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Delaware
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13-2857434
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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520 Madison Avenue,
New York, New York
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10022
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(Address of principal executive offices)
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(Zip Code)
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(Check one:)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Title of Class
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Shares Outstanding
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Common Stock
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as of July 17, 2014
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par value $0.10 per share
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445,060,827
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Page
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PART I.
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Financial Information
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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June 30,
2014 |
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March 31,
2014 |
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(unaudited)
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Assets
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Current assets:
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||||
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Cash and cash equivalents
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$
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3,255
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$
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3,252
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Trade accounts receivable, net
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553
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800
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Deferred income taxes
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336
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315
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Other current assets
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154
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192
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Total current assets
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$
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4,298
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$
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4,559
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Property and equipment, net of accumulated depreciation of $847 and $828, respectively
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$
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291
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$
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295
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Goodwill
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5,922
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5,922
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Capitalized software and other intangible assets, net
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978
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1,063
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Deferred income taxes
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58
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59
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Other noncurrent assets, net
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119
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118
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Total assets
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$
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11,666
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$
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12,016
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Liabilities and stockholders' equity
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Current liabilities:
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Current portion of long-term debt
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$
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515
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$
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514
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Accounts payable
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115
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129
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Accrued salaries, wages and commissions
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179
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275
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Accrued expenses and other current liabilities
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473
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510
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Deferred revenue (billed or collected)
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2,205
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2,419
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Taxes payable, other than income taxes payable
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42
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66
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Federal, state and foreign income taxes payable
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26
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—
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Deferred income taxes
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7
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9
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Total current liabilities
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$
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3,562
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$
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3,922
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Long-term debt, net of current portion
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$
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1,254
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$
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1,252
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Federal, state and foreign income taxes payable
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185
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182
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Deferred income taxes
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67
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67
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Deferred revenue (billed or collected)
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805
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872
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Other noncurrent liabilities
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125
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151
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Total liabilities
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$
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5,998
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$
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6,446
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Stockholders' equity:
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Preferred stock, no par value, 10,000,000 shares authorized; No shares issued and outstanding
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$
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—
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$
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—
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Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 440,239,855 and 438,740,478 shares outstanding, respectively
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59
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59
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Additional paid-in capital
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3,566
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3,610
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Retained earnings
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5,924
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5,818
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Accumulated other comprehensive loss
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(161
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)
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(171
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)
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Treasury stock, at cost, 149,455,226 and 150,954,603 shares, respectively
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(3,720
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)
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(3,746
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)
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Total stockholders' equity
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$
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5,668
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$
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5,570
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Total liabilities and stockholders' equity
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$
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11,666
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$
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12,016
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For the Three
Months Ended June 30, |
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2014
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2013
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||||
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Revenue:
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Subscription and maintenance
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$
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909
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$
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922
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Professional services
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87
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98
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Software fees and other
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73
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75
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Total revenue
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$
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1,069
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$
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1,095
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Expenses:
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Costs of licensing and maintenance
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$
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72
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$
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68
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Cost of professional services
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81
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88
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Amortization of capitalized software costs
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67
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66
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Selling and marketing
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246
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269
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General and administrative
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92
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91
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Product development and enhancements
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150
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132
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Depreciation and amortization of other intangible assets
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34
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36
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Other expenses, net
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14
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126
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Total expenses before interest and income taxes
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$
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756
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$
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876
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Income from continuing operations before interest and income taxes
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$
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313
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$
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219
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Interest expense, net
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14
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11
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Income from continuing operations before income taxes
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$
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299
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$
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208
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Income tax expense (benefit)
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87
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(122
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)
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Income from continuing operations
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$
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212
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$
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330
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Income from discontinued operations, net of income taxes
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$
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5
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$
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5
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Net income
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$
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217
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$
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335
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Basic income per common share:
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Income from continuing operations
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$
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0.48
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$
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0.72
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Income from discontinued operations
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0.01
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|
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0.01
|
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Net income
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$
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0.49
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$
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0.73
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Basic weighted average shares used in computation
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440
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450
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Diluted income per common share:
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||||
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Income from continuing operations
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$
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0.48
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$
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0.72
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Income from discontinued operations
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0.01
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|
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0.01
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Net income
|
$
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0.49
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|
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$
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0.73
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Diluted weighted average shares used in computation
|
441
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|
|
451
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For the Three
Months Ended June 30, |
||||||
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|
2014
|
|
2013
|
||||
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Net income
|
$
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217
|
|
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$
|
335
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|
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Other comprehensive gain (loss):
|
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|
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Foreign currency translation adjustments
|
10
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(43
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)
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Total other comprehensive gain (loss)
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$
|
10
|
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|
$
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(43
|
)
|
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Comprehensive income
|
$
|
227
|
|
|
$
|
292
|
|
|
|
For the Three
Months Ended June 30, |
||||||
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2014
|
|
2013
|
||||
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Operating activities from continuing operations:
|
|
|
|
||||
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Net income
|
$
|
217
|
|
|
$
|
335
|
|
|
Income from discontinued operations
|
(5
|
)
|
|
(5
|
)
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Income from continuing operations
|
$
|
212
|
|
|
$
|
330
|
|
|
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
|
|
|
|
||||
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Depreciation and amortization
|
101
|
|
|
102
|
|
||
|
Deferred income taxes
|
(20
|
)
|
|
(48
|
)
|
||
|
Provision for bad debts
|
(1
|
)
|
|
2
|
|
||
|
Share-based compensation expense
|
20
|
|
|
20
|
|
||
|
Asset impairments and other non-cash items
|
1
|
|
|
2
|
|
||
|
Foreign currency transaction gains
|
—
|
|
|
(1
|
)
|
||
|
Changes in other operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
||||
|
Decrease in trade accounts receivable
|
251
|
|
|
316
|
|
||
|
Decrease in deferred revenue
|
(285
|
)
|
|
(317
|
)
|
||
|
Increase (decrease) in taxes payable, net
|
17
|
|
|
(338
|
)
|
||
|
(Decrease) increase in accounts payable, accrued expenses and other
|
(30
|
)
|
|
8
|
|
||
|
Decrease in accrued salaries, wages and commissions
|
(97
|
)
|
|
(38
|
)
|
||
|
Changes in other operating assets and liabilities
|
(3
|
)
|
|
(35
|
)
|
||
|
Net cash provided by operating activities - continuing operations
|
$
|
166
|
|
|
$
|
3
|
|
|
Investing activities from continuing operations:
|
|
|
|
||||
|
Acquisitions of businesses, net of cash acquired, and purchased software
|
$
|
(11
|
)
|
|
$
|
(122
|
)
|
|
Purchases of property and equipment
|
(21
|
)
|
|
(13
|
)
|
||
|
Capitalized software development costs
|
—
|
|
|
(25
|
)
|
||
|
Maturities of short-term investments
|
—
|
|
|
184
|
|
||
|
Net cash (used in) provided by investing activities - continuing operations
|
$
|
(32
|
)
|
|
$
|
24
|
|
|
Financing activities from continuing operations:
|
|
|
|
||||
|
Dividends paid
|
$
|
(111
|
)
|
|
$
|
(114
|
)
|
|
Purchases of common stock
|
(50
|
)
|
|
(49
|
)
|
||
|
Notional pooling borrowings
|
1,334
|
|
|
725
|
|
||
|
Notional pooling repayments
|
(1,323
|
)
|
|
(723
|
)
|
||
|
Debt repayments
|
(2
|
)
|
|
(4
|
)
|
||
|
Debt issuance costs
|
—
|
|
|
(1
|
)
|
||
|
Exercise of common stock options and other
|
12
|
|
|
28
|
|
||
|
Net cash used in financing activities - continuing operations
|
$
|
(140
|
)
|
|
$
|
(138
|
)
|
|
Effect of exchange rate changes on cash
|
$
|
1
|
|
|
$
|
(29
|
)
|
|
Net change in cash and cash equivalents - continuing operations
|
$
|
(5
|
)
|
|
$
|
(140
|
)
|
|
Cash provided by operating activities - discontinued operations
|
$
|
8
|
|
|
$
|
8
|
|
|
Net effect of discontinued operations on cash and cash equivalents
|
$
|
8
|
|
|
$
|
8
|
|
|
Increase (decrease) in cash and cash equivalents
|
$
|
3
|
|
|
$
|
(132
|
)
|
|
Cash and cash equivalents at beginning of period
|
$
|
3,252
|
|
|
$
|
2,593
|
|
|
Cash and cash equivalents at end of period
|
$
|
3,255
|
|
|
$
|
2,461
|
|
|
•
|
Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
|
|
•
|
Level 2: Quoted prices for identical assets and liabilities in markets that are not active, or quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and
|
|
•
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Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
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|
|
Three Months Ended
June 30, |
||||||
|
(in millions)
|
2014
|
|
2013
|
||||
|
Subscription and maintenance
|
$
|
21
|
|
|
$
|
22
|
|
|
Software fees and other
|
10
|
|
|
11
|
|
||
|
Total revenue
|
$
|
31
|
|
|
$
|
33
|
|
|
Income from operations of discontinued components, net of tax expense of $4 million and $4 million, respectively
|
$
|
5
|
|
|
$
|
5
|
|
|
(in millions)
|
Accrued
Balance at
March 31, 2014
|
|
Expense
|
|
Change in
Estimate
|
|
Payments
|
|
Accretion
and Other
|
|
Accrued
Balance at
June 30, 2014
|
||||||||||||
|
Severance charges
|
$
|
55
|
|
|
$
|
8
|
|
|
$
|
1
|
|
|
$
|
(28
|
)
|
|
$
|
(3
|
)
|
|
$
|
33
|
|
|
Facility exit charges
|
29
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
25
|
|
||||||
|
Total accrued liabilities
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
$
|
58
|
|
||||||||
|
(in millions)
|
Accrued
Balance at
March 31, 2013
|
|
Expense
|
|
Change in
Estimate
|
|
Payments
|
|
Accretion
and Other
|
|
Accrued
Balance at
June 30, 2013
|
||||||||||||
|
Severance charges
|
$
|
16
|
|
|
$
|
103
|
|
|
$
|
(1
|
)
|
|
$
|
(28
|
)
|
|
$
|
3
|
|
|
$
|
93
|
|
|
Facility exit charges
|
23
|
|
|
17
|
|
|
—
|
|
|
(4
|
)
|
|
(3
|
)
|
|
33
|
|
||||||
|
Total accrued liabilities
|
$
|
39
|
|
|
|
|
|
|
|
|
|
|
$
|
126
|
|
||||||||
|
|
June 30,
2014 |
|
March 31,
2014 |
||||
|
|
(in millions)
|
||||||
|
Accounts receivable – billed
|
$
|
512
|
|
|
$
|
739
|
|
|
Accounts receivable – unbilled
|
51
|
|
|
61
|
|
||
|
Other receivables
|
8
|
|
|
19
|
|
||
|
Less: Allowances
|
(18
|
)
|
|
(19
|
)
|
||
|
Trade accounts receivable, net
|
$
|
553
|
|
|
$
|
800
|
|
|
|
At June 30, 2014
|
||||||||||||||||||
|
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Purchased software products
|
$
|
5,706
|
|
|
$
|
4,849
|
|
|
$
|
857
|
|
|
$
|
337
|
|
|
$
|
520
|
|
|
Internally developed software products
|
1,561
|
|
|
771
|
|
|
790
|
|
|
425
|
|
|
365
|
|
|||||
|
Other intangible assets
|
846
|
|
|
490
|
|
|
356
|
|
|
263
|
|
|
93
|
|
|||||
|
Total capitalized software and other intangible assets
|
$
|
8,113
|
|
|
$
|
6,110
|
|
|
$
|
2,003
|
|
|
$
|
1,025
|
|
|
$
|
978
|
|
|
|
At March 31, 2014
|
||||||||||||||||||
|
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Purchased software products
|
$
|
5,706
|
|
|
$
|
4,849
|
|
|
$
|
857
|
|
|
$
|
309
|
|
|
$
|
548
|
|
|
Internally developed software products
|
1,561
|
|
|
757
|
|
|
804
|
|
|
397
|
|
|
407
|
|
|||||
|
Other intangible assets
|
846
|
|
|
489
|
|
|
357
|
|
|
249
|
|
|
108
|
|
|||||
|
Total capitalized software and other intangible assets
|
$
|
8,113
|
|
|
$
|
6,095
|
|
|
$
|
2,018
|
|
|
$
|
955
|
|
|
$
|
1,063
|
|
|
|
Year Ended March 31,
|
||||||||||||||||||
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Purchased software products
|
$
|
113
|
|
|
$
|
111
|
|
|
$
|
108
|
|
|
$
|
105
|
|
|
$
|
62
|
|
|
Internally developed software products
|
142
|
|
|
112
|
|
|
81
|
|
|
38
|
|
|
10
|
|
|||||
|
Other intangible assets
|
57
|
|
|
35
|
|
|
8
|
|
|
3
|
|
|
1
|
|
|||||
|
Total
|
$
|
312
|
|
|
$
|
258
|
|
|
$
|
197
|
|
|
$
|
146
|
|
|
$
|
73
|
|
|
|
June 30,
2014 |
|
March 31,
2014 |
||||
|
|
(in millions)
|
||||||
|
Current:
|
|
|
|
||||
|
Subscription and maintenance
|
$
|
2,033
|
|
|
$
|
2,237
|
|
|
Professional services
|
145
|
|
|
149
|
|
||
|
Software fees and other
|
27
|
|
|
33
|
|
||
|
Total deferred revenue (billed or collected) – current
|
$
|
2,205
|
|
|
$
|
2,419
|
|
|
Noncurrent:
|
|
|
|
||||
|
Subscription and maintenance
|
$
|
778
|
|
|
$
|
845
|
|
|
Professional services
|
24
|
|
|
26
|
|
||
|
Software fees and other
|
3
|
|
|
1
|
|
||
|
Total deferred revenue (billed or collected) – noncurrent
|
$
|
805
|
|
|
$
|
872
|
|
|
Total deferred revenue (billed or collected)
|
$
|
3,010
|
|
|
$
|
3,291
|
|
|
|
Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated Statements of Operations
|
||||||
|
(in millions)
|
Three Months Ended June 30, 2014
|
|
Three Months Ended June 30, 2013
|
||||
|
Interest expense, net – interest rate swaps designated as fair value hedges
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
|
Other expenses, net – foreign currency contracts
|
$
|
5
|
|
|
$
|
(9
|
)
|
|
|
At June 30, 2014
|
|
At March 31, 2014
|
|
||||||||||||||||||||
|
|
Fair Value
Measurement Using
Input Types
|
|
Estimated
Fair
Value
|
|
Fair Value
Measurement Using
Input Types
|
|
Estimated
Fair
Value
|
|
||||||||||||||||
|
(in millions)
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Money market funds
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
1,000
|
|
(1)
|
$
|
1,277
|
|
|
$
|
—
|
|
|
$
|
1,277
|
|
(2)
|
|
Foreign exchange derivatives
(3)
|
—
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
||||||
|
Interest rate derivatives
(3)
|
—
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
8
|
|
|
8
|
|
|
||||||
|
Total assets
|
$
|
1,000
|
|
|
$
|
15
|
|
|
$
|
1,015
|
|
|
$
|
1,277
|
|
|
$
|
10
|
|
|
$
|
1,287
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Foreign exchange derivatives
(3)
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
(1)
|
At
June 30, 2014
, the Company had approximately
$1,000 million
and
less than $1 million
of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.
|
|
(2)
|
At
March 31, 2014
, the Company had approximately
$1,277 million
and
less than $1 million
of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.
|
|
(3)
|
See Note G, “Derivatives” for additional information. Interest rate derivatives fair value excludes accrued interest.
|
|
|
At June 30, 2014
|
|
At March 31, 2014
|
||||||||||||
|
(in millions)
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Total debt
(1)
|
$
|
1,769
|
|
|
$
|
1,890
|
|
|
$
|
1,766
|
|
|
$
|
1,884
|
|
|
Facility exit reserve
(2)
|
$
|
25
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
$
|
33
|
|
|
(1)
|
Estimated fair value of total debt is based on quoted prices for similar liabilities for which significant inputs are observable except for certain long-term lease obligations, for which fair value approximates carrying value (Level 2).
|
|
(2)
|
Estimated fair value for the facility exit reserve is determined using the Company’s incremental borrowing rate at
June 30, 2014
and
March 31, 2014
. At
June 30, 2014
and
March 31, 2014
, the facility exit reserve included approximately
$10 million
and
$11 million
, respectively, in “Accrued expenses and other current liabilities” and approximately
$15 million
and
$18 million
, respectively,
in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).
