Lofgrens qualifications include: extensive executive leadership experience at a large, complex company; extensive technology
experience; understanding of regulatory compliance through Schneider Nationals highly regulated industry; and international business management experience.
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RICHARD SULPIZIO
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Director since 2009
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Age 66
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Business Experience
Mr. Sulpizio served as President and Chief Executive Officer of Qualcomm Enterprise Services, a division of Qualcomm Incorporated
(Qualcomm) responsible for mobile communications and services to the transportation industry, from December 2009 to February 2013. He served as Senior Advisor of Qualcomm Enterprise Services from February 2013 to November 2013.
Mr. Sulpizio served as President and Chief Operating Officer of Qualcomm, a developer of wireless technologies, products and services, from 1998 to 2001 and served in various other executive positions between 1991 and 1998. He served as a
director of Qualcomm from 2000 to 2007. Mr. Sulpizio served as President and Chief Executive Officer of MediaFLO, USA, Inc., a Qualcomm subsidiary involved in bringing multimedia services to the wireless industry, from 2005 to 2006.
Mr. Sulpizio served as President of Qualcomm Europe in 2004 and President of Qualcomm China from 2002 to 2003. Before joining Qualcomm, Mr. Sulpizio worked for eight years at Unisys Corporation, a worldwide information technology company,
and 10 years at Fluor Corporation, an engineering and construction company.
Current Directorships
Mr. Sulpizio has served as a director of ResMed Inc., a global developer, manufacturer and marketer of medical products, since 2005, where
he has served on its governance committee and compensation committee.
Previous Directorships
As stated above, Mr. Sulpizio served as a director of Qualcomm from 2000 to 2007.
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Other Experience
Mr. Sulpizio serves on the advisory board of the University of California San Diegos Sulpizio Family Cardiovascular Center.
Qualifications
Mr. Sulpizios qualifications include: extensive executive leadership experience at a large, complex, global public company;
extensive technology experience; international management experience; and public company governance experience as a member or chair of boards and board committees of public companies.
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LAURA S. UNGER
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Director since 2004
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Age 55
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Business Experience
Ms. Unger served as a special advisor to Promontory Financial Group, a global consulting firm for financial services companies, from 2010
to 2014. She served as the Independent Consultant to JPMorgan Chase & Co., a global securities, investment banking and retail banking firm for the global analyst conflict settlement from 2003 to 2010. From 2002 to 2003, Ms. Unger was
employed by CNBC, a satellite and cable television business news channel, as a Regulatory Expert. Ms. Unger was a Commissioner of the SEC from 1997 to 2002, and served as Acting Chairperson of the SEC from February to August 2001.
Ms. Unger served as Counsel to the U.S. Senate Committee on Banking, Housing and Urban Affairs from 1990 to 1997. Prior to working on Capitol Hill, Ms. Unger was an attorney with the Enforcement Division of the SEC.
Current Directorships
Ms. Unger has served as a director of CIT Group, Inc., a provider of financing to small businesses and middle market companies, since
2010, where she has served as chairman of its nominating and governance committee and member of its audit committee. She has served as a director and member of the audit committee and nominations and governance committee of Navient Corporation,
which operates the loan management, servicing and asset recovery business that was previously operated by Sallie Mae, since 2014. Ms. Unger has served as a director of Nomura Securities International, Inc. and Nomura Global Financial Products,
Inc., privately held U.S. subsidiaries of Nomura Holdings, Inc., a Japanese financial services provider, since 2015. She also serves as a director of Childrens National Medical Center and Childrens National Medical Center Foundation.
Previous Directorships
Ms. Unger was a director and member of the governance, compensation and audit committees of Ambac Financial Group, Inc., a holding company
whose affiliates provide financial guarantees and financial services, from 2002 to 2013, a director and member of the nominating and governance committee and audit committee of the IQ Funds Complex, a group of closed-end mutual funds, from 2008 to
2010, a director and a member of the audit committee of Borland Software Corporation, a provider of software lifecycle management solutions, from 2002 to 2004, and a director and member of the audit committee of MNBA Corporation, a bank holding
company, from 2004 to 2006.
Qualifications
Ms. Ungers qualifications include: government and public policy experience; legal and regulatory experience; extensive leadership
experience at government agencies; and public company governance experience as a member or chair of boards and board committees of public companies.
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ARTHUR F. WEINBACH
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Director since 2008
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Age 73
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Business Experience
Mr. Weinbach has been Chairman of the Board of the Company since May 2010. From 2007 to June 2010, Mr. Weinbach was Executive
Chairman and from July 2010 to November 2011 non-executive Chairman of Broadridge Financial Solutions, Inc., a provider of products and services for securities processing, clearing and outsourcing which was spun off from Automatic Data Processing,
Inc. (ADP), a provider of business outsourcing solutions. Prior to the spin-off, Mr. Weinbach was associated with ADP from 1980 to 2007, serving as executive Chairman and Chief Executive Officer from 1996 to 2006 and as
non-executive Chairman until November 2007. Prior to joining ADP, Mr. Weinbach held various positions at Touche Ross & Co., an accounting firm and a predecessor of Deloitte Touche Tohmatsu, and was a partner from 1975 to 1979.
Current Directorships
Mr. Weinbach has been a director of The Phoenix Companies, Inc., a provider of life insurance and annuity products, since 2008, chairman
of its audit committee since 2009 and a member of its compensation committee since 2008.
Previous Directorships
In addition to having served as a director of Broadridge and ADP, including as Chairman of both, Mr. Weinbach served as a director of
First Data Corporation, a provider of electronic commerce and payment solutions for merchants, financial institutions and card issuers, from 2000 to 2006, and as a member of its audit committee for much of that period. He was also a director of
Schering-Plough Corporation, a pharmaceutical manufacturer, from 1999 to 2009, at which he chaired its audit and finance committees during various times.
Other Experience
Mr. Weinbach is currently a Trustee of New Jersey SEEDS, a non-profit organization providing academic enrichment and leadership programs
for high-achieving, low-income youth.
Qualifications
Mr. Weinbachs qualifications include: extensive financial, accounting and auditing experience; international experience; technology
experience; and public company governance experience as a member or chair of boards and board committees of public companies.
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RENATO (RON) ZAMBONINI
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Director since 2005
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Age 69
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Business Experience
Mr. Zambonini was Chairman of the Board of Cognos Incorporated (Cognos), a developer of business intelligence software, from
2004 until 2008, and a director from 1994 until 2008. Mr. Zambonini was Chief Executive Officer of Cognos from 1995 to 2004, President from 1993 to 2002, and Senior Vice President, Research and Development from 1990 to 1993. Prior to joining
Cognos, Mr. Zambonini served as Vice President, Research and Development of Cullinet Software, Inc., a software developer, from 1987 to 1989.
Current Directorships
Mr. Zambonini has served as a director of PTC Inc., a company that develops, markets and supports product development software solutions
and related services, since May 2011.
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Previous Directorships
In addition to having served as a director of Cognos, including as Chairman, Mr. Zambonini served as a director of Reynolds &
Reynolds, a software company servicing automotive dealerships, from 2003 to 2006, and a director of Emergis, Inc., an electronic commerce business, from 2004 to 2008. Mr. Zambonini served on the audit committee of Reynolds & Reynolds
and the compensation committee of Emergis, Inc.
Qualifications
Mr. Zamboninis qualifications include: extensive executive leadership experience at a large, complex, public company; extensive
technology experience; and public company governance experience as a member or chair of boards and board committees of public companies.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
EACH OF THE NOMINEES LISTED ABOVE (PROPOSAL 1).
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Other Important Compensation Matters
Compensation Committee Discretion to Reduce Performance-Based Award Payouts
The Compensation Committee retains discretion to reduce the amount of any incentive compensation payout (including annual performance cash
incentive and performance share awards) for any reason, including the results of the Compensation Committees review of the basis on which the performance goals were achieved. This review includes an examination of, among other things, the
quality and long-term strategic alignment of the performance underlying the attainment of the performance goals, as well as the long-term risks associated with the manner in which the performance goals were attained. In addition, given the
investments made by the Company in acquisitions, the Compensation Committee also evaluates and considers the performance of any acquisition during the fiscal year relative to the targets provided at the time such acquisition was approved.
Executive compensation payouts are also tied to the ethical standards of the Company. A failure to complete annual ethics training results in
a mandatory 10% reduction of an executives target performance incentive. Moreover, in determining whether to exercise additional discretion to reduce payouts on the basis of issues relating to ethical standards, the Compensation Committee
considers each executives contribution to the establishment and maintenance of high ethical and compliance standards throughout his or her organization and, in general, throughout the Company. Management also notifies the Compensation
Committee of any incidents or reports of unethical behavior or other misconduct.
As noted above, the Compensation Committee approved a
payout for the fiscal year 2016 annual performance cash incentive at 87.65% of target, which was below the core plan formulaic attainment level, due to the Companys overall performance, including our revenue performance relative to our
internal targets, which fell short of target performance. The 2014-2016 performance shares paid out at the core plan formulaic attainment level.
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Policy on Adjustments or Recovery of Compensation
The Compensation Committee maintains a compensation recovery (clawback) policy that is applicable in the event of a substantial
restatement of our financial statements that is a direct result of the intentional misconduct or fraud of an executive officer or other senior executive. Under this policy, the Compensation Committee can, in its discretion, direct that we recover
all or a portion of any award (which includes any cash or equity-based award or incentive compensation award) made to any executive officer or other senior executive who engaged in that intentional misconduct and/or fraud for any fiscal year that is
negatively affected by the restatement. The amount the Compensation Committee can seek to recover is the amount by which the affected award exceeds the amounts that would have been payable to that executive had the financial statements been
initially filed as restated, or any greater or lesser amount (but not greater than the entire affected awards in the given period). The Compensation Committee will determine how we may recover this compensation, including by seeking repayment,
reduction of any potential future payments and/or an adjustment of what otherwise might have been a future increase in compensation or a compensatory grant.
In addition, the Company has included clawback provisions in certain agreements evidencing grants of restricted stock awards, restricted stock
units and stock option awards entered into in fiscal year 2016, including for those awards made to our NEOs under the fiscal year 2016 LTIP. These provisions generally permit the Company to recover shares or gains from restricted stock, restricted
stock units and stock options granted to an employee who violates the Companys non-competition and non-solicitation provisions. The Compensation Committee believes that these provisions are important to the Company and its stockholders because
they provide a means by which to recover compensation that was paid to an employee who subsequently breached restrictive covenant provisions intended to protect the Company and its assets.
Tax Deductibility of Performance-Based Compensation
As previously mentioned, the Company is asking shareholders to re-approve its 2011 Incentive Plan in order to continue to satisfy the
requirements of Section 162(m) of the U.S. Internal Revenue Code (Section 162(m)) and provide the Company with the discretion to make awards that may qualify for tax deductibility under Section 162(m).
Section 162(m) of the U.S. Internal Revenue Code limits the annual deductibility of compensation in excess of $1 million paid to the CEO
and to the other three highest-paid executive officers (other than the CFO) unless this compensation qualifies as performance-based. For purposes of Section 162(m), compensation derived from the exercise of stock options generally
qualifies as performance-based. In addition, we generally structure and intend that incentive compensation paid in cash or in the form of restricted stock, restricted stock units or performance shares to our NEOs should qualify as performance-based.
In order for the fiscal year 2016 restricted stock awards granted to our NEOs to begin vesting, the Company must achieve positive net income for the initial fiscal year. We believe this performance measure allows these time-based awards to qualify
as performance-based compensation under Section 162(m). We believe that, for fiscal year 2016, incentive compensation paid to our NEOs in cash and equity under the LTIP qualified as performance-based. However, the Compensation
Committee retains discretion to approve annual, long-term or other compensation arrangements in a manner that does not permit the compensation to qualify for tax deductibility under Section 162(m). In addition, it is possible that
performance-based compensation that is intended to be exempt from the deduction limit under Section 162(m) may not meet the requirements to qualify for such exemption.
Since fiscal year 2011, the Companys annual performance cash incentive and three-year performance share awards under the long-term
incentive plans have been designed to give additional flexibility in the payout of awards while also satisfying the requirements of Section 162(m) of the Internal Revenue Code regarding the deductibility of performance-based compensation. We
followed the same approach for fiscal year 2016 compensation. Under this design, when the performance period begins, the Compensation Committee:
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establishes the performance metrics and objective performance goals relating to each award;
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establishes a 162(m) plan funding level that reflects the maximum amounts of cash or stock that may be payable upon achievement of those performance goals;
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retains discretion to pay out the awards at a level below the 162(m) plan funding level; and
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48
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establishes a core plan funding level that reflects the expected payout of the awards upon achievement of those performance goals, which payout is lower than the 162(m) plan funding level.
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After the performance period ends and we receive certification of the extent to which the performance goals were achieved, the awards are
determined under the 162(m) plan funding level based on the certified extent of achievement. The Compensation Committee then considers other factors relating to the manner in which the performance goals were attained, including the effect of events
that were unforeseeable when the performance goals were established. The Compensation Committee may exercise its discretion to pay out the awards at a lower level than the 162(m) plan. After the Compensation Committees evaluation of these
matters after fiscal year 2016 ended, the Committee exercised its discretion to pay the fiscal year 2016 annual performance cash incentive at 87.65% of target, which was below the core plan funding level and to pay the fiscal year 2014-2016
performance shares at the core plan funding level, as described above.
Executive Stock Ownership Requirements
The objective of our Executive Stock Ownership Requirements is to align senior executives interests with those of stockholders and
encourage growth in stockholder value. Our Executive Stock Ownership Requirements apply to a group of executives that includes our NEOs.
Under our Executive Stock Ownership Requirements, the amount of Common Stock each executive is required to own, which is stated as a multiple
of the executives base salary, reflects each executives role and level of responsibility at the Company. Shares owned outright by the executive (including those held through our 401(k) plan) count towards meeting this objective. Unvested
equity and unexercised stock options do not count towards fulfillment of this requirement. The CEO (or the Committee, in the case of a CEO request) may provide a modification or exception to the requirements.
The multiples that apply to our NEOs are as follows: (i) CEO (five times), (ii) CFO (three times) and (iii) other NEOs (two
times). A NEO who is in compliance with the applicable stock ownership requirement may dispose of shares of Common Stock only so long as his or her remaining ownership of Common Stock equals or exceeds the applicable stock ownership requirement. If
a NEO is not in compliance with the applicable stock ownership requirement, he or she must maintain a minimum retention ratio of 75% of the after tax value of any Common Stock that he or she receives upon vesting of any Company incentive award.
Additionally, the Compensation Committee may, among other things, elect to reduce future equity awards or require cash incentives to be paid in shares of Common Stock for executives who do not meet the minimum stock ownership requirement.
Anti-Hedging and Pledging Policies
As part of our policy against insider trading, our officers and other employees are prohibited from purchasing or selling (1) short-term
or speculative securities that are based on Company securities and (2) financial instruments designed to hedge or offset any change in the market value of Company securities. Prohibited instruments include prepaid variable forward contracts,
puts or calls and other exchange-traded options, swaps, collars, exchange funds and other derivative securities. Short-sales of Company securities are also prohibited. Pledging of any Company stock by the NEOs is not permitted without
the approval of the CEO and the Compensation Committee. These provisions also apply to our non-employee directors.
Equity Grant
Timing Policy
The Compensation Committee and executive management monitor the Companys stock option and equity grant
policies to ensure that those policies comply with applicable regulations and are consistent with good corporate practice. Grants to executive officers are customarily approved by the Compensation Committee at a regularly scheduled meeting. The
Compensation Committee may approve grants to executive officers at a special meeting or by unanimous written consent under special circumstances, such as those involving new hires, promotions or retention issues. Beginning with fiscal year 2017, the
Compensation Committee will generally approve stock option or other equity awards granted to executive officers as part of the long-term incentive plan on the later of May 15
th
of the
applicable fiscal year or the second trading day after the trading blackout period ends following the public announcement of the Companys financial results for the fiscal year just ended.
49
The Compensation Committee has delegated authority to the CEO to make limited equity grants to
non-executive officers at any time of the year, including for new hires, promotions or retention grants. Equity awards that are approved by the CEO are granted on pre-established grant dates each month. The grants approved by the CEO are reviewed
with the Compensation Committee on a quarterly basis.
Effect of Termination of Employment on Performance-Based Compensation
If an executives employment terminates before the end of the applicable performance period, the executive generally ceases
to be eligible for any portion of the executives performance-based award, except as described below. Certain executive arrangements, including our Executive Severance Policy, may provide for the executive whose employment terminates by the
Company without cause or by the executive for good reason prior to payout to be paid a prorated portion of his or her annual performance cash incentive bonus and three-year performance shares after the end of the performance
period, based on the actual attainment of applicable performance goals. In addition, consistent with the terms of our long-term incentive awards, unless otherwise provided in an executives employment contract, an executive forfeits any
unvested stock options and restricted stock awards upon termination of employment. Upon a retirement, as defined in our equity incentive plan, vested stock options can be exercised for up to one year following a termination of
employment. If employment is terminated due to disability, an executive may be eligible for a prorated portion of the three-year performance shares after the three-year performance period based on the Companys actual performance. In the event
of the executives death, the executives estate would receive the prorated target amount of the executives annual cash incentive and a prorated portion of the three-year performance share target awards (in each case, based on the
portion of the period completed through the date of death). All termination terms are also subject to the Compensation Committees discretion. For further information please see Compensation and Other Information Concerning Executive
Officers Other Compensation Arrangements Provided to Our NEOs, below.
Employment and Separation Arrangements
Detailed descriptions of any employment or separation arrangements with our NEOs are provided below under Compensation and
Other Information Concerning Executive Officers Other Compensation Arrangements Provided to Our NEOs Employment and Separation Arrangements.
The Company entered into an employment arrangement with Ayman Sayed on June 30, 2015 and hired Mr. Sayed, effective as of
August 10, 2015, as the new Executive Vice President and Chief Product Officer. The Compensation Committee determined that it would be advisable to enter into an employment arrangement in order to recruit Mr. Sayed and to help assure that
he remains focused on maximizing Company performance and stockholder value, as described below.
The Compensation Committee intends to
enter into employment agreements or arrangements with executive officers only where it deems it necessary to recruit or retain the executive or where customary or required under local rules. We currently do not have any employment agreements with
our NEOs that provide for a fixed term of employment. The employment of each of our NEOs remains at-will and can be terminated at any time in accordance with the terms of the applicable employment arrangement.
In fiscal year 2015, the Compensation Committee adopted a standardized executive severance policy for the CEO and for the senior executives
who report to the CEO. The policy provides for severance in the event of a termination without cause or a resignation for good reason. Additional details about this policy are provided below.
Deferred Compensation Arrangements
The Company maintains a non-qualified Executive Deferred Compensation Plan, under which our executive officers, including our NEOs, may defer a
portion of their annual performance cash incentive award. The Company also provides unfunded, supplemental plans to our 401(k) plan, which enable all employees, including the NEOs, to continue to make or receive employee and employer contributions
in excess of the limitations imposed under the Internal Revenue Code. The Company does not provide any defined benefit pension or supplemental pension plan for NEOs.
50
Change in Control Severance Policy
As described below under Compensation and Other Information Concerning Executive Officers Other Compensation Arrangements Provided
to Our NEOs Change in Control Severance Policy, the Change in Control Severance Policy is intended to maintain continuity of executive management in the event of a change in control of the Company. The Compensation Committee has broad
latitude to amend this policy and to add or remove executives as participants under the policy, as it deems appropriate. The policy generally provides for certain payments and benefits upon a double trigger event (
i.e.
,
termination without cause or for good reason following a change in control).
In fiscal year 2011, the
Compensation Committee determined that it would not enter into any new or materially amended agreements with executive officers providing for excise tax gross-up provisions with respect to payments contingent upon a change in control. One executive
officer retained a legacy excise tax gross-up provision. During fiscal year 2016, this executive officer agreed to remove this long-standing obligation such that there are no longer any CA executive officers entitled to reimbursement of excise taxes
on a change in control-related payment. In connection with that agreement, the Change in Control Severance Policy was formally amended to remove all excise tax gross-up related provisions.
Performance Measure Definitions
Fiscal Year 2016 Annual Performance Cash Incentive Awards
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Revenue Growth
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Growth in total revenue, as reported in
the Companys Annual Report on Form 10-K for fiscal year 2016 (the Form 10-K), excluding the impact of foreign currency exchange. Maximum payout opportunity: 150% of target.
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The revenue growth, new sales growth and operating margin metrics exclude any: (1) results from
discontinued operations as reported in the Form 10-K (adjusting the payout schedule to remove the effect of the discontinued operations from both target and actual financial results); (2) internally reported results from any acquisition during
fiscal year 2016 that has a purchase price of $50 million or greater and that was not contemplated at the time the target performance goals were established; and (3) cumulative effect of changes in accounting rules and methods and tax laws, retained
and uninsured losses from natural disaster or catastrophe and business losses resulting from extraordinary political, economic or legal changes.
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New Sales Growth
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Growth in total new product and
mainframe capacity sales, as reported in the Form 10-K, excluding the impact of foreign currency exchange. Maximum payout opportunity: 200% of target.
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Operating Margin
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Operating income divided by total
revenue for fiscal year 2016. Maximum payout opportunity: 150% of target; 100% of target if specified threshold level of revenue growth and new sales growth are not achieved.
Operating income is defined as income from continuing operations before interest and income taxes, as reported in the Form 10-K, plus non-GAAP operating
adjustments, including, purchased software amortization, intangibles amortization, share-based compensation, software capitalization and amortization expense for internally developed software products (internally developed software product expense),
expenses associated with the Board-approved rebalancing plan (Fiscal 2014 Plan), and hedging gains/losses, net, as reported in the Reconciliation of GAAP Results to Non-GAAP Net Income table of the Companys fiscal year 2016 fourth
quarter financial results press release.
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51
Fiscal Year 2014-2016 Three-Year Performance Shares Awards
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Three-Year Revenue Growth
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Three-year average growth in total
revenue as disclosed in the Form 10-K over the three-year performance period ending March 31, 2016, excluding the impact of foreign currency exchange.
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The three-year revenue growth, three-year operating margin growth and three-year adjusted CFFO
growth metrics exclude any: (1) results from discontinued operations as reported in the Companys Form 10-K for any of the fiscal years in the performance period (adjusting the payout schedule to remove the effect of the discontinued operations
from both actual and projected financial results); (2) internally reported results from any acquisition during fiscal years 2014, 2015 and 2016 that has a purchase price of $50 million or greater and that was not contemplated at the time the target
performance goals were established and (3) cumulative effect of changes in accounting rules and methods and tax laws, retained and uninsured losses from natural disaster or catastrophe and business losses resulting from extraordinary political,
economic or legal changes.
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Adjusted Three-Year Cash Flow from Operations
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Three-year average growth in net cash
provided by continuing operating activities as disclosed in the Form 10-K over the three-year performance period ending March 31, 2016, plus restructuring and other payments for those fiscal years, less software capitalization payments for
internally developed software products, reported in the Companys Supplemental Financials provided at www.ca.com/invest.
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Three-Year Operating Margin Growth
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Three-year average growth in operating
margin calculated as operating income divided by total revenue as reported in the Form 10-K over the three-year performance period ending March 31, 2016.
Operating income is defined as income from continuing operations before interest and income taxes as reported in the Form 10-K, plus non-GAAP operating
adjustments, including, but not limited to, purchased software amortization, intangibles amortization, share-based compensation, software capitalization and amortization expense for internally developed software products, expenses associated with
the Fiscal 2014 Plan and hedging (gains)/losses, net, as reported in the Reconciliation of GAAP Results to non-GAAP Net Income table of the Companys fiscal year fourth quarter financial results press release.
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52
COMPENSATION AND OTHER INFORMATION CONCERNING EXECUTIVE OFFICERS
Fiscal Year 2016 Summary Compensation Table
The following table includes information concerning compensation paid to or earned by our NEOs for the fiscal year ended March 31, 2016.
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Name and Principal
Position
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Fiscal
Year
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Salary
($)
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|
Bonus
($)
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Stock
Awards(1)
($)
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Option
Awards(2)
($)
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Non-Equity
Incentive
Plan
Compensation(3)
($)
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All
Other
Compensation(4)
($)
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Total
($)
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Michael P. Gregoire
Chief Executive Officer
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2016
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1,000,000
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6,159,111
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1,650,660
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1,314,750
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276,102
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10,400,623
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2015
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1,000,000
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4,797,581
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1,249,621
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1,131,750
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264,121
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8,443,073
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2014
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1,000,000
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3,228,921
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1,865,899
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1,108,500
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1,140,902
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8,344,222
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Richard J. Beckert(5)
EVP & Chief Financial Officer
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2016
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687,500
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1,941,040
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520,206
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613,550
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101,285
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3,863,581
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2015
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637,500
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1,771,398
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461,395
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490,425
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100,297
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3,461,015
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2014
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587,500
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1,408,981
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814,209
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443,400
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99,226
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3,353,316
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Adam Elster
EVP & Group Executive, Worldwide Sales & Services
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2016
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700,000
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1,941,040
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520,206
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613,550
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56,126
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3,830,922
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2015
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700,000
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|
|
|
|
1,919,021
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499,846
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528,150
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51,676
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3,698,693
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2014
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659,896
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1,245,136
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723,804
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487,436
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46,981
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3,163,253
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Ayman Sayed(6)
EVP & Chief Product Officer
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2016
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387,500
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1,750,000
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4,556,518
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258,662
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337,668
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2,500
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7,292,848
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Lauren P. Flaherty(7)
EVP & Chief Marketing Officer
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2016
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625,000
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250,000
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|
|
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1,642,387
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440,175
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547,813
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43,964
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|
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3,549,339
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2015
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605,208
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1,392,376
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358,853
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456,679
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32,673
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2,845,789
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2014
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400,000
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|
250,000
|
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|
2,319,459
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2,644,077
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295,195
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105,180
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|
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|
6,013,911
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(1)
|
This column shows the aggregate grant date fair value in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation
Stock Compensation, for all restricted stock awards, restricted stock units and performance shares granted in fiscal years 2016, 2015 and 2014. These award fair values have been determined based on the assumptions set forth in the Stock
Plans footnote in the Notes to the Consolidated Financial Statements in our fiscal year 2016, 2015 and 2014 Annual Reports on Form 10-K
(Form 10-K).
Additional information about the
awards reflected in this column is set forth in the notes to the Fiscal Year 2016 Grants of Plan-Based Awards table and the Outstanding Equity Awards at 2016 Fiscal Year-End table, below.
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(2)
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This column shows the aggregate grant date fair value in accordance with FASB ASC Topic 718 for all stock option awards granted in fiscal years 2016, 2015 and 2014. These award fair values have been determined based on
the assumptions set forth in the Stock Plans footnote in the Notes to the Consolidated Financial Statements in our fiscal year 2016, 2015 and 2014 Form 10-Ks.
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(3)
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The amounts in this column for fiscal year 2016 represent the annual performance cash incentives described under Compensation Discussion and Analysis Discussion and Analysis Determining Payouts for
Fiscal Year 2016 Determining Annual Performance Cash Incentive Award Payouts, above. These amounts were paid early in fiscal years 2017, 2016 and 2015 for performance in fiscal years 2016, 2015 and 2014, respectively. These amounts had
been accrued for financial reporting purposes in fiscal years 2016, 2015 and 2014, respectively.
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(4)
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The All Other Compensation column includes for fiscal year 2016 the perquisites and other personal benefits detailed below, as well as contributions we made under our tax-qualified 401(k) plan and related
nonqualified supplemental retirement plans, as required to be disclosed under the applicable SEC rules. We also purchase tickets to certain sports and entertainment events. The tickets are used for business development and partnership building. If,
however, the tickets are not used for business and may otherwise go unused, Company employees, including NEOs, may have access to the tickets. Because these tickets have already been purchased by the Company, we believe that there is no incremental
cost associated with the use of the tickets. This column also includes a modest amount for the incremental cost of personal meals and/or entertainment for the family members of NEOs attending business-related events.
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53
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|
Gregoire
($)
|
|
|
Beckert
($)
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|
|
Elster
($)
|
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|
Sayed
($)
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|
Flaherty
($)
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|
Company automobile use(a)
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|
40,000
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Company aircraft use(b)
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168,562
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|
|
|
|
|
|
|
1,473
|
|
|
|
|
|
|
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|
|
Relocation-alternative Company accommodations or transportation(c)
|
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|
|
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|
54,000
|
|
|
|
5,940
|
|
|
|
|
|
|
|
|
|
Financial planning(d)
|
|
|
18,317
|
|
|
|
17,159
|
|
|
|
18,176
|
|
|
|
|
|
|
|
18,177
|
|
Employer contributions to tax-qualified and nonqualified retirement plans(e)
|
|
|
25,126
|
|
|
|
25,126
|
|
|
|
25,787
|
|
|
|
|
|
|
|
25,787
|
|
Matching charitable contributions(f)
|
|
|
23,750
|
|
|
|
5,000
|
|
|
|
4,750
|
|
|
|
2,500
|
|
|
|
|
|
|
(a)
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In order to help maintain the confidentiality of business matters and to increase productivity when traveling, Mr. Gregoire was provided personal automobile transportation. The amount reported is the incremental
cost to the Company for Mr. Gregoires commutation and other non-business use of that transportation.
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(b)
|
The Companys Aircraft Use Policy permits the NEOs to use the corporate aircraft for personal travel. Reasonable personal use of corporate aircraft is permitted to reduce these executives travel time and to
allow them to devote more time to work duties and to help maintain the confidentiality of business matters. The amount reflected is the aggregate incremental cost of Mr. Gregoires personal travel including the incremental cost, if any,
for family members or non-CA employees accompanying him on business and non-business trips. The amount for Mr. Elster reflects the incremental cost of a personal stop made by Mr. Elster during a business trip. The NEOs personal use
of the corporate aircraft results in imputed taxable income to them. There are no tax gross-up payments provided in connection with any NEOs personal use of the corporate aircraft. The incremental cost is based on the direct operating
cost on an hourly basis, calculated based on a number of variables, including fuel, maintenance, crew-related expenses, catering, landing, ramp and parking fees. For purposes of calculating incremental cost, any applicable repositioning
(deadhead) segments incurred during personal trips are also allocated to the NEOs. This incremental cost valuation of aircraft use is different from the standard industry fare level valuation used to impute income to the executives for
tax purposes.
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(c)
|
The table shows the amount we paid to Mr. Beckert pursuant to a corporate housing policy that provides certain executives with a corporate housing allowance in lieu of relocation of the executive. The amounts shown
for Mr. Elster are Company-paid parking fees.
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(d)
|
The table shows the amounts we pay for the cost of financial planning services provided by a third party to certain of our executives to assist them in managing complex investment, tax, legal and estate planning matters
so that the executives remain focused on our business priorities rather than personal financial concerns.
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(e)
|
The amounts include our matching contributions under our tax-qualified 401(k) plan and related non-qualified supplemental retirement plans. The amounts also include our annual discretionary contribution under the
tax-qualified 401(k) plan, which was made in fiscal year 2017, but relates to fiscal year 2016. We offer a tax-qualified 401(k) plan and related non-qualified supplemental retirement plans that provide a competitive long-term retirement savings
opportunity on a tax-efficient basis.
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(f)
|
Under our charitable gift matching program, we offer to match up to $5,000 per fiscal year of charitable contributions for any full-time U.S. employee and $25,000 per fiscal year for any director. The table shows the
amounts of the Companys matching contributions made or accrued for in fiscal year 2016 with respect to charitable contributions made by the NEOs for fiscal year 2016.
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(5)
|
Mr. Beckerts annual base salary increased, effective July 2015, from $650,000 to $700,000. The amount in the Summary Compensation Table reflects the amount actually paid to Mr. Beckert for the fiscal
year.
