UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
(Rule 14a-101)
Filed by the
Registrant
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Filed by a Party other than the
Registrant
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Check the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
DOUBLE-TAKE SOFTWARE, INC
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the
appropriate box):
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No fee required.
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Fee computed on table below per
Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of each class of securities
to which transaction applies:
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(2)
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Aggregate number of securities to
which transaction applies:
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(3)
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of
transaction:
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Fee
paid previously with preliminary materials.
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Check box if any part of the fee is
offset as provided by Exchange Act
Rule 0-1
1(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration
Statement No.:
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DOUBLE-TAKE SOFTWARE, INC.
257 Turnpike Road, Suite 210
Southborough, MA 01772
SUPPLEMENT DATED JULY 16, 2010 TO DEFINITIVE PROXY STATEMENT
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 22, 2010
This is a supplement to the proxy statement dated June 18, 2010 (the “Definitive Proxy Statement”)
of Double-Take Software, Inc. (“Double-Take Software,” “we,” “us,” or the “Company”) that was
mailed to you in connection with the solicitation of proxies for use at the special meeting of
Double-Take Software stockholders to be held at The Harvard Club of Boston, located at 374
Commonwealth Avenue, Boston, Massachusetts, 02215 on July 22, 2010, beginning at 4:00 p.m. EDT.
The special meeting has been called for the following purposes:
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To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of May
17, 2010, as it may be amended from time to time, which we refer to as the merger agreement,
by and among Double-Take Software, Vision Solutions, Inc., a Delaware corporation, which we
refer to as Parent, and HA Merger Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of Parent. A copy of the merger agreement is attached as
Annex A
to the Definitive
Proxy Statement.
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2.
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To consider and vote on a proposal to adjourn the special meeting, if necessary or
appropriate, to solicit additional proxies if there are insufficient votes at the time of the
special meeting to approve the proposal to adopt the merger agreement.
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3.
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To transact any other business that may properly come before the special meeting, or any
adjournment or postponement of the special meeting, by or at the direction of the board of
directors of Double-Take Software.
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Only stockholders of record of our common stock as of the close of business on June 18, 2010, will
be entitled to notice of, and to vote at, the special meeting and any adjournment or postponement
of the special meeting. All stockholders of record are cordially invited to attend the special
meeting in person.
The board of directors of the Company unanimously (i) determined that the merger is advisable, and
in the best interests of, the Company and our stockholders, (ii) authorized, adopted, approved and
declared advisable the merger agreement, the merger and the other transactions contemplated by the
merger agreement, (iii) resolved that the merger agreement be submitted for consideration by the
stockholders of the Company at a special meeting of stockholders, and (iv) recommended that our
stockholders vote to adopt the merger agreement.
If you have not already submitted a proxy for use at the special meeting, you are urged to do so
promptly. No action in connection with this supplement to the Definitive Proxy Statement is
required by any stockholder who has previously delivered a proxy and who does not wish to revoke or
change that proxy. Information about voting or revoking a proxy appears on pages 18 of the
Definitive Proxy Statement.
Litigation Relating to the Merger
On June 16, 2010, a putative class action lawsuit was commenced against us, our directors, Parent,
Merger Sub and Thoma Bravo in the Court of Chancery of the State of Delaware, captioned
Ian Wyer
vs. Dean Goodermote et al
., Case No. 5569. On June 22, 2010, a second putative class action lawsuit
was commenced against us, our directors, Parent, Merger Sub and Thoma Bravo in the Court of
Chancery of the State of Delaware, captioned
Alejandro Gonzales vs. Dean Goodermote et al
., Case
No. 5591. On July 7, 2010, the Court of Chancery entered an order consolidating the
Wyer
and the
Gonzales
actions, captioned
In re: Double-Take Software, Inc. Shareholder Litigation
, Consolidated
CA. No. 5569-CC. The complaint in the consolidated action alleges generally that our directors
breached their fiduciary duties in connection with the transaction by, among other things, failing
to conduct a thorough and proper sales process to maximize shareholder value, restricting the
Company’s ability to solicit or otherwise engage in discussions with other potential buyers of the
Company and putting their own interests above those of our stockholders generally, as well as that
our directors had breached their duty of disclosure to our shareholders. The complaint in the
consolidated action alleges that we, Parent and Thoma Bravo aided and abetted those alleged
breaches of duty.