|
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
|
May 15, 2014
|
|
$0.25
|
|
May 29, 2014
|
|
$111
|
|
June 17, 2014
|
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
|
May 9, 2013
|
|
$0.25
|
|
May 23, 2013
|
|
$114
|
|
June 11, 2013
|
|
|
Three Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in millions, except per share amounts)
|
||||||
|
Basic income from continuing operations per common share:
|
|
|
|
||||
|
Income from continuing operations
|
$
|
212
|
|
|
$
|
330
|
|
|
Less: Income from continuing operations allocable to participating securities
|
(2
|
)
|
|
(4
|
)
|
||
|
Income from continuing operations allocable to common shares
|
$
|
210
|
|
|
$
|
326
|
|
|
Weighted average common shares outstanding
|
440
|
|
|
450
|
|
||
|
Basic income from continuing operations per common share
|
$
|
0.48
|
|
|
$
|
0.72
|
|
|
|
|
|
|
||||
|
Diluted income from continuing operations per common share:
|
|
|
|
||||
|
Income from continuing operations
|
$
|
212
|
|
|
$
|
330
|
|
|
Less: Income from continuing operations allocable to participating securities
|
(2
|
)
|
|
(4
|
)
|
||
|
Income from continuing operations allocable to common shares
|
$
|
210
|
|
|
$
|
326
|
|
|
Weighted average shares outstanding and common share equivalents:
|
|
|
|
||||
|
Weighted average common shares outstanding
|
440
|
|
|
450
|
|
||
|
Weighted average effect of share-based payment awards
|
1
|
|
|
1
|
|
||
|
Denominator in calculation of diluted income per share
|
441
|
|
|
451
|
|
||
|
Diluted income from continuing operations per common share
|
$
|
0.48
|
|
|
$
|
0.72
|
|
|
|
Three Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in millions)
|
||||||
|
Costs of licensing and maintenance
|
$
|
1
|
|
|
$
|
1
|
|
|
Cost of professional services
|
1
|
|
|
1
|
|
||
|
Selling and marketing
|
7
|
|
|
7
|
|
||
|
General and administrative
|
6
|
|
|
6
|
|
||
|
Product development and enhancements
|
5
|
|
|
5
|
|
||
|
Share-based compensation expense before tax
|
$
|
20
|
|
|
$
|
20
|
|
|
Income tax benefit
|
(6
|
)
|
|
(7
|
)
|
||
|
Net share-based compensation expense
|
$
|
14
|
|
|
$
|
13
|
|
|
|
Unrecognized Share-Based Compensation Costs
|
|
Weighted Average Period Expected to be Recognized
|
||
|
|
(in millions)
|
|
(in years)
|
||
|
Stock option awards
|
$
|
9
|
|
|
2.2
|
|
Restricted stock units
|
28
|
|
|
2.4
|
|
|
Restricted stock awards
|
93
|
|
|
2.4
|
|
|
Performance share units
|
36
|
|
|
3.1
|
|
|
Total unrecognized share-based compensation costs
|
$
|
166
|
|
|
2.5
|
|
|
Three Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
Weighted average fair value
|
$
|
5.87
|
|
|
$
|
4.89
|
|
|
Dividend yield
|
3.29
|
%
|
|
4.09
|
%
|
||
|
Expected volatility factor
(1)
|
29
|
%
|
|
30
|
%
|
||
|
Risk-free interest rate
(2)
|
2.1
|
%
|
|
1.3
|
%
|
||
|
Expected life (in years)
(3)
|
6.0
|
|
|
6.0
|
|
||
|
(1)
|
Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.
|
|
(2)
|
The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.
|
|
(3)
|
The expected life is the number of years the Company estimates that options will be outstanding prior to exercise.
The Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term).
|
|
|
|
|
RSAs
|
|
RSUs
|
||||
|
Incentive Plans for Fiscal Years
|
Performance Period
|
|
Shares
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
|
Shares
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
|
2014
|
1 year
|
|
0.7
|
|
$29.91
|
|
0.1
|
|
$28.92
|
|
2013
|
1 year
|
|
0.4
|
|
$27.11
|
|
0.1
|
|
$26.12
|
|
|
|
|
RSAs
|
|
RSUs
|
||||
|
Incentive Plans for Fiscal Years
|
Performance Period
|
|
Shares
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
|
Shares
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
|
2014
|
1 year
|
|
0.2
|
|
$28.69
|
|
0.1
|
|
$25.73
|
|
2013
|
1 year
|
|
0.2
|
|
$27.11
|
|
0.1
|
|
$24.13
|
|
|
Three Months Ended
June 30, |
|||||
|
|
2014
|
2013
|
||||
|
|
(shares in millions)
|
|||||
|
RSAs:
|
|
|
||||
|
Shares
|
2.9
|
|
2.7
|
|
||
|
Weighted average grant date fair value
(1)
|
$
|
28.96
|
|
$
|
27.01
|
|
|
RSUs:
|
|
|
||||
|
Shares
|
0.8
|
|
0.7
|
|
||
|
Weighted average grant date fair value
(2)
|
$
|
26.92
|
|
$
|
25.00
|
|
|
(1)
|
The fair value is based on the quoted market value of the Company's common stock on the grant date.
|
|
(2)
|
The fair value is based on the quoted market value of the Company's common stock on the grant date reduced by the present value of dividends expected to be paid on the Company's common stock prior to vesting of the RSUs, which is calculated using a risk-free interest rate.
|
|
|
Three Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in millions)
|
||||||
|
Total borrowings outstanding at beginning of period
(1)
|
$
|
139
|
|
|
$
|
136
|
|
|
Borrowings
|
1,334
|
|
|
725
|
|
||
|
Repayments
|
(1,323
|
)
|
|
(723
|
)
|
||
|
Foreign currency exchange effect
|
(10
|
)
|
|
—
|
|
||
|
Total borrowings outstanding at end of period
(1)
|
$
|
140
|
|
|
$
|
138
|
|
|
(1)
|
Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.
|
|
Three Months Ended June 30, 2014
|
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
|
(dollars in millions)
|
||||||||||||||||
|
Revenue
|
|
$
|
614
|
|
|
$
|
368
|
|
|
$
|
87
|
|
|
$
|
1,069
|
|
|
Expenses
|
|
235
|
|
|
325
|
|
|
82
|
|
|
642
|
|
||||
|
Segment profit
|
|
$
|
379
|
|
|
$
|
43
|
|
|
$
|
5
|
|
|
$
|
427
|
|
|
Segment operating margin
|
|
62
|
%
|
|
12
|
%
|
|
6
|
%
|
|
40
|
%
|
||||
|
Depreciation
|
|
$
|
12
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
(in millions)
|
|
||
|
Segment profit
|
$
|
427
|
|
|
Less:
|
|
||
|
Purchased software amortization
|
28
|
|
|
|
Other intangibles amortization
|
15
|
|
|
|
Software development costs capitalized
|
—
|
|
|
|
Internally developed software products amortization
|
39
|
|
|
|
Share-based compensation expense
|
20
|
|
|
|
Other expenses, net
(1)
|
12
|
|
|
|
Interest expense, net
|
14
|
|
|
|
Income from continuing operations before income taxes
|
$
|
299
|
|
|
(1)
|
Other expenses, net consists of approximately
$9 million
of costs associated with the Fiscal 2014 Plan, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
|
Three Months Ended June 30, 2013
|
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
|
(dollars in millions)
|
||||||||||||||||
|
Revenue
|
|
$
|
619
|
|
|
$
|
378
|
|
|
$
|
98
|
|
|
$
|
1,095
|
|
|
Expenses
|
|
243
|
|
|
351
|
|
|
90
|
|
|
684
|
|
||||
|
Segment profit
|
|
$
|
376
|
|
|
$
|
27
|
|
|
$
|
8
|
|
|
$
|
411
|
|
|
Segment operating margin
|
|
61
|
%
|
|
7
|
%
|
|
8
|
%
|
|
38
|
%
|
||||
|
Depreciation
|
|
$
|
14
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
(1)
|
Other expenses, net consists of approximately
$117 million
of costs associated with the Fiscal 2014 Plan, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
|
|
Three Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in millions)
|
||||||
|
United States
|
$
|
643
|
|
|
$
|
657
|
|
|
EMEA
(1)
|
259
|
|
|
264
|
|
||
|
Other
|
167
|
|
|
174
|
|
||
|
Total revenue
|
$
|
1,069
|
|
|
$
|
1,095
|
|
|
(1)
|
Consists of Europe, the Middle East and Africa.
|
|
•
|
Innovating in key product areas to extend our market leadership and differentiation.
Our product development strategy is built around three key growth areas, where we are focused on innovating and delivering differentiated products and solutions: application development and IT operations (DevOps), Management Cloud, and Security across multiple platforms.
|
|
•
|
Addressing shifts in market dynamics and technology.
We will innovate to deliver new differentiated solutions that enable our customers to manage the challenges and capture the opportunities of disruptive technologies such as the ability to harvest big data, the shift to software-defined IT, the proliferation of mobile technologies, social access (or social credentials) authentication, and the always on, ubiquitously connected “Internet of Things.”
|
|
•
|
Accelerating growth in our global customer base.
We are focused on maintaining strong relationships with our core, large enterprise customer base, and will proactively target growth with these customers as well as new large enterprises we do not currently serve. In parallel, we are broadening our customer base to new buyer segments beyond the customer’s Chief Information Officer and IT department and increasingly to geographic regions we have underserved.
|
|
•
|
Pursuing new business models and expanded routes to market.
While our traditional on-premise software delivery remains core to our enterprise customers, we see Software-as-a-Service (SaaS) and managed services as increasingly attractive for our customers. This simplifies their decision-making and accelerates the value they can derive from new solution investments.
|
|
•
|
Mainframe Solutions products are designed mainly for the IBM System z mainframe platform, which runs many of our largest customers’ mission-critical applications. We help customers seamlessly manage their mainframe as part of their evolving data center through flexible management approaches, cross-platform visibility and workload portability.
|
|
•
|
Enterprise Solutions products operate on non-mainframe platforms and include our DevOps, Management Cloud, and Security product groups. DevOps includes application delivery, application performance management and infrastructure management. Management Cloud
helps customers optimize their investments, projects, resources and processes. Security delivers
identity-centric security solutions to meet the needs of today’s mobile, cloud-connected, open enterprise.
|
|
•
|
Services helps customers reach their IT and business goals by enabling the rapid implementation and adoption of our mainframe solutions and enterprise solutions.
|
|
•
|
Total revenue declined
2%
as a result of a decrease in subscription and maintenance revenue and a decrease in professional services revenue. The decrease in professional services revenue was primarily due to a decrease in the size and number of professional services engagements during the first quarter of fiscal 2015, including non-core engagements with government customers that are not directly related to our software product sales. The decrease in subscription and maintenance revenue in the
first
quarter of fiscal
2015
compared with the
first
quarter of fiscal
2014
was primarily attributable to a decrease in prior period new product and mainframe capacity sales. We currently expect the percentage decline in professional services revenue to be greater than the percentage decline in total revenue for fiscal 2015 compared with fiscal 2014. This decline is primarily a result of the decrease in non-core professional services engagements with government customers that are not directly related to our software product sales.
|
|
•
|
As a result of prior period sales under-performance, we continue to expect a year-over-year decrease in total revenue for fiscal
2015
compared with fiscal
2014
due to the high percentage of our revenue that is recognized from license agreements with customers signed in prior periods that are being recognized ratably. Excluding the effect of foreign exchange, we currently expect the year-over-year percentage decline in total revenue for fiscal 2015 compared with fiscal 2014 to be similar to the year-over-year percentage decline in total revenue for fiscal 2014 compared with fiscal 2013.
|
|
•
|
Total bookings decreased
9%
primarily due to a year-over-year decrease in professional services bookings and to a lesser extent, a decrease in subscription and maintenance bookings.
|
|
•
|
Mainframe solutions renewals decreased year-over-year. The decrease was partially offset by an increase in enterprise solutions renewals primarily due to the composition of our renewal portfolio being more heavily weighted to enterprise solutions renewals in the quarter.
|
|
•
|
Total new product sales, a subset of our total bookings, for the first quarter of fiscal 2015 was consistent with the first quarter of fiscal 2014. For the first quarter of fiscal 2015, mainframe solutions new sales including capacity were down in the high-single-digit percentage range. The decrease in mainframe solutions new product sales was primarily due to the composition of the renewal portfolio. Enterprise solutions new product sales increased by a mid-single-digit percentage as a result of new sales in connection with renewals within our Platinum customer accounts and good sales execution in the Europe, Middle East and Africa region during the first quarter of fiscal 2015.
|
|
•
|
We expect our fiscal 2015 renewal portfolio to decline by a high-single-digit percentage compared with fiscal 2014. Excluding the impact from a contract renewal with a large system integrator which occurred during the third quarter of fiscal 2014, we expect the value of our fiscal 2015 renewal portfolio to be consistent with the value of our fiscal 2014 renewal portfolio. For the second quarter of fiscal 2015, we expect renewals to decline compared with the second quarter of fiscal 2014 and as a result, we expect lower new product and capacity sales in connection with renewals.
|
|
•
|
Total expenses before interest and income taxes decreased compared with the year-ago period, primarily due to a decrease in cost associated with our fiscal 2014 workforce rebalancing plan (Fiscal 2014 Plan). The decrease was also attributable to the timing of selling and marketing expenses and a decrease in personnel-related costs, partially offset by an increase in product development and enhancements expenses. We expect an increase in the third quarter of fiscal 2015 for selling and marketing expenses, as a result of the timing of CA World ‘14.
|
|
•
|
Income tax expense for the
first
quarter of fiscal
2015
was
$87 million
, compared with an income tax benefit for the
first
quarter fiscal
2014
of
$122 million
. During the first quarter of fiscal 2014, we recognized a net discrete tax benefit of $181 million, resulting primarily from the resolutions of uncertain tax positions from final settlement of the examination of our U.S. federal income tax returns.
|
|
•
|
We expect a fiscal
2015
effective tax rate of
30%
.
|
|
•
|
Diluted income per common share decreased to
$0.48
from
$0.72
, primarily due to the income tax benefit of
$122 million
for the first quarter of fiscal 2014 compared with the income tax expense of
$87 million
for the first quarter of fiscal 2015.
|
|
•
|
Mainframe Solutions revenue for the first quarter of fiscal 2015 decreased slightly compared with the year-ago period primarily due to the decrease in prior period new product and mainframe capacity sales. The
increase
in operating margin for the
first
quarter of fiscal
2015
compared with the year-ago period was primarily the result of the timing of selling and marketing expenses and an overall decrease in personnel-related costs.
|
|
•
|
Enterprise Solutions revenue for the first quarter of fiscal 2015 decreased compared with the year-ago period primarily due to a decrease in new product sales in the prior fiscal year. This decline in prior year new product sales was primarily due to a decrease in sales of certain mature product lines, partially offset by an increase in sales of recently acquired products. Enterprise Solutions operating margin for the
first
quarter of fiscal
2015
increased
compared with the year-ago period as a result of the timing of selling and marketing expenses and an overall decrease in personnel-related costs.
|
|
•
|
Services revenue for the
first
quarter of fiscal
2015
decreased compared with the
first
quarter of fiscal
2014
primarily as a result of a decrease in the size and number of professional services engagements during the first quarter of fiscal 2015, including non-core engagements with government customers that are not directly related to our software product sales, as well as the timing of the revenue recognition for some engagements that were associated with product sales for which the revenue will be recognized on a ratable basis. We expect the percentage decline in professional services revenue to be greater than the percentage decline in total revenue for fiscal 2015 compared with fiscal 2014. Operating margin for our Services segment decreased in the first quarter of fiscal
2015
compared with the
first
quarter of fiscal
2014
as a result of lower utilization rates for professional services personnel due to the decrease in the number of professional services engagements.
|
|
•
|
Net cash provided by operating activities
increased
$163 million compared with the year-ago period primarily due to a decrease in income tax payments of
$165 million
and a decrease in vendor disbursements and payroll of
$45 million
. These favorable effects were partially offset by a decrease in cash collections of
$44 million
and an increase in payments associated with the Fiscal 2014 Plan of $10 million.
|
|
•
|
In May 2014, the Company appointed Amit Chatterjee as its Executive Vice President, Enterprise Solutions and Technology Group. Mr. Chatterjee will have overall responsibility for strategy and execution across the full portfolio of Enterprise Solutions businesses, from development to commercialization.
|
|
•
|
In June 2014, the Company entered into a definitive agreement to divest arcserve.