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(6)
|
Information for Mr. Sayed is shown only for the portion of fiscal year 2016 after he joined the Company in August 2015. He was not an NEO prior to fiscal year 2016. The amount shown in the Bonus column
is the cash sign-on bonus paid to Mr. Sayed in fiscal year 2016. The cash sign-on bonus is subject to recoupment if Mr. Sayeds employment is terminated before the first anniversary of his start date by the Company with
cause or by Mr. Sayed other than for good reason, each as defined in his employment arrangement. The amount in the Stock Awards column includes the grant date fair value of his sign-on restricted stock unit
award, as described in more detail in the Fiscal Year 2016 Grants of Plan-based Awards table below.
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(7)
|
The amount shown in the Bonus column is the last installment of Ms. Flahertys cash sign-on bonus that was paid in fiscal year 2016 in accordance with her June 14, 2013 offer letter.
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54
Fiscal Year 2016 Grants of Plan-Based Awards
The following table provides additional information about stock and option awards, equity incentive plan awards and non-equity incentive plan
awards granted to the NEOs during the fiscal year ended March 31, 2016. The compensation plans under which the grants in the following table were made are described in the Compensation Discussion and Analysis section above.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards
|
|
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards(1)
|
|
|
All Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
|
|
|
Exercise
or Base
Price of
Option
Awards
|
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
|
|
Name
|
|
Grant Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
M.P. Gregoire
|
|
|
5/29/2015(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,640
|
|
|
|
162,561
|
|
|
|
325,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,509,117
|
|
|
|
5/29/2015(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,187
|
|
|
|
|
|
|
|
|
|
|
|
1,649,994
|
|
|
|
5/29/2015(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
352,216
|
|
|
|
30.45
|
|
|
|
1,650,660
|
|
|
|
5/29/2015(8)
|
|
|
|
375,000
|
|
|
|
1,500,000
|
|
|
|
2,437,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.J. Beckert
|
|
|
5/29/2015(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,808
|
|
|
|
51,231
|
|
|
|
102,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,421,045
|
|
|
|
5/29/2015(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,077
|
|
|
|
|
|
|
|
|
|
|
|
519,995
|
|
|
|
5/29/2015(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,001
|
|
|
|
30.45
|
|
|
|
520,206
|
|
|
|
5/29/2015(8)
|
|
|
|
175,000
|
|
|
|
700,000
|
|
|
|
1,137,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Elster
|
|
|
5/29/2015(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,808
|
|
|
|
51,231
|
|
|
|
102,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,421,045
|
|
|
|
5/29/2015(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,077
|
|
|
|
|
|
|
|
|
|
|
|
519,995
|
|
|
|
5/29/2015(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,001
|
|
|
|
30.45
|
|
|
|
520,206
|
|
|
|
5/29/2015(8)
|
|
|
|
175,000
|
|
|
|
700,000
|
|
|
|
1,137,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Sayed
|
|
|
8/10/2015(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,536
|
|
|
|
26,144
|
|
|
|
52,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
699,718
|
|
|
|
8/10/2015(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,714
|
|
|
|
|
|
|
|
|
|
|
|
256,802
|
|
|
|
8/10/2015(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129,856
|
|
|
|
|
|
|
|
|
|
|
|
3,599,998
|
|
|
|
8/10/2015(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,647
|
|
|
|
29.47
|
|
|
|
258,662
|
|
|
|
5/29/2015(8)
|
|
|
|
96,311
|
|
|
|
385,246
|
|
|
|
626,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L.P. Flaherty
|
|
|
5/29/2015(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,837
|
|
|
|
43,349
|
|
|
|
86,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,202,415
|
|
|
|
5/29/2015(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,449
|
|
|
|
|
|
|
|
|
|
|
|
439,972
|
|
|
|
5/29/2015(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,924
|
|
|
|
30.45
|
|
|
|
440,175
|
|
|
|
5/29/2015(8)
|
|
|
|
156,250
|
|
|
|
625,000
|
|
|
|
1,015,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts shown represent shares of our Common Stock in respect of three-year performance share awards granted in fiscal year 2016. The threshold level is set at 25% and the maximum level is set at 200%.
|
(2)
|
The amounts in this row represent the fiscal year 2016-2018 three-year performance share award threshold, target and maximum payouts approved under the fiscal year 2016 long-term incentive plan by the Compensation
Committee in early fiscal year 2016, as described above in Compensation Discussion and Analysis, and the amounts reported in the last column represent the fair value as of the date the targets were set, computed in accordance with FASB
ASC Topic 718 based on probable outcome, assuming target. See Stock Plans, in the Notes to the Consolidated Financial Statements in our 2016 Form 10-K for an explanation of the methodology and assumptions used in the FASB ASC Topic 718
valuations.
|
(3)
|
The amounts in this row represent the number and grant date fair value of restricted stock awards granted on May 29, 2015, which vest 34%, 33% and 33% on May 29, 2016, 2017 and 2018, respectively.
|
(4)
|
The amounts in this row represent the number, exercise price and grant date fair value of stock options awarded on May 29, 2015, which vest 34%, 33% and 33% on May 29, 2016, 2017 and 2018, respectively.
|
(5)
|
The amounts in this row represent the number and grant date fair value of restricted stock awards granted to Mr. Sayed on August 10, 2015, which vest 34%, 33% and 33% on August 10, 2016, 2017 and 2018,
respectively. These awards were part of his fiscal year 2016 LTIP award.
|
(6)
|
The amounts in this row represent the number and grant date fair value of restricted stock units awarded to Mr. Sayed on August 10, 2015, which vest 45%, 33% and 22% on August 10, 2016, 2017 and 2018,
respectively. This grant represents his sign-on equity grant, as described in more detail below.
|
55
(7)
|
The amounts in this row represent the number, exercise price and grant date fair value of stock options awarded to Mr. Sayed on August 10, 2015, which vest 34%, 33% and 33% on August 10, 2016, 2017 and
2018, respectively. These awards were part of his fiscal year 2016 LTIP award.
|
(8)
|
The amounts in this row represent the threshold, target and maximum payouts under the annual performance cash incentive for fiscal year 2016. Payout of the annual performance cash incentive was made early in fiscal year
2017 and is reflected in the Non-Equity Incentive Plan Compensation column of the Fiscal Year 2016 Summary Compensation Table above, and is discussed in Compensation Discussion and Analysis, above.
|
56
Outstanding Equity Awards at 2016 Fiscal Year-End
The following table sets forth certain information with respect to outstanding equity awards at March 31, 2016 with respect to the NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Date/
Service
Inception
Date
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units
of
Stock
That Have
Not
Vested
(#)
|
|
|
Market
Value of
Shares
or Units
of
Stock
That
Have Not
Vested(4)
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
Value of
Unearned
Shares,
Units or
Other Rights
That
Have
Not
Vested(5)
($)
|
|
M.P. Gregoire
|
|
|
1/7/2013
|
|
|
|
394,389
|
(1)
|
|
|
|
|
|
|
22.82
|
|
|
|
1/7/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2013
|
|
|
|
291,157
|
(2)
|
|
|
|
|
|
|
24.41
|
|
|
|
1/7/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/13/2013
|
|
|
|
255,410
|
(1)
|
|
|
125,798
|
(1)
|
|
|
26.98
|
|
|
|
5/13/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
72,409
|
(1)
|
|
|
140,557
|
(1)
|
|
|
28.69
|
|
|
|
6/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
352,216
|
(1)
|
|
|
30.45
|
|
|
|
5/29/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,905
|
|
|
|
920,775
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,187
|
|
|
|
1,668,418
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162,714
|
(6)
|
|
|
5,009,964
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
203,526
|
(7)
|
|
|
6,266,566
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,092
|
|
|
|
2,589,193
|
|
|
|
336,240
|
|
|
|
11,276,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.J. Beckert
|
|
|
9/21/2006
|
|
|
|
4,864
|
(1)
|
|
|
|
|
|
|
23.27
|
|
|
|
9/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/14/2011
|
|
|
|
24,561
|
(1)
|
|
|
|
|
|
|
21.78
|
|
|
|
6/14/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/22/2012
|
|
|
|
84,864
|
(1)
|
|
|
|
|
|
|
25.24
|
|
|
|
5/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2013
|
|
|
|
53,062
|
(3)
|
|
|
|
|
|
|
24.41
|
|
|
|
5/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/13/2013
|
|
|
|
111,452
|
(1)
|
|
|
54,893
|
(1)
|
|
|
26.98
|
|
|
|
5/13/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
26,736
|
(1)
|
|
|
51,897
|
(1)
|
|
|
28.69
|
|
|
|
6/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
111,001
|
(1)
|
|
|
30.45
|
|
|
|
5/29/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,041
|
|
|
|
339,952
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,077
|
|
|
|
525,801
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,078
|
(6)
|
|
|
1,849,802
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,141
|
(7)
|
|
|
1,974,901
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,118
|
|
|
|
865,753
|
|
|
|
124,219
|
|
|
|
3,824,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Elster
|
|
|
5/22/2012
|
|
|
|
53,343
|
(1)
|
|
|
|
|
|
|
25.24
|
|
|
|
5/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2013
|
|
|
|
33,353
|
(3)
|
|
|
|
|
|
|
24.41
|
|
|
|
5/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/13/2013
|
|
|
|
92,877
|
(1)
|
|
|
45,744
|
(1)
|
|
|
26.98
|
|
|
|
5/13/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/21/2014
|
|
|
|
4,208
|
(1)
|
|
|
2,072
|
(1)
|
|
|
34.26
|
|
|
|
1/21/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
28,964
|
(1)
|
|
|
56,222
|
(1)
|
|
|
28.69
|
|
|
|
6/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
111,001
|
(1)
|
|
|
30.45
|
|
|
|
5/29/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,961
|
|
|
|
368,279
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,077
|
|
|
|
525,801
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,085
|
(6)
|
|
|
2,003,967
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,141
|
(7)
|
|
|
1,974,901
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,038
|
|
|
|
894,080
|
|
|
|
129,226
|
|
|
|
3,978,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Sayed
|
|
|
8/10/2015
|
|
|
|
|
|
|
|
56,647
|
(1)
|
|
|
29.47
|
|
|
|
8/10/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,714
|
|
|
|
268,304
|
|
|
|
|
|
|
|
|
|
|
|
|
8/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129,856
|
|
|
|
3,998,266
|
|
|
|
|
|
|
|
|
|
|
|
|
8/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,732
|
(7)
|
|
|
1,007,818
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138,570
|
|
|
|
4,266,570
|
|
|
|
32,732
|
|
|
|
1,007,818
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Date/
Service
Inception
Date
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units
of
Stock
That Have
Not
Vested
(#)
|
|
|
Market
Value of
Shares
or Units
of
Stock
That
Have Not
Vested(4)
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
Value of
Unearned
Shares,
Units or
Other Rights
That
Have
Not
Vested(5)
($)
|
|
L.P. Flaherty
|
|
|
8/1/2013
|
|
|
|
49,848
|
(1)
|
|
|
24,551
|
(1)
|
|
|
30.12
|
|
|
|
8/1/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/1/2013
|
|
|
|
246,952
|
(1)
|
|
|
121,632
|
(1)
|
|
|
30.12
|
|
|
|
8/1/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
20,052
|
(1)
|
|
|
38,923
|
(1)
|
|
|
28.69
|
|
|
|
6/2/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/14/2015
|
|
|
|
869
|
(1)
|
|
|
1,684
|
(1)
|
|
|
31.06
|
|
|
|
1/14/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
93,924
|
(1)
|
|
|
30.45
|
|
|
|
5/29/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,756
|
|
|
|
577,497
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,281
|
|
|
|
254,972
|
|
|
|
|
|
|
|
|
|
|
|
|
1/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
358
|
|
|
|
11,023
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,449
|
|
|
|
444,885
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,058
|
(6)
|
|
|
1,387,336
|
|
|
|
|
1/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,951
|
(6)
|
|
|
60,071
|
|
|
|
|
5/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,272
|
(7)
|
|
|
1,671,035
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,844
|
|
|
|
1,288,377
|
|
|
|
101,281
|
|
|
|
3,118,442
|
|
(1)
|
Award vests 34% on the first anniversary of the grant date and 33% on each of the second and third anniversaries of the grant date.
|
(2)
|
Award granted on February 21, 2013 vested 34%, 33%, and 33% on January 7, 2014, 2015, and 2016, respectively.
|
(3)
|
Award granted on February 21, 2013 vested 34%, 33%, and 33% on May 22, 2013, 2014, and 2015, respectively.
|
(4)
|
Represents the market value, based on the closing price of the Common Stock on March 31, 2016 ($30.79), for shares held as of March 31, 2016.
|
(5)
|
Represents the market value, based on the closing price of the Common Stock on March 31, 2016 ($30.79), for shares projected to be issuable in settlement of performance shares for those performance cycles that have
not concluded as of March 31, 2016.
|
(6)
|
Represents the number of shares that may be issued under the fiscal year 2015-2017 three-year performance share component of the fiscal year 2015 long-term incentive plan if performance shares are earned at the
projected earnings level as of the fiscal year end 2016 of 119.7%. No shares have been issued under this award to date and the number of shares earned, if any, will depend on performance and the Compensation Committees discretion. Any shares
earned will immediately vest on issuance early in fiscal year 2018.
|
(7)
|
Represents the number of shares that may be issued under the fiscal year 2016-2018 three-year performance share component of the fiscal year 2016 long-term incentive plan if performance shares are earned at the
projected earnings level as of the fiscal year end 2016 of 125.2%. No shares have been issued under this award to date and the number of shares earned, if any, will depend on performance and the Compensation Committees discretion. Any shares
earned will immediately vest on issuance early in fiscal year 2019.
|
58
Fiscal Year 2016 Option Exercises and Stock Vested
The following table presents information about each stock option exercise and vesting of stock during the fiscal year ended March 31, 2016
for each of the NEOs on an aggregated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number
of
Shares
Acquired on
Exercise
(#)
|
|
|
Value
Realized on
Exercise
($)
|
|
|
Number
of
Shares
Acquired on
Vesting
(#)
|
|
|
Value
Realized on
Vesting(2)
($)
|
|
M.P.
Gregoire
|
|
|
|
|
|
|
|
|
|
|
152,971
|
(1)
|
|
|
4,568,724
|
|
R.J.
Beckert
|
|
|
|
|
|
|
|
|
|
|
70,295
|
(1)
|
|
|
2,169,897
|
|
A.
Elster
|
|
|
1,738
|
|
|
|
14,895
|
|
|
|
63,837
|
(1)
|
|
|
1,970,129
|
|
A.
Sayed
|
|
|
|
|
|
|
|
|
|
|
44,411
|
(1)
|
|
|
1,331,885
|
|
L.P.
Flaherty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These amounts represent restricted stock units that vested in fiscal year 2016, in addition to the shares that relate to performance cycles that concluded in fiscal year 2016. These shares vested early in fiscal year
2017, when the Compensation Committee certified the attainment of the performance goals for these performance cycles.
|
(2)
|
Value Realized on Vesting for restricted stock was calculated using the stock price on the respective vesting dates. Value Realized on Vesting for the performance share awards was calculated
using $30.79 (the closing stock price on March 31, 2016), because the actual value was not determined until early in fiscal year 2017, when the Compensation Committee certified the attainment of the performance goals for these performance
cycles.
|
59
Fiscal Year 2016 Non-Qualified Deferred Compensation
The following table summarizes the NEOs compensation under our Executive Deferred Compensation Plan, including our 401(k) Supplemental
Plans and the executive deferred compensation arrangements. See Other Compensation Arrangements Provided to Our Named Executive Officers Deferred Compensation Arrangements and 401(k) Supplemental Plans, below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last Fiscal
Year
($)
|
|
|
Registrant
Contributions
in Last Fiscal
Year(1)
($)
|
|
|
Aggregate
Earnings /
Losses in
Last Fiscal
Year(2)
($)
|
|
|
Aggregate
Withdrawals /
Distributions
($)
|
|
|
Aggregate
Balance
at
Last Fiscal
Year-End(3)
($)
|
|
M.P. Gregoire
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Deferred Compensation
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA, Inc. Restoration Plan
|
|
|
|
|
|
|
7,900
|
|
|
|
14
|
|
|
|
|
|
|
|
7,264
|
|
CA, Inc.
Excess Benefit Plan
|
|
|
|
|
|
|
11,263
|
|
|
|
20
|
|
|
|
|
|
|
|
10,366
|
|
|
|
|
|
|
|
R.J. Beckert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Deferred Compensation
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA, Inc. Restoration Plan
|
|
|
|
|
|
|
7,900
|
|
|
|
101
|
|
|
|
|
|
|
|
47,238
|
|
CA, Inc.
Excess Benefit Plan
|
|
|
|
|
|
|
11,263
|
|
|
|
145
|
|
|
|
|
|
|
|
68,005
|
|
|
|
|
|
|
|
A. Elster
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Deferred Compensation
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA, Inc. Restoration Plan
|
|
|
|
|
|
|
7,900
|
|
|
|
114
|
|
|
|
|
|
|
|
53,030
|
|
CA, Inc.
Excess Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Sayed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Deferred Compensation
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA, Inc. Restoration Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA, Inc.
Excess Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L.P. Flaherty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Deferred Compensation
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA, Inc. Restoration Plan
|
|
|
|
|
|
|
7,900
|
|
|
|
14
|
|
|
|
|
|
|
|
7,264
|
|
CA, Inc.
Excess Benefit Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As reflected and described above in footnote (4) to the Fiscal Year 2016 Summary Compensation Table, we made a discretionary contribution in fiscal year 2017 to our 401(k) Supplemental Plans in respect of fiscal
year 2016 performance and, therefore, that contribution is reflected in the table above. For additional information, please see Other Compensation Arrangements Provided to Our Named Executive Officers 401(k) Supplemental Plans,
below.
|
(2)
|
Represents earnings during fiscal year 2016 under the Executive Deferred Compensation Plan and the 401(k) Supplemental Plans. For additional information, please see Other Compensation Arrangements Provided to Our
Named Executive Officers Deferred Compensation Arrangements and 401(k) Supplemental Plans, below.
|
(3)
|
This column does not include amounts that are represented in footnote (1) concerning the Companys discretionary contribution made in respect of fiscal year 2016 as the timing of the fiscal year 2016
discretionary contribution was made after the Companys fiscal year end and therefore was not included in the NEOs aggregate balances as of March 31, 2016.
|
60
Other Compensation Arrangements Provided to Our Named Executive Officers
Deferred Compensation Arrangements
The Company offers senior executives, including the NEOs, an unfunded Executive Deferred Compensation Plan, under which they may defer up to
90% of their annual performance cash incentive payouts. Compensation that is deferred is credited to a participants account, which is indexed to one or more investment options chosen by the participant. The amount credited is adjusted for,
among other things, hypothetical investment earnings, expenses and gains or losses to the investment options. The investment options generally track those options available to our U.S. employees under the tax-qualified 401(k) plan.
Under the Executive Deferred Compensation Plan, a participant receives a lump sum distribution of the value of the participants deferral
account after the earliest of death, disability, six months after separation from service, a termination in connection with a change in control (as each term is defined in the plan document) or a date specified by the
participant (generally 5, 10 or 15 years following the deferral).
401(k) Supplemental Plans
The CA, Inc. Restoration Plan and the CA, Inc. Excess Benefit Plan (the 401(k) Supplemental Plans) are unfunded plans that were
created for the purpose of benefiting participants in the CA Savings Harvest Plan, our 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 these plans, we 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, we 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 our 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 termination of the plan or a change in control of the Company, the accounts become fully
vested. Within six months following a separation from service, the vested portion of the accounts is distributed in the form of a lump sum.
Employment and Separation Arrangements
Below are summaries of the employment and separation arrangements for the NEOs. The Company also adopted an Executive Severance Policy in
fiscal year 2015 that provides for payments to be made upon certain termination events, a description of which immediately follows these summaries.
Michael P. Gregoire (Chief Executive Officer)
Mr. Gregoires employment arrangement, dated December 10, 2012, provides that he will be paid an initial base salary at the
annual rate of $1,000,000. In each fiscal year, Mr. Gregoire is eligible to receive a target annual performance cash incentive of 150% of his annual base salary and a target long-term incentive performance award of at least $5,500,000, subject
to the terms and conditions of the Companys annual performance cash incentive and long-term incentive performance programs, respectively, and subject to reduction only in connection with a proportionate reduction affecting target levels for
the Companys other executive officers. As described in the Compensation Discussion and Analysis section above, Mr. Gregoires target long-term incentive performance award was increased to $8,250,000 for fiscal year 2016.
Mr. Gregoire is eligible to participate in all retirement, welfare and benefit plans and perquisites on a basis that is no less favorable than those provided to other senior executives of the Company generally.
61
In connection with his commencement of employment, Mr. Gregoire was awarded sign-on equity
grants under the Companys 2011 Incentive Plan of $3,000,000 in stock options and $2,000,000 in restricted stock units, of which 34% vested on January 7, 2014 and 33% vested on both of January 7, 2015 and January 7, 2016.
Mr. Gregoire was also paid a cash sign-on bonus of $500,000 in lieu of an annual bonus for fiscal year 2013 and to help offset his expenses associated with his relocation to the New York, NY metropolitan area and negotiation of his employment
arrangement.
Mr. Gregoires employment is at-will and may be terminated at any time in accordance with the terms of his
employment arrangement. If Mr. Gregoires employment is terminated by the Company without cause or by Mr. Gregoire for good reason, each as defined in his employment arrangement, on or before January 7,
2018, he will be eligible to receive, subject to his execution of a release of claims in favor of the Company: (i) accelerated vesting of any then-unvested portion of his sign-on equity grants (but sign-on stock options may not be exercised and
sign-on restricted stock units will not be settled prior to their original vesting dates, and sign-on stock options will expire no later than one year thereafter); (ii) a prorated annual bonus for the year in which the termination date occurs,
in an amount determined based on the Companys actual performance and paid at the time his annual bonus would otherwise have been paid; (iii) a cash severance payment equal to 150% of his annual base salary if the termination date occurs
on or prior to January 7, 2016, 75% of his annual base salary if the termination date occurs during the period from January 8, 2016 through January 7, 2017, and 37.5% of his annual base salary if the termination date occurs during the
period from January 8, 2017 through January 7, 2018; and (iv) payment of Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums for up to 18 months following termination for himself and his eligible dependents.
If Mr. Gregoires employment is terminated by the Company without cause or by Mr. Gregoire for good
reason after January 7, 2018, his employment arrangement provides that he will not be entitled to receive any cash severance, but he will be eligible to receive, subject to his execution of a release of claims in favor of the Company:
(i) a full annual bonus for the year in which the termination date occurs, in an amount determined based on the Companys actual performance and paid at the time his annual bonus would otherwise have been paid, provided that the targets
and terms of the annual bonus for that year have been approved by the Compensation Committee prior to his termination date; and (ii) COBRA premium payments as described above.
Under Mr. Gregoires employment arrangement, the Company must also indemnify and hold Mr. Gregoire harmless for acts and
omissions in connection with his employment to the maximum extent permitted under applicable law and the Companys certificate of incorporation and bylaws, and must provide him coverage under the Companys directors and officers liability
insurance policy. Mr. Gregoire is subject to standard non-compete and non-solicitation covenants during, and for the 18-month period following, his employment with the Company, as well as perpetual confidentiality and mutual non-disparagement
covenants.
Ayman Sayed (Executive Vice President, Chief Product Officer)
Mr. Sayeds start date with the Company was August 10, 2015. His employment arrangement, dated June 30, 2015, provides an
initial base salary at the annual rate of $600,000. For fiscal year 2016, Mr. Sayeds target annual performance cash incentive was $600,000 and his target long-term incentive performance award was $2,000,000, each of which was prorated
based on the number of days employed during the fiscal year. Mr. Sayeds annual base salary is subject to reduction only in connection with a proportionate reduction affecting salaries for the Companys other executive officers. The
target levels for his future annual and long-term performance incentive awards remain subject to the review and approval of the Compensation Committee. Mr. Sayed is eligible to participate in all retirement, welfare and benefit plans and
perquisites on a basis that is no less favorable than those provided to other senior executives of the Company generally.
The Company
paid Mr. Sayed, 30 days after Mr. Sayeds start date, a cash sign-on bonus of $1,750,000. He was also awarded a sign-on equity grant under the Companys 2011 Incentive Plan of $3,600,000 in restricted
62
stock units, of which 45% will vest on August 10, 2016, 33% will vest on August 10, 2017 and 22% will vest on August 10, 2018. These sign-on awards were granted as an inducement to
accept the Companys offer of employment and to compensate him for amounts forfeited with his previous employer. The cash sign-on bonus is subject to recoupment if Mr. Sayeds employment is terminated before the first anniversary of
his start date by the Company with cause or by Mr. Sayed other than for good reason, each as defined in his employment arrangement.
Mr. Sayeds employment is at-will and may be terminated at any time in accordance with the terms of his employment arrangement and
any severance or separation pay due will be governed by the Executive Severance Policy, subject to his execution of a release of claims in favor of the Company, and any then-unvested portion of his sign-on equity grant will continue to vest in
accordance with the original schedule.
Mr. Sayed is subject to standard non-compete and non-solicitation covenants during, and for
the one-year period following, his employment with the Company, as well as perpetual confidentiality and non-disparagement covenants.
Lauren P. Flaherty (Executive Vice President and Chief Marketing Officer)
Ms. Flahertys start date with the Company was August 1, 2013. For fiscal year 2016, her base salary and target annual
performance cash incentive were each $625,000 and her target long-term incentive performance award was $2,200,000. Ms. Flahertys annual base salary is subject to reduction only in connection with a proportionate reduction affecting
salaries for the Companys other executive officers. The target levels for her annual and long-term performance incentive awards remain subject to the review and approval of the Compensation Committee. Ms. Flaherty is eligible to
participate in all retirement, welfare and benefit plans and perquisites on a basis that is no less favorable than those provided to other senior executives of the Company generally.
In connection with her hire, Ms. Flaherty was awarded sign-on equity grants under the Companys 2011 Incentive Plan of $2,200,000 in
stock options and $1,600,000 in restricted stock units, all of which will vest in approximately equal installments on each of the first three anniversaries of the grant date. The Company also agreed to pay Ms. Flaherty a cash sign-on bonus of
$500,000 intended to compensate her for amounts forfeited with her prior employer, of which $250,000 was paid 30 days after her start date and the remaining $250,000 was paid on the second anniversary of her start date as shown in the Summary
Compensation Table. The cash sign-on bonus was subject to recoupment if Ms. Flahertys employment was terminated before the second anniversary of her start date by the Company with cause or by Ms. Flaherty other than for
good reason, each as defined in her employment arrangement.
Ms. Flahertys employment is at-will and may be
terminated at any time in accordance with the terms of her employment arrangement. If Ms. Flahertys employment is terminated by the Company without cause or by Ms. Flaherty for good reason on or before
December 31, 2016, her employment arrangement provides that she will be eligible to receive, subject to her execution of a release of claims in favor of the Company: (i) accelerated vesting of any then-unvested portion of her sign-on
equity grants (but sign-on stock options may not be exercised and sign-on restricted stock units will not be settled prior to their original vesting dates, and sign-on stock options will expire no later than one year thereafter); (ii) a
prorated annual bonus for the year in which the termination date occurs, in an amount determined based on the Companys actual performance and paid at the time her annual bonus would otherwise have been paid; and (iii) a cash severance
payment equal to her annual base salary.
Ms. Flaherty is subject to standard non-compete and non-solicitation covenants during, and
for the one-year period following, her employment with the Company pursuant to our standard employment and confidentiality agreement, as well as perpetual confidentiality and non-disparagement covenants.
63
Richard Beckert (Executive Vice President and Chief Financial Officer) and Adam Elster
(Executive Vice President and Group Executive, Worldwide Sales and Services)
At the time Mr. Beckert was promoted to CFO in
May 2011, we agreed that, in the event his employment is terminated by the Company without cause or he resigns for good reason on or before April 1, 2015, he would be eligible to receive a severance payment equal to his
base salary and payment of a prorated amount of any outstanding annual performance cash incentive award based on the Companys actual performance and paid at the time the bonus would have otherwise been paid.
At the time Mr. Elster was promoted to Executive Vice President and Group Executive, Worldwide Sales and Services in January 2014, we
agreed that, in the event his employment is terminated by the Company without cause or he resigns for good reason on or before January 21, 2017, he would be eligible to receive a severance payment equal to his annual
base salary (or 75% of his annual base salary if such termination occurs after January 21, 2017 but before January 21, 2018) and payment of a prorated amount of any outstanding annual performance cash incentive award based on the
Companys actual performance and paid at the time the bonus would have otherwise been paid.
The employment arrangements with the
NEOs summarized above generally contain similar definitions for good reason and cause. Good reason is generally defined as: (i) any material and adverse change in the NEOs authorities and
responsibilities; (ii) any material reduction by the Company of the NEOs base salary or target incentive compensation; or (iii) any material breach by the Company of the NEOs employment arrangement. Cause is
generally defined as: (i) willful failure to perform duties; (ii) conduct that materially harms the reputation or financial position of the Company; (iii) conviction of, or plea of guilty or
nolo contendere
to, a felony; or
(iv) the commission of any other crime involving dishonesty, breach of fiduciary duties, or failure to cooperate with the Company in any investigation, or impeding any investigation.
Further, as described immediately below, the NEOs are eligible for separation payments in accordance with the Companys Executive
Severance Policy. If an NEO is covered by and receives termination of employment benefits under an individual employment arrangement (as described above), such payments and benefits will reduce (but not below zero) the corresponding payments or
benefits provided under the Executive Severance Policy. In that case, the NEO would receive the greater of the two separation payments but not both of them.
Executive Severance Policy
As of May 13, 2014, the Compensation Committee approved a severance policy for senior executives, intended to provide a uniform policy for
the payment of severance benefits to the CEO and the CEOs direct reports in the event of certain terminations of employment. The policy generally provides for the following in the event of a termination without cause or resignation
for good reason: (i) cash severance payment equal to 100% of each executives respective base salary (or 150% of base salary in the case of the CEO), (ii) a prorated annual performance cash incentive for the year in which
the termination occurs, based on actual performance and paid at the time the bonus would otherwise have been paid, (iii) a prorated portion of outstanding performance shares (based on the portion of the performance cycle completed prior to the
termination date), based on actual performance and paid at the time the shares would otherwise have been paid and (iv) 18 months of COBRA premium-equivalent payments. All payments would be conditioned on the executive executing a valid
release of claims against the Company.
Change in Control Severance Policy
We maintain a Change in Control Severance Policy, which was initially approved by the Board of Directors in October 2004. This policy covers
such senior executives as the Board of Directors may designate from time to time, including the NEOs discussed below.
64
Our Change in Control Severance Policy is intended to provide post-change in control severance
benefits consistent with current competitive practice. These benefits are intended to: (i) provide additional incentive to those key executives most closely connected to a potential change in control to remain focused on the Companys
business priorities and to act more objectively and, therefore, in the best interests of stockholders, despite the fact that such a transaction could result in the executives termination; (ii) encourage key executives to remain with us
prior to completion of a change in control and to work toward a successful transition; and (iii) provide potential additional non-competition and employee non-solicitation protection. In addition, pursuant to the equity incentive plans under
which equity-based awards are granted such as options, restricted stock, restricted stock units and performance shares those equity-based awards generally vest upon a change in control if granted under the 2002 or 2007 Incentive Plans.
Stock options and restricted stock awards granted under the 2011 Incentive Plan generally vest upon a termination without cause or for good reason (each as defined in the 2011 Incentive Plan) within a two-year period
following a change in control or will immediately vest upon a change in control if the Companys stock ceases to be publicly traded following the change in control or these equity awards are not honored or assumed in connection with the change
in control. As a condition to receiving a payment under the Change in Control Severance Policy, an executive must sign a separation and release agreement that, among other things, requires the executive to acknowledge that his or her existing
confidentiality agreement with us, including with respect to non-competition and non-solicitation provisions, continues to be in full force and effect.
