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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
HASHICORP, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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HashiCorp, Inc.
101 Second Street, Suite 700
San Francisco, California 94105
This special meeting described in these materials relates only to the proposed transaction with IBM.
We will separately be holding our annual meeting of stockholders,
which is unrelated to the proposed transaction.
Dear Fellow Stockholders of HashiCorp, Inc.:
You are cordially invited to attend a special meeting of stockholders (which we refer to, together with any adjournment, postponement or other delay thereof, as the “special meeting”) of HashiCorp, Inc. (which we refer to as “HashiCorp,” “we,” “our,” “us” and similar words). The special meeting will be held on Monday, July 15, 2024, at 8:00 a.m., Pacific Time. You may attend the special meeting via a live interactive webcast on the internet at https://www.virtualshareholdermeeting.com/HCP2024SM. You will be able to listen to the special meeting live and vote online. We believe that a virtual meeting provides expanded access, improved communication and cost savings for our stockholders.
At the special meeting, you will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of April 24, 2024 (which we refer to, as it may be amended, modified, supplemented or waived, in each case from time to time, as the “merger agreement”), by and among International Business Machines Corporation, a New York corporation (which we refer to as “IBM”), McCloud Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of IBM (which we refer to as “Sub”), and HashiCorp. Pursuant to the terms of the merger agreement, Sub will merge with and into HashiCorp, with HashiCorp surviving the merger and becoming a wholly owned subsidiary of IBM. We refer to the merger of Sub with and into HashiCorp as the “merger.” At the special meeting, you will also be asked to consider and vote on proposals to (1) approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (2) adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
If the merger is completed, you will be entitled to receive $35.00 in cash, without interest and less any applicable withholding taxes, for each share of our Class A common stock or Class B common stock that you own immediately prior to the effective time of the merger (unless you have properly exercised your appraisal rights with respect to such shares). This amount represents a premium of approximately 43 percent over HashiCorp’s closing stock price on April 22, 2024, the last day prior to media reports that IBM was nearing an acquisition of HashiCorp.
HashiCorp’s Board of Directors, after considering the factors more fully described in the enclosed proxy statement, unanimously: (1) approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement; and (2) declared that it is in the best interests of HashiCorp and its stockholders to enter into the merger agreement and consummate the merger and the other transactions contemplated by the merger agreement on the terms and subject to the conditions set forth in the merger agreement.
HashiCorp’s Board of Directors unanimously recommends that you vote: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (3) “FOR” the proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
The proxy statement to which this notice is attached provides detailed information about the special meeting, the merger agreement, the merger, the actions and determinations of HashiCorp’s Board of Directors in connection

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with its evaluation of the merger agreement and the merger, and the other proposals to be considered at the special meeting. A copy of the merger agreement, as well as the certificate of incorporation of the surviving corporation in the merger included as an exhibit to the merger agreement, is attached as Annex A to the proxy statement. All such documents are considered attached to this notice.
Please read the proxy statement and its annexes, including the merger agreement, carefully and in their entirety, as they contain important information.
Even if you plan to attend the special meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend and vote at the special meeting, your vote will revoke any proxy that you have previously submitted. If you fail to return your proxy or attend the special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting or be voted at the special meeting, and if a quorum is present, that will have the same effect as voting “AGAINST” the proposal to adopt the merger agreement.
If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you will receive instructions from your bank, broker or other nominee that you must follow in order to submit your voting instructions and have your shares counted at the special meeting. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting or be voted at the special meeting, and, if a quorum is present, that will have the same effect as voting “AGAINST” the proposal to adopt the merger agreement.
Your vote is very important, regardless of the number of shares that you own.
If you have any questions or need assistance voting your shares, please contact our proxy solicitor:

Innisfree M&A Incorporated
501 Madison Avenue, 20th floor
New York, New York 10022
Stockholders may call toll free: (877) 750-8240
Banks and Brokers may call collect: (212) 750-5833
On behalf of HashiCorp’s Board of Directors, thank you for your support.
Very truly yours,
 
 
 

 
 
 
David McJannet
 
Chief Executive Officer and Chairman of the Board of Directors
 
The accompanying proxy statement is dated June 13, 2024, and, together with the enclosed form of proxy card, is first being sent to stockholders on or about June 13, 2024.

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HashiCorp, Inc.
101 Second Street, Suite 700
San Francisco, California 94105
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD VIRTUALLY VIA WEBCAST ON JULY 15, 2024
This special meeting described in these materials relates only to the proposed transaction with IBM.
We will separately be holding our annual meeting of stockholders,
which is unrelated to the proposed transaction.
Notice is given that a special meeting of stockholders (which we refer to, together with any adjournment, postponement or other delay thereof, as the “special meeting”) of HashiCorp, Inc., a Delaware corporation (which we refer to as “HashiCorp,” “we,” “our,” “us” and similar words) will be held on Monday, July 15, 2024, at 8:00 a.m., Pacific Time, for the following purposes:
1.
To consider and vote on the proposal to adopt the Agreement and Plan of Merger, dated as of April 24, 2024 (which we refer to, as it may be amended, modified, supplemented or waived, in each case from time to time, as the “merger agreement”), by and among International Business Machines Corporation, a New York corporation (which we refer to as “IBM”), McCloud Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of IBM (which we refer to as “Sub”), and HashiCorp;
2.
To consider and vote on a proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger of Sub with and into HashiCorp (which we refer to as the “merger”); and
3.
To consider and vote on any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
The proxy statement to which this notice is attached includes a summary of the merger agreement, and a complete copy of the merger agreement is attached as Annex A to the proxy statement. Included with the merger agreement is a copy of the certificate of incorporation of the surviving corporation in the merger. All such documents are considered attached to this notice. Please read the proxy statement and its annexes, including the merger agreement, carefully and in their entirety, as they contain important information.
The special meeting will be held by means of a live interactive webcast on the internet at https://www.virtualshareholdermeeting.com/HCP2024SM. By accessing that web address and using the control number found on your proxy card, you will be able to listen to the special meeting live and vote online. The special meeting will begin promptly at 8:00 a.m., Pacific Time. Online check-in will begin a few minutes prior to the special meeting. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares).
Only HashiCorp stockholders as of the close of business on May 28, 2024, are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof. A list of HashiCorp stockholders entitled to vote at the special meeting will be available in our principal executive offices located at 101 2nd St., Suite 700, San Francisco, CA 94105 during regular business hours for a period of no less than ten (10) days ending on the day before the special meeting.
HashiCorp’s Board of Directors unanimously recommends that you vote: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by HashiCorp to our named executive officers in

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connection with the merger; and (3) “FOR” the proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
HashiCorp stockholders of record or beneficial owners who do not vote in favor of the proposal to adopt the merger agreement will have the right to seek appraisal of the “fair value” of their shares of our Class A common stock or Class B common stock (exclusive of any elements of value arising from the accomplishment or expectation of the merger and together with interest (as described in the accompanying proxy statement), if any, to be paid on the amount determined to be “fair value”) in lieu of receiving $35.00 in cash without interest, and subject to applicable withholding taxes, pursuant to the terms of the merger agreement for each share of our Class A common stock or Class B common stock that they own if the merger is completed, as determined in accordance with Section 262 of the General Corporation Law of the State of Delaware (which we refer to as the “DGCL”). To do so, a HashiCorp stockholder of record or beneficial owner must properly demand appraisal before the vote is taken to adopt the merger agreement and comply with all other requirements of the DGCL, and not validly withdraw their demands or lose their appraisal rights under the applicable provisions of the DGCL, which are summarized in the accompanying proxy statement. A copy of Section 262, which details the appraisal statute, may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262
Even if you plan to attend the special meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend and vote at the special meeting, your vote will revoke any proxy that you have previously submitted. If you fail to return your proxy or to attend the special meeting, your shares will not be counted for purposes of determining whether a quorum is present or be voted at the special meeting, and, if a quorum is present, that will have the same effect as voting “AGAINST” the proposal to adopt the merger agreement.
If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you will receive instructions from your bank, broker or other nominee that you must follow in order to submit your voting instructions and have your shares counted at the special meeting. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting or be voted at the special meeting, and, if a quorum is present, that will have the same effect as voting “AGAINST” the proposal to adopt the merger agreement.
By Order of the Board of Directors,
 
 
 

 
 
Paul D. Warenski
 
Chief Legal Officer
 
Dated: June 13, 2024
San Francisco, California

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HASHICORP, INC.
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD VIRTUALLY VIA WEBCAST ON JULY 15, 2024
This proxy statement is dated June 13, 2024, and, together with the enclosed form of proxy card, is first being sent
to stockholders on or about June 13, 2024.

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YOUR VOTE IS IMPORTANT
EVEN IF YOU PLAN TO ATTEND THE SPECIAL MEETING, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE: (1) OVER THE INTERNET; (2) BY TELEPHONE; OR (3) BY SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD (A PREPAID REPLY ENVELOPE IS PROVIDED FOR YOUR CONVENIENCE).
You may revoke your proxy or change your vote at any time before your proxy is voted at the special meeting.
If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you will receive instructions from your bank, broker or other nominee that you must follow in order to submit your voting instructions and have your shares counted at the special meeting. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting or be voted at the special meeting, and, if a quorum is present, that will have the same effect as voting “AGAINST” the proposal to adopt the merger agreement.
If you are a stockholder of record, voting at the special meeting will revoke any proxy that you previously submitted. If you hold your shares through a bank, broker or other nominee, you must obtain a “legal proxy” from the bank, broker or other nominee that holds your shares in order to vote at the special meeting.
If you fail to (1) return your proxy card; (2) grant your proxy electronically over the internet or by telephone; or (3) vote by virtual ballot in person at the special meeting, your shares will (a) not be voted at the special meeting, (b) not be counted for purposes of determining whether a quorum is present at the special meeting and (c) have the same effect as voting “AGAINST” the proposal to adopt the merger agreement but will have no effect on: (1) the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to HashiCorp’s named executive officers in connection with the merger or (2) the proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
We encourage you to read the accompanying proxy statement and its annexes, including all documents incorporated by reference into the accompanying proxy statement, carefully and in their entirety, as they contain important information. If you have any questions concerning the merger, the special meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement, or need help voting your shares, please contact HashiCorp’s proxy solicitor:

Innisfree M&A Incorporated
501 Madison Avenue, 20th floor
New York, New York 10022
Stockholders may call toll free: (877) 750-8240
Banks and Brokers may call collect: (212) 750-5833
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TRANSACTION SUMMARY
Except as otherwise specifically noted in this proxy statement, “HashiCorp,” “we,” “our,” “us” and similar words refer to HashiCorp, Inc., including, in certain cases, HashiCorp’s subsidiaries. Throughout this proxy statement, the “HashiCorp Board” refers to HashiCorp’s Board of Directors. Throughout this proxy statement, we refer to International Business Machines Corporation as “IBM” and McCloud Merger Sub, Inc. as “Sub.” In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger (as it may be amended, modified, supplemented or waived, in each case from time to time), dated as of April 24, 2024, by and among IBM, Sub and HashiCorp as the “merger agreement.”
This summary highlights selected information from this proxy statement related to the proposed merger of Sub (a wholly owned subsidiary of IBM) with and into HashiCorp, with HashiCorp surviving the merger and continuing as a wholly owned subsidiary of IBM. We refer to that transaction as the “merger.”
This proxy statement may not contain all of the information that is important to you. To understand the merger more fully and for a complete description of its legal terms, you should carefully read this entire proxy statement, including its annexes and the other documents to which we refer in this proxy statement. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find More Information.” A copy of the merger agreement is attached as Annex A to this proxy statement. We encourage you to read the merger agreement, which is the legal document that governs the merger, carefully and in its entirety.
Introduction
On April 24, 2024, HashiCorp entered into the merger agreement, pursuant to which it agreed to be acquired by IBM, subject to the terms and conditions set forth therein. If the merger is completed, each share of our Class A common stock, $0.000015 par value per share (the “Class A common stock”), and Class B common stock, $0.000015 par value per share (the “Class B common stock”) issued and outstanding immediately prior to the effective time of the merger (subject to certain exceptions set forth in the merger agreement), will automatically be cancelled and converted into the right to receive $35.00 per share in cash, without interest and less any applicable withholding taxes. Our Class A common stock and Class B common stock are collectively referred to in this proxy statement as our “common stock.
Parties Involved in the Merger
HashiCorp
Incorporated in 2013, HashiCorp is a leading provider of enterprise cloud adoption software and services. Our products aim to provide consistent workflows and a standardized approach to automating the critical processes involved in delivering applications in the cloud: infrastructure provisioning, security, networking and application deployment.
Our Class A common stock is listed on the Nasdaq Global Select Market (which we refer to as “Nasdaq”) under the symbol “HCP.” Our corporate headquarters are located at 101 Second Street, Suite 700, San Francisco, California 94105, and our telephone number is (415) 301-3227.
IBM
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. IBM helps clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to its clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.
IBM is a New York corporation and was formed in 1911 as the Computing-Tabulating-Recording Company. IBM’s common stock, par value $0.20 per share, is currently listed on the New York Stock Exchange (which we refer to as the “NYSE”), the NYSE Chicago and outside the United States, in each case under the symbol “IBM.” IBM’s corporate headquarters are located at 1 New Orchard Road, Armonk, New York 10504, and its telephone number is (914) 499-1900.
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Additional information about IBM and its subsidiaries can be found on its website: www.IBM.com. The information provided or accessible through IBM’s website is not part of, or incorporated by reference in, this proxy statement.
McCloud Merger Sub
Sub is a Delaware corporation and wholly owned subsidiary of IBM, formed on April 16, 2024, solely for the purpose of engaging in the merger and the transactions contemplated by the merger agreement and has not engaged in any business activities other than those incident to its formation and in connection with the merger and transactions contemplated by the merger agreement. Upon completion of the merger, Sub will merge with and into HashiCorp and Sub will cease to exist.
Sub’s corporate headquarters are located at c/o International Business Machines Corporation, 1 New Orchard Road, Armonk, New York 10504, and its telephone number is (914) 499-1900.
Effect of the Merger
Subject to the terms and conditions of the merger agreement and in accordance with the Delaware General Corporation Law (which we refer to as the “DGCL”), Sub will merge with and into HashiCorp. As a result, the separate corporate existence of Sub will cease and HashiCorp will survive the merger and continue to exist after the merger as a direct, wholly owned subsidiary of IBM (we refer to that surviving company as the “surviving corporation”).
The merger will become effective at such day and time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware (which we refer to as the “Delaware Secretary of State”) or at a subsequent date and time that IBM and HashiCorp agree and specify in the certificate of merger. The date and time at which the merger becomes effective is referred to as the “effective time.”
Merger Consideration
At the effective time, each issued and outstanding share of our common stock (subject to certain limited exceptions set forth in the merger agreement) will be automatically canceled and converted into the right to receive $35.00 in cash, without interest (the “merger consideration” or the “per share price”) and subject to applicable withholding taxes, in accordance with the terms and conditions set forth in the merger agreement. For more information, see the section of this proxy statement captioned “The Merger Agreement—Merger Consideration—Common Stock.”
After the merger is completed, you will have the right to receive the merger consideration for each share of our common stock that you own (subject to certain limited exceptions set forth in the merger agreement, including if you have properly exercised, and not validly withdrawn or subsequently lost, your appraisal rights under the DGCL and certain other conditions under the DGCL are satisfied), and you will no longer have any other rights as a stockholder of HashiCorp. Our stockholders who properly and validly exercise and perfect, and do not validly withdraw or otherwise lose, their demand for appraisal or dissenters’ rights under the DGCL will have the right to receive a payment for the “fair value” of their shares of our common stock as determined pursuant to an appraisal proceeding as contemplated by the DGCL, as described in the section of this proxy statement captioned “The Merger—Appraisal Rights.”
The Special Meeting
Date, Time and Place
A special meeting of our stockholders will be held on Monday, July 15, 2024, at 8:00 a.m., Pacific Time. We refer to the special meeting, and any adjournment, postponement or other delay of the special meeting, as the “special meeting.”
You may attend the special meeting solely via a live interactive webcast on the internet at https://www.virtualshareholdermeeting.com/HCP2024SM. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares). We believe that a virtual meeting provides expanded access, improved communication and cost savings for our stockholders.
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Purpose
At the special meeting, we will ask stockholders to vote on the following proposals:
Proposal 1: to adopt the merger agreement;
Proposal 2: to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and
Proposal 3: to approve any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Record Date; Shares Entitled to Vote
You are entitled to vote at the special meeting if you owned shares of our Class A common stock or Class B common stock as of the close of business on May 28, 2024 (which we refer to as the “record date”).
As of the close of business on the record date, there were 152,466,678 shares of our Class A common stock outstanding and entitled to vote at the special meeting. For each share of our Class A common stock that you owned as of the close of business on the record date, you will have one vote on each matter submitted for a vote at the special meeting. As of the close of business on the record date, there were 48,596,759 shares of our Class B common stock outstanding and entitled to vote at the special meeting. For each share of our Class B common stock that you owned as of the close of business on the record date, you will have 10 votes on each matter submitted for a vote at the special meeting.
In the aggregate, 201,063,437 shares of our common stock are outstanding and entitled to vote at the special meeting, representing a total of 638,434,268 votes.
Quorum
The holders of a majority of the voting power of shares of our common stock issued and outstanding and entitled to vote as of the record date, present in person or represented by proxy, will constitute a quorum at the special meeting. A quorum is the minimum number of shares (or holders of shares) required to be present at the special meeting for it to be properly held under our bylaws and the DGCL.
Required Vote
The proposals to be voted on at the special meeting require the following votes:
Proposal 1: The affirmative vote of a majority of the voting power of all issued and outstanding shares of our common stock entitled to vote (voting together as a single class).
Proposal 2: The affirmative vote of a majority of the voting power of the shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal. This vote will be on a non-binding, advisory basis.
Proposal 3: The affirmative vote of a majority of the voting power of the shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
Voting and Proxies
Any stockholder of record entitled to vote at the special meeting may vote in any of the following ways:
by proxy, by returning a signed and dated proxy card (a prepaid reply envelope is provided for your convenience);
by proxy, by granting a proxy electronically over the internet or by telephone (using the instructions found on the proxy card); or
by attending the special meeting and voting at the special meeting using the control number on the enclosed proxy card.
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If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by (1) signing another proxy card with a later date and returning it prior to the special meeting; (2) submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy; (3) delivering a written notice of revocation to our Corporate Secretary; or (4) attending the special meeting and voting at the special meeting.
If you are a beneficial owner and hold your shares of our common stock in “street name” through a bank, broker or other nominee, you will receive instructions from your bank, broker or other nominee that you must follow to submit your voting instructions and have your shares counted at the special meeting. Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote on routine matters, but not on non-routine matters. The proposals to be considered at the special meeting are all non-routine matters, and banks, brokers and other nominees cannot vote on these proposals without your instructions. Therefore, it is important that you cast your vote or instruct your bank, broker or other nominee on how you wish to vote your shares.
If you hold your shares of our common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.
Recommendation of the HashiCorp Board and Reasons for the Merger
The HashiCorp Board, after considering the various factors described in the section of this proxy statement captioned “The Merger— Recommendation of the HashiCorp Board and Reasons for the Merger,” unanimously: (1) approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement; and (2) declared that it is in the best interests of HashiCorp and our stockholders to enter into the merger agreement and consummate the merger and the other transactions contemplated by the merger agreement on the terms and subject to the conditions set forth in the merger agreement.
The HashiCorp Board unanimously recommends that you vote: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (3) “FOR” the proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Opinion of Qatalyst Partners LP
HashiCorp retained Qatalyst Partners LP (which we refer to as “Qatalyst Partners”) to act as its financial advisor in connection with a potential transaction such as the merger and to evaluate whether the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM) was fair, from a financial point of view, to such holders. HashiCorp selected Qatalyst Partners to act as HashiCorp’s financial advisor based on Qatalyst Partners’ long-standing relationship with HashiCorp as well as Qatalyst Partners’ extensive expertise, knowledge of the industry in which HashiCorp operates and experience advising technology companies in connection with potential strategic transactions. Qatalyst Partners has provided its written consent to the reproduction of its opinion in this proxy statement. At the meeting of the HashiCorp Board on April 24, 2024, Qatalyst Partners rendered to the HashiCorp Board its oral opinion, subsequently confirmed in writing, to the effect that, as of the date thereof and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM) was fair, from a financial point of view, to such holders. Qatalyst Partners delivered its written opinion, dated April 24, 2024, to the HashiCorp Board following this meeting of the HashiCorp Board.
The full text of Qatalyst Partners’ written opinion, dated April 24, 2024, is attached to this proxy statement as Annex B and is incorporated by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. Holders of shares of our common stock should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the HashiCorp Board and addresses only, as of the date of
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the opinion, the fairness, from a financial point of view, of the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM), to such holders, and it does not address any other aspect of the merger. It does not constitute a recommendation as to how any holder of shares of our common stock should vote with respect to the merger or any other matter and does not in any manner address the price at which shares of our common stock will trade or otherwise be transferable at any time. The summary of Qatalyst Partners’ opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached to this proxy statement as Annex B.
For more information, see the section of this proxy statement captioned “The Merger—Opinion of Qatalyst Partners LP.”
Treatment of HashiCorp Equity Awards and the ESPP in the Merger
The merger agreement provides that in connection with the merger, our equity awards that are outstanding immediately prior to the effective time and our 2021 Employee Stock Purchase Plan (which we refer to as the “ESPP”) will be treated as described below. For more information, see the section of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger—Treatment of HashiCorp Equity Awards and the ESPP in the Merger.”
Treatment of HashiCorp Options
At the effective time, each option to purchase shares of our common stock (whether vested or unvested) that is outstanding immediately prior to the effective time (each of which we refer to as a “HashiCorp option”) will be canceled in exchange for the right to receive an amount in cash, subject to applicable withholding taxes, equal to the product of (1) the total number of shares of our common stock covered by such HashiCorp option immediately prior to the effective time multiplied by (2) the excess, if any, of (a) the per share price over (b) the per share exercise price of such HashiCorp option (we refer to such amounts payable as the “option payments”).
Treatment of HashiCorp RSUs
At the effective time, each restricted stock unit covering shares of our common stock subject to only service-based vesting conditions (each of which we refer to as a “HashiCorp RSU”) that is (1) held by any person who, as of immediately prior to the effective time, is a non-employee director, consultant or independent contractor of HashiCorp or any of its subsidiaries (whether or not such HashiCorp RSU is vested or unvested) or (2) held by any person other than a non-employee director, consultant or independent contractor and is vested but not settled and is outstanding immediately prior to the effective time will, in each case, be canceled in exchange for the right to receive an amount in cash, subject to applicable withholding taxes, equal to the product of (a) the per share price multiplied by (b) the total number of shares of our common stock covered by such HashiCorp RSU. We refer to the HashiCorp RSUs contemplated by this paragraph as the “cashed-out HashiCorp RSUs.”
At the effective time, each outstanding HashiCorp RSU that is not a cashed-out HashiCorp RSU (each of which we refer to as a “rollover HashiCorp RSU”) will be converted into an IBM restricted stock unit (each of which we refer to as an “IBM RSU”) with respect to a number of shares of IBM common stock determined by multiplying (1) the number of shares of our common stock subject to such rollover HashiCorp RSU immediately prior to the effective time by (2) the exchange ratio described below, and rounded down to the nearest whole share. Such IBM RSU will be subject to substantially the same terms and conditions (including the same vesting and acceleration terms, as applicable) as were applicable to the rollover HashiCorp RSU.
The “exchange ratio” is a fraction, the numerator of which is the per share price and the denominator of which is the average closing price per share of IBM common stock on the New York Stock Exchange Composite Transactions Tape on the 20 trading days immediately preceding the date on which the effective time occurs.
Treatment of HashiCorp PSUs
At the effective time, each restricted stock unit covering shares of our common stock subject to both service-based and performance-based vesting conditions (each of which we refer to as a “HashiCorp PSU”) that is held by any person who, as of immediately prior to the effective time, is a non-employee director, consultant or independent contractor of HashiCorp or any of its subsidiaries (whether or not such HashiCorp PSU is vested
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or unvested) will be canceled in exchange for the right to receive an amount in cash, subject to applicable withholding taxes, equal to the product of (1) the per share price multiplied by (2) the number of shares of our common stock subject to such HashiCorp PSU immediately prior to the effective time (with any performance conditions deemed to be achieved at the target level). We refer to the HashiCorp PSUs contemplated by this paragraph as the “cashed-out HashiCorp PSUs.”
At the effective time, each HashiCorp PSU that is not a cashed-out HashiCorp PSU (each of which we refer to as a “rollover HashiCorp PSU”) will be converted into an IBM RSU with respect to a number of shares of IBM common stock determined by multiplying (1) the number of shares of our common stock subject to such rollover HashiCorp PSU immediately prior to the effective time (with any performance conditions deemed to be achieved at the target level) by (2) the exchange ratio, and rounded down to the nearest whole share. Such IBM RSU will be subject to substantially the same terms and conditions (including the same service-based vesting and acceleration terms, as applicable) as were applicable to the rollover HashiCorp PSU, except that there will no longer be a performance-based vesting schedule.
For clarity, if the closing of the merger occurs on or after the last day of the performance period for the applicable HashiCorp PSUs, then the HashiCorp PSUs that become eligible to vest under the service-based vesting schedule of that HashiCorp PSU (based on actual attainment of the applicable performance-based vesting conditions) will be treated as HashiCorp RSUs.
Treatment of ESPP
The merger agreement provides that:
participation in the ESPP is now limited to those employees who are participants on April 24, 2024;
except to the extent necessary to maintain the status of the ESPP as an “employee stock purchase plan” within the meaning of Section 423 of the Code, participants in the ESPP may not increase their payroll deduction elections or rate of contributions from those in effect on April 24, 2024, or make any separate non-payroll contributions to the ESPP on or following April 24, 2024;
no ESPP offering period will commence after April 24, 2024;
as of the earlier of the first scheduled purchase date following April 24, 2024, or a date that is no later than the last trading day before the effective time, each participant’s then-outstanding share purchase right under the ESPP will be exercised; and
the ESPP will terminate as of the effective time.
For more information, see the section of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger—Treatment of HashiCorp Equity Awards and the ESPP in the Merger.”
Employee Matters
For a period of one year following the effective time or, if earlier, the date of termination of employment of the relevant HashiCorp employee who remains employed with HashiCorp after the closing of the merger (who we refer to as a “continuing employee”), IBM will:
honor all compensation and benefit plans, programs, policies, practices or agreements that HashiCorp maintained, sponsored, or participated in as of the date of the merger agreement;
provide each continuing employee with:
base salary and wages that are no less favorable than those provided to such continuing employee immediately before the effective time; and
(1) target annual cash bonus, target cash-based commission, and other target cash-based incentive compensation opportunities (excluding any equity or equity-based awards), (2) retirement, (3) welfare and (4) severance benefits (in each case, excluding any post-employment health benefits, post-employment welfare benefits and defined benefit pension and non-qualified deferred compensation plans) that are substantially comparable in the aggregate to the greater of (a) those provided to such continuing employee immediately before the effective time or (b) those provided to employees of IBM and its subsidiaries.
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Unless prohibited by applicable law or doing so would result in duplication of benefits (or the funding of benefits), IBM or its applicable affiliates will give continuing employees credit for purposes of (1) eligibility to participate (other than any defined benefit pension, post-employment health benefits or post-employment welfare benefits plan), (2) vesting and (3) determining the level of benefits (with respect to severance and vacation benefits only, and not for benefit accrual (unless such accruals are required by applicable law)), in each case under employee benefit plans maintained by IBM or its affiliates and in which such continuing employee participates after the closing of the merger, for the applicable continuing employee’s service before the closing of the merger, to the same extent recognized by HashiCorp before the closing of the merger.
With respect to any welfare plan maintained by IBM or any of its affiliates in which continuing employees are eligible to participate after the closing of the merger, IBM will:
waive all waiting periods, evidence of insurability requirements and actively-at-work or similar requirements, limitations as to preexisting conditions and exclusions with respect to participation and coverage requirements applicable to a continuing employee, to the extent that such conditions and exclusions were satisfied or did not apply to such employee under the welfare plans of HashiCorp before the closing of the merger (other than with respect to pre-existing health conditions pursuant to underwriting requirements under fully insured plans);
provide continuing employees with credit for any co-payments and deductibles paid before the closing of the merger in satisfying any analogous deductible or out-of-pocket requirements to the same extent recognized by HashiCorp before the closing of the merger; and
credit the account of each continuing employee under any such welfare plan that is a flexible spending plan with any unused balance in the account of such continuing employee under the applicable compensation or employee benefit arrangement of HashiCorp.
Any vacation or paid time off accrued but unused by a continuing employee as of immediately before the effective time will be credited to such continuing employee following the effective time and will not be subject to accrual limits or other forfeiture conditions that were not applicable as of immediately before the effective time.
Interests of HashiCorp’s Directors and Executive Officers in the Merger
When considering the recommendation of the HashiCorp Board that you vote to approve the proposal to adopt the merger agreement, you should be aware that HashiCorp’s directors and executive officers may have interests in the merger that are different from, or in addition to, your interests as a stockholder. In (1) evaluating and negotiating the merger agreement; (2) approving the merger agreement and the merger; and (3) recommending that the merger agreement be adopted by our stockholders, the HashiCorp Board was aware of and considered these interests to the extent that they existed at the time, among other matters. These interests include the following:
For HashiCorp’s current executive officers, the treatment of their outstanding HashiCorp equity awards and ESPP purchase rights as described in more detail in the section of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger—Treatment of HashiCorp Equity Awards and the ESPP in the Merger.”
For HashiCorp’s non-employee directors, the accelerated vesting, as of immediately prior to the effective time, of their HashiCorp RSUs as described in more detail in the section of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger—Treatment of HashiCorp Equity Awards and the ESPP in the Merger.”
The entitlement of each of HashiCorp’s executive officers to receive payments and benefits pursuant to their change in control and severance agreements with HashiCorp if, during the period beginning three months before the closing date and ending 12 months after the closing date, their employment with HashiCorp is terminated for a reason other than “cause” (excluding by reason of death or disability) or they resign for “good reason,” in each case as set forth in the executive officer’s change in control and severance agreement (or for certain of HashiCorp’s executive officers, as set forth under offer letters entered into with IBM which will become effective upon the closing of the merger, as described in more detail in the sections of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger— HashiCorp Change in Control and Severance Benefits Existing Prior to Entry into the Merger Agreement”) and “The Merger— Interests of HashiCorp’s Directors and Executive Officers in the Merger — Employment Arrangements Following the Merger”).
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The entitlement of certain of HashiCorp’s executive officers to receive payments and benefits under offer letters that they have entered into with IBM with respect to their employment with IBM following the completion of the merger.
The continued indemnification and insurance coverage for HashiCorp’s directors and executive officers from the surviving corporation and IBM under the terms of the merger agreement.
Appraisal Rights
Our stockholders and beneficial owners of our common stock are entitled, under certain circumstances, to seek appraisal of their shares in connection with the merger under Delaware law. Pursuant to Section 262(d) of the DGCL, this proxy statement serves as notice that record or beneficial owners of our common stock may be entitled to appraisal rights under Section 262 of the DGCL (which we refer to as “Section 262”) in connection with the merger. Under Section 262, if the merger is consummated, our stockholders (including beneficial owners of shares of our common stock) will be entitled to seek appraisal of their shares of our common stock if they (1) do not vote in favor of the adoption of the merger agreement; (2) properly demand appraisal of their shares; (3) continuously hold of record or beneficially own their shares of our common stock through the effective date of the merger; (4) meet certain statutory requirements described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal. This means that these persons will be entitled to have their shares of our common stock appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of our common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown or as otherwise provided in Section 262) interest, if any, on the amount determined by the Delaware Court of Chancery to be the fair value from the effective date of the merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation makes a voluntary cash payment to each person seeking appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares of our common stock as determined by the Delaware Court of Chancery; and (2) interest accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, persons who wish to seek appraisal of their shares of our common stock are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.
Persons considering seeking appraisal should be aware that the fair value of their shares of our common stock as determined pursuant to Section 262 could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares of our common stock.
Only a stockholder of record or a beneficial owner of shares of our common stock may submit a demand for appraisal. To exercise appraisal rights, such person must (1) deliver a written demand for appraisal of such person’s shares to HashiCorp before the vote is taken on the proposal to adopt the merger agreement; (2) not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement; (3) continuously hold of record or beneficially own such person’s shares through the effective date of the merger; (4) otherwise comply with the procedures for exercising appraisal rights under the DGCL; and (5) not withdraw such person’s demand or otherwise lose such person’s right to appraisal. The failure to follow the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of HashiCorp Class A common stock unless certain conditions are satisfied by the persons seeking appraisal, as described further below. The requirements under Section 262 for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262. You may find an electronic copy of Section 262 at the following website, accessible without subscription or cost, which copy is incorporated in this proxy statement by reference: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. In the event of any inconsistency between the information contained in this summary, this proxy statement or any of the documents incorporated by reference and the actual text of Section 262, the actual text of Section 262 controls. All references in Section 262 and in this summary to a “stockholder” mean a holder of record of stock, unless otherwise expressly noted. All references in Section 262 and in this summary to a “beneficial owner” mean a person who is the beneficial
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owner of shares of stock held either in voting trust or by a nominee on behalf of such person, unless otherwise expressly noted. All references in Section 262 and in this summary to a “person” mean any individual, corporation, limited liability company, partnership, unincorporated association or other entity.
Material U.S. Federal Income Tax Consequences of the Merger
For U.S. federal income tax purposes, the receipt of cash by a U.S. holder (as defined in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) in exchange for such U.S. holder’s shares of our common stock in the merger generally will result in the recognition of gain or loss in an amount measured by the difference, if any, between the amount of cash that such U.S. holder receives in the merger and such U.S. holder’s adjusted tax basis in the shares of our common stock surrendered in the merger.
A Non-U.S. holder (as defined in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to the exchange of our common stock for cash in the merger unless such Non-U.S. holder has certain connections to the United States, but may be subject to backup withholding tax unless the Non-U.S. holder complies with certain certification procedures or otherwise establishes a valid exemption from backup withholding tax.
Stockholders should consult their tax advisors concerning the U.S. federal income tax consequences relating to the merger in light of their particular circumstances and any consequences arising under U.S. federal non-income tax laws or the laws of any state, local or non-U.S. taxing jurisdiction.
Regulatory Approvals Required for the Merger
Under the merger agreement, the merger cannot be completed until the waiting period (and any extension thereof) applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which we refer to as the “HSR Act”), has been terminated or has expired.
Each of IBM and HashiCorp filed a Premerger Notification and Report Form under the HSR Act with the Antitrust Division of the Department of Justice (which we refer to as the “DOJ”) and the U.S. Federal Trade Commission (which we refer to as the “FTC”) in connection with the merger on May 10, 2024. Following informal discussions with the DOJ and FTC, IBM notified the FTC and the DOJ that it had elected to withdraw and refile its Premerger Notification and Report Form pursuant to 16 C.F.R. 803.12 of the HSR Act in order to allow the FTC additional time to review the transaction. IBM’s Premerger Notification and Report Form was withdrawn effective as of June 10, 2024, and IBM refiled the Premerger Notification and Report Form on June 12, 2024, at which time a new waiting period commenced under the HSR Act. This waiting period is 30 days and would therefore expire at 11:59 p.m., Eastern time, on July 12, 2024, though this period may be shortened if the reviewing agency grants “early termination” and may be extended if the reviewing agency issues a “second request.”
In addition to the U.S. antitrust-related clearance discussed above, HashiCorp and IBM are required to obtain approvals or authorizations in connection with certain antitrust and foreign investment laws in other specified jurisdictions.
There can be no assurance that IBM and HashiCorp will be able to obtain all required regulatory clearances and approvals in the timeframe required or at all. In addition, even if IBM and HashiCorp obtain all required regulatory clearances and approvals, and the merger proposal is approved by our stockholders, conditions may be placed on any such clearance or approval that could cause IBM to abandon the merger.
Financing of the Merger
There is no financing condition to the merger. IBM expects to pay the aggregate price per share from its cash on hand.
No Solicitation of Takeover Proposals
The merger agreement provides that HashiCorp will be subject to customary “no-shop” restrictions prohibiting HashiCorp and its representatives from soliciting alternative takeover proposals from or participating in discussions or negotiations with, third parties regarding alternative takeover proposals (subject to limited exceptions).
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Except as expressly permitted by the merger agreement, HashiCorp has agreed that it will not, and will not authorize or knowingly permit any of its subsidiaries, or any of its or its subsidiaries’ directors, officers, employees or any investment banker, attorney, accountant or other advisor or representative to, and will not publicly announce any intention to, directly or indirectly:
solicit, initiate or knowingly encourage, or knowingly take any other action to facilitate, any takeover proposal;
enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any third party any information regarding HashiCorp or its subsidiaries, or otherwise cooperate in any way with any third party, with respect to any takeover proposal; or
execute or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other similar agreement with a third party relating to any takeover proposal.
However, at any time prior to obtaining the requisite stockholder approval at the special meeting, in response to a bona fide written takeover proposal (which did not result from a breach of the non-solicitation provisions of the merger agreement) received after the date of the merger agreement that the HashiCorp Board determines in good faith constitutes, or would reasonably be expected to lead to, a superior proposal, HashiCorp may, and may permit and authorize its subsidiaries and representatives to, in each case, subject to compliance with the other requirements in the merger agreement:
furnish information with respect to HashiCorp and its subsidiaries to the person making such takeover proposal (and its representatives) pursuant to a confidentiality agreement in effect as of the date of the merger agreement or entered into after the date of the merger agreement that comply with the terms of the merger agreement; and
participate in discussions or negotiations with the person making such takeover proposal (and its representatives), and no other third party, regarding such takeover proposal.
For more information, see the section of this proxy statement captioned “The Merger Agreement—Additional Agreements—No Solicitation of Takeover Proposals.”
Change of HashiCorp Board’s Recommendation
The HashiCorp Board may not withhold, withdraw, qualify or modify in any manner adverse to IBM or Sub its recommendation that our stockholders vote to adopt the merger agreement or take certain similar actions other than, under certain circumstances, if the HashiCorp Board determines in good faith, after consultation with its outside legal counsel and HashiCorp’s financial advisor, that failure to do so would be inconsistent with the directors’ fiduciary duties under applicable law.
Moreover, the HashiCorp Board cannot withhold, withdraw, qualify or modify in any manner adverse to IBM or Sub its recommendation that our stockholders vote to adopt the merger agreement or take certain similar actions unless it complies with certain procedures in the merger agreement, including engaging in good faith negotiations with IBM during a specified period. If HashiCorp or IBM terminates the merger agreement under certain circumstances, including because the HashiCorp Board withdraws its recommendation that our stockholders adopt the merger agreement, then HashiCorp must pay to IBM a termination fee. For more information, see the section of this proxy statement captioned “The Merger Agreement—Additional Agreements—Change of Recommendation.”
Conditions to the Closing of the Merger
The respective obligations of HashiCorp, IBM and Sub to effect the merger are subject to the satisfaction or waiver on or prior to the closing date of the following conditions:
the adoption of the merger agreement by our stockholders;
the expiration or termination of the applicable waiting period under the HSR Act and the obtainment, termination or expiration, as applicable, of any approval or waiting period under antitrust or foreign investment laws in certain specified non-U.S. jurisdictions, in each case without the imposition of a burdensome condition (as defined in the section of this proxy statement captioned “The Merger Agreement—Additional Agreements—Efforts to Complete the Merger”); and
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the absence of any (1) temporary restraining order, preliminary or permanent injunction, or other judgment or law issued by any court of competent jurisdiction or other governmental entity of competent jurisdiction preventing or materially restraining the consummation of the merger or imposing, individually or in the aggregate, a burdensome condition (we refer to these, collectively, as a “legal restraint”), and (2) formal adjudicative proceeding by a governmental entity before any court of competent jurisdiction or other governmental entity of competent jurisdiction seeking to impose a legal restraint.
The obligations of IBM and Sub to effect the merger are further subject to the satisfaction or waiver on or prior to the closing date of the following conditions:
the representations and warranties of HashiCorp set forth in the merger agreement being true and correct, subject to applicable materiality or other qualifiers, as of the closing date (or the earlier date as of which such representation or warranty was specifically made);
HashiCorp having performed in all material respects all covenants and agreements in the merger agreement required to be performed at or prior to the closing date;
since the date of the merger agreement, no material adverse effect having occurred of which the existence or consequences are still continuing; and
IBM having received a certificate signed on behalf of HashiCorp by the Chief Executive Officer or the Chief Financial Officer of HashiCorp, certifying that the conditions set forth in the preceding bullet points of this paragraph have been satisfied.
The obligation of HashiCorp to effect the merger is further subject to the satisfaction or waiver on or prior to the closing date of the following conditions:
the representations and warranties of IBM and Sub set forth in the merger agreement being true and correct as of the closing date (or the earlier date as of which such representation or warranty was specifically made), except for any such failure to be true and correct that would not, individually or in the aggregate, reasonably be expected to, prevent, materially impair or materially delay beyond the termination date, the consummation of the merger;