|
|
|
First Quarter Comparison
Fiscal
|
|
|
|
|
|||||||||
|
|
2015
(1)
|
|
2014
(1)
|
|
Dollar
Change
|
|
Percentage Change
|
|||||||
|
|
(dollars in millions)
|
|
|
|||||||||||
|
Total revenue
|
$
|
1,069
|
|
|
$
|
1,095
|
|
|
$
|
(26
|
)
|
|
(2
|
)%
|
|
Income from continuing operations
|
$
|
212
|
|
|
$
|
330
|
|
|
$
|
(118
|
)
|
|
(36
|
)%
|
|
Net cash provided by operating activities - continuing operations
|
$
|
166
|
|
|
$
|
3
|
|
|
$
|
163
|
|
|
NM
|
|
|
Total bookings
|
$
|
724
|
|
|
$
|
796
|
|
|
$
|
(72
|
)
|
|
(9
|
)%
|
|
Subscription and maintenance bookings
|
$
|
603
|
|
|
$
|
617
|
|
|
$
|
(14
|
)
|
|
(2
|
)%
|
|
Weighted average subscription and maintenance license
agreement duration in years
|
3.60
|
|
|
3.10
|
|
|
0.50
|
|
|
16
|
%
|
|||
|
|
June 30, 2014
|
|
March 31, 2014
|
|
Change
From
Year End
|
|
June 30, 2013
|
|
Change
From Prior
Year Quarter
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
|
Cash, cash equivalents and short-term investments
(2)
|
$
|
3,255
|
|
|
$
|
3,252
|
|
|
$
|
3
|
|
|
$
|
2,461
|
|
|
$
|
794
|
|
|
Total debt
|
$
|
1,769
|
|
|
$
|
1,766
|
|
|
$
|
3
|
|
|
$
|
1,285
|
|
|
$
|
484
|
|
|
Total expected future cash collections
from committed contracts
(1) (3)
|
$
|
4,873
|
|
|
$
|
5,148
|
|
|
$
|
(275
|
)
|
|
$
|
4,780
|
|
|
$
|
93
|
|
|
Total revenue backlog
(1) (3)
|
$
|
7,330
|
|
|
$
|
7,639
|
|
|
$
|
(309
|
)
|
|
$
|
7,295
|
|
|
$
|
35
|
|
|
Total current revenue backlog
(1) (3)
|
$
|
3,402
|
|
|
$
|
3,500
|
|
|
$
|
(98
|
)
|
|
$
|
3,371
|
|
|
$
|
31
|
|
|
(1)
|
Information presented excludes the results of our discontinued operations.
|
|
(2)
|
At
June 30, 2014
,
March 31, 2014
and
June 30, 2013
, short-term investments were less than $1 million, respectively.
|
|
(3)
|
Refer to the discussion in the “Liquidity and Capital Resources” section of this MD&A for additional information on expected future cash collections from committed contracts and revenue backlog.
|
|
|
First Quarter Comparison Fiscal 2015 Versus Fiscal 2014
|
|||||||||||||||||||
|
|
|
|
|
|
Dollar Change
|
|
Percentage Change
|
|
Percentage of
Total Revenue
|
|||||||||||
|
|
2015
(1)
|
|
2014
(1)
|
|
2015 / 2014
|
|
2015 / 2014
|
|
2015
|
|
2014
|
|||||||||
|
|
(dollars in millions)
|
|
|
|
|
|
|
|||||||||||||
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Subscription and maintenance
|
$
|
909
|
|
|
$
|
922
|
|
|
$
|
(13
|
)
|
|
(1
|
)%
|
|
85
|
%
|
|
84
|
%
|
|
Professional services
|
87
|
|
|
98
|
|
|
(11
|
)
|
|
(11
|
)
|
|
8
|
|
|
9
|
|
|||
|
Software fees and other
|
73
|
|
|
75
|
|
|
(2
|
)
|
|
(3
|
)
|
|
7
|
|
|
7
|
|
|||
|
Total revenue
|
$
|
1,069
|
|
|
$
|
1,095
|
|
|
$
|
(26
|
)
|
|
(2
|
)%
|
|
100
|
%
|
|
100
|
%
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Costs of licensing and maintenance
|
$
|
72
|
|
|
$
|
68
|
|
|
$
|
4
|
|
|
6
|
%
|
|
7
|
%
|
|
6
|
%
|
|
Cost of professional services
|
81
|
|
|
88
|
|
|
(7
|
)
|
|
(8
|
)
|
|
8
|
|
|
8
|
|
|||
|
Amortization of capitalized software costs
|
67
|
|
|
66
|
|
|
1
|
|
|
2
|
|
|
6
|
|
|
6
|
|
|||
|
Selling and marketing
|
246
|
|
|
269
|
|
|
(23
|
)
|
|
(9
|
)
|
|
23
|
|
|
25
|
|
|||
|
General and administrative
|
92
|
|
|
91
|
|
|
1
|
|
|
1
|
|
|
9
|
|
|
8
|
|
|||
|
Product development and enhancements
|
150
|
|
|
132
|
|
|
18
|
|
|
14
|
|
|
14
|
|
|
12
|
|
|||
|
Depreciation and amortization of other intangible assets
|
34
|
|
|
36
|
|
|
(2
|
)
|
|
(6
|
)
|
|
3
|
|
|
3
|
|
|||
|
Other expenses, net
|
14
|
|
|
126
|
|
|
(112
|
)
|
|
(89
|
)
|
|
1
|
|
|
12
|
|
|||
|
Total expenses before interest and income taxes
|
$
|
756
|
|
|
$
|
876
|
|
|
$
|
(120
|
)
|
|
(14
|
)%
|
|
71
|
%
|
|
80
|
%
|
|
Income from continuing operations before interest and income taxes
|
$
|
313
|
|
|
$
|
219
|
|
|
$
|
94
|
|
|
43
|
%
|
|
29
|
%
|
|
20
|
%
|
|
Interest expense, net
|
14
|
|
|
11
|
|
|
3
|
|
|
27
|
|
|
1
|
|
|
1
|
|
|||
|
Income from continuing operations before income taxes
|
$
|
299
|
|
|
$
|
208
|
|
|
$
|
91
|
|
|
44
|
%
|
|
28
|
%
|
|
19
|
%
|
|
Income tax expense
|
87
|
|
|
(122
|
)
|
|
209
|
|
|
(171
|
)
|
|
8
|
|
|
(11
|
)
|
|||
|
Income from continuing operations
|
$
|
212
|
|
|
$
|
330
|
|
|
$
|
(118
|
)
|
|
(36
|
)%
|
|
20
|
%
|
|
30
|
%
|
|
(1)
|
Information presented excludes the results of our discontinued operations.
|
|
|
First Quarter Comparison Fiscal 2015 Versus Fiscal 2014
|
|||||||||||||||||||
|
|
2015
(1)
|
|
Percentage of Total Revenue
|
|
2014
(1)
|
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
|
(dollars in millions)
|
|||||||||||||||||||
|
United States
|
$
|
643
|
|
|
60
|
%
|
|
$
|
657
|
|
|
60
|
%
|
|
$
|
(14
|
)
|
|
(2
|
)%
|
|
International
|
426
|
|
|
40
|
|
|
438
|
|
|
40
|
|
|
(12
|
)
|
|
(3
|
)
|
|||
|
Total Revenue
|
$
|
1,069
|
|
|
100
|
%
|
|
$
|
1,095
|
|
|
100
|
%
|
|
$
|
(26
|
)
|
|
(2
|
)%
|
|
(1)
|
Information presented excludes the results of our discontinued operations.
|
|
|
First Quarter
Fiscal 2015 |
|
First Quarter
Fiscal 2014 |
|
||||
|
|
(dollars in millions)
|
|
||||||
|
Fiscal 2014 Plan
|
$
|
9
|
|
|
$
|
117
|
|
(1)
|
|
Legal settlements
|
—
|
|
|
10
|
|
|
||
|
Losses (gains) from foreign exchange derivative contracts
|
5
|
|
|
(9
|
)
|
|
||
|
Losses from foreign exchange rate fluctuations
|
—
|
|
|
7
|
|
|
||
|
Other miscellaneous items
|
—
|
|
|
1
|
|
|
||
|
Total
|
$
|
14
|
|
|
$
|
126
|
|
|
|
(1)
|
During the first quarter of fiscal 2015, we reclassified $3 million of severance costs for the first quarter of fiscal 2014 to discontinued operations. Refer to Note B, “Divestitures,” in the Notes to the Condensed Consolidated Financial Statements for additional information.
|
|
Mainframe Solutions
|
First Quarter
Fiscal 2015 (1) |
|
First Quarter
Fiscal 2014 (1) |
||||
|
|
(dollars in millions)
|
||||||
|
Revenue
|
$
|
614
|
|
|
$
|
619
|
|
|
Expenses
|
235
|
|
|
243
|
|
||
|
Segment profit
|
$
|
379
|
|
|
$
|
376
|
|
|
Segment operating margin
|
62
|
%
|
|
61
|
%
|
||
|
(1)
|
Information presented excludes the results of our discontinued operations.
|
|
Enterprise Solutions
|
First Quarter
Fiscal 2015 (1) |
|
First Quarter
Fiscal 2014 (1) |
||||
|
|
(dollars in millions)
|
||||||
|
Revenue
|
$
|
368
|
|
|
$
|
378
|
|
|
Expenses
|
325
|
|
|
351
|
|
||
|
Segment profit
|
$
|
43
|
|
|
$
|
27
|
|
|
Segment operating margin
|
12
|
%
|
|
7
|
%
|
||
|
(1)
|
Information presented excludes the results of our discontinued operations.
|
|
Services
|
First Quarter
Fiscal 2015 |
|
First Quarter
Fiscal 2014 |
||||
|
|
(dollars in millions)
|
||||||
|
Revenue
|
$
|
87
|
|
|
$
|
98
|
|
|
Expenses
|
82
|
|
|
90
|
|
||
|
Segment profit
|
$
|
5
|
|
|
$
|
8
|
|
|
Segment operating margin
|
6
|
%
|
|
8
|
%
|
||
|
(in millions)
|
June 30,
2014
(1)
|
|
March 31, 2014
(1)
|
|
June 30,
2013
(1)
|
||||||
|
Billings backlog:
|
|
|
|
|
|
||||||
|
Amounts to be billed – current
|
$
|
2,031
|
|
|
$
|
1,983
|
|
|
$
|
2,097
|
|
|
Amounts to be billed – noncurrent
|
2,289
|
|
|
2,365
|
|
|
2,146
|
|
|||
|
Total billings backlog
|
$
|
4,320
|
|
|
$
|
4,348
|
|
|
$
|
4,243
|
|
|
|
|
|
|
|
|
||||||
|
Revenue backlog:
|
|
|
|
|
|
||||||
|
Revenue to be recognized within the next 12 months – current
|
$
|
3,402
|
|
|
$
|
3,500
|
|
|
$
|
3,371
|
|
|
Revenue to be recognized beyond the next 12 months – noncurrent
|
3,928
|
|
|
4,139
|
|
|
3,924
|
|
|||
|
Total revenue backlog
|
$
|
7,330
|
|
|
$
|
7,639
|
|
|
$
|
7,295
|
|
|
|
|
|
|
|
|
||||||
|
Deferred revenue (billed or collected)
|
$
|
3,010
|
|
|
$
|
3,291
|
|
|
$
|
3,052
|
|
|
Total billings backlog
|
4,320
|
|
|
4,348
|
|
|
4,243
|
|
|||
|
Total revenue backlog
|
$
|
7,330
|
|
|
$
|
7,639
|
|
|
$
|
7,295
|
|
|
(1)
|
Information presented excludes the results of our discontinued operations.
|
|
(in millions)
|
June 30,
2014
(1)
|
|
March 31, 2014
(1)
|
|
June 30,
2013
(1)
|
||||||
|
Expected future cash collections:
|
|
|
|
|
|
||||||
|
Total billings backlog
|
$
|
4,320
|
|
|
$
|
4,348
|
|
|
$
|
4,243
|
|
|
Trade accounts receivable, net
|
553
|
|
|
800
|
|
|
537
|
|
|||
|
Total expected future cash collections
|
$
|
4,873
|
|
|
$
|
5,148
|
|
|
$
|
4,780
|
|
|
(1)
|
Information presented excludes the results of our discontinued operations.
|
|
|
First Quarter of Fiscal
|
|
Change
|
||||||||
|
|
2015
(1)
|
|
2014
(1)
|
|
2015 / 2014
|
||||||
|
|
(in millions)
|
||||||||||
|
Cash collections from billings
(2)
|
$
|
1,088
|
|
|
$
|
1,132
|
|
|
$
|
(44
|
)
|
|
Vendor disbursements and payroll
(2)
|
(833
|
)
|
|
(878
|
)
|
|
45
|
|
|||
|
Income tax payments, net
|
(30
|
)
|
|
(195
|
)
|
|
165
|
|
|||
|
Other disbursements, net
(3)
|
(59
|
)
|
|
(56
|
)
|
|
(3
|
)
|
|||
|
Net cash provided by operating activities - continuing operations
|
$
|
166
|
|
|
$
|
3
|
|
|
$
|
163
|
|
|
(1)
|
Information presented excludes the results of our discontinued operations.
|
|
(2)
|
Amounts include value added taxes and sales taxes.
|
|
(3)
|
For the
first
quarter of fiscal
2015
, amount includes $30 million of payments associated with the Fiscal 2014 Plan, interest, prior period restructuring plans and miscellaneous receipts and disbursements. For the
first
quarter of fiscal
2014
, amount includes $20 million of payments associated with the Fiscal 2014 Plan, interest, prior period restructuring plans, and miscellaneous receipts and disbursements.
|
|
|
June 30, 2014
|
|
March 31, 2014
|
||||
|
|
(in millions)
|
||||||
|
Revolving credit facility due June 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
5.375% Senior Notes due December 2019
|
750
|
|
|
750
|
|
||
|
6.125% Senior Notes due December 2014, net of unamortized premium from fair value hedge of $5 and $8
|
505
|
|
|
508
|
|
||
|
2.875% Senior Notes due August 2018
|
250
|
|
|
250
|
|
||
|
4.500% Senior Notes due August 2023
|
250
|
|
|
250
|
|
||
|
Other indebtedness, primarily capital leases
|
19
|
|
|
13
|
|
||
|
Unamortized discount for Notes
|
(5
|
)
|
|
(5
|
)
|
||
|
Total debt outstanding
|
$
|
1,769
|
|
|
$
|
1,766
|
|
|
Less the current portion
|
(515
|
)
|
|
(514
|
)
|
||
|
Total long-term debt portion
|
$
|
1,254
|
|
|
$
|
1,252
|
|
|
|
Three Months Ended
June 30, |
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in millions)
|
||||||
|
Total borrowings outstanding at beginning of period
(1)
|
$
|
139
|
|
|
$
|
136
|
|
|
Borrowings
|
1,334
|
|
|
725
|
|
||
|
Repayments
|
(1,323
|
)
|
|
(723
|
)
|
||
|
Foreign currency exchange effect
|
(10
|
)
|
|
—
|
|
||
|
Total borrowings outstanding at end of period
(1)
|
$
|
140
|
|
|
$
|
138
|
|
|
(1)
|
Included in “Accrued expenses and other current liabilities” in our Condensed Consolidated Balance Sheets.
|
|
Period
|
Total Number
of Shares
Purchased
|
Average
Price Paid
per Share
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs
|
Approximate
Dollar Value of
Shares that
May Yet Be
Purchased Under
the Plans
or Programs
|
||||||
|
|
(in thousands, except average price paid per share)
|
|||||||||
|
April 1, 2014 - April 30, 2014
|
—
|
|
$
|
—
|
|
—
|
|
$
|
1,000,000
|
|
|
May 1, 2014 - May 31, 2014
|
—
|
|
$
|
—
|
|
—
|
|
$
|
1,000,000
|
|
|
June 1, 2014 - June 30, 2014
|
1,737
|
|
$
|
28.79
|
|
1,737
|
|
$
|
950,000
|
|
|
Total
|
1,737
|
|
|
1,737
|
|
|
||||
|
|
|
Incorporated by Reference
|
|
||
|
Exhibit Number
|
Exhibit Description
|
Form
|
Exhibit
|
Filing Date
|
Filed or Furnished Herewith
|
|
3.1
|
Restated Certificate of Incorporation.
|
8-K
|
3.3
|
3/9/06
|
|
|
3.2
|
By-Laws of the Company, as amended.
|
8-K
|
3.1
|
2/28/07
|
|
|
10.1*
|
Schedules A, B, and C (as amended effective May 13, 2014) to CA, Inc. Change in Control Severance Policy.