The policy provides for certain payments and benefits in the event that, following a change in control or potential change in control of the
Company, a covered executives employment is terminated either without cause by us or for good reason by the executive. The amount of the severance payment would range from 1.00 to 2.99 times an executives annual
base salary and bonus (bonus is generally defined under the policy as the higher of the target annual performance cash incentive for the fiscal year in which the termination occurs or the average annual performance cash incentives earned
during the last three completed fiscal years of the Company immediately preceding the date of termination) as determined from time to time by the Compensation Committee. As of March 31, 2016, Messrs. Gregoire, Beckert, Elster and Sayed would
have been entitled to cash severance payments equal to 2.99 times their respective annual base salaries and bonuses and Ms. Flaherty would be entitled to a cash severance payment equal to 2.00 times her annual base salary and bonus, to be paid
no later than 60 days following a termination of employment.
The policy also provides the following additional benefits:
(i) prorated target bonus payments for the year of termination; (ii) a payment equal to the cost of 18 months of COBRA premium payments; (iii) one year of outplacement services; and (iv) if applicable, certain relocation
expenses. In fiscal year 2016, the Company amended the Change in Control Severance Policy to remove all provisions that could require the Company to gross-up an executive with respect to excise taxes under Section 280G of the
Internal Revenue Code. Although these provisions existed since the Policys inception, effective July 2010, the Compensation Committee determined that it would not enter into any new agreements with executive officers providing for excise tax
gross-up provisions with respect to payments contingent upon a change in control. In fiscal year 2016, the only officer with a legacy change in control tax gross-up provision agreed to have such provision removed. In connection with that agreement,
the Change in Control Severance Policy was formally amended to remove all excise tax gross-up related provisions. There are no executive officers entitled to any excise tax gross up benefits as of March 31, 2016.
Under the policy, a change in control would include, among other things, each of the following events: (i) the acquisition of
35% or more of our voting power; (ii) a change in a majority of the incumbent members of our Board of Directors; (iii) the sale of all or substantially all our assets; (iv) the consummation of certain mergers or other business
combinations; and (v) stockholder approval of a plan of liquidation or dissolution.
65
Estimated Payments in the Event of Termination of Employment or Following a Change
in Control
Upon certain types of terminations of employment not related to a change in control of the Company, the Company may pay
severance benefits to the NEOs. As described above, the NEOs are eligible for separation payments under the Companys Executive Severance Policy and, in certain situations, separation payments are also provided under an individual employment
arrangement entered into with an NEO. For additional information, please see Other Compensation Arrangements Provided to Our Named Executive Officers Employment and Separation Arrangements and Other Compensation Arrangements
Provided to Our Named Executive Officers Executive Severance Policy, above.
The following table shows the potential payments
to our NEOs under existing policies, agreements, plans or arrangements, under various scenarios involving a change in control or termination of employment, assuming a March 31, 2016 termination date and using the closing price of the Common
Stock on March 31, 2016 of $30.79.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Due
to Death(1)
($)
|
|
|
Termination Due
To Disability(1)
($)
|
|
|
Without Cause
/
Resignation for
Good Reason (per
Employment
Arrangement)(2)
($)
|
|
|
Certain
Terminations
Following a
Change in
Control(3)
($)
|
|
M.P. Gregoire
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
1,500,000
|
|
|
|
7,475,000
|
|
Interrupted Performance Cycles(4)
|
|
|
4,455,960
|
|
|
|
4,408,696
|
|
|
|
4,408,696
|
|
|
|
4,455,960
|
|
Acceleration of Unvested
Equity(5)
|
|
|
3,483,406
|
|
|
|
3,483,406
|
|
|
|
|
|
|
|
3,483,406
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
37,355
|
|
|
|
47,355
|
|
Total Payments
|
|
|
7,939,366
|
|
|
|
7,892,102
|
|
|
|
5,946,051
|
|
|
|
15,461,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.J. Beckert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
700,000
|
|
|
|
4,186,000
|
|
Interrupted Performance Cycles(4)
|
|
|
1,555,911
|
|
|
|
1,539,840
|
|
|
|
1,539,840
|
|
|
|
1,555,911
|
|
Acceleration of Unvested
Equity(5)
|
|
|
1,221,620
|
|
|
|
1,221,620
|
|
|
|
|
|
|
|
1,221,620
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
37,355
|
|
|
|
47,355
|
|
Total Payments
|
|
|
2,777,531
|
|
|
|
2,761,460
|
|
|
|
2,277,195
|
|
|
|
7,010,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Elster
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
700,000
|
|
|
|
4,186,000
|
|
Interrupted Performance Cycles(4)
|
|
|
1,642,215
|
|
|
|
1,625,475
|
|
|
|
1,625,475
|
|
|
|
1,642,215
|
|
Acceleration of Unvested
Equity(5)
|
|
|
1,224,172
|
|
|
|
1,224,172
|
|
|
|
|
|
|
|
1,224,172
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
37,355
|
|
|
|
47,355
|
|
Total Payments
|
|
|
2,866,387
|
|
|
|
2,849,647
|
|
|
|
2,362,830
|
|
|
|
7,099,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. Sayed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
|
|
3,588,000
|
|
Interrupted Performance Cycles(4)
|
|
|
265,625
|
|
|
|
261,522
|
|
|
|
261,522
|
|
|
|
265,625
|
|
Acceleration of Unvested
Equity(5)
|
|
|
4,341,344
|
|
|
|
4,341,344
|
|
|
|
3,963,288
|
|
|
|
4,341,344
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
37,355
|
|
|
|
47,355
|
|
Total Payments
|
|
|
4,606,969
|
|
|
|
4,602,866
|
|
|
|
4,862,165
|
|
|
|
8,242,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L.P. Flaherty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
625,000
|
|
|
|
2,500,000
|
|
Interrupted Performance Cycles(4)
|
|
|
1,250,597
|
|
|
|
1,237,511
|
|
|
|
1,237,511
|
|
|
|
1,250,597
|
|
Acceleration of Unvested
Equity(5)
|
|
|
1,499,992
|
|
|
|
1,499,992
|
|
|
|
658,990
|
|
|
|
1,499,992
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
34,116
|
|
|
|
44,116
|
|
Total
Payments
|
|
|
2,750,589
|
|
|
|
2,737,503
|
|
|
|
2,555,617
|
|
|
|
5,294,705
|
|
66
(1)
|
Upon termination due to an executives death or disability, stock options become immediately exercisable and can be exercised within one year of such death or disability, but not later than the normal expiration
date of the option. Restricted stock awards that have not vested immediately vest upon death or disability. This column includes the intrinsic value (
i.e.
, the value based upon our stock price, and in the case of options, less the exercise
price) of equity awards that would become exercisable or vested if the NEO had died or become disabled as of March 31, 2016. With regard to the three-year performance shares, promptly after death, the executives estate would receive a
prorated portion of the target share award based on the portion of the performance cycle that lapsed prior to the death. In the event of a disability, the executive would be eligible to receive a prorated number of shares based on the actual results
after the end of the performance cycle, based on the portion of the performance cycle that lapsed prior to the disability. For purposes of this calculation, we determined the value of the prorated amount of the outstanding performance share awards
under the fiscal year 2015-2017 and 2016-2018 long-term incentive plans using the closing market price of the Companys Common Stock ($30.79) on March 31, 2016 based on the achievement of target performance under those awards,
with the value of such awards discounted to reflect the present value of the target awards in the case of disability since those awards would not be paid until after the end of the applicable performance cycle.
|
(2)
|
If Mr. Gregoires employment had been terminated by the Company without cause or by Mr. Gregoire for good reason on March 31, 2016, he would have received a cash severance
payment equal to 150% of his annual base salary. Assuming a March 31, 2016 termination date, Messrs. Beckert, Sayed and Elster and Ms. Flaherty would have been entitled to their respective annual base salary amount, payable in a lump sum,
upon termination without cause or resignation for good reason. Ms. Flaherty would also be entitled to accelerated vesting of her sign-on restricted stock units and stock options and Mr. Sayed would also be entitled
to accelerated vesting of his sign-on restricted stock units (but sign-on stock options may not be exercised and sign-on restricted stock units will not be settled prior to their original vesting dates, and sign-on stock options will expire no later
than one year thereafter). Under the terms of the Executive Severance Policy, each NEO would also receive (i) a lump-sum payment of an amount equal to 18 months of COBRA premium payments, provided he or she has not commenced employment with or
accepted an offer of employment with a subsequent employer offering health benefits and (ii) with regard to the fiscal year 2015-2017 and fiscal year 2016-2018 three-year performance shares, a prorated portion of any award the executive would
have received had the executive remained employed through the payment date, based upon the attainment of the performance goals and pro-rated for the period during the performance period through the NEOs termination date.
|
(3)
|
Represents cash payments and the value of benefits payable upon a termination of employment without cause or resignation for good reason within the two-year period following a change in control,
under our Change in Control Severance Policy (described above). As of March 31, 2016, Messrs. Gregoire, Beckert, Elster and Sayed would each have been entitled to 2.99 times their annual base salaries and annual performance cash incentive
targets and Ms. Flaherty would have been entitled to 2.00 times her annual base salary and annual performance cash incentive target. In addition, this calculation includes: (i) the value of the accelerated vesting of each executives
equity awards and prorated payout with regard to outstanding three-year performance shares, calculated as described in footnote (1) above in the event of death; (ii) the value of one year of outplacement services; and (iii) the
lump-sum payment of an amount equal to 18 months of COBRA premium payments. With regard to outstanding options and restricted stock: (i) the 2002 Incentive Plan and 2007 Incentive Plan each provide for the immediate acceleration of awards upon
a change in control and (ii) the 2011 Incentive Plan generally provides for the immediate acceleration of awards upon a termination without cause or for good reason (each as defined in the 2011 Incentive Plan) within a
two-year period following a change in control or for immediate acceleration upon a change in control if the Companys stock ceases to be publicly traded following the change in control or these equity awards are not honored or assumed in
connection with the change in control.
|
67
(4)
|
With regard to the fiscal year 2015-2017 and fiscal year 2016-2018 three-year performance shares, the Compensation Committee reserves discretion, in the event of a disability, to pay a prorated portion of any award the
executive would have received had the executive remained employed through the payment date. Eligibility and amount would be determined at the conclusion of the applicable performance cycle. See also the description of the long-term incentive awards
and the three-year performance share component in Compensation Discussion and Analysis, above.
|
(5)
|
For Mr. Sayed and Ms. Flaherty, the amounts in this row reflect the accelerated vesting of the unvested portions of their respective sign-on restricted stock awards/units and stock option awards as of
March 31, 2016 pursuant to their employment arrangements.
|
In addition to the payments summarized above, upon any
termination of employment (including the scenarios described above, or a termination for cause or resignation without good reason), whether or not in connection with a change in control, the NEOs would be entitled to the balance of their vested
accounts under our tax-qualified 401(k) plan, the 401(k) Supplemental Plans and the deferred compensation arrangements and vested equity, each in accordance with their terms. Without regard to vesting, the balances of these accounts for the NEOs as
of March 31, 2016 (except for the 401(k) plan) are disclosed in the last column of the Fiscal Year 2016 Non-Qualified Deferred Compensation table, above.
Risk Considerations Relating to Compensation
The Companys management presented the Compensation Committee with an assessment of the risks involved in the design and implementation of
all of the Companys incentive compensation programs, including all of the executive compensation plans that cover our NEOs. The Compensation Committee concurred with managements assessment that our incentive compensation programs do not
give rise to risks that are reasonably likely to have a material adverse effect on the Company. Some factors considered in this analysis were the following:
|
|
|
The long-term equity awards granted to our executives are subject to long-term performance goals that are linked to the Companys long-term strategy and have long-term performance cycles or vesting schedules, which
links the compensation to long-term stock price performance and to the long-term interests of the Companys stockholders.
|
|
|
|
The Companys clawback policy gives the Compensation Committee the ability under certain circumstances to recover executive compensation awards when an executive engages in intentional misconduct or fraud that
results in a substantial restatement of the Companys financial statements.
|
|
|
|
The Compensation Committee has discretion to decrease the amount of any incentive compensation payouts (negative discretion) when determining final payouts of awards, which gives the Compensation Committee the ability
to avoid rewarding executives for excessive or inappropriate risk-taking.
|
68
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table summarizes share and exercise price information about our equity compensation plans as of March 31, 2016.
All of our equity compensation plans pursuant to which grants are being made have been approved by our stockholders. Our 2011 Incentive Plan was approved by stockholders in August 2011 and all equity awards to employees after the date of stockholder
approval will be granted under the 2011 Incentive Plan; however, awards already granted under the 2007 and 2002 Incentive Plans, including awards for which performance targets have been established under those plans, will remain outstanding and be
satisfied under those plans. Non-employee directors receive fees under the CA, Inc. 2012 Compensation Plan for Non-Employee Directors.
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number
of
Securities
Issuable
Upon
Exercise of
Outstanding
Options,
Warrants
and Rights
(#)
|
|
|
Weighted
Average
Exercise
Price of
Outstanding
Options,
Warrants
and
Rights(1)
($)
|
|
|
Number
of
Securities
Remaining
Available for
Future
Issuance
Under Equity
Compensation
Plans
(Excluding
Securities
Reflected in
the First
Column)
(#)
|
|
Equity
compensation plans approved by security holders
|
|
|
8,089,504
|
(2)
|
|
|
27.72
|
|
|
|
58,132,674
|
(3)
|
Equity
compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8,089,504
|
|
|
|
27.72
|
|
|
|
58,132,674
|
|
(1)
|
The calculation of the weighted average exercise price includes only stock options and does not include the outstanding deferred stock units, restricted stock units, performance-based awards/targets and stock units
reflected in the first column.
|
(2)
|
Includes all stock options outstanding under the 2002, 2007 and 2011 Incentive Plans; all restricted stock units outstanding under the 2007 and 2011 Incentive Plans; and all deferred stock units outstanding under the
2002, 2003 and 2012 Compensation Plans for Non-Employee Directors. Although certain shares were not awarded as of March 31, 2016 for the performance-based targets set under the fiscal year 2014, 2015 and 2016 long-term incentive plans, we have
assumed the following for purposes of this table: with regard to (i) the three-year performance share components of the fiscal year 2015-2017 and 2016-2018 long-term incentive plans (for which the performance cycles will end after fiscal years
2017 and 2018, respectively), we have assumed a payout at the maximum level and note that payouts under these arrangements could range from 0-200% of target at the end of the applicable performance cycle, depending on performance; and (ii) the
one-year performance share component of the fiscal year 2016 long-term incentive plan and the three-year performance share component of the fiscal year 2014-2016 long-term incentive plan, the actual grants occurred in fiscal year 2017 (as indicated
in the Outstanding Equity Awards at 2016 Fiscal Year-End table, above) and we have reflected the actual number of shares awarded with respect to this component in this column.
|
(3)
|
As of March 31, 2016, there were 28,763,723 shares available under the 2011 Incentive Plan, 177,145 shares available under the 2012 Compensation Plan for Non-Employee Directors, and 29,191,806 shares available
under the 2012 Employee Stock Purchase Plan.
|
69
STOCKHOLDER PROPOSALS FOR OUR 2017 ANNUAL MEETING
The submission deadline for stockholder proposals to be included in our proxy materials for the 2017 annual meeting pursuant to rule 14a-8 of
the Exchange Act is February 16, 2017, except as may otherwise be provided in rule 14a-8. All such proposals must be received by the Corporate Secretary at CA, Inc., 520 Madison Avenue, New York, New York 10022 by the required deadline in order
to be considered for inclusion in the Companys 2017 proxy materials.
ADVANCE NOTICE PROCEDURES
FOR OUR 2017 ANNUAL MEETING
Under our By-laws, director nominations and other business may be brought at the annual meeting only by
or at the direction of the Board of Directors or by a stockholder entitled to vote who has delivered notice to us containing certain information specified in the By-laws (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 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 2017 annual meeting must be submitted no earlier than April 5, 2017 and no later than May 5, 2017 (unless the
date of the meeting is changed by more than 30 days). A copy of the full text of the By-law 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 of 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.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the meeting. However, if any other business properly comes before the
meeting or any adjournment or postponement, it is the intention of the persons named in the Companys proxy to vote the shares represented thereby on those matters in accordance with their best judgment.
FORM 10-K
A COPY OF OUR ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT CHARGE TO ANY STOCKHOLDER WHO REQUESTS IN WRITING, ADDRESSED TO:
CA, INC.
ATTN.: INVESTOR
RELATIONS DEPARTMENT
520 MADISON AVENUE, NEW YORK, NEW YORK 10022
OUR ANNUAL REPORT ON FORM 10-K MAY ALSO BE OBTAINED VIA THE INTERNET AT WWW.CA.COM/INVEST.
85
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement is incorporated by reference into any other filing by us under the Securities Act of 1933, as amended,
or the Exchange Act, the sections of this Proxy Statement entitled Audit Committee Report and Compensation and Human Resources Committee Report on Executive Compensation (to the extent permitted by the rules of the SEC), as
well as the exhibits to this Proxy Statement, will not be deemed incorporated, unless specifically provided otherwise in such filing.
Dated:
June 15, 2016
New York, New York
86
SUPPLEMENTAL FINANCIAL INFORMATION
Non-GAAP Financial Measures
This Proxy
Statement includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Non-GAAP metrics for operating
expenses, operating income, operating margin and income from continuing operations exclude the following items: share-based compensation expense, non-cash amortization of purchased software and other intangible assets, charges relating to
rebalancing initiatives that are large enough to require approval from the Companys Board of Directors, fiscal 2007 restructuring costs and certain other gains and losses. The Company began expensing costs for internally developed software
where development efforts commenced in the first quarter of fiscal 2014. Due to this change, the Company also adds back capitalized internal software costs and excludes the amortization of internally developed software costs previously capitalized
from these non-GAAP metrics. Adjusted cash flow from operations excludes payments associated with the fiscal 2014 Board-approved rebalancing initiative (as described above), capitalized software development costs (as described above), and
restructuring and other payments. In addition, the non-GAAP metrics reported in this Proxy Statement exclude internally reported results from any acquisition that had a purchase price of $50 million or greater during the performance period and that
was not contemplated at the time the respective target performance goals were established. The Company presents constant currency information to provide a framework for assessing how the Companys underlying businesses performed excluding the
effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than U.S. dollars are converted into U.S. dollars at the exchange rate in effect on
the last day of the Companys prior fiscal year (
i.e.
, March 31, 2015, March 31, 2014 and March 31, 2013, respectively). Constant currency excludes the impacts from the Companys hedging program. These non-GAAP
financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with
GAAP. By excluding these items, non-GAAP financial measures facilitate managements internal comparisons to the Companys historical operating results and cash flows, to competitors operating results and cash flows, and to estimates
made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance and they are key variables in determining management incentive compensation. The Company believes these non-GAAP financial measures
are useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, the Company has historically reported similar non-GAAP financial measures to
its investors and believes that the inclusion of comparative numbers provides consistency in its financial reporting.
Stockholders are
encouraged to review the reconciliation of the non-GAAP financial measures included in the Compensation Discussion and Analysis section of this Proxy Statement to their most directly comparable GAAP financial measures, which are included
in the following tables.
87
CA, Inc.
Reconciliation of GAAP Results to Fiscal Year 2016 Non-GAAP Revenue Growth
(unaudited)
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Delta
|
|
Revenue
|
|
$
|
4,025
|
|
|
$
|
4,262
|
|
|
|
(237
|
)
|
Adjustment from acquisitions (Rally/Xceedium)
|
|
|
(97
|
)
|
|
|
|
|
|
|
(97
|
)
|
Impact of foreign currency exchange
|
|
|
|
|
|
|
(212
|
)
|
|
|
212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in constant currency adjusted for acquisitions(1)
|
|
$
|
3,928
|
|
|
$
|
4,050
|
|
|
|
(122
|
)
|
y/y decline in constant currency(1)
|
|
|
(3.0
|
)%
|
|
|
|
|
|
|
|
|
(1)
|
Constant currency information is presented to provide a framework for assessing how the Companys underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this
information, current and comparative prior period results for entities reporting in currencies other than U.S. dollars are converted into U.S. dollars at the exchange rate in effect on March 31, 2015, which was the last day of the prior fiscal
year. Constant currency excludes the impacts from the Companys hedging program.
|
Refer to Compensation Discussion and
AnalysisPerformance Measure DefinitionsFiscal 2016 Annual Performance Cash Incentive Awards for a definition of the fiscal year 2016 non-GAAP revenue growth calculation.
Certain non-material differences may arise versus actual from impact of rounding.
88
CA, Inc.
Reconciliation of GAAP Results to Fiscal Year 2016 Non-GAAP Operating Margin
(Income from Continuing Operations Before Interest and Income Taxes)
(unaudited)
(dollars in
millions)
|
|
|
|
|
|
|
Fiscal Year Ended
March 31, 2016
|
|
Revenue
|
|
$
|
4,025
|
|
Adjustment for acquisitions (Rally/Xceedium)
|
|
|
(97
|
)
|
|
|
|
|
|
Revenue adjusted for acquisitions
|
|
$
|
3,928
|
|
|
|
|
|
|
GAAP income from continuing operations before interest and income taxes
|
|
$
|
1,135
|
|
|
|
|
|
|
GAAP operating margin (% of revenue)(1)
|
|
|
28.2
|
%
|
Non-GAAP adjustments to expenses:
|
|
|
|
|
Costs of licensing and maintenance(2)
|
|
$
|
7
|
|
Cost of professional services(2)
|
|
|
4
|
|
Amortization of capitalized software costs(3)
|
|
|
256
|
|
Selling and marketing(2)
|
|
|
34
|
|
General and administrative(2)
|
|
|
35
|
|
Product development and enhancements(2)
|
|
|
17
|
|
Depreciation and amortization of other intangible assets(4)
|
|
|
44
|
|
Other expenses, net(5)
|
|
|
(1
|
)
|
|
|
|
|
|
Total Non-GAAP adjustment to operating expenses
|
|
$
|
396
|
|
|
|
|
|
|
Non-GAAP operating income (income from continuing operations before interest and income
taxes)
|
|
$
|
1,531
|
|
|
|
|
|
|
Non-GAAP operating margin (% of revenue)(6)
|
|
|
38.0
|
%
|
|
|
|
|
|
Non-GAAP adjustment for acquisitions, net (Rally/Xceedium)
|
|
$
|
52
|
|
|
|
|
|
|
Non-GAAP operating income (income from continuing operations before interest and income taxes)
adjusted for acquisitions
|
|
$
|
1,583
|
|
|
|
|
|
|
Non-GAAP operating margin adjusted for acquisitions (% of revenue)(7)(8)
|
|
|
40.3
|
%
|
(1)
|
GAAP operating margin is calculated by dividing GAAP income from continuing operations before interest and income taxes by revenue.
|
(2)
|
Non-GAAP adjustment consists of share-based compensation.
|
(3)
|
Non-GAAP adjustment consists of $146 million of purchased software amortization and $110 million of internally developed software products amortization, respectively.
|
(4)
|
Non-GAAP adjustment consists of other intangibles amortization.
|
(5)
|
Non-GAAP adjustment consists of charges relating to the FY2014 Board approved rebalancing initiative (the Fiscal 2014 Plan) and certain other gains and losses.
|
(6)
|
Non-GAAP operating margin is calculated by dividing non-GAAP operating income by revenue.
|
(7)
|
Non-GAAP operating margin adjusted for acquisitions is calculated by dividing non-GAAP operating income adjusted for acquisitions by revenue adjusted for acquisitions.
|
(8)
|
Payout attainments reflect management discretion to 100% payout for Non-GAAP Operating Margin metric.
|
Refer
to Compensation Discussion and AnalysisPerformance Measure DefinitionsFiscal 2016 Annual Performance Cash Incentive Awards for a definition of the fiscal year 2016 non-GAAP operating margin calculation.
Certain non-material differences may arise versus actual from impact of rounding.
89
CA, Inc.
Reconciliation of GAAP Results to Three-Year Non-GAAP Revenue Growth
(unaudited)
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Delta
|
|
Revenue
|
|
$
|
4,025
|
|
|
$
|
4,262
|
|
|
|
(237
|
)
|
Adjustment from acquisitions (Rally/Xceedium)
|
|
|
(97
|
)
|
|
|
|
|
|
|
(97
|
)
|
Impact of foreign currency exchange
|
|
|
|
|
|
|
(212
|
)
|
|
|
212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in constant currency adjusted for acquisitions(1)
|
|
$
|
3,928
|
|
|
$
|
4,050
|
|
|
|
(122
|
)
|
y/y decline in constant currency(1)
|
|
|
(3.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Delta
|
|
Revenue
|
|
$
|
4,262
|
|
|
$
|
4,412
|
|
|
|
(150
|
)
|
Adjustment from acquisitions (Rally/Xceedium)
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of foreign currency exchange
|
|
|
88
|
|
|
|
17
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in constant currency adjusted for acquisitions(1)
|
|
$
|
4,350
|
|
|
$
|
4,429
|
|
|
|
(79
|
)
|
y/y decline in constant currency(1)
|
|
|
(1.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Delta
|
|
Revenue
|
|
$
|
4,412
|
|
|
$
|
4,504
|
|
|
|
(92
|
)
|
Adjustment from acquisitions (Rally/Xceedium)
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of foreign currency exchange
|
|
|
4
|
|
|
|
(28
|
)
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in constant currency adjusted for acquisitions(1)
|
|
$
|
4,416
|
|
|
$
|
4,476
|
|
|
|
(60
|
)
|
y/y decline in constant currency(1)
|
|
|
(1.3
|
)%
|
|
|
|
|
|
|
|
|
Three-year average decline
|
|
|
(2.0
|
)%
|
|
|
|
|
|
|
|
|
(1)
|
Constant currency information is presented to provide a framework for assessing how the Companys underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this
information, current and comparative prior period results for entities reporting in currencies other than U.S. dollars are converted into U.S. dollars at the exchange rate in effect on the last day of the prior fiscal year (
i.e.
,
March 31, 2015, March 31, 2014 and March 31, 2013, respectively). Constant currency excludes the impact from the Companys hedging program.
|
Refer to Compensation Discussion and AnalysisPerformance Measure DefinitionsFiscal Year 2014-2016 Three-Year Performance Share Awards
for a definition of the three-year non-GAAP revenue growth calculation.
Certain non-material differences may arise versus actual from impact of rounding.
90
CA, Inc.
Reconciliation of GAAP Results to Three-Year Non-GAAP Operating Margin Growth
(Income from Continuing Operations Before Interest and Income Taxes)
(unaudited)
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Revenue
|
|
$
|
4,025
|
|
|
$
|
4,262
|
|
|
$
|
4,412
|
|
|
$
|
4,504
|
|
Adjustment for acquisitions (Rally/Xceedium)
|
|
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue adjusted for acquisitions
|
|
$
|
3,928
|
|
|
$
|
4,262
|
|
|
$
|
4,412
|
|
|
$
|
4,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income from continuing operations before interest and income taxes
|
|
$
|
1,135
|
|
|
$
|
1,162
|
|
|
$
|
1,070
|
|
|
$
|
1,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating margin (% of revenue)(1)
|
|
|
28.2
|
%
|
|
|
27.3
|
%
|
|
|
24.3
|
%
|
|
|
29.0
|
%
|
Non-GAAP adjustments to expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of licensing and maintenance(2)
|
|
$
|
7
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Cost of professional services(2)
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
Amortization of capitalized software costs(3)
|
|
|
256
|
|
|
|
273
|
|
|
|
271
|
|
|
|
305
|
|
Selling and marketing(2)
|
|
|
34
|
|
|
|
30
|
|
|
|
28
|
|
|
|
30
|
|
General and administrative(2)
|
|
|
35
|
|
|
|
29
|
|
|
|
26
|
|
|
|
23
|
|
Product development and enhancements(4)
|
|
|
17
|
|
|
|
19
|
|
|
|
(14
|
)
|
|
|
(135
|
)
|
Depreciation and amortization of other intangible assets(5)
|
|
|
44
|
|
|
|
58
|
|
|
|
60
|
|
|
|
54
|
|
Other expenses, net(6)
|
|
|
(1
|
)
|
|
|
17
|
|
|
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-GAAP adjustment to operating expenses
|
|
$
|
396
|
|
|
$
|
435
|
|
|
$
|
549
|
|
|
$
|
284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income (income from continuing operations before interest and income
taxes)
|
|
$
|
1,531
|
|
|
$
|
1,597
|
|
|
$
|
1,619
|
|
|
$
|
1,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating margin (% of revenue)(7)
|
|
|
38.0
|
%
|
|
|
37.5
|
%
|
|
|
36.7
|
%
|
|
|
35.3
|
%
|
Non-GAAP adjustment for acquisitions, net (Rally/Xceedium)
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income (income from continuing operations before interest and income taxes)
adjusted for acquisitions
|
|
$
|
1,583
|
|
|
$
|
1,597
|
|
|
$
|
1,619
|
|
|
$
|
1,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating margin adjusted for acquisitions (% of revenue)(8)
|
|
|
40.3
|
%
|
|
|
37.5
|
%
|
|
|
36.7
|
%
|
|
|
35.3
|
%
|
y/y growth
|
|
|
7.5
|
%
|
|
|
2.2
|
%
|
|
|
4.0
|
%
|
|
|
|
|
Three-year average growth
|
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
GAAP operating margin is calculated by dividing GAAP income from continuing operations before interest and income taxes by revenue.
|
(2)
|
Non-GAAP adjustment consists of share-based compensation.
|
(3)
|
For the twelve month periods ending March 31, 2016, 2015, 2014 and 2013, non-GAAP adjustment consists of $146 million, $124 million, $116 million and $162 million of purchased software amortization and $110 million
$149 million, $155 million and $143 million of internally developed software products amortization, respectively.
|
(4)
|
For the twelve month periods ending March 31 2016 and 2015, non-GAAP adjustment consists of $17 million and $19 million of share-based compensation, respectively. For the twelve month periods ending March 31,
2014 and 2013, non-GAAP adjustment consists of $19 million and $17 million of share-based compensation and ($33) million and ($152) million of software development costs capitalized, respectively.
|
91
(5)
|
Non-GAAP adjustment consists of other intangibles amortization.
|
(6)
|
Non-GAAP adjustment consists of charges relating to the FY2014 Board approved rebalancing initiative (the Fiscal 2014 Plan) and certain other gains and losses.
|
(7)
|
Non-GAAP operating margin is calculated by dividing non-GAAP operating income by revenue.
|
(8)
|
Non-GAAP operating margin adjusted for acquisitions is calculated by dividing non-GAAP operating income adjusted for acquisitions by revenue adjusted for acquisitions.
|
Refer to Compensation Discussion and AnalysisPerformance Measure DefinitionsFiscal Year 2014-2016 Three-Year Performance Share Awards
for a definition of the three-year non-GAAP operating margin growth calculation.
Certain non-material differences may arise versus actual from impact of
rounding.
92
CA, Inc.
Reconciliation of GAAP Results to Three-Year Non-GAAP Adjusted Cash Flow From Operations Growth
(unaudited)
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Net cash provided by operating activities
|
|
$
|
1,034
|
|
|
$
|
1,030
|
|
|
$
|
973
|
|
|
$
|
1,359
|
|
Restructuring and other payments
|
|
|
7
|
|
|
|
69
|
|
|
|
113
|
|
|
|
15
|
|
Capitalized software development
|
|
|
|
|
|
|
|
|
|
|
(40
|
)
|
|
|
(156
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted cash flow from operations
|
|
$
|
1,041
|
|
|
$
|
1,099
|
|
|
$
|
1,046
|
|
|
$
|
1,218
|
|
y/y (decline) growth
|
|
|
(5.3
|
)%
|
|
|
5.1
|
%
|
|
|
(14.1
|
)%
|
|
|
|
|
Adjustment for acquisitions (Rally/Xceedium)(1)
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted cash flow from operations adjusted for acquisitions
|
|
$
|
1,093
|
|
|
$
|
1,099
|
|
|
$
|
1,046
|
|
|
$
|
1,218
|
|
y/y (decline) growth adjusted for acquisitions
|
|
|
(0.5
|
)%
|
|
|
5.1
|
%
|
|
|
(14.1
|
)%
|
|
|
|
|
Three-year average decline
|
|
|
(3.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Cash flow from operations impact for acquisitions assumed to be equal to Non-GAAP Operating Margin impact (see previous table).
|
Refer to Compensation Discussion and AnalysisPerformance Measure DefinitionsFiscal Year 2014-2016 Three-Year Performance Share Awards
for a definition of the three-year non-GAAP adjusted cash flow from operations growth calculation.