IBM and Sub having performed in all material respects all covenants and agreements in the merger agreement required to be performed at or prior to the closing date; and
HashiCorp having received a certificate signed on behalf of IBM by the Chief Executive Officer or the Chief Financial Officer of IBM, certifying that conditions set forth in the preceding bullet points in this paragraph have been satisfied.
Termination
The merger agreement may be terminated, and the merger may be abandoned, at any time prior to the effective time:
by the mutual written consent of HashiCorp, IBM and Sub;
by either IBM or HashiCorp, if:
the merger has not been consummated by April 24, 2025, which may be extended up to six months in the event that all conditions to closing other than those conditions relating to antitrust law, foreign investment law or other legal restraints have been satisfied (we refer to the date, including if and as extended, as the “termination date”);
any final and non-appealable legal restraint is in effect; or
the special meeting has been held and the HashiCorp stockholders did not adopt the merger agreement;
by IBM, if:
HashiCorp has breached any of its representations or warranties, or failed to perform any of its covenants or agreements, such that any of the applicable closing conditions for the benefit of IBM would not be satisfied and the breach or failure to perform is not cured within the requisite period (if applicable); or
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prior to the Merger Agreement being adopted by our stockholders, the HashiCorp Board has made an adverse recommendation change (as defined below); or
by HashiCorp, if:
IBM has breached any of its representations or warranties, or failed to perform any of its covenants or agreements, such that any of the applicable closing conditions for the benefit of HashiCorp would not be satisfied and the breach or failure to perform is not cured within the requisite period (if applicable); or
prior to Merger Agreement being adopted by our stockholders, HashiCorp has received a superior proposal to acquire HashiCorp and substantially concurrently with such termination HashiCorp enters into a definitive agreement for the transaction contemplated by that superior proposal and pays the termination fee described in the section of this proxy statement captioned “The Merger Agreement—Termination of the Merger Agreement and Expenses.”
Termination Fee
Under the merger agreement, HashiCorp will be required to pay IBM a termination fee equal to $264,200,000 in connection with a termination of the merger agreement under the following circumstances:
if, prior to the special meeting, a takeover proposal for a majority of our common stock or our assets has been made or publicly announced and thereafter:
the merger agreement is terminated by:
IBM because HashiCorp has breached certain representations and warranties, or failed to perform any of its covenants or agreements, such that any of the applicable closing conditions for the benefit of IBM would not be satisfied and the breach or failure to perform is not cured within the requisite period (if applicable);
HashiCorp because the merger has not been consummated prior to the termination date, including any extensions thereof, but only if, as of such termination, the special meeting has not been held; or
either IBM or HashiCorp after the special meeting has been held and the requisite stockholder approval to adopt the merger agreement was not obtained; and
within 12 months after such termination, HashiCorp or any of its subsidiaries enters into any definitive agreement to consummate a takeover proposal for a majority of our common stock or HashiCorp’s assets (or any such takeover proposal is consummated);
if the merger agreement is terminated by IBM, prior to the merger agreement being adopted by HashiCorp’s stockholders, because an adverse recommendation change has occurred; or
if the merger agreement is terminated by HashiCorp in order to enter into a definitive agreement for a superior proposal, subject to compliance with certain procedures in the merger agreement, including engaging in good faith negotiations with IBM during a specified period.
The merger agreement does not contain a “reverse termination fee” provision pursuant to which IBM would be required to pay HashiCorp a fee in connection with the termination of the merger agreement.
The Voting Agreement
Simultaneously with the execution of the merger agreement, certain stockholders of HashiCorp entered into a voting agreement (which we refer to as the “voting agreement”) with IBM, Sub and HashiCorp. As of the record date, these stockholders beneficially owned, in the aggregate, 3,441,992 shares of our Class A common stock and 36,274,679 shares of our Class B common stock, representing a total of 366,188,782 votes, or approximately 57 percent of the voting power of all of the shares of our common stock outstanding as of the record date and entitled to vote at the special meeting.
Pursuant to the voting agreement, the applicable stockholders have agreed, among other things, to vote their shares of our common stock (1) in favor of the adoption of the merger agreement and the transactions
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contemplated thereby; and (2) in the manner specified in the voting agreement on certain other matters. However, in the event of an adverse recommendation change (as defined below) by the HashiCorp Board in compliance with the terms of the merger agreement, the voting agreement only obligates these stockholders to vote an aggregate of 35 percent of the voting power of the outstanding shares of our common stock in the manner specified in the voting agreement. The voting agreement also contains customary restrictions on the transfer of shares of our common stock held by these stockholders, subject to certain exceptions. The foregoing description of the voting agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the voting agreement, a copy of which is attached hereto as Annex B and is incorporated by reference.
Delisting and Deregistration of Our Common Stock
If the merger is completed, our common stock will no longer be traded on Nasdaq and will be deregistered under the Securities Exchange Act of 1934 (which we refer to as the “Exchange Act”). At that time, we will no longer be required to file periodic reports, current reports and proxy and information statements with the Securities and Exchange Commission (which we refer to as the “SEC”) with respect to our Class A common stock.
Effect on HashiCorp if the Merger is Not Completed
If the merger is not completed for any reason, our stockholders will not receive or be entitled to any payment for their shares of our common stock in connection with the merger. Instead:
we will remain an independent public company;
our Class A common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act;
we will continue to file periodic reports with the SEC; and
under certain circumstances specified in the merger agreement, HashiCorp would be required to pay IBM a termination fee equal to $264,200,000.
Litigation Relating to the Merger
On June 10, 2024, a purported stockholder of HashiCorp filed a complaint in the U.S. District Court for the Northern District of California against HashiCorp and the members of the HashiCorp Board. This complaint is captioned Graff v. HashiCorp, Inc., et al., No. 4:24-cv-03468-DMR. The complaint asserts claims against the defendants under Section 14(a) of the Exchange Act, and SEC Rule 14a-9, for issuing HashiCorp’s preliminary proxy statement with allegedly false and misleading statements of material fact and alleged omissions of material fact, and against the individual defendants under Section 20(a) of the Exchange Act for alleged control person liability. The Graff action seeks, among other things, to (1) enjoin defendants from consummating the merger; (2) rescind the merger and recover damages; (3) disseminate revised disclosures; and (4) recover reasonable attorneys’ and expert fees and expenses. On June 12, 2024, the complaint was voluntarily dismissed with prejudice.
Additional lawsuits may be filed before the special meeting or the consummation of the merger.
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QUESTIONS AND ANSWERS
The following questions and answers address some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that are important to you. We encourage you to carefully read the more detailed information contained elsewhere in this proxy statement, including the annexes to this proxy statement and the other documents to which we refer in this proxy statement. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find More Information.”
Questions About the Merger and the Treatment of Our Common Stock in the Merger
Q:
Why am I receiving these materials?
A:
On April 24, 2024, we announced that HashiCorp agreed to be acquired by IBM and we entered into the merger agreement. Under the merger agreement, IBM will acquire HashiCorp for $35.00 in cash per share of our common stock, without interest and less any applicable withholding taxes. In order to complete the merger, our stockholders must vote to approve the proposal to adopt the merger agreement at the special meeting. See the section of this proxy statement captioned “The Merger Agreement—Conditions to the Closing of the Merger.” The HashiCorp Board is furnishing this proxy statement and form of proxy card to the holders of shares of our common stock in connection with the solicitation of proxies of our stockholders to be voted at the special meeting.
This proxy statement, which you should read carefully, contains important information about the merger, the merger agreement, the special meeting and the matters to be voted on at the special meeting. The enclosed materials allow you to submit a proxy to vote your shares of our common stock without attending the special meeting and to ensure that your shares of our common stock are represented and voted at the special meeting.
Your vote is very important. Even if you plan to attend the special meeting, we encourage you to submit a proxy as soon as possible.
Q:
What is the proposed merger and what effects will it have on HashiCorp?
A:
The proposed merger will result in the acquisition of HashiCorp by IBM. If the proposal to adopt the merger agreement is approved by our stockholders and the other closing conditions under the merger agreement are satisfied or waived, then Sub will merge with and into HashiCorp, with HashiCorp continuing as the surviving corporation. As a result of the merger, HashiCorp will become a wholly owned subsidiary of IBM, and our Class A common stock will no longer be publicly traded and will be delisted from Nasdaq. In addition, our Class A common stock will be deregistered under the Exchange Act, and we will no longer be required to file periodic reports, current reports and proxy statements with the SEC. If the merger is completed, holders of our Class A common stock will not own any shares of common stock of the surviving corporation.
Q:
What will I receive if the merger is completed?
A:
Upon completion of the merger, you will be entitled to receive $35.00 in cash, without interest and less any applicable withholding taxes, for each share of our common stock that you own immediately prior to the effective time of the merger, subject to certain limited exceptions set forth in the merger agreement, including if you have properly exercised, and not validly withdrawn or subsequently lost, your appraisal rights under the DGCL and certain other conditions under the DGCL are satisfied. For example, if you own 100 shares of our common stock immediately prior to the effective time of the merger and you do not properly exercise your appraisal rights under the DGCL, you will receive $3,500.00 in cash in exchange for such shares of our common stock, without interest and less any applicable withholding taxes.
Q:
How does the per share price compare to the market price of HashiCorp’s Class A common stock?
A:
This amount represents a premium of approximately 43 percent over HashiCorp’s closing stock price on April 22, 2024, the last day prior to media reports that IBM was nearing an acquisition of HashiCorp
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Q:
Will I be subject to U.S. federal income tax upon the exchange of common stock for cash pursuant to the merger?
A:
If you are a U.S. holder, the exchange of our common stock for cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes, which generally will require a U.S. holder to recognize a gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by such U.S. holder in the merger and such U.S. holder’s adjusted tax basis in the shares of our common stock surrendered in the merger.
A Non-U.S. holder (as defined in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to the exchange of our common stock for cash in the merger unless such Non-U.S. holder has certain connections to the United States, but may be subject to backup withholding tax unless the Non-U.S. holder complies with certain certification procedures or otherwise establishes a valid exemption from backup withholding tax.
You should consult your own tax advisor to determine the U.S. federal income tax consequences relating to the merger in light of your own particular circumstances and any consequences arising under U.S. federal non-income tax laws or the laws of any state, local or non-U.S. taxing jurisdiction. This discussion is provided for general information only and does not constitute legal or tax advice to any holder. A more complete description of material U.S. federal income tax consequences of the merger is provided in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.”
Q:
When do you expect the merger to be completed?
A:
We currently expect to complete the merger by the end of 2024. However, the exact timing of completion of the merger, if at all, cannot be predicted because the merger is subject to the closing conditions specified in the merger agreement, many of which are outside of our control.
Q:
What governmental and regulatory approvals are required?
A:
Under the merger agreement, the merger cannot be completed until the waiting period (and any extension thereof) applicable to the merger under the HSR Act has expired or otherwise been terminated.
Each of IBM and HashiCorp filed a Premerger Notification and Report Form under the HSR Act with the DOJ and the FTC in connection with the merger on May 10, 2024. Following informal discussions with the DOJ and FTC, IBM notified the FTC and the DOJ that it had elected to withdraw and refile its Premerger Notification and Report Form pursuant to 16 C.F.R. 803.12 of the HSR Act in order to allow the FTC additional time to review the transaction. IBM’s Premerger Notification and Report Form was withdrawn effective as of June 10, 2024, and IBM refiled the Premerger Notification and Report Form on June 12, 2024, at which time a new waiting period commenced under the HSR Act. This waiting period is 30 days and would therefore expire at 11:59 p.m., Eastern time, on July 12, 2024, though this period may be shortened if the reviewing agency grants “early termination” and may be extended if the reviewing agency issues a “second request.”
In addition to the U.S. antitrust-related clearance discussed above, HashiCorp and IBM are required to obtain approvals or authorizations in connection with certain antitrust and foreign investment laws in other specified jurisdictions.
Q:
Am I entitled to appraisal rights under the DGCL?
A:
If the merger is consummated, our stockholders (including beneficial owners of shares of our common stock) who (1) do not vote in favor of the proposal to adopt the merger agreement; (2) continuously hold their shares of our common stock through the effective time; (3) properly perfect appraisal of their applicable shares of our common stock; (4) meet certain other conditions and statutory requirements described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares of our common stock in connection with the merger under Section 262 if certain conditions set forth in Section 262(g) of the DGCL are satisfied. This means that these persons will be entitled to have their shares of our common stock appraised by the
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Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of our common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown or as otherwise provided in Section 262) interest, if any, on the amount determined by the Delaware Court of Chancery to be the fair value from the effective date of the merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation makes a voluntary cash payment to each person seeking appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares of our common stock as determined by the Delaware Court of Chancery; and (2) interest accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, persons who wish to seek appraisal of their shares of our common stock are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.
The DGCL requirements for exercising appraisal rights are described in additional detail in the section of this proxy statement captioned “The Merger—Appraisal Rights.”
Questions About the Treatment of Equity Awards in the Merger
Q:
What will happen to HashiCorp equity awards?
A:
Generally speaking, HashiCorp equity awards will be treated as follows:
HashiCorp Options. At the effective time, each HashiCorp option will be canceled in exchange for the right to receive the option payment, subject to applicable withholding taxes.
HashiCorp RSUs.
At the effective time, each cashed-out HashiCorp RSU will be canceled in exchange for the right to receive an amount in cash, subject to applicable withholding taxes, equal to the product of (1) the per share price multiplied by (2) the total number of shares of our common stock covered by such HashiCorp RSU.
At the effective time, each rollover HashiCorp RSU will be converted into an IBM RSU with respect to a number of shares of IBM common stock determined by multiplying (1) the number of shares of our common stock subject to such rollover HashiCorp RSU immediately prior to the effective time by (2) the exchange ratio, and rounded down to the nearest whole share. Such IBM RSU will be subject to substantially the same terms and conditions (including the same vesting and acceleration terms, as applicable) as were applicable to the rollover HashiCorp RSU.
HashiCorp PSUs.
At the effective time, each cashed-out HashiCorp PSU will be canceled in exchange for the right to receive an amount in cash, subject to applicable withholding taxes, equal to the product of (1) the per share price multiplied by (2) the number of shares of our common stock subject to such HashiCorp PSU immediately prior to the effective time (with any performance conditions deemed to be achieved at the target level).
At the effective time, each rollover HashiCorp PSU will be converted into an IBM RSU with respect to a number of shares of IBM common stock determined by multiplying (1) the number of shares of our common stock subject to such rollover HashiCorp PSU immediately prior to the effective time (with any performance conditions deemed to be achieved at the target level) by (2) the exchange ratio, and rounded down to the nearest whole share. Such IBM RSU will be subject to substantially the same terms and conditions (including the same service-based vesting and acceleration terms, as applicable) as were applicable to the rollover HashiCorp PSU, except that there will no longer be a performance-based vesting schedule.
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For clarity, if the closing of the merger occurs on or after the last day of the performance period for the HashiCorp PSUs, the HashiCorp PSUs that become eligible to vest under the service-based vesting schedule (based on actual attainment of the applicable performance-based vesting conditions) will be treated as HashiCorp RSUs, as described above.
Q:
What will happen to the ESPP?
A:
Under the merger agreement, we are required to take action to provide for the following with respect to the ESPP:
participation in the ESPP is now limited to those employees who are participants on April 24, 2024;
except to the extent necessary to maintain the status of the ESPP as an “employee stock purchase plan” within the meaning of Section 423 of the Code, participants in the ESPP may not increase their payroll deduction elections or rate of contributions from those in effect on April 24, 2024, or make any separate non-payroll contributions to the ESPP on or following April 24, 2024;
no ESPP offering period will commence after April 24, 2024;
as of the earlier of the first scheduled purchase date following April 24, 2024, or a date that is no later than the last trading day before the effective time, each participant’s then-outstanding share purchase right under the ESPP will be exercised; and
the ESPP will terminate as of the effective time.
Questions About the Special Meeting
Q:
When and where is the special meeting?
A:
The special meeting will take place on Monday, July 15, 2024, at 8:00 a.m., Pacific Time. You may attend the special meeting via a live interactive webcast on the internet at https://www.virtualshareholdermeeting.com/HCP2024SM. You will be able to listen to the special meeting live and vote online. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares).
Q:
What am I being asked to vote on at the special meeting?
A:
You are being asked to vote on the following proposals:
Proposal 1: to adopt the merger agreement;
Proposal 2: to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and
Proposal 3: to approve any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Q:
Who is entitled to vote at the special meeting?
A:
All of our stockholders as of the close of business on May 28, 2024, which is the record date for the special meeting, are entitled to vote their shares of our Class A common stock and Class B common stock at the special meeting. As of the close of business on the record date, there were 152,466,678 shares of our Class A common stock and 48,596,759 shares of our Class B common stock outstanding and entitled to vote at the special meeting. Each share of our Class A common stock outstanding as of the record date is entitled to one vote per share on each matter properly brought before the special meeting, and each share of our Class B common stock outstanding as of the record date is entitled to 10 votes per share on each matter properly brought before the special meeting.
Q:
What is a quorum?
A:
A quorum is the minimum number of shares (or holders of shares) required to be present at the special meeting for it to be properly held under our bylaws and the DGCL. The holders of a majority of the voting power of the shares of our common stock issued and outstanding and entitled to vote as of the record date, present in person or represented by proxy, will constitute a quorum at the special meeting.
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Q:
How may I vote?
A:
If you are a stockholder of record (that is, if your shares of our common stock are registered directly in your name with our transfer agent, Equiniti Trust Company, LLC), there are four ways to vote:
by proxy, by signing, dating and returning the enclosed proxy card (a prepaid reply envelope is provided for your convenience);
by proxy, by visiting the internet address on your proxy card;
by proxy, by calling the toll-free (within the United States or Canada) phone number on your proxy card; or
by attending the special meeting and voting at the special meeting using the control number on the enclosed proxy card.
The control number located on your proxy card is designed to verify your identity and allow you to vote your shares of our common stock and to confirm that your voting instructions have been properly recorded when voting electronically over the internet or by telephone. Although there is no charge for voting your shares, if you vote electronically over the internet or by telephone, you may incur costs such as internet access and telephone charges for which you will be responsible.
Even if you plan to attend the special meeting, you are strongly encouraged to vote your shares of our common stock by proxy. If you are a stockholder of record or if you obtain a ‘‘legal proxy” to vote shares that you beneficially own, you may still vote your shares of our common stock at the special meeting even if you have previously voted by proxy. If you attend the special meeting and vote at the special meeting, your vote will revoke any previously submitted proxy.
If your shares of our common stock are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee, or, if such a service is provided by your bank, broker or other nominee, electronically over the internet or by telephone. To vote over the internet or by telephone through your bank, broker or other nominee, you should follow the instructions on the voting instruction form provided by your bank, broker or other nominee. However, because you are not the stockholder of record, you may not vote your shares at the special meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.
Q:
May I attend the special meeting and vote at the special meeting?
A:
Yes. You may attend the special meeting via a live interactive webcast on the internet at https://www.virtualshareholdermeeting.com/HCP2024SM. You will be able to listen to the special meeting live and vote online. The special meeting will begin at 8:00 a.m., Pacific Time, on Monday, July 15, 2024. Online check-in will begin a few minutes prior to the special meeting. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares of our common stock). As the special meeting is virtual, there will be no physical meeting location.
Even if you plan to attend the special meeting, to ensure that your shares will be represented at the special meeting, we encourage you to sign, date and return the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend the special meeting and vote at the special meeting, your vote will revoke any proxy previously submitted.
If, as of the record date, you are a beneficial owner of shares held in “street name,” you may not vote your shares at the special meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting. Otherwise, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided by your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting or be voted at the special meeting, and, if a quorum is present, that will have the same effect as voting “AGAINST” the proposal to adopt the merger agreement.
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Q:
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
A:
If your shares of our common stock are registered directly in your name with our transfer agent, Equiniti Trust Company, LLC, you are considered, with respect to those shares, to be the “stockholder of record.” If you are a stockholder of record, this proxy statement and your proxy card have been sent directly to you by or on behalf of HashiCorp. As a stockholder of record, you may attend the special meeting and vote your shares at the special meeting using the control number on the enclosed proxy card. You may also vote by proxy, which involves granting your voting rights to a third party as described on the enclosed proxy card.
If your shares of our common stock are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of our common stock held in “street name.” If you are a beneficial owner of shares of our common stock held in “street name,” this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the special meeting. However, because you are not the stockholder of record, you may not vote your shares at the special meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.
Q:
If my broker holds my shares in “street name,” will my bank, broker or other nominee automatically vote my shares for me?
A:
No. Your bank, broker or other nominee is only permitted to vote your shares of our common stock on any proposal currently scheduled to be considered at the special meeting if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your shares of our common stock. Without your instructions, your shares will not be counted for the purpose of obtaining a quorum and your shares will not be voted on any of the proposals, which will have the same effect as if you voted “AGAINST” the proposal to adopt the merger agreement, but, assuming a quorum is present, will have no effect on the outcome of the other proposals being considered at the special meeting.
Q:
What is a proxy?
A:
A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of our common stock. The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of our common stock is called a “proxy card.” You may follow the instructions on the enclosed proxy card to designate a proxy by telephone or by the internet, or by signing, dating and returning the enclosed proxy card. The HashiCorp Board has designated David McJannet, Navam Welihinda and Paul Warenski, each with full powers of substitution, as proxy holders for the special meeting.
Q:
If a stockholder gives a proxy, how are the shares voted?
A:
Regardless of the method you choose to grant your proxy, the individuals named on the enclosed proxy card will vote your shares in the way that you direct.
If you sign, date and return your proxy card but do not mark the boxes showing how your shares should be voted on a matter, or if you do not indicate how you wish to vote when designating a proxy by telephone or by the internet, the shares represented by your properly authorized proxy will be voted as recommended by the HashiCorp Board with respect to that matter. This means that, as applicable, they will be voted: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (3) “FOR” any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Q:
Why did HashiCorp choose to hold a virtual special meeting?
A:
The HashiCorp Board decided to hold the special meeting virtually in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location
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around the world, at no cost. However, you will bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies. We believe this is the right choice for a company with a global footprint. A virtual special meeting makes it possible for more stockholders (regardless of size, resources or physical location) to have direct access to information, while saving us and our stockholders time and money. We also believe that the online tools that we have selected will increase stockholder communication. We have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication.
Q:
May I change my vote after I have mailed my signed and dated proxy card?
A:
Yes. If you are a stockholder of record entitled to vote at the special meeting, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by:
signing another proxy card with a later date and returning it to us prior to the special meeting;
submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy;
delivering a written notice of revocation to our Corporate Secretary; or
attending the special meeting and voting at the special meeting using the control number on the enclosed proxy card.
If you hold your shares in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.
Q:
What vote is required to approve the proposal to adopt the merger agreement?
A:
The affirmative vote of a majority of the voting power of all issued and outstanding shares of our common stock entitled to vote (voting together as a single class) is required to adopt the merger agreement.
The failure of any stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) attend and vote at the special meeting will, in each case, have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement. Abstentions will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.
Q:
What vote is required to approve (1) the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (2) any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting?
A:
Approval of the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger requires the affirmative vote of a majority of the voting power of the shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
Approval of any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting requires the affirmative vote of a majority of the voting power of the shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
The failure of any stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) vote at the special meeting will not have any effect on the outcome of either of the proposals described above, except to the extent that such failure affects obtaining a quorum at the meeting. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee
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how to vote your shares will not have any effect on these proposals, except to the extent that such failure affects obtaining a quorum at the meeting. In all cases, abstentions will not have any effect on these proposals.
Q:
Are any stockholders obligated to vote in a certain way?
A:
Yes. Simultaneously with the execution of the merger agreement, certain stockholders of HashiCorp entered into the voting agreement. As of the record date, these stockholders beneficially owned, in the aggregate, 3,441,992 shares of our Class A common stock and 36,274,679 shares of our Class B common stock, representing a total of 366,188,782 votes, or approximately 57 percent of the voting power of all of the shares of our common stock outstanding as of the record date and entitled to vote at the special meeting.
Pursuant to the voting agreement, the applicable stockholders have agreed, among other things, to vote their shares of our common stock (1) in favor of the adoption of the merger agreement and the transactions contemplated thereby; and (2) in the manner specified in the voting agreement on certain other matters. However, if the HashiCorp Board has made an adverse recommendation change in compliance with the terms of the merger agreement, then the voting agreement only obligates these stockholders to vote an aggregate of 35 percent of the voting power of the outstanding shares of our common stock in the manner specified in the voting agreement. The voting agreement also contains customary restrictions on the transfer of shares of our common stock held by these stockholders, subject to certain exceptions.
Q:
What do I need to do now?
A:
We encourage you to read this proxy statement, the annexes to this proxy statement and the documents that we refer to or incorporate by reference in this proxy statement carefully and in their entirety and consider how the merger affects you.
Then, even if you expect to attend the special meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience), or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card), so that your shares can be voted at the special meeting. If you hold your shares in “street name,” please refer to the voting instruction form provided by your bank, broker or other nominee for information on how to vote your shares. Please do not send your stock certificates with your proxy card. If you attend the special meeting and vote at the special meeting, your vote will revoke any previously submitted proxy.
Q:
How does the HashiCorp Board recommend that I vote?
A:
The HashiCorp Board unanimously recommends that you vote: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (3) “FOR” the proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Q:
What happens if the merger is not completed?
A:
If the merger is not completed for any reason, our stockholders will not receive or be entitled to any payment for their shares of our common stock in connection with the merger. Instead: (1) we will remain an independent public company; (2) our Class A common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act; and (3) we will continue to file periodic reports with the SEC.
In specified circumstances in which the merger agreement is terminated, HashiCorp has agreed to pay IBM (or its designee) a termination fee. For more information, see the section of this proxy statement captioned “The Merger Agreement—Termination of the Merger Agreement and Expenses.”
Q:
What is the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger?
A:
The compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger is certain compensation that is tied to or based on the merger and payable to
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certain of HashiCorp’s named executive officers pursuant to underlying plans and arrangements that are contractual in nature. Compensation that will or may become payable by IBM or its affiliates (including, following the consummation of the merger, the surviving corporation) to HashiCorp’s named executive officers in connection with or following the merger is not subject to this advisory vote. For further information, see the section of this proxy statement captioned “Proposal 2: Approval, on a Non-Binding, Advisory Basis, of Certain Merger-Related Executive Compensation.”
Q:
Why am I being asked to cast a vote to approve the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger?
A:
HashiCorp is required pursuant to Section 14A of the Exchange Act to seek stockholder approval, on a non-binding, advisory basis, of compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger. Approval of the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger is not required to consummate the merger.
Q:
What will happen if HashiCorp’s stockholders do not approve the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger?
A:
Approval of the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger is not a condition to consummation of the merger. This is an advisory vote and will not be binding on HashiCorp or IBM. The underlying plans and arrangements providing for such compensation are contractual in nature and are not, by their terms, subject to stockholder approval.
Accordingly, if the merger agreement is adopted by our stockholders and the merger is consummated, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger will or may be paid to HashiCorp’s named executive officers even if our stockholders do not approve such compensation.
Q:
Should I send in my stock certificates now?
A:
No. After the merger is completed, any holders of physical stock certificates will receive a letter of transmittal containing instructions for how to send your stock certificates to the paying agent in order to receive the appropriate cash payment for the shares of our common stock represented by your stock certificates. Unless you are seeking appraisal, you should use the letter of transmittal to exchange your stock certificates for the cash payment to which you are entitled. Please do not send your stock certificates with your proxy card.
If you hold your shares of our common stock in book-entry form, you will not receive a letter of transmittal. Instead, the paying agent will pay you the appropriate portion of the merger consideration in a process that is expected to be automatic to you.
Q:
What happens if I sell or transfer my shares of common stock after the record date but before the special meeting?
A:
The record date for the special meeting is earlier than the date of the special meeting and the expected closing date of the merger. If you sell or transfer your shares of our common stock after the record date but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or transfer your shares of our common stock and each of you notifies HashiCorp in writing of such special arrangements, you will transfer the right to receive an amount in cash equal to the per share price with respect to such shares, if the merger is completed, to the person to whom you sell or transfer your shares, but you will retain your right to vote those shares at the special meeting. Even if you sell or transfer your shares of our common stock after the record date, we encourage you to sign, date and return the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card).
Q:
What should I do if I receive more than one set of voting materials?
A:
Please sign, date and return (or grant your proxy electronically over the internet or by telephone for) each proxy card and voting instruction form that you receive to ensure that all of your shares are voted.
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You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction forms, if your shares are registered differently or are held in more than one account. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please vote each proxy card and voting instruction form that you receive.
Q:
Where can I find the voting results of the special meeting?
A:
If available, HashiCorp may announce preliminary voting results at the conclusion of the special meeting. HashiCorp intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the special meeting. All reports that HashiCorp files with the SEC are publicly available when filed. For more information, see the section of this proxy statement captioned “Where You Can Find More Information.”
Q:
Do any of HashiCorp’s directors or officers have interests in the merger that may differ from those of HashiCorp stockholders generally?
A:
Yes. In considering the recommendation of the HashiCorp Board with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of our stockholders generally. The HashiCorp Board was aware of and considered these interests to the extent that they existed at the time, among other matters, in (1) evaluating and negotiating the merger agreement; (2) approving the merger agreement and the merger; and (3) unanimously recommending that the merger agreement be adopted by our stockholders. For more information, see the section of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger.”
Q:
Who can help answer my questions?
A:
If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of the accompanying proxy statement or need help submitting your proxy or voting your shares of our common stock, please contact our proxy solicitor:

Innisfree M&A Incorporated
501 Madison Avenue, 20th floor
New York, New York 10022
Stockholders may call toll free: (877) 750-8240
Banks and Brokers may call collect: (212) 750-5833
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FORWARD-LOOKING STATEMENTS
This proxy statement, the documents to which we refer you in this proxy statement and the information included in oral statements or other written statements made or to be made by us or on HashiCorp’s behalf may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbor created by such sections and other applicable laws. Such forward-looking statements include: (1) statements relating to the merger, including the expected timing of the closing of the merger; (2) considerations taken into account by the HashiCorp Board in approving the merger; (3) the value of the merger to our stockholders; and (4) expectations for us following the closing of the merger or termination of the merger agreement. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “might,” “ongoing” or similar expressions and the negatives of those terms. These forward-looking statements are based on HashiCorp management’s beliefs and assumptions and on information currently available. There can be no assurance that the merger will in fact be consummated.
These forward-looking statements involve risks and uncertainties, and if any of these risks or uncertainties materialize, or if any of HashiCorp’s assumptions prove incorrect, HashiCorp’s actual results could differ materially from the results expressed or implied by these forward-looking statements. These risks and uncertainties include those associated with:
the possibility that the conditions to the closing of the merger are not satisfied (or waived), including the risk that required approvals from our stockholders for the merger or required regulatory approvals to consummate the merger are not obtained, on a timely basis or at all;
the occurrence of any event, change or other circumstance that could give rise to the right to terminate the merger agreement, including in circumstances requiring us to pay a termination fee;
uncertainties as to the timing of the consummation of the merger and the ability of each party to consummate the merger;
the nature, cost and outcome of any legal proceeding that may be instituted against us and others relating to the merger;
global economic volatility, macroeconomic political, legislative, and regulatory developments, geopolitical conflict or competitive pressures, or changes in such conditions, negatively affecting our markets, customers, business, operations and financial performance;
the effect of the announcement or pendency of the merger on our business partners or other business relationships, customers, operating results and business generally, and the response of competitors to the merger;
possible disruption related to the merger to our ongoing business operations and opportunities, including risks related to the loss of customers and the diversion of the time and attention of HashiCorp management or employees during the pendency of the merger;
risks that the pendency of the merger affects our current operations or our ability to retain or recruit employees;
the amount of the costs, fees, expenses and charges related to the merger agreement or the merger;
the risk that our stock price may fluctuate during the pendency of the merger and may decline significantly if the merger is not completed on the terms reflected in the merger agreement, or at all;
the restraints on our ability to solicit other acquisition proposals from third parties during the pendency of the merger;
the reality that we will forgo the opportunity to realize the potential long-term value of the successful execution of HashiCorp’s current strategy as an independent company if the merger is completed; and
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other risks and uncertainties detailed in the periodic reports that we file with the SEC, including our most recent Annual Report on Form 10-K filed with the SEC on March 21, 2024, or our Quarterly Report on Form 10-Q filed with the SEC on May 30, 2024.
All forward-looking statements contained or referred to in this proxy statement are based on information available to us as of the date of this proxy statement, and we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date of this proxy statement, except as required by law. We expressly qualify in their entirety all forward-looking statements attributable to either us or any person acting on our behalf by the cautionary statements contained or referred to in this proxy statement.
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THE SPECIAL MEETING
Date, Time and Place
We will hold the special meeting on July 15, 2024, at 8:00 a.m., Pacific Time. You may attend the special meeting via a live interactive webcast on the internet at https://www.virtualshareholdermeeting.com/HCP2024SM. You will be able to listen to the special meeting live and vote online. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares). We believe that a virtual meeting provides expanded access, improved communication and cost savings for our stockholders.
If you encounter technical difficulties accessing the special meeting or during the special meeting, a support line will be available on the login page of the special meeting website.
Purpose of the Special Meeting
At the special meeting, we will ask stockholders to vote on the following proposals:
Proposal 1: to adopt the merger agreement;
Proposal 2: to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and
Proposal 3: to approve any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Record Date; Shares Entitled to Vote
You are entitled to vote at the special meeting if you owned shares of our Class A common stock or Class B common stock as of the close of business on the record date.
As of the close of business on the record date, there were 152,466,678 shares of our Class A common stock outstanding and entitled to vote at the special meeting. For each share of our Class A common stock that you owned as of the close of business on the record date, you will have one vote on each matter submitted for a vote at the special meeting. As of the close of business on the record date, there were 48,596,759 shares of our Class B common stock outstanding and entitled to vote at the special meeting. For each share of our Class B common stock that you owned as of the close of business on the record date, you will have 10 votes on each matter submitted for a vote at the special meeting.
In the aggregate, 201,063,437 shares of our common stock are outstanding and entitled to vote at the special meeting, representing a total of 638,434,268 votes.
A list of our stockholders entitled to vote at the special meeting will be available in our principal executive offices located at 101 2nd Street, Suite 700, San Francisco, California 94105 during regular business hours for a period of 10 days ending on the day before the special meeting.
Quorum
A quorum is the minimum number of shares (or holders of shares) required to be present at the special meeting for it to be properly held under our bylaws and the DGCL. The holders of a majority of the voting power of the shares of our common stock issued and outstanding and entitled to vote as of the record date, present in person or represented by proxy, will constitute a quorum at the special meeting.
Attending the Special Meeting
The special meeting will begin at 8:00 a.m., Pacific Time, on Monday, July 15, 2024. Online check-in will begin a few minutes prior to the special meeting. We encourage you to access the meeting prior to the start time. As the special meeting is virtual, there will be no physical meeting location.
To attend the special meeting, log in at https://www.virtualshareholdermeeting.com/HCP2024SM. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares). If you encounter technical difficulties accessing the special meeting or during the special meeting, a support line will be available on the login page of the special meeting website.
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Once online access to the special meeting is open, stockholders may submit questions pertinent to special meeting matters through the special meeting website. You may need the control number found on your proxy card or voting instruction form in order to submit questions. Questions pertinent to special meeting matters will be answered during the meeting, subject to time constraints and any rules of conduct adopted with respect to the special meeting.
Vote Required; Abstentions and Broker Non-Votes
Approval of the proposal to adopt the merger agreement requires the affirmative vote of a majority of the voting power of all issued and outstanding shares of our common stock entitled to vote (voting together as a single class). Adoption of the merger agreement by our stockholders is a condition to the closing of the merger.
Approval, on a non-binding, advisory basis, of the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger requires the affirmative vote of a majority of the voting power of the shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
Approval of any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting requires the affirmative vote of a majority of the voting power of the shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
If a stockholder abstains from voting, that abstention will have the same effect as if the stockholder voted “AGAINST” the proposal to adopt the merger agreement, but will have no effect on the outcome of the other proposals being considered at the special meeting, except to the extent that such failure affects obtaining a quorum at the meeting.
A “broker non-vote” generally occurs when a bank, broker or other nominee holding shares on your behalf does not vote on a proposal because the bank, broker or other nominee has not received your voting instructions and lacks discretionary power to vote your shares of our common stock. We do not expect any broker non-votes at the special meeting, but if any are received, they will be counted for purposes of determining whether a quorum is present. Each broker non-vote will be counted as a vote “AGAINST” the proposal to adopt the merger agreement, but, assuming a quorum is present, will have no effect on the outcome of the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger or any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Shares Held by HashiCorp’s Directors and Executive Officers
As of the record date, HashiCorp’s directors and executive officers and certain of their affiliates that hold shares of our common stock beneficially owned and were entitled to vote, in the aggregate, 3,776,939 shares of our Class A common stock and 36,486,507 shares of our Class B common stock, representing approximately 58 percent of the voting power of all of the shares of our common stock outstanding and entitled to vote at the special meeting.
As of the date of this proxy statement, HashiCorp has not been informed that any of our directors or such affiliates intend to vote all of their shares of our common stock other than: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (3) “FOR” any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Subject to certain exceptions, each of David McJannet, Armon Dadgar and Glenn Solomon, as well as certain of their affiliated entities, and investment funds affiliated with Notable Capital (formerly known as GGV Capital) is contractually obligated to vote in favor of the adoption of the merger agreement pursuant to the terms and conditions of the voting agreement. As of the record date, these stockholders beneficially owned, in the aggregate, 3,441,992 shares of our Class A common stock and 36,274,679 shares of our Class B common stock,
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representing a total of 366,188,782 votes, or approximately 57 percent of the voting power of all of the shares of our common stock outstanding as of the record date and entitled to vote at the special meeting. For more information on the voting agreement, see the section of this proxy statement captioned “The Merger—The Voting Agreement.”
Voting of Proxies
If your shares are registered in your name with HashiCorp’s transfer agent, Equiniti Trust Company, LLC, you may vote your shares by returning a signed and dated proxy card (a prepaid reply envelope is provided for your convenience), or you may vote at the special meeting using the control number located on the enclosed proxy card. Additionally, you may grant a proxy electronically over the internet or by telephone by following the instructions on your proxy card. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the internet or by telephone.
If you attend the special meeting and wish to vote at the special meeting, you will need the control number located on the enclosed proxy card. Beneficial owners of shares held in “street name” will also need to present proof of ownership of shares of our common stock (such as a bank or brokerage account statement) and must also provide a “legal proxy” from their bank, broker or other nominee in order to vote at the special meeting. You are encouraged to vote by proxy even if you plan to attend the special meeting. If you attend the special meeting and vote at the special meeting, your vote will revoke any previously submitted proxy.
All shares represented by properly signed and dated proxies (or proxies granted electronically over the internet or by telephone) will, if received before the special meeting, be voted at the special meeting in accordance with the instructions of the stockholder. Properly signed and dated proxies (or proxies granted electronically over the internet or by telephone) that do not contain voting instructions will be voted: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (3) “FOR” any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
If your shares are held in “street name” through a bank, broker or other nominee, you may vote by completing and returning the voting instruction form provided by your bank, broker or other nominee. If available from your bank, broker or other nominee, you may vote over the internet or telephone through your bank, broker or other nominee by following the instructions on the voting instruction form provided by your bank, broker or other nominee. You may also attend the special meeting and vote at the special meeting if you have a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting. If your shares are held in “street name” and you do not (1) return the voting instruction form provided by your bank, broker or other nominee; (2) vote over the internet or by telephone through your bank, broker or other nominee; or (3) attend the special meeting and vote at the special meeting with a “legal proxy” from your bank, broker or other nominee, it will, in each case, have the same effect as if you voted “AGAINST” the proposal to adopt the merger agreement. It will not, however, have any effect on the outcome of the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger or any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Revocability of Proxies
If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by:
signing another proxy card with a later date and returning it to us prior to the special meeting;
submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy;
delivering a written notice of revocation to our Corporate Secretary; or
attending the special meeting and voting at the special meeting using the control number on the enclosed proxy card.
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If you have submitted a proxy, your attendance at the special meeting, in the absence of voting at the special meeting or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.
If you hold your shares of our common stock in “street name” through a bank, broker or other nominee, you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.
Any adjournment, postponement or other delay of the special meeting, including for the purpose of soliciting additional proxies in accordance with the merger agreement, will allow our stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting.
Recommendation of the HashiCorp Board
The HashiCorp Board, after considering various factors described in the section of this proxy statement captioned “The Merger—Recommendation of the HashiCorp Board and Reasons for the Merger,” has unanimously: (1) approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement and; (2) declared that it is in the best interests of HashiCorp and its stockholders to enter into the merger agreement and consummate the merger and the other transactions contemplated by the merger agreement on the terms and subject to the conditions set forth in the merger agreement.
The HashiCorp Board unanimously recommends that you vote: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (3) “FOR” any proposal to adjourn the special meeting, from time to time, to a later date or dates, including if necessary or appropriate, to solicit additional proxies if there are insufficient votes.
Adjournment
In addition to (1) the proposal to adopt the merger agreement and (2) the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger, our stockholders are being asked to approve any proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies or votes if there are insufficient votes to adopt the merger agreement at the time of the special meeting. If a quorum is not present, then either (1) the chairperson of the special meeting or (2) our stockholders entitled to vote at the special meeting, present in person or represented by proxy, will have power to adjourn the special meeting from time to time, without notice other than announcement at the special meeting, until a quorum is present or represented. The chairperson may also adjourn the special meeting to another place, if any, date or time, whether or not a quorum is present, regardless of the outcome of the vote on any proposal to adjourn the special meeting. In addition, the special meeting could be postponed before it commences, subject to the terms of the merger agreement. If the special meeting is adjourned or postponed, our stockholders who have already submitted their proxies will be able to revoke them at any time before they are voted at the special meeting.
Solicitation of Proxies
The expense of soliciting proxies will be borne by HashiCorp. We have retained Innisfree M&A Incorporated, a professional proxy solicitation firm, to assist in the solicitation of proxies and provide related advice and informational support during the solicitation process, for a fee of up to $30,000 plus reasonable out-of-pocket expenses. Generally, we will indemnify this firm against losses arising out of its provision of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of shares of our common stock for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by HashiCorp’s directors, officers and employees, personally or by telephone, mail, email, fax or over the internet. No additional compensation will be paid to such directors, officers and employees for such services.
Anticipated Date of Completion of the Merger
We currently expect to complete the merger by the end of 2024. However, the exact timing of completion of the merger, if at all, cannot be predicted because the merger is subject to the closing conditions specified in the merger agreement, many of which are outside of our control.
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Appraisal Rights
If the merger is consummated, our stockholders (including beneficial owners of shares of our common stock) who (1) do not vote in favor of the proposal to adopt the merger agreement; (2) continuously hold their shares of our common stock through the effective time; (3) properly perfect appraisal of their applicable shares of our common stock; (4) meet certain other conditions and statutory requirements described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares of our common stock in connection with the merger under Section 262 if certain conditions set forth in Section 262(g) of the DGCL are satisfied. This means that such persons will be entitled to seek appraisal of their shares of our common stock by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of our common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown or as otherwise provided in Section 262) interest, if any, on the amount determined by the Delaware Court of Chancery to be the fair value from the effective date of the merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation makes a voluntary cash payment to each person seeking appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares of our common stock as determined by the Delaware Court of Chancery; and (2) interest accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, persons who wish to seek appraisal of their shares of our common stock are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.
Persons considering seeking appraisal should be aware that the fair value of shares of our common stock as determined pursuant to Section 262 could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares of our common stock.
For information on exercising appraisal rights, see the section of this proxy statement captioned “The Merger—Appraisal Rights.”
Other Matters
At this time, we know of no other matters to be voted on at the special meeting. If any other matters properly come before the special meeting and you deliver a proxy to us, your shares of our common stock will be voted in accordance with the discretion of the appointed proxy holders, with full power of substitution and re-substitution.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on July 15, 2024
This proxy statement is available on the “SEC Filings” section of HashiCorp’s website located at https://ir.hashicorp.com/. The information included on HashiCorp’s website is not incorporated by reference into this proxy statement.
Householding of Special Meeting Materials
We have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders who have the same address and last name will receive only one copy of this proxy statement unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces printing costs, postage fees and the use of natural resources. Each stockholder who participates in householding will continue to be able to access or receive a separate proxy card. If you wish to receive a separate set of HashiCorp’s disclosure documents at this time, please notify us by sending a written request to HashiCorp, Inc., 101 Second Street, Suite 700, San Francisco, California 94105, Attn: Corporate Secretary, or by telephone at (415) 301-3250.
If you are a stockholder who has multiple accounts in your name or you share an address with other stockholders and would like to receive a single set of HashiCorp’s disclosure documents for your household, you may notify
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your broker, if your shares are held in a brokerage account, or you may contact HashiCorp’s Corporate Secretary using the contact method above, if you hold registered shares.
Questions and Additional Information
If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of this proxy statement or need help submitting your proxy or voting your shares of our common stock, please contact our proxy solicitor at:

Innisfree M&A Incorporated
501 Madison Avenue, 20th floor
New York, New York 10022
Stockholders may call toll free: (877) 750-8240
Banks and Brokers may call collect: (212) 750-5833
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THE MERGER
The rights and obligations of the parties to the merger agreement are governed by the specific terms and conditions of the merger agreement and not by any summary or other information provided in this proxy statement. Therefore, this discussion of the merger is qualified in its entirety by reference to the merger agreement, a copy of which is attached as Annex A to this proxy statement and incorporated into this proxy statement by reference. You should read the entire merger agreement carefully as it is the legal document that governs the merger.
Parties Involved in the Merger
HashiCorp
Incorporated in 2013, HashiCorp is a leading provider of enterprise cloud adoption software and services. Our products aim to provide consistent workflows and a standardized approach to automating the critical processes involved in delivering applications in the cloud: infrastructure provisioning, security, networking and application deployment.
Our Class A common stock is listed on Nasdaq under the symbol “HCP.” Our corporate headquarters are located at 101 Second Street, Suite 700, San Francisco, California 94105, and our telephone number is (415) 301-3227.
IBM
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. IBM helps clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to its clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.
IBM is a New York corporation and was formed in 1911 as the Computing-Tabulating-Recording Company. IBM’s common stock, par value $0.20 per share, is currently listed on the NYSE, the NYSE Chicago and outside the United States, in each case under the symbol “IBM.” IBM’s corporate headquarters are located at 1 New Orchard Road, Armonk, New York 10504, and its telephone number is (914) 499-1900.
Additional information about IBM and its subsidiaries can be found on its website: www.IBM.com. The information provided or accessible through IBM’s website is not part of, or incorporated by reference in, this proxy statement.
McCloud Merger Sub
Sub is a Delaware corporation and wholly owned subsidiary of IBM, formed on April 16, 2024, solely for the purpose of engaging in the merger and the transactions contemplated by the merger agreement and has not engaged in any business activities other than those incident to its formation and in connection with the merger and transactions contemplated by the merger agreement. Upon completion of the merger, Sub will merge with and into HashiCorp and Sub will cease to exist.
Sub’s corporate headquarters are located at c/o International Business Machines Corporation, 1 New Orchard Road, Armonk, New York 10504, and its telephone number is (914) 499-1900.
Effect of the Merger
Subject to the terms and conditions of the merger agreement and in accordance with the DGCL, Sub will merge with and into HashiCorp. As a result, the separate corporate existence of Sub will cease and HashiCorp will survive the merger and continue to exist after the merger as a direct, wholly owned subsidiary of IBM.
The merger will become effective at such date and time as the certificate of merger is duly filed with the Delaware Secretary of State or at a subsequent date and time that IBM and HashiCorp agree and specify in the certificate of merger.
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Effect on HashiCorp if the Merger is Not Completed
If the merger is not completed for any reason, our stockholders will not receive or be entitled to any payment for their shares of our common stock in connection with the merger. Instead:
HashiCorp will remain an independent public company;
our Class A common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act; and
we will continue to file periodic reports with the SEC.
In addition, if the merger is not completed, we expect that:
HashiCorp’s management will continue to operate the business as it is currently being operated; and
our stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including risks related to the highly competitive industry in which HashiCorp operates and adverse economic conditions.
Furthermore, if the merger is not completed, and depending on the circumstances that cause the merger not to be completed, there can be no assurance as to the price at which our Class A common stock may trade, and the price of our Class A common stock may decline significantly.
Accordingly, there can be no assurance as to the effect of the merger not being completed on the future value of your shares of our common stock. If the merger is not completed, the HashiCorp Board will continue to evaluate and review, among other things, HashiCorp’s business, operations, strategic direction and capitalization, and will make whatever changes it deems appropriate. If the merger is not completed for any reason, HashiCorp’s business, prospects or results of operation may be adversely impacted.
In specified circumstances in which the merger agreement is terminated, HashiCorp has agreed to pay IBM a termination fee. For more information, see the section of this proxy statement captioned “The Merger Agreement—Termination of the Merger Agreement and Expenses—Termination Fee.”
Effect of the Merger on Our Common Stock
The merger agreement generally provides that each share of our common stock issued and outstanding immediately prior to the effective time (subject to certain limited exceptions set forth in the merger agreement) will be automatically canceled and converted into the right to receive, subject to the terms and conditions contained in the merger agreement, an amount in cash per share, without interest, equal to the per share price subject to applicable withholding taxes. We do not have any preferred stock outstanding.
Dissenting shares will be treated as described under “The Merger—Appraisal Rights.” All shares of our common stock owned directly by HashiCorp, including as treasury stock, or owned of record by IBM or Sub will automatically be canceled and cease to exist, with no payment being made with respect thereto. All shares of our common stock owned by any direct or indirect wholly owned subsidiary of HashiCorp or IBM (other than Sub) immediately prior to the effective time will be converted into such number of fully paid and nonassessable shares of common stock, par value $0.001 per share, of the surviving corporation, such that each such direct or indirect wholly owned subsidiary that owned capital stock in HashiCorp immediately prior to the effective time will own the same percentage of the outstanding capital stock of the surviving corporation immediately following the effective time.
Prior to the effective time, IBM will designate a bank or trust company reasonably acceptable to HashiCorp (which we refer to as the “paying agent”) for the payment of the merger consideration to holders of our common stock upon surrender of their certificates. IBM will deposit with the paying agent sufficient funds at or prior to the closing of the merger to pay the aggregate merger consideration payable to our stockholders in the merger.
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As soon as reasonably practicable, and within three business days after the closing date of the merger, IBM will cause the paying agent to mail to each holder of record of a certificate whose shares of our common stock were converted into the right to receive the merger consideration:
a letter of transmittal; and
instructions for use in effecting the surrender of the holder’s certificate(s) in exchange for the merger consideration.
Holders of shares of our common stock evidenced in book-entry form will not be required to deliver a certificate or an executed letter of transmittal to receive the merger consideration, and will be deemed to have surrendered their shares upon receipt of an “agent’s message” or other customary evidence at the effective time.
For more information, see the section of this proxy statement captioned “The Merger Agreement—Merger Consideration—Exchange Procedures.”
Background of the Merger
The following chronology summarizes the key meetings and events that led to the signing of the merger agreement. This chronology does not purport to catalogue every conversation of or among the HashiCorp Board, its committees, its representatives or other parties.
The HashiCorp Board regularly evaluates HashiCorp’s strategic direction and ongoing business plans with a view toward strengthening HashiCorp’s business and enhancing stockholder value. As part of this evaluation, the HashiCorp Board has, from time to time, considered a variety of strategic alternatives. These have included, among others, (1) the continuation of, and potential improvements to, HashiCorp’s current business plan, with HashiCorp remaining an independent entity; (2) the continued investment in, and development of, new products and services; (3) capital return activities; (4) potential expansion opportunities through investments, acquisitions, partnerships or other commercial relationships; and (5) business combinations, acquisitions and other financial and strategic alternatives, including the sale of HashiCorp.
For the purpose of discussing HashiCorp’s business and industry, HashiCorp management regularly holds introductory and informational meetings with actual and potential investors in HashiCorp, as well as with industry participants that may have an interest in engaging in potential commercial or strategic transactions with HashiCorp. HashiCorp management regularly updates the HashiCorp Board with respect to these meetings.
On May 23, 2023, the HashiCorp Board met, with members of HashiCorp management in attendance. To assist the HashiCorp Board with overseeing the acquisition of BluBracket, Inc. and evaluating other potential acquisitions and corporate development opportunities by HashiCorp, the HashiCorp Board established a committee of the HashiCorp Board (which we refer to as the “M&A Committee”) to advise and oversee HashiCorp management with respect to these matters. The M&A Committee was not established to oversee the exploration of a potential sale of HashiCorp. The HashiCorp Board appointed Todd Ford, Glenn Solomon and David Henshall to the M&A Committee, with Mr. Ford serving as chairman. The HashiCorp Board did not provide for the payment of any new or additional compensation to the members of the M&A Committee for their service on the M&A Committee. Following its establishment, the M&A Committee met from time to time as needed to fulfill its mandate.
On October 29, 2023, the HashiCorp Board met, with representatives of Wilson Sonsini Goodrich & Rosati, Professional Corporation, HashiCorp’s outside legal counsel (which we refer to as “Wilson Sonsini”), in attendance. The HashiCorp management members of the HashiCorp Board reviewed HashiCorp’s recent and prospective operating and trading performance. The HashiCorp Board discussed various challenges facing HashiCorp’s business, including (1) the current sales environment; (2) constraints on HashiCorp’s ability to make investments in product development, sales functions and other areas at levels that the HashiCorp Board believed would be sufficient to advance HashiCorp’s business and remain competitive in the medium and long term, while also achieving HashiCorp’s public commitment to transition to profitability in the near term; and (3) increased competition from other companies in HashiCorp’s industry with greater scale and resources, greater flexibility to invest in product development while maintaining profitability, and established relationships with our potential and existing customers. The HashiCorp Board discussed ways to address these challenges, including potential strategic, organizational and personnel changes. The HashiCorp Board also discussed stock market and investor perspectives on HashiCorp, including in regard to HashiCorp’s public commitment to transition to profitability in
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the near term. The HashiCorp Board discussed the possibility of exploring strategic alternatives for HashiCorp, including: (1) a sale of HashiCorp; (2) a share repurchase program; and (3) other organizational changes to reduce operating expenses and transition to profitability. As part of this discussion, the HashiCorp Board considered, on a preliminary basis, the potential counterparties that would likely have the greatest interest in pursuing an acquisition of HashiCorp, including two strategic counterparties (which we refer to as “Party A” and “Party B,” respectively) that had maintained regular commercial dialogue with HashiCorp. The HashiCorp Board was aware that (1) Party A had, from time to time, expressed an interest in a closer collaboration with HashiCorp; and (2) Party B had, from time to time, expressed a non-specific interest in exploring a strategic transaction involving HashiCorp. The HashiCorp Board concluded that it was appropriate to engage in a formalized review of strategic alternatives, including to evaluate the possibility of engaging in a “market check” process to gauge interest from a selected group of counterparties concerning their interest in acquiring HashiCorp. In furtherance of this review and the HashiCorp Board’s consideration of a potential broader “market check” process, the HashiCorp Board authorized HashiCorp management to contact Party A and Party B to seek to assess, on a preliminary basis, their interest in pursuing a potential strategic transaction with HashiCorp. These counterparties were selected based on the HashiCorp Board’s view that they would be the most likely to be interested in acquiring HashiCorp. The HashiCorp Board also determined to engage a financial advisor to provide advice and assistance to the HashiCorp Board in connection with a review of strategic alternatives. After discussing various candidates, the HashiCorp Board directed HashiCorp management to contact Qatalyst Partners, LP (which we refer to as “Qatalyst Partners”) to determine if Qatalyst Partners was available to serve as financial advisor to HashiCorp and, if so, to negotiate engagement terms. The members of the HashiCorp Board were well acquainted with Qatalyst Partners, and selected Qatalyst Partners based on its qualifications, expertise and reputation, as well as its knowledge of HashiCorp’s business and the industry in which it operates. The HashiCorp Board determined that the M&A Committee would oversee the review of strategic alternatives in light of (1) the potentially significant workload that would be involved in any decision to evaluate or negotiate a sale of HashiCorp or other strategic alternatives; and (2) the possibility that HashiCorp management and HashiCorp’s advisors would need feedback and direction on relatively short notice. This delegation of responsibility was not a result of any potential or actual conflict of interest of any director or officer of HashiCorp. The HashiCorp Board retained the exclusive power and authority to approve the final decision on pursuing a potential sale of HashiCorp. Other members of the HashiCorp Board, including the management members of the HashiCorp Board, were invited to attend future meetings of the M&A Committee. On October 30, 2023, the first trading day after this meeting, our Class A common stock closed trading at a price of $19.65 per share.
In early November 2023, representatives of two financial sponsors separately contacted David McJannet, HashiCorp’s Chief Executive Officer and Chairman, on an unsolicited basis, to express their interest in learning more about HashiCorp’s business.
On November 15, 2023, Mr. McJannet spoke with the Chief Executive Officer of Party A. During this conversation, Mr. McJannet stated, on a non-specific basis, that HashiCorp had received unsolicited inbound interest from potential acquirors. Party A’s Chief Executive Officer expressed interest in discussing a potential strategic transaction.
On November 16, 2023, Mr. McJannet spoke with the Chief Executive Officer of Party B. During this conversation, Mr. McJannet stated, on a non-specific basis, that HashiCorp had received interest from potential acquirors. Party B’s Chief Executive Officer expressed interest in discussing a potential strategic transaction.
On November 17, 2023, the M&A Committee met. Also in attendance were Mr. McJannet, Armon Dadgar, HashiCorp’s Chief Technology Officer and a member of the HashiCorp Board, other members of HashiCorp management and representatives of Wilson Sonsini. Mr. McJannet described his discussions with Party A and Party B, as well as the unsolicited contacts in early November 2023 from the two financial sponsors. The M&A Committee discussed the possibility of (1) engaging further Party A and Party B; and (2) engaging a broader “market check” process and contacting additional counterparties to gauge their interest in acquiring HashiCorp. The M&A Committee determined to recommend that the HashiCorp Board approve contacting additional counterparties in light of the preliminary acquisition interest expressed by Party A, Party B and the two financial sponsors. The M&A Committee authorized Mr. McJannet to continue to engage with Party A and Party B to
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further assess each party’s interest in an acquisition of HashiCorp. At the meeting, members of HashiCorp management summarized the terms of the engagement letter being negotiated with Qatalyst Partners, and the M&A Committee directed Wilson Sonsini and HashiCorp management to finalize, and enter into, the engagement letter consistent with the terms discussed at the meeting.
On November 20, 2023, Mr. McJannet spoke with a senior executive of Party A at the suggestion of Party A’s Chief Executive Officer. This senior executive expressed interest in learning more about HashiCorp’s business in the context of evaluating Party A’s interest in a potential acquisition of HashiCorp, and requested that HashiCorp and Party A enter into a confidentiality agreement to facilitate further discussions and due diligence.
Also on November 20, 2023, Mr. McJannet spoke again with the Chief Executive Officer of Party B. Mr. McJannet and Party B’s Chief Executive Officer discussed each company’s product portfolio and made plans to meet during the subsequent week.
On November 27, 2023, as directed by the M&A Committee, HashiCorp entered into an engagement letter with Qatalyst Partners.
On November 28, 2023, the HashiCorp Board met, with members of HashiCorp management and representatives of Wilson Sonsini in attendance. The members of HashiCorp management reviewed HashiCorp’s recent and prospective financial and operating performance, including for HashiCorp’s fourth quarter 2024 and full fiscal year 2024 and 2025. The members of HashiCorp management also discussed challenges facing HashiCorp’s business and industry. Mr. McJannet summarized his discussions with Party A and Party B, as well as the unsolicited contacts in early November 2023 from the two financial sponsors. The members of the M&A Committee provided their recommendation to contact additional counterparties concerning an acquisition of HashiCorp. Various risks of such contacts were identified and discussed, including the potential for public speculation that HashiCorp was pursuing a sale, management and employee distraction and other adverse impacts on HashiCorp’s business. It was noted that a broader process was likely to magnify those risks relative to a more narrow, targeted process that focused on the potential counterparties most likely to be interested in, and capable of executing, an acquisition of HashiCorp. In this regard, the members of the HashiCorp Board considered HashiCorp’s size and financial profile, and the challenges for a financial sponsor to seriously consider an acquisition. Further, it was noted that engagement with multiple financial sponsors was likely to occupy a significant amount of time and attention from HashiCorp management but had a questionable probability of yielding a transaction that would be attractive to the HashiCorp Board. The HashiCorp Board directed HashiCorp management, with the assistance of Qatalyst Partners, to (1) continue to engage with Party A and Party B; (2) contact 10 additional strategic counterparties (including IBM), in addition to Party A and Party B, to assess their interest in an acquisition of HashiCorp, which counterparties were chosen based on the HashiCorp Board’s view of their likely interest in, and capability to execute, an acquisition of HashiCorp; and (3) as appropriate, provide due diligence information to interested counterparties. The HashiCorp Board also met in executive session, without members of HashiCorp management (including without the management members of the HashiCorp Board) in attendance, to discuss these matters.
Between November 28, 2023, and December 8, 2023, members of HashiCorp management and representatives of Qatalyst Partners contacted representatives of the 10 strategic counterparties identified by the HashiCorp Board to discuss their interest in exploring an acquisition of HashiCorp, and continued to engage with Party A and Party B. Five of the 10 additional counterparties declined to engage in discussions regarding an acquisition. IBM and the other remaining four strategic counterparties (which we refer to as “Party C,” “Party D,” “Party E” and “Party F,” respectively) requested additional meetings with HashiCorp management to learn more about HashiCorp’s business and product portfolio. HashiCorp had entered into a confidentiality agreement with Party C prior to HashiCorp’s initial public offering in connection with commercial discussions between the parties, which confidentiality agreement did not include a “standstill,” “don’t ask, don’t waive” or similar restriction limiting the ability of Party C to make a proposal to acquire HashiCorp. HashiCorp did not enter into a confidentiality agreement with Party D as part of its discussions with Party D.
On November 30, 2023, HashiCorp entered into a confidentiality agreement with Party A, which confidentiality agreement did not include a “standstill,” “don’t ask, don’t waive” or similar restriction limiting the ability of Party A to make a proposal to acquire HashiCorp.
On December 1, 2023, members of HashiCorp management met with representatives of Party A to provide an overview of HashiCorp’s business and product portfolio.
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Also on December 1, 2023, members of HashiCorp management met with representatives of Party B to provide an overview of HashiCorp’s business and product portfolio.
On December 4, 2023, HashiCorp entered into a confidentiality agreement with Party E, which confidentiality agreement did not include a “standstill,” “don’t ask, don’t waive” or similar restriction limiting the ability of Party E to make a proposal to acquire HashiCorp.
On December 5, 2023, HashiCorp entered into a confidentiality agreement with Party B, which confidentiality agreement did not include a “standstill,” “don’t ask, don’t waive” or similar restriction limiting the ability of Party B to make a proposal to acquire HashiCorp.
On December 7, 2023, HashiCorp entered into a confidentiality agreement with IBM, which confidentiality agreement did not include a “standstill,” “don’t ask, don’t waive” or similar restriction limiting the ability of IBM to make a proposal to acquire HashiCorp.
On December 8, 2023, members of HashiCorp management met with representatives of Party B for a more detailed discussion of HashiCorp’s product portfolio.
Also on December 8, 2023, members of HashiCorp management met with representatives of Party E to provide an overview of HashiCorp’s business and product portfolio.
On December 12, 2023, representatives of Party E informed representatives of Qatalyst Partners that Party E was not interested in further considering an acquisition of HashiCorp due to concerns about insufficient synergy opportunities and potential dis-synergies.
On December 14, 2023, the M&A Committee met. Also in attendance were Mr. McJannet, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of discussions with potential acquirors of HashiCorp. The M&A Committee discussed next steps with respect to the process and a potential acquisition of HashiCorp. The members of HashiCorp management presented a draft operating and financial plan for HashiCorp for fiscal years 2024 through 2026, as well as sensitivities for an upside scenario that assumed improved sales productivity and operating margins. The M&A Committee discussed the draft plan and upside scenario, including the underlying sales and operating margin assumptions, and requested that HashiCorp management present the draft plan and upside scenario to the HashiCorp Board for further review and discussion. The M&A Committee directed HashiCorp management and Qatalyst Partners to continue to engage with those counterparties still considering an acquisition of HashiCorp and, as appropriate, to continue to provide these parties with due diligence information, including prospective operating and financial plans for HashiCorp. Subsequently, as part of the meetings and diligence of the counterparties still considering an acquisition as described below, IBM, Party A, Party C, Party D, Party F and Party G were provided a draft operating and financial plan for HashiCorp for fiscal years 2024 through 2026 and an upside scenario, in each case, that reflected updates as of the time of such meetings based on trends in HashiCorp’s business and industry. Party B was not provided a draft operating and financial plan for HashiCorp because it did not request detailed information with respect to HashiCorp’s financial performance as part of its due diligence.
Also on December 14, 2023, at Party B’s request, members of HashiCorp management met with representatives of Party B to provide an overview of HashiCorp’s go-to-market strategy. From time to time over the subsequent month, at Party B’s request, members of HashiCorp management met with representatives of Party B to provide additional information with respect to HashiCorp’s product portfolio.
Also on December 14, 2023, members of HashiCorp management met with representatives of IBM to provide an overview of HashiCorp’s business and product portfolio.
On December 18, 2023, Mr. McJannet held an introductory meeting with representatives of one of the financial sponsors that initially contacted HashiCorp in early November 2023. This discussion was general in nature and focused on publicly available information concerning HashiCorp’s business and industry generally. The parties did not discuss a potential strategic transaction involving HashiCorp. HashiCorp did not enter into a confidentiality agreement with this financial sponsor as part of these discussions.
On December 19, 2023, at Party A’s request, members of HashiCorp management met with representatives of Party A for a more detailed discussion of HashiCorp’s product portfolio.
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On December 20, 2023, at IBM’s request, members of HashiCorp management met with representatives of IBM to provide additional information with respect to HashiCorp’s financial performance.
During January 2024, representatives of eight financial sponsors, including the financial sponsor with whom Mr. McJannet met on December 18, 2023, separately contacted members of HashiCorp management and representatives of Qatalyst Partners, on an unsolicited basis, to express a desire to learn more about HashiCorp’s business. None of these financial sponsors submitted a proposal to acquire HashiCorp.
On January 4, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, other members of HashiCorp management and representatives of Wilson Sonsini. Mr. McJannet provided an update on the status of discussions with potential acquirors of HashiCorp, and reviewed with the M&A Committee illustrative next steps. The members of HashiCorp management provided an update on HashiCorp’s fourth quarter 2024 financial and operating performance to date.
On January 9, 2024, HashiCorp entered into a confidentiality agreement with Party F, which confidentiality agreement did not include a “standstill,” “don’t ask, don’t waive” or similar restriction limiting the ability of Party F to make a proposal to acquire HashiCorp.
On January 11, 2024, members of HashiCorp management met with representatives of Party D to provide an overview of HashiCorp’s business and product portfolio.
Also on January 11, 2024, at Party A’s request, members of HashiCorp management met with representatives of Party A to provide additional information with respect to HashiCorp’s financial performance.
On January 19, 2024, members of HashiCorp management met with representatives of Party C to provide an overview of HashiCorp’s business and product portfolio.
On January 23, 2024, the HashiCorp Board met, with members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini in attendance. The members of HashiCorp management reviewed HashiCorp’s recent and prospective financial and operating performance, including HashiCorp’s fourth quarter 2024 performance to date and expectations for the remainder of the fourth quarter and full fiscal year 2024 and 2025. As part of this discussion, the members of HashiCorp management presented a draft long-term operating and financial plan for HashiCorp for fiscal years 2024 through 2029, as well as sensitivities for an upside scenario that assumed improved sales productivity and operating margins. The HashiCorp Board discussed the draft plan and upside scenario, including the underlying sales and operating margin assumptions, as well as business, competitive and industry challenges to achieving the forecasted results. The representatives of Wilson Sonsini reviewed with the members of the HashiCorp Board their fiduciary duties under Delaware law. The representatives of Qatalyst Partners provided an update on the status of discussions with potential acquirors of HashiCorp and noted the separate, unsolicited contacts from financial sponsors. The representatives of Qatalyst Partners reviewed an illustrative timeline and potential next steps with respect to an acquisition of HashiCorp. The representatives of Qatalyst Partners presented preliminary market and valuation perspectives on HashiCorp. As part of its presentation, the representatives of Qatalyst Partners reviewed an illustrative analysis of a “take-private” acquisition of HashiCorp by a financial sponsor, and discussed with the HashiCorp Board the expected challenges for a financial sponsor to execute an acquisition that would yield acceptable returns based on (1) HashiCorp’s financial profile and the size of that acquisition; and (2) the likely difficulties that any financial sponsor would encounter in securing sufficient equity and debt financing for that transaction. Following discussion, the HashiCorp Board (1) directed HashiCorp management and Qatalyst Partners to continue to engage with those strategic counterparties who were still considering an acquisition of HashiCorp; and (2) determined not to engage with financial sponsors based on the belief that such engagement was likely to occupy a significant amount of time and attention from HashiCorp management and could increase the risk of public speculation that HashiCorp was pursuing a sale, but had a low probability of yielding a transaction that would be attractive to the HashiCorp Board. The HashiCorp Board also met in executive session, without members of HashiCorp management (including without the management members of the HashiCorp Board) or representatives of Qatalyst Partners in attendance, to discuss these matters.
On January 26, 2024, representatives of Party D informed representatives of Qatalyst Partners that Party D was not interested in further considering an acquisition of HashiCorp due to a lack of conviction about the merits of the acquisition.
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On January 30, 2024, members of HashiCorp management met with representatives of Party F to provide an overview of HashiCorp’s business and product portfolio.
Also on January 30, 2024, representatives of Party A informed representatives of Qatalyst Partners that Party A was not interested in further considering an acquisition of HashiCorp due to concerns about the size of the acquisition and HashiCorp’s growth profile.
On February 5, 2024, IBM delivered a non-binding written proposal to acquire HashiCorp for $29.00 in cash per share of our common stock (which we refer to as the “Initial IBM Proposal”). As part of the Initial IBM Proposal, IBM requested that HashiCorp agree to negotiate exclusively with IBM with respect to a sale of HashiCorp.
Also on February 5, 2024, representatives of Party F informed representatives of Qatalyst Partners that Party F was not interested in further considering an acquisition of HashiCorp due to competing strategic priorities.
Also on February 5, 2024, a senior executive of a strategic counterparty (which we refer to as “Party G”) contacted Mr. McJannet to discuss a potential strategic partnership. A potential acquisition of HashiCorp was not discussed.
On February 6, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, Susan St. Ledger, HashiCorp’s President, Worldwide Field Operations and a member of the HashiCorp Board, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of discussions with potential acquirors of HashiCorp, including the contact from Party G to Mr. McJannet. The HashiCorp Board discussed the possibility that Party G could be interested in pursuing a potential strategic transaction with HashiCorp. The representatives of Qatalyst Partners presented preliminary financial analyses of the Initial IBM Proposal. The representatives of Wilson Sonsini reviewed with the members of the HashiCorp Board their fiduciary duties under Delaware law. The M&A Committee considered the Initial IBM Proposal in relation to the continued execution of HashiCorp’s business plan as an independent company and the possibility of receiving an acquisition proposal from one or more other potential acquirors. The M&A Committee discussed with HashiCorp management HashiCorp’s recent and prospective operating and financial performance, including planned growth initiatives and the achievability of the long-term operating and financial plan and upside scenarios for HashiCorp reviewed at the meeting of the HashiCorp Board on January 23, 2024. The M&A Committee discussed the expectation that engagement with financial sponsors continued to have a low probability of yielding a transaction that would be attractive to the HashiCorp Board based on the reasons identified at the meeting of the HashiCorp Board on January 23, 2024. The M&A Committee determined to (1) authorize HashiCorp management and Qatalyst Partners to engage with Party G with respect to a potential transaction, if appropriate, and (2) meet again to further discuss the Initial IBM Proposal.