As more fully described in the Definitive Proxy Statement, a number of substantively similar
putative stockholder class action suits have also been filed in the Superior Courts of the
Commonwealth of Massachusetts in Worcester County.
On July 15, 2010, counsel for the parties in the Delaware consolidated action and the Massachusetts
actions entered into a memorandum of understanding in which they agreed on the terms of a
settlement of the Delaware litigation, which would include the dismissal with prejudice of all
claims against all of the defendants. The proposed settlement is conditional upon, among other
things, the execution of an appropriate stipulation of settlement and final approval of the
proposed settlement by the court in Delaware. The counsel for the Massachusetts plaintiffs also
agreed to stay the Massachusetts actions pending final approval of the settlement and thereafter
to seek dismissal of the Massachusetts actions, provided that the settlement receives final
approval.
In addition, in connection with the settlement and as provided in the memorandum of understanding,
the parties contemplate that plaintiff’s counsel will seek an award of attorneys’ fees and expenses
as part of the settlement. There can be no assurance that the parties will ultimately enter into a
stipulation of settlement or that the court will approve the settlement even if the parties were to
enter into such stipulation. In such event, the proposed settlement as contemplated by the
memorandum of understanding may be terminated. The settlement will not affect the amount of the
merger consideration that Double-Take Software stockholders are entitled to receive in the merger.
The defendants deny all liability with respect to the facts and claims alleged in the lawsuits and
specifically deny that any further supplemental disclosure was required under any applicable rule,
statute, regulation or law. However, because it will eliminate the uncertainty, distraction, burden
and expense of further litigation and will permit the merger to proceed without risk of injunctive
or other relief, the defendants have agreed to the terms of the proposed settlement described above
and to make the supplemental disclosures below.
2
Supplemental Disclosure
The following supplemental information should be read in conjunction with the Definitive Proxy
Statement, which should be read in its entirety. Defined terms used but not defined herein have the
meanings set forth in the Definitive Proxy Statement.
Background of The Merger
The following disclosure supplements the discussion at page 24 of the Definitive Proxy Statement
concerning the decision of the Company’s board of directors to authorize Mr. Goodermote to direct
BofA Merrill Lynch and Thomas Weisel Partners to contact Thoma Bravo and Parent to discuss their
willingness to increase their $10.00 per share offer and whether a definitive agreement for a
transaction with a “go-shop” provision allowing the Company to continue to solicit alternative
acquisition proposals for a period after entering into the definitive agreement could be entered
into in an expedited manner.
In authorizing Mr. Goodermote to direct BofA Merrill Lynch and Thomas Weisel Partners to contact
Thoma Bravo and Parent, the board of directors expressed the view that moving quickly to reach a
final offer prior to announcement of the first quarter financial results, scheduled for early
April, would be in the Company’s best interests. In considering whom to contact, the board of
directors noted that the indication of interest from Interested Party B was at $10.25 per share,
which was higher than the $10.00 per share indication from Thoma Bravo and Parent. However, it was
judged that Thoma Bravo and Parent were more likely than Interested Party B to be in a position to
move promptly to a final offer at a higher price and on terms that could be considered by the board
of directors.
The following disclosure supplements the discussion at the bottom of page 24 of the Definitive
Proxy Statement that carries over onto page 25 concerning contacts with the 28 parties contacted by
BofA Merrill Lynch and Thomas Weisel Partners.
Except as described herein there were no other indications of interest provided by, or exchanges of
material non-public information with, the 28 parties contacted.
The following disclosure supplements the discussion at page 25 of the Definitive Proxy Statement
concerning the April 9, 2010 special telephonic meeting of the Company’s board of directors.
The board of directors discussed that Interested Party B had indicated that if it were to proceed,
it would most likely be through Interested Party B’s portfolio company, and that the portfolio
company had not yet begun due diligence efforts.
The following disclosure supplements the discussion at page 27 of the Definitive Proxy Statement
concerning the Company’s setting May 10th as the date for all active parties to submit best and
final offers.