Certain non-material differences may arise versus
actual from impact of rounding.
93
EXHIBIT A
CA, INC.
2011
INCENTIVE PLAN
Effective as of August 3, 2011
ARTICLE I
ESTABLISHMENT AND
PURPOSE
1.1
Purpose
.
The purpose of this CA, Inc. 2011 Incentive Plan (the Plan) is to enable CA, Inc. (the
Company) to achieve superior financial performance, as reflected in the performance of its Common Stock and other key financial or operating indicators by (i) providing incentives and rewards to certain Employees and Consultants who
are in a position to contribute to the success and long-term objectives of the Company, (ii) aiding in the recruitment and retention of Employees and (iii) providing Employees and Consultants an opportunity to acquire or expand equity
interests in the Company, thus aligning the interests of such Employees and Consultants with those of the Companys shareholders. Towards these objectives, the Plan provides for the grant of Annual Performance Bonuses, Stock Options, Restricted
Stock and Other Equity-Based Awards.
1.2
Effective Date; Shareholder Approval
.
The Plan is effective as of August 3,
2011, subject to the approval by a vote at the Companys 2011 Annual Meeting of Stockholders, or any adjournment of such meeting, of the holders of at least a majority of the Shares of the Company, present in person or by proxy and entitled to
vote at such meeting (the
Effective Date
). Any Awards granted under the Plan prior to the approval of the Plan by the Companys shareholders, as provided herein, shall be contingent on such approval; if such approval is not
obtained, the Plan shall have no effect, and any Awards granted under the Plan shall be rescinded. The Plan replaces the Companys 2007 Incentive Plan (the 2007 Plan) for Awards granted on or after the Effective Date. Awards may not
be granted under the 2007 Plan beginning on the Effective Date, but the adoption and effectiveness of this Plan will not affect the terms or conditions of any outstanding grants under the 2007 Plan prior to the Effective Date.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings, unless another definition is clearly indicated by
particular usage and context:
2.1
Annual Performance Bonus
means an Award described in Section 4.4 of the
Plan.
2.2
Award
means any form of incentive or performance award granted under the Plan, whether singly or in
combination, to a Participant pursuant to such terms, conditions, restrictions and/or limitations (if any) as the Committee may establish and as set forth in the applicable Award Agreement. Awards granted under the Plan may consist of:
(a)
Annual Performance Bonuses
awarded pursuant to Section 4.4;
(b)
Long-Term Performance Bonuses
awarded pursuant to Section 4.5;
(c)
Restricted Stock
awarded pursuant to Section 4.6;
(d)
Stock Options
awarded pursuant to Section 4.7; and
A-1
(e)
Other Equity-Based Awards
awarded pursuant to Section 4.8.
2.3
Award Agreement
means the document issued, either in writing or by electronic means, by the Company to a
Participant evidencing the grant of an Award.
2.4
Board
means the Board of Directors of the Company.
2.5
Cause
means, unless otherwise provided in the Award Agreement, (a) if the Participant has an effective
employment agreement with the Company, or participates in the Companys Change in Control Severance Policy (the
CIC Severance Policy
) on the date of grant of an Award, the definition used in such employment agreement or in
the CIC Severance Policy as in effect on the date of grant of an Award, or (b) if the Participant does not have an effective employment agreement and does not participate in the CIC Severance Policy on the date of grant of the Award,
Cause is defined as employment termination for misconduct, poor performance, or violation of any company policy or procedure. By way of example, 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 the Companys Employment and Confidentiality Agreement; (6) violation of the Companys
policies on discrimination, unlawful harassment or substance abuse; (7) violation of the Companys Work Rules, (8) violation of the Companys Workplace Violence Policy; or (9) excessive absenteeism.
2.6
Change in Control
means the occurrence of any of the following events:
(a) individuals who, on the Effective Date of the Plan, constitute the Board (the Incumbent Directors) cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a director subsequent to the Effective Date of the Plan whose election or nomination for election was approved by a vote of a majority of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that
no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be an Incumbent Director until the second anniversary of such election;
(b)
any person (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the Exchange Act) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Companys then outstanding securities eligible to
vote generally in the election of directors (the Company Voting Securities); provided, however, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of any of the following
acquisitions: (A) by the Company or any subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary, (C) by any underwriter temporarily holding securities pursuant to an
offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (c) below), or (E) a transaction (other than one described in paragraph (c) below) in which Company Voting Securities are acquired
from the Company, if a majority of the Incumbent Directors approve a resolution providing expressly that the acquisition pursuant to this clause (E) does not constitute a Change in Control under this paragraph (b);
(c) the consummation of a merger, consolidation, statutory share exchange, reorganization, sale of all or substantially all the Companys
assets or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Companys stockholders, whether for such transaction or the issuance of securities in the transaction (a
Business Combination), unless immediately following such Business Combination: (A) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the Surviving Corporation),
or (y) if applicable, the ultimate parent corporation that directly or
A-2
indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect directors of the Surviving Corporation (the Parent Corporation), is represented by
Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee
benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 35% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is
no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Boards approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a Non-Qualifying Transaction and any Business Combination which does not satisfy all of the
criteria specified in (A), (B) and (C) shall be deemed a Qualifying Transaction); or
(d) the stockholders of the
Company approve a plan of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because any person acquires beneficial ownership of more than 35% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company or its affiliates which reduces the number of
Company Voting Securities outstanding; provided, that if after the consummation of such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company
Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur. For purposes of this Change in Control definition, corporation shall include any limited liability company, partnership,
association, business trust and similar organization, board of directors shall refer to the ultimate governing body of such organization and director shall refer to any member of such governing body.
2.7
Code
means the Internal Revenue Code of 1986, as amended.
2.8
Committee
means the Compensation and Human Resource Committee of the Board formed to act on performance-based
compensation for Key Employees, or any successor committee or subcommittee of the Board. However, if a member of the Compensation and Human Resource Committee is not an outside director within the meaning of Section 162(m) of the
Code or is not a non-employee director within the meaning of Rule 16b-3 under the Exchange Act, the Compensation and Human Resource Committee may from time to time delegate some or all of its functions under the Plan to a committee or
subcommittee composed of members that meet the relevant requirements. The term Committee includes any such committee or subcommittee, to the extent of the Compensation and Human Resource Committees delegation.
2.9
Common Stock
means the Common Stock, $.10 par value per share, of the Company.
2.10
Company
means CA, Inc.
2.11
Consultant
means any consultant or adviser if:
(a) the consultant or advisor renders bona fide services to the Company;
A-3
(b) the services rendered by the consultant or advisor are not in connection with the offer or
sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Companys securities; and
(c) the consultant or adviser is a natural person who has contracted directly with the Company to render such services.
2.12
Disabled
or
Disability
means permanently and totally disabled within the meaning of the
Companys Long Term Disability Plan.
2.13
Employee
means any individual who performs services as a common
law employee for the Company or a Related Company. Employee shall not include any seasonal or temporary employees.
2.14
Exercise Price
means the price per Share, as fixed by the Committee, at which Shares may be purchased under a Stock Option. In no event shall the Exercise Price with respect to any Share subject to a Stock Option be set at
a price that is less than the Fair Market Value of a Share as of the date of grant.
2.15
Fair Market Value
of a
Share means either (a) the closing sales price of a Share as listed on the NASDAQ Stock Market on the applicable date, (b) if no sales of Shares are reported for such date, for the next preceding day for which such sales were reported or
(c) the fair market value of a Share determined in accordance with any other reasonable method approved by the Committee in its discretion.
2.16
Fair Market Value Stock Option
means a Stock Option the Exercise Price of which is set by the Committee at a
price per Share equal to the Fair Market Value of a Share on the date of grant.
2.17
GAAP
means generally
accepted accounting principles.
2.18
Good Reason
means, solely for those Participants who, on the date of grant
of an Award, (i) have an employment agreement with the Company which defines Good Reason, or (ii) participate in the CIC Severance Policy, the meaning ascribed to such term in the applicable employment agreement or CIC
Severance Policy on the date of grant of the Award.
2.19
Incentive Stock Option
means a Stock Option granted
under Section 4.7 of the Plan that meets the requirements of Section 422 of the Code and any regulations or rules promulgated thereunder and is designated in the Award Agreement to be an Incentive Stock Option.
2.20
Key Employee
means an Employee who is a covered employee within the meaning of
Section 162(m)(3) of the Code.
2.21
Long-Term Performance Bonus
means an Award described in
Section 4.5 of the Plan.
2.22
Nonqualified Stock Option
means any Stock Option granted under
Section 4.7 of the Plan that is not an Incentive Stock Option.
2.23
Participant
means an Employee or
Consultant who has been granted an Award under the Plan.
2.24
Performance Cycle
means a period measured by the
Companys fiscal year or years over which the level of attainment of performance of one or more Performance Measures shall be determined; provided, however, that the Committee, in its discretion, may determine to use a period that is less than
a full fiscal year.
A-4
2.25
Performance Measure
means, with respect to any Award granted in
connection with a Performance Cycle, the business criteria selected by the Committee to measure the level of performance of the Company during such Performance Cycle. The Committee may select as the Performance Measure for a Performance Cycle any
one or combination of the following Company measures (including any component thereof), as interpreted by the Committee, which (to the extent applicable) shall be determined on a GAAP basis, either pre-tax or after-tax and may be determined on a per
share basis:
(a) Net Operating Profit;
(b) Return On Invested Capital;
(c) Total Shareholder Return;
(d) Relative Total Shareholder Return (as compared against a peer group of the Company, which, unless otherwise specified by the Committee,
shall be the companies comprising the Standard & Poors Systems Software Index, excluding the Company);
(e) Earnings;
(f) Net Income, as adjusted;
(g) Cash Flow;
(h) Revenue
(i) Revenue Growth;
(j)
Share Performance;
(k) Relative Share Performance;
(l) Billings Growth;
(m)
Customer Satisfaction; and/or
(n) New License Sales.
2.26
Plan
means the CA, Inc. 2011 Incentive Plan, as set forth in this document and as may be further amended from
time to time.
2.27
Qualified Performance Award
means an Annual Performance Bonus, Long-Term Performance Bonus,
Restricted Stock Award or Other Equity-Based Award that is intended by the Committee to meet the requirements for qualified performance-based compensation within the meaning of Code section 162(m) and Treasury Regulation section
1.162-27(e).
2.28
Qualified Performance Award Determination Period
means the period within which Committee
determinations regarding Performance Measures, targets and payout formulas in connection with Qualified Performance Awards must be made. The Qualified Performance Award Determination Period is the period beginning on the first day of a Performance
Cycle and ending no later than ninety (90) days after commencement of the Performance Cycle; provided, however, that in the case of a Performance Cycle that is less than 12 months in duration, the Qualified Performance Award Determination
Period shall end no later than the date on which 25% of the Performance Cycle has elapsed.
A-5
2.29
Related Company
means a consolidated subsidiary of the Company for
purposes of reporting in the Companys consolidated financial statements.
2.30
Reporting Person
means an
Employee who is subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934.
2.31
Restricted Stock
means Shares issued under a Long-Term Performance Bonus under Section 4.5 or under a Restricted Stock Award pursuant to Section 4.6, which are subject to such restrictions as the Committee, in its
discretion, may impose.
2.32
Retirement
means retirement (i) at or after age 55 with ten years of service
or (ii) at or after age 65.
2.33
Rights Agreement
means the Stockholder Protection Rights Agreement dated
as of November 5, 2009 between the Company and Mellon Investor Services LLC (as rights agent).
2.34
Shares
means shares of Common Stock.
2.35
Stock Option
means a right granted under Section 4.7 of the Plan to
purchase from the Company a stated number of Shares at a specified price. Stock Options awarded under the Plan shall be in the form of either Incentive Stock Options or Nonqualified Stock Options.
2.36
Termination of Consultancy
means the date of cessation of a Consultants service relationship with the
Company for any reason, with or without cause, as determined by the Company.
2.37
Termination of Employment
means the date of cessation of an Employees employment relationship with the Company and any Related Company for any reason, with or without Cause, as determined by the Company; provided, however, that, subject to the requirements of
applicable law, an Employees employment relationship for purposes of the Plan may be treated as continuing intact while the Employee is on military leave, sick leave or other bona fide leave of absence (such as temporary employment with the
Government). Notwithstanding the foregoing, for purposes of Incentive Stock Options granted under the Plan, an Employees employment relationship shall be treated as continuing intact if the period of such leave does not exceed ninety
(90) days, or if longer, so long as the Employees right to reemployment with the Company or a Related Company is guaranteed either by statute or by contract.
ARTICLE III
ADMINISTRATION
3.1
The Committee
.
The Plan shall be administered by the Committee.
3.2
Authority of the Committee
.
The Committee shall have authority, in its sole and absolute discretion and subject to the terms
of the Plan, to (1) interpret the Plan; (2) prescribe such rules and regulations as it deems necessary for the proper operation and administration of the Plan, and amend or rescind any existing rules or regulations relating to the Plan;
(3) select Employees and Consultants to receive Awards under the Plan; (4) determine the form of an Award, the number of Shares subject to an Award, all the terms, conditions, restrictions and/or limitations, if any, of an Award including,
without limitation, the timing or conditions of exercise or vesting, and the terms of any Award Agreement; (5) determine whether Awards will be granted singly, in combination or in tandem; (6) establish and administer Performance Measures
in connection with Awards, including Qualified Performance Awards granted under the Plan; (7) certify the level of performance attainment for Performance Measures in connection with Qualified Performance Awards granted under the Plan;
(8) except as provided in Section 4.10, waive or amend any terms, conditions, restrictions or limitations of an
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Award; (9) in accordance with Article V, make such adjustments to the Plan (including but not limited to adjustment of the number of shares available under the Plan or any Award) and/or to
any Award granted under the Plan, as may be appropriate; (10) accelerate the vesting, exercise or payment of an Award; (11) provide for the deferred payment of Awards in Shares and the extent to which dividend equivalents shall be paid or
credited with respect to such Awards; (12) determine whether Nonqualified Stock Options may be transferable to family members, a family trust or a family partnership; (13) establish such subplans as the Committee may determine to be
necessary in order to implement and administer the Plan in foreign countries; and (14) take any and all other action it deems necessary or advisable for the proper operation or administration of the Plan.
3.3
Effect of Determinations
.
All determinations of the Committee shall be final, binding and conclusive on all persons having
an interest in the Plan.
3.4
Delegation of Authority
.
The Committee, in its discretion, may delegate its authority and
duties under the Plan to such other individual, individuals or committee as it may deem advisable, under such conditions and subject to such limitations as the Committee may establish. Notwithstanding the foregoing, only the Committee shall have
authority to grant and administer Awards to Key Employees and other Reporting Persons, to establish and certify Performance Measures and to grant Awards to any Employee who is acting as a delegate of the Committee in respect of the Plan.
3.5
No Liability
.
No member of the Committee, nor any person acting as a delegate of the Committee in respect of the Plan, shall
be liable for any losses incurred by any person resulting from any action, interpretation or construction made in good faith with respect to the Plan or any Award granted thereunder.
ARTICLE IV
AWARDS
4.1
Eligibility
.
Except as otherwise provided herein with respect to a specific form of an Award, all Employees and Consultants
shall be eligible to receive Awards granted under the Plan.
4.2
Participation
.
The Committee, at its sole discretion, shall
select from time to time Participants from those persons eligible under Section 4.1 above to receive Awards under the Plan.
4.3
Form of Awards
.
(a) Awards granted under the Plan shall be in the form of Annual Performance Bonuses, Long-Term Performance Bonuses, Restricted Stock, Stock Options, and Other Equity-Based Awards. Awards shall be in the form
determined by the Committee, in its discretion, and shall be evidenced by an Award Agreement. Awards may be granted singly, in combination or in tandem with other Awards. The terms and conditions applicable to Annual Performance Bonuses shall be as
set forth in Section 4.4. The terms applicable to Long-Term Performance Bonuses shall be as set forth in Section 4.5. The terms and conditions applicable to Restricted Stock shall be as set forth in Section 4.6. The terms and
conditions applicable to Stock Options shall be as set forth in Section 4.7. The terms and conditions applicable to Other Equity-Based Awards shall be as set forth in Section 4.8.
(b)
Qualified Performance Awards
.
The Committee shall designate whether an Annual Performance Bonus, Long-Term Performance
Bonus, Restricted Stock Award or Other Equity-Based Award granted under the Plan is intended to constitute a Qualified Performance Award. Qualified Performance Awards under the Plan may be granted either separately, at the same time as other Awards
designated as Qualified Performance Award, or at the same time as Awards that are not designated as Qualified Performance Awards; provided, however, that in no event may the payment of an Award that is not a Qualified Performance Award be contingent
upon the failure to attain a specific level of performance on the Performance Measure(s) applicable to a Qualified Performance
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Award for the same Performance Cycle. In the event the Committee designates an Award as a Qualified Performance Award, any determinations of the Committee pertaining to Performance Measures and
other terms and conditions of such Qualified Performance Award (other than a determination under Section 4.4(c)(ii), 4.5(c)(ii) or 4.6(b)(iii) to reduce the amount of an Award) shall be in writing and made within the Qualified Performance Award
Determination Period.
4.4
Annual Performance Bonuses
.
The Committee may grant Annual Performance Bonuses under the Plan
only to such Employees as the Committee may from time to time select, in such amounts and subject to such terms and conditions as the Committee, in its discretion, may determine. An Annual Performance Bonus awarded under the Plan may, at the
discretion of the Committee, be designated as a Qualified Performance Award. An Annual Performance Bonus that the Committee designates as a Qualified Performance Award shall be subject to the provisions of paragraphs (a) through (d) below.
(a)
Performance Cycles
.
Annual Performance Bonuses designated as Qualified Performance Awards shall be awarded in
connection with a 12-month Performance Cycle, which shall be the fiscal year of the Company; provided, however, that the Committee may, in its discretion, establish a Performance Cycle of less than 12 months.
(b)
Bonus Participants
.
Within the Qualified Performance Award Determination Period, the Committee shall determine the Employees
who shall be eligible to receive an Annual Performance Bonus designated as a Qualified Performance Award for such Performance Cycle.
(c)
Performance Measures; Targets; Payout Formula
.
(i) For each Annual Performance Bonus designated as a Qualified Performance
Award, the Committee shall fix and establish, in writing, within the Qualified Performance Award Determination Period (A) the Performance Measure(s) that shall apply to such Annual Performance Bonus; (B) the target amount of such Annual
Performance Bonus that shall be payable to each such Employee; and (C) subject to paragraph (g) below, the payout formula for computing the actual amount of such Annual Performance Bonus that shall become payable with respect to each level
of attained performance. Towards this end, such payout formula shall, based on objective criteria, set forth for the applicable Performance Measure(s) the minimum level of performance that must be attained during the Performance Cycle before any
such Annual Performance Bonus shall become payable and the percentage (which percentage may not exceed 200%) of the target amount of such Annual Performance Bonus that shall be payable to each such Employee upon attainment of various levels of
performance that equal or exceed the minimum required level.
(ii) Notwithstanding anything in this paragraph (c) to the contrary,
the Committee may, on a case by case basis and in its sole discretion, reduce, but not increase, any Annual Performance Bonus designated as a Qualified Performance Award that is payable to any Employee with respect to any given Performance Cycle,
provided
,
however
, that no such reduction shall result in an increase in the dollar amount of any such Annual Performance Bonus payable to any Key Employee.
(d)
Payment of Bonuses; Certification
.
No Annual Performance Bonus designated as a Qualified Performance Award shall be paid to
a Key Employee under this Section 4.4 unless and until the Committee certifies in writing the level of attainment of the applicable Performance Measure(s) for the applicable Performance Cycle.
(e)
Other Annual Performance Bonuses
.
Annual Performance Bonuses that are not Qualified Performance Awards shall be based on a
Performance Cycle (which may be less than 12 months) and such Performance Measures and payout formulas (which may be the same as or different than those applicable to Annual
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Performance Bonuses that are designated as Qualified Performance Awards) as the Committee, in its discretion, may establish for such purposes.
(f)
Form of Payment
.
Annual Performance Bonuses shall be paid in cash.
(g)
Amount of Bonus
.
The maximum amount that may be paid as an Annual Performance Bonus to any one Participant during any fiscal
year of the Company shall not exceed $10,000,000.
4.5
Long-Term Performance Bonuses
.
The Committee may grant Long-Term
Performance Bonuses under the Plan only to such Employees as the Committee may from time to time select, in such amounts and subject to such terms and conditions as the Committee, in its discretion, may determine. A Long-Term Performance Bonus
awarded under the Plan may, at the discretion of the Committee, be designated as a Qualified Performance Award. A Long-Term Performance Bonus that the Committee designates as a Qualified Performance Award shall be subject to the provisions of
paragraphs (a) through (d) below.
(a)
Performance Cycles
.
Long-Term Performance Bonuses designated as Qualified
Performance Awards shall be awarded in connection with a Performance Cycle, which shall be at least one fiscal year of the Company. The Committee shall determine the length of a Performance Cycle within the Qualified Performance Award Determination
Period. In the event that the Committee determines that a Performance Cycle shall be a period greater than one fiscal year, a new Long-Term Performance Bonus Award may be granted and designated as a Qualified Performance Award and a new Performance
Cycle may commence prior to the completion of the Performance Cycle associated with the prior Long-Term Performance Bonus Award.
(b)
Bonus Participants
.
Within the Qualified Performance Award Determination Period, the Committee shall determine the Employees who shall be eligible to receive a Long-Term Performance Bonus designated as a Qualified Performance Award for
such Performance Cycle.
(c)
Performance Measures; Targets; Payout Formula
.
(i) For each Long-Term Performance Bonus designated as a Qualified Performance Award, the Committee shall fix and establish, in writing,
within the Qualified Performance Award Determination Period (A) the Performance Measure(s) that shall apply to such Performance Cycle; (B) the target amount of such Long-Term Performance Bonus that shall be payable to each such Employee;
and (C) subject to paragraph (g) below, the payout formula for computing the actual amount of such Long-Term Performance Bonus that shall become payable with respect to each level of attained performance. Towards this end, such payout
formula shall, based on objective criteria, set forth for the applicable Performance Measure(s) the minimum level of performance that must be attained during the Performance Cycle before any such Long-Term Performance Bonus shall become payable and
the percentage (which percentage may not exceed 200%) of the target amount of such Long-Term Performance Bonus that shall be payable to each such Employee upon attainment of various levels of performance that equal or exceed the minimum required
level.
(ii) Notwithstanding anything in this paragraph (c) to the contrary, the Committee may, on a case by case basis and in its
sole discretion, reduce, but not increase, any Long-Term Performance Bonus designated as a Qualified Performance Award that is payable to any Employee with respect to any given Performance Cycle,
provided
,
however
, that no such
reduction shall result in an increase in the dollar amount of any such Long-Term Performance Bonus payable to any Key Employee.
(d)
Payment of Bonuses; Certification
.
No Long-Term Performance Bonus designated as a Qualified Performance Award shall be paid to a Key Employee under this Section 4.5 unless and until the Committee certifies in writing the level of
attainment of the applicable Performance Measure(s) for the applicable Performance Cycle.
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(e)
Other Long-Term Performance Bonuses
.
Long-Term Performance Bonuses that are not
Qualified Performance Awards shall be based on such Performance Cycles, Performance Measures and payout formulas (which may be the same as or different than those applicable to Long Term Performance Bonuses that are designated as Qualified
Performance Awards) as the Committee, in its discretion, may establish for such purposes.
(f)
Form of Payment
.
Long-Term
Performance Bonuses may be either paid in cash or the value of the Award may be settled in Shares, Shares of Restricted Stock, Stock Options or other Awards or any combination of the foregoing in such proportions as the Committee may, in its
discretion, determine. To the extent that a Long-Term Performance Bonus is paid in Shares of Restricted Stock, and/or Stock Options, the number of Shares of Restricted Stock payable and/or the number of Stock Options granted shall be based on the
Fair Market Value of a Share on the date of grant, subject to such reasonable Restricted Stock discount factors and/or Stock Option valuation methodology as the Committee may, in its discretion, apply. Any Shares of Restricted Stock or Awards
granted in connection with a Long-Term Performance Bonus shall be subject to the provisions of Sections 4.6(e), (f) or 4.8, as applicable. Any Stock Options granted in payment of a Long-Term Performance Bonus shall be subject to the provisions
of Sections 4.7(a), (b), (c), (d), (f) and (g).
(g)
Amount of Bonus
.
Subject to Section 4.6(f), the maximum
amount that may be paid as a Long-Term Performance Bonus in the form of Restricted Stock to any one Participant during any fiscal year of the Company shall not exceed $20,000,000.
4.6
Restricted Stock
.
The Committee may grant Restricted Stock under the Plan to such Employees as the Committee may from time
to time select, in such amounts and subject to such terms, conditions and restrictions as the Committee, in its discretion, may determine. A Restricted Stock Award may, at the discretion of the Committee, be designated as a Qualified Performance
Award. A Restricted Stock Award that the Committee designates as a Qualified Performance Award shall be subject to the provisions of paragraphs (a) through (c) below.
(a)
Performance Cycles
.
A Restricted Stock Award designated as a Qualified Performance Award shall be awarded in connection with
a Performance Cycle. Unless the Committee determines that some other period shall apply, the Performance Cycle shall be the fiscal year of the Company. In the event that the Committee determines that a Performance Cycle shall be a period greater
than a 12-month period, a new Restricted Stock Award may be granted and designated as a Qualified Performance Award and a new Performance Cycle may commence prior to the completion of the Performance Cycle associated with the prior Restricted Stock
Award.
(b)
Performance Measures; Targets and Payout Formulas
.
(i) Within the Qualified Performance Award Determination Period, the Committee shall determine the Employees who shall be eligible to receive
a Restricted Stock Award designated as a Qualified Performance Award for such Performance Cycle and shall establish, in writing, the Performance Measure(s) that shall apply for such Performance Cycle.
(ii) For each Restricted Stock Award designated as a Qualified Performance Award, the Committee shall establish, in writing, within the
Qualified Performance Award Determination Period (A) a target amount of Restricted Stock that shall be payable to each such Employee and (B) subject to paragraph (f) below, a payout formula for computing the actual amount of
Restricted Stock that shall become payable with respect to each level of attained performance. Towards this end, such payout formula shall, based on objective criteria, set forth for the applicable Performance Measure the minimum level of
performance that must be attained during the Performance Cycle before any such Restricted Stock shall become payable and the percentage (which percentage may not exceed 200%) of the target amount of Restricted Stock that shall be payable to each
such Employee
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upon attainment of various levels of performance that equal or exceed the minimum required level.
(iii) The actual amount of Restricted Stock that shall be paid to each such Employee for any given Performance Cycle under a Restricted Stock
Award designated as a Qualified Performance Award shall be determined based on such Employees target Restricted Stock Award, the actual level of achievement of the Performance Measure(s) and the payout formula determined by the Committee
pursuant to this paragraph (b) for such Performance Cycle. Notwithstanding the foregoing, the Committee may, on a case by case basis and in its sole discretion, reduce, but not increase, the actual amount of any Restricted Stock Award
designated as a Qualified Performance Award that is payable to any Employee with respect to any given Performance Cycle,
provided
,
however
, that no such reduction shall result in an increase in the amount of such Restricted Stock Award
payable to any Key Employee.
(c)
Committee Certification
.
No Shares of Restricted Stock payable under a Restricted Stock
Award designated as a Qualified Performance Award shall be paid to a Key Employee under this Section 4.6 unless and until the Committee certifies in writing the level of attainment of the applicable Performance Measure(s) for the applicable
Performance Cycle.
(d)
Other Restricted Stock Awards
.
Restricted Stock Awards that are not Qualified Performance Awards
shall be subject to such provisions as the Committee may, in its discretion, determine, and may be granted at any time; provided, however, that to the extent that the Committee determines that a Restricted Stock Award that is not a Qualified
Performance Award shall be performance-based, such Restricted Stock Award shall be awarded in connection with a Performance Cycle, applying such Performance Measures and payout formulas (which may be the same as or different than those applicable to
Restricted Stock Awards designated as Qualified Performance Awards) as the Committee, in its discretion, may establish for such purposes.
(e)
Payment of Restricted Stock
.
As soon as practicable after Restricted Stock has been awarded, a certificate or certificates
for all such Shares of Restricted Stock shall be registered in the name of the Participant and, at the discretion of the Company, be either (i) delivered to the Participant or (ii) held for the Participant by the Company. The Participant
shall thereupon have all the rights of a stockholder with respect to such Shares, including the right to vote and receive dividends or other distributions made or paid with respect to such Shares, except that such Shares shall be subject to the
vesting and forfeiture provisions of paragraph (e)(i) below. The Committee may, in its discretion, impose such restrictions on Restricted Stock as it deems appropriate. Except as the Committee may otherwise determine, and subject to the
Committees authority under Section 3.2, such Shares shall be subject to the following vesting provisions:
(i)
Vesting and
Forfeiture
.
Shares of Restricted Stock that have not yet vested shall be forfeited by a Participant upon the Participants Termination of Employment for any reason other than death or Disability. Shares of Restricted Stock shall vest in
approximately equal annual installments over a threeyear period after the end of the applicable Performance Cycle (or date of grant, in the case of Awards that are not Qualified Performance Awards).
(ii)
Acceleration of Vesting
.
Notwithstanding the foregoing, all Shares of Restricted Stock shall immediately vest upon the
death or Disability of the Participant.
(iii)
Legend
.
In order to enforce any restrictions that the Committee may impose on
Restricted Stock, the Committee shall cause a legend or legends setting forth a specific reference to such restrictions to be placed on all certificates for Shares of Restricted Stock. As restrictions are released, a new certificate, without the
legend, for the number of Shares with respect to which restrictions have been released shall be issued and delivered to the Participant as soon as possible thereafter.
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(f)
Amount of Restricted Stock
.
The maximum aggregate number of Shares of
Restricted Stock that may be issued to any one Participant under Section 4.5 and this Section 4.6 during any fiscal year of the Company shall not exceed 1,000,000 Shares, subject to adjustment as provided in Section 5.3.
4.7
Stock Options
.
Stock Options granted under the Plan may, at the discretion of the Committee, be in the form of either
Nonqualified Stock Options, Incentive Stock Options or a combination of the two, subject to the restrictions set forth in paragraph (e) below. Where both a Nonqualified Stock Option and an Incentive Stock Option are granted to a Participant at
the same time, such Awards shall be deemed to have been granted in separate grants, shall be clearly identified, and in no event will the exercise of one such Award affect the right to exercise the other Award. Unless otherwise specified, a Stock
Option shall be a Non-Qualified Stock Option. Except as the Committee may otherwise determine, and subject to the Committees authority under Section 3.2, Stock Options shall be subject to the following terms and conditions:
(a)
Amount of Shares
.
The Committee may grant Stock Options to a Participant in such amounts as the Committee may determine,
subject to the limitations set forth in Section 5.1 of the Plan. The number of Shares subject to a Stock Option shall be set forth in the applicable Award Agreement.
(b)
Exercise Price
.
Stock Options granted under the Plan shall be Fair Market Value Stock Options. The Exercise Price of a Stock
Option, as determined by the Committee pursuant to this Section 4.7(b), shall be set forth in the applicable Award Agreement.
(c)
Option Term
.
Except as provided in Section 4.7(g), all Stock Options granted under the Plan shall lapse no later than the tenth anniversary of the date of grant.