|
8-K
|
10.1
|
5/14/14
|
|
|
10.2*
|
Letter dated June 14, 2013 from the Company to Lauren P. Flaherty regarding terms of employment.
|
|
|
|
X
|
|
10.3*
|
Final Release and Indemnity dated June 16, 2014 between the Company and Peter JL Griffiths.
|
|
|
|
X
|
|
10.4*
|
Form of Award Agreement under the CA, Inc. 2011 Incentive Plan - Executive Officer Restricted Stock Awards.
|
|
|
|
X
|
|
10.5*
|
Amended Form of Award Agreement under the CA, Inc. 2011 Incentive Plan - Restricted Stock Units.
|
|
|
|
X
|
|
10.6*
|
Amended Form of Award Agreement under the CA, Inc. 2011 Incentive Plan - Restricted Stock Awards.
|
|
|
|
X
|
|
10.7*
|
Amended Form of Award Agreement under the CA, Inc. 2011 Incentive Plan - Non-Qualified Stock Options.
|
|
|
|
X
|
|
10.8*
|
Amended Form of Award Agreement under the CA, Inc. 2011 Incentive Plan - Non-Qualified Stock Options (Canadian employees).
|
|
|
|
X
|
|
12
|
Statement of Ratios of Earnings to Fixed Charges.
|
|
|
|
X
|
|
15
|
Accountants’ acknowledgment letter.
|
|
|
|
X
|
|
31.1
|
Certification of the Principal Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
X
|
|
31.2
|
Certification of the Principal Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
X
|
|
32†
|
Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
X
|
|
101
|
The following financial statements from CA, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014, formatted in XBRL (eXtensible Business Reporting Language):
|
|
|
|
X
|
|
|
(i) Condensed Consolidated Balance Sheets - June 30, 2014 (Unaudited) and March 31, 2014.
|
|
|
|
|
|
|
(ii) Unaudited Condensed Consolidated Statements of Operations - Three Months Ended June 30, 2014 and 2013.
|
|
|
|
|
|
|
(iii) Unaudited Condensed Consolidated Statements of Comprehensive Income - Three Months Ended June 30, 2014 and 2013.
|
|
|
|
|
|
|
(iv) Unaudited Condensed Consolidated Statements of Cash Flows - Three Months Ended June 30, 2014 and 2013.
|
|
|
|
|
|
|
(v) Notes to Condensed Consolidated Financial Statements - June 30, 2014.
|
|
|
|
|
|
*
|
Management contract or compensatory plan or arrangement.
|
|
†
|
Furnished herewith.
|
|
CA, INC.
|
|
|
|
|
|
By:
|
/s/ Michael P. Gregoire
|
|
|
Michael P. Gregoire
|
|
|
Chief Executive Officer
|
|
|
|
|
By:
|
/s/ Richard J. Beckert
|
|
|
Richard J. Beckert
|
|
|
Executive Vice President and Chief Financial Officer
|
|
1.
|
Your Position, Performance and Other Activities
|
|
2.
|
Term of Your Employment
|
|
3.
|
Your Compensation
|
|
4.
|
Other Employee Benefits; Change in Control Severance Policy
|
|
5.
|
Termination of Your Employment
|
|
6.
|
The Company’s Obligations in Connection With Your Termination
|
|
7.
|
Employment and Confidentiality Agreement; No Public Statements or Disparagement; Proprietary Information
|
|
8.
|
Representations
|
|
9.
|
General Provisions
|
|
Accepted and agreed to:
/s/ Lauren P. Flaherty
|
|
/s/ Guy A. Di Lella
|
|
Lauren P. Flaherty
Date:
6.15.2013
|
|
Guy A. Di Lella
Chief Human Resources Officer CA, Inc.
June 14, 2013
|
|
1.
|
Your salary, all applicable benefits and vesting of equity will continue through June 30, 2014 (the “Termination Date”); until the Termination Date, you will be expected to assist with transition issues, on an “as needed basis,” at the reasonable request of the Chief Human Resources Officer.
|
|
2.
|
In accordance with the Agreement, paragraph 5(B), the Company will pay you a lump sum of CDN$1,400,000.00, less applicable deductions and required withholdings, no later than the sixtieth (60
th
) calendar day following the Termination Date, subject to and conditional upon your agreement to execute and return the enclosed release, waiver and non-competition agreement.
|
|
3.
|
You will also participate in the medical and dental benefits provided by the Company to its active employees (based on the coverage you currently have) until no later than June 30, 2015. If you become eligible for similar coverage through a new employer, you will notify us to terminate this coverage. You will be responsible for the tax associated with this benefit such that the full value will be imputed as income to you for the year in which the benefit is provided. The Company will also offer you Senior Executive Outplacement Assistance for a period of six (6) months at a level commensurate with your position and through an agency chosen by the Company. You may commence the six-month program any time before June 30, 2015. You understand and agree that the Company does not assign any cash value to these services and that you do not have the option of requesting a cash payment in lieu of these services. Further, the Company will continue to reimburse you for reasonable expenses associated with financial planning and tax preparation services provided through June 30, 2015, not to exceed CDN$18,000 in total for the period from April 1, 2014 through June 30, 2015, subject to your submission of invoices for such services to the Chief Human Resources Officer no later than July 31, 2015.
|
|
4.
|
Additionally, you will be eligible to receive a portion of the FY15 annual cash bonus, pro-rated from April 1, 2014 to the Termination Date; the amount of such FY15 annual cash bonus will be determined based on actual performance of the Company as determined by the Compensation Committee and paid at the time such bonus would have otherwise been paid, subject to and conditional upon your agreement to execute and return the enclosed release, waiver and non-competition agreement. You will also be eligible for your FY14 annual cash bonus, based on actual performance of the Company as determined by the Compensation Committee, after the end of the FY14 performance cycle. Determinations made by the Compensation Committee of the actual performance of the Company shall be consistent with that made generally to the executive management team.
|
|
5.
|
Although not required under the Agreement, the Company is also prepared to provide you with a pro-rata portion of your FY13, FY14 and FY15 3-year Performance Share Awards, based on the
|
|
6.
|
Any unvested Initial Equity Awards (specifically, RSU’s and stock options granted pursuant to paragraphs 4(A) and (B) of the Agreement) will vest upon the Termination Date. In accordance with the Incentive Plan, you will have ninety (90) days from the Termination Date to exercise vested stock options. Any and all other equity will be governed by the terms of the applicable grant agreements and incentive plans.
|
|
7.
|
In addition, as of May 13, 2014, you understand and agree that you will no longer be a participant in the Company’s Change in Control Severance Policy.
|
|
8.
|
In accordance with applicable law and the Company’s Bylaws as in effect from time to time, the Company agrees that it will indemnify you with respect to any action, suit or proceeding to which you are made or threatened to be made a party that arises out of the good faith performance of your job responsibilities with the Company..
|
|
SIGNED, SEALED AND DELIVERED
in the presence of
|
|
|
|
/s/ Willemina Griffiths
|
|
/s/ Peter Griffiths
|
|
Witness
|
|
PETER GRIFFITHS
|
|
1.
|
I acknowledge that in my capacity as a senior executive of the Releasee I was privy to a wide range of confidential information. Some examples of the types of confidential information that I learned in my role include (but are not limited to): The Releasee's short-term and long-term business and technology strategy and overall strategic plan; the strategies the Releasee utilized and the strategies the Releasee was developing to compete effectively in the marketplace; information about the Releasee's growth strategy including entities it was considering acquiring or developing strategic partnerships with; information about the Releasee's sales strategies and pricing plans; information concerning existing or prospective customers; and, information about the Releasee's product roadmap.
|
|
2.
|
I agree that the Releasee would be severely damaged if I disclosed confidential information that I learned during my tenure to a competitor or if I accepted a position with a competitor that involved sales or sales-related activities or the development or oversight of corporate or technology strategy. I further acknowledge that it would be impossible for me to work in a sales or strategic position with the Releasee's competitors without inevitably using and/or disclosing confidential information that I learned in my senior executive role with the Releasee. Therefore, in furtherance of my duty of loyalty to the Releasee and to prevent this harm, I promise that until June 15, 2015,
I will not:
|
|
a.
|
accept or act in an executive or senior position (as an owner, employee, consultant or in any other capacity) involving sales or sales-related activities, software development or the development or oversight of corporate or technology strategy with any of the following companies or their affiliates, subsidiaries or successors in interest (the “Restricted” Company or Companies): Gartner, BMC, Compuware, HP, EMC, Oracle, VMWare, ServiceNow, Solar Winds, AppDynamics or New Relic.
Notwithstanding the above, I understand that after June 15, 2014, the Releasee will permit me to accept employment with a division of a Restricted Company only if (1) such division does not license or lease products or provide services that are competitive with products that are licensed or leased or services that are provided by the Releasee; and, (2) my employment at the Restricted Company will not involve or influence the strategy, software development or sales of any division of a Restricted Company that is competitive with the business of the Releasee. I understand and agree that before accepting such position with a division of a Restricted Company, I must request and receive the written approval of the Releasee’s Chief Human Resources Officer, such approval not to be unreasonably withheld;
|
|
b.
|
solicit, call on, service or induce others to solicit, call on or service any "Customer" for the purpose of inducing it to license or lease a product or purchase a service that competes with a product or service offered by the Releasee. A "Customer," for purposes of this Agreement, is any person or business entity that licensed or leased a Releasee product or purchased a service within the 18 months preceding my Termination Date;
|
|
c.
|
solicit, call on, or induce others to solicit or call on, any "Prospective Customer" for the purpose of inducing it to license or lease a product or purchase a service which competes with a product or service offered by the Releasee. A
"Prospective Customer," for purposes of this Agreement, is any person or business entity that I solicited (whether directly or through another employee or agent of the Releasee at my direction) on behalf of the Releasee anytime within the 9 months preceding my Termination Date; and,
|
|
d.
|
solicit or encourage or endeavor to cause, directly or indirectly, any employee or contractor of the Releasee to leave his or her employment or placement with the Releasee, or breach his or her Confidentiality Agreement or employment or placement agreement with the Releasee.
|
|
3.
|
This Non-Competition Agreement shall be governed by and, for all purposes, construed in accordance with the laws of Ontario, Canada.
|
|
4.
|
This Non-Competition Agreement shall inure to the benefit of and may be enforced by Releasee, its successors and assigns. I understand and agree that this Non-Competition Agreement is personal to me and I may not assign it.
|
|
5.
|
If the Releasee is successful in a suit or proceeding to enforce any of the terms of this Non-Competition Agreement, I will pay the Releasee’s costs of bringing such suit or proceeding, including its reasonable attorney’s fees and litigation expenses (including expert witness and deposition expenses).
|
|
Total Number of Restricted Stock Shares Granted
|
[Number of Restricted Shares Granted]
|
|
Grant Date
|
[Grant Date]
|
|
1.
|
Grant of Restricted Shares
. This grant of Restricted Stock is made pursuant to Section 4.6 of the Plan and is intended to be a Qualified Performance Award as defined in the Plan, except that such Restricted Stock shall not be subject to discretion of the Committee to make any negative adjustment to such Restricted Stock under Section 4.6(b)(iii) of the Plan. The Company hereby grants to the Participant the number of shares of Restricted Stock (the "Restricted Stock") set forth above on the grant date set forth above (the "Grant Date") subject to the vesting Restriction noted in Section 2 below and such other the terms outlined below.
|
|
2.
|
Vesting of Restricted Shares.
The Restricted Stock will vest with respect to 34% of the underlying shares of Restricted Stock on the first anniversary of the Grant Date and with respect to an additional 33% of the underlying shares of Restricted Stock on each of the second and third anniversaries of the Grant Date; provided that the Company achieves its Qualified Performance Measure at the end of the Performance Cycle and the Committee has certified the achievement of the Qualified Performance Measure in accordance with the Plan. Except as otherwise provided in Section 6 of this Agreement, unvested shares of Restricted Stock shall be forfeited by the Participant (i) upon the Participant's Termination of Employment, as defined in the Plan, for any reason other than death or Termination of Employment due to Disability, as defined in the Plan and (ii) if the Qualified Performance Measure established by the Committee is not achieved at the end of the Performance Cycle.
|
|
3.
|
Timing of Grant Acceptance.
Participant must electronically accept his/her grant of Restricted Stock award within 90 days from the Grant Date (the “Grant Acceptance Date”) or he/she will forfeit this Restricted Stock award. A Participant who forfeits his/her Restricted Stock award for failure to accept the award by the Grant Acceptance Date has no right of ownership or other rights as stockholder under this Restricted Stock award and may not be eligible for future Restricted Stock awards or other equity awards granted by the Company.
|
|
4.
|
Delivery of Restricted Stock.
Restricted Stock award shall be registered in the name of the Participant and the Restricted Stock will be held for the Participant by the Company until vesting. Upon grant of the shares of Restricted Stock, the Participant shall thereupon have all the rights of
|
|
5.
|
Restrictions on Transfer.
Shares of Restricted Stock that are included in this award may not be transferred by the Participant prior to vesting.
|
|
6.
|
Forfeiture and Recovery of Restricted Shares.
Notwithstanding any other provision of this Agreement or the Plan to the contrary, the Restricted Stock may be forfeited without consideration if the Participant, as determined by the Committee in its sole discretion, engages in any Prohibited Activities (as defined in
Appendix A
). If the Participant engages in any Prohibited Activities, the Participant shall, at the sole discretion of the Committee, return any shares of Common Stock or forfeit any gain realized in respect of Restricted Stock that vested within 12 months prior to the Participant's Termination of Employment (the "Affected Restricted Stock"). The gain pursuant to this Section 6 shall be deemed to be an amount equal to the Fair Market Value, on the applicable vesting date, of the shares of Common Stock deemed delivered to the Participant in respect of the Affected Restricted Stock (including any dividends and distributions thereon and any shares withheld to cover any portion of the tax withholding obligations). It will be at the Company's discretion as to whether shares of Common Stock or cash equal to the gain realized in respect of the Affected Restricted Stock shall be returned to the Company and such return or reimbursement shall be made by the Participant immediately after demand by the Company, but not later than ten days following such demand. The amount of the gain calculated pursuant to this Section 6 shall not take into account any taxes paid by or withheld from the Participant in respect of the Affected Restricted Stock.
|
|
7.
|
Tax Withholding.
As a condition to the delivery of any shares pursuant to the vesting of the Restricted Stock, the Participant is required to pay tax withholding obligations that arise in connection with the vesting of the Restricted Stock. The Company shall satisfy the tax withholding obligations arising in connection with release of restrictions on Shares of Restricted Stock held by Participant (where withholding is required at the time of release of restrictions on Shares of Restricted Stock or as may be determined by the Company from time to time) by withholding shares of Common Stock that would otherwise be available for delivery upon the vesting of this award having a Fair Market Value on the date of the release equal to the minimum statutory withholding obligation or such other withholding obligation required by applicable law or require a Participant satisfy its withholding obligation in some other form as determined Company from time to time and in accordance with applicable law.
|
|
8.
|
Changes In Stock.
The Restricted Stock is subject to the adjustment provisions set forth in Sections 4.11, 5.3 and 5.4 of the Plan.
|
|
9.
|
No Guarantee of Employment or Service.
This award will not obligate the Company or any Related Company to retain the Participant in its employ or service for any period.
|
|
10.
|
Governing Law; Severability; Choice of Law.
This Agreement will 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 Agreement is held unlawful or otherwise invalid or unenforceable, in whole or in part, the unlawfulness, invalidity or unenforceability will not affect any other provision of this Agreement or part thereof, each of which will remain in full force and effect. Any action related to this Agreement shall be brought exclusively in the federal or state courts of the State of New York, County of Suffolk. The Participant will accept service of process as provided under New York law or by registered mail, return receipt requested, and waive any objection based upon
forum non conveniens
or as to personal jurisdiction over the Participant in federal or state courts of the State of New York, County of Suffolk. The choice of forum set forth in this Section 10 shall not be deemed to preclude the enforcement of any judgment obtained in such forum in any other jurisdiction.
|
|
11.
|
Acceptance and Acknowledgment.