The date of May 10 was set in order to provide a clear deadline for parties to determine their
willingness to make serious offers and permit a timely resolution of a process that was consuming
significant management time and effort, while permitting parties adequate time to prepare and
submit offers.
3
Opinions of Financial Advisors
Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
The following disclosure supplements the discussion at page 34 of the Definitive Proxy Statement
concerning the Selected Publicly Traded Company Analysis performed by BofA Merrill Lynch.
In the Selected Publicly Traded Companies Analysis, BofA Merrill Lynch applied a multiple range of
15.0x — 21.0x of 2011E P/E and applied a multiple range of 1.00x — 1.50x of 2010E Revenue to
derive the implied per share equity value reference ranges for the Company that are shown. Because
this analysis was based on the trading prices of publicly traded companies, no control premium was
applied.
The following disclosure supplements the discussion at pages 34 and 35 of the Definitive Proxy
Statement concerning the Selected Precedent Transactions Analysis performed by BofA Merrill Lynch.
In the Selected Precedent Transactions Analysis, BofA Merrill Lynch applied a multiple range of
15.0x — 21.0x of 2011E Net Income and applied a multiple range of 1.25x — 1.75x of calendar year
2010E Revenue to derive the implied per share equity value reference ranges for the Company that
are shown.
The following disclosure supplements the discussion at page 35 of the Definitive Proxy Statement
concerning the Discounted Cash Flow Analysis performed by BofA Merrill Lynch by replacing the
second and third sentences of the last paragraph on page 35 of the Definitive Proxy Statement.
BofA Merrill Lynch calculated terminal values for the Company by applying terminal forward
multiples of 1.00x to 1.50x, which were selected based on estimates for the long-term growth of the
economy and sectors in which the Company operates, to the Company’s fiscal year 2015 revenue. The
cash flows and terminal values were then discounted to present value as of March 31, 2010 using
discount rates ranging from 13% to 15%, which were chosen based upon a weighted average cost of
capital (“WACC”) of the Company.
The following disclosure supplements the discussion at page 37 of the Definitive Proxy Statement
concerning the aggregate fee to be paid to BofA Merrill Lynch by replacing the first sentence of
the first full paragraph on page 37.
The Company has agreed to pay BofA Merrill Lynch an aggregate fee currently estimated to be
approximately $1.535 million, $250,000 of which was payable upon the rendering of BofA Merrill
Lynch’s opinion and the remaining portion of which is contingent on the completion of the merger.
Opinion of Thomas Weisel Partners LLC
The following disclosure supplements the discussion at pages 39 and 40 of the Definitive Proxy
Statement concerning the Comparable Company Analysis performed by Thomas Weisel Partners.
Because this analysis was based on the trading prices of publicly traded companies, no control
premium was applied.
4
The following disclosure supplements the discussion at page 41 of the Definitive Proxy Statement
concerning the Discounted Cash Flow Analysis performed by Thomas Weisel Partners by replacing the
third through sixth sentences of the paragraph entitled “Discounted Cash Flow Analysis” on page 41
of the Definitive Proxy Statement.
Thomas Weisel Partners used two approaches. In the first approach, Thomas Weisel Partners
estimated the terminal value of the projected cash flows by applying exit multiples to the
Company’s estimated 2015 EBITDA, which multiples ranged from 6.0x to 8.0x, which were selected
based on Thomas Weisel Partners’ experience and judgment, taking into account the Company’s growth
profile and the sectors in which the Company operates. Thomas Weisel Partners then discounted the
cash flows projected through 2014 and the 2015 terminal value to present values using rates ranging
from 14.0% to 18.0%, which were chosen based upon an analysis of the WACC of the Company. In the
second approach, Thomas Weisel Partners estimated the perpetual cash flows by applying annual
growth rates of 2.0% to 4.0%, which were selected based on Thomas Weisel Partners’ experience and
judgment, taking into account the Company’s growth profile, to the Company’s estimated 2015 free
cash flow and then discounted the cash flows projected through 2014 and the perpetual cash flows to
present values using rates ranging from 14.0% to 18.0%, which were chosen based upon a WACC of the
Company.