On February 8, 2024, representatives of Party B informed representatives of Qatalyst Partners that Party B was not interested in further considering an acquisition of HashiCorp due to competing strategic priorities.
On February 9, 2024, the M&A Committee met. Also in attendance were Sigal Zarmi, a member of the HashiCorp Board, Messrs. McJannet and Dadgar, Ms. St. Ledger, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of discussions with potential acquirors of HashiCorp. The M&A Committee (1) considered the Initial IBM Proposal in relation to the continued execution of HashiCorp’s business plan as an independent company; and (2) discussed HashiCorp’s recent and prospective operating and financial performance, including expectations regarding HashiCorp’s upcoming announcement of its fourth quarter 2024 results. The M&A Committee considered the possibility of engaging with financial sponsors regarding an acquisition of HashiCorp, and determined not to do so for the reasons previously identified. The M&A Committee instructed Qatalyst Partners to inform IBM that the Initial IBM Proposal was inadequate. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters.
Later on February 9, 2024, representatives of Qatalyst Partners met with representatives of IBM and informed them of the determination of the M&A Committee.
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On February 13, 2024, at IBM’s request, HashiCorp provided IBM with a summary of its preliminary fourth quarter 2024 operating and financial results. In the course of discussions over the subsequent weeks, representatives of IBM indicated that they would revert with additional information on IBM’s interest in a potential transaction following HashiCorp’s public announcement of its fourth quarter results.
On February 14, 2024, at Party G’s request, Mr. McJannet met with a senior executive of Party G to discuss a potential commercial relationship between HashiCorp and Party G. The Party G executive also expressed non-specific interest in a potential strategic transaction between Party G and HashiCorp and requested a follow-up meeting.
On February 16, 2024, representatives of Party C informed representatives of Qatalyst Partners that Party C was not interested in further considering an acquisition of HashiCorp, but was interested in continuing discussions with respect to the parties’ commercial and strategic partnership. Thereafter, HashiCorp did not engage further with Party C concerning an acquisition of HashiCorp.
On February 26, 2024, the M&A Committee received customary relationship disclosures from Qatalyst Partners. After receiving these disclosures, the M&A Committee did not identify any potential or actual conflicts that would affect the ability of Qatalyst Partners to fulfill its responsibilities to the HashiCorp Board.
On February 27, 2024, the HashiCorp Board met, with members of HashiCorp management in attendance. An update on the status of discussions with potential acquirors of HashiCorp was provided. The members of HashiCorp management reviewed HashiCorp’s recent and prospective financial and operating performance, including (1) preliminary results for HashiCorp’s fourth quarter 2024; (2) results for HashiCorp’s first quarter 2025 to date; and (3) expectations for the remainder of the first quarter and full fiscal year 2025. HashiCorp management presented a proposed budget for HashiCorp’s fiscal year 2025. The HashiCorp Board also discussed a proposed share repurchase program. Following discussion, the HashiCorp Board approved HashiCorp’s budget for fiscal year 2025. Subsequently, as part of the diligence of the IBM and Party G, the only counterparties still considering an acquisition at that time, IBM and Party G were provided certain prospective financial information included in HashiCorp’s budget for fiscal year 2025.
On March 5, 2024, the HashiCorp Board approved a share repurchase program for up to $250 million of our Class A common stock.
After the close of trading on March 5, 2024, HashiCorp held its earnings call to (1) report fourth quarter and full year financial results for fiscal year 2024; (2) provide financial guidance for the first quarter and full year for fiscal year 2025; and (3) announce the approval of the share repurchase program. Our Class A common stock closed trading at a price of $26.56 per share on March 6, 2024, the first full trading day following this earnings call.
On March 6, 2024, at Party G’s request, Mr. McJannet met with representatives of Party G to discuss Party G’s interest in exploring a potential strategic transaction with HashiCorp. Mr. McJannet referred the representatives of Party G to Qatalyst Partners for any follow-up.
On March 10, 2024, HashiCorp entered into a confidentiality agreement with Party G. The confidentiality agreement with Party G was negotiated from a draft initially provided by representatives of HashiCorp to Party G and contained customary “standstill” provisions restricting Party G from submitting a proposal with respect to the acquisition of HashiCorp without the prior consent of the HashiCorp Board, which restrictions would terminate upon the occurrence of, among other things, HashiCorp’s execution of a definitive agreement providing for the acquisition of more than 50 percent of the voting power of HashiCorp’s outstanding common stock. This confidentiality agreement did not include “don’t ask, don’t waive” provisions prohibiting Party G from requesting that HashiCorp release Party G from its “standstill” restrictions.
On March 11, 2024, members of HashiCorp management met with representatives of Party G to provide an overview of HashiCorp’s business and product portfolio.
On March 12, 2024, members of HashiCorp management met with representatives of Party G to provide an overview of HashiCorp’s financial performance.
On March 14, 2024, representatives of Party G met with Qatalyst Partners to discuss process and timing with respect to a potential strategic transaction with HashiCorp.
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On March 15, 2024, IBM delivered a revised non-binding written proposal to acquire HashiCorp for $33.50 in cash per share of our common stock (which we refer to as the “First Revised IBM Proposal”). As part of the First Revised IBM Proposal, IBM requested that HashiCorp agree to negotiate exclusively with IBM with respect to a sale of HashiCorp.
Also on March 15, 2024, Bloomberg published an article reporting that HashiCorp was exploring a sale. Our Class A common stock closed trading at a price of $25.74 per share on March 14, 2024, the day prior to the publication of the Bloomberg article.
Over the course of the two weeks following the publication of the Bloomberg article, five financial sponsors, including the two financial sponsors that had initially contacted HashiCorp in early November 2023, and three of the other financial sponsors that had initially contacted HashiCorp in January 2024, separately contacted members of HashiCorp management and the HashiCorp Board, and representatives of Qatalyst Partners, in each case on an unsolicited basis, to express a desire to learn more about HashiCorp’s business. None of these financial sponsors submitted a proposal to acquire HashiCorp.
On March 17, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, Mses. Zarmi and St. Ledger, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of discussions with potential acquirors of HashiCorp, including the separate, unsolicited contacts, following the Bloomberg article, from financial sponsors. By this time, of the 13 strategic counterparties with which HashiCorp had engaged regarding their interest in a transaction with HashiCorp, only IBM and Party G were still considering a transaction. The M&A Committee discussed the expectation that Party G would likely require multiple weeks to consider a transaction with HashiCorp, and that Party G had never undertaken a transaction of comparable scale. The M&A Committee noted that engagement with financial sponsors continued to have a low probability of yielding a transaction that would be attractive to the HashiCorp Board, including for the reasons previously identified. The representatives of Qatalyst Partners presented preliminary financial analyses of the First Revised IBM Proposal. The M&A Committee considered the First Revised IBM Proposal in relation to the continued execution of HashiCorp’s business plan as an independent company and discussed the challenges and risks to achieving the financial results implied by the long-term operating and financial plans for HashiCorp and upside scenario sensitivities previously reviewed by the HashiCorp Board. The M&A Committee determined (1) to make a counterproposal to IBM; (2) to inform Party G that discussions with another potential acquirer were progressing rapidly, with the objective of encouraging Party G to submit a transaction proposal; and (3) not to engage with financial sponsors regarding a potential acquisition of HashiCorp. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters. Following the meeting, after considering further input from representatives of Qatalyst Partners, the M&A Committee authorized Qatalyst Partners to make a counterproposal to IBM for the acquisition of HashiCorp at $37.00 in cash per share of our common stock (which we refer to as the “First Counterproposal”).
Later on March 17, 2024, representatives of Qatalyst Partners delivered the First Counterproposal to representatives of IBM.
On March 18, 2024, representatives of IBM informed representatives of Qatalyst Partners that IBM was not willing to acquire HashiCorp at $37.00 in cash per share of our common stock, but that IBM would be making another proposal to acquire HashiCorp.
On March 19, 2024, IBM delivered a revised non-binding written proposal to acquire HashiCorp for $34.50 in cash per share of our common stock (which we refer to as the “Second Revised IBM Proposal”). As part of the Second Revised IBM Proposal, IBM requested that HashiCorp agree to negotiate exclusively with IBM with respect to a sale of HashiCorp.
On March 20, 2024, representatives of Qatalyst Partners met with representatives of Party G to inform Party G that discussions with another potential acquirer were progressing rapidly. In response, the representatives of Party G stated that Party G required approximately one month to complete its internal analysis to consider its interest in a potential acquisition of HashiCorp and that, as a result, it was unlikely Party G would be able to continue substantive discussions regarding a potential transaction on the required timeline if HashiCorp’s discussions with
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another potential acquirer were progressing rapidly. The representatives of Party G stated that they would contact Qatalyst Partners if Party G was able to accelerate its internal analysis of a transaction. Party G did not subsequently contact Qatalyst Partners in this regard, and HashiCorp and Party G did not engage further concerning an acquisition of HashiCorp thereafter.
Also on March 20, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, Mses. Zarmi and St. Ledger, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of acquisition discussions with IBM and Party G, and noted the unsolicited contacts, following the Bloomberg article, from financial sponsors. Noting the timing requirements of Party G with respect to a transaction with HashiCorp, the M&A Committee discussed various circumstances in which HashiCorp could re-engage with Party G with respect to a potential acquisition, including if discussions with IBM did not result in a transaction. The representatives of Qatalyst Partners presented preliminary financial analyses of the Second Revised IBM Proposal and shared their belief that IBM could further improve the terms of its acquisition proposal. The representatives of Qatalyst Partners relayed that, in recent discussions not primarily related to HashiCorp, representatives of one of the financial sponsors that had contacted HashiCorp in January 2024 and again in March 2024 had shared their perspective that such financial sponsor would not be able to offer a meaningful premium to the then-current trading price of our Class A common stock (which closed trading at $28.08 per share on March 19, 2024) in an acquisition. The M&A Committee noted that the Second Revised IBM Proposal represented a premium of approximately 23 percent to the trading price of our Class A common stock and a premium of approximately 34 percent to the trading price of our Class A common stock as of March 14, 2024, the last day prior to the publication of the Bloomberg article. The M&A Committee discussed with the representatives of Wilson Sonsini regulatory and closing certainty risks of an acquisition of HashiCorp by IBM, and potential ways to address those risks. The M&A Committee (1) directed Qatalyst Partners to make a counterproposal to IBM at $36.00 in cash per share of our common stock (which we refer to as the “Second Counterproposal”); and (2) determined to continue not to engage with financial sponsors regarding a potential acquisition of HashiCorp. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters.
Later on March 20, 2024, representatives of Qatalyst Partners delivered the Second Counterproposal to representatives of IBM.
On March 21, 2024, representatives of IBM informed representatives of Qatalyst Partners that IBM was not willing to acquire HashiCorp at $36.00 in cash per share of our common stock. The representatives of IBM requested a meeting between Messrs. McJannet and Dadgar and Arvind Krishna, the Chief Executive Officer of IBM, while IBM considered whether to make a counterproposal.
On March 22, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, Mses. Zarmi and St. Ledger, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of discussions with IBM and the request for Messrs. McJannet and Dadgar to meet with Mr. Krishna. The M&A Committee authorized Messrs. McJannet and Dadgar to meet with Mr. Krishna. In so doing, the M&A Committee instructed Messrs. McJannet and Dadgar not to engage in discussions regarding their potential individual roles or employment arrangements with IBM following an acquisition. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters.
On March 25, 2024, Messrs. McJannet and Dadgar met with Mr. Krishna and Rob Thomas, the Senior Vice President, Software and Chief Commercial Officer of IBM, and discussed HashiCorp’s product portfolio, IBM’s strategic priorities and how HashiCorp could fit within IBM following an acquisition. The terms of a potential acquisition of HashiCorp by IBM were not otherwise discussed.
On March 27, 2024, representatives of IBM informed representatives of Qatalyst Partners that IBM would be submitting a “best and final” proposal to acquire HashiCorp at $35.00 in cash per share of our common stock.
On March 28, 2024, IBM delivered a revised non-binding written proposal to acquire HashiCorp for $35.00 in cash per share of our common stock (which we refer to as the “Final IBM Proposal”). As part of the Final IBM Proposal, IBM requested that HashiCorp agree to negotiate exclusively with IBM with respect to a sale of HashiCorp.
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Later on March 28, 2024, the HashiCorp Board met, with members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini in attendance. The representatives of Qatalyst Partners provided an update on the status of discussions with IBM, and Messrs. McJannet and Dadgar reported on their discussion with Mr. Krishna. The representatives of Qatalyst Partners relayed that the Final IBM Proposal had been presented as IBM’s “best and final” acquisition proposal. The representatives of Qatalyst Partners presented preliminary financial analyses of the Final IBM Proposal. The representatives of Qatalyst Partners noted the separate, unsolicited contacts from financial sponsors. The HashiCorp Board determined to continue not to engage with financial sponsors regarding a potential acquisition of HashiCorp based on its belief that such engagement would have a low probability of yielding a transaction that would be more attractive than the Final IBM Proposal, including for the reasons previously identified. The HashiCorp Board discussed a draft long-term operating and financial plan for HashiCorp for fiscal years 2025 through 2029, as well as sensitivities for an upside scenario that assumed improved sales productivity and operating margins, in each case that reflected updates based on HashiCorp’s actual results for fourth quarter and full fiscal year 2024, HashiCorp’s budget for fiscal year 2025 previously approved by the HashiCorp Board, and trends in HashiCorp’s business and industry. The HashiCorp Board discussed risks and challenges to achieving the operating and financial results implied by the plan and the upside scenario. Members of HashiCorp management stated that this long-term operating and financial plan reflected their then-current best estimates of the future operational and financial performance of HashiCorp, and that the upside scenario was not likely to be achievable. The HashiCorp Board adopted this long-term operating and financial plan, including for use by Qatalyst Partners for purposes of performing its financial analyses in connection with rendering an opinion to the HashiCorp Board. We refer to this long-term operating and financial plan, as adopted by the HashiCorp Board at this meeting, as the “HashiCorp Long-Term Plan.” Additional information about the preparation and substance of the HashiCorp Long-Term Plan is contained in the section of this proxy statement captioned “—Financial Projections.” After considering (1) the Final IBM Proposal in relation to the operating and financial results implied by the HashiCorp Long-Term Plan, (2) the results of the “market check” process and negotiations with IBM, and (3) its belief as to the low likelihood that engagement with financial sponsors would yield a more attractive acquisition proposal, the HashiCorp Board determined to authorize HashiCorp to negotiate with IBM on an exclusive basis. The HashiCorp Board directed HashiCorp management and Wilson Sonsini to finalize an exclusivity agreement with IBM consistent with the terms discussed at the meeting. The HashiCorp Board also discussed with the representatives of Wilson Sonsini regulatory and closing certainty risks of an acquisition of HashiCorp by IBM, and potential ways to address these risks. The HashiCorp Board also met in executive session, without members of HashiCorp management (including without the management members of the HashiCorp Board) or representatives of Qatalyst Partners in attendance, to discuss these matters.
On March 30, 2024, as authorized by the HashiCorp Board, HashiCorp entered into an exclusivity agreement with IBM in which it committed to negotiate exclusively with IBM with respect to a sale of HashiCorp until April 12, 2024, which date would be extended to April 28, 2024, if IBM confirmed in writing on April 12, 2024, that it remained prepared to negotiate an acquisition of HashiCorp at a price of $35.00 per share of our common stock.
On April 1, 2024, HashiCorp entered into an agreement with IBM that set out the terms and conditions for the exchange of certain commercially sensitive information.
Beginning on April 2, 2024, IBM and its representatives, including Paul, Weiss, Rifkind, Wharton & Garrison LLP, outside legal counsel to IBM (which we refer to as “Paul, Weiss”), were granted access to additional operational and legal due diligence documents and information regarding HashiCorp in a virtual data room to support IBM’s due diligence review of HashiCorp. Over the course of the following three weeks, IBM and its representatives conducted operational, financial, legal, employment, accounting and other due diligence on HashiCorp, and met regularly with members of HashiCorp management and representatives of HashiCorp’s advisors regarding due diligence matters.
On April 5, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of IBM’s due diligence of HashiCorp. It was noted that IBM had requested meetings with a number of HashiCorp’s senior executives, including Messrs. McJannet and Dadgar, as part of its due diligence. The M&A Committee authorized these meetings. In doing so, the M&A Committee instructed these senior executives not to engage in discussions regarding their potential
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individual roles or employment arrangements with IBM following an acquisition. Messrs. McJannet and Dadgar confirmed that they had not engaged in discussions with IBM on these topics to date. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters.
Later on April 5, 2024, representatives of Paul, Weiss delivered an initial draft of the merger agreement to representatives of Wilson Sonsini. The initial draft of the merger agreement included a termination fee payable by HashiCorp to IBM that was equal to five percent of HashiCorp’s equity value in the transaction if the merger agreement were terminated under certain circumstances. The initial draft of the merger agreement also noted that IBM expected to enter into employment and related agreements with certain unspecified senior executives of HashiCorp in connection with the execution of the merger agreement.
On April 8, 2024, the M&A Committee received customary relationship disclosures from Qatalyst Partners. After receiving these disclosures, the M&A Committee did not identify any potential or actual conflicts that would affect the ability of Qatalyst Partners to fulfill its responsibilities to the HashiCorp Board.
On April 10, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, Ms. St. Ledger, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of IBM’s due diligence of HashiCorp. The representatives of Wilson Sonsini discussed with the M&A Committee the key terms of the draft merger agreement to be negotiated with IBM, including the terms related to regulatory and closing certainty matters. The M&A Committee also discussed IBM’s request to enter into employment and related agreements with certain of HashiCorp’s senior executives, and concluded to revisit the matter if IBM provided additional information on these requested arrangements. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters.
On April 11, 2024, representatives of Wilson Sonsini delivered a revised draft of the merger agreement to representatives of Paul, Weiss. The revised draft of the merger agreement included a termination fee payable by HashiCorp to IBM that was equal to 2.5 percent of HashiCorp’s equity value in the transaction. Over the subsequent two weeks, representatives of each of IBM and HashiCorp exchanged drafts and negotiated the terms of the merger agreement. Key terms negotiated included: (1) the conditions to each party’s obligations to complete the merger; (2) the efforts required by IBM and HashiCorp to obtain the required regulatory clearances to consummate the merger; (3) the terms of the “no-shop” restrictions applicable to HashiCorp, including the terms pursuant to which HashiCorp would be able to accept a Superior Proposal; (4) the amount of the termination fee payable by HashiCorp and the circumstances in which it would be payable; (5) the circumstances in which the parties could terminate the merger agreement, as well as limitations of the parties’ liability if the merger agreement was terminated; (6) the definition of “material adverse effect”; and (7) the restrictions on the operation of HashiCorp’s business between signing and closing of the merger and related exceptions for matters such as employee retention and compensation.
On April 12, 2024, IBM confirmed in writing to HashiCorp that it remained prepared to negotiate an acquisition of HashiCorp at a price of $35.00 per share of our common stock. As a result, the exclusivity agreement between IBM and HashiCorp remained in effect.
On April 13, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, Ms. St. Ledger, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of IBM’s due diligence of HashiCorp. The representatives of Wilson Sonsini provided an update on the key terms of the merger agreement being negotiated with IBM. The M&A Committee discussed with the representatives of Wilson Sonsini and HashiCorp management (1) the restrictions on the operation of HashiCorp’s business between signing and closing contemplated by the merger agreement; (2) the need for HashiCorp to retain executives and employees during the pendency of the merger; and (3) the exceptions to the restrictions for employee retention and compensation matters (including retention payments and equity award grants) to be proposed to, and negotiated with, IBM. IBM’s continued request to enter into employment and related agreements with certain of HashiCorp’s senior executives was noted. In addition, the M&A Committee concluded that negotiations over the acquisition of HashiCorp by IBM were sufficiently advanced to warrant allowing Mr. McJannet and the other applicable executives to discuss these arrangements with IBM. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters.
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On April 15, 2024, representatives of Paul, Weiss delivered an initial draft of the voting agreement to representatives of Wilson Sonsini. Over the subsequent nine days, representatives of each of IBM and HashiCorp exchanged drafts and negotiated the terms of the voting agreement. Key terms negotiated between the parties included: (1) the stockholders of HashiCorp expected to be party to the voting agreement; (2) the terms of such stockholders’ commitment to vote their shares of our common stock with respect to the adoption of the merger agreements and other related matters; (3) the exceptions to the restrictions on the transfer of shares of our common stock applicable to such stockholders; and (4) the circumstances in which the voting agreement would terminate.
On April 17, 2024, IBM provided preliminary information to HashiCorp related to (1) IBM’s request that HashiCorp’s executives amend certain terms of their applicable change in control and severance agreements such that the completion of the merger would not, in itself, constitute “good reason” that could result in the acceleration of their equity awards and other payments and benefits upon resignation; (2) IBM’s proposed arrangements for the long-term retention of certain HashiCorp executives following the merger; (3) IBM’s proposed arrangements for the short-term retention of certain other HashiCorp executives for a transition period following the merger; and (4) IBM’s request that HashiCorp’s executives enter into non-competition and non-solicitation agreements with IBM that would be effective for a specified period following the merger (all of which arrangements we refer to as the “executive retention and transition arrangements”). As part of the executive retention and transition arrangements, IBM proposed to pay retention payments to certain executives as consideration for (1) their continued employment with IBM following the closing of the merger; (2) the amendment of their change in control and severance agreements; and (3) the entry into non-competition and non-solicitation agreements. The information initially provided by IBM to HashiCorp contemplated that Mr. Dadgar receive a retention payment subject to continued employment with IBM; however, Mr. Dadgar and IBM did not engage in any discussions or negotiations with respect to retention payments for Mr. Dadgar. IBM’s initial information did not contemplate retention payments to Mr. McJannet. Ultimately, Messrs. McJannet and Dadgar and IBM did not engage in discussions or negotiations prior to the execution of the merger agreement with respect to retention payments, and IBM and Messrs. McJannet and Dadgar, prior to the execution of the merger agreement, agreed that neither Messrs. McJannet or Dadgar would receive any such retention payments (other than the continuation of the salary each currently received from HashiCorp). Ms. St. Ledger indicated to IBM that she did not expect to continue her executive role with HashiCorp or IBM following the merger, and IBM did not propose to make retention payments to Ms. St. Ledger. Over the subsequent week, IBM and its representatives negotiated the terms of the executive retention and transition arrangements with the relevant HashiCorp executives and their representatives, including their independent legal counsel. Key terms negotiated included (1) the amount and terms of retention payments proposed to be paid to certain executives; (2) the circumstances in which these retention payments would be accelerated upon termination of such executive’s employment with IBM prior to the applicable retention or transition period; and (3) the circumstances that would constitute a “good reason” resignation under the executive’s applicable change in control and severance agreements. For more information on the terms of the executive retention and transition arrangements, see the section of this proxy statement captioned “—Interests of HashiCorp’s Directors and Executive Officers in the Merger.”
Later on April 17, 2024, the M&A Committee met. Also in attendance were Messrs. McJannet and Dadgar, Mses. Zarmi and St. Ledger, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of IBM’s due diligence of HashiCorp. The representatives of Wilson Sonsini provided an update on negotiations of the merger agreement and the voting agreement, including the terms related to regulatory and closing certainty matters and exceptions to the restrictions on the operation of the business between signing and closing with respect to employee retention and compensation matters. Mr. McJannet provided an update on the executive retention and transition arrangements. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters.
On April 20, 2024, the M&A Committee met. Also in attendance were Ms. Zarmi, Messrs. McJannet and Dadgar, other members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini. The representatives of Qatalyst Partners provided an update on the status of IBM’s due diligence of HashiCorp. The representatives of Wilson Sonsini provided an update on negotiations of the merger agreement and the voting agreement. Mr. McJannet provided an update on IBM’s negotiations of the executive retention and transition arrangements with certain of HashiCorp’s senior executives. The M&A Committee also met in executive session, without members of HashiCorp management or representatives of Qatalyst Partners in attendance, to discuss these matters.
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On April 23, 2024, the Wall Street Journal published an article reporting that IBM and HashiCorp were in advanced discussions with respect to an acquisition of HashiCorp by IBM. Our Class A common stock closed trading at a price of $24.55 per share on April 22, 2024, the day prior to the publication of the Wall Street Journal article, and closed trading at a price of $29.15 per share on April 23, 2024, following the publication of the Wall Street Journal article.
On April 23, 2024, a representative of a financial sponsor that had previously contacted HashiCorp in January 2024 and again in March 2024 contacted Mr. McJannet on an unsolicited basis to express an interest in exploring a potential strategic transaction and referenced the Wall Street Journal article. This financial sponsor did not submit a proposal to acquire HashiCorp. Mr. McJannet did not engage in substantive discussions with this financial sponsor.
In the morning of April 24, 2024, the HashiCorp Board met, with members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini in attendance. The representatives of Qatalyst Partners reviewed the process overseen by the M&A Committee to consider an acquisition of HashiCorp, including the parties contacted and the reasons given by each (other than IBM) for not pursuing an acquisition. It was noted that only IBM had submitted a proposal to acquire HashiCorp. The negotiations with IBM were also reviewed, including the various acquisition proposals made by IBM and the counterproposals made by HashiCorp. The HashiCorp Board reaffirmed its prior conclusion not to pursue discussions with financial sponsors. The representatives of Qatalyst Partners presented Qatalyst Partners’ financial analyses of the merger and confirmed that Qatalyst Partners would be prepared to deliver an opinion, based on the financial analyses presented at the meeting, that the per share price to be received pursuant to, and in accordance with, the terms of the draft merger agreement by the holders of our common stock (other than IBM or any affiliate of IBM) was fair, from a financial point of view, to such stockholders, if and when requested by the HashiCorp Board. The representatives of Qatalyst Partners also provided the HashiCorp Board with customary relationship disclosures, which included disclosures with respect to the fact that Qatalyst Partners had not had any material relationship with IBM pursuant to which compensation was received within the prior two-year period, consistent with the prior disclosures received on April 8, 2024. The HashiCorp Board did not identify any potential or actual conflicts that would affect the ability of Qatalyst Partners to fulfill its responsibilities to the HashiCorp Board in rendering Qatalyst Partners’ opinion. The representatives of Wilson Sonsini reviewed the key terms of the merger agreement and the voting agreement. The key terms of the executive retention and transition arrangements were also reviewed; it was noted in particular that the executive retention and transition arrangements did not provide for compensation or other payments to Messrs. McJannet or Dadgar or Ms. St. Ledger in excess of the amounts to which such individuals were entitled as a result of existing arrangements with HashiCorp. The representatives of Wilson Sonsini reviewed with the members of the HashiCorp Board their fiduciary duties under Delaware law. The HashiCorp Board directed Wilson Sonsini and members of HashiCorp management to finalize the merger agreement and the voting agreement. The HashiCorp Board also met in executive session, without members of HashiCorp management (including without the management members of the HashiCorp Board) or representatives of Qatalyst Partners in attendance, to discuss these matters.
Later on April 24, 2024, representatives of each of Wilson Sonsini and Paul, Weiss finalized the forms of the merger agreement and the voting agreement.
