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Form PREM14A ForgeRock, Inc. For: Nov 28

November 28, 2022 6:04 AM EST

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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
FORGEROCK, 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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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION, DATED NOVEMBER 28, 2022

ForgeRock, Inc.
201 Mission Street, Suite 2900
San Francisco, California 94105
To the Stockholders of ForgeRock, 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 ForgeRock, Inc. (which we refer to as “ForgeRock”). The special meeting will be held on [•], at [•], Pacific time. You may attend the special meeting via a live interactive webcast on the internet at [•]. 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 (as it may be amended from time to time), dated October 10, 2022 (which we refer to as the “merger agreement”), between Project Fortress Parent, LLC, a Delaware limited liability company (which we refer to as “Parent”), Project Fortress Merger Sub, Inc., (which we refer to as “Merger Sub”) and ForgeRock. Parent and Merger Sub are affiliates of Thoma Bravo, L.P. (which we refer to as “Thoma Bravo”), one of the largest and most experienced global private equity firms. We refer to the merger of Merger Sub (a wholly owned subsidiary of Parent) with and into ForgeRock as the “merger.” At the special meeting, you will also be asked to consider and vote on a proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to its named executive officers in connection with the merger; and a proposal for the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, 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 $23.25 in cash, without interest and subject to any applicable withholding taxes, for each share of our Class A common stock and Class B common stock that you own (unless you have properly exercised your appraisal rights). This amount constitutes (1) a premium of approximately 53% over ForgeRock’s closing share price on October 10, 2022, the last full trading day prior to the transaction announcement, and (2) a premium of approximately 44% over the volume weighted average price of ForgeRock stock for the 30-day period ending October 10, 2022.
ForgeRock’s Board of Directors, after considering the factors more fully described in the enclosed proxy statement, unanimously: (1) determined that the merger agreement, and the other transactions contemplated by the merger agreement, including the merger are advisable, fair to and in the best interests of ForgeRock and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement in all respects.
ForgeRock’s Board of Directors unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to its named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
The accompanying proxy statement provides detailed information about the special meeting, the merger agreement and the merger, and the other proposals to be considered at the special meeting. A copy of the merger agreement is attached as Annex A to the proxy statement.
The accompanying proxy statement also describes the actions and determinations of ForgeRock’s Board of Directors in connection with its evaluation of the merger agreement and the merger. 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

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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 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 at the special meeting and will have the same effect as a vote against the adoption of 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 a quorum or be voted at the special meeting, and that will have the same effect as voting against the adoption of 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:

1407 Broadway, 27th Floor
New York, New York 10018
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
On behalf of ForgeRock’s Board of Directors, thank you for your support.
 
Very truly yours,
 
 
 
 
 
Francis Rosch
 
Chief Executive Officer
The accompanying proxy statement is dated [•], and, together with the enclosed form of proxy card, is first being sent to stockholders on or about [•].

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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION, DATED NOVEMBER 28, 2022

ForgeRock, Inc.
201 Mission Street, Suite 2900
San Francisco, California 94105
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD VIRTUALLY VIA WEBCAST ON [•]
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 ForgeRock, Inc., a Delaware corporation (which we refer to as “ForgeRock”), will be held on [•], at [•], Pacific time, for the following purposes:
1.
To consider and vote on the proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time), dated as of October 10, 2022, between Parent, Merger Sub and ForgeRock (which we refer to as the “merger agreement”);
2.
To consider and vote on the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to its named executive officers in connection with the merger of Merger Sub with and into ForgeRock (which we refer to as the “merger”);
3.
To consider and vote on any proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and
4.
To transact any other business that may properly come before the special meeting.
The special meeting will be held by means of a live interactive webcast on the internet at [•]. 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 [•], 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 ForgeRock stockholders as of the close of business on [•], are entitled to notice of, and to vote at, the special meeting.
ForgeRock’s Board of Directors unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to its named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
ForgeRock record stockholders 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 and 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) to be paid on the amount determined to be “fair value”) in lieu of receiving $23.25 per share in cash 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 ForgeRock record stockholder or beneficial owner must properly demand appraisal before the vote is taken on the merger agreement and comply with all other requirements of the DGCL, including Section 262 of the DGCL, which are summarized in the accompanying proxy statement, and certain conditions set forth in Section 262(g) of the DGCL must be satisfied. A copy of Section 262 of the DGCL is available as a publicly available electronic resource, which may be accessed without subscription or cost, at the following hyperlink, which is incorporated in this notice by reference: 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

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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 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 at the special meeting and will have the same effect as a vote against the adoption of 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 a quorum or be voted at the special meeting, and that will have the same effect as voting against the adoption of the merger agreement.
 
By Order of the Board of Directors,
 
 
 
 
 
Samuel Fleischmann
 
Chief Legal Officer
 
 
 
Dated: [•]
 
 
 
San Francisco, California

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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION, DATED NOVEMBER 28, 2022

ForgeRock, Inc.

PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD VIRTUALLY VIA WEBCAST ON [•]
This proxy statement is dated [] and, together with the enclosed form of proxy card,
is first being sent to stockholders on or about [].

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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 a quorum or be voted at the special meeting, and that will have the same effect as voting against the adoption of 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 not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.
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. 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 our proxy solicitor:

1407 Broadway, 27th Floor
New York, New York 10018
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
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TRANSACTION SUMMARY
Except as otherwise specifically noted in this proxy statement, “ForgeRock,” “we,” “our,” “us and similar words refer to ForgeRock, Inc., including, in certain cases, our subsidiaries. Throughout this proxy statement, the “ForgeRock Board refers to ForgeRock’s Board of Directors. Throughout this proxy statement, we refer to Project Fortress Parent, LLC, as “Parent,” and Project Fortress Merger Sub, Inc., as “Merger Sub.” In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger (as it may be amended from time to time), dated October 10, 2022, between Parent, Merger Sub and ForgeRock as the “merger agreement.”
This summary highlights selected information from this proxy statement related to the proposed merger of Merger Sub (a wholly owned subsidiary of Parent) with and into ForgeRock with ForgeRock surviving and continuing as a wholly owned subsidiary of Parent. 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 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.” 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 October 10, 2022, ForgeRock agreed to be acquired by affiliates of Thoma Bravo, L.P. (which we refer to as “Thoma Bravo”). Thoma Bravo is one of the largest and most experienced global private equity firms. If the merger is completed, each outstanding share of our Class A common stock and Class B common stock will be converted into the right to receive $23.25 per share in cash (subject to certain exceptions). 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
ForgeRock
ForgeRock supports billions of identities to help people simply and safely access the connected world—from shopping and banking to accessing company networks to get their work done. We make this possible through a unified and extensive identity platform to enable enterprises to provide exceptional digital user experiences without compromising security and privacy. This allows enterprises to deepen their relationships with customers and increase the productivity of their workforce and partners, while at the same time providing better security and regulatory compliance.
ForgeRock’s platform is purpose-built for the enterprise and provides mission-critical capabilities, including performance and scale, rich identity functionality, deployment flexibility, and extensive integration and interoperability. Our platform includes a full suite of identity functionality across Customer Identity Access Management, Access Management, and Identity Governance Administration and a differentiated identity object modeling approach that supports all identity types. We enable enterprises to rapidly integrate and secure thousands of applications across types, deployments, and operating environments such as SaaS, mobile, microservices, web, and legacy, running in public and private cloud, and on-premise. Together, these deep capabilities enable us to provide enterprises with a single view of all their identities in one unified platform and position us as a leader in digital identity for the enterprise market.
Our Class A common stock is listed on the New York Stock Exchange (which we refer to as the “NYSE”) under the symbol “FORG.” ForgeRock’s corporate offices are located at 201 Mission Street, Suite 2900, San Francisco, CA 94105, and its telephone number is (415) 599-1100.
Project Fortress Parent, LLC
Parent was formed on October 3, 2022, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Parent has not engaged in any business activities other than as incidental to its formation and in connection with the transactions contemplated by the merger agreement and arranging of the equity financing and any debt financing in connection with the merger.
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Parent’s address is c/o Thoma Bravo, L.P., 600 Montgomery Street, 20th Floor, San Francisco, California 94111, and its telephone number is (415) 263-3660.
Project Fortress Merger Sub, Inc.
Merger Sub is a wholly owned subsidiary of Parent and was formed on October 3, 2022, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not engaged in any business activities other than as incidental to its formation and in connection with the transactions contemplated by the merger agreement and arranging of the equity financing and any debt financing in connection with the merger. Upon completion of the merger, Merger Sub will cease to exist and ForgeRock will continue as the surviving corporation.
Merger Sub’s address is c/o Thoma Bravo, L.P., 600 Montgomery Street, 20th Floor, San Francisco, California 94111, and its telephone number is (415) 263-3660.
Thoma Bravo
Thoma Bravo is a private equity investment firm and registered investment advisor.
Thoma Bravo’s address is 600 Montgomery Street, 20th Floor, San Francisco, California 94111, and its telephone number is (415) 263-3660.
Parent and Merger Sub are each affiliated with Thoma Bravo Fund XV, L.P. (which we refer to as the “Thoma Bravo Fund”). In connection with the transactions contemplated by the merger agreement, the Thoma Bravo Fund has committed to capitalize Parent on the closing date of the merger (which we refer to as the “Closing”) on the terms and subject to the conditions set forth in an equity commitment letter. This amount will be sufficient to fund the aggregate purchase price and the other payments contemplated by the merger agreement (in each case, pursuant to certain terms and conditions as described further in this proxy statement under the caption “The Merger—Financing of the Merger”).
Effect of the Merger
Upon the terms and subject to the conditions of the merger agreement, and in accordance with the General Corporation Law of the State of Delaware (which we refer to as the “DGCL”), at the effective time of the merger: (1) Merger Sub will merge with and into ForgeRock; (2) the separate corporate existence of Merger Sub will cease; and (3) ForgeRock will continue as the surviving corporation of the merger and as a wholly owned subsidiary of Parent. Throughout this proxy statement, we use the term “surviving corporation” to refer to ForgeRock as the surviving corporation following the merger.
As a result of the merger, ForgeRock will cease to be a publicly traded company. If the merger is completed, you will not own any shares of capital stock of the surviving corporation as a result of the merger.
The time at which the merger becomes effective (which we refer to as the “effective time of the merger”) will occur upon the filing of a certificate of merger with, and acceptance of that certificate by, the Secretary of State of the State of Delaware (or at a later time as ForgeRock, Parent and Merger Sub may agree and specify in the certificate of merger).
Per Share Price
Upon the terms and subject to the conditions set forth in the merger agreement, at the effective time of the merger, each share of our common stock that is issued and outstanding as of immediately prior to the effective time of the merger (other than shares of our common stock that are (1) held by ForgeRock as treasury stock; (2) owned by Parent or Merger Sub; (3) owned by any direct or indirect wholly owned subsidiary of Parent or Merger Sub as of immediately prior to the effective time of the merger; or (4) held by stockholders who have (a) neither voted in favor of the adoption of the merger agreement or the merger nor consented thereto in writing and (b) properly demanded appraisal of such shares of our common stock pursuant to, and in accordance with, Section 262 of the DGCL (which shares of our common stock in clauses (1) – (4) we refer to collectively as the “excluded shares”)) will be automatically converted into the right to receive an amount in cash equal to $23.25, without interest and less any applicable withholding taxes. We refer to this amount as the “per share price.”
At or prior to the Closing, a sufficient amount of cash will be deposited with a designated payment agent to pay the aggregate per share price. Once a stockholder has provided the payment agent with any documentation required by the
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payment agent, the payment agent will pay the stockholder the appropriate portion of the aggregate per share price in exchange for the shares of our common stock held by that stockholder. For more information, see the section of this proxy statement captioned “The Merger Agreement—Payment Agent, Exchange Fund, and Exchange and Payment Procedures.”
After the merger is completed, you will have the right to receive the per share price for each share of our common stock that you own, but you will no longer have any rights as a stockholder (except that our stockholders holding shares with respect to which an appropriate person has properly and validly exercised and perfected, and has not validly withdrawn or otherwise lost, their appraisal rights will have the right to receive a payment for the “fair value” of their shares 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 [•], at [•], Pacific time. You may attend the special meeting solely via a live interactive webcast on the internet at [•]. We refer to the special meeting, and any adjournment, postponement or other delay of the special meeting, as 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). We believe that a virtual meeting provides expanded access, improved communication and cost savings for our stockholders.
Purpose
At the special meeting, we will ask stockholders to vote on proposals to: (1) adopt the merger agreement; (2) approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; and (3) adjourn the special meeting, from time to time, to a later date or dates, if necessary or appropriate, 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 [•] (which we refer to as the “record date”). 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. 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 ten votes on each matter submitted for a vote at the special meeting.
Quorum
As of the record date, there were [•] shares of our Class A common stock and [•] shares of our Class B common stock outstanding and entitled to vote at the special meeting. The holders of the outstanding shares of capital stock representing a majority of the voting power of all issued and outstanding shares of our common stock entitled to vote, present in person or represented by proxy, shall constitute a quorum.
Required Vote
The proposals to be voted on at the special meeting require the following votes:
Proposal 1: Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the voting power of all issued and outstanding shares of our common stock as of the record date.
Proposal 2: Approval of the proposal to approve the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger requires the affirmative vote of a majority of the voting power 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: Approval of the proposal to adjourn the special meeting to a later date or dates 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 our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
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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.
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 in order 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 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 ForgeRock Board and Reasons for the Merger
The ForgeRock Board, after considering various factors described in the section of this proxy statement captioned “The Merger—Recommendation of the ForgeRock Board and Reasons for the Merger,” unanimously: (1) determined that the merger agreement, and the transactions contemplated by the merger agreement, including the merger, are advisable, fair to and in the best interests of ForgeRock and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement in all respects.
The ForgeRock Board unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Opinion of J.P. Morgan Securities LLC
On October 10, 2022, J.P. Morgan Securities LLC (“J.P. Morgan”) delivered its written opinion to the ForgeRock Board, dated October 10, 2022, that, as of such date, and based upon and subject to the various assumptions, limitations, qualifications and other factors set forth in its opinion, the per share consideration of $23.25 in cash to be paid to holders of our common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.
The full text of the written opinion of J.P. Morgan dated October 10, 2022, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this proxy statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. ForgeRock’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the ForgeRock Board (in its capacity
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as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the consideration to be paid in the merger and did not address any other aspect of the merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of ForgeRock as to how such stockholder should vote with respect to the proposed merger or any other matter.
For additional information, see the section of this proxy statement captioned “The Merger—Opinion of J.P. Morgan Securities LLC” and Annex B to this proxy statement.
Treatment of Equity Awards in the Merger
The merger agreement provides that ForgeRock’s equity awards that are outstanding immediately prior to the effective time of the merger will be treated in the following manner in connection with the merger. For more information, see the section of this proxy statement captioned “The Merger Agreement—Conversion of Shares—Treatment of Equity Awards; ESPP.”
Treatment of ForgeRock Restricted Stock Units
At the effective time of the merger, each outstanding ForgeRock restricted stock unit subject to time-based vesting (which we refer to as “ForgeRock RSUs”) that is vested but not yet settled or that vests as a result of the closing of the merger (which we refer to as a “vested ForgeRock RSU”) will be cancelled and converted into the right to receive an amount in cash equal in value to (1) the total number of shares of our Class A common stock or Class B common stock subject to such vested ForgeRock RSU immediately prior to the effective time of the merger, multiplied by (2) the per share price, without interest and less applicable withholding taxes.
At the effective time of the merger, each outstanding ForgeRock RSU that is not a vested ForgeRock RSU (which we refer to an “unvested ForgeRock RSU”) will be cancelled and converted into the contingent right to receive from Parent or the surviving corporation an amount in cash (which we refer to as a “Converted Cash Award”) equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to such unvested ForgeRock RSU immediately prior to the effective time of the merger, multiplied by (2) the per share price, without interest and less applicable withholding taxes. Except as otherwise provided in the merger agreement, each Converted Cash Award will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding unvested ForgeRock RSU immediately prior to the effective time of the merger, provided that terms rendered inoperable by the transactions contemplated by the transaction documents entered into connection with the merger will no longer have any force or effect.
Treatment of ForgeRock Options
At the effective time of the merger, each outstanding ForgeRock stock option (which we refer to as “ForgeRock options”) that is vested, or that vests as a result of the merger (which we refer to as a “vested ForgeRock option”), will be cancelled and converted into the right to receive an amount in cash equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to the vested ForgeRock option immediately prior to the effective time multiplied by (2) the excess, if any, of the per share price over the per share exercise price of such vested ForgeRock option, without interest and less applicable withholding taxes.
At the effective time of the merger, each outstanding ForgeRock option that is not a vested ForgeRock option (which we refer to as an “unvested ForgeRock option”) will be converted into the contingent right to receive from Parent or the surviving corporation a Converted Cash Award equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to such unvested ForgeRock option immediately prior to the effective time of the merger, multiplied by (2) the excess, if any, of the per share price over the per share exercise price per of such unvested ForgeRock option, without interest and less applicable withholding taxes. Except as otherwise provided in the merger agreement, each such Converted Cash Award will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding unvested ForgeRock option immediately prior to the effective time of the merger.
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Any ForgeRock option that has a per share exercise price that is greater than or equal to the per share price (which we refer to as an “underwater ForgeRock option”) will be cancelled at the effective time of the merger for no consideration or payment.
Treatment of the ESPP
From the date of the merger agreement, we have taken, or will take, all actions necessary to (1) provide that no new individuals will be permitted to enroll in our 2021 Employee Stock Purchase Plan (which we refer to as the “ESPP”); (2) make any adjustment that may be necessary or advisable to reflect the shortened offering period or purchase period, but otherwise treat such shortened offering period or purchase period as a fully effective and completed offering period or purchase period for all purposes pursuant to the ESPP; (3) not allow any increase in the amount of participants’ payroll deduction elections under the ESPP during the offering period or purchase period that is in effect on date of the merger agreement; (4) cause the exercise (as of no later than one business day prior to the date on which the effective time occurs) of each outstanding purchase right pursuant to the ESPP (but otherwise no other of our Class A common stock under the ESPP will be issued); (5) provide that no further offering period or purchase period will commence pursuant to the ESPP, and if the effective time of the merger would otherwise occur before the end of the current purchase period under the ESPP (which we refer to as the “Current Purchase Period”), shorten the Current Purchase Period as of a specified trading day at least ten days prior to the date on which the effective time of the merger occurs; and (6) not extend the Current Purchase Period. Immediately prior to and effective as of the effective time of the merger (but subject to the consummation of the merger), we will terminate the ESPP and no further rights will be granted or exercised under the ESPP after such termination.
Employee Benefits
From and after the effective time of the merger, the surviving corporation will (and Parent will cause the surviving corporation to) honor all of our arrangements providing for compensation or employee benefits (which we refer to as “ForgeRock benefit plans”) in accordance with their terms as in effect immediately prior to the effective time of the merger, provided that such ForgeRock benefit plans were made available to Parent as of the date of the merger agreement, except that the surviving corporation is permitted to amend or terminate ForgeRock benefit plans in accordance with their terms or if otherwise required by applicable law.
We refer to each individual who is our employee or an employee of any of our subsidiaries immediately prior to the effective time of the merger and continues to be an employee of Parent or one of its subsidiaries (including the surviving corporation) immediately following the effective time of the merger as a “continuing employee.”
For the period beginning on the effective time of the merger and ending on the earlier of the anniversary of such date or the date on which a continuing employee’s employment terminated (which we refer to as the “Benefits Period”), the surviving corporation and its subsidiaries will:
maintain employee benefits for the benefit of each continuing employee (other than defined benefit pension, retiree welfare, and the opportunity to participate in equity or equity-based or other long term incentive compensation, change of control, retention, transaction bonus or similar arrangements, defined benefit pension, retiree or post-employment welfare or nonqualified deferred compensation (which we refer to as the “Excluded Benefits”)) that are substantially comparable in the aggregate to those in effect at ForgeRock or its subsidiaries on the date of the merger agreement;
provide an annual base salary or wage rate, and target annual cash bonus opportunity to each Continuing Employee that is substantially the same in the aggregate to that provided to such Continuing Employee immediately prior to the effective time of the merger, which will not, in the aggregate, be decreased during the Benefits Period; and
provide to Continuing Employees cash severance benefits upon a qualifying termination of employment (subject to satisfying any requirements required by Parent) that are substantially the same as those provided by ForgeRock and its subsidiaries as of the date of the merger agreement.
At or after the effective time of the merger, Parent, the surviving corporation or any other subsidiary of Parent will use commercially reasonable efforts to cause Continuing Employees to receive credit for all service with ForgeRock and its subsidiaries prior to the effective time of the merger, and with Parent, the surviving corporation, and any of their subsidiaries on or after the effective time of the merger, for purposes of eligibility to participate, vesting and entitlement to benefits for purposes of vacation accrual and severance pay entitlement (but not including for any
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Excluded Benefits), to the same extent such service was credited under the corresponding ForgeRock benefit plan in which such Continuing Employee participated immediately prior to the date of the merger agreement.
Additionally, Parent will, or will cause the surviving corporation or any other subsidiary of Parent to, use commercially reasonable efforts to provide that:
each Continuing Employee will be immediately eligible to participate in any employee benefit plans sponsored by Parent and its subsidiaries (other than the Excluded Benefits) (which we refer to as the “New Plans”) to the extent that coverage pursuant to any New Plan replaces coverage pursuant to a comparable ForgeRock benefit plan in which such Continuing Employee participates immediately before the effective time of the merger (which we refer to as the “Old Plans”);
for purposes of New Plans providing medical, dental, pharmaceutical, or vision benefits to any Continuing Employee, cause all pre-existing conditions or limitations, physical examination requirements, evidence of insurability requirements and actively-at-work requirements of such New Plan to be waived for such Continuing Employee and his or her covered dependents, to the same extent waived under the corresponding ForgeRock benefit plan;
during the plan year in which the closing of the merger occurs, cause any eligible expenses paid by such Continuing Employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date that such Continuing Employee’s participation in the corresponding New Plan begins to be given full credit pursuant to such New Plan for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such Continuing Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan; and