The following disclosure supplements the discussion at page 42 of the Definitive Proxy Statement
concerning the aggregate fee to be paid to Thomas Weisel Partners by replacing the first sentence
of the fourth paragraph under the heading “Miscellaneous” on page 42 of the Definitive Proxy
Statement.
The Company has agreed to pay Thomas Weisel Partners an aggregate fee currently estimated to be
approximately $1.535 million, $250,000 of which was payable upon the rendering of Thomas Weisel
Partners’ opinion and the remaining portion of which is contingent on the completion of the merger.
Important Information Filed with the SEC
Investors and security holders are advised to read the Definitive Proxy Statement and other
documents because they contain important information about Double-Take Software and the proposed
transaction.
Investors and stockholders may obtain a free copy of the Definitive Proxy Statement and any other
relevant documents filed or furnished by Double-Take Software with the SEC at the SEC’s Web site at
www.sec.gov. In addition, investors and stockholders may obtain free copies of the documents filed
or furnished with the SEC by Double-Take Software by contacting Double-Take Software Investor
Relations by e-mail at investor@doubletake.com or by phone at 212.766.1800, by going to the
investor relations website portion of the Double-Take website at
http://investor.doubletake.com/
or
by contacting The Altman Group, Double-Take Software’s proxy solicitor, at (866) 304-2060.
Double-Take Software and our directors and certain executive officers may be deemed to be
participants in the solicitation of proxies from Double-Take Software stockholders in respect of
the proposed transaction. Information about the directors and executive officers of Double-Take
Software and their respective interests in Double-Take Software by security holdings or otherwise
is set forth in our proxy statement for the 2010 Annual Meeting of Stockholders, which was filed
with the SEC on April 1, 2010 and our Annual Report on Form 10-K for the year ended December 31,
5
2009, which was filed with the SEC on March 12, 2010. Stockholders may obtain additional
information regarding the interests of Double-Take Software and our directors and executive
officers in the merger, which may be different than those of the Company’s stockholders generally,
by reading the Definitive Proxy Statement and other relevant documents regarding the merger filed
or furnished with the SEC by the Company. Each of these documents is, or will be, available as
described above.
Forward-Looking Statements
This filing contains certain “forward-looking statements” within the meaning of the safe harbor
provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking
statements are statements that are not historical facts. Words such as “expect(s)”, “feel(s)”,
“believe(s)”, “will”, “may”, “anticipate(s)”, “intend(s)” and similar expressions are intended to
identify such forward-looking statements. These statements include, but are not limited to, the
expected timing of the acquisition, the ability of Parent and Double-Take to close the acquisition
and that the proposed settlement will be finalized. All of such information and statements are
subject to certain risks and uncertainties, the effects of which are difficult to predict and
generally beyond the control of Double-Take Software, that could cause actual results to differ
materially from those expressed in, or implied or projected by, the forward-looking information and
statements. These risks and uncertainties include, but are not limited to: (i) uncertainties
associated with the acquisition of the Company by Parent; (ii) uncertainties as to the timing of
the merger; (iii) failure to receive approval of the transaction by the Double-Take Software
stockholders; (iv) the ability of the parties to satisfy closing conditions to the transaction; (v)
the ability to finalize the proposed settlement, including obtaining court approval; (v) changes in
economic, business, competitive, technological and/or regulatory factors; and (vi) those risks
identified and discussed by us in our filings with the U.S. Securities and Exchange Commission,
including the Definitive Proxy Statement.
All of the forward-looking statements we make in this document are qualified by the information
contained herein or contained or incorporated by reference in the Definitive Proxy Statement,
including, but not limited to, (a) the information contained under this heading and (b) the
information contained under the headings “Risk Factors” in the Definitive Proxy Statement and in
our consolidated financial statements and notes thereto included in our most recent filings on
Forms 10-Q and 10-K (see “Where You Can Find More Information” beginning on page 76 of the
Definitive Proxy Statement). We are under no obligation to publicly release any revision to any
forward-looking statement contained or incorporated herein to reflect any future events or
occurrences.
You should carefully consider the cautionary statements contained or referred to in this section in
connection with any subsequent written or oral forward-looking statements that may be issued by us
or persons acting on our behalf.
6
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