In the afternoon of April 24, 2024, the HashiCorp Board met, with members of HashiCorp management and representatives of each of Qatalyst Partners and Wilson Sonsini in attendance. The final forms of the merger agreement and the voting agreement were provided to, and reviewed with, the HashiCorp Board by representatives of Wilson Sonsini. The representatives of Qatalyst Partners, after reviewing with the HashiCorp Board the financial analyses of the merger discussed with the HashiCorp Board at its meeting earlier in the day, rendered Qatalyst Partners’ oral opinion, subsequently confirmed in writing, that, as of April 24, 2024, and based upon and subject to the various other assumptions, qualifications, limitations and other matters specified by Qatalyst Partners as set forth in the written opinion, the per share consideration of $35.00 in cash to be received by the holders of shares of our common stock (other than IBM or any affiliate of IBM) pursuant to, and in accordance with, the terms of the merger agreement was fair from a financial point of view to such holders, as more fully described in the section of this proxy statement captioned “—Opinion of Qatalyst Partners LP.” The HashiCorp Board, after considering the factors more fully described in the section of this proxy statement captioned “—Recommendation of the HashiCorp Board and Reasons for the Merger,” unanimously adopted resolutions (1) approving and declaring advisable the merger agreement, the merger and the other transactions
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contemplated by the merger agreement; (2) declaring that it is in the best interests of HashiCorp and our stockholders to enter into the merger agreement and consummate the merger and the other transactions contemplated by the merger agreement on the terms and subject to the conditions set forth in the merger agreement; (3) directing that the adoption of the merger agreement be submitted to a vote at the special meeting; and (4) resolving to recommend that our stockholders adopt the merger agreement. The HashiCorp Board also met in executive session, without members of HashiCorp management (including without the management members of the HashiCorp Board) or representatives of Qatalyst Partners in attendance, to discuss these matters.
Still later on April 24, 2024, the merger agreement, the voting agreement and the employee offer letters and other agreements related to the executive retention and transition arrangements were executed by the applicable parties.
Shortly thereafter, HashiCorp and IBM jointly publicly announced the merger.
Recommendation of the HashiCorp Board and Reasons for the Merger
Recommendation of the HashiCorp Board
On April 24, 2024, the HashiCorp Board unanimously: (1) approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement; and (2) declared that it is in the best interests of HashiCorp and our stockholders that HashiCorp enter into the merger agreement and consummate the merger and the other transactions contemplated by the merger agreement on the terms and subject to the conditions set forth in the merger agreement.
The HashiCorp Board unanimously recommends that you vote: (1) “FOR” the proposal to adopt the merger agreement; (2) “FOR” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by HashiCorp to our named executive officers in connection with the merger; and (3) “FOR” the proposal to adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Reasons for the Merger
In evaluating the merger agreement and the merger, the HashiCorp Board consulted with members of HashiCorp management, as well as representatives of each of Wilson Sonsini and Qatalyst Partners. In recommending that our stockholders vote “FOR” the adoption of the merger agreement, the HashiCorp Board considered and analyzed a number of factors, including the factors summarized below (which factors are not necessarily exhaustive or presented in order of relative importance). Based on this, the HashiCorp Board concluded that entering into the merger agreement was advisable and in the best interests of HashiCorp and our stockholders.
The HashiCorp Board believed that the following material factors and benefits supported its determination and recommendation:
Business, Financial Condition, Prospects and Execution Risks. The HashiCorp Board’s assessment of the then-current and historical financial condition, results of operations, business and competitive positioning of HashiCorp. As part of this analysis, the HashiCorp Board considered HashiCorp management’s business plans and strategies, including the HashiCorp Long-Term Plan, and the potential opportunities that these plans and strategies presented against, among other things, various execution and other risks and challenges to achieving the HashiCorp Long-Term Plan. Additional information about the preparation and substance of the HashiCorp Long-Term Plan is contained in the section of this proxy statement captioned “— Financial Projections.” Among the potential risks and challenges identified by the HashiCorp Board were:
Our prospects and competitive position as an independent public company. In this regard, the HashiCorp Board considered:
the expectation of our stockholders that we transition to profitability in the near term and the practical impact of this commitment—including the expectation of our stockholders that we achieve this commitment—on our ability to make investments in product development, our go-to-market functions and other areas of our business at levels that we believed would be sufficient to advance our business and remain competitive;
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other challenges to improving our operating margins and achieving profitability;
competition from larger companies, including large cloud service providers (often referred to as hyperscalers), that have greater scale and resources than we do and greater flexibility to make investments in competitive product development while maintaining profitability;
the ability of hyperscalers to subsidize competitive product offerings (including by giving those products away for free) through revenues received from their broader portfolio of products and services;
the rapid technological change, frequent new product and service introductions and enhancements, changing customer demands and evolving standards that characterize our industry;
the challenges to acquiring new customers and retaining our existing customers, including challenges to increasing productivity and capacity of our sales force and competition from hyperscalers and other companies in our ecosystem that have established relationships with our potential and existing customers; and
the other risk factors and uncertainties described in our other filings with the SEC, as listed in the section of this proxy statement captioned “Where You Can Find More Information.”
Market volatility and the current and prospective business environment in which we operate, including macroeconomic headwinds facing us and our industry more generally and the impact of changed economic circumstances on key customer segments, and the impact of this environment on the ability of HashiCorp management to successfully execute our business plan.
The historical market prices, volatility and trading information with respect to shares of our Class A common stock, and the likely negative impact on the price of our Class A common stock if we did not achieve our commitment to transition to profitability in the near term.
The need to attract and retain talented senior management to execute our business plan. The HashiCorp Board considered organizational and management changes that might be appropriate if we were to remain an independent public company, and the potential costs and operational disruption that could result from those changes, including the possible impact on the price of our Class A common stock.
Results of Strategic Review Process. The merger being the result of a reasoned, fully-informed process overseen by the M&A Committee and the HashiCorp Board. Among the process considerations identified by the HashiCorp Board were:
HashiCorp, through its representatives, engaged 13 potential acquirors (including IBM) concerning their interest in participating in an acquisition of HashiCorp, of which eight engaged in substantive discussions and/or due diligence with respect to a potential acquisition of HashiCorp. The HashiCorp Board considered the nature of the engagement by each of these potential acquirors, and that, of these potential acquirors, only IBM made a proposal for an acquisition of HashiCorp. The HashiCorp Board also considered the potential negative effects that a further extended or expanded sale process might have on our business, including as the result of the further distraction of HashiCorp management. For more information on this process, see the section of this proxy statement captioned “—Background of the Merger.”
The press reports beginning on March 15, 2024, that HashiCorp was exploring a possible sale.
Our rights under the merger agreement to respond to unsolicited acquisition proposals from third parties, and, subject to compliance with the terms of the merger agreement, to terminate the merger agreement to accept a superior offer from a third party.
Cash Consideration and Certainty of Value. The consideration to be received by our stockholders in the merger consists entirely of cash. The receipt of cash consideration provides HashiCorp stockholders with certainty of value and liquidity upon the consummation of the merger, while eliminating risks and uncertainties related to the continued execution of HashiCorp’s business and financial markets generally.
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Negotiations with IBM. The fact that HashiCorp negotiated vigorously with IBM with respect to price and other terms of the merger agreement, including obtaining a price increase from IBM’s initial offer price of $29.00 per share of our common stock to $35.00 per share of our common stock, which the HashiCorp Board believed represented the highest price that IBM was willing to pay.
Best Value Reasonably Obtainable. The HashiCorp Board’s belief that the per share price represents the best value reasonably obtainable for the shares of our common stock, taking into account the HashiCorp Board’s familiarity with our business, operations, prospects, business strategy, assets, liabilities and general financial condition on a historical and prospective basis. In addition, the HashiCorp Board believed that, measured against our longer-term execution risks, the per share price reflects a fair and favorable price for the shares of our common stock. The HashiCorp Board also considered that the per share price constitutes a premium of approximately 43 percent over HashiCorp’s closing stock price on April 22, 2024, the last day prior to media reports that IBM was nearing an acquisition of HashiCorp.
Potential Strategic Alternatives. The HashiCorp Board’s assessment that none of the possible alternatives to the merger (including the possibility of continuing to operate HashiCorp as an independent public company or pursuing a different transaction, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to our stockholders of those alternatives and the timing and likelihood of effecting such alternatives) was reasonably likely to present superior opportunities for us to create greater value for our stockholders, taking into account execution risks as well as business, competitive, financial, industry, legal, market and regulatory risks.
Fairness Opinion of Qatalyst Partners. The oral opinion of Qatalyst Partners, subsequently confirmed in writing, delivered to the HashiCorp Board stating that as of April 24, 2024, based upon and subject to the various assumptions, qualifications, limitations and other matters set forth in the opinion, the merger consideration of $35.00 in cash to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM) was fair from a financial point of view to such stockholders. The opinion is more fully described in the section of this proxy statement captioned “—Opinion of Qatalyst Partners LP,” and the full text of the opinion is attached as Annex B to this proxy statement.
Terms of the Merger Agreement. The terms of the merger agreement, which was the product of robust, arm’s-length negotiations. In this regard, the factors considered by the HashiCorp Board included:
Our ability, under certain circumstances, to respond to third parties regarding unsolicited alternative acquisition proposals.
The HashiCorp Board’s belief that the terms of the merger agreement would not preclude third parties from making a superior proposal.
The HashiCorp Board’s ability, under certain circumstances, to withdraw or modify its recommendation that our stockholders vote in favor of the adoption of the merger agreement.
Our ability, under certain circumstances, to terminate the merger agreement to enter into an alternative acquisition agreement with respect to a superior proposal. In that regard, the HashiCorp Board believed that the termination fee payable by us in such instance was reasonable, consistent with or below similar fees payable in comparable transactions, and not preclusive of other offers.
The conditions to IBM’s obligation to consummate the merger and the likelihood they would be satisfied.
Our ability to conduct business in the ordinary course prior to the consummation of the merger, subject to the restrictions (and exceptions to those restrictions) under the merger agreement.
Our ability to specifically enforce IBM’s obligation to cause the merger to be consummated in certain circumstances.
Retention of Key Employees. The HashiCorp Board’s belief that transition and retention plans that with respect to certain of its employees in connection with the merger could help assure the continuity of
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management, and increase the likelihood of the successful operation of HashiCorp during the pendency of the merger. For further information on these arrangements, see the section of this proxy statement captioned “—Interests of HashiCorp’s Directors and Executive Officers in the Merger.”
Reasonable Likelihood of Consummation. The HashiCorp Board’s belief that an acquisition by IBM has a reasonable likelihood of closing. Further, IBM’s stockholders are not required to approve the merger and IBM possesses sufficient cash resources to fund the entire purchase price without having to rely on third-party debt or equity financing.
Business Reputation of IBM. The HashiCorp Board’s assessment that the business reputation and financial resources of IBM supported the conclusion that a transaction with IBM was reasonably likely to be consummated successfully and in an expedited manner.
Appraisal Rights. The appraisal rights in connection with the merger available to our stockholders who do not vote in favor of the adoption of the merger agreement and properly exercise their appraisal rights under the DGCL.
The HashiCorp Board also considered a number of uncertainties and risks and other potentially negative factors related to its recommendation, including the following:
Uncertain Regulatory Approval Process. The possibility that regulatory agencies may delay, object to or challenge the merger or may seek to impose terms and conditions on their approvals that are not acceptable to IBM and that could ultimately result in the merger not being consummated. In this regard, the HashiCorp Board was aware that the regulatory approval process could be prolonged and could have an impact on our business. Further, IBM would not owe any compensation to HashiCorp if the merger cannot be completed for regulatory reasons. For a more complete description of IBM’s obligations to obtain required regulatory approvals, see the section of this proxy statement captioned “The Merger Agreement—Efforts to Complete the Merger.”
Risks Associated with Failure to Consummate the Merger. The possibility that the merger might not be consummated, and if it is not consummated, that: (1) our directors, senior management and other employees will have expended extensive time and effort and will have experienced significant distractions from their work on behalf of HashiCorp during the pendency of the merger; (2) we will have incurred significant transaction and other costs; (3) our business relationships with current or prospective customers, business partners, employees and investors may be adversely affected, which could cause an adverse impact on our operating results; (4) a failed transaction could damage our brand and our reputation with our customers and other business partners; (5) the trading price of our Class A common stock could be adversely affected; and (6) the contractual and legal remedies available to us if IBM were to seek to terminate the merger agreement or abandon the merger may be insufficient from a variety of perspectives, costly to pursue, or both.
No Stockholder Participation in Future Growth or Earnings. The nature of the merger as a cash transaction means that our stockholders will not participate in our future earnings or growth and will not benefit from any appreciation in value of the surviving corporation following the merger. In this regard, the HashiCorp Board considered the other potential alternative strategies available to us as an independent public company, which, despite significant uncertainty, could have the potential to result in a more successful and valuable company.
No Ability to Solicit an Alternative Transaction. The restrictions in the merger agreement on our ability to solicit alternative acquisition proposals.
Termination Fee Payable by HashiCorp. The requirement that we pay IBM a termination fee of $264,200,000 under certain circumstances following termination of the merger agreement, including if the HashiCorp Board terminates the merger agreement to accept a superior proposal. The HashiCorp Board considered the potentially dampening effect that this termination fee could have on a third party’s interest in making a proposal to acquire HashiCorp.
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Impact of Interim Restrictions on HashiCorp’s Business Pending the Completion of the Merger. The restrictions in the merger agreement on the conduct of our business prior to the consummation of the merger, which may delay or prevent us from undertaking strategic initiatives before the completion of the merger that, absent the merger agreement, we might have pursued.
Effects of the Announcement of the Merger. The effects of the public announcement of the merger, including the: (1) effects on our employees, customers, partners, suppliers, vendors, operating results and stock price; (2) impact on our ability to attract and retain management, sales and marketing and technical personnel; and (3) potential for litigation in connection with the merger.
Taxable Consideration. The receipt of cash in exchange for shares of our common stock in the merger will generally be a taxable transaction for U.S. federal income tax purposes for our stockholders that are U.S. persons.
Interests of HashiCorp’s Directors and Executive Officers. Interests that our directors and executive officers may have in the merger, which may be different from, or in addition to, those of our other stockholders, as described in the section of this proxy statement captioned “—Interests of HashiCorp’s Directors and Executive Officers in the Merger.”
Costs and Time Required. The significant costs involved in connection with entering into the merger agreement and consummating the merger (many of which are payable whether or not the merger is consummated) and the substantial time and effort required of HashiCorp management to enter into the merger agreement and complete the merger.
This discussion is not meant to be exhaustive. Rather, it summarizes the material considerations and analyses evaluated by the HashiCorp Board in its consideration of the merger, and such considerations and analyses are not necessarily presented in order of importance. After considering these and other factors, the HashiCorp Board concluded that the potential benefits of entering into the merger agreement outweighed the potential uncertainties and risks. In light of the variety of factors considered by the HashiCorp Board and the complexity of these factors, the HashiCorp Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the foregoing factors in reaching its determination and recommendations. Moreover, each member of the HashiCorp Board applied his or her own personal business judgment to the process and may have assigned different relative weights to the different factors. The HashiCorp Board adopted and approved the merger agreement based upon the totality of the information presented to, and considered by, the HashiCorp Board. The explanation of the factors and reasoning set forth above may contain forward-looking statements, which should be read in conjunction with the section of this proxy statement captioned “Forward-Looking Statements.”
Opinion of Qatalyst Partners LP
HashiCorp retained Qatalyst Partners to act as its financial advisor in connection with a potential transaction such as the merger and to evaluate whether the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM) was fair, from a financial point of view, to such holders. HashiCorp selected Qatalyst Partners to act as HashiCorp’s financial advisor based on Qatalyst Partners’ long-standing relationship with HashiCorp as well as Qatalyst Partners’ extensive expertise, knowledge of the industry in which HashiCorp operates and experience advising technology companies in connection with potential strategic transactions. Qatalyst Partners has provided its written consent to the reproduction of its opinion in this proxy statement. At the meeting of the HashiCorp Board on April 24, 2024, Qatalyst Partners rendered to the HashiCorp Board its oral opinion, subsequently confirmed in writing, to the effect that, as of the date thereof and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM) was fair, from a financial point of view, to such holders. Qatalyst Partners delivered its written opinion, dated April 24, 2024, to the HashiCorp Board following the meeting of the HashiCorp Board.
The full text of Qatalyst Partners’ written opinion, dated April 24, 2024, is attached to this proxy statement as Annex B and is incorporated by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. Holders of shares of our common stock
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should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the HashiCorp Board and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM), to such holders, and it does not address any other aspect of the merger. It does not constitute a recommendation as to how any holder of shares of our common stock should vote with respect to the merger or any other matter and does not in any manner address the price at which shares of our common stock will trade or otherwise be transferable at any time. The summary of Qatalyst Partners’ opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached to this proxy statement as Annex B.
In arriving at its opinion, Qatalyst Partners reviewed a draft of the merger agreement, certain related documents and certain publicly available financial statements and other business and financial information of HashiCorp. Qatalyst Partners also reviewed the Financial Projections (as defined in the section of this proxy statement captioned “The Merger—Financial Projections.” Additionally, Qatalyst Partners discussed the past and current operations and financial condition and the prospects of HashiCorp with senior management of HashiCorp. Qatalyst Partners also reviewed the historical market prices and trading activity for HashiCorp’s Class A common stock and compared the financial performance of HashiCorp and the prices and trading activity of HashiCorp’s Class A common stock with that of certain other selected publicly-traded companies and their securities. In addition, Qatalyst Partners reviewed the financial terms, to the extent publicly available, of selected acquisition transactions and performed such other analyses, reviewed such other information and considered such other factors as Qatalyst Partners deemed appropriate.
In arriving at its opinion, Qatalyst Partners assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to, or discussed with, Qatalyst Partners by HashiCorp. With respect to the Financial Projections, Qatalyst Partners was advised by the management of HashiCorp, and Qatalyst Partners assumed based on discussions with the management of HashiCorp and the HashiCorp Board, that the Financial Projections had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of HashiCorp of the future financial performance of HashiCorp and other matters covered thereby. Qatalyst Partners expressed no view as to the Financial Projections or the assumptions on which they were based. Qatalyst Partners assumed that the terms of the draft merger agreement reviewed by Qatalyst Partners would not differ materially from the final executed merger agreement, and that the merger will be consummated in accordance with the terms set forth in the merger agreement, without any modification, waiver or delay. In addition, Qatalyst Partners assumed that in connection with the receipt of all the necessary approvals of the merger, no delays, limitations, conditions or restrictions will be imposed that could have an adverse effect on HashiCorp or the contemplated benefits expected to be derived in the merger. Qatalyst Partners did not make any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of HashiCorp or its affiliates, nor was Qatalyst Partners furnished with any such evaluation or appraisal. In addition, Qatalyst Partners relied, without independent verification, upon the assessment of the management of HashiCorp as to the existing and future technology and products of HashiCorp and the risks associated with such technology and products. Qatalyst Partners’ opinion has been approved by its opinion committee in accordance with its customary practice.
Qatalyst Partners’ opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. Events occurring after the date of the opinion may affect Qatalyst Partners’ opinion and the assumptions used in preparing it, and Qatalyst Partners has not assumed any obligation to update, revise or reaffirm its opinion. Qatalyst Partners’ opinion does not address the underlying business decision of HashiCorp to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to HashiCorp. Qatalyst Partners’ opinion is limited to the fairness, from a financial point of view, of the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM), and Qatalyst Partners expressed no opinion with respect to the fairness of (i) the amount or nature of the compensation to any of the officers, directors or employees of HashiCorp or any of its affiliates, or any class of such persons, relative to such consideration; (ii) the allocation of the aggregate consideration to be paid to holders between the holders of HashiCorp’s Class A common stock and the holders of
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Class B common stock or the relative fairness of the merger consideration to the holders or (iii) the voting rights associated with the Class B common stock or any governance or other rights of the holders thereof (and Qatalyst Partners has not taken any such rights into account in its analysis).
The following is a brief summary of the material analyses performed by Qatalyst Partners in connection with its opinion dated April 24, 2024. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Qatalyst Partners’ opinion. For purposes of its analyses, Qatalyst Partners utilized both the Financial Projections, described in the section of this proxy statement captioned “The Merger—Financial Projections,” and third-party research analyst consensus estimates as of April 23, 2024 (which we refer to as the “Street Estimates”). Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by Qatalyst Partners, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Qatalyst Partners’ financial analyses.
Discounted Cash Flow Analysis
Qatalyst Partners performed an illustrative discounted cash flow analysis, which is designed to imply a range of potential per-share present values for our common stock as of January 31, 2024 (which is the end of HashiCorp’s most recent completed fiscal quarter and most recent publicly available balance sheet date), by:
adding:
(a)
the implied net present value of the estimated future unlevered free cash flows (which we refer to as “UFCF”) of HashiCorp, based on the Financial Projections for the fiscal year 2025 through fiscal year 2028 (which implied present value was calculated using a range of discount rates of 13.0% to 16.5%, based on an estimated weighted average cost of capital for HashiCorp);
(b)
the implied net present value of a corresponding terminal value of HashiCorp, calculated by multiplying HashiCorp’s estimated UFCF in fiscal year 2029 of approximately $282 million, based on the Financial Projections (assuming a long-term effective tax rate of 21%, as provided by management of HashiCorp), by a range of fully diluted enterprise value to next-twelve-months’ estimated UFCF multiples of 30.0x to 40.0x (which were chosen based on Qatalyst Partners’ professional judgment and experience), and discounted to present value using the same range of discount rates used in item (a) above;
(c)
the net cash of HashiCorp as of January 31, 2024, as disclosed in HashiCorp’s Annual Report on Form 10-K for the year ended January 31, 2024; and
(d)
the implied net present value of estimated federal tax savings due to its net operating losses for the fiscal years 2029 and beyond, as provided by management of HashiCorp, discounted to present value using the same range of discount rates used in item (a) above; and
dividing the resulting amount by the number of fully diluted shares of our common stock outstanding (calculated using the treasury stock method), taking into account the restricted stock units, performance-based restricted stock units and in-the-money stock options as of April 22, 2024, all as provided by management of HashiCorp, with each of the above-referenced estimated future UFCFs, terminal value and federal tax savings due to net operating losses for the fiscal years 2029 and beyond having also been adjusted for the degree of estimated dilution to current stockholders through each respective applicable period (which totaled approximately 16% in the case of the terminal value) due to the estimated net effects of equity issuances and cancellations related to future equity compensation, based on estimates of future dilution provided by management of HashiCorp.
Based on the calculations set forth above, this analysis implied a range of values for our common stock of approximately $25.78 to $35.11 per share.
Selected Companies Analysis
Qatalyst Partners reviewed and compared selected financial information and public market multiples for HashiCorp with publicly available financial information and public market multiples for selected companies. The
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companies used in this comparison were those companies listed below, which were selected by Qatalyst Partners in its professional judgment, based on factors including that they are publicly traded companies in similar lines of business to HashiCorp, have a similar business model, have similar financial performance or have other relevant or similar characteristics.
Based upon third-party research analyst consensus estimates as of April 23, 2024, and using the closing prices as of April 23, 2024, for shares of the selected companies, Qatalyst Partners calculated, among other things, the fully diluted enterprise value divided by the estimated consensus revenue for calendar year 2024 (which we refer to as the “CY24E revenue multiples”), for each of the selected companies, as shown below:
Selected Infrastructure Software Companies
CY2024E Revenue
Multiple
Gitlab Inc.
11.9x
CyberArk Software Ltd.
10.9x
Confluent, Inc.
9.9x
JFrog Ltd.
9.8x
Dynatrace, Inc.
8.4x
Elastic N.V. Inc.
7.7x
Tenable Holdings, Inc.
6.5x
UiPath, Inc.
6.5x
Okta, Inc.
6.4x
DigitalOcean Holdings, Inc.
5.8x
PagerDuty, Inc.
4.4x
Selected Profitable Software Companies
CY2024E Revenue
Multiple
ServiceNow Inc.
13.9x
Palo Alto Networks, Inc.
11.7x
Adobe Inc.
9.8x
Workday, Inc.
8.0x
Salesforce, Inc.
7.2x
Based on an analysis of the CY2024E revenue multiples for the selected companies and the application of its professional judgment, Qatalyst Partners selected a representative multiple range of 5.0x to 8.0x. For purposes of this analysis, Qatalyst Partners used HashiCorp’s fiscal year ending January 31, 2025, as a proxy for calendar year 2024.
Qatalyst Partners then applied this range to HashiCorp’s estimated revenue for calendar year 2024, based on the Financial Projections and based on the Street Estimates. Based on the fully diluted shares of our common stock outstanding as of April 22, 2024 (calculated utilizing the same methodology as used in the above discounted cash flow analysis), this analysis implied (1) a range of values for HashiCorp common stock of approximately $21.15 to $30.32 per share based on the Financial Projections and (2) a range of values for HashiCorp common stock of approximately $20.61 to $29.45 per share based on the Street Estimates.
No company included in the selected companies analysis is identical to HashiCorp. In evaluating the selected companies, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Many of these matters are beyond the control of HashiCorp, such as the impact of competition on HashiCorp’s business or the industry in general, industry growth and the absence of any material adverse change in HashiCorp’s financial condition and prospects or the industry or in the financial markets in general. Individual multiples or mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected company data.
Selected Transactions Analysis
Qatalyst Partners compared 76 selected public company transactions, including transactions involving companies participating in similar lines of business to HashiCorp or with similar business models, similar financial performance or other relevant or similar characteristics.
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For each of the selected transactions listed below, Qatalyst Partners reviewed, among other things, (1) the implied fully diluted enterprise value of the target company as a multiple of last-twelve-months’ revenue of the target company (which we refer to as the “LTM revenue multiples”) and (2) the implied fully diluted enterprise value of the target company as a multiple of third-party research analyst consensus estimates of the next-twelve-months’ revenue of the target company (which we refer to as the “NTM revenue multiples”).