any vacation or paid time off accrued but unused by a Continuing Employee as of immediately prior to the effective time of the merger will be credited to such Continuing Employee following the effective time of the merger, will not be subject to accrual limits or other forfeiture and will not limit future accruals.
Interests of ForgeRock’s Directors and Executive Officers in the Merger
When considering the recommendation of the ForgeRock 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, 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 ForgeRock 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 our executive officers, the treatment of their outstanding awards of restricted stock units and options, as described in more detail in the section of this proxy statement captioned “The Merger—Interests of ForgeRock’s Directors and Executive Officers in the Merger—Treatment of Equity Awards.”
For our non-employee directors, the accelerated vesting, at or immediately prior to the effective time of the merger, of ForgeRock RSUs and ForgeRock options, and the treatment of such equity awards, as described in more detail in the section of this proxy statement captioned “The Merger—Interests of ForgeRock’s Directors and Executive Officers in the Merger—Treatment of Equity Awards.”
The entitlement of each of our executive officers to receive payments and benefits pursuant to ForgeRock’s Change of Control and Severance Policy (which we refer to as the “Severance Policy”) if, during the period beginning three months before our change of control through 12 months after our change of control, ForgeRock terminates their employment with ForgeRock for a reason other than “cause,” death or “disability” or they resign for “good reason,” in each case as set forth in the Severance Policy. These payments and benefits include:
a lump sum payment equal to 12 months’ base salary (18 months for Francis Rosch, our president and chief executive officer);
a lump sum equal to a 100% of the executive’s target annual bonus for the year of termination (150% for Mr. Rosch);
payment of COBRA continuation coverage premiums for up to 12 months (18 months for Mr. Rosch); and
100% acceleration of unvested time-based equity awards.
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The continued indemnification and insurance coverage for our directors and executive officers from the surviving corporation and Parent under the terms of the merger agreement.
Appraisal Rights
If the merger is consummated, our stockholders (including beneficial owners of shares of capital stock) who (1) do not vote in favor of the adoption of the merger agreement; (2) continuously hold their applicable shares of our common stock through the effective time of the merger; (3) properly demand appraisal of their shares; (4) meet certain 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 of the DGCL 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 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) interest on the amount determined by the Delaware Court of Chancery to be the fair value from the effective time 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 time 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 persons seeking appraisal, interest will accrue thereafter only upon the sum of (x) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (y) interest theretofore 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 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 as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.
Only a stockholder of record or a beneficial owner may submit a demand for appraisal. To exercise appraisal rights, such person must (1) submit a written demand for appraisal to ForgeRock before the vote is taken on the proposal to adopt the merger agreement; (2) not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement; (3) continue to hold of record or own beneficially the subject shares of our common stock through the effective time of the merger; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings with respect of ForgeRock unless certain conditions are satisfied by the persons seeking appraisal, as described further below. The requirements under Section 262 of the DGCL for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL. Pursuant to Subsection (d)(1) of Section 262 of the DGCL, this proxy statement is to include either a copy of Section 262 of the DGCL or information directing the stockholders to a publicly available electronic resource at which Section 262 of the DGCL may be accessed without subscription or cost. You may find an electronic copy of Section 262 of the DGCL available at the following URL, accessible without subscription or cost, which is incorporated herein 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 herein or therein by reference, and the actual text of Section 262 of the DGCL, the actual text of Section 262 of the DGCL controls. All references in Section 262 of the DGCL and in this summary to a “stockholder” are to the record holder of shares as to which appraisal rights are asserted, unless otherwise expressly noted herein. All references in Section 262 and in this summary “beneficial owner” mean a person who is the beneficial owner of shares of stock held either in voting trust or by a nominee on behalf of such person, unless otherwise expressly noted.
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.
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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.
For more information, see the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.” Stockholders should consult their own 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 extensions thereof, if any) applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (which we refer to as the “HSR Act”) have expired or otherwise been terminated, and all consents, approvals and filings required under the specified foreign regulatory laws (as defined in the section of this proxy statement captioned “The Merger—Regulatory Approvals Required for the Merger”), which include filings under foreign direct investment laws (which we refer to as “FDI” laws), have been obtained or made.
ForgeRock and Parent each filed or caused to be filed the requisite notification forms under the HSR Act with the Federal Trade Commission (which we refer to as the “FTC”) and the Antitrust Division of the Department of Justice (which we refer to as the “DOJ”) on October 24, 2022. Following informal discussions with the DOJ, Parent notified the FTC and the DOJ that it had elected to withdraw and refile its notification and report form pursuant to 16 C.F.R. 803.12 of the HSR Act in order to allow the DOJ additional time to review the transaction. Parent’s notification and report form was withdrawn effective as of November 23, 2022, and Parent intends to refile on or about November 28, 2022. A new 30-day waiting period under the HSR Act will commence on the date of such refiling. Both before and after the expiration of the applicable waiting period, the FTC and the DOJ retain the authority to challenge the merger on antitrust grounds.
In addition, Parent, in coordination and consultation with ForgeRock, submitted the specified FDI filings on October 31, 2022.
Financing of the Merger
The transactions contemplated by the merger agreement, including the payment of consideration due to our stockholders and the holders of our equity awards under the merger agreement, the repayment of all obligations under our existing credit agreement and the payment of all related fees and expenses, will be funded with the proceeds of committed equity financing, as further described below.
Pursuant to an equity commitment letter (which we refer to as the “equity commitment letter”), the Thoma Bravo Fund has committed to capitalize Parent on the Closing on the terms and subject to the conditions set forth in the equity commitment letter.
For more information, see the section of this proxy statement captioned “The Merger—Financing of the Merger.”
The Voting Agreements
In connection with entering into the merger agreement, on October 10, 2022, following approval thereof by the ForgeRock Board, certain of ForgeRock’s directors and certain of their affiliates that hold shares of common stock, in each case solely in their capacities as stockholders of ForgeRock, entered into voting agreements (which we refer to as the “voting agreements”) with Parent and ForgeRock. The voting agreements obligate the applicable stockholders to vote their respective shares of our Class A common stock and Class B common stock in favor of the adoption of the merger agreement and against any competing transaction. The voting agreements terminate in certain circumstances, including in connection with the ForgeRock Board’s determination to (1) change its recommendation with respect to the merger; and (2) terminate the merger agreement in order to accept a superior proposal, as defined herein, from a third party. The voting agreements also contain restrictions on the transfer of shares of our common stock held by the stockholders party thereto, subject to certain exceptions.
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The voting agreements cover approximately 83.2% of the voting power of all issued and outstanding shares of our common stock, based on the number of shares of common stock outstanding as of October 6, 2022. For more information, see the section of this proxy statement captioned “The Merger—The Voting Agreements.”
No Solicitation of Other Acquisition Offers
From the date of the merger agreement until the effective time of the merger (or the earlier termination of the merger agreement) (which we refer to as the “no-shop period”) ForgeRock agreed to, and agreed to (1) cause its subsidiaries and its executive officers and directors, (2) instruct its legal and financial advisors and (3) use reasonable best efforts to cause each of its representatives to, in each case, cease and cause to be terminated any discussions or negotiations with, and terminate any data room access (or other access to diligence) of any person and its representatives relating to an acquisition transaction.
In particular, under and subject to the terms of the merger agreement, from the date of the merger agreement until the earlier to occur of the effective time of the merger or the termination of the merger agreement, ForgeRock, its subsidiaries, and their respective directors and executive officers, will not, and ForgeRock will not authorize or direct any of its and its subsidiaries’ other employees, consultants or other representatives to, directly or indirectly:
solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any proposal that constitutes, or is reasonably expected to lead to, an acquisition proposal;
furnish to any person or group (other than Parent, Merger Sub or any of their respective representatives) any non-public information relating to ForgeRock or any of its subsidiaries or afford to any person or group (other than Parent, Merger Sub or any of their respective representatives) access to the business, properties, assets, books, records or other non-public information, or to any personnel, of ForgeRock or any of its subsidiaries, in any such case in connection with any acquisition proposal or with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, an acquisition proposal or the making of any proposal that would reasonably be expected to lead to an acquisition proposal;
knowingly participate, facilitate, or engage in discussions or negotiations, with any person or group with respect to an acquisition proposal or with respect to any inquiries from third persons relating to the making of an acquisition proposal, subject to certain exceptions under the merger agreement;
approve, endorse or recommend any proposal that constitutes, or is reasonably expected to lead to, an acquisition proposal;
enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an acquisition transaction, other than an acceptable confidentiality agreement (we refer to any of these as an “alternative acquisition agreement”); or
authorize or commit to do any of the foregoing.
However, prior to the adoption of the merger agreement by our stockholders, ForgeRock and the ForgeRock Board (or a committee thereof) may, directly or indirectly through one or more of their representatives (including its financial advisor), (1) participate or engage in discussions or negotiations with; (2) subject to an acceptable confidentiality agreement, (a) furnish any non-public information relating to ForgeRock or any of its subsidiaries or (b) afford access to the business, properties, assets, books, records or other non-public information or to any personnel, of ForgeRock or any of its subsidiaries to; or (3) otherwise facilitate the making of a superior proposal by, in each case, any person or group or their respective representatives that has made, renewed or delivered to ForgeRock an acquisition proposal after the date of the merger agreement that was not solicited in material breach of the applicable restrictions. ForgeRock and the ForgeRock Board (or a committee thereof) may only take the foregoing actions if the ForgeRock Board (or a committee thereof) has determined in good faith (after consultation with its financial advisor and outside legal counsel) that (A) such acquisition proposal either constitutes a superior proposal or is reasonably likely to lead to a superior proposal; and (B) the failure to take such actions would reasonably be expected to be inconsistent with its fiduciary duties pursuant to applicable law.
ForgeRock is not entitled to terminate the merger agreement to enter into an agreement for a superior proposal unless it complies with certain procedures in the merger agreement, including engaging in good faith negotiations with Parent during a specified period. If ForgeRock terminates the merger agreement in order to accept a superior proposal
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from a third party, it must pay a termination fee to Parent. For more information, see the section of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Acquisition Offers.”
Change in the ForgeRock Board’s Recommendation
The ForgeRock Board may not withdraw its recommendation that our stockholders adopt the merger agreement or take certain similar actions other than, under certain circumstances, if it (or a committee of the ForgeRock Board) determines in good faith, after consultation with its financial advisor and outside legal counsel, that failure to do so would reasonably be expected to be inconsistent with the ForgeRock Board’s fiduciary duties pursuant to applicable law and the ForgeRock Board (or a committee thereof) complies in all material respects with the terms of the merger agreement.
Moreover, the ForgeRock Board cannot withdraw its recommendation that our stockholders 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 Parent during a specified period. If ForgeRock or Parent terminates the merger agreement under certain circumstances, including because the ForgeRock Board withdraws its recommendation that our stockholders adopt the merger agreement, then ForgeRock must pay to Parent a termination fee. For more information, see the section of this proxy statement captioned “The Merger Agreement—The ForgeRock Board’s Recommendation; Board Recommendation Change.”
Conditions to the Closing of the Merger
The respective obligations of Parent, Merger Sub and ForgeRock, as applicable, to consummate the merger are subject to the satisfaction or waiver (where permitted by applicable law) at or prior to the effective time of the merger of certain conditions, including the following:
the adoption of the merger agreement by the requisite affirmative vote of our stockholders holding a majority of the voting power of all issued and outstanding shares of our common stock;
the expiration or termination of the waiting periods, if any, applicable to the merger pursuant to the HSR Act; and the absence of any agreement with any governmental authority not to consummate the merger;
all consents, approvals and filings required under certain specified FDI laws shall have been obtained or made, and all waiting periods (including any extensions thereof) (including any timing agreements with applicable governmental authorities) relating to the execution, delivery and performance of the merger agreement and the consummation of the merger shall have expired or otherwise been terminated under any such laws; and
the absence of (1) any order issued by any governmental authority of competent jurisdiction or (2) any law applicable to the merger, that in the case of each of the foregoing clauses (1) or (2), prevents, materially restrains or materially impairs the consummation of the merger.
In addition, the obligations of Parent and Merger Sub to consummate the merger are subject to the satisfaction or waiver (where permitted by applicable law) at or prior to the effective time of the merger of each of the following additional conditions, any of which may be waived exclusively by Parent:
the accuracy of the representations and warranties of ForgeRock set forth in the merger agreement, subject to applicable materiality or other qualifiers, as of the Closing or the date in respect of which such representation or warranty was specifically made;
ForgeRock having performed and complied in all material respects with all covenants in the merger agreement required to be performed and complied with by it at or prior to the Closing;
receipt by Parent and Merger Sub of a customary closing certificate of ForgeRock; and
the absence of any Company Material Adverse Effect (as defined in the section of this proxy statement captioned “The Merger Agreement—Representations and Warranties”) having occurred after the date of the merger agreement that is continuing.
In addition, the obligations of ForgeRock to consummate the merger are subject to the satisfaction or waiver (where permitted by applicable law) at or prior to the effective time of the merger of each of the following additional conditions, any of which may be waived exclusively by ForgeRock:
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the accuracy of the representations and warranties of Parent and Merger Sub set forth in the merger agreement, subject to applicable materiality or other qualifiers, as of the effective time of the merger or the date in respect of which such representation or warranty was specifically made;
Parent and Merger Sub having performed and complied in all material respects with all covenants in the merger agreement required to be performed and complied by Parent and Merger Sub at or prior to the Closing; and
the receipt by ForgeRock of a customary closing certificate of Parent and Merger Sub.
Termination of the Merger Agreement
The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the adoption of the merger agreement by our stockholders (except as otherwise provided in the merger agreement), in the following circumstances:
by mutual written agreement of ForgeRock and Parent;
by either ForgeRock or Parent if:
any governmental authority of competent jurisdiction issues any order that has become final and non-appealable that, in each case, prevents, materially restrains, or materially impairs the consummation of the merger, except that the right to terminate will not be available to any party that has failed to comply with certain covenants set forth in the merger agreement;
the merger has not been consummated by 11:59 p.m., Eastern time, on October 10, 2023 (which we refer to as the “termination date”), except that if as of the termination date, the relevant waiting periods or required consents or clearance required under the HSR Act or certain specified FDI laws have not been obtained, the termination date will automatically be extended to 11:59 p.m., Eastern time, on January 10, 2024, unless ForgeRock delivers written notice to Parent prior to 11:59 p.m., Eastern time, on October 10, 2023 specifying that the termination date shall not be so extended; or
our stockholders do not adopt the merger agreement at the special meeting, except that a party may not terminate the merger agreement pursuant to this provision if such party’s action or failure to act constitutes a breach of the merger agreement and is the primary cause of, or primarily resulted in, the failure to obtain the approval of our stockholders at the special meeting;
by ForgeRock if:
subject to a 45-day cure period, Parent or Merger Sub has breached or failed to perform in any material respect any of its respective representations, warranties or covenants in the merger agreement such that the related closing condition would not be satisfied;
prior to the adoption of the merger agreement by our stockholders: (1) ForgeRock has received a superior proposal as defined in the section of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Acquisition Offers;” (2) the ForgeRock Board (or a committee thereof) has authorized ForgeRock to enter into an alternative acquisition agreement to consummate the acquisition transaction contemplated by that superior proposal; (3) ForgeRock has complied in all material respects with its covenants under the merger agreement with respect to such superior proposal; and (4) ForgeRock pays Parent or its designee the applicable termination fee; or
(1) certain of the closing conditions set forth in the merger agreement have been and continue to be satisfied (other than those conditions that by their terms are to be satisfied at the Closing, each of which is capable of being satisfied at the closing) or waived; (2) Parent and Merger Sub fail to consummate the Closing as required; (3) ForgeRock has notified Parent in writing that if Parent performs its obligations under the merger agreement and the equity financing contemplated by the equity commitment letter, then ForgeRock stands ready, willing and able to consummate the closing; (4) ForgeRock gives Parent written notice at least two business days prior to such termination stating ForgeRock’s intention to terminate the merger agreement; and (5) the closing has not been consummated by the end of such two business day period; and
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by Parent if:
subject to a 45-day cure period, ForgeRock has breached or failed to perform in any material respect any of its representations, warranties or covenants in the merger agreement such that the related closing condition would not be satisfied; or
the ForgeRock Board (or a committee thereof) has effected a ForgeRock Board recommendation change (as defined in the section of this proxy statement captioned “The Merger Agreement—The ForgeRock Board’s Recommendation; Board Recommendation Change”) (except that Parent’s right to terminate in such instance will expire at 5:00 p.m., Eastern time, on the tenth business day following the date on which such right to terminate first arose).
Termination Fees and Remedies
The merger agreement contains certain termination rights for ForgeRock and Parent. Upon valid termination of the merger agreement under specified circumstances, ForgeRock agreed to pay Parent (or its designee) a termination fee of $60.0 million. Specifically, this termination fee will be payable by ForgeRock to Parent if the merger agreement is terminated:
by ForgeRock if (1) ForgeRock has received a superior proposal, (2) the ForgeRock Board authorizes the acceptance of a superior proposal and (3) ForgeRock has complied in all material respects with its obligations under the alternative solicitation provisions in the merger agreement; or
by Parent if the ForgeRock Board changes its recommendation with respect to the merger
The termination fee will also be payable by ForgeRock in certain circumstances if:
the merger agreement is terminated (1) because the merger is not completed by the termination date at a time when our stockholders have not adopted the merger agreement at the special meeting; (2) because of ForgeRock’s failure to obtain the required approval of our stockholders; or (3) subject to a 45-day cure period, because ForgeRock breaches or fails to perform in any material respect any of its representations, warranties or covenants in a manner that would cause the related closing conditions to not be satisfied;
at the time of such termination, Parent is in compliance with certain conditions under the merger agreement;
following the execution and delivery of the merger agreement, an acquisition proposal has been publicly announced or publicly disclosed and not withdrawn or otherwise abandoned; and
ForgeRock subsequently consummates, or enters into a definitive agreement providing for (and such acquisition proposal is subsequently consummated at any time), a transaction involving the acquisition of at least 50.1% of its stock or assets within one year of such termination.
ForgeRock is not required to pay its termination fee on more than one occasion. The merger agreement also provides that ForgeRock, on the one hand, or Parent and Merger Sub, on the other hand, may specifically enforce the obligations under the merger agreement, except that ForgeRock may only cause Parent and Merger Sub to consummate the merger, and Parent to cause the equity financing to be funded pursuant to the equity commitment letter, if certain conditions are satisfied. Subject to limited exceptions, Parent’s and Merger Sub’s aggregate liability for monetary damages for breaches of the merger agreement are capped at $140.0 million, plus certain reimbursement obligations, and ForgeRock’s liability for monetary damages for breaches of the merger agreement is capped at $60.0 million, plus any enforcement expenses.
Limited Guarantee
Pursuant to the limited guarantee delivered by the Thoma Bravo Fund in favor of ForgeRock, dated as of October 10, 2022 (which we refer to as the “limited guarantee”), the Thoma Bravo Fund agreed to guaranty the due, punctual and complete payment of certain of the liabilities and obligations of Parent or Merger Sub under the merger agreement plus amounts in respect of certain reimbursement obligations of Parent and Merger Sub for certain costs, expenses or losses incurred or sustained by ForgeRock, as specified in the merger agreement. For more information, see the section of this proxy statement captioned “The Merger—Limited Guarantee.”
Delisting and Deregistration of Our Class A Common Stock
If the merger is completed, our Class A common stock will no longer be traded on the NYSE and will be deregistered under the Securities Exchange Act of 1934 (which we refer to as the “Exchange Act”). We will no longer be required
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to file periodic reports, current reports and proxy and information statements with the Securities and Exchange Commission (which we refer to as the “SEC”) on account of our Class A common stock.
Effect on ForgeRock if the Merger is Not Completed
If the merger agreement is not adopted by our stockholders, or if the merger is not completed for any other reason, our stockholders will not receive any payment for their shares of our common stock in connection with the merger. Instead: (1) ForgeRock will remain an independent public company; (2) our Class A common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act; and (3) we will continue to file periodic reports with the SEC.
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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.”
Q:
Why am I receiving these materials?
A:
On October 10, 2022, we announced that ForgeRock entered into the merger agreement. Under the merger agreement, Parent will acquire ForgeRock for $23.25 in cash per share of our common stock. In order to complete the merger, our stockholders representing a majority of the voting power of all issued and outstanding shares of our common stock as of the record date must vote to adopt the merger agreement at the special meeting. This approval is a condition to the consummation of the merger. See the section of this proxy statement captioned “The Merger Agreement—Conditions to the Closing of the Merger.” The ForgeRock 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 ForgeRock?
A:
The proposed merger is the acquisition of ForgeRock by Parent. 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, Merger Sub will merge with and into ForgeRock, with ForgeRock continuing as the surviving corporation. As a result of the merger, ForgeRock will become a wholly owned subsidiary of Parent, and our Class A common stock will no longer be publicly traded and will be delisted from the NYSE. In addition, our Class A common stock will be deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC.
Q:
What will I receive if the merger is completed?
A:
Upon completion of the merger, you will be entitled to receive $23.25 in cash (subject to certain exceptions), without interest and less any applicable withholding taxes, for each share of our common stock that you own, unless 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, you will receive $2,325 in cash in exchange for your 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 ForgeRock’s Class A common stock?
A:
This amount constitutes (1) a premium of approximately 53% over ForgeRock’s closing share price on October 10, 2022, the last full trading day prior to the transaction announcement, and (2) a premium of approximately 44% over the volume weighted average price of our Class A common stock for the 30-day period ending October 10, 2022.
Q:
What will happen to ForgeRock RSUs and ForgeRock options?
A:
Generally speaking, ForgeRock RSUs and ForgeRock options will be treated as follows:
At the effective time of the merger each vested ForgeRock RSU will be cancelled and converted into the right to receive an amount in cash equal in value to (1) the total number of shares of our Class A common stock or Class B common stock subject to such vested ForgeRock RSU immediately prior to the effective time or the merger, multiplied by (2) the per share price, less applicable withholding taxes.
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At the effective time of the merger, each unvested ForgeRock RSU will be cancelled and converted into the contingent right to receive from Parent or the surviving corporation a Converted Cash Award equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to such unvested ForgeRock RSU immediately prior to the effective time of the merger, multiplied by (2) the per share price, less applicable withholding taxes. Except as otherwise provided in the merger agreement, each Converted Cash Award will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding unvested ForgeRock RSU immediately prior to the effective time of the merger, provided that terms rendered inoperable by the transactions contemplated by the transaction documents entered into connection with the merger will no longer have any force or effect.
At the effective time of the merger, each vested ForgeRock option will be cancelled and converted into the right to receive an amount in cash equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to the vested ForgeRock option multiplied by (2) the excess, if any, of the per share price over the per share exercise price of such vested ForgeRock option, less applicable withholding taxes.
At the effective time of the merger each unvested ForgeRock option will be converted into the contingent right to receive from Parent or the surviving corporation a Converted Cash Award equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to such unvested ForgeRock option immediately prior to the effective time of the merger, multiplied by (2) the excess, if any, of the per share price over the per share exercise price per of such unvested ForgeRock option, less applicable withholding taxes. Except as otherwise provided in the merger agreement, each such Converted Cash Award will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding unvested ForgeRock option immediately prior to the effective time of the merger.
Any underwater ForgeRock option will be cancelled at the effective time of the merger for no consideration or payment.
Q:
What will happen to the ESPP?
A:
From the date of the merger agreement, we will take all actions necessary to (1) provide that no new individuals will be permitted to enroll in the ESPP; (2) make any adjustment that may be necessary or advisable to reflect the shortened offering period or purchase period, but otherwise treat such shortened offering period or purchase period as a fully effective and completed offering period or purchase period for all purposes pursuant to the ESPP; (3) not allow any increase in the amount of participants’ payroll deduction elections under the ESPP during the offering period or purchase period that is in effect on date of the merger agreement; (4) cause the exercise (as of no later than one business day prior to the date on which the effective time occurs) of each outstanding purchase right pursuant to the ESPP (but otherwise no other of our Class A common stock under the ESPP will be issued); (5) provide that no further offering period or purchase period will commence pursuant to the ESPP, and if the effective time of the merger would otherwise occur before the end of the Current Purchase Period, shorten the Current Purchase Period as of a specified trading day at least ten days prior to the date on which the effective time of the merger occurs; and (6) not extend the Current Purchase Period. Immediately prior to and effective as of the effective time of the merger (but subject to the consummation of the merger), we will terminate the ESPP and no further rights will be granted or exercised under the ESPP after such termination.
Q:
What am I being asked to vote on at the special meeting?
A:
You are being asked to vote on the following proposals:
to adopt the merger agreement pursuant to which Merger Sub will merge with and into ForgeRock and ForgeRock will become a wholly owned subsidiary of Parent;
to approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; and
to approve the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
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Q:
When and where is the special meeting?
A:
The special meeting will take place on [•], at [•], Pacific time. You may attend the special meeting via a live interactive webcast on the Internet at [•]. 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:
Who is entitled to vote at the special meeting?
A:
All of our stockholders as of the close of business on [•], 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 [•] shares of our Class A common stock and [•] 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 ten votes per share on each matter properly brought before the special meeting.
Q:
What vote is required to approve the proposal to adopt the merger agreement?
A:
The affirmative vote of the holders of a majority of the voting power of all issued and outstanding shares of common stock of ForgeRock as of the record date (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 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 ForgeRock to its named executive officers in connection with the merger; and (2) the proposal to adjourn the special meeting, if necessary or appropriate, 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 ForgeRock to our named executive officers in connection with the merger requires the affirmative vote of a majority of the voting power of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
Approval of the proposal to adjourn the special meeting to a later date or dates 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 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 proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger, or the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting, 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 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 have the same effect as a vote “AGAINST” these proposals.
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 consider how the merger affects you.
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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 ForgeRock Board recommend that I vote?
A:
The ForgeRock Board unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, 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 agreement is not adopted by our stockholders or if the merger is not completed for any other reason, our stockholders will not receive any payment for their shares of our common stock in connection with the merger. Instead: (1) ForgeRock will remain an independent public company; (2) our Class A common stock will continue to be listed and traded on the NYSE 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, ForgeRock has agreed to pay Parent (or its designee) a termination fee.
For more information, see the section of this proxy statement captioned “The Merger Agreement—Termination Fees and Remedies.”
Q:
What is the compensation that will or may become payable by ForgeRock to its named executive officers in connection with the merger?
A:
The compensation that will or may become payable by ForgeRock 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 certain of ForgeRock’s named executive officers pursuant to underlying plans and arrangements that are contractual in nature. Compensation that will or may become payable by Parent or its affiliates (including, following the consummation of the merger, the surviving corporation) to our 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 ForgeRock to our named executive officers in connection with the merger?
A:
ForgeRock is required to seek approval, on a non-binding, advisory basis, of compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger. Approval of the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger is not required to consummate the merger.
Q:
What will happen if ForgeRock’s stockholders do not approve the compensation that will or may become payable by ForgeRock to its named executive officers in connection with the merger?
A:
Approval of the compensation that will or may become payable by ForgeRock 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 ForgeRock or Parent. 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 ForgeRock to our named executive officers in connection with the merger will or may be paid to ForgeRock’s named executive officers even if our stockholders do not approve such compensation.
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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 are registered directly in your name with our transfer agent, American Stock Transfer & 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 ForgeRock. 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.
If your shares 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 broker automatically vote my shares for me?
A:
No. Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the special meeting only 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. Without instruction, your shares will not be counted for the purpose of obtaining a quorum or voted on the proposals, which will have the same effect as if you voted “AGAINST” adoption of the merger agreement, but will have no effect on the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger or the adjournment proposal.
Q:
How may I vote?
A:
If you are a stockholder of record (that is, if your shares of our common stock are registered in your name with American Stock Transfer & Trust Company, LLC, our transfer agent), there are four ways to vote:
by signing, dating and returning the enclosed proxy card (a prepaid reply envelope is provided for your convenience);
by visiting the internet address on your proxy card;
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 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
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nominee, you should follow the instructions on the voting instruction form provided by your bank, broker or 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 [•]. You will be able to listen to the special meeting live and vote online. The special meeting will begin at [•], Pacific time, on [•]. 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). 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 a quorum or voted at the meeting, which will have the same effect as voting against the adoption of the merger agreement.
Q:
Why did ForgeRock choose to hold a virtual special meeting?
A:
The ForgeRock 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 virtually any location 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 remain very sensitive to concerns that virtual meetings may diminish stockholder voice or reduce accountability. Accordingly, we have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication.
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 proxy card to designate a proxy by telephone or by the Internet in the same manner as if you had signed, dated and returned a proxy card. Francis Rosch, John Fernandez and Samuel Fleischmann, each with full powers of substitution and resubstitution, are the proxy holders for the special meeting.
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, 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;
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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 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.
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 and date your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted as recommended by the ForgeRock Board with respect to each proposal. This means that they will be voted: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
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 payment 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 payment agent will pay you the appropriate portion of the merger consideration upon receipt of a customary “agent’s message” and any other items specified by the payment agent.
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 effective 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 and each of you notifies ForgeRock in writing of such special arrangements, you will transfer the right to receive 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.
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 all voting materials that you receive.
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Q:
Where can I find the voting results of the special meeting?
A:
If available, ForgeRock may announce preliminary voting results at the conclusion of the special meeting. ForgeRock 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 ForgeRock 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:
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 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 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.
Because particular circumstances may differ, we recommend that you 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 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 in the first half of 2023. 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 terms of the merger agreement, the merger cannot be completed until the waiting period applicable to the merger under the HSR Act has expired or been terminated, and no agreement with any governmental authority not to consummate the merger shall be in effect. In addition, the merger cannot be completed until all consents, approvals and filings required under certain specified FDI laws have been obtained or made and all waiting periods (including any extensions thereof) (including any timing agreements with applicable governmental authorities) relating to the execution, delivery and performance of the merger agreement and the consummation of the merger shall have expired or otherwise been terminated under any such laws.
ForgeRock and Parent each filed or caused to be filed the requisite notification forms under the HSR Act with the FTC and the DOJ on October 24, 2022. Following informal discussions with the DOJ, Parent notified the FTC and the DOJ that it had elected to withdraw and refile its notification and report form pursuant to 16 C.F.R. 803.12 of the HSR Act in order to allow the DOJ additional time to review the transaction. Parent’s notification and report form was withdrawn effective as of November 23, 2022, and Parent intends to refile on or about November 28, 2022. A new 30-day waiting period under the HSR Act will commence on the date of such refiling. Both before and after the expiration of the applicable waiting period, the FTC and the DOJ retain the authority to challenge the merger on antitrust grounds.
In addition, Parent, in coordination and consultation with ForgeRock, submitted the specified FDI filings on October 31, 2022.
Q:
Am I entitled to appraisal rights under the DGCL?
A:
If the merger is consummated, our stockholders (including beneficial owners of shares of capital stock) who (1) do not vote in favor of the adoption of the merger agreement; (2) continuously hold their shares of our
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common stock through the effective time of the merger; (3) properly perfect appraisal of their shares; (4) meet certain other conditions and statutory requirements as 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 in connection with the merger under Section 262 of the DGCL 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 appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares, 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) interest 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 (x) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (y) interest theretofore 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. Persons who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for exercising appraisal rights are described in additional detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL regarding appraisal rights, available at the following URL, accessible without subscription or cost, which is incorporated herein by reference: https://delcode.delaware.gov/title8/c001/sc09/index.html#262.
Q:
Do any of ForgeRock’s directors or officers have interests in the merger that may differ from those of ForgeRock stockholders generally?
A:
Yes. In considering the recommendation of the ForgeRock 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. 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, the ForgeRock Board was aware of and considered these interests to the extent that they existed at the time, among other matters. For more information, see the section of this proxy statement captioned “The Merger—Interests of ForgeRock’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:

1407 Broadway, 27th Floor
New York, New York 10018
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
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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 our 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, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Such forward-looking statements include statements relating to ForgeRock’s strategy, goals, future focus areas and the value of the proposed transaction to ForgeRock’s stockholders. These forward-looking statements are based on ForgeRock’s management’s beliefs and assumptions and on information currently available to management. 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” or “continue” or similar expressions and the negatives of those terms. These forward-looking statements involve risks and uncertainties, including statements regarding: the merger, including the expected timing of the closing of the merger; considerations taken into account by the ForgeRock Board in approving the merger; and expectations for ForgeRock following the closing of the merger.
If any of these risks or uncertainties materialize, or if any of ForgeRock’s assumptions prove incorrect, ForgeRock’s actual results could differ materially from the results expressed or implied by these forward-looking statements. Additional risks and uncertainties include those associated with:
the possibility that the conditions to the closing of the merger are not satisfied, 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 circumstances that could give rise to the right to terminate the merger, including in circumstances requiring ForgeRock 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;
economic, market, business or geopolitical conditions (including resulting from the COVID-19 pandemic, inflationary pressures, supply chain disruptions, or the military conflict in Ukraine and related sanctions against Russia and Belarus) or competition, or changes in such conditions, negatively affecting ForgeRock’s business, operations and financial performance;
the effect of the announcement or pendency of the merger on our business relationships, customers, operating results and business generally, including risks related to the diversion of the attention of ForgeRock management or employees during the pendency of the merger;
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 fact that under the terms of the merger agreement, ForgeRock is restrained from soliciting other acquisition proposals during the pendency of the merger;
the fact that, if the merger is completed, our stockholders will forgo the opportunity to realize the potential long-term value of the successful execution of ForgeRock’s current strategy as an independent company;
possible disruption related to the merger to ForgeRock’s current plans and operations, including through the loss of customers and employees; and
other risks and uncertainties detailed in the periodic reports that ForgeRock files with the SEC, including ForgeRock’s Annual Report on Form 10-K filed with the SEC on March 9, 2022, ForgeRock’s quarterly report on Form 10-Q filed with the SEC on November 10, 2022, and subsequent filings.
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All forward-looking statements contained or referred to in this proxy statement are based on information available to ForgeRock as of the date of this proxy statement, and ForgeRock does 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. ForgeRock expressly qualifies in their entirety all forward-looking statements attributable to either ForgeRock or any person acting on ForgeRock’s 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 [•], at [•], Pacific time. You may attend the special meeting via a live interactive webcast on the Internet at [•]. 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 proposals to (1) adopt the merger agreement; (2) approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; and (3) adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Attending the Special Meeting
The special meeting will begin at [•], Pacific time. 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 [•]. 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.
Once online access to the special meeting is open, stockholders may submit questions pertinent to meeting matters, if any, through the special meeting website. You will need the control number found on your proxy card or voting instruction form in order to submit questions. Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints and any rules of conduct adopted with respect to the special meeting.
Record Date; Shares Entitled to Vote; Quorum
Only our stockholders as of the close of business on the record date are entitled to notice of, and to vote at, the special meeting. A list of stockholders of record entitled to vote at the special meeting will be available for inspection by stockholders for any purpose germane to the special meeting at our corporate offices located at 201 Mission Street, Suite 2900, San Francisco, California 94105, during regular business hours for a period of no less than ten days ending on the day before the date of the special meeting. The stockholder list will also be available to stockholders of record for examination during the special meeting at [•]. You will need the control number included on your proxy card or otherwise provided by your bank, broker or other nominee to access the stockholder list during the special meeting.
As of the record date, there were [•] shares of our Class A common stock and [•] 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 close of business on the record date is entitled to one vote per share on each matter properly submitted for a vote at the special meeting. Each share of our Class B common stock outstanding as of the close of business on the record date is entitled to ten votes per share on each matter properly submitted for a vote at the special meeting.
The holders of a majority of the voting power of all issued and outstanding shares of our common stock entitled to vote, present in person or represented by proxy at the special meeting, shall constitute a quorum.
Vote Required; Abstentions and Broker Non-Votes
Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the voting power of all issued and outstanding shares of our common stock as of the record date. Adoption of the merger agreement by our stockholders is a condition to the closing of the merger.
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Approval, on a non-binding, advisory basis, of the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger requires the affirmative vote of a majority of the voting power of our common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.
Approval of the proposal to adjourn the special meeting to a later date or dates 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 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: (1) “AGAINST” the proposal to adopt the merger agreement; (2) “AGAINST” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; and (3) “AGAINST” any proposal to adjourn the special meeting to a later date to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting. Abstentions will be counted as present for purposes of determining whether a quorum exists.
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. We do not expect any “broker non-votes” at the special meeting, but if there are any, they will be counted for the purpose of determining whether a quorum is present. If there are broker non-votes, each broker non-vote will count as a vote “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 ForgeRock to our named executive officers in connection with the merger; or (2) the proposal to adjourn the special meeting if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Shares Held by ForgeRock’s Directors and Executive Officers
As of the record date, ForgeRock’s directors and certain of their affiliates that hold shares of common stock, in each case in their capacities as stockholders of ForgeRock, beneficially owned and were entitled to vote, in the aggregate, [•] shares of our Class A common stock and [•] shares of our Class B common stock, representing approximately [•]% of the voting power of all the issued and outstanding shares of our common stock as of the record date.
Certain of ForgeRock’s directors and certain of their affiliates hold shares of common stock. As of the date of this proxy statement, ForgeRock 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 adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to its named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, 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, all of these individuals are contractually obligated to vote in favor of the adoption of the merger agreement pursuant to the terms and conditions of certain voting agreements entered into as of the date of the merger agreement. For more information, see the section of this proxy statement captioned “The Merger—The Voting Agreements.”
Voting of Proxies
If your shares are registered in your name with our transfer agent, American Stock Transfer & 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” must also provide a “legal proxy” from their bank or broker 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.
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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” adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, 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 through your bank, broker or other nominee by completing and returning 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 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. If you do not (1) return your bank’s, broker’s or other nominee’s voting instruction form; (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 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 proposals (A) to approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger; or (B) to adjourn the special meeting, if necessary or appropriate, 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.
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, 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 as adjourned, postponed or delayed.
The ForgeRock Board’s Recommendation
The ForgeRock Board, after considering various factors described in the section of this proxy statement captioned “The Merger—Recommendation of the ForgeRock Board and Reasons for the Merger,” has unanimously: (1) determined that the merger agreement, and the other transactions contemplated by the merger agreement, including the merger are advisable, fair to and in the best interests of ForgeRock and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement in all respects.
The ForgeRock Board unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to our named executive officers in
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connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.
Adjournment
In addition to the proposals to (1) adopt the merger agreement and (2) approve, on a non-binding, advisory basis, the compensation that will or may become payable by ForgeRock to our named executive officers in connection with the merger, our stockholders are also being asked to approve any proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional votes or proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to approve the merger agreement. If a quorum is not present, the chairperson of the special meeting or the stockholders entitled to vote at the special meeting, present in person or represented by proxy, may adjourn the special meeting, from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. The chairperson may also adjourn the meeting to another place, if any, date or time, even if a quorum is present. 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 ForgeRock. We have retained Mackenzie Partners, Inc., 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 $15,000, plus reasonable out-of-pocket expenses. We will indemnify this firm against losses arising out of its provisions 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 our directors, officers and employees, personally or by telephone, email, fax or over the internet. No additional compensation will be paid for such services.
Anticipated Date of Completion of the Merger
We currently expect to complete the merger in the first half of 2023. 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.
Appraisal Rights
If the merger is consummated, our stockholders (including beneficial owners of shares of capital stock) who (1) do not vote in favor of the adoption of the merger agreement; (2) continuously hold their shares through the effective time of the merger; (3) properly perfect appraisal of their shares; (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 in connection with the merger under Section 262 of the DGCL 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 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) interest 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 (x) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (y) interest theretofore 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 are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.
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Persons considering seeking appraisal should be aware that the fair value of shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.
To exercise appraisal rights, the stockholder of record or a beneficial owner must (1) submit a written demand for appraisal to ForgeRock before the vote is taken on the proposal to adopt the merger agreement; (2) not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement; (3) continue to hold of record or own beneficially the subject shares of our common stock through the effective time of the merger; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of ForgeRock unless certain conditions are satisfied by the persons seeking appraisal. The requirements under Section 262 of the DGCL for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights. You may find an electronic copy of Section 262 of the DGCL available at the following URL, accessible without subscription or cost, which is incorporated herein 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 herein or therein by reference, and the actual text of Section 262 of the DGCL, the actual text of Section 262 of the DGCL controls. If you hold your shares of our common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee.
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 [•]
This proxy statement is available through the SEC’s website at www.sec.gov and on the “SEC Filings” section of our website located at https://investors.forgerock.com/financial-information/sec-filings. The information included on our website is not incorporated herein by reference.
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 our disclosure documents at this time, please notify us by sending a written request to Investor Relations, 201 Mission Street, Suite 2900, San Francisco, California, 94105, or by telephone at (415) 599-1100.
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 our disclosure documents for your household, you may notify your broker, if your shares are held in a brokerage account, or you may contact our Corporate Secretary using the contact method above, if you hold registered shares.
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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:

1407 Broadway, 27th Floor
New York, New York 10018
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
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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
ForgeRock, Inc.
201 Mission Street, Suite 2900
San Francisco, California 94105
(415) 599-1100
ForgeRock supports billions of identities to help people simply and safely access the connected world—from shopping and banking to accessing company networks to get their work done. We make this possible through a unified and extensive identity platform to enable enterprises to provide exceptional digital user experiences without compromising security and privacy. This allows enterprises to deepen their relationships with customers and increase the productivity of their workforce and partners, while at the same time providing better security and regulatory compliance.
Our platform is purpose-built for the enterprise and provides mission-critical capabilities, including performance and scale, rich identity functionality, deployment flexibility, and extensive integration and interoperability. Our platform includes a full suite of identity functionality across Customer Identity Access Management (CIAM), Access Management (AM), and Identity Governance Administration (IGA) and a differentiated identity object modeling approach that supports all identity types. We enable enterprises to rapidly integrate and secure thousands of applications across types, deployments, and operating environments such as SaaS, mobile, microservices, web, and legacy, running in public and private cloud, and on-premise. Together, these deep capabilities enable us to provide enterprises with a single view of all their identities in one unified platform and position us as a leader in digital identity for the enterprise market.
Our Class A common stock is listed on the NYSE under the symbol “FORG.”
Project Fortress Parent, LLC
c/o Thoma Bravo, L.P.
600 Montgomery Street, 20th Floor
San Francisco, California 94111
(415) 263-3660
Parent was formed on October 3, 2022, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Parent has not engaged in any business activities other than as incidental to its formation and in connection with the transactions contemplated by the merger agreement and arranging of the equity financing and any debt financing in connection with the merger.
Project Fortress Merger Sub, Inc.
c/o Thoma Bravo, L.P.
600 Montgomery Street, 20th Floor
San Francisco, California 94111
(415) 263-3660
Merger Sub is a wholly owned subsidiary of Parent and was formed on October 3, 2022, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not engaged in any business activities other than as incidental to its formation and in connection with the transactions contemplated by the merger agreement and arranging of the equity financing and any debt financing in connection with the merger. Upon completion of the merger, Merger Sub will cease to exist and ForgeRock will continue as the surviving corporation.
Effects of the Merger
Upon the terms and subject to the conditions of the merger agreement, and in accordance with the DGCL, at the effective time of the merger, (1) Merger Sub will merge with and into ForgeRock; (2) the separate corporate existence
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of Merger Sub will cease; and (3) ForgeRock will continue as the surviving corporation of the merger and a wholly owned subsidiary of Parent.
As a result of the merger, ForgeRock will cease to be a publicly traded company, our Class A common stock will be delisted from the NYSE and deregistered under the Exchange Act and ForgeRock will no longer file periodic reports with the SEC. If the merger is completed, you will not own any shares of capital stock of the surviving corporation.
The effective time of the merger will occur upon the filing of a certificate of merger with, and acceptance of that certificate by, the Secretary of State of the State of Delaware (or at a later time as we, Parent and Merger Sub may agree and specify in such certificate of merger).
Effect on ForgeRock if the Merger is Not Completed
If the merger agreement is not adopted by our stockholders, or if the merger is not completed for any other reason, our stockholders will not receive any payment for their shares of our common stock in connection with the merger. Instead, (1) ForgeRock will remain an independent public company; (2) our Class A common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act; and (3) we will continue to file periodic reports with the SEC. In addition, if the merger is not completed, we expect that: (A) our management will continue to operate the business as it is currently being operated; and (B) 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 ForgeRock 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, 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 ForgeRock Board will continue to evaluate and review, among other things, ForgeRock’s business, operations, strategic direction and capitalization, and will make whatever changes it deems appropriate. If the merger agreement is not adopted by our stockholders or if the merger is not completed for any other reason, ForgeRock’s business, prospects or results of operation may be adversely impacted.
In specified circumstances in which the merger agreement is terminated, ForgeRock has agreed to pay Parent (or its designee) the applicable termination fee.
Effect of the Merger on Our Outstanding Common Stock
Upon the terms and subject to the conditions set forth in the merger agreement, at the effective time of the merger:
each outstanding share of our common stock that is (1) held by ForgeRock as treasury stock; (2) owned by Parent or Merger Sub; or (3) owned by any direct or indirect wholly owned subsidiary of Parent or Merger Sub as of immediately prior to the effective time of the merger will automatically be cancelled and will cease to exist without any conversion thereof or consideration paid in exchange therefor;
each share of our common stock that is issued and outstanding as of immediately prior to the effective time of the merger (other than the shares identified in the prior bullet and shares of our common stock held by our stockholders who have (1) neither voted in favor of the adoption of the merger agreement or the merger nor consented thereto in writing; and (2) properly demanded appraisal of such shares of our common stock pursuant to, and in accordance with Section 262 of the DGCL, if any) will be automatically converted into the right to receive cash in an amount equal to the per share price without interest thereon and less any applicable withholding taxes; and
each certificate formerly representing any shares of our common stock or any book-entry shares that represented shares of our common stock immediately prior to the effective time of the merger will automatically be cancelled and retired and all such shares will cease to exist and will thereafter only represent the right to receive the per share price.
At or prior to the Closing, a sufficient amount of cash will be deposited with a designated payment agent to pay the aggregate per share price. Once a stockholder has provided the payment agent with his, her or its stock certificates (or an affidavit of loss in lieu of a stock certificate) or customary agent’s message with respect to book-entry shares, appropriate letter of transmittal and other items specified by the payment agent, then the payment agent will pay the
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stockholder the appropriate portion of the aggregate per share price. For more information, see the section of this proxy statement captioned “The Merger Agreement—Payment Agent, Exchange Fund and Exchange and Payment Procedures.”
After the merger is completed, each of our stockholders will have the right to receive the per share price for each share of our common stock that such stockholder owned, as described in the section of this proxy statement captioned “The Merger Agreement—Conversion of Shares,” but will no longer have any rights as a ForgeRock stockholder (except that our stockholders holding shares with respect to which an appropriate person has properly and validly exercised and perfected, and has not validly withdrawn or otherwise lost their appraisal rights will have the right to receive payment for the “fair value” of their shares, determined pursuant to an appraisal proceeding contemplated by the DGCL as described below in the section of this proxy statement captioned “—Appraisal Rights”).
Background of the Merger
The ForgeRock Board, together with senior management, regularly evaluates ForgeRock’s strategic direction and ongoing business plans with a view toward strengthening ForgeRock’s business and enhancing stockholder value. As part of this evaluation, the ForgeRock 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, ForgeRock’s current business plan, with ForgeRock remaining an independent entity; (2) potential expansion opportunities through acquisitions, partnerships or other commercial relationships; (3) various capital raising alternatives; and (4) other financial and strategic alternatives, including the sale of ForgeRock.
In June 2021, after ForgeRock confidentially submitted a registration statement on Form S-1 in connection with its initial public offering and before ForgeRock became a publicly listed company, at the direction of the ForgeRock Board, representatives of J.P. Morgan and ForgeRock’s other lead book-running manager in the initial public offering contacted seven potential strategic acquirors, including Strategic A, Strategic B, Strategic C and Strategic D, and two financial sponsors, including Thoma Bravo, regarding a potential acquisition of ForgeRock. Of the contacted parties, Thoma Bravo expressed interest in pursuing a potential transaction with ForgeRock. ForgeRock entered into a confidentiality agreement with Thoma Bravo containing a customary “standstill” restriction that would terminate upon entry into a definitive agreement for an acquisition of ForgeRock. Thereafter, representatives of Thoma Bravo conducted due diligence with respect to ForgeRock’s business. Thoma Bravo submitted two proposals to acquire ForgeRock before ForgeRock’s initial public offering. At that time, the ForgeRock Board determined that ForgeRock could achieve a more attractive valuation for our stockholders in an initial public offering. ForgeRock terminated those discussions with Thoma Bravo regarding a potential acquisition in August 2021.
Following its initial public offering, ForgeRock from time to time received inbound inquiries expressing a non-specific interest in pursuing a potential transaction from a potential strategic acquiror (which is referred to as “Strategic E”) and three financial sponsors (which are referred to as “Sponsor A,” “Sponsor B” and “Sponsor C”). Fran Rosch, ForgeRock’s chief executive officer, met with these parties from time to time to discuss ForgeRock’s business and the industry in which it operates; other than as described below, these discussions did not advance beyond preliminary, hypothetical conversations regarding a potential transaction or result in the receipt by ForgeRock of an acquisition proposal. Mr. Rosch regularly updated Bruce Golden, as chairperson of the ForgeRock Board, on inquiries and preliminary discussions with respect to potential strategic transactions involving ForgeRock.
On January 31, 2022, at Thoma Bravo’s request, Mr. Rosch met with senior representatives of Thoma Bravo to generally discuss updates on ForgeRock’s business. At the meeting, the parties did not discuss a potential acquisition of ForgeRock.
On April 25, 2022, Mr. Rosch met with senior representatives of Thoma Bravo, at Mr. Rosch’s invitation, to generally discuss the potential benefits of a technology partnership between ForgeRock and another company. Entities affiliated with Thoma Bravo had entered into a definitive agreement to acquire that other company on April 10, 2022. At the meeting, the parties did not discuss a potential acquisition of ForgeRock.
On May 16, 2022, Mr. Rosch met with a senior executive of Thoma Bravo, at Thoma Bravo’s request. During this meeting, Thoma Bravo expressed a non-specific interest in an acquisition of ForgeRock but did not make a formal acquisition proposal. Mr. Rosch informed Thoma Bravo that ForgeRock would be open to discussing a potential acquisition. Thereafter, on or about May 16, 2022, Mr. Rosch updated Mr. Golden on the meeting with Thoma Bravo.
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On May 25, 2022, Mr. Rosch met with a senior representative of Thoma Bravo, at Thoma Bravo’s request. Thoma Bravo informed Mr. Rosch that it would be submitting an offer to acquire ForgeRock at a purchase price of $23.00 per share.
Later on May 25, 2022, representatives of Thoma Bravo sent to ForgeRock a non-binding indication of interest addressed to the ForgeRock Board to acquire all of ForgeRock’s outstanding shares of common stock for $23.00 per share (which is referred to as the “May proposal”), representing a 32% premium to ForgeRock’s closing share price as of May 25, 2022. The May proposal also contemplated a “go-shop” provision that would permit ForgeRock to solicit alternative bids for 30 days after signing a definitive agreement providing for the acquisition of ForgeRock by Thoma Bravo. On May 26, 2022 Mr. Rosch informed Mr. Golden of ForgeRock’s receipt of the May proposal.
On May 27, 2022, Mr. Rosch informed the ForgeRock Board that Thoma Bravo had submitted the May proposal.
On June 1, 2022, the ForgeRock Board held a meeting, with members of ForgeRock’s management, representatives of Wilson Sonsini Goodrich & Rosati, P.C. (which we refer to as “Wilson Sonsini”), ForgeRock’s outside legal advisor, and, at the invitation of the ForgeRock Board, representatives of J.P. Morgan in attendance. As part of an ordinary course market update, the representatives of J.P. Morgan reviewed with the ForgeRock Board the current market environment and ForgeRock’s trading and financial performance since its initial public offering. The representatives of J.P. Morgan then left the meeting. Mr. Rosch reviewed the May proposal with the ForgeRock Board. The representatives of Wilson Sonsini reviewed with the directors their fiduciary duties. It was proposed to establish a strategic committee of the ForgeRock Board to work with ForgeRock’s legal counsel and other advisors in connection with ForgeRock’s review of the May proposal, including its review of ForgeRock’s standalone plan and the evaluation of other potential strategic alternatives. In considering the establishment of a strategic committee, the ForgeRock Board discussed (1) the potentially significant workload that could be involved in the evaluation of the May proposal and other strategic alternatives; (2) the possibility that ForgeRock’s management may need feedback and direction on relatively short notice in connection with a potential process of considering strategic alternatives; and (3) the benefits and convenience of having a subset of directors oversee a potential process of considering strategic alternatives. Following the discussion, the ForgeRock Board determined that it would form a strategic committee of the ForgeRock Board to evaluate the May proposal, including comparing the proposal to ForgeRock’s standalone plan and potential strategic alternatives.
On June 5, 2022, the ForgeRock Board, acting by unanimous written consent, established the strategic committee of the ForgeRock Board (which we refer to as the “Strategic Committee”). The ForgeRock Board delegated authority to the Strategic Committee to, among other things, (1) oversee and assist ForgeRock’s management, advisors and consultants with respect to the exploration and evaluation of strategic alternatives, including to explore, evaluate and consider potential counterparties to a strategic transaction involving ForgeRock; (2) explore, evaluate, consider, review and negotiate the terms and conditions of any transaction relating to any strategic alternative; and (3) if appropriate, recommend to the ForgeRock Board what action, if any, should be taken by ForgeRock with respect to any strategic alternative. The ForgeRock Board retained the power and authority to approve the entry into a definitive agreement relating to any strategic alternative, including a sale of ForgeRock. The ForgeRock Board also determined that it would continue to have an active role in the consideration of strategic alternatives. The ForgeRock Board appointed Mr. Golden, Jeff Parks and Dave Welsh, all of whom are independent members of the ForgeRock Board, as the members of the Strategic Committee.