(d)
Timing of Exercise
.
Except as may otherwise be provided in the Award Agreement or as the Committee may otherwise determine,
and subject to the Committees authority under Section 3.2 to accelerate the vesting of an Award and to waive or amend any terms, conditions, limitations or restrictions of an Award, each Stock Option granted under the Plan shall be
exercisable in whole or in part, subject to the following conditions, limitations and restrictions:
(i) 34% of the Shares subject to a
Stock Option shall first become exercisable on the one-year anniversary of the date of grant, 33% shall first become exercisable on the two-year anniversary of the date of grant and the remainder shall first become exercisable on the three-year
anniversary of the date of grant;
(ii) All Stock Options granted to a Participant shall become immediately exercisable upon the death or
Disability of the Participant and must be exercised, if at all, within one year after such Participants death or Disability, but in no event after the date such Stock Options would otherwise lapse. Stock Options of a deceased Participant may
be exercised only by the estate of the Participant or by the person given authority to exercise such Stock Options by the Participants will or by operation of law. In the event a Stock Option is exercised by the executor or administrator of a
deceased Participant, or by the person or persons to whom the Stock Option has been transferred by the Participants will or the applicable laws of descent and distribution, the Company shall be under no obligation to deliver Shares thereunder
unless and until the Company is satisfied that the person or persons exercising the Stock Option is or are the duly appointed executor(s) or administrator(s) of the deceased Participant or the person to whom the Stock Option has been transferred by
the Participants will or by the applicable laws of descent and distribution;
(iii) Upon an Employees Retirement, all Stock
Options that have not become exercisable as of the date of Retirement shall be forfeited and to the extent that Stock Options have become exercisable as of such date, such Stock Options must be exercised, if at all, within one year after Retirement,
but in no event after the date such Stock Options would otherwise lapse; and
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(iv) Except as otherwise provided in Section 4.7(g) or Section 7.5, upon an
Employees Termination of Employment, or a Consultants Termination of Consultancy, for any reason other than death, Disability or Retirement, all Stock Options that have not become exercisable as of the date of termination shall be
forfeited and to the extent that Stock Options have become exercisable as of such date, such Stock Options must be exercised, if at all, within 90 days after such Termination of Employment or Termination of Consultancy.
(e)
Payment of Exercise Price
.
The Exercise Price shall be paid in full when the Stock Option is exercised and stock
certificates shall be registered and delivered only upon receipt of such payment. Unless otherwise provided by the Committee, payment of the Exercise Price may be made in cash or by certified check, bank draft, wire transfer, or postal or express
money order or any other form of consideration approved by the Committee. In addition, at the discretion of the Committee, payment of all or a portion of the Exercise Price may be made by
(i) Delivering a properly executed exercise notice to the Company, or its agent, together with irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale proceeds with respect to the portion of the Shares to be acquired upon exercise having a Fair Market Value on the date of exercise equal to the sum of the applicable portion of the Exercise Price being so
paid and appropriate tax withholding;
(ii) Tendering (actually or by attestation) to the Company previously acquired Shares that have
been held by the Participant for at least six months having a Fair Market Value on the day prior to the date of exercise equal to the applicable portion of the Exercise Price being so paid; or
(iii) any combination of the foregoing.
(f)
Incentive Stock Options
.
Incentive Stock Options granted under the Plan shall be subject to the following additional
conditions, limitations and restrictions:
(i)
Eligibility
.
Incentive Stock Options may only be granted to Employees of the
Company or a Related Company that is a subsidiary or parent corporation, within the meaning of Code Section 424, of the Company (an
ISO Related Company
). In no event may an Incentive Stock Option be granted to an Employee who
owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or such Related Company or to a Consultant.
(ii)
Timing of Grant
.
No Incentive Stock Option shall be granted under the Plan after the 10-year anniversary of the date the
Plan is adopted by the Board.
(iii)
Amount of Award
.
The aggregate Fair Market Value on the date of grant of the Shares
with respect to which such Incentive Stock Options first become exercisable during any calendar year under the terms of the Plan for any Participant may not exceed $100,000 (or such other limit as may be specified in the Code). For purposes of this
$100,000 limit, the Participants Incentive Stock Options under this Plan and all Plans maintained by the Company and an ISO Related Company shall be aggregated. To the extent any Incentive Stock Option first becomes exercisable in a
calendar year and such limit would be exceeded, such Incentive Stock Option shall thereafter be treated as a Nonqualified Stock Option for all purposes.
(iv)
Timing of Exercise
.
In the event that the Committee exercises its discretion to permit an Incentive Stock Option to be
exercised by a Participant more than 90 days after the Participants Termination of Employment and such exercise occurs more than three months after such Participant has ceased being an Employee (or more than 12 months after the Participant is
Disabled or dies), such Incentive Stock Option shall thereafter be treated as a Nonqualified Stock Option for all purposes.
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(v)
Transfer Restrictions
.
In no event shall the Committee permit an Incentive
Stock Option to be transferred by a Participant other than by will or the laws of descent and distribution, and any Incentive Stock Option granted hereunder shall be exercisable, during his or her lifetime, only by the Participant.
(g)
Extension of Stock Option Term for Blackouts
.
At its discretion, the Committee may extend the term of any Stock Option
beyond its earlier termination pursuant to Section 4.7(c), (d)(ii), (iii) or (iv) if the Company had prohibited the participant from exercising the option prior to termination or expiration in order to comply with applicable Federal,
state, local or foreign law, provided that such extension may not exceed 30 days from the date such prohibition is lifted.
4.8
Other Equity-Based Awards
.
The Committee may, from time to time, grant Awards (other than Performance Bonuses, Restricted Stock or Stock Options) under this Section 4.8 that consist of, or are denominated in, payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares to any Employee or Consultant. These Awards may include, among other things Shares, restricted stock options, restricted stock units, stock appreciation rights (SARs)
(which shall lapse no later than the tenth anniversary of the grant date, subject to extension consistent with Section 4.7(g)), phantom or hypothetical Shares and Share units. The Committee shall determine, in its discretion, the terms,
conditions, restrictions and limitations, if any, that shall apply to Awards granted pursuant to this Section 4.8, including whether dividend equivalents shall be credited or paid with respect to any Award, which terms, conditions, restrictions
and/or limitations shall be set forth in the applicable Award Agreement; provided, however, that in no event will the exercise price of an SAR with respect to any Share be less than the Fair Market Value of a Share as of the date of grant.
Other Equity Based Awards under the Plan may, in the discretion of the Committee, be designated as Qualified Performance Awards. In the event
the Committee designates an Other Equity-Based Award as a Qualified Performance Award, the Committee shall condition the grant of such Other Equity-Based Award on the attainment during a Performance Cycle of specified levels of performance of one or
more Performance Measures. The Performance Cycle, Performance Measure(s) and payout schedules applicable to Other Equity-Based Awards that are designated as Qualified Performance Awards shall be determined by the Committee at such time and in the
manner as set out in paragraphs (a) and (b) of Section 4.6. In such case, no Other Equity-Based Award designated as a Qualified Performance Award shall be paid to a Key Employee under this Section 4.8 unless and until the
Committee certifies in writing the level of attainment of the applicable Performance Measure(s) for the applicable Performance Cycle.
4.9
Code Section 162(m
).
It is the intent of the Company that Qualified Performance Awards granted to Key Employees under the Plan satisfy the applicable requirements of Code Section 162(m) and the regulations thereunder so that
the Companys tax deduction for Qualified Performance Awards is not disallowed in whole or in part by operation of Code Section 162(m). If any provision of this Plan pertaining to Qualified Performance Awards, or any Award to a Key
Employee under the Plan that the Committee designates as a Qualified Performance Award, would otherwise frustrate or conflict with such intent, that provision or Award shall be interpreted and deemed amended so as to avoid such conflict.
4.10
No Repricing
.
Repricing of Options or SARs shall not be permitted without stockholder approval. For this purpose, a
repricing means any of the following (or any other action that has the same effect as any of the following): (A) changing the terms of an Option or SAR to lower its Exercise Price (other than pursuant to Section 5.3);
(B) any other action that is treated as a repricing under generally accepted accounting principles; and (C) repurchasing for cash or canceling an Option or SAR at a time when its Exercise Price is greater than the Fair Market
Value of the underlying stock in exchange for another Award, unless the cancellation and exchange occurs in connection with an event set forth in Section 5.3. Such cancellation and exchange would be considered a repricing regardless
of whether it is treated as a repricing under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Participant.
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4.11
Change in Control
.
Except as otherwise determined by the Committee,
(a) if the Committee determines that, in connection with a Change in Control, (x) the Common Stock of the Company (or of any direct or indirect parent entity) will not be publicly traded or (y) Restricted Stock and Stock Options will
not be honored or assumed, or new rights that substantially preserve the terms of the Restricted Stock and Stock Options substituted therefor, (i) any outstanding time-vesting Restricted Stock and Stock Options then held by a Participant which
are unexercisable or otherwise unvested or subject to lapse restrictions will automatically be deemed exercisable or otherwise vested or no longer subject to lapse restrictions, as the case may be, as of the date of such Change in Control and
(b) if the Committee determines that, in connection with a Change in Control, (x) the Common Stock of the Company or of any direct or indirect parent entity will be publicly traded and (y) Restricted Stock and Stock Options will be
honored or assumed, or new rights that substantially preserve the terms of Restricted Stock and Stock Options substituted therefore, if a Participants employment is terminated without Cause, or for Good Reason, within a 2 year period following
such Change in Control, (i) any outstanding time-vesting Restricted Stock and Stock Options then held by such Participant which are unexercisable or otherwise unvested or subject to lapse restrictions will automatically be deemed exercisable or
otherwise vested or no longer subject to lapse restrictions, as the case may be, as of the date such Participants employment is terminated.
ARTICLE V
SHARES SUBJECT TO
THE PLAN; ADJUSTMENTS
5.1
Shares Available
.
The Shares issuable under the Plan shall be authorized but unissued Shares
or Shares held in the Companys treasury. Subject to adjustments in accordance with Section 5.3, the total number of Shares with respect to which Awards may be issued during the term of the Plan may equal but shall not exceed in the
aggregate 45,099,377 Shares, which includes 15,099,377 shares available for grant under the 2007 Plan, as of June 6, 2011. Of the shares available under the Plan no more than 10,000,000 Shares may be granted in the form of Incentive Stock
Options and the maximum aggregate number of Shares with respect to which Awards may be granted to any one Participant during any such fiscal year of the Company may not exceed 3,000,000 Shares. Any Shares (a) delivered by the Company,
(b) with respect to which Awards are made hereunder and (c) with respect to which the Company becomes obligated to make Awards, in each case through the assumption of, or in substitution for, outstanding awards previously granted by an
acquired entity, shall not count against the Shares available to be delivered pursuant to Awards under this Plan.
5.2
Counting
Rules
.
For purposes of determining the number of Shares remaining available under the Plan, only Awards payable in Shares shall be counted. Any Shares related to Awards under the Plan, which terminate by expiration, forfeiture, cancellation
or otherwise without issuance of Shares, or are settled in cash in lieu of Shares, shall be available again for issuance under the Plan. In the event Shares are tendered or withheld in payment of all or part of the Exercise Price of a Stock Option,
or in satisfaction of the withholding obligations of any Award, the Shares so tendered or withheld shall become available for issuance under the Plan. To the extent that any option or other award outstanding pursuant to the 2007 Plan as of the
Effective Date which for any reason, on or after the Effective Date, expires, is terminated, forfeited or cancelled without having been exercised or settled in full, Shares subject to such awards shall deem to have not been delivered and shall be
added to the share maximum; provided, however, that the aggregate number of Shares outstanding under the 2007 Plan that may be added to the share maximum pursuant to this Section 5.2 shall not exceed 10,786,054 shares, the number of shares
subject to outstanding awards under the 2007 Plan as of June 6, 2011 (as such number may be adjusted from time to time as provided in Section 5.3). With respect to stock appreciation rights (SARs), when a SAR is exercised and
settled in whole or in part in Shares, the Shares subject to a SAR grant agreement shall be counted against the Shares available for issuance as one (1) Share for every Share subject thereto, regardless of the number of Shares used to settle
the SAR upon exercise.
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5.3
Adjustments
.
In the event of any change in the number of issued Shares (or
issuance of shares of stock other than shares of Common Stock) by reason of any stock split, reverse stock split, or stock dividend, recapitalization, reclassification, merger, consolidation, split-up, spin-off, reorganization, combination, or
exchange of Shares, the exercisability of stock purchase rights received under the Rights Agreement, the issuance of warrants or other rights to purchase Shares or other securities, or any other change in corporate structure or in the event of any
extraordinary distribution (whether in the form of cash, Shares, other securities or other property), the Committee shall adjust the number or kind of Shares that may be issued under the Plan, and the terms of any outstanding Award (including,
without limitation, the number of Shares subject to an outstanding Award, the type of property to which the Award relates and the Exercise Price of a Stock Option, stock appreciation right or other Award) in such manner as the Committee shall
determine is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, and such adjustment shall be conclusive and binding for all purposes under the Plan.
Notwithstanding the foregoing, no adjustments shall be made with respect to Qualified Performance Awards granted to a Key Employee to the extent such adjustment would cause the Award to fail to qualify as performance-based compensation under
Section 162(m) of the Code and no adjustment shall be required if the Committee determines that such action could cause an Award to fail to satisfy the conditions of an applicable exception from the requirements of Section 409A of the Code
(
Section 409A
) or otherwise could subject a Participant to the additional tax imposed under Section 409A in respect of an outstanding Award.
5.4
Consolidation, Merger or Sale of Assets
.
Upon the occurrence of (i) a merger, consolidation, acquisition of property or
stock, reorganization or otherwise involving the Company in which the Company is not to be the surviving corporation, (ii) a merger, consolidation, acquisition of property or stock, reorganization or otherwise involving the Company in which the
Company is the surviving corporation but holders of Shares receive securities of another corporation, or (iii) a sale of all or substantially all of the Companys assets (as an entirety) or capital stock to another person, any Award
granted hereunder shall be deemed to apply to the securities, cash or other property (subject to adjustment by cash payment in lieu of fractional interests) to which a holder of the number of Shares equal to the number of Shares the Participant
would have been entitled, and proper provisions shall be made to ensure that this clause is a condition to any such transaction;
provided
,
however
, that the Committee (or, if applicable, the board of directors of the entity assuming
the Companys obligations under the Plan) shall, in its discretion, have the power to either:
(a) provide, upon written notice to
Participants, that all Awards that are currently exercisable must be exercised within the time period specified in the notice and that all Awards not exercised as of the expiration of such period shall be terminated without consideration;
provided
,
however
, that the Committee (or successor board of directors) may provide, in its discretion, that, for purposes of this subsection, all outstanding Awards are currently exercisable, whether or not vested; or
(b) cancel any or all Awards and, in consideration of such cancellation, pay to each Participant an amount in cash with respect to each Share
issuable under an Award equal to the difference between the Fair Market Value of such Share on such date (or, if greater, the value per Share of the consideration received by holders of Shares as a result of such merger, consolidation,
reorganization or sale) and the Exercise Price.
5.5
Fractional Shares
.
No fractional Shares shall be issued under the Plan.
In the event that a Participant acquires the right to receive a fractional Share under the Plan, such Participant shall receive, in lieu of such fractional Share, cash equal to the Fair Market Value of the fractional Share as of the date of
settlement.
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ARTICLE VI
AMENDMENT AND TERMINATION
6.1
Amendment
.
The Plan may be amended at any time and from time to time by the Board without the approval of shareholders of
the Company, except that no amendment which increases the aggregate number of Shares which may be issued pursuant to the Plan, decreases the Exercise Price at which Stock Options or stock appreciation rights may be granted or materially modifies the
eligibility requirements for participation in the Plan shall be effective unless and until the same is approved by the shareholders of the Company. No amendment of the Plan shall materially adversely affect any right of any Participant with respect
to any Award theretofore granted without such Participants written consent.
6.2
Termination
.
The Plan shall terminate
upon the earlier of the following dates or events to occur:
(a) the adoption of a resolution of the Board terminating the Plan; or
(b) the 10-year anniversary of the date of the Companys 2011 Annual Meeting of Stockholders
No Awards shall be granted under this Plan after it has been terminated. However, the termination of the Plan shall not alter or impair any of
the rights or obligations of any person, without such persons consent, under any Award theretofore granted under the Plan. After the termination of the Plan, any previously granted Awards shall remain in effect and shall continue to be
governed by the terms of the Plan and the applicable Award Agreement.
ARTICLE VII
GENERAL PROVISIONS
7.1
Nontransferability of Awards
.
Except as otherwise provided in this Section 7.1, no Awards under the Plan shall be subject in any manner to alienation, anticipation, sale, assignment, pledge, encumbrance or transfer, other than by
will or by the laws of descent or distribution, by the Participant and no other persons shall otherwise acquire any rights therein. During the lifetime of a Participant, Stock Options (except for Nonqualified Stock Options that are transferable
pursuant to subparagraphs (a) and (b) below) shall be exercisable only by the Participant and shall not be assignable or transferable except as provided above.
(a) In the case of a Nonqualified Stock Option, except as the Committee may otherwise determine, and subject to the Committees authority
under Section 3.2 to waive or amend any terms, conditions, limitations or restrictions of an Award, all or any part of such Nonqualified Stock Option may, subject to the prior written consent of the Committee, be transferred to one or more of a
following classes of donees: family member, a trust for the benefit of a family member, a limited partnership whose partners are solely family members or any other legal entity set up for the benefit of family members. For purposes of this
Section 7.1, a family member means a Participants spouse, children, grandchildren, parents, grandparents (natural, step, adopted, or in-laws), siblings, nieces, nephews and grandnieces and grandnephews.
(b) Except as the Committee may at any time determine, and subject to the Committees authority under Section 3.2 to waive or amend
any terms, conditions, limitations or restrictions of an Award, any Nonqualified Stock Option transferred by a Participant pursuant to paragraph (a) above may be exercised by the transferee only to the extent such Nonqualified Stock Option
would have been exercisable by the Participant had no transfer occurred. Any such transferred Nonqualified Stock Option shall be subject to all of the same terms and conditions as provided in the Plan and in the applicable Award Agreement. The
Participant or the Participants estate shall remain liable for any withholding tax which may be imposed by any federal, state or local tax authority and the transfer of Shares upon exercise of such Nonqualified Stock Option shall be
conditioned on the payment of such withholding tax. The Committee may, in its sole discretion, withhold its consent to all or a part of any transfer of a Nonqualified Stock Option pursuant to this Section 7.1 unless and until the Participant
makes arrangements satisfactory to the Committee for the payment of any such withholding tax. The Participant must
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immediately notify the Committee, in such form and manner as required by the Committee, of any proposed transfer of a Nonqualified Stock Option pursuant to this Section and no such transfer shall
be effective until the Committee consents thereto in writing.
(c) Anything in this Section 7.1 to the contrary notwithstanding, in
no event may the Committee permit an Incentive Stock Option to be transferred by any Participant other than by will or the laws of descent and distribution.
7.2
Withholding of Taxes
.
(a)
Stock Options
.
As a condition to the delivery of any Shares pursuant to the exercise of a Stock Option, the Committee may
require that the Participant, at the time of such exercise, pay to the Company by cash or by certified check, bank draft, wire transfer or postal or express money order an amount sufficient to satisfy any applicable tax withholding obligations. The
Committee may, however, in its discretion, accept payment of tax withholding obligations through any of the Exercise Price payment methods described in Section 4.7(e). In addition, the Committee may, in its discretion, permit payment of tax
withholding obligations to be made by instructing the Company to withhold Shares that would otherwise be issued on exercise having a Fair Market Value on the date of exercise equal to the applicable portion of the tax withholding obligations being
so paid. Notwithstanding the foregoing, in no event may any amount greater than the minimum statutory withholding obligation or such other withholding obligation as required by applicable law be satisfied by tendering or withholding Shares.
(b)
Restricted Stock
.
The Company shall satisfy tax withholding obligations arising in connection with the release of
restrictions on Shares of Restricted Stock or Restricted Stock Units held by Participants subject to the tax laws of the United States, United Kingdom or Israel (and such other country where withholding is required at the time of the release of
restrictions or as may be determined by the Company from time to time) by withholding Shares that would otherwise be available for delivery upon such release having a Fair Market Value on the date of release equal to the minimum statutory
withholding obligation or such other withholding obligation as required by applicable law.
(c)
Awards
.
To the extent not
covered by 7.2(a) or (b) above, as a condition to the delivery of any Shares, other property or cash pursuant to any Award or the lifting or lapse of restrictions on any Award, or in connection with any other event that gives rise to a federal
or other governmental tax withholding obligation on the part of the Company relating to an Award (including, without limitation, FICA tax), (a) the Company may deduct or withhold (or cause to be deducted or withheld) from any payment or
distribution to the Participant, whether or not pursuant to the Plan, (b) the Company shall be entitled to require that the Participant remit cash to the Company (through payroll deduction or otherwise) or (c) the Company may enter into
any other suitable arrangements to withhold, in each case in an amount sufficient in the opinion of the Company to satisfy such withholding obligation.
7.3
Non-Uniform Determinations
.
None of Committees determinations under the Plan and Award Agreements need to be uniform
and any such determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the
Committee shall be entitled, among other things, to make non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements, as to (a) the persons to receive Awards, (b) the terms
and provisions of Awards, (c) whether a Participants employment has been terminated for purposes of the Plan and (d) any adjustments to be made to Awards pursuant to Section 5.3 or otherwise.
7.4
Required Consents and Legend
.
(a) If the Committee shall at any time determine that any consent (as hereinafter
defined) is necessary or desirable as a condition of, or in connection with, the granting of any Award, the delivery of Shares or the delivery of any cash, securities or other property under the Plan, or the taking of any
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other action thereunder (each such action being hereinafter referred to as a plan action), then such plan action shall not be taken, in whole or in part, unless and until such consent
shall have been effected or obtained to the full satisfaction of the Committee. The Committee may direct that any Certificate evidencing Shares delivered pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as
the Committee may determine to be necessary or desirable, and may advise the transfer agent to place a stop order against any legended shares. By accepting an Award, each Participant shall have expressly provided consent to the items described in
Section 7.4(b)(iv) hereof.
(b) The term consent as used herein with respect to any plan action includes (i) any and
all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, or law, rule or regulation of a jurisdiction outside the United States, (ii) any and all written agreements
and representations by the Participant with respect to the disposition of shares, or with respect to any other matter, which the Committee may deem necessary or desirable to comply with the terms of any such listing, registration or qualification or
to obtain an exemption from the requirement that any such listing, qualification or registration be made, (iii) any and all other consents, clearances and approvals in respect of a plan action by any governmental or other regulatory body or any
stock exchange or self-regulatory agency, (iv) any and all consents by the Participant to (A) the Companys supplying to any third party recordkeeper of the Plan such personal information as the Committee deems advisable to administer
the Plan, (B) the Companys deducting amounts from the Participants wages, or another arrangement satisfactory to the Committee, to reimburse the Company for advances made on the Participants behalf to satisfy certain
withholding and other tax obligations in connection with an Award and (C) the Companys imposing sales and transfer procedures and restrictions and hedging restrictions on Shares delivered under the Plan and (v) any and all consents
or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Committee. Nothing herein shall require the Company to list, register or qualify the Shares on any securities exchange.
7.5
Special Forfeiture Provision
.
If the Committee, in its discretion, determines and the applicable Award Agreement so
provides, a Participant who, without prior written approval of the Company, enters into any employment or consultation arrangement (including service as an agent, partner, stockholder, consultant, officer or director) to any entity or person engaged
in any business in which the Company or its affiliates is engaged which, in the sole judgment of the Company, is competitive with the Company or any subsidiary or affiliate, (i) shall forfeit all rights under any outstanding Stock Option or
stock appreciation right and shall return to the Company the amount of any profit realized upon the exercise, within such period as the Committee may determine, of any Stock Option or stock appreciation right and (ii) shall forfeit and return
to the Company all Shares of Restricted Stock and other Awards which are not then vested or which vested but remain subject to the restrictions imposed by this Section 7.3, as provided in the Award Agreement.
7.6
Code Section 83(b) Elections
.
Neither the Company, any Related Company, nor the Committee shall have any responsibility
in connection with a Participants election, or attempt to elect, under Code section 83(b) to include the value of a Restricted Stock Award in the Participants gross income for the year of payment. Any Participant who makes a Code section
83(b) election with respect to any such Award shall promptly notify the Committee of such election and provide the Committee with a copy thereof.
7.7
No Implied Rights
.
The establishment and subsequent operation of the Plan, including eligibility as a Participant, shall not
be construed as conferring any legal or other right upon any Employee for the continuation of his or her employment, or upon any Consultant for the continuation of his or her consultancy, for any Performance Cycle or any other period. The Company
expressly reserves the right, which may be exercised at any time and without regard to when, during a Performance Cycle or other accounting period, such exercise
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occurs, to discharge any individual and/or treat him or her without regard to the effect which such treatment might have upon him or her under any outstanding Award.
7.8
No Obligation to Exercise Options
.
The granting of a Stock Option shall impose no obligation upon the Participant to
exercise such Stock Option.
7.9
No Rights as Stockholders
.
A Participant granted an Award under the Plan shall have no
rights as a stockholder of the Company with respect to such Award unless and until such time as certificates for the Shares underlying the Award are registered in such Participants name. The right of any Participant to receive Shares by virtue
of the terms of an Award or participation in the Plan shall be no greater than the right of any unsecured general creditor of the Company. With respect to any or all Awards, the Company may, in lieu of physical certificates, cause for electronic
shares to be held in the Participants name with a transfer agent or broker.
7.10
Indemnification of Committee
.
The
Company shall indemnify, to the full extent permitted by law, each person made or threatened to be made a party to any civil or criminal action or proceeding by reason of the fact that he, or his testator or intestate, is or was a member of the
Committee or a delegate of the Committee so acting.
7.11
No Required Segregation of Assets
.
Neither the Company nor any
Related Company shall be required to segregate any assets that may at any time be represented by Awards granted pursuant to the Plan.
7.12
Nature of Payments
.
All Awards made pursuant to the Plan are in consideration of services for the Company or the Related
Companies. Any gain realized pursuant to Awards under the Plan constitutes a special incentive payment to the Participant and shall not be taken into account as compensation for purposes of any of the employee benefit plans of the Company or any
Related Company except as may be determined by the Board or by the board of directors of the applicable Related Company.
7.13
Securities Exchange Act Compliance
.
Awards under the Plan are intended to satisfy the requirements of Rule 16b-3 under the Securities Exchange Act of 1934. If any provision or this Plan or of any grant of an Award would otherwise
frustrate or conflict with such intent, that provision shall be interpreted and deemed amended so as to avoid such conflict.
7.14
Section 409A
(a) All Awards made under the Plan that are intended to be deferred compensation subject to
Section 409A shall be interpreted, administered and construed to comply with Section 409A, and all Awards made under the Plan that are intended to be exempt from Section 409A shall be interpreted, administered and construed to comply
with and preserve such exemption. The Committee shall have full authority to give effect to the intent of the foregoing sentence. To the extent necessary to give effect to this intent, in the case of any conflict or potential inconsistency between
the Plan and a provision of any Award or Award Agreement with respect to an Award, the Plan shall govern.
(b) Without limiting the
generality of Section 7.14(a), with respect to any Award made under the Plan that is intended to be deferred compensation subject to Section 409A: (a) any payment to be made with respect to such Award in connection with
the Participants separation from service to the Company within the meaning of Section 409A (and any other payment that would be subject to the limitations in Section 409A(a)(2)(b) of the Code) shall be delayed until six months after
the Participants separation from service (or earlier death) in accordance with the requirements of Section 409A; (b) if any payment to be made with respect to such Award would occur at a time when the tax deduction with respect to
such payment would be limited or eliminated by Section 162(m), such payment may be deferred by the Company under the circumstances described in Section 409A until the earliest date that the Company reasonably anticipates that the deduction
or payment will
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not be limited or eliminated; (c) to the extent necessary to comply with Section 409A, any other securities, other Awards or other property that the Company may deliver in lieu of
shares of Common Stock in respect of an Award shall not have the effect of deferring delivery or payment beyond the date on which such delivery or payment would occur with respect to the shares of Common Stock that would otherwise have been
deliverable (unless the Committee elects a later date for this purpose in accordance with the requirements of Section 409A); (d) with respect to any required consent described in Section 7.4 or the applicable Award Agreement, if such
consent has not been effected or obtained as of the latest date provided by such Award Agreement for payment in respect of such Award and further delay of payment is not permitted in accordance with the requirements of Section 409A, such Award
or portion thereof, as applicable, will be forfeited and terminate notwithstanding any prior earning or vesting; (e) if the Award includes a series of installment payments (within the meaning of Section 1.409A-2(b)(2)(iii) of
the Treasury Regulations), the Participants right to the series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment; (f) if the Award includes dividend
equivalents (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), the Participants right to the dividend equivalents shall be treated separately from the right to other amounts under the Award; and (g) for
purposes of determining whether the Participant has experienced a separation from service to the Company within the meaning of Section 409A, subsidiary shall mean a corporation or other entity, starting with CA, Inc., in a chain of
corporations or other entities in which each corporation or other entity has a controlling interest in another corporation or other entity in the chain, ending with such corporation or other entity. For purposes of the preceding sentence, the term
controlling interest has the same meaning as provided in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations, provided that the language at least 20 percent is used instead of at least 80 percent each
place it appears in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations.
7.15
Governing Law; Severability
.
The
Plan and all determinations made and actions taken thereunder shall be governed by the internal substantive laws, and not the choice of law rules, of the State of New York and construed accordingly, to the extent not superseded by applicable federal
law. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in part, the unlawfulness, invalidity or unenforceability shall not affect any other provision of the Plan or part thereof, each of which
shall remain in full force and effect.
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EXHIBIT B
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
November 30,
2015
between
CA, INC.
and
COMPUTERSHARE TRUST COMPANY,
N.A.,
as Rights Agent
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
Table of Contents
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Page
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ARTICLE I
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DEFINITIONS
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1.1
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Definitions
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B-1
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ARTICLE II
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THE RIGHTS
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2.1
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Summary of Rights
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B-8
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2.2
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Legend
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B-8
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2.3
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Exercise of Rights; Separation of Rights
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B-9
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2.4
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Adjustments to Exercise Price; Number of Rights
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B-11
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2.5
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Date on Which Exercise is Effective
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B-12
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2.6
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Execution, Authentication, Delivery and Dating of Rights Certificates
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B-12
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2.7
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Registration, Registration of Transfer and Exchange
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B-12
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2.8
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Mutilated, Destroyed, Lost and Stolen Rights Certificates
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B-13
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2.9
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Persons Deemed Owners
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B-14
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2.10
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Delivery and Cancellation of Certificates
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B-14
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2.11
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Agreement of Rights Holders
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B-14
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ARTICLE III
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ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
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3.1
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Flip-in
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B-15
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3.2
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Flip-over
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B-17
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ARTICLE IV
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THE RIGHTS AGENT
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4.1
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General
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B-17
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4.2
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Merger or Consolidation or Change of Name of Rights Agent
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B-18
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4.3
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Duties of Rights Agent
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B-18
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4.4
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Change of Rights Agent
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B-21
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ARTICLE V
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MISCELLANEOUS
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5.1
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Redemption
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B-22
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5.2
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Effective Time; Expiration
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B-23
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B-i
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Page
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5.3
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Issuance of New Rights Certificates
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B-23
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5.4
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Supplements and Amendments
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B-24
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5.5
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Fractional Shares
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B-24
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5.6
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Rights of Action
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B-24
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5.7
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Holder of Rights Not Deemed a Stockholder
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B-24
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5.8
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Notice of Proposed Actions
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B-25
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5.9
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Notices
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B-25
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5.10
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Suspension of Exercisability or Exchangeability
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B-25
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5.11
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Successors
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B-26
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5.12
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Benefits of this Agreement
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B-26
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5.13
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Determination and Actions by the Board of Directors, etc.