By accepting this Agreement, the Participant:
|
|
(a)
|
accepts and acknowledges he or she must electronically accept this Restricted Stock award as specified in Section 3 of this Agreement or this award will be forfeited;
|
|
(b)
|
upon electronic acceptance of this Restricted Stock awards, accepts and acknowledges receipt of the Restricted Stock which has been issued to the Participant under the terms and conditions of the Plan;
|
|
(c)
|
acknowledges and confirms the Participant's acceptance and agreement to the collection, use and transfer, in electronic or other form, of personal information about the Participant, including, without limitation, the Participant's name, home address, and telephone number, date of birth, social security number or other identification number, and details of all the Participant's shares held and transactions related thereto, by the Company and its Related Companies and agents for the purpose of implementing, administrating and managing the Participant's participation in the Plan, and further understands and agrees that the Participant's personal information may be transferred to third parties assisting in the implementation, administration and management of the Plan, that any recipient may be located in the Participant's country or elsewhere, and that such recipient's country may have different data privacy laws and protections than the Participant's country;
|
|
(d)
|
acknowledges and confirms the Participant's consent to receive electronically this Agreement, the Plan and the related Prospectus and any other Plan documents that the Company is required to deliver;
|
|
(e)
|
acknowledges that a copy of the Plan and the related Prospectus is posted on the Company's website and that the Participant has access to such documents;
|
|
(f)
|
agrees to be bound by the terms and conditions of this Agreement and the Plan (including, but not limited to, Section 7.5 of the Plan, Section 6 of this Agreement and
Appendix A
to this Agreement), as may be amended from time to time;
|
|
(g)
|
acknowledges and confirms that (i) he or she may file an election pursuant to Section 83(b) of the Code to be taxed currently on the Fair Market Value of the shares of Restricted Stock (less any purchase price paid for such shares), provided that such election must be filed with the Internal Revenue Service
no later than thirty (30) days
after the grant of such shares and may seek the advice of his or her own tax advisors as to the advisability of making such a Section 83(b) election, the potential consequences of making such an election, the requirements for making such an election, and the other tax consequences of this award under federal, state, and any other laws that may be applicable, and (iii) the Company and its Subsidiaries and agents have not and are not providing any tax advice to the Participant;
|
|
(h)
|
agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions related to the Plan or this Agreement;
|
|
(i)
|
understands that neither Plan nor this Agreement gives the Participant any right to employment or service with the Company or any Related Company and that the Restricted Stock is not part of the Participant's normal or expected compensation; and
|
|
(j)
|
understands and acknowledges that the grant of the Restricted Stock is expressly conditioned on the Participant's adherence to the terms of the applicable policies and procedures of the Company and its Related Companies.
|
|
12.
|
Entire Agreement.
This Agreement and the Plan and, to the extent applicable to the Participant, any written employment agreement between the Participant and the Company, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between the parties with respect to the subject matter hereof.
|
|
1.
|
Prohibited Activities.
The Participant recognizes that the Company is engaged in a highly competitive business and that its customer, employee, licensee, supplier and financial relationships are of a highly sensitive nature. As a reasonable means to protect the Company's Confidential Information (as defined in the subclause (a) below), investment, relationships, and goodwill, and in consideration for this Restricted Stock grant, the Participant agrees that, to the extent permitted by applicable law, the Participant will not, either during his or her employment or for a period of 12 months following the termination of his or her employment (or such longer period specified below) for any reason engage in any of the following "
Prohibited Activities
":
|
|
(a)
|
Engage in any business activity in a Restricted Area that competes with the business activities of the Company and its corporate affiliates about which Participant either had (i) a job responsibility to promote, or (ii) access to Confidential Information. "Restricted Area" for purposes of this Agreement, means a geographic area that the Participant served or covered on behalf of the Company at any time within the 18 months preceding the end of his or her employment with the Company. "
Confidential Information,
" for the purposes of this Agreement, means information, including information that is conceived or developed by the Participant that is not generally known to the public and that is used by the Company in connection with its business. By way of example, the term "Confidential Information" would include: trade secrets; processes; formulas; research data; program documentation; algorithms; source codes; object codes; know-how; improvements; inventions; techniques; training materials and methods; product information; corporate strategy; sales forecast and pipeline information; research and development; plans or strategies for marketing and pricing; and information concerning existing or potential customers, partners, or vendors. The Participant understands that this list is not all-inclusive and merely serves as examples of the types of information that falls within the definition of Confidential Information.
|
|
(b)
|
Solicit, call on, service or induce others to solicit, call on or service any "Customer" for the purpose of inducing it to license or lease a product or provide it with services that compete with a product or service offered by the Company. A "Customer," for purposes of this Agreement, means any person or business entity that licensed or leased a Company product or obtained Company services within the 18 months preceding the end of the Participant's employment with the Company and that the Participant had solicited, called on, or served on the Company's behalf anytime within that 18-month time period.
|
|
(c)
|
Solicit, call on, or induce others to solicit or call on, any "Prospective Customer" for the purpose of inducing it to license or lease a product or provide it with services which compete with a product or service offered by the Company. A "Prospective Customer," for purposes of this Agreement, is any person or business entity that the Participant solicited or called on (whether directly or through another Company agent at the Participant's direction) on behalf of the Company anytime within the 12 months preceding the end of the Participant's employment with the Company.
|
|
(d)
|
Directly or indirectly through others, hire any employee or contractor of the Company, or solicit or induce, or attempt to solicit or induce, any Company employee or contractor to leave the Company for any reason.
|
|
(e)
|
For any period following the termination of the Participant's employment, violate a non-competition, non-solicitation or non-disclosure covenant or agreement between the Participant and the Company or any Related Company (including, without limitation, the Employment and Confidentiality Agreement signed at or around the time of the Participant's hire).
|
|
2.
|
Tolling of Covenants in the Event of Breach.
In the event the Participant engages in any of the Prohibited Activities, the time period of the violated covenant(s) shall be tolled throughout the duration of any violation and shall continue until the Participant has complied with such covenant(s) for a period of 12 consecutive full months.
|
|
3.
|
Injunction.
The Participant acknowledges that, by virtue of the Participant's employment with the Company, the Participant will have access to Confidential Information of the Company, the disclosure of which will irreparably harm the Company. The Participant further acknowledges that the Company will suffer irreparable harm if the Participant breaches any of the Participant's obligations under this Agreement. Therefore, the Participant agrees that the Company will be entitled, in addition to its other rights, to enforce the Participant's obligations through an injunction or decree of specific performance from a court having proper jurisdiction. Any claims the Participant may assert against the Company shall not constitute a defense in any injunction action brought by the Company to force the Participant to keep the promises the Participant made in this Agreement.
|
|
4.
|
Authorization to Modify Restrictions.
The Participant agrees that the restrictions contained in this Agreement are reasonable. However, if any court having proper jurisdiction holds a particular restriction to be unreasonable, that restriction shall be modified only to the extent necessary in the court's opinion to make it reasonable and the remaining provisions of this Agreement including without limitation Appendix A shall nonetheless remain in full force and effect. The other provisions of this Agreement are likewise severable.
|
|
5.
|
General.
|
|
(a)
|
The Participant understands and agrees that, if the Company is successful in a suit or proceeding to enforce any of the terms of this Agreement, the Participant will pay the Company's costs of bringing such suit or proceeding, including its reasonable attorney's fees and litigation expenses (including expert witness and deposition expenses).
|
|
(b)
|
This Agreement shall inure to the benefit of and may be enforced by the Company, its successors and assigns. This Agreement is personal to the Participant and the Participant may not assign it.
|
|
(c)
|
The Company’s rights under this Agreement shall be in addition to any rights it may have under any other Agreement with Participant.
|
|
(d)
|
Any failure to enforce the terms of this Agreement with any other employee of the Company shall not be deemed a waiver by the Company to enforce its rights under this Agreement. Further, any waiver by the Company of any breach by the Participant of any provision of this Agreement, shall not operate or be construed as a waiver of any subsequent breach hereof.
|
|
Total Number of Restricted Stock Units Granted
|
[Number of Restricted Stock Units Granted]
|
|
Grant Date
|
[Grant Date]
|
|
1.
|
Grant of Restricted Stock Unit.
The Company hereby grants to the Participant the number of shares of Restricted Stock Units (the “Restricted Stock Units”) set forth above on the grant date set forth above (the “Grant Date”), subject to the terms outlined below.
|
|
2.
|
Vesting of Restricted Stock Unit.
This Restricted Stock Unit award will vest with respect to 34% of the underlying shares on the first anniversary of the Grant Date and with respect to an additional 33% of the underlying shares on each of the second and third anniversaries of the Grant Date. No shares of Common Stock shall be issued to the Participant prior to the date on which the Restricted Stock Units vest, and shall be forfeited by the Participant upon the Participant’s Termination of Employment, as defined in the Plan, prior to vesting for any reason other than death or Termination of Employment due to Disability, as defined in the Plan.
|
|
3.
|
Timing of Grant Acceptance.
Participant must electronically accept his/her grant of Restricted Stock Unit award within 90 days from the Grant Date (the “Grant Acceptance Date”) or he/she will forfeit this Restricted Stock Unit award. A Participant who forfeits his/her restricted stock unit award for failure to accept the award by the Grant Acceptance Date has no rights under this Restricted Stock Unit award and may not be eligible for future Restricted Stock Unit awards or other equity awards granted by the Company.
|
|
4.
|
Tax and Withholding.
As a condition to the delivery of any shares pursuant to the vesting of the Restricted Stock Units, the Participant is required to pay tax withholding obligations that arise in connection with the vesting of the Restricted Stock Units. The Company shall satisfy the tax withholding obligations arising in connection with release of Shares of Restricted Stock Units held by Participant (where withholding is required at the time of release of Shares of Restricted Stock Units or as may be determined by the Company from time to time) by withholding shares of Common
|
|
5.
|
Forfeiture and Recovery of Restricted Shares.
Notwithstanding any other provision of this Agreement or the Plan to the contrary, the Restricted Stock Units may be forfeited without consideration if the Participant, as determined by the Committee in its sole discretion, engages in any Prohibited Activities (as defined in
Appendix A
). If the Participant engages in any Prohibited Activities, the Participant shall, at the sole discretion of the Committee, return any shares of Common Stock or forfeit any gain realized in respect of Restricted Stock Units that vested within 12 months prior to the Participant’s Termination of Employment (the “Affected Restricted Stock Units”). The gain pursuant to this Section 5 shall be deemed to be an amount equal to the Fair Market Value, on the applicable vesting date, of the shares of Common Stock deemed delivered to the Participant in respect of the Affected Restricted Stock Units (including any dividends and distributions thereon and any shares withheld to cover any portion of the tax withholding obligations). It will be at the Company’s discretion as to whether shares of Common Stock or cash equal to the gain realized in respect of the Affected Restricted Stock Units shall be returned to the Company and such return or reimbursement shall be made by the Participant immediately after demand by the Company, but not later than ten days following such demand. The amount of the gain calculated pursuant to this Section 5 shall not take into account any taxes paid by or withheld from the Participant in respect of the Affected Restricted Stock Units.
|
|
6.
|
Changes In Stock.
The Restricted Stock Units are subject to the adjustment provisions set forth in Sections 4.11, 5.3 and 5.4 of the Plan.
|
|
7.
|
No Guarantee of Employment or Service.
This award will not obligate the Company or any Related Company to retain the Participant in its employ or service for any period.
|
|
8.
|
Governing Law; Severability; Choice of Law.
This Agreement will 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 Agreement is held unlawful or otherwise invalid or unenforceable, in whole or in part, the unlawfulness, invalidity or unenforceability will not affect any other provision of this Agreement or part thereof, each of which will remain in full force and effect. Any action related to this Agreement shall be brought exclusively in the federal or state courts of the State of New York, County of Suffolk. The Participant will accept service of process as provided under New York law or by registered mail, return receipt requested, and waive any objection based upon
forum non conveniens
or as to personal jurisdiction over the Participant in federal or state courts of the State of New York, County of Suffolk. The choice of forum set forth in this Section 8 shall not be deemed to preclude the enforcement of any judgment obtained in such forum in any other jurisdiction.
|
|
9.
|
Acceptance and Acknowledgment.
By accepting this Agreement, the Participant:
|
|
(a)
|
accepts and acknowledges he or she must electronically accept this Restricted Stock Unit award as specified in Section 3 of this Agreement or this award will be forfeited;
|
|
(b)
|
upon electronic acceptance of this Restricted Stock Unit award, accepts and acknowledges receipt of the Restricted Stock Units which have been issued to the Participant under the terms and conditions of the Plan;
|
|
(c)
|
acknowledges and confirms the Participant’s acceptance and agreement to the collection, use and transfer, in electronic or other form, of personal information about the Participant, including, without limitation, the Participant’s name, home address, and telephone number, date of birth, social security number or other identification number, and details of all the Participant’s shares held and transactions related thereto, by the Company and its Related Companies and agents for the purpose of implementing, administrating and managing the Participant’s participation in the Plan, and further understands and agrees that the Participant’s personal information may be transferred to third parties assisting in the implementation, administration and management of the Plan, that any recipient may be located in the Participant’s country or elsewhere, and that such recipient’s country may have different data privacy laws and protections than the Participant’s country;
|
|
(d)
|
acknowledges and confirms the Participant’s consent to receive electronically this Agreement, the Plan and the related Prospectus and any other Plan documents that the Company is required to deliver;
|
|
(e)
|
acknowledges that a copy of the Plan and the related Prospectus is posted on the Company’s website and that the Participant has access to such documents;
|
|
(f)
|
agrees to be bound by the terms and conditions of this Agreement and the Plan (including, but not limited to, Section 7.5 of the Plan, Section 5 of this Agreement,
Appendix A
, to this Agreement), as may be amended from time to time;
|
|
(g)
|
understands that neither the Plan nor this Agreement gives the Participant any right to employment or service with the Company or any Related Company and that the Restricted Stock Units are not part of the Participant’s normal or expected compensation; and
|
|
(h)
|
understands and acknowledges that the grant of the Restricted Stock Units is expressly conditioned on the Participant’s adherence to the terms of the applicable policies and procedures of the Company and its Related Companies.
|
|
10.
|
Entire Agreement.
This Agreement and the Plan and, to the extent applicable to the Participant, any written employment agreement between the Participant and the Company, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between the parties with respect to the subject matter hereof.
|
|
11.
|
Electronic Delivery.
The Company may, in its sole discretion, deliver any documents related to the Restricted Stock Units and the Participant’s participation in the Plan, or future awards that may be granted under the Plan, by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic
|
|
12.
|
Nature of Grant.
In accepting the grant of Restricted Stock Units, the Participant acknowledges that:
|
|
(a)
|
the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement;
|
|
(b)
|
the grant of Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted repeatedly in the past;
|
|
(c)
|
all decisions with respect to future Restricted Stock Units, if any, will be at the sole discretion of the Company;
|
|
(d)
|
the Participant’s participation in the Plan will not create a right to further employment with the Participant’s employer (the “Employer”) and shall not interfere with the ability of the Employer to terminate the Participant’s employment relationship;
|
|
(e)
|
the Participant is voluntarily participating in the Plan;
|
|
(f)
|
the Restricted Stock Units are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Participant’s employment contract, if any;
|
|
(g)
|
the Restricted Stock Units are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Employer;
|
|
(h)
|
in the event that the Participant is not an employee of the Company, the grant of Restricted Stock Units will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the grant of Restricted Stock Units will not be interpreted to form an employment contract with the Employer or any subsidiary or affiliate of the Company;
|
|
(i)
|
the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty;
|
|
(j)
|
if the Participant vests in the Restricted Stock Units and obtains shares of Common Stock, the value of those shares may increase or decrease in value;
|
|
(k)
|
in consideration of the grant of the Restricted Stock Units, no claim or entitlement to compensation or damages shall arise from termination of the Restricted Stock Units or diminution in value of the Restricted Stock Units or shares acquired through vesting of the Restricted Stock Units resulting from termination of the Participant’s employment by the Company or the Employer, and the Participant irrevocably releases the Company and the Employer from any
|
|
(l)
|
in the event of termination of the Participant’s employment, Participant’s right to receive the Restricted Stock Units and vest in the Restricted Stock Units under the Plan, if any, will terminate effective as of the date that the Participant is no longer actively employed.
|
|
1.
|
Prohibited Activities.