On June 6, 2022, the Strategic Committee met, with representatives of ForgeRock’s management and Wilson Sonsini in attendance. The representatives of Wilson Sonsini reviewed with the members of the Strategic Committee their fiduciary duties. The Strategic Committee discussed whether to engage a financial advisor in connection with the ForgeRock Board’s and Strategic Committee’s review of the May proposal. The Strategic Committee requested that Mr. Golden, with the assistance of ForgeRock management, meet with J.P. Morgan and report back to the Strategic Committee.
On June 9, 2022, the Strategic Committee informed the ForgeRock Board of its selection of J.P. Morgan as ForgeRock’s financial advisor in connection with its evaluation of the May proposal. J.P. Morgan is well known to ForgeRock given J.P. Morgan’s service as a lead book running manager in ForgeRock’s initial public offering. The Strategic Committee selected J.P. Morgan to act as financial advisor to ForgeRock after considering J.P. Morgan’s qualifications, extensive expertise, international reputation, knowledge of ForgeRock’s business and the industry in
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which ForgeRock operates and experience in advising similar companies in connection with potential strategic transactions. In addition, representatives from J.P. Morgan had from time-to-time presented to the ForgeRock Board and management about public market perspectives of ForgeRock.
On June 9, 2022, ForgeRock management distributed to the ForgeRock Board a draft of ForgeRock’s then-current business plan, which had been prepared as a basis for issuing ForgeRock’s guidance for the second quarter of 2022 and subsequently updated by management, including the unaudited prospective financial information for fiscal years 2022 through 2024 (which we refer to as the “June 2022 business plan”). Additional information about the preparation and substance of the June 2022 business plan is contained in the section of this proxy statement captioned “—Unaudited Prospective Financial Information.” Following the ForgeRock Board’s review, management provided the June 2022 business plan to representatives of J.P. Morgan for purposes of its preliminary financial analysis of the May proposal.
On June 18, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The representatives of J.P. Morgan reviewed a preliminary financial analysis of the May proposal. The representatives of Wilson Sonsini discussed with the members of the Strategic Committee their fiduciary duties. The representatives of J.P. Morgan left the meeting. The Strategic Committee discussed the May proposal and the potential landscape of other potential strategic acquirors and financial sponsors most likely to be interested in pursuing a strategic transaction with ForgeRock. Mr. Rosch noted that Strategic E had previously expressed a non-specific interest in acquiring ForgeRock, and had indicated in a prior discussion that it may submit a proposal in July 2022. Strategic E never submitted such a proposal. The Strategic Committee authorized Mr. Rosch, on behalf of the ForgeRock Board, to inform Thoma Bravo that the ForgeRock Board (1) was not interested in pursuing a transaction with Thoma Bravo at $23.00 per share of ForgeRock at that time; and (2) would be interested in taking the next step in pursuing a transaction if the offer price per share were increased to an amount “closer to $30.00 than $25.00.”
On June 19, 2022, representatives of J.P. Morgan and Mr. Rosch contacted a senior representative of Thoma Bravo and Mr. Rosch delivered the ForgeRock Board’s message. Thoma Bravo responded that it would need to conduct additional due diligence before submitting a revised proposal. Mr. Rosch informed the Strategic Committee of Thoma Bravo’s response, and the Strategic Committee authorized management to provide additional due diligence to Thoma Bravo.
On June 29, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The representatives of J.P. Morgan reviewed a preliminary financial analysis of the May proposal. The Strategic Committee reviewed J.P. Morgan’s relationship disclosure letter. Mr. Rosch also provided an update on ForgeRock’s anticipated results for the second quarter of 2022, including relative to ForgeRock’s publicly issued guidance for this period (which we refer to as the “Q2 2022 results”). It was noted that ForgeRock would not meet its publicly issued guidance for annual recurring revenue for the second quarter of 2022.
On July 5, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The representatives of J.P. Morgan reviewed a preliminary financial analysis of the May proposal. The Strategic Committee discussed the Q2 2022 results. The representatives of J.P. Morgan left the meeting. The Strategic Committee instructed management to update the June 2022 business plan in light of the Q2 2022 results and to present the updated business plan to the ForgeRock Board. Representatives of management left the meeting. The Strategic Committee determined that it would instruct J.P. Morgan to contact Thoma Bravo to share the Q2 2022 results and gauge Thoma Bravo’s reaction to the Q2 2022 results.
On July 6, 2022, representatives of J.P. Morgan spoke to a senior representative of Thoma Bravo regarding the Q2 2022 results. Thoma Bravo informed J.P. Morgan that it remained interested in acquiring ForgeRock, and that Thoma Bravo intended to submit a revised proposal following its next investment committee meeting in mid-July 2022.
On July 11, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. Mr. Rosch provided an overview of Thoma Bravo’s diligence over the preceding week, and management’s plan to update its June 2022 business plan based on actual results and business trends, including the Q2 2022 results. The Strategic Committee discussed a potential outreach process to solicit interest in a strategic transaction from additional potential counterparties, including the possibility of soliciting alternative acquisition proposals in conjunction with Thoma Bravo’s anticipated acquisition proposal and the possibility of executing such a strategic transaction prior to ForgeRock's upcoming public announcement of its earnings results for the second
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quarter of 2022. Representatives of J.P. Morgan reviewed various strategic acquirors and financial sponsors most likely to be interested in exploring a transaction with ForgeRock, based on such acquirors’ perceived interest in making investments in the industry in which ForgeRock operates, whether they had previously expressed a credible interest in acquiring ForgeRock and/or their financial capability to consummate a transaction of this size. The Strategic Committee discussed the risks in connection with an outreach, and in particular, the risk that the Q2 2022 results could be leaked. The representatives of Wilson Sonsini reviewed with the members of the Strategic Committee their fiduciary duties. It was the consensus of the Strategic Committee that an outreach process to additional potential acquirors (1) was unlikely to yield a counterparty that could execute a transaction before ForgeRock’s upcoming earnings announcement; (2) would consume management’s time as it was preparing for its upcoming earnings announcement; and (3) posed a substantial risk of leaks. The Strategic Committee also considered that should ForgeRock enter into a transaction with Thoma Bravo in conjunction with ForgeRock’s upcoming earnings announcement, it expected that ForgeRock would have the ability to conduct a broad outreach process during a go-shop period as previously proposed by Thoma Bravo. The Strategic Committee determined that it would wait until Thoma Bravo submitted a revised offer, and at that time, the Strategic Committee would revisit whether to initiate an outreach to certain counterparties.
On July 12, 2022, Thoma Bravo was granted access to a virtual data room hosted by ForgeRock to share due diligence information.
On July 13, 2022, ForgeRock amended and restated the confidentiality agreement with Thoma Bravo that had been entered into prior to ForgeRock’s initial public offering. As amended, the confidentiality agreement, among other things, extended the term of the confidentiality restrictions and the “standstill” period under the existing confidentiality agreement.
Later on July 13, 2022, members of management gave a management presentation regarding ForgeRock to Thoma Bravo.
On July 14, 2022, the ForgeRock Board met, with representatives of management and Wilson Sonsini in attendance. Representatives of management discussed management’s then-updated business plan, including the unaudited prospective financial information for fiscal years 2022 through 2024 included in the business plan as of July 2022 (which we refer to as the “July 2022 business plan”). Additional information about the preparation and substance of the July 2022 business plan is contained in the section of this proxy statement captioned “—Unaudited Prospective Financial Information.” The ForgeRock Board authorized sharing the July 2022 business plan with Thoma Bravo. The July 2022 business plan was provided to Thoma Bravo in due diligence, and also J.P. Morgan for purposes of its ongoing financial analyses.
On July 19, 2022, Thoma Bravo orally informed representatives of J.P. Morgan that, following additional diligence, Thoma Bravo maintained its initial proposed purchase price of $23.00 per share (which we refer to as the “July proposal”). Representatives of Thoma Bravo noted to the representatives of J.P. Morgan that they viewed the July proposal as an improvement to the May proposal in light of the Q2 2022 results.
On July 20, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The representatives of J.P. Morgan shared with the Strategic Committee the July proposal, and reviewed with the Strategic Committee the current market and industry conditions and potential responses to the July proposal, including (1) attempting to negotiate for a higher purchase price; (2) guiding Thoma Bravo to an increased purchase price range; or (3) terminating the discussions with Thoma Bravo altogether. The representatives of J.P. Morgan then left the meeting. Representatives of management reviewed the Q2 2022 results and potential execution risks to achieving ForgeRock’s July 2022 business plan, including current market and industry conditions and challenges to attracting and retaining personnel.
Later on July 20, 2022, the ForgeRock Board met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. Representatives of J.P. Morgan and management reviewed the discussions with Thoma Bravo to date, and the July proposal. The Strategic Committee reviewed with the ForgeRock Board potential responses to the July proposal. The ForgeRock Board considered a potential outreach process to solicit interest in a strategic transaction from additional potential counterparties at that time, including the risks in connection with such an outreach. Representatives of management reviewed the Q2 2022 results and potential execution risks to achieving ForgeRock’s July 2022 business plan, including current market and industry conditions and challenges to attracting and retaining personnel.
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Still later on July 20, 2022, the Strategic Committee reconvened, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The Strategic Committee discussed ForgeRock’s potential responses to the July proposal. The Strategic Committee discussed again whether to conduct a potential outreach process to solicit interest from additional potential counterparties at that time. The representatives of Wilson Sonsini discussed with the members of the Strategic Committee their fiduciary duties. It was the consensus of the Strategic Committee that ForgeRock should continue to discuss a potential transaction with Thoma Bravo, and the Strategic Committee instructed J.P. Morgan to request that Thoma Bravo submit a revised acquisition proposal at an increased value. The Strategic Committee also determined not to conduct a broader outreach process to additional potential acquirors at that time. Representatives of J.P. Morgan communicated the Strategic Committee’s response to Thoma Bravo.
On July 26, 2022, representatives of Thoma Bravo informed representatives of J.P. Morgan that Thoma Bravo had determined that it would not move forward with an acquisition of ForgeRock at that time. Among the reasons cited were the uncertainty surrounding the market’s reaction to ForgeRock’s upcoming second quarter earnings announcement and ForgeRock’s then-current trading price.
On July 27, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The Strategic Committee discussed Thoma Bravo’s decision to not move forward with an acquisition at that time. The Strategic Committee also discussed ForgeRock’s upcoming earnings announcement and guidance for the remainder of 2022. The Strategic Committee determined that it would suspend its review of strategic alternatives at that time.
On July 28, 2022, the ForgeRock Board met, with representatives of Wilson Sonsini in attendance. Mr. Rosch updated the ForgeRock Board on the discussions with Thoma Bravo. The ForgeRock Board discussed Thoma Bravo’s decision not to move forward with an acquisition at that time. The ForgeRock Board determined that it would suspend its review of strategic alternatives at that time. As a result, on that day, ForgeRock sent to Thoma Bravo a request to return or destroy ForgeRock confidential information in accordance with the confidentiality agreement with Thoma Bravo.
On August 3, 2022, a senior representative of Thoma Bravo contacted Mr. Rosch to indicate interest in re-engaging in discussions with ForgeRock regarding a potential transaction at some point in the future. Later on August 3, 2022, Mr. Rosch updated Mr. Golden on Thoma Bravo’s outreach.
On August 11, 2022, ForgeRock announced its financial results for the quarter ended June 30, 2022.
On August 26, 2022, the Strategic Committee met, with representatives of management and Wilson Sonsini in attendance. In light of the potential for Thoma Bravo to renew its interest in exploring an acquisition of ForgeRock, and based on the Strategic Committee’s prior review of potential strategic acquirors and financial sponsors most likely to be interested in exploring a transaction with ForgeRock, the Strategic Committee determined it would be prudent to begin conversations with those additional parties that might consider an acquisition of ForgeRock. The Strategic Committee directed management to work with J.P. Morgan to contact four financial sponsors, including Sponsor A, Sponsor B and Sponsor C, and four strategic acquirors, Strategic A, Strategic B, Strategic C and Strategic D, to solicit interest in a potential acquisition of ForgeRock, and if such counterparties decided to engage, enter into confidentiality agreements, hold initial management presentations and provide due diligence to such parties.
Later on August 26, 2022, the ForgeRock Board met, with representatives of management and Wilson Sonsini in attendance. Mr. Golden, on behalf of the Strategic Committee, informed the ForgeRock Board of the Strategic Committee’s determination to engage in a targeted outreach to certain potential counterparties. The ForgeRock Board agreed with the Strategic Committee’s determination.
Between August 26, 2022 and August 28, 2022, representatives of the financial sponsors and potential strategic acquirors that the Strategic Committee had selected for outreach were contacted (at the request of the Strategic Committee) by representatives of J.P. Morgan and/or Mr. Rosch. Of the parties contacted, Sponsor A, Sponsor B and Sponsor C expressed an interest in pursuing discussions regarding a potential strategic transaction with ForgeRock. The remaining parties declined.
On August 31, 2022 and September 1, 2022, ForgeRock entered into confidentiality agreements with each of Sponsor A, Sponsor B and Sponsor C. The confidentiality agreements with each of those parties included a customary “standstill” restriction that would terminate upon ForgeRock’s entry into a definitive agreement for an acquisition of ForgeRock.
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On September 2, 2022, representatives of management gave management presentations regarding ForgeRock to each of Sponsor A, Sponsor B and Sponsor C. Thereafter, and throughout the month of September, each of Sponsor A, Sponsor B and Sponsor C engaged in due diligence and discussions with ForgeRock, which included multiple meetings with members of ForgeRock management, members of the Strategic Committee and representatives of J.P. Morgan to discuss ForgeRock’s business and a potential acquisition of ForgeRock.
On September 12, 2022, a representative of Sponsor D, on an unsolicited basis, contacted a ForgeRock director, expressing a non-specific interest in meeting with representatives of management. Thereafter, the director connected representatives of Sponsor D with Mr. Rosch, and Mr. Rosch had an introductory meeting with representatives of Sponsor D on September 30, 2022.