Announcement
Date
Target
Acquiror
LTM
Revenue
Multiple
NTM
Revenue
Multiple
02/15/24
Altium Limited
Renesas Electronics Corporation
20.4x
16.4x
01/16/24
Ansys, Inc.
Synopsys, Inc.
16.1x
14.5x
04/11/22
SailPoint Technologies Holdings, Inc.
Thoma Bravo, L.P.
15.7x
13.3x
06/06/22
Anaplan, Inc.
Thoma Bravo, L.P.
16.0x
12.8x
10/15/18
SendGrid, Inc.
Twilio Inc.
14.3x
11.5x
06/10/19
Tableau Software, Inc
salesforce.com, inc.
13.2x
10.9x
07/26/21
Medallia, Inc.
Thoma Bravo, L.P.
13.0x
10.8x
09/18/14
Concur Technologies, Inc.
SAP America, Inc.
12.6x
10.2x
08/18/11
Autonomy Corporation plc
HP Inc.
11.8x
9.6x
04/26/21
Proofpoint, Inc.
Thoma Bravo, L.P.
10.8x
9.4x
10/28/18
Red Hat, Inc.
IBM
10.8x
9.3x
04/22/24
Matterport, Inc.
CoStar Group, Inc.
10.3x
9.3x
08/08/22
Avalara, Inc.
Vista Equity Partners
10.7x
8.8x
08/19/21
Inovalon Holdings, Inc.
Nordic Capital
10.0x
8.8x
12/07/21
Mimecast Ltd
Permira
10.0x
8.8x
10/23/23
EngageSmart, Inc.
Vista Equity Partners
10.6x
8.8x
12/12/22
Coupa Software Inc.
Thoma Bravo, L.P.
9.8x
8.4x
03/08/21
Pluralsight, Inc.
Vista Equity Partners
9.8x
8.4x
10/11/22
ForgeRock, Inc.
Thoma Bravo, L.P.
10.5x
8.4x
02/04/19
Ultimate Software Group, Inc.
Investor group led by Hellman and Friedman
10.0x
8.4x
04/11/22
Datto, Inc.
KaseyaLtd and Insight Partners
9.7x
8.3x
01/29/18
Callidus Software Inc.
SAP SE
9.8x
8.3x
12/21/20
RealPage, Inc.
Thoma Bravo, L.P.
9.1x
8.2x
12/17/17
Aconex Limited
Oracle Corp
9.4x
8.1x
08/22/19
Carbon Black, Inc.
VMware, Inc.
9.2x
8.0x
08/03/22
Ping Identity Corp.
Thoma Bravo, L.P.
8.9x
8.0x
09/28/22
BTRS Holdings Inc.
EQT X Fund
9.7x
7.9x
05/22/12
Ariba, Inc.
SAP SE
8.8x
7.8x
06/12/19
Medidata, Inc.
Dassault Systèmes SE
8.8x
7.5x
03/10/21
Talend S.A.
Thoma Bravo, L.P.
8.5x
7.4x
09/21/23
Splunk Inc.
Cisco Systems, Inc.
7.7x
7.1x
03/13/23
Qualtrics International Inc.
Silver Lake Technology Management, LLC and Canada Pension Plan Investment Board
8.0x
7.1x
01/09/23
Duck Creek Technologies, Inc.
Vista Equity Partners
7.7x
7.0x
11/11/18
Apptio Inc.
Vista Equity Partners
8.1x
7.0x
12/20/13
Responsys, Inc.
Oracle Corp
8.1x
6.9x
02/12/19
Ellie Mae, Inc.
Thoma Bravo, L.P.
7.0x
6.8x
12/24/18
MINDBODY, Inc.
Vista Equity Partners
7.8x
6.7x
04/18/16
Cvent, Inc.
Vista Equity Partners
8.0x
6.5x
03/14/23
Cvent, Inc.
Blackstone Inc.
7.6x
6.5x
06/04/13
ExactTarget, Inc.
Salesforce, Inc.
7.9x
6.5x
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Announcement
Date
Target
Acquiror
LTM
Revenue
Multiple
NTM
Revenue
Multiple
12/04/19
Instructure Holdings, Inc.
Thoma Bravo, L.P.
7.7x
6.5x
08/01/16
Fleetmatics Group Limited
Verizon Communications Inc.
7.6x
6.3x
10/24/11
RightNow Technologies, Inc.
Oracle Corp
7.4x
6.2x
08/05/21
Cornerstone OnDemand, Inc.
Clearlake Capital Group, L.P.
6.3x
5.9x
12/01/21
Blue Prism Group Plc
SS&C Technologies Holdings, Inc.
7.2x
5.8x
07/31/23
New Relic, Inc.
Francisco Partners Management, L.P. and TPG Capital, L.P.
6.4x
5.8x
02/09/12
Taleo Corporation
Oracle Corp
6.3x
5.3x
10/03/18
Hortonworks, Inc.
Cloudera, Inc.
6.4x
5.3x
10/27/22
UserTesting, Inc.
Thoma Bravo, L.P.
6.2x
5.3x
06/28/21
QAD Inc.
Thoma Bravo, L.P.
5.8x
5.3x
06/01/21
Cloudera, Inc.
Kohlberg Kravis Roberts & Co. L.P. and Clayton, Dubilier & Rice, LLC
5.5x
5.2x
05/26/22
VMware, Inc.
Broadcom Inc.
5.4x
5.1x
10/10/18
Imperva, Inc.
Thoma Bravo, L.P.
5.4x
5.1x
01/31/22
Citrix Systems, Inc.
Evergreen Coast Capital and Vista Equity Partners
5.2x
5.1x
10/14/19
Sophos Group PLC
Thoma Bravo, L.P.
5.5x
5.0x
12/23/18
MYOB Group Ltd.
Kohlberg Kravis Roberts & Co. L.P.
5.4x
4.9x
04/08/24
Model N, Inc.
Vista Equity Partners
5.0x
4.8x
10/23/17
BroadSoft, Inc.
Cisco Systems Inc
5.3x
4.6x
10/29/12
OPNET Technologies, Inc.
Riverbed Technology Inc
5.1x
4.4x
12/18/23
Alteryx, Inc.
Clearlake Capital Group, L.P. and Insight Partners
4.7x
4.2x
02/09/23
Sumo Logic, Inc.
Francisco Partners
4.9x
4.2x
06/15/15
Dealertrack Technologies, Inc.
Cox Automotive, Inc.
4.9x
4.1x
11/11/18
athenahealth, Inc.
Veritas Capital and Elliott Investment Management L.P.
4.3x
3.9x
03/01/24
Everbridge, Inc.
Thoma Bravo, L.P.
4.0x
3.9x
11/27/17
Barracuda Networks, Inc.
Thoma Bravo, L.P.
3.8x
3.6x
05/18/16
inContact, Inc.
NICE Ltd.
4.2x
3.6x
12/17/19
LogMeIn, Inc.
Francisco Partners Management, L.P.
3.5x
3.4x
08/22/19
Pivotal Corp
VMware, Inc.
3.9x
3.4x
08/27/12
Kenexa Corp
IBM
4.0x
3.3x
07/01/11
Blackboard Inc.
Providence Equity Partners LLC
3.7x
3.2x
08/31/16
Interactive Intelligence Group Inc.
Genesys Telecommunications Laboratories Inc. (backed by Permira)
3.4x
3.2x
08/09/23
Avid Technology, Inc.
Symphony Technology Group, LLC
3.3x
3.0x
03/13/23
Momentive Global Inc.
Symphony Technology Group, LLC
3.1x
3.0x
11/11/19
Carbonite, Inc.
Open Text Corporation
2.8x
2.7x
05/04/23
Software AG
Silver Lake Technology Management, LLC
2.8x
2.6x
11/02/15
Constant Contact, Inc.
Endurance International Group, Inc.
2.6x
2.3x
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Based on the analysis of the LTM revenue multiples for the selected transactions and its professional judgment, Qatalyst Partners selected a representative multiple range of 5.0x to 11.0x then applied this range to HashiCorp’s last-twelve months’ revenue (calculated as the 12-month period ended January 31, 2024). Based on the fully diluted shares of our common stock outstanding as of April 22, 2024 (calculated utilizing the same methodology as used in the above discounted cash flow analysis), this analysis implied a range of values for our common stock of approximately $19.19 to $35.16 per share.
Based on the analysis of the NTM revenue multiples for the selected transactions and its professional judgment, Qatalyst Partners selected a representative multiple range of 5.0x to 9.5x, then applied this range to HashiCorp’s estimated next-twelve months’ revenue (calculated as the 12-month period ending January 31, 2025) based on the Street Estimates. Based on the fully diluted shares of our common stock outstanding as of April 22, 2024 (calculated utilizing the same methodology as used in the above discounted cash flow analysis) as provided by management of HashiCorp, this analysis implied a range of values for our common stock of approximately $20.61 to $33.87 per share.
No company or transaction utilized in the selected transactions analysis is identical to HashiCorp or the merger. In evaluating the selected transactions, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond HashiCorp’s control, such as the impact of competition on HashiCorp’s business or the industry generally, industry growth and the absence of any material adverse change in HashiCorp’s financial condition and prospects or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which they are being compared. Individual multiples or mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected transactional data. Because of the unique circumstances of each of these transactions and the merger, Qatalyst Partners cautioned against placing undue reliance on this information.
Miscellaneous
In connection with the review of the merger by the HashiCorp Board, Qatalyst Partners performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving at its opinion, Qatalyst Partners considered the results of all its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Qatalyst Partners believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, Qatalyst Partners may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Qatalyst Partners’ view of the actual value of HashiCorp. In performing its analyses, Qatalyst Partners made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of HashiCorp. Any estimates contained in Qatalyst Partners’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.
Qatalyst Partners conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM), to such holders. These analyses do not purport to be appraisals or to reflect the price at which shares of our common stock might actually trade or otherwise be transferable at any time.
Qatalyst Partners’ opinion and its presentation to the HashiCorp Board was one of many factors considered by the HashiCorp Board in deciding to approve the merger agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the HashiCorp Board with respect to the merger consideration to be received pursuant to, and in accordance with, the terms of the merger agreement by the holders of shares of our common stock (other than IBM or any affiliate of IBM) or of whether the HashiCorp Board would have been willing to agree to different consideration. The merger consideration payable in the merger was determined through arm’s-length negotiations between HashiCorp and IBM and was approved by the
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HashiCorp Board. Qatalyst Partners provided advice to HashiCorp during these negotiations. Qatalyst Partners did not, however, recommend any specific consideration to HashiCorp or that any specific consideration constituted the only appropriate consideration for the merger.
Qatalyst Partners provides investment banking and other services to a wide range of entities and individuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst Partners may at any time hold long or short positions, and may trade or otherwise effect transactions in debt or equity securities or loans of HashiCorp, IBM or certain of their respective affiliates. During the two-year period prior to the date of Qatalyst Partners’ opinion, no material relationship existed between Qatalyst Partners or any of its affiliates and HashiCorp or IBM pursuant to which compensation was received by Qatalyst Partners or its affiliates. Qatalyst Partners and/or its affiliates may in the future provide investment banking and other financial services to HashiCorp or IBM or their respective affiliates for which Qatalyst Partners would expect to receive compensation.
Under the terms of its engagement letter, Qatalyst Partners provided HashiCorp with financial advisory services in connection with the merger for which it will be paid an aggregate amount currently estimated at approximately $87 million, $10 million of which was payable upon delivery of its opinion (regardless of the conclusion reached in the opinion), and the remaining portion of which will be paid upon, and subject to, the closing of the merger. HashiCorp has also agreed to reimburse Qatalyst Partners for its expenses incurred in performing its services. HashiCorp has also agreed to indemnify Qatalyst Partners and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling Qatalyst Partners or any of its affiliates against certain liabilities, including liabilities under the federal securities laws, and certain expenses related to or arising out of Qatalyst Partners’ engagement.
Financial Projections
Other than in connection with HashiCorp’s regular earnings press releases and related investor materials, HashiCorp does not, as a matter of course, make public its prospective or projected financial or operating plans, due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. However, HashiCorp management regularly prepares, and the HashiCorp Board regularly evaluates, prospective financial information concerning HashiCorp’s future performance as part of its business and strategic planning processes. In addition, HashiCorp management regularly makes and reviews with the HashiCorp Board updates and sensitivities to its business plan, including to reflect actual results, HashiCorp’s strategic initiatives and trends in HashiCorp’s performance and industry.
As part of HashiCorp’s exploration and evaluation of a sale of HashiCorp and other strategic alternatives available to HashiCorp (including continuing as an independent company), the HashiCorp Long-Term Plan was prepared by HashiCorp management and reviewed with the HashiCorp Board and the M&A Committee. In addition, for the use and information of the M&A Committee and the HashiCorp Board, HashiCorp management prepared various sensitivities to the financial and operating results implied by the HashiCorp Long-Term Plan, including sensitivities for an upside scenario that assumed improved sales productivity and operating margins. The HashiCorp Long-Term Plan was provided to, and approved by the HashiCorp Board for use by, Qatalyst Partners for purposes of performing its financial analyses in connection with rendering its opinion to the HashiCorp Board, as described in the section of this proxy statement captioned “—Opinion of Qatalyst Partners.” Prospective financial information for HashiCorp’s fiscal years 2024 through 2026 included in a draft of the HashiCorp Long-Term Plan, which we refer to as the “Draft HashiCorp Long-Term Plan,” was provided to, and discussed with, IBM and certain other potential acquirers of HashiCorp as part of such parties’ respective due diligence review of HashiCorp. In addition, prospective financial information included in HashiCorp’s budget for fiscal year 2025 was also provided to, and discussed with, IBM as part of its due diligence review of HashiCorp; HashiCorp’s budget for fiscal year 2025 was reflected in the HashiCorp Long-Term Plan.
We refer to the HashiCorp-Long Term Plan and the Draft HashiCorp Long-Term Plan together as the “Financial Projections.” For more information on the preparation, review and use of the Financial Projections, see the section of this proxy statement captioned “—Background of the Merger.”
The Financial Projections were developed by HashiCorp management for internal use as then-current estimates of HashiCorp’s future financial performance as an independent company. The Financial Projections do not give effect to the merger, including (1) any impact of the negotiation or execution of the merger agreement or the merger; (2) the expenses that have already and will be incurred in connection with completing the merger; or
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(3) any changes to HashiCorp’s operations or strategy that may be implemented in connection with the pendency, or following the consummation, of the merger. The Financial Projections also do not consider the effect of any failure of the merger to be completed, and the Financial Projections should not be viewed as accurate or continuing in that context.
The Financial Projections are not included in this proxy statement to influence any decision on whether to vote in favor of the adoption of the merger agreement or any other proposal presented at the special meeting, but rather are included in this proxy statement to give stockholders access to certain non-public information that was provided to the M&A Committee, the HashiCorp Board, Qatalyst Partners and IBM. By including the Financial Projections in this proxy statement, none of HashiCorp, the M&A Committee, the HashiCorp Board, Qatalyst Partners, IBM or any of our or their respective officers, directors, advisors or other representatives or any other person has made or makes any representation to any person regarding HashiCorp’s ultimate performance as compared to the information contained in the Financial Projections. The inclusion of the Financial Projections should not be regarded as an indication that HashiCorp, the M&A Committee, the HashiCorp Board, Qatalyst Partners or any other person considered, or now considers, them to be necessarily predictive of actual future results, and such information should not be relied on as such. Further, the inclusion of the Financial Projections in this proxy statement does not constitute an admission or representation by HashiCorp that the information presented is material.
The Financial Projections were not prepared with a view toward public disclosure or complying with U.S. generally accepted accounting principles (which we refer to as “GAAP”). In addition, the Financial Projections were not prepared with a view toward compliance with published guidelines of the SEC with respect to forward-looking information or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. The Financial Projections were prepared by, and are the responsibility of, HashiCorp management. Neither HashiCorp’s independent registered public accounting firm, Deloitte & Touche LLP, nor any other independent accountants have compiled, examined or performed any procedures with respect to the Financial Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the Financial Projections. The report of Deloitte & Touche LLP incorporated by reference into this proxy statement relates solely to HashiCorp’s previously issued financial statements. It does not extend to the Financial Projections and should not be read to do so.
Although the Financial Projections are presented with numerical specificity, they reflect numerous assumptions, estimates and uncertainties as to future events made by HashiCorp management that HashiCorp management believed in good faith were reasonable at the time that the Financial Projections were prepared, including as described below. HashiCorp’s ability to achieve the financial results contemplated by the Financial Projections will be affected by our ability to achieve our strategic goals, objectives and targets over the applicable periods, and will be subject to industry, operational and execution risks. The Financial Projections are forward-looking information and are subject to many risks and uncertainties and reflect assumptions as to certain business decisions that are subject to change. Important factors that may affect actual results and cause the Financial Projections not to be achieved can be found in the risk factors included in HashiCorp’s periodic filings with the SEC. These factors are difficult to predict, and may be outside of HashiCorp’s control. As a result, there can be no assurance that the Financial Projections will be realized, and our actual results may be materially better or worse than those implied by the Financial Projections. For information on factors that may cause our future results to materially vary, see the section of this proxy statement captioned “Forward-Looking Statements.”
The Financial Projections may differ from publicized estimates, guidance and forecasts with respect to HashiCorp’s future financial performance. Stockholders should evaluate the Financial Projections, if at all, in conjunction with our historical financial statements and other information regarding HashiCorp contained in our public filings with the SEC. The Financial Projections may not be comparable with our historical operating data as a result of the assumptions utilized in preparing such information. The Financial Projections do not include any updates or revisions to reflect information or results as of any date subsequent to their preparation. Except to the extent required by applicable federal securities laws, we do not intend to update or otherwise revise the Financial Projections to reflect circumstances existing after the date that such information was prepared or to reflect the occurrence of future events. We may have reported, and may continue to report, results of operations for periods included in the Financial Projections that were or will be completed following the preparation of the Financial Projections. Stockholders and investors are urged to refer to our periodic filings with the SEC for information on our actual historical results.
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Because the Financial Projections reflect estimates and judgments, they are susceptible to sensitivities and assumptions, as well as to multiple interpretations based on actual experience and business developments. The Financial Projections also cover multiple years, and such information by its nature becomes less predictive with each succeeding year. The Financial Projections are not, and should not be considered to be, a guarantee of future operating results. Further, the Financial Projections are not fact and should not be relied upon as being necessarily indicative of HashiCorp’s future results or for purposes of making any investment decision. In light of the foregoing factors and the uncertainties inherent in the Financial Projections, stockholders and investors are cautioned not to place undue, if any, reliance on the Financial Projections.
Certain of the financial measures included in the Financial Projections are non-GAAP financial measures (which we refer to as “non-GAAP financial measures”). These are financial performance measures that are not calculated in accordance with GAAP. These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures, and may be different from similarly titled non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.
Financial measures included in forecasts provided to a financial advisor and a board of directors in connection with a business combination transaction, such as the Financial Projections, are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not presented to or relied upon by the HashiCorp Board, Qatalyst Partners or any other person, and were not presented to IBM or any other potential acquirer. Accordingly, no reconciliation of the financial measures included in the Financial Projections is provided in this proxy statement. The following table summarizes the HashiCorp Long-Term Plan. HashiCorp management made various estimates and assumptions when preparing the Financial Projections, including: (1) the growth in new customers adopting HashiCorp’s cloud-based products; (2) increasing customer renewal rates through fiscal year 2026 and remaining flat in fiscal years 2027 through 2029; (3) timing of sales productivity and efficiency improvements; (4) expected improving profitability and cash flow generation as HashiCorp’s operations continue to scale over time; and (5) an effective tax rate of 21 percent, with 80 percent utilization of HashiCorp’s U.S. Federal net operating loss carryforwards of $690.4 million as of January 31, 2024.
(dollars in millions)
2025E
2026E
2027E
2028E
2029E
Revenue
$669
$ 801
$968
$1,179
$1,426
Non-GAAP Operating Income (Loss)(1)
$(36)
$47
$106
$200
$285
Unlevered Free Cash Flow(2)
$28
$117
$169
$253
$282
(1)
Non-GAAP Operating Income (Loss) is defined as GAAP Operating Income (Loss) adjusted to exclude amortization of stock-based compensation of capitalized internal-use software, stock-based compensation expense, amortization of acquired intangibles and acquisition-related expenses.
(2)
Unlevered Free Cash Flow used by Qatalyst Partners, with the approval of the HashiCorp Board, in its financial analyses (as described in more detail in the section of this proxy statement captioned “—Opinion of Qatalyst Partners”), is calculated as Non-GAAP Operating Income (Loss) (as defined above) subtracting the impact of cash taxes, and adding or subtracting (as applicable) the impact of depreciation and amortization, capital expenditures, capitalized internal-use software costs and changes in net working capital. HashiCorp management’s calculation of Free Cash Flow (as defined in the table below) was not provided to the HashiCorp Board as part of the HashiCorp Long-Term Plan. Fiscal year 2029 assumes a long-term effective tax rate of 21%, as provided by HashiCorp management.
The following table summarizes the Draft HashiCorp Long-Term Plan. As described in the section of this proxy statement captioned “—Background of the Merger,” the Draft HashiCorp Long-Term Plan was shared with IBM prior to the adoption of the HashiCorp Long-Term Plan by the HashiCorp Board. The HashiCorp Long-Term Plan reflected certain updates from HashiCorp management relative to the Draft HashiCorp Long-Term Plan; except for prospective financial information included in HashiCorp’s budget for fiscal year 2025, which was reflected in the estimated financial results for fiscal year 2025 included in the HashiCorp Long-Term Plan, IBM did not receive the HashiCorp Long-Term Plan or the updates reflected therein as part of its due diligence of HashiCorp. The Draft HashiCorp Long-Term Plan did not include estimates for HashiCorp’s fiscal years 2027 through 2029.
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(dollars in millions)
2024E
2025E
2026E
Revenue
$581
$660
$791
Non-GAAP Operating Income (Loss)(1)
$(85)
$(41)
$42
Free Cash Flow(2)
$(32)
$86
$147
(1)
Non-GAAP Operating Income (Loss) is defined as GAAP Operating Income (Loss) adjusted to exclude amortization of stock-based compensation of capitalized internal-use software, stock-based compensation expense, amortization of acquired intangibles and acquisition-related expenses.
(2)
Free Cash Flow is defined as GAAP net cash provided by (used in) operating activities minus the impact of purchases of property and equipment and capitalized internal-use software. Free Cash Flow includes interest income of $65 million, $66 million and $58 million for FY2024E, FY2025E and FY2026E, respectively. Unlevered Free Cash Flow (as defined in the table above) was not calculated as part of the Draft HashiCorp Long-Term Plan.
Interests of HashiCorp’s Directors and Executive Officers in the Merger
When considering the recommendation of the HashiCorp Board that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of our stockholders generally, as more fully described below. The HashiCorp Board was aware of and considered these interests, among other matters, to the extent that they existed at the time, in approving the merger agreement and the merger and recommending that the merger agreement be adopted by our stockholders. These interests are described in more detail and, where applicable, are quantified in the narrative below.
Treatment of HashiCorp Equity Awards and the ESPP in the Merger
Treatment of HashiCorp Options
As of June 30, 2024, we estimate that there will be outstanding HashiCorp options covering an aggregate of 5,876,913 shares of our common stock, of which HashiCorp options covering an aggregate of 4,220,943 shares of our common stock are estimated to be held by individuals serving as executive officers of HashiCorp as of the date of this proxy statement.
Under the terms of the merger agreement, at the effective time, each HashiCorp option will be canceled in exchange for the right to receive the option payment, subject to applicable withholding taxes.
For more information regarding the treatment of HashiCorp options held by HashiCorp’s executive officers, see the section of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger—Treatment of HashiCorp Equity Awards and the ESPP in the Merger—Equity Interests of HashiCorp’s Directors and Executive Officers.”
Treatment of HashiCorp RSUs
As of June 30, 2024, we estimate that there will be outstanding HashiCorp RSUs that cover an aggregate of 14,038,529 shares of our common stock, of which HashiCorp RSUs covering an aggregate of 54,915 shares of our common stock are estimated to be held by individuals serving as non-employee directors of HashiCorp as of the date of this proxy statement, and of which HashiCorp RSUs covering an aggregate of 254,372 shares of our common stock are estimated to be held by individuals serving as executive officers of HashiCorp as of the date of this proxy statement.
Under the terms of the merger agreement, at the effective time, each cashed-out HashiCorp RSU will be canceled in exchange for the right to receive an amount in cash, subject to applicable withholding taxes, equal to the product of (1) the per share price multiplied by (2) the total number of shares of our common stock covered by such HashiCorp RSU.
Under the terms of the merger agreement, at the effective time, each rollover HashiCorp RSU will be converted into an IBM RSU with respect to a number of shares of IBM common stock determined by multiplying (1) the number of shares of our common stock subject to such rollover HashiCorp RSU immediately prior to the effective time by (2) the exchange ratio, and rounded down to the nearest whole share. Such IBM RSU will be subject to substantially the same terms and conditions (including the same vesting and acceleration terms, as applicable) as were applicable to the rollover HashiCorp RSU.
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For more information regarding the treatment of HashiCorp RSUs held by HashiCorp’s directors and executive officers, see the section of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger—Treatment of HashiCorp Equity Awards and the ESPP in the Merger—Equity Interests of HashiCorp’s Directors and Executive Officers.”
Treatment of HashiCorp PSUs
Certain HashiCorp employees (including certain HashiCorp executive officers) have been granted HashiCorp PSUs that vest based on a combination of continued service and the attainment of financial performance conditions during a performance period covering our 2025 fiscal year.
If the closing of the merger occurs before the last day of the performance period for the HashiCorp PSUs and either (1) the holder remains a service provider of HashiCorp through the closing date or (2) the holder experiences a qualifying termination under their change in control and severance agreement (if any) within three months before the closing date, the performance conditions will be deemed to be achieved at the target level, as described below. If the closing of the merger occurs on or after the last day of the performance period, the HashiCorp PSUs that become eligible to vest according to the service-based vesting schedule (based on actual attainment of the performance conditions) will be treated as HashiCorp RSUs, as described above.
As of June 30, 2024, we estimate that there will be outstanding HashiCorp PSUs that cover an aggregate of 335,159 shares of our common stock, of which HashiCorp PSUs covering an aggregate of 245,636 shares of our common stock are estimated to be held by HashiCorp’s current executive officers (based on an assumption that the performance conditions are met at target levels). If performance conditions for HashiCorp PSUs are assumed to be met at maximum levels, as of such date, we estimate that there will be outstanding HashiCorp PSUs that cover an aggregate of 670,318 shares of our common stock, of which HashiCorp PSUs covering an aggregate of 491,272 shares of our common stock are estimated to be held by HashiCorp’s current executive officers. We estimate that all of these PSUs will remain outstanding as of June 30, 2024, which is the assumed closing date solely for purposes of the description of the equity interests of HashiCorp’s directors and executive officers and the golden parachute compensation disclosure below.
Under the terms of the merger agreement, at the effective time, each cashed-out HashiCorp PSU will be canceled in exchange for the right to receive an amount in cash, subject to applicable withholding taxes, equal to the product of (1) the per share price multiplied by (2) the number of shares of our common stock subject to such HashiCorp PSU immediately prior to the effective time (with any performance conditions deemed to be achieved at the target level).
Under the terms of the merger agreement, at the effective time, each rollover HashiCorp PSU will be converted into an IBM RSU with respect to a number of shares of IBM common stock determined by multiplying (1) the number of shares of our common stock subject to such rollover HashiCorp PSU immediately prior to the effective time (with any performance conditions deemed to be achieved at the target level) by (2) the exchange ratio, and rounded down to the nearest whole share. Such IBM RSU will be subject to substantially the same terms and conditions (including the same service-based vesting and acceleration terms, as applicable) as were applicable to the rollover HashiCorp PSU, except that there will no longer be a performance-based vesting schedule.
For more information regarding the treatment of HashiCorp PSUs held by HashiCorp’s executive officers, see the section of this proxy statement captioned “The Merger—Interests of HashiCorp’s Directors and Executive Officers in the Merger—Treatment of HashiCorp Equity Awards and the ESPP in the Merger—Equity Interests of HashiCorp’s Directors and Executive Officers.”
Treatment of the ESPP
Under the merger agreement, we are required to take action to provide for the following with respect to the ESPP:
participation in the ESPP is now limited to those employees who are participants on April 24, 2024;
except to the extent necessary to maintain the status of the ESPP as an “employee stock purchase plan” within the meaning of Section 423 of the Code, participants in the ESPP may not increase their payroll deduction elections or rate of contributions from those in effect on April 24, 2024, or make any separate non-payroll contributions to the ESPP on or following April 24, 2024;
no ESPP offering period will commence after April 24, 2024;
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as of the earlier of the first scheduled purchase date following April 24, 2024, or a date that is no later than the last trading day before the effective time, each participant’s then-outstanding share purchase right under the ESPP will be exercised; and
the ESPP will terminate as of the effective time.
Equity Interests of HashiCorp’s Directors and Executive Officers
The following table sets forth for each person who has been a HashiCorp executive officer or member of the HashiCorp Board at any time since the beginning of HashiCorp’s 2024 fiscal year, (1) the number of shares of our common stock directly held; (2) the number of shares of our common stock subject to his or her HashiCorp options; and (3) the number of shares of our common stock subject to his or her HashiCorp RSUs or HashiCorp PSUs, in each case assuming the following and such additional assumptions set forth in the footnotes to the table:
each figure in this table represents an estimate of the shares or values, as applicable, estimated to be outstanding as of June 30, 2024 (which, solely for purposes of this proxy statement, is the assumed closing date);
no additional HashiCorp options, HashiCorp RSUs or HashiCorp PSUs are granted to such individuals prior to June 30, 2024 (other than as indicated in the footnotes to the table for non-employee directors); and
that the values of these shares of our common stock and equity awards are equal to the per share price of $35.00.
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Name
Shares of Common Stock
Held Directly(1)
HashiCorp Options(2)
HashiCorp Restricted
Stock Units(3)
Total
($)
Number of
Shares
(#)
Value of
Shares
($)
Number of
Shares
(#)
Value of
Shares
($)
Number
of Shares
(#)
Value of
Shares
($)
David McJannet
3,341,819
116,963,665
3,433,638
120,177,330
931,289
32,595,115
269,736,110
Armon Dadgar.
17,749,373
621,228,055
315,084
11,027,940
406,861
14,240,135
646,496,130
Navam Welihinda
189,681
6,638,835
182,539
6,388,865
377,761
13,221,635
26,249,335
Susan St. Ledger
278,672
9,753,520
356,331
12,471,585
22,225,105
Marc Holmes
30,022
1,050,770
289,682
10,138,870
284,025
9,940,875
21,130,515
Michael Weingartner