The Participant recognizes that the Company is engaged in a highly competitive business and that its customer, employee, licensee, supplier and financial relationships are of a highly sensitive nature. As a reasonable means to protect the Company’s Confidential Information (as defined in the subclause (a) below), investment, relationships, and goodwill, and in consideration for this Restricted Stock Unit grant, the Participant agrees that, to the extent permitted by applicable law, the Participant will not, either during his or her employment or for a period of 12 months following the termination of his or her employment (or such longer period specified below) for any reason engage in any of the following “
Prohibited Activities
”:
|
|
(a)
|
Engage in any business activity in a Restricted Area that competes with the business activities of the Company and its corporate affiliates about which Participant either had (i) a job responsibility to promote, or (ii) access to Confidential Information. “Restricted Area” for purposes of this Agreement, means a geographic area that the Participant served or covered on behalf of the Company at any time within the 18 months preceding the end of his or her employment with the Company. “
Confidential Information,
” for the purposes of this Agreement, means information, including information that is conceived or developed by the Participant that is not generally known to the public and that is used by the Company in connection with its business. By way of example, the term “Confidential Information” would include: trade secrets; processes; formulas; research data; program documentation; algorithms; source codes; object codes; know-how; improvements; inventions; techniques; training materials and methods; product information; corporate strategy; sales forecast and pipeline information; research and development; plans or strategies for marketing and pricing; and information concerning existing or potential customers, partners, or vendors. The Participant understands that this list is not all-inclusive and merely serves as examples of the types of information that falls within the definition of Confidential Information.
|
|
(b)
|
Solicit, call on, service or induce others to solicit, call on or service any “Customer” for the purpose of inducing it to license or lease a product or provide it with services that compete with a product or service offered by the Company. A “Customer,” for purposes of this Agreement, means any person or business entity that licensed or leased a Company product or obtained Company services within the 18 months preceding the end of the Participant’s employment with the Company and that the Participant had solicited, called on, or served on the Company’s behalf anytime within that 18-month time period.
|
|
(c)
|
Solicit, call on, or induce others to solicit or call on, any “Prospective Customer” for the purpose of inducing it to license or lease a product or provide it with services which compete with a product or service offered by the Company. A “Prospective Customer,” for purposes of this Agreement, is any person or business entity that the Participant solicited or called on (whether directly or through another Company agent at the Participant’s direction) on behalf of the Company anytime within the 12 months preceding the end of the Participant’s employment with the Company.
|
|
(d)
|
Directly or indirectly through others, hire any employee or contractor of the Company, or solicit or induce, or attempt to solicit or induce, any Company employee or contractor to leave the Company for any reason.
|
|
(e)
|
For any period following the termination of the Participant’s employment, violate a non-competition, non-solicitation or non-disclosure covenant or agreement between the Participant and the Company or any Related Company (including, without limitation, the Employment and Confidentiality Agreement signed at or around the time of the Participant’s hire).
|
|
2.
|
Tolling of Covenants in the Event of Breach.
In the event the Participant engages in any of the Prohibited Activities, the time period of the violated covenant(s) shall be tolled throughout the duration of any violation and shall continue until the Participant has complied with such covenant(s) for a period of 12 consecutive full months.
|
|
3.
|
Injunction.
The Participant acknowledges that, by virtue of the Participant’s employment with the Company, the Participant will have access to Confidential Information of the Company, the disclosure of which will irreparably harm the Company. The Participant further acknowledges that the Company will suffer irreparable harm if the Participant breaches any of the Participant’s obligations under this Agreement. Therefore, the Participant agrees that the Company will be entitled, in addition to its other rights, to enforce the Participant’s obligations through an injunction or decree of specific performance from a court having proper jurisdiction. Any claims the Participant may assert against the Company shall not constitute a defense in any injunction action brought by the Company to force the Participant to keep the promises the Participant made in this Agreement.
|
|
4.
|
Authorization to Modify Restrictions.
The Participant agrees that the restrictions contained in this Agreement are reasonable. However, if any court having proper jurisdiction holds a particular restriction to be unreasonable, that restriction shall be modified only to the extent necessary in the court’s opinion to make it reasonable and the remaining provisions of this Agreement including without limitation Appendix A shall nonetheless remain in full force and effect. The other provisions of this Agreement are likewise severable.
|
|
5.
|
General.
|
|
(a)
|
The Participant understands and agrees that, if the Company is successful in a suit or proceeding to enforce any of the terms of this Agreement, the Participant will pay the Company’s costs of bringing such suit or proceeding, including its reasonable attorney’s fees and litigation expenses (including expert witness and deposition expenses).
|
|
(b)
|
This Agreement shall inure to the benefit of and may be enforced by the Company, its successors and assigns. This Agreement is personal to the Participant and the Participant may not assign it.
|
|
(c)
|
The Company’s rights under this Agreement shall be in addition to any rights it may have under any other Agreement with Participant.
|
|
(d)
|
Any failure to enforce the terms of this Agreement with any other employee of the Company shall not be deemed a waiver by the Company to enforce its rights under this Agreement. Further, any waiver by the Company of any breach by the Participant of any provision of this Agreement, shall not operate or be construed as a waiver of any subsequent breach hereof.
|
|
Total Number of Restricted Stock Shares Granted
|
[Number of Restricted Shares Granted]
|
|
Grant Date
|
[Grant Date]
|
|
1.
|
Grant of Restricted Shares
. The Company hereby grants to the Participant the number of shares of Restricted Stock (the "Restricted Stock") set forth above on the grant date set forth above (the "Grant Date") subject to the terms outlined below.
|
|
2.
|
Vesting of Restricted Shares.
The Restricted Stock will vest with respect to 34% of the underlying shares of Restricted Stock on the first anniversary of the Grant Date and with respect to an additional 33% of the underlying shares of Restricted Stock on each of the second and third anniversaries of the Grant Date. Shares of Restricted Stock shall fully vest upon the Participant's death or Termination of Employment due to Disability. Except as otherwise provided in Section 6 of this Agreement, unvested shares of Restricted Stock shall be forfeited by the Participant upon the Participant's Termination of Employment, as defined in the Plan, for any reason other than death or Termination of Employment due to Disability, as defined in the Plan.
|
|
3.
|
Timing of Grant Acceptance.
Participant must electronically accept his/her grant of Restricted Stock award within 90 days from the Grant Date (the “Grant Acceptance Date”) or he/she will forfeit this Restricted Stock award. A Participant who forfeits his/her Restricted Stock award for failure to accept the award by the Grant Acceptance Date has no right of ownership or other rights as stockholder under this Restricted Stock award and may not be eligible for future Restricted Stock awards or other equity awards granted by the Company.
|
|
4.
|
Delivery of Restricted Stock.
Restricted Stock award shall be registered in the name of the Participant and the Restricted Stock will be held for the Participant by the Company until vesting. Upon grant of the shares of Restricted Stock, 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 Section 2 above. As promptly as practicable after the
|
|
5.
|
Restrictions on Transfer.
Shares of Restricted Stock that are included in this award may not be transferred by the Participant prior to vesting.
|
|
6.
|
Forfeiture and Recovery of Restricted Shares.
Notwithstanding any other provision of this Agreement or the Plan to the contrary, the Restricted Stock may be forfeited without consideration if the Participant, as determined by the Committee in its sole discretion, engages in any Prohibited Activities (as defined in
Appendix A
). If the Participant engages in any Prohibited Activities, the Participant shall, at the sole discretion of the Committee, return any shares of Common Stock or forfeit any gain realized in respect of Restricted Stock that vested within 12 months prior to the Participant's Termination of Employment (the "Affected Restricted Stock"). The gain pursuant to this Section 6 shall be deemed to be an amount equal to the Fair Market Value, on the applicable vesting date, of the shares of Common Stock deemed delivered to the Participant in respect of the Affected Restricted Stock (including any dividends and distributions thereon and any shares withheld to cover any portion of the tax withholding obligations). It will be at the Company's discretion as to whether shares of Common Stock or cash equal to the gain realized in respect of the Affected Restricted Stock shall be returned to the Company and such return or reimbursement shall be made by the Participant immediately after demand by the Company, but not later than ten days following such demand. The amount of the gain calculated pursuant to this Section 6 shall not take into account any taxes paid by or withheld from the Participant in respect of the Affected Restricted Stock.
|
|
7.
|
Tax Withholding.
As a condition to the delivery of any shares pursuant to the vesting of the Restricted Stock, the Participant is required to pay tax withholding obligations that arise in connection with the vesting of the Restricted Stock. The Company shall satisfy the tax withholding obligations arising in connection with release of restrictions on Shares of Restricted Stock held by Participant (where withholding is required at the time of release of restrictions on Shares of Restricted Stock or as may be determined by the Company from time to time) by withholding shares of Common Stock that would otherwise be available for delivery upon the vesting of this award having a Fair Market Value on the date of the release equal to the minimum statutory withholding obligation or such other withholding obligation required by applicable law or require a Participant satisfy its withholding obligation in some other form as determined Company from time to time and in accordance with applicable law.
|
|
8.
|
Changes In Stock.
The Restricted Stock is subject to the adjustment provisions set forth in Sections 4.11, 5.3 and 5.4 of the Plan.
|
|
9.
|
No Guarantee of Employment or Service.
This award will not obligate the Company or any Related Company to retain the Participant in its employ or service for any period.
|
|
10.
|
Governing Law; Severability; Choice of Law.
This Agreement will 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 Agreement is held unlawful or otherwise invalid or unenforceable, in whole or in part, the unlawfulness, invalidity or unenforceability will not affect any other provision of this Agreement or part thereof, each of which will remain in full force and effect. Any action related to this Agreement shall be brought exclusively in the federal or state courts of the State of New York, County of Suffolk. The Participant will accept service of process as provided under New York law or by registered mail, return receipt requested, and waive any objection based upon
forum non conveniens
or as to personal jurisdiction over the Participant in federal or state courts of the State of New York, County of Suffolk. The choice of forum set forth in this Section 10 shall not be deemed to preclude the enforcement of any judgment obtained in such forum in any other jurisdiction.
|
|
11.
|
Acceptance and Acknowledgment.
By accepting this Agreement, the Participant:
|
|
(a)
|
accepts and acknowledges he or she must electronically accept this Restricted Stock award as specified in Section 3 of this Agreement or this award will be forfeited;
|
|
(b)
|
upon electronic acceptance of this Restricted Stock Award, accepts and acknowledges receipt of the Restricted Stock which has been issued to the Participant under the terms and conditions of the Plan;
|
|
(c)
|
acknowledges and confirms the Participant's acceptance and agreement to the collection, use and transfer, in electronic or other form, of personal information about the Participant, including, without limitation, the Participant's name, home address, and telephone number, date of birth, social security number or other identification number, and details of all the Participant's shares held and transactions related thereto, by the Company and its Related Companies and agents for the purpose of implementing, administrating and managing the Participant's participation in the Plan, and further understands and agrees that the Participant's personal information may be transferred to third parties assisting in the implementation, administration and management of the Plan, that any recipient may be located in the Participant's country or elsewhere, and that such recipient's country may have different data privacy laws and protections than the Participant's country;
|
|
(d)
|
acknowledges and confirms the Participant's consent to receive electronically this Agreement, the Plan and the related Prospectus and any other Plan documents that the Company is required to deliver;
|
|
(e)
|
acknowledges that a copy of the Plan and the related Prospectus is posted on the Company's website and that the Participant has access to such documents;
|
|
(f)
|
agrees to be bound by the terms and conditions of this Agreement and the Plan (including, but not limited to, Section 7.5 of the Plan, Section 6 of this Agreement and
Appendix A
to this Agreement), as may be amended from time to time;
|
|
(g)
|
acknowledges and confirms that (i) he or she may file an election pursuant to Section 83(b) of the Code to be taxed currently on the Fair Market Value of the shares of Restricted Stock (less any purchase price paid for such shares), provided that such election must be filed with the Internal Revenue Service
no later than thirty (30) days
after the grant of such shares and may
|
|
(h)
|
agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions related to the Plan or this Agreement;
|
|
(i)
|
understands that neither Plan nor this Agreement gives the Participant any right to employment or service with the Company or any Related Company and that the Restricted Stock is not part of the Participant's normal or expected compensation; and
|
|
(j)
|
understands and acknowledges that the grant of the Restricted Stock is expressly conditioned on the Participant's adherence to the terms of the applicable policies and procedures of the Company and its Related Companies.
|
|
12.
|
Entire Agreement.
This Agreement and the Plan and, to the extent applicable to the Participant, any written employment agreement between the Participant and the Company, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between the parties with respect to the subject matter hereof.
|
|
1.
|
Prohibited Activities.
The Participant recognizes that the Company is engaged in a highly competitive business and that its customer, employee, licensee, supplier and financial relationships are of a highly sensitive nature. As a reasonable means to protect the Company's Confidential Information (as defined in the subclause (a) below), investment, relationships, and goodwill, and in consideration for this Restricted Stock grant, the Participant agrees that, to the extent permitted by applicable law, the Participant will not, either during his or her employment or for a period of 12 months following the termination of his or her employment (or such longer period specified below) for any reason engage in any of the following "
Prohibited Activities
":
|
|
(a)
|
Engage in any business activity in a Restricted Area that competes with the business activities of the Company and its corporate affiliates about which Participant either had (i) a job responsibility to promote, or (ii) access to Confidential Information. "Restricted Area" for purposes of this Agreement, means a geographic area that the Participant served or covered on behalf of the Company at any time within the 18 months preceding the end of his or her employment with the Company. "
Confidential Information,
" for the purposes of this Agreement, means information, including information that is conceived or developed by the Participant that is not generally known to the public and that is used by the Company in connection with its business. By way of example, the term "Confidential Information" would include: trade secrets; processes; formulas; research data; program documentation; algorithms; source codes; object codes; know-how; improvements; inventions; techniques; training materials and methods; product information; corporate strategy; sales forecast and pipeline information; research and development; plans or strategies for marketing and pricing; and information concerning existing or potential customers, partners, or vendors. The Participant understands that this list is not all-inclusive and merely serves as examples of the types of information that falls within the definition of Confidential Information.
|
|
(b)
|
Solicit, call on, service or induce others to solicit, call on or service any "Customer" for the purpose of inducing it to license or lease a product or provide it with services that compete with a product or service offered by the Company. A "Customer," for purposes of this Agreement, means any person or business entity that licensed or leased a Company product or obtained Company services within the 18 months preceding the end of the Participant's employment with the Company and that the Participant had solicited, called on, or served on the Company's behalf anytime within that 18-month time period.
|
|
(c)
|
Solicit, call on, or induce others to solicit or call on, any "Prospective Customer" for the purpose of inducing it to license or lease a product or provide it with services which compete with a product or service offered by the Company. A "Prospective Customer," for purposes of this Agreement, is any person or business entity that the Participant solicited or called on (whether directly or through another Company agent at the Participant's direction) on behalf of the Company anytime within the 12 months preceding the end of the Participant's employment with the Company.
|
|
(d)
|
Directly or indirectly through others, hire any employee or contractor of the Company, or solicit or induce, or attempt to solicit or induce, any Company employee or contractor to leave the Company for any reason.
|
|
(e)
|
For any period following the termination of the Participant's employment, violate a non-competition, non-solicitation or non-disclosure covenant or agreement between the Participant and the Company or any Related Company (including, without limitation, the Employment and Confidentiality Agreement signed at or around the time of the Participant's hire).
|
|
2.
|
Tolling of Covenants in the Event of Breach.
In the event the Participant engages in any of the Prohibited Activities, the time period of the violated covenant(s) shall be tolled throughout the duration of any violation and shall continue until the Participant has complied with such covenant(s) for a period of 12 consecutive full months.
|
|
3.
|
Injunction.
The Participant acknowledges that, by virtue of the Participant's employment with the Company, the Participant will have access to Confidential Information of the Company, the disclosure of which will irreparably harm the Company. The Participant further acknowledges that the Company will suffer irreparable harm if the Participant breaches any of the Participant's obligations under this Agreement. Therefore, the Participant agrees that the Company will be entitled, in addition to its other rights, to enforce the Participant's obligations through an injunction or decree of specific performance from a court having proper jurisdiction. Any claims the Participant may assert against the Company shall not constitute a defense in any injunction action brought by the Company to force the Participant to keep the promises the Participant made in this Agreement.
|
|
4.
|
Authorization to Modify Restrictions.
The Participant agrees that the restrictions contained in this Agreement are reasonable. However, if any court having proper jurisdiction holds a particular restriction to be unreasonable, that restriction shall be modified only to the extent necessary in the court's opinion to make it reasonable and the remaining provisions of this Agreement including without limitation Appendix A shall nonetheless remain in full force and effect. The other provisions of this Agreement are likewise severable.
|
|
5.
|
General.
|
|
(a)
|
The Participant understands and agrees that, if the Company is successful in a suit or proceeding to enforce any of the terms of this Agreement, the Participant will pay the Company's costs of bringing such suit or proceeding, including its reasonable attorney's fees and litigation expenses (including expert witness and deposition expenses).
|
|
(b)
|
This Agreement shall inure to the benefit of and may be enforced by the Company, its successors and assigns. This Agreement is personal to the Participant and the Participant may not assign it.
|
|
(c)
|
The Company’s rights under this Agreement shall be in addition to any rights it may have under any other Agreement with Participant.
|
|
(d)
|
Any failure to enforce the terms of this Agreement with any other employee of the Company shall not be deemed a waiver by the Company to enforce its rights under this Agreement. Further, any waiver by the Company of any breach by the Participant of any provision of this Agreement, shall not operate or be construed as a waiver of any subsequent breach hereof.
|
|
Total Number of Shares Subject to Option Granted
|
[Number of Shares Granted]
|
|
Grant Date
|
[Grant Date]
|
|
Exercise Price
|
[Exercise Price]
|
|
Expiration Date
|
[Expiration Date]
|
|
1.
|
Grant of Option
. The Company hereby grants to the Optionee an option (the "Option") to purchase the number of shares of Common Stock set forth above at an exercise price per share set forth above which is equal to the Fair Market Value of such shares on the date the Option is granted (the "Grant Date"). The Option is not an "incentive stock option" within the meaning of Section 422 of the Code.
|
|
2.
|
Vesting of Option.