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B-26
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5.14
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Descriptive Headings; Section References
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B-26
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5.15
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GOVERNING LAW; EXCLUSIVE JURISDICTION
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B-26
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5.16
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Counterparts
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B-27
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5.17
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Severability
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B-27
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5.18
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Customer Identification Program
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B-27
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5.19
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Withholding
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B-27
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EXHIBITS
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Exhibit A
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Form of Rights Certificate (together with Form of Election to Exercise)
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Exhibit B
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Form of Certificate of Designation and Terms of Participating Preferred Stock
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B-ii
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time, this Agreement), dated as of November 30, 2015,
between CA, Inc., a Delaware corporation (the Company), and Computershare Trust Company, N.A., a federally chartered trust company, as Rights Agent (the Rights Agent, which term shall include any successor Rights Agent
hereunder).
WITNESSETH
:
WHEREAS, the Stockholder Protection Rights Agreement (the Existing Rights Agreement), dated as of November 8, 2012, between
the Company and Computershare Shareowner Services LLC is scheduled to expire on the Close of Business of November 30, 2015;
WHEREAS,
the Company desires to enter into this Agreement to become effective immediately upon the expiration of the Existing Rights Agreement;
WHEREAS, the Board of Directors of the Company (the Board of Directors) has (a) authorized and declared a dividend of one
right (Right) in respect of each share of Common Stock (as hereinafter defined) held of record as of the Close of Business (as hereinafter defined) on December 11, 2015 (the Record Time) payable in respect of each such
share upon the certification by the NASDAQ Stock Market (NASDAQ) to the Securities and Exchange Commission that the Rights have been approved for listing and registration (the Payment Time) and (b) as provided in
Section 2.4, authorized the issuance of one Right in respect of each share of Common Stock issued after the Record Time and prior to the Separation Time (as hereinafter defined) and, to the extent provided in Section 5.3, each share of
Common Stock issued after the Separation Time;
WHEREAS, subject to the terms and conditions hereof, each Right entitles the holder
thereof, after the Separation Time, to purchase securities or assets of the Company (or, in certain cases, securities of certain other entities) pursuant to the terms and subject to the conditions set forth herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act on behalf of the Company, and the Rights Agent is willing so to act, in
connection with the issuance, transfer and exchange of Rights Certificates (as hereinafter defined), the exercise of Rights and other matters referred to herein;
NOW THEREFORE, in consideration of the premises and the respective agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1
Definitions
. For purposes of this Agreement, the following terms have the meanings indicated:
Acquiring Person shall mean any Person who is or becomes the Beneficial Owner of 20% or more of the outstanding shares of Common
Stock at any time after the Effective Time;
provided
,
however
, that the term Acquiring Person shall not include any Person (i) who is the Beneficial Owner of 20% or more of the outstanding shares of Common Stock at the
Effective Time and who continuously thereafter is the Beneficial Owner of 20% or more of the outstanding shares of Common Stock, until such time thereafter as such Person becomes the Beneficial Owner (other than by means of a stock dividend, stock
split or reclassification) of additional shares of Common Stock that, in the aggregate, amount to 0.1% or more of the outstanding shares of Common Stock, (ii) who becomes the Beneficial Owner of 20% or more of the outstanding shares of Common
Stock after the time of the first public announcement of this Agreement solely as a result of (A) an acquisition by the Company of shares of Common Stock until such time after the public announcement by the Company of such
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repurchases as such Person becomes the Beneficial Owner (other than by means of a stock dividend, stock split or reclassification) of additional shares of Common Stock that, in the aggregate,
amounts to 0.1% or more of the outstanding shares of Common Stock while such Person is or as a result of which such Person becomes the Beneficial Owner of 20% or more of the outstanding shares of Common Stock or (B) the occurrence of a Flip-in
Date which has not resulted from the acquisition of Beneficial Ownership of Common Stock by such Person or any of such Persons Affiliates or Associates, (iii) who becomes the Beneficial Owner of 20% or more of the outstanding shares of
Common Stock but who acquired Beneficial Ownership of shares of Common Stock without any plan or intention to seek or affect control of the Company, if such Person promptly divests, or promptly enters into an agreement with, and satisfactory to, the
Board of Directors, in the Board of Directors sole discretion, to divest, and subsequently divests in accordance with the terms of such agreement (without exercising or retaining any power, including voting power, with respect to such shares),
sufficient shares of Common Stock (or securities convertible into, exchangeable into or exercisable for Common Stock or otherwise deemed to be Beneficially Owned by such Person) so that such Person ceases to be the Beneficial Owner of 20% or more of
the outstanding shares of Common Stock or (iv) who Beneficially Owns shares of Common Stock consisting solely of one or more of (A) shares of Common Stock Beneficially Owned pursuant to the grant or exercise of an option granted to such
Person (an Option Holder) by the Company in connection with an agreement to merge with, or acquire, the Company entered into prior to a Flip-in Date, (B) shares of Common Stock (or securities convertible into, exchangeable into or
exercisable for Common Stock or otherwise deemed to be Beneficially Owned by such Person) Beneficially Owned by such Option Holder or its Affiliates or Associates at the time of grant of such option and (C) shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for Common Stock or otherwise deemed to be Beneficially Owned by such Person) acquired by Affiliates or Associates of such Option Holder after the time of such grant that, in the aggregate, amount
to less than 1% of the outstanding shares of Common Stock. In addition, the Company, any Subsidiary of the Company and any employee stock ownership or other employee benefit plan of the Company or a Subsidiary of the Company (or any entity or
trustee holding shares of Common Stock for or pursuant to the terms of any such plan or for the purpose of funding any such plan or funding other employee benefits for employees of the Company or of any Subsidiary of the Company) shall not be an
Acquiring Person. For the avoidance of doubt, (x) Martin Haefner and Eva Maria Bucher-Haefner (together, the Haefners) and their respective Affiliates and Associates shall not be or become an Acquiring Person on account of the
Beneficial Ownership of Common Stock by any of them, so long as the Haefners and their respective Affiliates and Associates (other than the Company and its Subsidiaries) do not, in the aggregate, Beneficially Own more than 25% of the shares of
outstanding Common Stock;
provided
,
further
, that any of such Persons shall also not be an Acquiring Person if such Person becomes the Beneficial Owner of in excess of 25% solely as a result of (1) an acquisition by the Company of
shares of Common Stock or (2) the occurrence of a Flip-in Date which has not resulted from the acquisition of Beneficial Ownership of Common Stock by such Person or any of such Persons Affiliates or Associates; and (y) no Successor
of the Haefners or any Affiliate or Associate of such Successor, shall become an Acquiring Person on account of Common Stock received directly or indirectly from the Haefners, so long as such Successor, Affiliate or Associate does not, in the
aggregate, Beneficially Own more than 25% of the outstanding shares of Common Stock, except solely as a result of the actions set forth in clause (1) or (2) above.
Affiliate and Associate shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Exchange
Act, as such Rule is in effect on the date of this Agreement.
Agreement shall have the meaning set forth in the Preamble.
A Person shall be deemed the Beneficial Owner, and to have Beneficial Ownership of, and to Beneficially
Own, (i) any securities as to which such Person or any of such Persons Affiliates or Associates is or may be deemed to be the beneficial owner pursuant to Rule 13d-3 and 13d-5 under the Exchange Act, as such Rules are in effect on
the date of this Agreement, (ii) any securities as to which such Person or any of such Persons Affiliates or Associates has the right to become the beneficial owner (whether such right is exercisable immediately or only after the passage
of time or the occurrence of conditions) pursuant to any agreement,
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arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise, (iii) any securities which are Beneficially Owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with whom such Person has an agreement, arrangement or understanding to act together for the purpose of acquiring, holding, voting or disposing of any securities of the Company and (iv) solely for purposes of
determining whether any Person is an Acquiring Person, any securities that such Person or any of such Persons Affiliates or Associates are determined to Constructively Own;
provided
,
however
, that a Person shall not be deemed the
Beneficial Owner, or to have Beneficial Ownership of, or to Beneficially Own, any security (A) solely because such security has been tendered pursuant to a tender or exchange offer made by such Person or any
of such Persons Affiliates or Associates until such tendered security is accepted for payment or exchange or (B) solely because such Person or any of such Persons Affiliates or Associates has or shares the power to vote or direct
the voting of such security pursuant to a revocable proxy or consent given in response to a public proxy or consent solicitation made to more than ten holders of shares of a class of stock of the Company registered under Section 12 of the
Exchange Act and pursuant to, and in accordance with, the applicable rules and regulations under the Exchange Act, unless such power (or the arrangements relating thereto) is then reportable under Item 6 of Schedule 13D under the Exchange Act
(or any similar provision of a comparable or successor report). Notwithstanding the foregoing, no officer or director of the Company shall be deemed to Beneficially Own any securities of any other Person by virtue of any actions that such officer or
director takes in such capacity. For purposes of this Agreement, in determining the percentage of the outstanding shares of Common Stock with respect to which a Person is the Beneficial Owner, all shares as to which such Person is deemed the
Beneficial Owner shall be deemed outstanding.
Board of Directors shall have the meaning set forth in the Recitals.
Business Day shall mean any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York are
generally authorized or obligated by law or executive order to close.
Close of Business on any given date shall mean 5:00
p.m. New York City time on such date or, if such date is not a Business Day, 5:00 p.m. New York City time on the next succeeding Business Day.
Common Stock shall mean the shares of Common Stock, par value $0.10 per share, of the Company.
Company shall have the meaning set forth in the Preamble.
A Person shall be determined to Constructively Own shares of Common Stock in respect of which such Person has a Synthetic Long
Position, calculated in the manner set forth below, if the Board of Directors, by a majority vote, determines that such Person is seeking to use the existence of such Synthetic Long Position, in combination with other securities Beneficially Owned
by such Person, for the purpose or effect of changing or influencing control of the Company. The number of shares of Common Stock in respect of a Synthetic Long Position that may be determined to be Constructively Owned is the notional
or other number of shares of Common Stock in respect of such Synthetic Long Position that is specified in a filing by such Person or any of such Persons Affiliates or Associates with the Securities and Exchange Commission or in the
documentation evidencing such Synthetic Long Position as the basis upon which the value or settlement amount of such right or derivative, or the opportunity of the holder of such right or derivative to profit or share in any profit, is to be
calculated in whole or in part and, in any case, including if no such number of shares of Common Stock is specified in any filing or documentation, as determined by the Board of Directors to be the number of shares of Common Stock to which such
Synthetic Long Position relates.
Customer Identification Program shall have the meaning set forth in Section 5.18.
Effective Time means the time immediately following the expiration of the Existing Rights Agreement on November 30, 2015.
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Election to Exercise shall have the meaning set forth in Section 2.3(d).
Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to time.
Exchange Ratio shall have the meaning set forth in Section 3.1(c).
Exchange Time shall mean the time at which the right to exercise the Rights shall terminate pursuant to Section 3.1(c).
Exercise Price shall mean, as of any date, the price at which a holder may purchase the securities issuable upon exercise of one
whole Right. Until adjustment thereof in accordance with the terms hereof, the Exercise Price shall equal $120.00.
Existing Rights
Agreement shall have the meaning set forth in the Recitals.
Expansion Factor shall have the meaning set forth in
Section 2.4(a).
Expiration Time shall mean the earliest of (i) the Exchange Time, (ii) the Redemption Time,
(iii) the Close of Business on the first anniversary of the date of this Agreement, unless this Agreement is ratified by the stockholders of the Company by a vote of the majority of the votes cast by the holders of shares entitled to vote
thereon at a stockholders meeting held on or prior to such date, in which case the Expiration Time shall be the third anniversary of the Effective Time and unless, for purposes of this clause (iii), extended by action of the Board of Directors (in
which case the applicable time shall be the time to which it has been so extended) and (iv) immediately prior to the effective time of a consolidation, merger or statutory share exchange that does not constitute a Flip-over Transaction or Event
in which the Common Stock is converted into, or into the right to receive, another security, cash or other consideration.
Flip-in
Date shall mean any Stock Acquisition Date or such later date and time as the Board of Directors may from time to time fix by resolution adopted prior to the Flip-in Date that would otherwise have occurred.
Flip-over Entity, for purposes of Section 3.2, shall mean (i) in the case of a Flip-over Transaction or Event described
in clause (i) of the definition thereof, the Person issuing any securities into which shares of Common Stock are being converted or exchanged and, if no such securities are being issued, the other Person that is a party to such Flip-over
Transaction or Event and (ii) in the case of a Flip-over Transaction or Event referenced in clause (ii) or (iii) of the definition thereof, the Person receiving the greatest portion of the (A) assets or, if (A) is not
readily determinable, (B) operating income or cash flow being transferred in such Flip-over Transaction or Event, provided in all cases if such Person is a Subsidiary of another Person, the ultimate parent entity of such Person shall be the
Flip-over Entity.
Flip-over Stock shall mean the capital stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or other Persons similarly responsible for the direction of the business and affairs) of the Flip-over Entity.
Flip-over Transaction or Event shall mean a transaction or series of transactions, on or after a Flip-in Date, in which, directly
or indirectly, (i) the Company shall consolidate or merge or participate in a statutory share exchange with any other Person if, immediately prior to the time of consummation of the consolidation, merger or statutory share exchange or at the
time the Company enters into any agreement with respect to any such consolidation, merger or statutory share exchange, the Acquiring Person is the Beneficial Owner of 50% or more of the outstanding shares of Common Stock or controls the Board of
Directors and either (A) any term of or arrangement concerning the treatment of shares of capital stock in such consolidation, merger or statutory share exchange relating to the Acquiring Person is not identical to the terms and arrangements
relating to other holders of the Common Stock or (B) the Person with whom the transaction or series of transactions occurs is the Acquiring Person or an Affiliate or Associate of the Acquiring Person or, (ii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer) assets (A) aggregating more than 50% of the assets (measured by either book value or fair market value) or (B) generating more than 50% of the
operating income or cash flow, of the Company and its Subsidiaries (taken as a whole) to any Person (other than the Company or one or more of its wholly owned Subsidiaries) or to two or more such Persons that are Affiliates or Associates or
otherwise
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acting in concert, if, at the time of the entry by the Company (or any such Subsidiary) into an agreement with respect to such sale or transfer of assets, the Acquiring Person or any of its
Affiliates or Associates controls the Board of Directors. For purposes of the foregoing description, the term Acquiring Person shall include any Acquiring Person and its Affiliates and Associates, counted together as a single Person. An
Acquiring Person shall be deemed to control the Board of Directors when, on or following a Stock Acquisition Date, the persons who were directors of the Company (or persons nominated and/or appointed as directors by vote of a majority of such
persons) before the Stock Acquisition Date shall cease to constitute a majority of the Board of Directors.
Haefners shall
have the meaning set forth in the definition of Acquiring Person.
Market Price per share of any securities on any date shall
mean the average of the daily closing prices per share of such securities (determined as described below) on each of the 20 consecutive Trading Days through and including the Trading Day immediately preceding such date;
provided
,
however
, that if any event described in Section 2.4, or any analogous event, shall have caused the closing prices used to determine the Market Price on any Trading Days during such period of 20 Trading Days not to be fully comparable
with the closing price on such date, each such closing price so used shall be appropriately adjusted by the Board of Directors in order to make it fully comparable with the closing price on such date. The closing price per share of any securities on
any date shall be the last reported sale price, regular way, or, in case no such sale takes place or is quoted on such date, the average of the closing bid and asked prices, regular way, for each share of such securities, in either case as reported
in the principal consolidated transaction reporting system with respect to securities listed on the New York Stock Exchange, Inc. (NYSE) or, if the securities are not listed on the NYSE, as reported on NASDAQ or, if the securities are
not listed on NASDAQ, as reported in the principal consolidated transaction reporting system with respect to the principal national securities exchange on which the securities are listed or admitted to trading or, if the securities are not listed or
admitted to trading on any national securities exchange, as reported by such other quotation system then in use or, if on any such date the securities are not listed or admitted to trading on any national securities exchange or quoted by any such
quotation system, the average of the closing bid and asked prices in the over-the-counter market as furnished by a professional market maker making a market in the securities selected by the Board of Directors;
provided
,
however
, that
if on any such date the securities are not listed or admitted to trading on a national securities exchange or traded in the over-the-counter market, the closing price per share of such securities on such date shall mean the fair value per share of
such securities on such date as determined in good faith by the Board of Directors, after consultation with a nationally recognized investment banking firm, and set forth in a certificate delivered to the Rights Agent.
NYSE shall have the meaning set forth in the definition of Market Price.
NASDAQ has the meaning set forth in the Recitals.
Option Holder shall have the meaning set forth in the definition of Acquiring Person.
Payment Time shall have the meaning set forth in the Recitals.
Person shall mean any individual, firm, partnership, limited liability company, trust, association, group (as such term is used in
Rule 13d-5 under the Exchange Act, as such Rule is in effect on the date of this Agreement), corporation or other entity.
Preferred
Stock shall mean the Series Two Participating Preferred Stock, Class A, without par value, of the Company created by a Certificate of Designation and Terms in substantially the form set forth in Exhibit B hereto appropriately completed.
Qualified Offer shall mean an offer that has, to the extent required for the type of offer specified, each of the following
characteristics:
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i.
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a fully financed all-cash tender offer or an exchange offer offering common stock of the offeror or a combination thereof (with the amount of such shares included in the offer to be adjusted to reflect any decrease in
the value of such shares prior to the consummation of the offer), in each such case for any and all of the outstanding Common Stock of the Company;
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ii.
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an offer that has commenced within the meaning of Rule 14d-2(a) under the Exchange Act;
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iii.
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an offer that within 20 Business Days after the commencement date of the offer within the meaning of Rule 14d-2(a) under the Exchange Act (or within 10 Business Days after any increase in the offer consideration), does
not result in a nationally recognized investment banking firm retained by the Board of Directors rendering an opinion to the Board of Directors that the consideration being offered to the holders of the Common Stock is either unfair or inadequate;
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iv.
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an offer that is subject only to the minimum tender condition described below in item (vi) of this definition and other usual and customary terms and conditions, which may include a condition that no change or
event has resulted in, or is reasonably expected to result in, a material adverse effect on the business, financial condition, assets, liabilities or results of operations of the Company, which conditions shall not include any financing, funding,
due diligence or similar condition;
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v.
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an offer pursuant to which the Company has received an irrevocable written commitment of the offeror that the offer will remain open for at least 60 Business Days and, if a Special Meeting is duly requested in
accordance with Section 5.1(c), for at least 10 Business Days after the date of the Special Meeting or, if no Special Meeting is held within 90 Business Days following receipt of the Special Meeting Notice in accordance with
Section 5.1(c)), for at least 10 Business Days following such 90 Business Day period; provided however, that such offer need not remain open, as a result of this definition of Qualified Offer, beyond (1) the time until which
any other offer satisfying the criteria for a Qualified Offer is then required to be kept open under this definition of Qualified Offer, or (2) the scheduled expiration date, as such date may be extended by public announcement on or
prior to the then scheduled expiration date, of any other tender or exchange offer for Common Stock of the Company with respect to which the Board of Directors has agreed to redeem the Rights immediately prior to acceptance for payment of the Common
Stock thereunder (unless such other offer is terminated prior to its expiration without any Common Stock having been purchased thereunder);
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vi.
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an offer that is conditioned on a minimum of at least 50% of the outstanding shares of Common Stock (other than shares of Common Stock held by the offeror or its Affiliates and Associates) being tendered and not
withdrawn as of the offers expiration date, which condition shall not be waivable;
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vii.
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an offer pursuant to which the Company has received an irrevocable written commitment by the offeror to consummate as promptly as practicable upon successful completion of the offer a second step transaction whereby all
shares of Common Stock not tendered into the offer will be acquired for the same amount and form of consideration per share actually paid pursuant to the offer, subject to stockholders statutory appraisal rights, if any;
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viii.
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an offer pursuant to which the Company has received an irrevocable written commitment of the offeror that no amendments will be made to the offer to reduce the offer consideration (other than a reduction to reflect any
dividend declared by the Company after the commencement of such offer within the meaning of Rule 14d-2(a) under the Exchange Act or any material change in the capital structure of the Company initiated by the Company after the commencement of such
offer, whether by way of reclassification, recapitalization, reorganization, repurchase or otherwise), change the form of consideration offered, reduce the number of shares being sought, or otherwise change the terms of the offer in a way that is
adverse to a tendering shareholder; and
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ix.
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if the offer includes common stock of the offeror, (A) the offeror is a publicly owned United States
corporation, and its Common Stock is freely tradable and is listed or admitted to trading on the New York Stock Exchange, the Nasdaq Global Market or the Nasdaq Global Select Market, (B) no stockholder approval of the offeror is required to
issue such Common Stock or, if required, such approval has already been obtained, and (C) no other class of voting stock of the offeror is outstanding, and the offeror meets the registrant eligibility requirements for use of Form S-3 for
registering
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securities under the Securities Act of 1933, as amended, including, without limitation, the filing of all required Exchange Act reports in a timely manner during the twelve calendar months prior
to the date of commencement of the offer within the meaning of Rule 14d-2(a) under the Exchange Act.
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For the purposes of
this definition of Qualified Offer, fully financed shall mean that the offeror has sufficient funds for the offer which shall be evidenced by (A) definitive financing agreements executed between the offeror and
responsible financial institutions having the necessary financial capacity to provide funds for such offer subject only to customary terms and conditions (which shall in no event include conditions requiring access by such financial institutions to
non-public information to be provided by the Company, conditions based on the accuracy of any information concerning the Company, or conditions requiring the Company to make any representations, warranties or covenants in connection with such
financing), (B) cash or cash equivalents then available to the offeror, set apart and maintained solely for the purpose of funding the offer with an irrevocable written commitment being provided by the offeror to the Company to maintain such
availability until the offer is consummated or withdrawn, or (C) a combination of the foregoing; which evidence (including certified copies of any such definitive financing agreements (including exhibits and related documents) and copies of all
written materials prepared by the offeror for such financial institutions in connection with entering into such financing agreements) has been provided to the Company prior to, or upon, commencement of the offer within the meaning of Rule 14d-2(a)
under the Exchange Act; provided, that sufficient funds for the offer shall be an amount sufficient to pay for all shares of Common Stock outstanding on a fully diluted basis the cash portion of the consideration pursuant to the offer
and the second-step transaction required by clause (ix) above and all related expenses. If an offer becomes a Qualified Offer in accordance with this definition but subsequently ceases to be a Qualified Offer as a result of the failure at a
later date to continue to satisfy any of the requirements of this definition, such offer shall cease to be a Qualified Offer and the provisions of Section 5.1(c) shall no longer be applicable to such offer, provided the actual redemption of the
Rights pursuant to Section 5.1(c) shall not have already occurred.
Record Time shall have the meaning set forth in the
Recitals.
Redemption Price shall mean an amount equal to one-tenth of one cent, $0.001.
Redemption Resolution shall have the meaning set forth in Section 5.1(c).
Redemption Time shall mean the time at which the right to exercise the Rights shall terminate pursuant to Section 5.1.
Right shall have the meaning set forth in the Recitals.
Rights Agent shall have the meaning set forth in the Preamble.
Rights Certificate shall have the meaning set forth in Section 2.3(c).
Rights Register shall have the meaning set forth in Section 2.7(a).
Separation Time shall mean the next Business Day following the earlier of (i) the tenth Business Day (or such later date as
the Board of Directors may from time to time fix by resolution adopted prior to the Separation Time that otherwise would have occurred) after the date on which any Person commences a tender or exchange offer that, if consummated, would result in
such Persons becoming an Acquiring Person and (ii) the date of the first event causing a Flip-in Date to occur;
provided
, that if the foregoing results in the Separation Time being prior to the Record Time, the Separation Time
shall be the Record Time and
provided
further
, that if any tender or exchange offer referenced in clause (i) of this paragraph is cancelled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of
any shares of Common Stock pursuant thereto, such offer shall be deemed, for purposes of this paragraph, never to have been made.
Special Meeting shall have the meaning set forth in Section 5.1(c).
Special Meeting Notice shall have the meaning set forth in Section 5.1(c).
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Stock Acquisition Date shall mean the earlier of (i) the first date on which
there shall be a public announcement by the Company (by any means) that a Person has become an Acquiring Person, which announcement makes express reference to such status as an Acquiring Person pursuant to this Agreement, or (ii) the date on
which any Acquiring Person becomes the Beneficial Owner of more than 50% of the outstanding shares of Common Stock, excluding for this purpose any shares determined to be Constructively Owned.
Subsidiary of any specified Person shall mean any corporation or other entity of which a majority of the voting power of the
equity securities or a majority of the equity or membership interest is Beneficially Owned, directly or indirectly, by such Person.
Successor shall mean the estate or legal representative of a deceased individual, the beneficiary of a deceased individuals
estate, a trust created by a deceased individual as grantor, or the beneficiary of a trust created by a deceased individual as grantor.
Synthetic Long Position shall mean any option, warrant, convertible security, stock appreciation right, swap agreement or other
security, contract right or derivative position, whether or not presently exercisable, that has an exercise or conversion privilege or a settlement payment or other mechanism at a price related to the value of Common Stock or a value determined in
whole or part with reference to, or derived in whole or in part from, the value of Common Stock and that increases in value as the value of Common Stock increases or that provides to the holder an opportunity, directly or indirectly, to profit or
share in any profit derived from any increase in the value of Common Stock, in any case without regard to whether (i) such derivative conveys any voting rights in such securities to such Person or any of such Persons Affiliates or
Associates, (ii) such derivative is required to be, or capable of being, settled through delivery of such securities, or (iii) such Person or any of such Persons Affiliates or Associates may have entered into other transactions that
hedge the economic effect of such derivative. A Synthetic Long Position shall not include any interests, rights, options or other securities set forth in Rule 16a-1(c)(1)-(5) or (7) promulgated pursuant to the Exchange Act.
Trading Day, when used with respect to any securities, shall mean a day on which the nyse is open for the transaction of business
or, if such securities are not listed or admitted to trading on the NYSE, a day on which the principal national securities exchange on which such securities are listed or admitted to trading is open for the transaction of business or, if such
securities are not listed or admitted to trading on any national securities exchange, a Business Day.
Trading Regulation
shall have the meaning set forth in Section 2.3(c).
Trust shall have the meaning set forth in Section 3.1(c).
Trust Agreement shall have the meaning set forth in Section 3.1(c).
Vice President, when used with respect to the Company, means any vice president, whether or not designated by a number or a word
or words added before or after the title vice president.
ARTICLE II
THE RIGHTS
2.1
Summary of
Rights
. As soon as practicable after the Record Time, the Company will mail a letter summarizing the terms of the Rights to each holder of record of Common Stock as of the Record Time, at such holders address as shown by the records of the
Company.
2.2
Legend
. Certificates for the Common Stock or, if a certificate has not been issued, the registration of the Common
Stock on the stock transfer books of the Company, issued on or after the Record Time but prior to the Separation Time, shall evidence one Right for each share of Common Stock represented thereby and the Company shall mail to every Person that
acquires Common Stock after the Payment Time, but prior to the Separation Time, either certificates for such Common Stock or a confirmation of the registration of such Common Stock on the stock transfer books of the Company, which certificates or
confirmation shall have
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impressed on, printed on, written on or otherwise affixed to them a legend substantially in the following form:
Until the Separation Time (as defined in the Rights Agreement referred to below), this also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement, dated as of November 30, 2015 (as such may be amended from time to time, the Rights Agreement), between CA, Inc. (the Company) and Computershare Trust Company, N.A., as Rights
Agent (or any successor Rights Agent), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may become exercisable for securities or assets of the Company or securities of another entity, may be exchanged for shares of Common Stock or other securities or assets of the Company, may expire, may become
null and void (including if they are Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof, as such terms are defined in the Rights Agreement, or by any transferee of any of the foregoing) or may be
evidenced by separate certificates and may no longer be evidenced hereby. The Company will mail or arrange for the mailing of a copy of the Rights Agreement to the holder hereof without charge after the receipt of a written request therefor.
Certificates representing shares of Common Stock that are issued and outstanding at the Payment Time (or confirmation of the registration of the Common Stock
on the stock transfer books with respect to uncertificated shares), together with the letter mailed pursuant to Section 2.1, shall evidence one Right for each share of Common Stock evidenced thereby notwithstanding the absence of the foregoing
legend.
The Company shall mail or arrange for the mailing of a copy of this Agreement to any Person that holds Common Stock, as evidenced
by the registration of the Common Stock in the name of such Person on the stock transfer books of the Company, without charge after the receipt of a written request therefor.
2.3
Exercise of Rights; Separation of Rights
. (a) Subject to Sections 3.1, 5.1 and 5.10 and subject to adjustment as herein set
forth, each Right will entitle the holder thereof, at or after the Separation Time and prior to the Expiration Time, to purchase, for the Exercise Price, one one-thousandth of a share of Preferred Stock.
(b) Until the Separation Time, (i) no Right may be exercised and (ii) each Right will be evidenced by the certificate for the
associated share of Common Stock (or, if the Common Stock shall be uncertificated, by the registration of the associated Common Stock on the stock transfer books of the Company and any confirmation thereof provided for in Section 2.2),
together, in the case of shares acquired prior to the Payment Time, with the letter mailed to the record holder thereof pursuant to Section 2.1, and will be transferable only together with, and will be transferred by a transfer (whether with or
without such letter or confirmation) of, such associated share.
(c) Subject to the terms and conditions hereof, at or after the
Separation Time and prior to the Expiration Time, (i) the Rights may be exercised pursuant to Section 2.3(d) below, (ii) the Rights will be transferred independent of shares of Common Stock and (iii) the Rights Agent will
promptly, at the Companys expense, if requested by the Company and provided with all necessary documentation and information (in the reasonable discretion of the Rights Agent), mail to each holder of record of Common Stock (provided that the
Board of Directors has not elected to exchange all of the then outstanding Rights pursuant to Section 3.1(c)) as of the Separation Time (other than any Person whose Rights have become null and void pursuant to Section 3.1(b)), at such
holders address as shown by the records of the Company (the Company hereby agreeing to furnish copies of such records to the Rights Agent for this purpose) or the transfer agent or registrar for the Common Stock, (x) a certificate (a
Rights Certificate) in substantially the form of Exhibit A hereto appropriately completed, representing the number of Rights held by such holder at the Separation Time and having such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement and as do not affect the rights, liabilities, responsibilities or duties of the Rights Agent, or
as may be required to comply with any law, rule or
B-9
regulation or with any rule or regulation of any national securities exchange or quotation system on which the Rights may from time to time be listed or traded (Trading Regulation),
or to conform to usage, and (y) a disclosure statement describing the Rights. Receipt of a Rights Certificate by any Person shall not preclude a later determination that such Rights are null and void pursuant to Section 3.1(b). The Company
may implement such procedures as it deems appropriate, in its sole discretion, to minimize the possibility that Rights are received by Persons with respect to whom Rights would be null and void under Section 3.1(b).
(d) Subject to the terms and conditions hereof, Rights may be exercised on any Business Day at or after the Separation Time and prior to the
Expiration Time by submitting to the Rights Agent the Rights Certificate evidencing such Rights with an Election to Exercise (an Election to Exercise) substantially in the form attached to the Rights Certificate duly executed and
properly completed, accompanied by payment in cash, or by certified or official bank check or money order payable to the order of the Company, of a sum equal to the Exercise Price multiplied by the number of Rights being exercised and a sum
sufficient to cover any tax or charge that may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery of certificates (or, if uncertificated, the registration on the stock
transfer books of the Company) for shares or depositary receipts (or both) in a name other than that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with a properly completed and duly executed Election to Exercise accompanied by payment as set forth
in Section 2.3(d), and subject to the terms and conditions hereof, the Rights Agent will thereupon promptly (i)(A) requisition from a transfer agent stock certificates evidencing such number of shares or other securities to be purchased or, in
the case of uncertificated shares or other securities, requisition from a transfer agent a notice setting forth such number of shares or other securities to be purchased for which registration will be made on the stock transfer books of the Company
(the Company hereby irrevocably authorizing its transfer agents to comply with all such requisitions), and (B) if the Company elects pursuant to Section 5.5 not to issue certificates (or effect registrations on the stock transfer books of
the Company) representing fractional shares, requisition from the depositary selected by the Company depositary receipts representing the fractional shares to be purchased (the Company hereby irrevocably authorizes each such depositary agent to
comply with such requisitions) or, when necessary to comply with this Agreement, requisition from the Company the amount of cash to be paid in lieu of fractional shares in accordance with Section 5.5 and (ii) after receipt of such
certificates, depositary receipts, notices and/or, when necessary to comply with this Rights Agreement, cash, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered (in the case of
certificates, depositary receipts or notices) in such name or names as may be designated by such holder.