The Option will vest with respect to 34% of the underlying shares of Common Stock on the first anniversary of the Grant Date and with respect to an additional 33% of the underlying shares of Common Stock on each of the second and third anniversaries of the Grant Date. Except as provided in Section 9 of this Agreement, the Option will expire and will not be exercisable after ten years from Grant Date (the "Expiration Date"). Notwithstanding the foregoing, the Company may extend the term of the Option to reflect certain securities trading blackouts that the Company may impose in order to comply with applicable laws.
|
|
3.
|
Timing of Grant Acceptance.
Participant must electronically accept his/her grant of this Option within 90 days from the Grant Date (the “Grant Acceptance Date”) or he/she will forfeit this Option. A Participant who forfeits his/her Option for failure to accept the award by the Grant Acceptance Date has no right of ownership or other rights as stockholder under this Option and may not be eligible for future Option awards or other equity awards granted by the Company.
|
|
4.
|
Exercise of Option
. To the extent that the Option is exercisable, the Optionee may exercise the Option by delivering to the Company or its agent a properly executed exercise notice on a form approved by the Committee. The Company will not permit the exercise of the Option if the Company
|
|
5.
|
Payment of Exercise Price.
Payment of the exercise price of the Option 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. Alternatively, payment of the exercise price may be made by (a) delivering to the Company, or its agent, a properly executed exercise notice, 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, (b) tendering (actually or by attestation) to the Company previously acquired Shares that have been held by the Optionee for at least six months having a Fair Market Value on the date prior to the date of exercise equal to the applicable portion of the Exercise Price being paid and appropriate tax witholding, or (c) any combination of the foregoing. Payment of the exercise price of the Option must be made in full for all shares for which the Option is exercised at the time of such exercise, and no shares will be delivered until such payment is made. Notwithstanding the foregoing, a form of payment will not be available if the Company determines, in its sole and absolute discretion, that such form of payment could violate any law or regulation.
|
|
6.
|
Delivery of Shares
. The Company will not be obligated to deliver any shares underlying the Option unless and until the Company is satisfied that (a) proper arrangements have been made with the Company for the payment of any applicable tax withholding obligations, (b) all requirements of all applicable laws have been met, (c) in the event the outstanding Common Stock is at the time listed upon any stock exchange, the shares to be delivered have been listed, or authorized to be listed, upon official notice of issuance upon the exchanges where it is listed, and (d) all legal matters in connection with the issuance and delivery of the shares have been approved by counsel of the Company. The Optionee will have no rights of a stockholder until the shares are actually delivered to the Optionee. Common Stock to be delivered upon the exercise of the Option may constitute an original issue of authorized stock or may consist of treasury stock.
|
|
7.
|
Transferability of Option
. Except as provided below, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution and during the Optionee's lifetime the Option may be exercised only by the Optionee. Notwithstanding the foregoing, the Option may be transferred by the Optionee to his or her family members or to one or more trusts for the benefit of such family members or to one or more limited partnerships in which such family members are the only partners; provided that (a) the Optionee does not receive any consideration for such transfer, (b) written notice of any proposed transfer and the details thereof will have been furnished to the Committee at least three days in advance of such transfer, and (c) the Committee consents to the transfer in writing. If the Option is transferred pursuant to this provision, it will continue to be subject to the same terms and conditions that were applicable to such Option immediately prior to transfer and the Option may be exercised by the transferee only to the same extent that the option
|
|
8.
|
Death or Termination of Employment Due to Disability
. If the Optionee dies or incurs a Termination of Employment due to Disability while employed by or providing services to the Company, any portion of the Option that has not become exercisable as of the date of the Optionee's death or Termination of Employment due to Disability will become exercisable in full and will remain exercisable (a) in the case of the Optionee's death, by the estate of the deceased Optionee or the person given authority to exercise the Option by the Optionee's will or by operation of law for a period of one year following the Optionee's death, but not later than the expiration date of the Option; and (b) in the case of the Optionee's Termination of Employment or Disability, by the Optionee for a period of one year following the Optionee's Termination of Employment due to Disability, but not later than the Expiration Date.
|
|
9.
|
Other Termination of Employment
|
|
(a)
|
Except as otherwise provided in this Agreement or the Plan, upon the Retirement of the Optionee, the portion of the Option that is not exercisable as of the date of such Retirement will be forfeited as of the date of such Retirement and the portion of the Option that is exercisable as of the date of such Retirement must be exercised, if at all, within one year after the date of such Retirement, but in no event after the Expiration Date.
|
|
(b)
|
Except as otherwise provided in this Agreement or the Plan or in an employment agreement between the Optionee and the Company, upon the Optionee's Termination of Employment, for reason other than death, Disability or Retirement, the portion of the Option that is not exercisable as of the Optionee's Termination of Employment will be forfeited as of the Optionee's Termination of Employment and the portion of the Option that is exercisable as of the Optionee's Termination of Employment must be exercised, if at all, within 90 days after such Termination of Employment but in no event after the Expiration Date.
|
|
10.
|
Forfeiture and Recovery and Reimbursement of Option Gain.
Notwithstanding any other provision of this Agreement or the Plan to the contrary, the Option will be terminated and become null and void without consideration if the Optionee, as determined by the Committee in its sole discretion, engages in any Prohibited Activities (as defined in Appendix A).
|
|
11.
|
Changes In Stock.
The Option is subject to the adjustment provisions set forth in Sections 4.11, 5.3 and 5.4 of the Plan.
|
|
12.
|
Tax Withholding
. As a condition to the delivery of any shares pursuant to the exercise of the Option, an Optionee is required to pay the Company an amount sufficient to satisfy applicable tax withholding obligations, which the
Company
, may in its discretion, determine to accept payment of tax withholding by the following methods described below:
|
|
(a)
|
the Company withholds 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.
|
|
(b)
|
through any of the exercise price payment methods described in Section 4 of this Agreement; or
|
|
(c)
|
any other method specified in Section 7.2 of the Plan that is necessary to satisfy Optionee’s withholding obligation in accordance with applicable law.;
|
|
13.
|
No Guarantee of Employment or Service.
The Option will not obligate the Company or any Related Company to retain
the
Optionee in its employ or service for any period.
|
|
14.
|
Governing Law; Severability; Choice of Law
. This Agreement will 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 Agreement is held unlawful or otherwise invalid or unenforceable, in whole or in part, the unlawfulness, invalidity or unenforceability will not affect any other provision of this Agreement or part thereof, each of which will remain in full force and effect. Any action related to this Agreement shall be brought exclusively in the federal or state courts of the State of New York, County of Suffolk. The Optionee will accept service of process as provided under New York law or by registered mail, return receipt requested, and waive any objection based upon forum non conveniens or as to personal jurisdiction over the Optionee in federal or state courts of the State of New York, County of Suffolk. The choice of forum set forth in this Section 14 shall not be deemed to preclude the enforcement of any judgment obtained in such forum in any other jurisdiction.
|
|
15.
|
Acceptance and Acknowledgment.
By accepting this Agreement, the Optionee:
|
|
(a)
|
accepts and acknowledges he or she must electronically accept this Option as specified in Section 3 of this Agreement or this award will be forfeited;
|
|
(b)
|
upon electronic acceptance of this Option, accepts and acknowledges receipt of the Option which has been issued to the Optionee under the terms and conditions of the Plan;
|
|
(c)
|
acknowledges and confirms the Optionee's acceptance and agreement to the collection, use and transfer, in electronic or other form, of personal information about the Optionee,
|
|
(d)
|
acknowledges and confirms the Optionee's consent to receive electronically this Agreement, the Plan and the related Prospectus and any other Plan documents that the Company is required to deliver;
|
|
(e)
|
acknowledges that a copy of the Plan and the related Prospectus is posted on the Company's website and that the Optionee has access to such documents;
|
|
(f)
|
agrees to be bound by the terms and conditions of this Agreement and the Plan (including, but not limited to, Section 7.5 of the Plan, Section 10 of this Agreement and Appendix A to this Agreement), as may be amended from time to time;
|
|
(g)
|
agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions related to the Plan or this Agreement;
|
|
(h)
|
understands that neither Plan nor this Agreement gives the Optionee any right to employment or service with the Company or any Related Company and that the Option is not part of the Optionee's normal or expected compensation, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Optionee's employer;
|
|
(i)
|
understands and acknowledges that the grant of the Option is expressly conditioned on the Optionee's adherence to the terms of the applicable policies and procedures of the Company and its Related Companies.
|
|
16.
|
Entire Agreement.
This Agreement and the Plan and, to the extent applicable to the Optionee, any written employment agreement between the Optionee and the Company, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between the parties with respect to the subject matter hereof.
|
|
1.
|
Prohibited Activities.
The Optionee recognizes that the Company is engaged in a highly competitive business and that its customer, employee, licensee, supplier and financial relationships are of a highly sensitive nature. As a reasonable means to protect the Company's Confidential Information (as defined in the subclause (a) below), investment, relationships, and goodwill, and in consideration for the Option grant, the Optionee agrees that, to the extent permitted by applicable law, the Optionee will not, either during his or her employment or for a period of 12 months following the termination of his or her employment (or such longer period specified below) for any reason engage in any of the following "
Prohibited Activities
":
|
|
(a)
|
Engage in any business activity in a Restricted Area that competes with the business activities of the Company and its corporate affiliates about which Optionee either had (i) a job responsibility to promote, or (ii) access to Confidential Information. "Restricted Area" for purposes of this Agreement, means a geographic area that the Optionee served or covered on behalf of the Company at any time within the 18 months preceding the end of his or her employment with the Company. "
Confidential Information,
" for the purposes of this Agreement, means information, including information that is conceived or developed by the Optionee that is not generally known to the public and that is used by the Company in connection with its business. By way of example, the term "Confidential Information" would include: trade secrets; processes; formulas; research data; program documentation; algorithms; source codes; object codes; know-how; improvements; inventions; techniques; training materials and methods; product information; corporate strategy; sales forecast and pipeline information; research and development; plans or strategies for marketing and pricing; and information concerning existing or potential customers, partners, or vendors. The Optionee understands that this list is not all-inclusive and merely serves as examples of the types of information that falls within the definition of Confidential Information.
|
|
(b)
|
Solicit, call on, service or induce others to solicit, call on or service any "Customer" for the purpose of inducing it to license or lease a product or provide it with services that compete with a product or service offered by the Company. A "Customer," for purposes of this Agreement, means any person or business entity that licensed or leased a Company product or obtained Company services within the 18 months preceding the end of the Optionee's employment with the Company and that the Optionee had solicited, called on, or served on the Company's behalf anytime within that 18-month time period.
|
|
(c)
|
Solicit, call on, or induce others to solicit or call on, any "Prospective Customer" for the purpose of inducing it to license or lease a product or provide it with services which compete with a product or service offered by the Company. A "Prospective Customer," for purposes of this Agreement, is any person or business entity that the Optionee solicited or called on (whether directly or through another Company agent at the Optionee's direction) on behalf of the Company anytime within the 12 months preceding the end of the Optionee's employment with the Company.
|
|
(d)
|
Directly or indirectly through others, hire any employee or contractor of the Company, or solicit or induce, or attempt to solicit or induce, any Company employee or contractor to leave the Company for any reason.
|
|
(e)
|
For any period following the termination of the Optionee's employment, violate a non-competition, non-solicitation or non-disclosure covenant or agreement between the Optionee and the Company or any Related Company (including, without limitation, the Employment and Confidentiality Agreement signed at or around the time of the Optionee's hire).
|
|
2.
|
Tolling of Covenants in the Event of Breach.
In the event the Optionee engages in any of the Prohibited Activities, the time period of the violated covenant(s) shall be tolled throughout the duration of any violation and shall continue until the Optionee has complied with such covenant(s) for a period of 12 consecutive full months.
|
|
3.
|
Injunction.
The Optionee acknowledges that, by virtue of the Optionee's employment with the Company, the Optionee will have access to Confidential Information of the Company, the disclosure of which will irreparably harm the Company. The Optionee further acknowledges that the Company will suffer irreparable harm if the Optionee breaches any of the Optionee's obligations under this Agreement. Therefore, the Optionee agrees that the Company will be entitled, in addition to its other rights, to enforce the Optionee's obligations through an injunction or decree of specific performance from a court having proper jurisdiction. Any claims the Optionee may assert against the Company shall not constitute a defense in any injunction action brought by the Company to force the Optionee to keep the promises the Optionee made in this Agreement.
|
|
4.
|
Authorization to Modify Restrictions.
The Optionee agrees that the restrictions contained in this Agreement are reasonable. However, if any court having proper jurisdiction holds a particular restriction to be unreasonable, that restriction shall be modified only to the extent necessary in the court's opinion to make it reasonable and the remaining provisions of this Agreement including without limitation Appendix A shall nonetheless remain in full force and effect. The other provisions of this Agreement are likewise severable.
|
|
5.
|
General.
|
|
(a)
|
The Optionee understands and agrees that, if the Company is successful in a suit or proceeding to enforce any of the terms of this Agreement, the Optionee will pay the Company's costs of bringing such suit or proceeding, including its reasonable attorney's fees and litigation expenses (including expert witness and deposition expenses).
|
|
(b)
|
This Agreement shall inure to the benefit of and may be enforced by the Company, its successors and assigns. Except as otherwise permitted by this Agreement, this Agreement is personal to the Optionee and the Optionee may not assign it.
|
|
(c)
|
The Company’s rights under this Agreement shall be in addition to any rights it may have under any other Agreement with Optionee.
|
|
(d)
|
Any failure to enforce the terms of this Agreement with any other employee of the Company shall not be deemed a waiver by the Company to enforce its rights under this Agreement. Further, any waiver by the Company of any breach by the Optionee of any provision of this Agreement, shall not operate or be construed as a waiver of any subsequent breach hereof.
|
|
Total Number of Shares Subject to Option Granted
|
[Number of Shares Granted]
|
|
Grant Date
|
[Grant Date]
|
|
Exercise Price
|
[Exercise Price]
|
|
Expiration Date
|
[Expiration Date]
|
|
1.
|
Grant of Option
. The Company hereby grants to the Optionee an option (the "Option") to purchase the number of shares of Common Stock set forth above at an exercise price per share set forth above which is equal to the Fair Market Value of such shares on the date the Option is granted (the "Grant Date"). The Option is not an "incentive stock option" within the meaning of Section 422 of the Code.
|
|
2.
|
Vesting of Option.
The Option will vest with respect to 34% of the underlying shares of Common Stock on the first anniversary of the Grant Date and with respect to an additional 33% of the underlying shares of Common Stock on each of the second and third anniversaries of the Grant Date. Except as provided in Section 9 of this Agreement, the Option will expire and will not be exercisable after ten years from Grant Date (the "Expiration Date"). Notwithstanding the foregoing, the Company may extend the term of the Option to reflect certain securities trading blackouts that the Company may impose in order to comply with applicable laws.
|
|
3.
|
Timing of Grant Acceptance.
Participant must electronically accept his/her grant of Option within 90 days from the Grant Date (the “Grant Acceptance Date”) or he/she will forfeit this Option. A Participant who forfeits his/her Option for failure to accept the award by the Grant Acceptance Date has no right of ownership or other rights as stockholder under this Option and may not be eligible for future stock option awards or other equity awards granted by the Company.
|
|
4.
|
Exercise of Option
. To the extent that the Option is exercisable, the Optionee may exercise the Option by delivering to the Company or its agent a properly executed exercise notice on a form approved by the Committee. The Company will not permit the exercise of the Option if the Company
|
|
5.
|
Payment of Exercise Price.