(f) In case the holder of any
Rights shall exercise less than all of the Rights evidenced by such holders Rights Certificate, a new Rights Certificate evidencing the Rights remaining unexercised will be issued by the Rights Agent to such holder or to such holders
duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all such action as may be necessary to ensure
that all shares delivered (or evidenced by registration on the stock transfer books of the Company) upon exercise of Rights shall, at the time of delivery of the certificates (or registration) for such shares (subject to payment of the Exercise
Price), be duly and validly authorized, executed, issued and delivered (or registered) and fully paid and nonassessable; (ii) take all such action as may be necessary to comply with any applicable requirements of the Securities Act of 1933, as
amended from time to time or the Exchange Act, and the rules and regulations thereunder, and any other applicable law, rule or regulation, in connection with the issuance of any shares upon exercise of Rights; and (iii) pay when due and payable
any and all federal and state taxes and charges that may be payable in respect of the original issuance or delivery of the Rights Certificates or of any shares issued upon the exercise of Rights,
provided
, that the Company shall not be
required to pay any tax or charge that may be payable in respect of any transfer involved in the transfer or delivery of Rights Certificates or the issuance or delivery
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of certificates (or the registration) for shares in a name other than that of the holder of the Rights being transferred or exercised.
(h) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the exercise or assignment of a Rights Certificate unless the registered holder of such Rights Certificate shall have (i) properly completed and duly signed the certificate following the form of assignment or the form of
election to exercise, as applicable, set forth on the reverse side of the Rights Certificate surrendered for such exercise or assignment, (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) thereof and of the Rights evidenced thereby, and the Affiliates and Associates of such Beneficial Owner or former Beneficial Owner, as the Company or the Rights Agent may reasonably request and (iii) paid a sum sufficient to cover any
tax or charge that may be imposed as required under Section 2.3(d).
2.4
Adjustments to Exercise Price; Number of Rights
.
(a) In the event the Company shall at any time after the Record Time and prior to the Separation Time (i) declare or pay a dividend on Common Stock payable in Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares of Common Stock, (x) the Exercise Price in effect after such adjustment will be equal to the Exercise Price in effect immediately prior to such adjustment divided
by the number of shares of Common Stock including any fractional shares in lieu of which such holder received cash (the Expansion Factor) that a holder of one share of Common Stock immediately prior to such dividend, subdivision or
combination would hold thereafter as a result thereof and (y) each Right held prior to such adjustment will become that number of Rights equal to the Expansion Factor, and the adjusted number of Rights will be deemed to be distributed among the
shares of Common Stock with respect to which the original Rights were associated (if they remain outstanding) and the shares issued in respect of such dividend, subdivision or combination, so that each such share of Common Stock will have exactly
one Right associated with it. Each adjustment made pursuant to this paragraph shall be made as of the payment or effective date for the applicable dividend, subdivision or combination.
In the event that the Company shall at any time after the Record Time and prior to the Separation Time issue any shares of Common Stock
otherwise than in a transaction referenced in the preceding paragraph, each such share of Common Stock so issued shall automatically have one new Right associated with it, which Right shall be evidenced by the certificate representing such share
(or, if the Common Stock shall be uncertificated, such Right shall be evidenced by the registration of such Common Stock on the stock transfer books of the Company and the confirmation thereof provided for in Section 2.2). Rights shall be
issued by the Company in respect of shares of Common Stock that are issued or sold by the Company after the Separation Time only to the extent provided in Section 5.3.
(b) In the event that the Company shall at any time after the Record Time and prior to the Separation Time issue or distribute any securities
or assets in respect of, in lieu of or in exchange for Common Stock (other than pursuant to any non-extraordinary periodic cash dividend or a dividend paid solely in Common Stock) whether by dividend, in a reclassification or recapitalization
(including any such transaction involving a merger, consolidation or statutory share exchange), or otherwise, the Company shall make such adjustments, if any, in the Exercise Price, number of Rights and/or securities or other property purchasable
upon exercise of Rights as the Board of Directors, in its sole discretion, may deem to be appropriate under the circumstances, and the Company and the Rights Agent shall amend this Agreement as necessary to provide for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this Section 2.4 shall be calculated to the nearest cent. Whenever an
adjustment to the Exercise Price is made pursuant to this Section 2.4, the Company shall (i) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment and
(ii) promptly file with the Rights Agent and with each transfer agent for the Common Stock a copy of such certificate. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or statement therein
contained and shall have no duty or liability with respect to, and shall not be
B-11
deemed to have knowledge of, any adjustment or any such event unless and until it shall have received such a certificate.
(d) Rights Certificates shall represent the right to purchase the securities purchasable under the terms of this Agreement, including any
adjustment or change in the securities purchasable upon exercise of the Rights, even though such certificates may continue to express the securities purchasable at the time of issuance of the initial Rights Certificates.
2.5
Date on Which Exercise is Effective
. Each Person in whose name any certificate for shares is issued (or registration on the stock
transfer books is effected) upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the shares represented thereby at the Close of Business on the Business Day upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Exercise Price for such Rights (and any applicable taxes and other charges payable by the exercising holder hereunder) was made;
provided
,
however
, that if the date of such surrender
and payment is a date upon which the stock transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate (or registration) shall be dated, the next succeeding Business
Day on which the stock transfer books of the Company are open.
2.6
Execution, Authentication, Delivery and Dating of Rights
Certificates
. (a) The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board of Directors, President or one of its Vice Presidents and by its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersignature and delivery of such Rights
Certificates.
Promptly after the Separation Time, the Company will notify the Rights Agent in writing of such Separation Time (and if
such notification is given orally, the Company shall confirm the same in writing on or prior to the Business Day next following) and will deliver Rights Certificates executed by the Company to the Rights Agent for countersignature, and, subject to
Sections 2.3(c) and 3.1(b), the Rights Agent shall manually or by facsimile countersign and deliver such Rights Certificates to the holders of the Rights pursuant to Section 2.3(c). Until the written notice provided for in this Section 2.6
is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that the Separation Time has not occurred. No Rights Certificate shall be valid for any purpose unless manually or by facsimile countersigned by the Rights
Agent.
In case any authorized signatory of the Rights Agent who has countersigned any of the Rights Certificates ceases to be an
authorized signatory of the Rights Agent before issuance and delivery by the Company, such Rights Certificates, nevertheless, may be issued and delivered by the Company with the same force and effect as though the person who countersigned such
Rights Certificates had not ceased to be an authorized signatory of the Rights Agent; and any Rights Certificates may be countersigned on behalf of the Rights Agent by any person who, at the actual date of the countersignature of such Rights
Certificate, is properly authorized to countersign such Rights Certificate, although at the date of the execution of this Agreement any such person was not so authorized.
(b) Each Rights Certificate shall be dated the date of countersignature thereof.
2.7
Registration, Registration of Transfer and Exchange
. (a) After the Separation Time, the Company will cause to be kept a
register (the Rights Register) in which, subject to such reasonable regulations as it may prescribe, the Company will provide for the registration and transfer of Rights. The Rights Agent is hereby appointed Rights Registrar
for the purpose of maintaining the Rights Register for the Company and registering Rights and transfers of Rights after the Separation Time as herein provided. In the event that the Rights Agent
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shall cease to be the Rights Registrar, the Rights Agent will have the right to examine the Rights Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of Sections 2.7(c) and (d), the Company will execute, and the Rights Agent will countersign and, if requested by the Company and provided with all necessary information, deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holders instructions, one or more new Rights Certificates evidencing the same aggregate number of Rights as did the Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights issued upon any registration of transfer or exchange of Rights
Certificates shall be the valid obligations of the Company, and such Rights shall be entitled to the same benefits under this Agreement as the Rights surrendered upon such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company or the Rights Agent, as the case may be, duly executed by the holder thereof or such holders attorney duly authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or other charge that may be imposed in relation thereto.
(d) The Company shall not register the transfer or exchange of any Rights that have become null and void under Section 3.1(b), been
exchanged under Section 3.1(c) or been redeemed under Section 5.1.
2.8
Mutilated, Destroyed, Lost and Stolen Rights
Certificates
. (a) If any mutilated Rights Certificate is surrendered to the Rights Agent prior to the Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1, the Company shall execute and the Rights Agent shall countersign and
deliver in exchange therefor a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights Agent prior to the Expiration Time (i) evidence to their satisfaction of
the destruction, loss or theft of any Rights Certificate and (ii) such security or indemnity as may be required by them to save each of them and any of their agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the absence
of written notice to the Company or the Rights Agent that such Rights Certificate has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Rights Agent shall countersign and, if requested by the Company
and provided with all necessary information, deliver, in lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights Certificate evidencing the same number of Rights as did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under this Section 2.8, the Company may require the payment of a sum
sufficient to cover any tax or other charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Rights Agent) connected therewith. The Rights Agent shall have no duty or obligation to take any
action under any Section of this Agreement which requires the payment by a Rights holder of applicable taxes and/or charges unless and until it is satisfied that all such taxes and/or charges have been paid.
(d) Every new Rights Certificate issued pursuant to this Section 2.8 in lieu of any destroyed, lost or stolen Rights Certificate shall
evidence an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Rights Certificate shall be at any time enforceable by anyone, and, subject to Section 3.1(b) shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other Rights duly issued hereunder.
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2.9
Persons Deemed Owners
. Prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Stock certificate or confirmation of registration, if uncertificated), the Company, the Rights Agent and any agent of the Company or the Rights Agent may deem and treat the Person in whose name such Rights
Certificate (or, prior to the Separation Time, such Common Stock certificate or confirmation, if uncertificated) is registered as the absolute owner thereof and of the Rights evidenced thereby for all purposes whatsoever, including the payment of
the Redemption Price, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary. As used in this Agreement, unless the context otherwise requires, the term holder of any Rights shall mean the registered
holder of such Rights (or, prior to the Separation Time, the associated shares of Common Stock).
2.10
Delivery and Cancellation of
Certificates
. All Rights Certificates surrendered upon exercise or for registration of transfer or exchange shall, if surrendered to any Person other than the Rights Agent, be delivered to the Rights Agent and, in any case, shall be promptly
cancelled by the Rights Agent. The Company may at any time deliver to the Rights Agent for cancellation any Rights Certificates previously countersigned and delivered hereunder that the Company may have acquired in any manner whatsoever, and all
Rights Certificates so delivered shall be promptly cancelled by the Rights Agent. No Rights Certificates shall be countersigned in lieu of or in exchange for any Rights Certificates cancelled as provided in this Section 2.10, except as
expressly permitted by this Agreement. The Rights Agent shall destroy all cancelled Rights Certificates and deliver a certificate of destruction to the Company.
2.11
Agreement of Rights Holders
. Every holder of Rights by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable only together with,
and will be transferred by a transfer of, the associated share of Common Stock;
(b) after the Separation Time, the Rights Certificates
will be transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to
the Separation Time, the associated Common Stock certificate or Common Stock registration, if uncertificated) for registration of transfer, the Company, the Rights Agent and any agent of the Company or the Rights Agent may deem and treat the Person
in whose name the Rights Certificate (or, prior to the Separation Time, the associated Common Stock certificate or Common Stock registration, if uncertificated) is registered as the absolute owner thereof and of the Rights evidenced thereby for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary;
(d) Rights
Beneficially Owned by certain Persons will, under the circumstances set forth in Section 3.1(b), become null and void;
(e) this
Agreement may be supplemented or amended from time to time in accordance with its terms;
(f) the Board of Directors shall have the
exclusive power and authority delegated to it pursuant to Section 5.13; and
(g) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such obligation.
B-14
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE
EVENT OF CERTAIN TRANSACTIONS
3.1
Flip-in
. (a) In the event that prior to the Expiration Time a Flip-in Date shall occur,
except as otherwise provided in this Section 3.1, each Right shall constitute the right to purchase from the Company, upon exercise thereof in accordance with the terms hereof (but subject to Section 5.10), that number of shares of Common
Stock having an aggregate Market Price on the Stock Acquisition Date that gave rise to the Flip-in Date equal to twice the Exercise Price for an amount in cash equal to the Exercise Price (such right to be appropriately adjusted in order to protect
the interests of the holders of Rights generally in the event that on or after such Stock Acquisition Date any of the events described in Sections 2.4(a) or (b), or any analogous event, shall have occurred with respect to the Common Stock).
(b) Notwithstanding the foregoing, any Rights that are Beneficially Owned on the Stock Acquisition Date by an Acquiring Person or an Affiliate
or Associate thereof shall become null and void and any holder of such Rights (including transferees, whether direct or indirect, of any such Persons) shall thereafter have no right to exercise or transfer such Rights under any provision of this
Agreement. If any Rights Certificate is presented for assignment or exercise and the Person presenting the same will not properly complete the certification set forth at the end of the form of assignment or notice of election to exercise or, if
requested, will not provide such additional evidence, including, without limitation, the identity of the Beneficial Owners and their Affiliates and Associates (or former Beneficial Owners and their Affiliates and Associates) as the Company or the
Board of Directors shall reasonably request in order to determine if such Rights are null and void, then the Company shall be entitled conclusively to deem the Rights to be Beneficially Owned by an Acquiring Person or an Affiliate or Associate
thereof or a transferee of any of the foregoing and accordingly deem the Rights evidenced thereby to be null and void and not transferable, exercisable or exchangeable.
(c) The Board of Directors may, at its option, at any time after a Flip-in Date and prior to the time that an Acquiring Person becomes the
Beneficial Owner of more than 50% of the outstanding shares of Common Stock, excluding for this purpose any shares determined to be Constructively Owned, elect to exchange all (but not less than all) of the then outstanding Rights (which shall not
include Rights that have become null and void pursuant to the provisions of Section 3.1(b)) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted in order to protect the interests of
holders of Rights generally in the event that after the Separation Time any of the events described in Sections 2.4(a) or (b), or any analogous event, shall have occurred with respect to the Common Stock (such exchange ratio, as adjusted from time
to time, being hereinafter referred to as the Exchange Ratio).
Immediately upon the action of the Board of Directors electing
to exchange the Rights, without any further action and without any notice, the right to exercise the Rights will terminate and each Right (other than Rights that have become null and void pursuant to Section 3.1(b)), whether or not an Election
to Exercise has been previously delivered, will thereafter represent only the right to receive a number of shares of Common Stock equal to the Exchange Ratio. The exchange of the Rights by the Board of Directors may be made effective at such time,
on such basis and with such conditions as the Board of Directors in its sole discretion may establish. Promptly after the action of the Board of Directors electing to exchange the Rights, the Company shall give written notice thereof (specifying the
steps to be taken to receive shares of Common Stock in exchange for Rights) to the Rights Agent and the holders of the Rights (other than Rights that have become null and void pursuant to Section 3.1(b)) outstanding immediately prior thereto by
mailing such notice in accordance with Section 5.9. Before effecting an exchange pursuant to this Section 3.1(c), the Board of Directors may direct the Company to enter into a Trust Agreement in such form and with such terms as the Board
of Directors shall then approve (the Trust Agreement). If the Board of Directors so directs, the Company shall enter into the Trust
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Agreement and shall issue to the trust created by such agreement (the Trust) all or some (as designated by the Board of Directors) of the shares of Common Stock (or other securities)
issuable pursuant to the exchange, and all or some (as designated by the Board of Directors) holders of Rights entitled to receive shares pursuant to the exchange shall be entitled to receive such shares (and any dividends paid or distributions made
thereon after the date on which such shares are deposited in the Trust) only from the Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement. Prior to effecting an exchange and registering shares of Common
Stock (or other such securities) in any Persons name, including any nominee or transferee of a Person, the Company may require (or cause the trustee of the Trust to require), as a condition thereof, that any holder of Rights provide evidence,
including, without limitation, the identity of the Beneficial Owners thereof and their Affiliates and Associates (or former Beneficial Owners thereof and their Affiliates and Associates) as the Company shall reasonably request in order to determine
if such Rights are null and void. If any Person shall fail to comply with such request, the Company shall be entitled conclusively to deem the Rights formerly held by such Person to be null and void pursuant to Section 3.1(b) and not
transferable or exercisable or exchangeable in connection herewith. Any shares of Common Stock or other securities issued at the direction of the Board of Directors in connection herewith shall be validly issued, fully paid and nonassessable shares
of Common Stock or of such other securities (as the case may be), and the Company shall be deemed to have received as consideration for such issuance a benefit having a value that is at least equal to the aggregate par value of the shares so issued.
Approval by the Board of Directors of the exchange shall constitute a determination by the Board of Directors that such consideration is adequate.
Each Person in whose name any certificate for shares is issued (or for whom any registration on the stock transfer books of the Company is
made) upon the exchange of Rights pursuant to this Section 3.1(c) shall for all purposes be deemed to have become the holder of record of the shares represented thereby on, and such certificate (or registration on the stock transfer books of
the Company) shall be dated (or registered as of), the date upon which the Rights Certificate evidencing such Rights was duly exchanged or deemed exchanged by the Company and payment of any applicable taxes and other governmental charges payable by
the holder was made;
provided
,
however
, that if the date of such exchange and payment is a date upon which the stock transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares
on, and such certificate (or registration on the stock transfer books of the Company) shall be dated (or registered as of), the next succeeding Business Day on which the stock transfer books of the Company are open.
(d) Whenever the Company shall become obligated under Section 3.1(a) or (c) to issue shares of Common Stock upon exercise of or in
exchange for Rights, the Company, as determined by the Board of Directors, may substitute therefor shares of Preferred Stock, at a ratio of one one-thousandth of a share of Preferred Stock for each share of Common Stock so issuable, subject to
adjustment.
(e) In the event that there shall not be sufficient treasury shares or authorized but unissued shares of Common Stock or
Preferred Stock of the Company to permit the exercise in full of the Rights in accordance with Section 3.1(a) or if the Company so elects to make the exchange referenced in Section 3.1(c), to permit the issuance of all shares pursuant to
the exchange, the Company shall either (i) call a meeting of stockholders seeking approval to cause sufficient additional shares to be authorized (provided that if such approval is not obtained the Company will take the action specified in
clause (ii) of this sentence) or (ii) take such action as shall be necessary to ensure and provide, without exposing the directors to personal liability (as determined by the Board of Directors), as and when and to the maximum extent
permitted by applicable law and any agreements or instruments in effect prior to the time an Acquiring Person controls the Board of Directors (and remaining in effect) to which the Company is a party, that each Right shall thereafter constitute the
right to receive, (x) in the case of any exercise in accordance with Section 3.1(a), at the Companys option, either (A) in return for the Exercise Price, debt or equity securities or other assets (or a combination thereof)
having a fair value equal to twice the Exercise Price, or (B) without payment of consideration (except as may be required for the valid issuance of securities or otherwise required by applicable law), debt or equity securities or other assets
(or a combination thereof) having a fair value equal to the Exercise Price, or (y) in the case of an exchange of Rights in accordance with Section 3.1(c), debt or equity securities or other assets (or a combination thereof) having a
B-16
fair value equal to the product of the Market Price of a share of Common Stock on the Flip-in Date times the Exchange Ratio in effect on the Flip-in Date, where in any case set forth in
(x) or (y) above the fair value of such debt or equity securities or other assets shall be as determined in good faith by the Board of Directors, after consultation with a nationally recognized investment banking firm.
3.2
Flip-over
. (a) Prior to the Expiration Time, the Company shall not enter into any agreement with respect to, consummate or
permit to occur any Flip-over Transaction or Event unless and until it shall have entered into a supplemental agreement with the Flip-over Entity, for the benefit of the holders of the Rights (the terms of which shall be reflected in an amendment to
this Agreement entered into with the Rights Agent), providing that, upon consummation or occurrence of the Flip-over Transaction or Event (i) each Right shall thereafter constitute the right to purchase from the Flip-over Entity, upon exercise
thereof in accordance with the terms hereof, that number of shares of Flip-over Stock of the Flip-over Entity having an aggregate Market Price on the date of consummation or occurrence of such Flip-over Transaction or Event equal to twice the
Exercise Price for an amount in cash equal to the Exercise Price (such right to be appropriately adjusted in order to protect the interests of the holders of Rights generally in the event that after such date of consummation or occurrence any of the
events described in Section 2.4(a) or (b), or any analogous event, shall have occurred with respect to the Flip-over Stock) and (ii) the Flip-over Entity shall thereafter be liable for, and shall assume, by virtue of such Flip-over
Transaction or Event and such supplemental agreement, all the obligations and duties of the Company pursuant to this Agreement.
(b) Prior
to the Expiration Time, unless the Rights will be redeemed pursuant to Section 5.1 pursuant to an agreement entered into by the Company prior to a Flip-in Date, the Company shall not enter into any agreement with respect to, consummate or
permit to occur any Flip-over Transaction or Event if (i) at the time thereof there are any rights, warrants or securities outstanding or any other arrangements, agreements or instruments that would eliminate or otherwise diminish in any
material respect the benefits intended to be afforded by this Rights Agreement to the holders of Rights upon consummation of such transaction, (ii) prior to, simultaneously with or immediately after such Flip-over Transaction or Event, the
stockholders of the Person who constitutes, or would constitute, the Flip-over Entity shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates, or (iii) the form or nature of
organization of the Flip-over Entity would preclude or limit the exercisability of the Rights.
(c) The provisions of this
Section 3.2 shall apply to successive Flip-over Transactions or Events.
ARTICLE IV
THE RIGHTS AGENT
4.1
General
. (a) The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the express terms and conditions hereof (and no implied terms or conditions), and the Rights Agent hereby accepts such
appointment. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, to reimburse its reasonable expenses, counsel fees and disbursements
and other disbursements incurred in the preparation, negotiation, delivery, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also covenants and agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including, without limitation, the reasonable fees and expenses of legal counsel), that may be paid,
incurred or suffered by it without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (each as determined by a final, non-appealable, judgment of a court of competent jurisdiction), for any action taken, suffered or
omitted to be taken by the Rights Agent arising from or out of, directly or indirectly, any claims or liability resulting from its actions as Rights Agent pursuant to this Agreement or in
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connection with the acceptance, administration, exercise and performance of its duties under this Agreement, including the costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly, or enforcing its rights hereunder. The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company. The provisions of this Section 4.1 and Section 4.3 below shall
survive the termination of this Agreement, the exercise or expiration of the Rights and the resignation, replacement or removal of the Rights Agent.
(b) The Rights Agent shall be authorized and protected and shall incur no liability for or in respect of any action taken, suffered or omitted
to be taken by it in connection with its acceptance and administration of this Agreement or the exercise and performance of its duties hereunder in reliance upon any certificate for securities (or registration on the stock transfer books of the
Company) purchasable upon exercise of Rights, Rights Certificate, certificate for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or upon any written instructions or statements from the Company with
respect to any matter relating to its acting as Rights Agent hereunder without further inquiry or examination on its part, or otherwise upon the advice of counsel as set forth herein. The Rights Agent shall not be deemed to have knowledge of any
event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take any action in connection therewith, unless and until it has received such notice in
writing.
4.2
Merger or Consolidation or Change of Name of Rights Agent
. (a) Any Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any Person succeeding to the shareholder
services business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided
that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 4.4. In case at the time such successor Rights Agent succeeds to the agency created by this Agreement any of the Rights Certificates
have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates
have not been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Rights Certificates will
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
4.3
Duties of Rights Agent
. The Rights Agent undertakes to perform only
the duties and obligations expressly imposed by this Agreement (and no implied duties or obligations) upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel selected by it (who may be legal counsel for the Rights Agent or the Company or
an employee of the Rights Agent), and the advice or opinion of such counsel will be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or
omitted to be taken by it in the absence of bad faith and in accordance with such advice or opinion.
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(b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it
necessary or desirable that any fact or matter (including without limitation, the identity of an Acquiring Person and the determination of the current per share market price of any security) be proved or established by the Company prior to taking,
suffering or omitting to take any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by a person believed
by the Rights Agent to be the Chairman of the Board of Directors, the President or any Vice President and by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate will be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for any action taken, suffered or omitted to be taken in the absence of bad faith by it under the provisions of
this Agreement in reliance upon such certificate. The Rights Agent shall have no duty to act without such a certificate signed by an officer of the Company as set forth in the preceding sentence.
(c) The Rights Agent will be liable to the Company and any other Person hereunder only for its own gross negligence, bad faith or willful
misconduct (each as determined by a final, non-appealable, judgment of a court of competent jurisdiction). Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including, but not limited to, lost profits) under any provision of this Agreement, even if the Rights Agent has been advised of or has foreseen the possibility or likelihood of such loss or damage.
Any and all liability of the Rights Agent under this Agreement will be limited to the amount of annual fees paid by the Company to the Rights Agent during the twelve (12) months immediately preceding the event for which recovery from the Rights
Agent is being sought.
(d) The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in
this Agreement or in the certificates, if any, for securities purchasable upon exercise of Rights or the Rights Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and will
be deemed to have been made by the Company only.
(e) The Rights Agent will not have any liability for nor be under any responsibility in
respect of the legality or validity of this Agreement or the execution and delivery hereof (except the due authorization, execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any certificate, if any, for
securities purchasable upon exercise of Rights or Rights Certificate (except its countersignature thereof) or any modification or order of any court, tribunal, or governmental authority in connection with the foregoing; nor will it be liable or
responsible for any breach by the Company of any covenant or failure by the Company to satisfy any condition contained in this Agreement or in any Rights Certificate; nor will it be liable or responsible for any change in the exercisability or
exchangeability of the Rights (including the Rights becoming null and void pursuant to Section 3.1(b)) or any change or adjustment in the terms of the Rights (including any adjustment required under the provisions of Sections 2.4, 3.1 or 3.2)
or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights after receipt by the Rights Agent of the
certificate contemplated by Section 2.4 describing any such adjustment, upon which the Rights Agent may rely); nor will it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any
securities purchasable upon exercise of Rights or any Rights or as to whether any securities purchasable upon exercise of Rights will, when issued, be duly and validly authorized, executed, issued and delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably be required or requested by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement, in the reasonable discretion of
the Rights Agent.
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(g) The Rights Agent is hereby authorized and directed to accept advice or written instructions
with respect to the performance of its duties hereunder from any person believed by the Rights Agent to be the Chairman of the Board of Directors, the President or any Vice President or the Secretary or any Assistant Secretary or the Treasurer or
any Assistant Treasurer of the Company, and to apply to such persons for advice or instructions in connection with its duties, and such advice or instructions shall be full authorization and protection to the Rights Agent and the Rights Agent shall
not be liable for or in respect of any action taken, suffered or omitted to be taken by it in the absence of bad faith in accordance with instruction of any such person or for any delay while acting or while waiting for those instructions. The
Rights Agent shall be fully authorized and protected in relying upon the most recent instructions received by any such person. In the event the Rights Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction,
direction, request or other communication, paper or document received by the Rights Agent hereunder, the Rights Agent may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to the
Company or any other Person for refraining from taking such action, if the Rights Agent shall have notified the Company promptly of such belief in writing, and unless the Rights Agent shall receive written instructions executed by a person
authorized under this Section 4.3(g), which eliminates such ambiguity or uncertainty to the satisfaction of the Rights Agent.
(h)
The Rights Agent and any stockholder, member, affiliate, director, officer, employee, agent, or representative of the Rights Agent may buy, sell or deal in Common Stock, Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent or any
such stockholder, member, affiliate, director, officer, employee, agent or representative from acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself
(through directors, officers or employees) or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to
the Company or any other Person resulting from any such act, omission, default, neglect or misconduct, absent gross negligence, bad faith or willful misconduct in the selection and continued employment thereof (each as determined by a final,
non-appealable, judgment of a court of competent jurisdiction).
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if it believes that repayment of such funds or adequate indemnification against such risk or
liability is not assured to it. The Rights Agent shall not be required to take any action or to follow any instruction of the Company that the Rights Agent has been advised of in writing by outside counsel would cause the Rights Agent to take action
that is illegal.
(k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the case may be, has not been properly completed or duly executed, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without
first consulting with the Company; provided, however that the Rights Agent shall not be liable for any delays arising from the duties under this section 4.3(k).
(l) The Rights Agent shall have no responsibility to the Company, any holders of Rights or any holders of shares of Common Stock for interest
or earnings on any moneys held by the Rights Agent pursuant to this Agreement.
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(m) The Rights Agent shall not be required to take notice or be deemed to have notice of any
event or condition hereunder, including any event or condition that may require action by the Rights Agent, unless the Rights Agent shall be specifically notified in writing of such event or condition by the Company, and all notices or other
instruments required by this Agreement to be delivered to the Rights Agent must, in order to be effective, be received by the Rights Agent as specified in Section 5.9 hereof, and in the absence of such notice so delivered, the Rights Agent may
conclusively assume no such event or condition exists.
(n) Notwithstanding anything to the contrary contained herein, the Rights Agent
shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunctions
of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.
4.4
Change of Rights Agent
. The Rights Agent may resign and be discharged from its duties under this Agreement upon at least 30
days notice (or such lesser notice as is acceptable to the Company) in writing mailed to the Company by registered or certified mail or nationally recognized overnight courier and, in the event that the Rights Agent or one of its affiliates is
not also the transfer agent of the Company, to each transfer agent of Common Stock known to the Rights Agent. In the event the transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be
deemed to have resigned automatically and be discharged from its duties as Rights Agent under this Agreement as of the effective date of such termination, provided that if the Rights Agent is the party terminating such transfer agency relationship,
its written notice of termination shall specify that, effective as of such termination, it shall be deemed to have resigned and be discharged from its duties as Rights Agent. If the Rights Agent is deemed to have resigned and is discharged from its
duties as Rights Agent in connection with the termination of the transfer agency relationship between the Company and the Rights Agent, the Company shall be responsible for sending any required notice hereunder. The Company may remove the Rights
Agent upon 30 days notice in writing, mailed to the Rights Agent and to each transfer agent of the Common Stock and to the holders of the Rights in accordance with Section 5.9. If the Rights Agent should resign or be removed or otherwise
become incapable of acting, the Company will appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of 30 days after such removal or the effectiveness of such resignation or after it has been notified
in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of any Rights (which holder shall, with such notice, submit such holders Rights Certificate for inspection by the Company), then the
incumbent Rights Agent or any registered holder of any Rights may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be
(a) a Person (other than a natural person) organized and doing business under the laws of the United States or any state of the United States, in good standing, which is authorized under such laws to exercise the powers of the Rights Agent
contemplated by this Agreement and is subject to supervision or examination by federal or state authority and which, when combined with its affiliates, has at the time of its appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate of a Person described in clause (a) of this sentence. After appointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the foregoing purpose, but the predecessor Rights Agent shall not be required to make any additional expenditure or assume any additional liability in connection with the foregoing. Not later than the effective date of any such
appointment, the Company will file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock, and mail a notice thereof in writing to the holders of the Rights. Failure to give any notice provided for in
this Section 4.4, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.