Payment of the exercise price of the Option 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. Alternatively, payment of the exercise price may be made by (a) delivering to the Company, or its agent, a properly executed exercise notice, 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, (b) tendering (actually or by attestation) to the Company previously acquired Shares that have been held by the Optionee for at least six months having a Fair Market Value on the date prior to the date of exercise equal to the applicable portion of the Exercise Price being paid, or (c) any combination of the foregoing. Payment of the exercise price of the Option must be made in full for all shares for which the Option is exercised at the time of such exercise, and no shares will be delivered until such payment is made. Notwithstanding the foregoing, a form of payment will not be available if the Company determines, in its sole and absolute discretion, that such form of payment could violate any law or regulation.
|
|
6.
|
Delivery of Shares
. The Company will not be obligated to deliver any shares underlying the Option unless and until the Company is satisfied that (a) proper arrangements have been made with the Company for the payment of any applicable tax withholding obligations, (b) all requirements of all applicable laws have been met, (c) in the event the outstanding Common Stock is at the time listed upon any stock exchange, the shares to be delivered have been listed, or authorized to be listed, upon official notice of issuance upon the exchanges where it is listed, and (d) all legal matters in connection with the issuance and delivery of the shares have been approved by counsel of the Company. The Optionee will have no rights of a stockholder until the shares are actually delivered to the Optionee. Common Stock to be delivered upon the exercise of the Option may constitute an original issue of authorized stock or may consist of treasury stock.
|
|
7.
|
Transferability of Option
. Except as provided below, the Option may not be transferred by the Optionee other than by will or the laws of descent and distribution and during the Optionee's lifetime the Option may be exercised only by the Optionee. Notwithstanding the foregoing, the Option may be transferred by the Optionee to his or her family members or to one or more trusts for the benefit of such family members or to one or more limited partnerships in which such family members are the only partners; provided that (a) the Optionee does not receive any consideration for such transfer, (b) written notice of any proposed transfer and the details thereof will have been furnished to the Committee at least three days in advance of such transfer, and (c) the Committee consents to the transfer in writing. If the Option is transferred pursuant to this provision, it will continue to be subject to the same terms and conditions that were applicable to such Option immediately prior to transfer and the Option may be exercised by the transferee only to the same extent that the option
|
|
8.
|
Death or Termination of Employment Due to Disability
. If the Optionee dies or incurs a Termination of Employment due to Disability while employed by or providing services to the Company, any portion of the Option that has not become exercisable as of the date of the Optionee's death or Termination of Employment due to Disability will become exercisable in full and will remain exercisable (a) in the case of the Optionee's death, by the estate of the deceased Optionee or the person given authority to exercise the Option by the Optionee's will or by operation of law for a period of one year following the Optionee's death, but not later than the expiration date of the Option; and (b) in the case of the Optionee's Termination of Employment or Disability, by the Optionee for a period of one year following the Optionee's Termination of Employment due to Disability, but not later than the Expiration Date.
|
|
9.
|
Other Termination of Employment
|
|
(a)
|
Except as otherwise provided in this Agreement or the Plan, upon the Retirement of the Optionee, the portion of the Option that is not exercisable as of the date of such Retirement will be forfeited as of the date of such Retirement and the portion of the Option that is exercisable as of the date of such Retirement must be exercised, if at all, within one year after the date of such Retirement, but in no event after the Expiration Date.
|
|
(b)
|
Except as otherwise provided in this Agreement or the Plan or in an employment agreement between the Optionee and the Company, upon the Optionee's Termination of Employment, for reason other than death, Disability or Retirement, the portion of the Option that is not exercisable as of the Optionee's Termination of Employment will be forfeited as of the Optionee's Termination of Employment and the portion of the Option that is exercisable as of the Optionee's Termination of Employment must be exercised, if at all, within 90 days after such Termination of Employment but in no event later than the Expiration Date.
|
|
10.
|
Forfeiture and Recovery and Reimbursement of Option Gain.
Notwithstanding any other provision of this Agreement or the Plan to the contrary, the Option will be terminated and become null and void without consideration if the Optionee, as determined by the Committee in its sole discretion, engages in any Prohibited Activities (as defined in
Appendix A
).
|
|
11.
|
Changes In Stock.
The Option is subject to the adjustment provisions set forth in Sections 4.11, 5.3 and 5.4 of the Plan.
|
|
12.
|
Tax Withholding
. As a condition to the delivery of any shares pursuant to the exercise of the Option, Optionee is required to pay the Company an amount sufficient to satisfy applicable tax withholding obligations, which
the
Committee, may in its discretion, determine to accept payment of tax withholding by the following methods described below:
|
|
(a)
|
Company withholds 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.
|
|
(b)
|
through any of the exercise price payment methods described in Section 5 of this Agreement; or
|
|
(c)
|
any other method specified in Section 7.2 of the Plan that is necessary to satisfy Optionee’s withholding obligation in accordance with applicable law.
|
|
13.
|
No Guarantee of Employment or Service.
The Option will not obligate the Company or any Related Company to
retain
the Optionee in its employ or service for any period.
|
|
14.
|
Governing Law; Severability; Choice of Law
. This Agreement will 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 Agreement is held unlawful or otherwise invalid or unenforceable, in whole or in part, the unlawfulness, invalidity or unenforceability will not affect any other provision of this Agreement or part thereof, each of which will remain in full force and effect. Any action related to this Agreement shall be brought exclusively in the federal or state courts of the State of New York, County of Suffolk. The Optionee will accept service of process as provided under New York law or by registered mail, return receipt requested, and waive any objection based upon forum non conveniens or as to personal jurisdiction over the Optionee in federal or state courts of the State of New York, County of Suffolk. The choice of forum set forth in this Section 14 shall not be deemed to preclude the enforcement of any judgment obtained in such forum in any other jurisdiction.
|
|
15.
|
Acceptance and Acknowledgment.
By accepting this Agreement, the Optionee:
|
|
(a)
|
accepts and acknowledges he or she must electronically accept this Option award as specified in Section 3 of this Agreement or this award will be forfeited;
|
|
(b)
|
upon electronic acceptance of this Option accepts and acknowledges receipts of the Option which has been issued to the Optionee under the terms and conditions of the Plan;
|
|
(c)
|
acknowledges and confirms the Optionee's acceptance and agreement to the collection, use and transfer, in electronic or other form, of personal information about the Optionee,
|
|
(d)
|
acknowledges and confirms the Optionee's consent to receive electronically this Agreement, the Plan and the related Prospectus and any other Plan documents that the Company is required to deliver;
|
|
(e)
|
acknowledges that a copy of the Plan and the related Prospectus is posted on the Company's website and that the Optionee has access to such documents;
|
|
(f)
|
agrees to be bound by the terms and conditions of this Agreement and the Plan (including, but not limited to, Section 7.5 of the Plan, Section 10 of this Agreement and Appendix A to this Agreement), as may be amended from time to time;
|
|
(g)
|
agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions related to the Plan or this Agreement;
|
|
(h)
|
understands that neither Plan nor this Agreement gives the Optionee any right to employment or service with the Company or any Related Company and that the Option is not part of the Optionee's normal or expected compensation, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Optionee's employer;
|
|
(i)
|
understands and acknowledges that the grant of the Option is expressly conditioned on the Optionee's adherence to the terms of the applicable policies and procedures of the Company and its Related Companies.
|
|
(j)
|
understands and acknowledges that the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement;
|
|
(k)
|
understands and acknowledges that the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options, even if Options have been granted repeatedly in the past;
|
|
(l)
|
all decisions with respect to future Options, if any, will be at the sole discretion of the Company;
|
|
(m)
|
the Optionee is voluntarily participating in the Plan;
|
|
(n)
|
the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Optionee's employment contract, if any;
|
|
(o)
|
in the event that the Optionee is not an employee of the Company, the grant of the Option will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the grant of the Option will not be interpreted to form an employment contract with the Optionee’s employer or any subsidiary or affiliate of the Company;
|
|
(p)
|
the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty;
|
|
(q)
|
if the Optionee exercises the Option and obtains shares of Common Stock, the value of those shares may increase or decrease in value; and
|
|
(r)
|
in consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from termination of the Option or diminution in value of the Option or shares acquired through the exercise of the Option resulting from termination of the Optionee's employment by the Company or his employer, and the Optionee irrevocably releases the Company and his employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, the Optionee will be deemed irrevocably to have waived his or her entitlement to pursue such claim.
|
|
(s)
|
the parties to this agreement have expressly required that this Agreement and all documents and notices relating hereto be drafted in English. Les parties aux présentes ont expressément exigé que la présente convention et tous les documents et avis qui y sont afférents soient rédigés en anglais.
|
|
(t)
|
in the event of termination of the Optionee’s employment, the Optionee’s right to vest in the Option under the Plan will terminate effective as of the date that the Optionee is no longer actively employed.
|
|
16.
|
Entire Agreement.
This Agreement and the Plan and, to the extent applicable to the Optionee, any written employment agreement between the Optionee and the Company, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements between the parties with respect to the subject matter hereof.
|
|
1.
|
Prohibited Activities.
The Optionee recognizes that the Company is engaged in a highly competitive business and that its customer, employee, licensee, supplier and financial relationships are of a highly sensitive nature. As a reasonable means to protect the Company's Confidential Information (as defined in the subclause (a) below), investment, relationships, and goodwill, and in consideration for the Option grant, the Optionee agrees that, to the extent permitted by applicable law, the Optionee will not, either during his or her employment or for a period of 12 months following the termination of his or her employment (or such longer period specified below) for any reason engage in any of the following "
Prohibited Activities
":
|
|
(a)
|
Engage in any business activity in a Restricted Area that competes with the business activities of the Company and its corporate affiliates about which Optionee either had (i) a job responsibility to promote, or (ii) access to Confidential Information. "Restricted Area" for purposes of this Agreement, means a geographic area that the Optionee served or covered on behalf of the Company at any time within the 18 months preceding the end of his or her employment with the Company. "
Confidential Information,
" for the purposes of this Agreement, means information, including information that is conceived or developed by the Optionee that is not generally known to the public and that is used by the Company in connection with its business. By way of example, the term "Confidential Information" would include: trade secrets; processes; formulas; research data; program documentation; algorithms; source codes; object codes; know-how; improvements; inventions; techniques; training materials and methods; product information; corporate strategy; sales forecast and pipeline information; research and development; plans or strategies for marketing and pricing; and information concerning existing or potential customers, partners, or vendors. The Optionee understands that this list is not all-inclusive and merely serves as examples of the types of information that falls within the definition of Confidential Information.
|
|
(b)
|
Solicit, call on, service or induce others to solicit, call on or service any "Customer" for the purpose of inducing it to license or lease a product or provide it with services that compete with a product or service offered by the Company. A "Customer," for purposes of this Agreement, means any person or business entity that licensed or leased a Company product or obtained Company services within the 18 months preceding the end of the Optionee's employment with the Company and that the Optionee had solicited, called on, or served on the Company's behalf anytime within that 18-month time period.
|
|
(c)
|
Solicit, call on, or induce others to solicit or call on, any "Prospective Customer" for the purpose of inducing it to license or lease a product or provide it with services which compete with a product or service offered by the Company. A "Prospective Customer," for purposes of this Agreement, is any person or business entity that the Optionee solicited or called on (whether directly or through another Company agent at the Optionee's direction) on behalf of the Company anytime within the 12 months preceding the end of the Optionee's employment with the Company.
|
|
(d)
|
Directly or indirectly through others, hire any employee or contractor of the Company, or solicit or induce, or attempt to solicit or induce, any Company employee or contractor to leave the Company for any reason.
|
|
(e)
|
For any period following the termination of the Optionee's employment, violate a non-competition, non-solicitation or non-disclosure covenant or agreement between the Optionee and the Company or any Related Company (including, without limitation, the Employment and Confidentiality Agreement signed at or around the time of the Optionee's hire).
|
|
2.
|
Tolling of Covenants in the Event of Breach.
In the event the Optionee engages in any of the Prohibited Activities, the time period of the violated covenant(s) shall be tolled throughout the duration of any violation and shall continue until the Optionee has complied with such covenant(s) for a period of 12 consecutive full months.
|
|
3.
|
Injunction.
The Optionee acknowledges that, by virtue of the Optionee's employment with the Company, the Optionee will have access to Confidential Information of the Company, the disclosure of which will irreparably harm the Company. The Optionee further acknowledges that the Company will suffer irreparable harm if the Optionee breaches any of the Optionee's obligations under this Agreement. Therefore, the Optionee agrees that the Company will be entitled, in addition to its other rights, to enforce the Optionee's obligations through an injunction or decree of specific performance from a court having proper jurisdiction. Any claims the Optionee may assert against the Company shall not constitute a defense in any injunction action brought by the Company to force the Optionee to keep the promises the Optionee made in this Agreement.
|
|
4.
|
Authorization to Modify Restrictions.
The Optionee agrees that the restrictions contained in this Agreement are reasonable. However, if any court having proper jurisdiction holds a particular restriction to be unreasonable, that restriction shall be modified only to the extent necessary in the court's opinion to make it reasonable and the remaining provisions of this Agreement including without limitation Appendix A shall nonetheless remain in full force and effect. The other provisions of this Agreement are likewise severable.
|
|
5.
|
General.
|
|
(a)
|
The Optionee understands and agrees that, if the Company is successful in a suit or proceeding to enforce any of the terms of this Agreement, the Optionee will pay the Company's costs of bringing such suit or proceeding, including its reasonable attorney's fees and litigation expenses (including expert witness and deposition expenses).
|
|
(b)
|
This Agreement shall inure to the benefit of and may be enforced by the Company, its successors and assigns. Except as otherwise permitted by this Agreement, this Agreement is personal to the Optionee and the Optionee may not assign it.
|
|
(c)
|
The Company’s rights under this Agreement shall be in addition to any rights it may have under any other Agreement with Optionee.
|
|
(d)
|
Any failure to enforce the terms of this Agreement with any other employee of the Company shall not be deemed a waiver by the Company to enforce its rights under this Agreement. Further, any waiver by the Company of any breach by the Optionee of any provision of this Agreement, shall not operate or be construed as a waiver of any subsequent breach hereof.
|
|
|
|
Fiscal Year
|
|
Three Months Ended
|
||||||||||||||||||||
|
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
June 30,
2014 |
||||||||||||
|
Earnings available for fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Earnings from continuing operations before income taxes, minority interest and discontinued operations
|
|
$
|
1,084
|
|
|
$
|
1,139
|
|
|
$
|
1,291
|
|
|
$
|
1,260
|
|
|
$
|
1,016
|
|
|
$
|
299
|
|
|
Add: Fixed charges
|
|
156
|
|
|
121
|
|
|
115
|
|
|
113
|
|
|
123
|
|
|
29
|
|
||||||
|
Total earnings available for fixed charges
|
|
$
|
1,240
|
|
|
$
|
1,260
|
|
|
$
|
1,406
|
|
|
$
|
1,373
|
|
|
$
|
1,139
|
|
|
$
|
328
|
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Interest expense
(1)
|
|
$
|
102
|
|
|
$
|
68
|
|
|
$
|
64
|
|
|
$
|
64
|
|
|
$
|
75
|
|
|
$
|
21
|
|
|
Interest portion of rental expense
|
|
54
|
|
|
53
|
|
|
51
|
|
|
49
|
|
|
48
|
|
|
8
|
|
||||||
|
Total fixed charges
|
|
$
|
156
|
|
|
$
|
121
|
|
|
$
|
115
|
|
|
$
|
113
|
|
|
$
|
123
|
|
|
$
|
29
|
|
|
RATIOS OF EARNINGS TO FIXED CHARGES
|
|
7.95
|
|
|
10.41
|
|
|
12.23
|
|
|
12.15
|
|
|
9.26
|
|
|
11.31
|
|
||||||
|
Deficiency of earnings to fixed charges
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
||||||
|
(1)
|
Includes amortization of discount related to indebtedness
|
|
1.
|
I have reviewed the Quarterly Report on Form 10-Q of CA, Inc. for its most recent fiscal quarter;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
|
|
|
|
|
Date:
|
July 24, 2014
|
|
|
|
|
|
/s/ Michael P. Gregoire
|
|
|
|
|
|
|
|
|
Michael P. Gregoire
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
CA, Inc.
|
|
1.
|
I have reviewed the Quarterly Report on Form 10-Q of CA, Inc. for its most recent fiscal quarter;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
|
|
|
|
|
Date:
|
July 24, 2014
|
|
|
|
|
|
/s/ Richard J. Beckert
|
|
|
|
|
|
|
|
|
Richard J. Beckert
|
|
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
CA, Inc.
|
|
|
|
/s/ Michael P. Gregoire
|
|
Michael P. Gregoire
|
|
Chief Executive Officer
|
|
July 24, 2014
|
|
|
|
/s/ Richard J. Beckert
|
|
Richard J. Beckert
|
|
Executive Vice President and Chief Financial Officer
|
|
July 24, 2014
|