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ARTICLE V
MISCELLANEOUS
5.1
Redemption
. (a) The Board of Directors may, at its option, at any time prior to the Flip-in Date, elect to redeem all (but not less than all) the then outstanding Rights at the Redemption Price and the Company, at its option, may pay the
Redemption Price either in cash or shares of Common Stock or other securities of the Company deemed by the Board of Directors, in the exercise of its sole discretion, to be at least equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors electing to redeem the Rights (or, if the resolution of the Board of Directors
electing to redeem the Rights states that the redemption will not be effective until the occurrence of a specified future time or event, upon the occurrence of such future time or event), without any further action and without any notice, the right
to exercise the Rights will terminate and each Right, whether or not previously exercised, will thereafter represent only the right to receive the Redemption Price in cash or securities, as determined by the Board of Directors. Promptly after the
Rights are redeemed, the Company shall give notice of such redemption to the Rights Agent and the holders of the then outstanding Rights by mailing such notice in accordance with Section 5.9.
(c) If the Company, not earlier than 60 Business Days nor later than 80 Business Days following the commencement of a Qualifying Offer within
the meaning of Rule 14d-2(a) under the Exchange Act, which has not been terminated prior thereto and which continues to be a Qualifying Offer, receives a written notice complying with the terms of this Section 5.1(c) (the Special Meeting
Notice) that is properly executed by the holders of record (or their duly authorized proxy) of at least ten percent (10%) of the shares of Common Stock of the Company then outstanding (other than shares of Common Stock held by the offeror
or its Affiliates and Associates) directing the Board of Directors to submit to a vote of stockholders at a special meeting of the stockholders of the Company (a Special Meeting) a resolution authorizing the redemption of all, but not
less than all, of the then outstanding Rights at the Redemption Price (the Redemption Resolution), then the Board of Directors shall take such actions as are necessary or desirable to cause the Redemption Resolution to be so submitted to
a vote of stockholders by including a proposal relating to adoption of the Redemption Resolution in the proxy materials of the Company for the Special Meeting; provided, however, that in any twelve-month period the Company shall not be required to
submit more than one Redemption Resolution to a vote of stockholders with respect to Qualifying Offers from any given potential Acquiring Person (including any Affiliates or Associates). For purposes of a Special Meeting Notice, the record date for
determining eligible holders of record shall be the 60th Business Day following the commencement of a Qualifying Offer within the meaning of Rule 14d-2(a) under the Exchange Act. Any Special Meeting Notice must be delivered to the Secretary of the
Company at the principal executive offices of the Company and must set forth as to the stockholders of record executing the request (i) the name and address of such stockholders, as they appear on the Companys books and records,
(ii) the class and number of shares of Common Stock of the Company that are owned of record by each of such stockholders, and (iii) in the case of Common Stock owned beneficially by another Person, an executed certification by the holder
of record that such holder has executed such Special Meeting Notice only after obtaining instructions to do so from such beneficial owner. The Board of Directors shall set a date for determining the stockholders of record entitled to notice of and
to vote at the Special Meeting in accordance with the Companys certificate of incorporation, bylaws and applicable law. Subject to the requirements of applicable law, the Board of Directors may take a position in favor of or opposed to the
adoption of the Redemption Resolution, or no position with respect to the Redemption Resolution, as it determines to be appropriate in the exercise of its duties. At the offerors request, the Company shall include in any proxy soliciting
material prepared by it in connection with the Special Meeting proxy soliciting material submitted by the offeror; provided, however, that the offeror, by written agreement with the Company contained in or delivered with such request, shall have
indemnified the Company against any and all liabilities resulting from any statements found to be defamatory, misstatements, misleading statements or omissions contained in or omitted from the offerors proxy soliciting materials and have
agreed to pay the Companys incremental costs incurred as a result of
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including such material in the Companys proxy soliciting material. Notwithstanding anything to the contrary contained in this Agreement, if the Board of Directors determines that it is in
the best interests of stockholders to seek an alternative transaction so as to obtain greater value for stockholders than that provided by any Qualifying Offer, the Company shall be entitled to include information relating to such alternative
transaction in the proxy soliciting material prepared by it in connection with the Special Meeting. If no Person has become an Acquiring Person prior to the redemption date referred to in this Section 5.1(c), and the Qualifying Offer continues
to be a Qualifying Offer and either (A) the Special Meeting is not held on or prior to the 90th Business Day following receipt of the Special Meeting Notice, or (B) at the Special Meeting, the holders of at least a majority of the shares
of Common Stock outstanding and entitled to vote as of the record date for the Special Meeting, not giving effect to any affirmative votes cast by the offeror or any of its Affiliates or Associates, shall vote in favor of the Redemption Resolution
(and the results of the vote are certified as official by the appointed inspectors of election for the Special Meeting), then all of the Rights shall be deemed redeemed by such failure to hold the Special Meeting or as a result of such stockholder
action, as the case may be, at the Redemption Price, or the Board of Directors shall take such other action as would prevent the existence of the Rights from interfering with the consummation of the Qualifying Offer, effective immediately prior to
the consummation of the Qualifying Offer, if, and only if, the Qualifying Offer is consummated within 60 days after either (x) the close of business on the 90th Business Day following receipt of the Special Meeting Notice if a Special Meeting
is not held on or prior to such date or (y) the date on which the results of the vote on the Redemption Resolution at the Special Meeting are certified as official by the appointed inspectors of election for the Special Meeting, as the case may
be. Nothing in this subparagraph (c) shall be construed as limiting or prohibiting the Company or any offeror from proposing or engaging in any acquisition, disposition or other transfer of any securities of the Company, any merger or
consolidation involving the Company, any sale or other transfer of assets of the Company, any liquidation, dissolution or winding-up of the Company, or any other business combination or other transaction, or any other action by the Company or such
offeror; provided, however, that the holders of Rights shall have the rights set forth in this Agreement with respect to any such acquisition, disposition, transfer, merger, consolidation, sale, liquidation, dissolution, winding-up, business
combination, transaction or action.
5.2
Effective Time; Expiration
. This Agreement shall be effective at the Effective Time. The
Rights and this Agreement shall expire at the Expiration Time and no Person shall have any rights pursuant to this Agreement or any Right after the Expiration Time, except, if the Rights have been exchanged or redeemed, as provided in Sections 3.1
or 5.1, respectively.
5.3
Issuance of New Rights Certificates
. Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the number or kind or class of shares of stock
purchasable upon exercise of Rights made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock by the Company following the Separation Time and prior to the Expiration
Time pursuant to the terms of securities convertible or redeemable into shares of Common Stock or to options, warrants or other rights (other than any securities issued or issuable in connection with the exercise or exchange of Rights), in each case
issued or granted prior to, and outstanding at, the Separation Time, the Company shall issue to the holders of such shares of Common Stock, Rights Certificates representing the appropriate number of Rights in connection with the issuance or sale of
such shares of Common Stock;
provided
,
however
, in each case, (i) no such Rights Certificate shall be issued, if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or to the Person to whom such Rights Certificates would be issued, (ii) no such Rights Certificates shall be issued if, and to the extent that, appropriate adjustment shall have otherwise been
made in lieu of the issuance thereof, and (iii) the Company shall have no obligation to distribute Rights Certificates to any Acquiring Person or Affiliate or Associate of an Acquiring Person or any transferee of any of the foregoing.
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5.4
Supplements and Amendments
. The Company and the Rights Agent may from time to time
supplement or amend this Agreement without the approval of any holders of Rights (i) prior to the Flip-in Date, in any respect and (ii) on or after the Flip-in Date, to make any changes that the Company may deem necessary or desirable
(x) that shall not materially adversely affect the interests of the holders of Rights generally (other than the Acquiring Person or any Affiliate or Associate thereof), (y) in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be inconsistent with any other provisions herein or otherwise defective or (z) in order to satisfy any applicable law, rule or regulation, including any Trading Regulation on any applicable exchange so as to
allow trading of the Companys securities thereon. The Rights Agent will duly execute and deliver any supplement or amendment hereto requested by the Company in writing, provided, that the Company has delivered to the Rights Agent a certificate
from an appropriate officer of the Company that states that the proposed supplement or amendment complies with the terms of this Agreement. Rights Agent agrees that time is of the essence in connection with any supplement or amendment that it is
directed to execute. Notwithstanding anything contained in this Agreement to the contrary, the Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that affects the Rights Agents own rights, duties,
obligations or immunities under this Agreement.
5.5
Fractional Shares
. If the Company elects not to issue certificates
representing (or register on the stock transfer books of the Company) fractional shares upon exercise, redemption or exchange of Rights, the Company shall, in lieu thereof, in the sole discretion of the Board of Directors, either (a) evidence
such fractional shares by depositary receipts issued pursuant to an appropriate agreement between the Company and a depositary selected by it, providing that each holder of a depositary receipt shall have all of the rights, privileges and
preferences to which such holder would be entitled as a beneficial owner of such fractional share, or (b) pay to the registered holder of such Rights the appropriate fraction of the Market Price per share in cash. Whenever a payment for
fractional shares is to be made by the Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and/or formulas
utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments. The Rights Agent shall be fully protected in relying upon such a certificate and shall
have no duty with respect to, and shall not be deemed to have knowledge of any payment for, fractional shares under any Section of this Agreement relating to the payment of fractional shares unless and until the Rights Agent shall have received such
a certificate and sufficient monies.
5.6
Rights of Action
. Subject to the terms of this Agreement (including Sections 3.1(b), 5.10
and 5.13), rights of action in respect of this Agreement, other than rights of action vested solely in the Rights Agent, the Board of Directors or the Company, are vested in the respective holders of the Rights; and any holder of any Rights, without
the consent of the Rights Agent or of the holder of any other Rights, may, on such holders own behalf and for such holders own benefit and the benefit of other holders of Rights, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of, such holders right to exercise such holders Rights in the manner provided in such holders Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement.
5.7
Holder of Rights Not Deemed a Stockholder
. No holder, as such, of any Rights shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of shares or any other securities that may at any time be issuable on the exercise of such Rights, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the holder of any
Rights, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as provided in Section 5.8), or to receive dividends or subscription rights, or
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otherwise, until such Rights shall have been exercised or exchanged in accordance with the provisions hereof.
5.8
Notice of Proposed Actions
. In case the Company shall propose at or after the Separation Time and prior to the Expiration Time
(i) to effect or permit a Flip-over Transaction or Event or (ii) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to the Rights Agent and to each holder of a Right, in
accordance with Section 5.9, written notice of such proposed action, which shall specify the date on which such Flip-over Transaction or Event, liquidation, dissolution, or winding up is to take place, and such notice shall be so given at least
20 Business Days prior to the date of the taking of such proposed action.
5.9
Notices
. Notices or demands authorized or required
by this Agreement to be given or made by the Rights Agent or by the holder of any Rights to or on the Company shall be in writing and shall be sufficiently given or made if in delivered or sent by nationally recognized overnight courier or
first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) or by facsimile transmission (with written confirmation thereof) as follows:
CA, Inc.
520 Madison Avenue
22
nd
Floor
New York, NY 10022
Attention:
Secretary
Facsimile: (212) 310-6222
Any notice or demand authorized or required by this Agreement to be given or made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by nationally recognized overnight courier or first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) or by facsimile transmission (with
written confirmation thereof) as follows:
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA
02021
Attention: Client Services
.Notices
or demands authorized or required by this Agreement to be given or made by the Company or the Rights Agent to or on the holder of any Rights shall be sufficiently given or made if delivered or sent by nationally recognized overnight courier or by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as it appears upon the registry books of the Rights Agent or, prior to the Separation Time, on the registry books of the transfer agent for the Common Stock.
Any notice that is sent in the manner herein provided shall be deemed given, whether or not the holder receives the notice.
5.10
Suspension of Exercisability or Exchangeability
. To the extent that the Board of Directors determines in good faith that some action will or need be taken pursuant to, or in order to properly give effect to, Sections 2.3, 3.1 or 4.4 or to
comply with federal or state securities laws or applicable Trading Regulations, the Company may suspend the exercisability or exchangeability of the Rights for a reasonable period sufficient to allow it to take such action or comply with such laws
or Trading Regulations. In the event of any such suspension, the Company shall issue as promptly as practicable a public announcement (with prompt written notice to the Rights Agent) stating that the exercisability or exchangeability of the Rights
has been temporarily suspended. Notice thereof pursuant to Section 5.9 shall not be required. Upon such suspension, any rights of action vested in a holder of Rights shall be similarly suspended.
Failure to give a notice pursuant to the provisions of this Agreement shall not affect the validity of any action taken hereunder.
B-25
5.11
Successors
. All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.
5.12
Benefits of this Agreement
. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the holders of the Rights any legal or equitable right, remedy or claim under this Agreement and this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the holders of the Rights.
5.13
Determination and Actions by the Board of Directors, etc
. The Board of Directors (or any duly authorized committee thereof) shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement
and (ii) make all determinations and calculations deemed necessary or advisable for the administration or implementation of this Agreement, without limitation, including the right to determine the Rights to be null and void pursuant to
Section 3.1, after taking into account the purpose of this Agreement and the Companys interest in maintaining an orderly trading market in the outstanding shares of Common Stock; provided, however, that nothing in this Section 5.13
shall give the Board of Directors the right to modify the Rights Agents rights, duties, obligations or immunities under this Agreement without the written consent of the Rights Agent. All such actions, interpretations, calculations and
determinations done or made by the Board of Directors (including by a committee of the Board of Directors to the extent permitted by applicable law) shall be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights
and all other Persons. The Rights Agent shall always be entitled to assume that the Board of Directors acted in good faith and the Rights Agent shall be fully protected and shall incur no liability in reliance thereon.
5.14
Descriptive Headings; Section References
. Descriptive headings appear herein for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof. Where a reference in this Agreement is made to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated.
5.15
GOVERNING LAW; EXCLUSIVE JURISDICTION
.
(a) THIS AGREEMENT, EACH RIGHT AND EACH RIGHTS CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE
OF DELAWARE AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS ENTERED INTO, MADE WITHIN, AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAWS PROVISIONS OR RULES THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN SUCH STATE; PROVIDED, HOWEVER, THAT ALL PROVISIONS REGARDING THE RIGHTS, DUTIES, LIABILITIES AND OBLIGATIONS OF THE RIGHTS AGENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO, MADE WITHIN, AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
(b) (i) THE COMPANY AND EACH HOLDER OF RIGHTS HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURT OF CHANCERY OF THE
STATE OF DELAWARE, OR, IF SUCH COURT SHALL LACK SUBJECT MATTER JURISDICTION, THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE OVER ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. The Company
and each holder of Rights acknowledge that the forum designated by this paragraph (b) has a reasonable relation to this Agreement, and to such Persons relationship with one another.
(ii) The Company and each holder of Rights hereby waive, to the fullest extent permitted by applicable law, any objection which they now or
hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in any court referred to in paragraph (b)(i). The Company and each holder of
B-26
Rights undertake not to commence any action subject to this Agreement in any forum other than the forum described in this paragraph (b). The Company and each holder of Rights agree that, to the
fullest extent permitted by applicable law, a final and non-appealable judgment in any such suit, action, or proceeding brought in any such court shall be conclusive and binding upon such Persons.
5.16
Counterparts
. This Agreement may be executed in any number of counterparts (including by facsimile, PDF or other electronic means)
and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
5.17
Severability
. If any term or provision hereof or the application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective as to such jurisdiction to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining terms and provisions hereof
or the application of such term or provision to circumstances other than those as to which it is held invalid or unenforceable; provided, that if any such excluded term or provision shall adversely affect the rights, immunities, duties or
obligations of the Rights Agent, the Rights Agent shall be entitled to resign immediately.
5.18
Customer Identification Program
.
The Company acknowledges that the Rights Agent is subject to the customer identification program (Customer Identification Program) requirements under the USA PATRIOT Act and its implementing regulations, and that the Rights Agent must
obtain, verify and record information that allows the Rights Agent to identify the Company. Accordingly, prior to accepting an appointment hereunder, the Rights Agent may request information from the Company that will help the Rights Agent to
identify the Company, including without limitation the Companys physical address, tax identification number, organizational documents, certificate of good standing, license to do business, or any other information that the Rights Agent deems
necessary. The Company agrees that the Rights Agent cannot accept an appointment hereunder unless and until the Rights Agent verifies the Companys identity in accordance with the Customer Identification Program requirements.
5.19
Withholding
. In the event that the Company, the Rights Agent or their agents determine that they are obligated to withhold or
deduct any tax or other charge under any applicable law on actual or deemed payments or distributions hereunder to a holder of the Rights, Common Stock or other cash, securities or other property, the Company, the Rights Agent or their agents shall
be entitled, but not obligated, to (i) deduct and withhold such amount by withholding a portion or all of the cash, securities or other property otherwise deliverable or by otherwise using any property (including, without limitation, Rights,
Preferred Stock, Common Stock or cash) that is owned by such holder, or (ii) in lieu of such withholding, require any holder to make a payment to the Company, the Rights Agent or their agents, in each case in such amounts as they deem necessary
to meet their withholding obligations, and in the case of (i) above, shall also be entitled, but not obligated, to sell all or a portion of such withheld securities or other property by public or private sale in such amounts and in such manner
as they deem necessary and practicable to pay such taxes and charges.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the
date first above written.
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CA, INC.
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By:
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/s/ Michael C. Bisignano
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Name:
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Michael C. Bisignano
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Title:
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Executive Vice President, General Counsel and Corporate Secretary
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COMPUTERSHARE TRUST COMPANY, N.A.
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By:
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/s/ Dennis V. Moccia
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Name:
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Dennis V. Moccia
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Title:
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Manager, Contract Administration
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B-28
EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
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Certificate No. W-
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Rights
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THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE FOREGOING WILL BE VOID.
RIGHTS CERTIFICATE
CA, INC.
This certifies that _____________, or registered assigns, is the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and conditions of the Stockholder Protection Rights Agreement, dated as of November 30, 2015 (as amended from time to time, the
Rights Agreement
),
between CA, Inc., a Delaware corporation (the
Company
), and Computershare Trust Company, N.A., a federally chartered trust company, as Rights Agent (the
Rights Agent
, which term shall include any successor
Rights Agent under the Rights Agreement), to purchase from the Company at any time after the Separation Time (as such term is defined in the Rights Agreement) and prior to the Expiration Time (as such term is defined in the Rights Agreement), one
one-thousandth of a fully paid share of Preferred Stock (as defined in, and subject to adjustment as provided in, the Rights Agreement), at the Exercise Price referred to below, upon presentation and surrender of this Rights Certificate with the
Form of Election to Exercise duly executed at the office of the Rights Agent designated for such purpose. The Exercise Price shall initially be $120 per Right and shall be subject to adjustment in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights evidenced hereby may entitle the registered holder thereof to
purchase securities of an entity other than the Company or securities of the Company other than Preferred Stock or assets of the Company, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of the Rights Agreement are on file at the principal office of the Company and are available without cost upon written request.
This Rights Certificate, with or without other Rights Certificates, upon surrender at the office of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor evidencing an aggregate number of Rights equal to the aggregate number of Rights evidenced by the Rights Certificate or Rights Certificates surrendered. If
this Rights Certificate shall be exercised in part, the registered holder shall be entitled to receive, upon surrender hereof, another Rights Certificate or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right evidenced by this Certificate may be (a) redeemed by the Company under
certain circumstances, at its option, at a redemption price of $0.001 per Right or (b) exchanged by the Company under certain circumstances, at its option, for one share of Common Stock or one one-thousandth of a share of Preferred Stock per
Right (or, in certain cases, other securities or assets of the Company), subject in each case to adjustment in certain events as provided in the Rights Agreement.
B-A-1
No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or
be deemed for any purpose the holder of any securities which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Rights evidenced by this Rights Certificate shall have been exercised or exchanged as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by
the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Date:
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ATTEST:
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CA, INC.
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By:
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Secretary
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Countersigned:
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COMPUTERSHARE TRUST COMPANY, N.A.
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By:
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Authorized Signature
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B-A-2
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be
executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED __________ hereby sells, assigns and transfers
unto
(Please print name
and address of transferee)
this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint __________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution.
Dated: _____, __
Signature
Guaranteed:
Signature
(Signature must correspond to name as
written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever)
Signatures must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee Medallion program), pursuant to Exchange Act Rule 17Ad-15. A notary is not sufficient.
The
undersigned hereby represents, for the benefit of all holders of Rights and shares of Common Stock, that the Rights evidenced by this Rights Certificate are not, and, to the knowledge of the undersigned, have never been, Beneficially Owned by an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).
B-A-3
NOTICE
In the event the certification set forth above is not properly completed in connection with a purported assignment, the Company will deem the
Beneficial Owner of the Rights evidenced by the enclosed Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or exercisable.
B-A-4
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
The undersigned hereby irrevocably elects to exercise ______ whole Rights
represented by the attached Rights Certificate to purchase the shares of Participating Preferred Stock issuable upon the exercise of such Rights and requests that certificates for such shares be issued in the name of:
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Address:
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Social Security or Other Taxpayer
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Identification Number:
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If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights
Certificate for the balance of such Rights shall be registered in the name of and delivered to:
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Address:
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Social Security or Other Taxpayer
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Identification Number:
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Signatures must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan
associations and credit unions with membership in an approved signature guarantee Medallion program), pursuant to Exchange Act Rule
17Ad-15.
A notary is not sufficient.
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Dated:_____, __
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Signature Guaranteed:
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Signature
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B-A-5
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(Signature must correspond to
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name as written upon the face
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of this Rights Certificate in
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every particular, without
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alteration or enlargement or
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any change whatsoever)
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(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and shares of Common Stock, that the Rights evidenced by the
attached Rights Certificate are not, and, to the knowledge of the undersigned, have never been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).
NOTICE
In the event the certification set forth above is not properly completed in connection with a purported exercise, the Company will deem the
Beneficial Owner of the Rights evidenced by the attached Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or exercisable.
B-A-6
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION AND TERMS
OF PARTICIPATING PREFERRED STOCK OF CA, INC.
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
We, the undersigned, __________ and __________, the __________ and __________, respectively, of CA, Inc., a Delaware corporation (the
Corporation
), do hereby certify as follows:
Pursuant to authority granted by Article FOURTH of the Restated
Certificate of Incorporation of the Corporation, and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Corporation has adopted the following resolutions
fixing the designations and certain terms, powers, preferences and other rights of a new series of the Corporations Preferred Stock, Class A, without par value, and certain qualifications, limitations and restrictions thereon:
RESOLVED
, that there is hereby established a series of Preferred Stock, Class A, without par value, of the Corporation, and the
designation and certain terms, powers, preferences and other rights of the shares of such series, and certain qualifications, limitations and restrictions thereon, are hereby fixed as follows:
(i) The distinctive serial designation of this series shall be
Series Two Participating Preferred Stock, Class A
(hereinafter called
this Series
). Each share of this Series shall be identical in all respects with the other shares of this Series except as to the dates from and after which dividends thereon shall be cumulative.
(ii) The number of shares in this Series shall initially be [600,000], which number may from time to time be increased or decreased (but not
below the number then outstanding) by the Board of Directors. Shares of this Series purchased by the Corporation shall be cancelled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series. Shares of this
Series may be issued in fractional shares which are whole number multiples of one one-thousandth of a share, which fractional shares shall entitle the holder, in proportion to such holders fractional share, to all rights of a holder of a whole
share of this Series.
(iii) The holders of full or fractional shares of this Series shall be entitled to receive, when and as
declared by the Board of Directors, but only out of funds legally available therefor, dividends, (A) on each date that dividends or other distributions (other than dividends or distributions payable in Common Stock of the Corporation) are
payable on or in respect of Common Stock comprising part of the Reference Package (as defined below), in an amount per whole share of this Series equal to the aggregate amount of dividends or other distributions (other than dividends or
distributions payable in Common Stock of the Corporation) that would be payable on such date to a holder of the Reference Package and (B) on the last day of March, June, September and December in each year, in an amount per whole share of this
Series equal to the excess (if any) of $___ over the aggregate dividends paid per whole share of this Series during the three month period ending on such last day. Each such dividend shall be paid to the holders of record of shares of this Series on
the date, not exceeding sixty days preceding such dividend or distribution payment date, fixed for the purpose by the Board of Directors in advance of payment of each particular dividend or distribution. Dividends on each full and each fractional
share of this Series shall be cumulative from the date such full or fractional share is originally issued;
provided
that any such full or fractional share originally issued after a dividend record date and on or prior to the dividend payment
date to which such record date relates shall not be entitled to receive the dividend payable on such dividend payment date or any amount in respect of the period from such original issuance to such dividend payment date.
B-B-1
The term
Reference Package
shall initially mean 1,000 shares of Common Stock,
par value $0.10 per share (
Common Stock
) of the Corporation. In the event the Corporation shall at any time after the close of business on December 11, 2015 (A) declare or pay a dividend on any Common Stock payable in
Common Stock, (B) subdivide any Common Stock or (C) combine any Common Stock into a smaller number of shares, then and in each such case the Reference Package after such event shall be the Common Stock that a holder of the Reference
Package immediately prior to such event would hold thereafter as a result thereof.
Holders of shares of this Series shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided on this Series.
So long as any shares of this Series are outstanding, no dividend (other than a dividend in Common Stock or in any other stock ranking junior
to this Series as to dividends and upon liquidation) shall be declared or paid or set aside for payment or other distribution declared or made upon the Common Stock or upon any other stock ranking junior to this Series as to dividends or upon
liquidation, unless the full cumulative dividends (including the dividend to be paid upon payment of such dividend or other distribution) on all outstanding shares of this Series shall have been, or shall contemporaneously be, paid. When dividends
are not paid in full upon this Series and any other stock ranking on a parity as to dividends with this Series, all dividends declared upon shares of this Series and any other stock ranking on a parity as to dividends shall be declared pro rata so
that in all cases the amount of dividends declared per share on this Series and such other stock shall bear to each other the same ratio that accumulated dividends per share on the shares of the Series and such other stock bear to each other.
Neither the Common Stock nor any other stock of the Corporation ranking junior to or on a parity with this Series as to dividends or upon liquidation shall be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for stock of the Corporation ranking junior to this Series as to dividends and upon liquidation),
unless the full cumulative dividends (including the dividend to be paid upon payment of such dividend, distribution, redemption, purchase or other acquisition) on all outstanding shares of this Series shall have been, or shall contemporaneously be,
paid.
(iv) In the event of any merger, consolidation, reclassification or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of this Series shall at the same time be similarly exchanged or changed in an amount per whole share equal to the aggregate
amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, that a holder of the Reference Package would be entitled to receive as a result of such transaction.
(v) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the
holders of full and fractional shares of this Series shall be entitled, before any distribution or payment is made on any date to the holders of the Common Stock or any other stock of the Corporation ranking junior to this Series upon liquidation,
to be paid in full an amount per whole share of this Series equal to the greater of (A) $1,000 or (B) the aggregate amount distributed or to be distributed in connection with such liquidation, dissolution or winding up to a holder of the
Reference Package (such greater amount being hereinafter referred to as the
Liquidation Preference
), together with accrued dividends to such distribution or payment date, whether or not earned or declared. If such payment shall
have been made in full to all holders of shares of this Series, the holders of shares of this Series as such shall have no right or claim to any of the remaining assets of the Corporation.
In the event the assets of the Corporation available for distribution to the holders of shares of this Series upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to the first paragraph of this Section (v), no such distribution shall be
made on account of any shares of any other class or series of Preferred Stock ranking on a party with the shares of this Series upon such liquidation, dissolution or winding up unless proportionate distributive amounts shall be paid on account of
the shares of this Series, ratably in proportion to
B-B-2
the full distributable amounts for which holders of all such parity shares are respectively entitled upon such liquidation, dissolution or winding up.
Upon the liquidation, dissolution or winding up of the Corporation, the holders of shares of this Series then outstanding shall be entitled to
be paid out of assets of the Corporation available for distribution to its stockholders all amounts to which such holders are entitled pursuant to the first paragraph of this Section (v) before any payment shall be made to the holders of Common
Stock or any other stock of the Corporation ranking junior upon liquidation to this Series.
For the purposes of this Section (v), the
consolidation or merger of, or binding statutory share exchange by, the Corporation with any other corporation shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.
(vi) The shares of this Series shall not be redeemable.
(vii) In addition to any other vote or consent of stockholders required by law or by the Restated Certificate of Incorporation, as amended, of
the Corporation, and except as otherwise required by law, each share (or fraction thereof) of this Series shall, on any matter, vote as a class with any other capital stock comprising part of the Reference Package and shall have the number of votes
thereon that a holder of the Reference Package would have.
(viii) If and whenever dividends payable on this Series and any other class or
series of stock of the Corporation ranking on a parity with this Series as to payment of dividends (any such class or series being herein referred to as
dividend parity stock
) shall be in arrears in an aggregate amount equal to at
least six quarterly dividends (whether or not consecutive), the number of directors then constituting the Board of Directors shall be increased by two and the holders of shares of this Series together with the holders of all other affected classes
and series of dividend parity stock similarly entitled to vote for the election of two additional directors, voting separately as a single class, shall be entitled to elect the two additional directors at any annual meeting of stockholders or any
special meeting of the holders of shares of this Series and such dividend parity stock called as hereinafter provided. Whenever all arrears in dividends on the shares of this Series and dividend parity stock then outstanding shall have been paid and
dividends thereon for the current quarterly dividend period shall have been paid or declared and set aside for payment, then the right of the holders of shares of this Series and such dividend parity stock to elect such additional two directors
shall cease (but subject always to the same provisions for the vesting of such voting rights in the case of any similar future arrearages in dividends), and the terms of office of all persons elected as directors by the holders of shares of this
Series and such dividend parity stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of shares of
this Series and such dividend parity stock, the Secretary of the Corporation may, and upon the written request of any holder of shares of this Series (addressed to the Secretary at the principal office of the Corporation) shall, call a special
meeting of the holders of shares of this Series and such dividend parity stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the by-laws for a special
meeting of the stockholders or as required by law. If any such special meeting so required to be called shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of shares of this Series may (at the
Corporations expense) call such meeting, upon notice as herein provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual
meeting of the stockholders if such office shall not have previously terminated as above provided. In case any vacancy shall occur among the directors elected by holders of shares of this Series and such dividend parity stock, a successor shall be
elected by the Board of Directors to serve until the next annual meeting of the stockholders upon the nomination of the then remaining director elected by holders of shares of this Series and such dividend parity stock or the successor of such
remaining director. If the holders of shares of this Series become entitled under the foregoing provisions to elect or participate in the election of two directors as a result of dividend arrearages, such entitlement shall not affect the right of
such holders to vote as stated in paragraph (vii), including the right to vote in the election of the remaining directors.
B-B-3
(ix) This Series shall rank as to the payment of dividends and distributions and amounts upon
liquidation, dissolution and winding-up junior to all other series or shares of Preferred Stock unless otherwise expressly provided in the terms of such series or shares of Preferred Stock
(x) In the event that the Corporation or its agents determine that they are obligated to withhold or deduct any tax or other governmental
charge under any applicable law on actual or deemed payments or distributions to a holder of the shares of this Series, the Corporation or its agents shall be entitled to (i) deduct and withhold such amount by withholding a portion or all of
the cash, securities or other property otherwise deliverable or by otherwise using any property that is owned by such holder, or (ii) in lieu of such withholding, require any holder to make a payment to the Corporation or its agent, in each
case in such amounts as they deem necessary to meet their withholding obligations, and in the case of (i) above, shall also be entitled, but not obligated, to sell all or a portion of such withheld securities or other property by public or
private sale in such amounts and in such manner as they deem necessary and practicable to pay such taxes and charges.
IN WITNESS
WHEREOF
, the undersigned have signed and attested this certificate on the __ day of _____, ___.
B-B-4
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CA, INC.
520 MADISON AVENUE
NEW YORK, NY
10022
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VOTE BY INTERNET
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Before The Meeting
- Go to
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 p.m. Eastern Daylight Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an
electronic voting instruction form.
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During The Meeting
-
Go to
www.virtualshareholdermeeting.com/CA2016
You may attend the meeting on
August 3, 2016 at 10:00 a.m. Eastern Daylight Time via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
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VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Daylight Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E12107-P80791-Z68094
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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