On September 12, 2022, Mr. Rosch met with representatives of Thoma Bravo, at Thoma Bravo’s request. The representatives of Thoma Bravo informed Mr. Rosch that Thoma Bravo desired to re-engage in discussions regarding a potential acquisition of ForgeRock.
On September 14, 2022, the ForgeRock Board met, with representatives of management and Wilson Sonsini in attendance. The Strategic Committee updated the ForgeRock Board on the status of discussions with Thoma Bravo, Sponsor A, Sponsor B and Sponsor C. Representatives of management reviewed management’s then-updated business plan, including the unaudited financial prospective financial information for fiscal years 2022 through 2024 included in the business plan as of September 2022 (which we refer to as the “September 2022 business plan”). Additional information about the preparation and substance of the September 2022 business plan is contained in the section of this proxy statement captioned “—Unaudited Prospective Financial Information.” The ForgeRock Board authorized sharing the September 2022 business plan with interested potential acquirors. The September 2022 business plan was provided to Thoma Bravo, Sponsor A and Sponsor B in due diligence, and also J.P. Morgan for purposes of its ongoing financial analyses.
On September 15, 2022, representatives of Sponsor C informed Mr. Rosch that Sponsor C was not interested in pursuing a strategic transaction with ForgeRock at that time.
On September 15, 2022, representatives of management met with representatives of Thoma Bravo to review the September 2022 business plan and to discuss general updates to ForgeRock’s business since July 2022. Thereafter, and until the parties executed and delivered the merger agreement, Thoma Bravo and its representatives engaged in due diligence and discussions with ForgeRock, which included multiple meetings with members of ForgeRock management, members of the Strategic Committee and representatives of J.P. Morgan to discuss ForgeRock’s business and a potential acquisition of ForgeRock.
Later on September 15, 2022, Sponsor A submitted a non-binding indication of interest to the ForgeRock Board to acquire all of the outstanding shares of our common stock for $23.15 per share (which we refer to as the “Sponsor A proposal”).
On September 16, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. Mr. Rosch provided an update on the due diligence information made available to, and discussions with, the potentially interested acquirors, including Sponsor A, Sponsor B and Sponsor C. Mr. Rosch noted that management expected that Thoma Bravo may make an updated proposal the following week. Representatives of J.P. Morgan discussed with the Strategic Committee a preliminary financial analysis of the Sponsor A proposal. The Strategic Committee discussed the uncertain status of Sponsor B, which had indicated it remained interested in pursuing a potential transaction with ForgeRock, but required additional due diligence before it could make a proposal. With respect to the Sponsor A proposal, the Strategic Committee authorized the representatives of management and J.P. Morgan to inform Sponsor A that its proposal was too low for the ForgeRock Board to find compelling, and to inquire what additional due diligence Sponsor A required to raise its bid. On September 16, 2022, Mr. Rosch, together with representatives of J.P. Morgan, communicated this information to Sponsor A.
On September 19, 2022, Thoma Bravo submitted a non-binding indication of interest to the ForgeRock Board to acquire all of the outstanding shares of our common stock for $21.75 per share (which we refer to as the “September proposal”). The September proposal also replaced the “go-shop” provision previously proposed by Thoma Bravo with a “no-shop” provision that would restrict ForgeRock from soliciting alternative acquisition proposals after signing a definitive agreement providing for the acquisition of ForgeRock by Thoma Bravo.
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On September 20, 2022, Sponsor A was granted access to a virtual data room hosted by ForgeRock to share due diligence information. On September 22, 2022, Sponsor B was granted access to the virtual data room. On September 25, 2022, Thoma Bravo was granted renewed access to the virtual data room.
On September 21, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. Mr. Rosch provided an overview of discussions with Thoma Bravo and Sponsor A, including that Sponsor A had indicated it was considering the submission of a revised proposal above $24.00 per share. Representatives of J.P. Morgan and a member of the Strategic Committee reviewed similar discussions each had separately had with senior representatives of Sponsor A. The Strategic Committee discussed the unsolicited outreach from Sponsor D. It was the consensus of the Strategic Committee that Sponsor D was unlikely to successfully pursue a full acquisition of ForgeRock on an acceptable timeline. The Strategic Committee discussed potential execution risks to achieving ForgeRock’s September 2022 business plan, including current market and industry conditions and challenges to attracting and retaining personnel. The Strategic Committee instructed management and J.P. Morgan to (1) continue to encourage Sponsor A to submit a revised proposal; (2) continue to provide Sponsor B with sufficient due diligence to enable it to make a proposal; and (3) inform Thoma Bravo that the September proposal was too low for the ForgeRock Board to find acceptable, and, as necessary, facilitate additional due diligence in order for Thoma Bravo to submit an increased proposal.
On September 22, 2022, representatives of J.P. Morgan and Mr. Rosch met with a senior representative of Thoma Bravo. At the meeting, Mr. Rosch informed Thoma Bravo that the September proposal was too low for the ForgeRock Board to accept.
On September 22, 2022, representatives of J.P. Morgan met with representatives of Sponsor B. At this meeting, Sponsor B indicated that it would need additional time to complete diligence and to decide whether it would pursue an acquisition of ForgeRock.
On September 26, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The Strategic Committee discussed the status of discussions with Thoma Bravo, Sponsor A and Sponsor B. The Strategic Committee discussed the uncertainty of Sponsor B’s status. The representatives of J.P. Morgan reviewed a preliminary financial analysis of the September proposal and the Sponsor A proposal. The representatives of Wilson Sonsini discussed certain potential execution and regulatory risks to completing a potential transaction with each of Thoma Bravo, Sponsor A and Sponsor B, and the key terms of a proposed merger agreement that would be provided to such parties should the ForgeRock Board decide to proceed.
On September 27, 2022, Mr. Rosch gave a management presentation regarding ForgeRock to Sponsor A’s investment committee.
On September 29, 2022 and September 30, 2022, each of Mr. Rosch and representatives of J.P. Morgan separately met with a senior representative of Sponsor A. During each meeting, the representative of Sponsor A indicated that Sponsor A was unable to support a proposal at or above the original Sponsor A proposal of $23.15 per share. The representative of Sponsor A also indicated to Mr. Rosch that Sponsor A expected that any further proposal by Sponsor A would be closer to $21.00 per share.
On September 29, 2022, Mr. Rosch met with senior representatives of Thoma Bravo. The representatives of Thoma Bravo indicated that Thoma Bravo was (1) ready to proceed with an acquisition of ForgeRock; (2) open to negotiating the purchase price; and (3) willing to provide an equity financing commitment for the entire aggregate purchase price of the acquisition (i.e., a full “equity backstop”). A senior representative of Thoma Bravo delivered the same message to representatives of J.P. Morgan during a meeting on September 29, 2022.
On September 30, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The Strategic Committee discussed the status of discussions with Thoma Bravo, Sponsor A and Sponsor B. Mr. Rosch noted that based on the lack of urgency with which Sponsor B was moving, it was unlikely that Sponsor B would make a proposal to acquire ForgeRock. The Strategic Committee also discussed the possibility of entering into exclusive negotiations with a potential acquiror. The Strategic Committee authorized J.P. Morgan and management to (1) instruct each of Thoma Bravo, Sponsor A and Sponsor B to submit “final” proposals by October 3, 2022; (2) inform the parties that ForgeRock would be willing to enter into exclusivity for a limited period with respect to acquisition proposals at a purchase price of $24.00 per share of our common stock; and (3) provide the parties an overview of ForgeRock’s preliminary results of operations for the third quarter of 2022
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to support ForgeRock seeking increased acquisition proposals. Mr. Rosch and representatives of J.P. Morgan subsequently communicated the ForgeRock Board’s message regarding price and provided an overview of ForgeRock’s preliminary results of operations for the third quarter of 2022 to Thoma Bravo, Sponsor A and Sponsor B.
On October 1, 2022, representatives of Thoma Bravo informed Mr. Rosch that Thoma Bravo had completed financial due diligence and was prepared to move expeditiously to sign and announce a transaction.
On October 1, 2022, Thoma Bravo submitted a non-binding indication of interest to the ForgeRock Board to acquire all of the outstanding shares of our common stock at a purchase price of $23.00 per share (which we refer to as the “first October proposal”). The first October proposal contemplated (1) a full “equity backstop” of the purchase price; and (2) that ForgeRock enter into exclusivity with Thoma Bravo through October 6, 2022.
Later on October 1, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The Strategic Committee instructed management and representatives of J.P. Morgan to make a counterproposal for Thoma Bravo to acquire ForgeRock at a purchase price of $23.50 per share. Still later on October 1, 2022, Mr. Rosch, together with representatives of J.P. Morgan, conveyed this counterproposal to Thoma Bravo.
On October 1 and October 2, 2022, each of Mr. Rosch and representatives of J.P. Morgan separately met with a senior representative of Sponsor A. During each meeting, Sponsor A indicated that Sponsor A was unable to make a proposal at or above the original Sponsor A proposal of $23.15 per share.
On October 2, 2022, Thoma Bravo submitted a revised proposal to acquire all of the outstanding shares of our common stock for $23.25 per share. Thoma Bravo informed Mr. Rosch that this represented Thoma Bravo’s “best and final” offer (which we refer to as the “final Thoma Bravo proposal”). The final Thoma Bravo proposal also contemplated that ForgeRock enter exclusivity with Thoma Bravo through October 6, 2022.
Later on October 2, 2022, the Strategic Committee met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. The Strategic Committee reviewed (1) the final Thoma Bravo proposal; and (2) the status of negotiations with each of Sponsor A and Sponsor B. Mr. Rosch noted that Sponsor B had been unresponsive to requests to submit a proposal by October 3, 2022. The representatives of J.P. Morgan left the meeting. The representatives of management reviewed potential execution risks to achieving ForgeRock’s September 2022 business plan. The representatives of management then left the meeting and the Strategic Committee continued to discuss the final Thoma Bravo proposal in executive session. The representatives of Wilson Sonsini discussed with the Strategic Committee members their fiduciary duties and potential execution and regulatory risks to completing a transaction with Thoma Bravo. It was the consensus of the Strategic Committee to enter into exclusive negotiations with Thoma Bravo based on the final Thoma Bravo proposal. In making its determination, the Strategic Committee considered, among other things, (1) the fact that Sponsor A was not prepared to submit a revised proposal at or above the original Sponsor A proposal; (2) the uncertainty around Sponsor B's status, and the low likelihood that Sponsor B would submit any acquisition proposal, let alone a proposal that the ForgeRock Board would consider attractive; (3) the outreach that ForgeRock had conducted to other potential acquirors; (4) ForgeRock’s prospects as a stand-alone company; (5) certain potential benefits and risks to completing a transaction with Thoma Bravo; and (6) the uncertainty in the debt financing markets, and Thoma Bravo’s commitment to provide a full “equity backstop” for the purchase price. Representatives of management and J.P. Morgan rejoined the meeting. The Strategic Committee directed management to work with Wilson Sonsini and J.P. Morgan to negotiate the terms of the draft merger agreement, with the objective of reaching a potential definitive agreement for an acquisition of ForgeRock by Thoma Bravo during the exclusivity period. The Strategic Committee reviewed the material terms of a proposed engagement letter with J.P. Morgan to memorialize the terms of J.P. Morgan’s engagement as financial advisor to ForgeRock, and approved ForgeRock’s entry into such engagement letter on the terms discussed.
Still later on October 2, 2022, ForgeRock entered into exclusivity with Thoma Bravo until 11:59 p.m., Pacific time, on October 6, 2022. Thereafter, ForgeRock provided a draft merger agreement to Thoma Bravo as prepared by Wilson Sonsini. The draft merger agreement provided for a regulatory termination fee payable by Parent in the event the merger agreement was terminated in certain circumstances at a time when the applicable regulatory approvals required to complete the merger had not been obtained.
Still later on October 2, 2022, ForgeRock entered into an engagement letter with J.P. Morgan with respect to J.P. Morgan’s engagement as financial advisor to ForgeRock.
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Following delivery of the draft merger agreement, representatives of Wilson Sonsini and Kirkland & Ellis LLP (which we refer to as “Kirkland & Ellis”), legal counsel to Thoma Bravo, met regularly to negotiate the terms of the merger agreement. The principal areas of negotiation in the merger agreement included (1) the respective efforts required by ForgeRock and Parent to obtain the required regulatory approvals necessary to consummate the merger; (2) the inclusion of a regulatory termination fee payable by Parent and the terms on which it might be payable; (3) the “termination date” of the merger agreement and the extensions thereto; (4) the restrictions on ForgeRock’s operation of the business prior to the completion of the merger (i.e., the “interim operating covenants”), including with respect to employee and compensation matters; and (5) the conditions to each party’s obligations to close the merger. The representatives of Wilson Sonsini and Kirkland & Ellis also negotiated the terms of the limited guaranty and the equity commitment letter. The representatives of Wilson Sonsini, Kirkland & Ellis and certain of ForgeRock’s directors and their affiliated investment funds, together with their representatives, also negotiated the terms of the voting agreements.
Following delivery of the draft merger agreement, Messrs. Rosch and Fernandez met on numerous occasions with senior representatives of Thoma Bravo to negotiate the interim operating covenants of the merger agreement.
On October 6, 2022, the ForgeRock Board met, with representatives of management and Wilson Sonsini in attendance. Messrs. Rosch and Golden reviewed the status of negotiations of the draft merger agreement with Thoma Bravo, and the discussions with Sponsor A and Sponsor B prior to entering into exclusivity with Thoma Bravo. The representatives of J.P. Morgan then joined the meeting and reviewed and discussed J.P. Morgan’s preliminary financial analysis of the final Thoma Bravo proposal based on the September 2022 business plan. The representatives of Wilson Sonsini reviewed with the directors their fiduciary duties and then discussed the key terms of the merger agreement and the equity commitment letter. Mr. Rosch confirmed to the ForgeRock Board that neither he nor, to his knowledge, any other member of management had engaged in any discussions with Thoma Bravo concerning any “rollover” of any equity stake in ForgeRock in connection with a potential acquisition, or the possibility of employment following an acquisition, or the potential terms thereof. The representatives of J.P. Morgan and management left the meeting and the ForgeRock Board continued in executive session. The ForgeRock Board unanimously approved continuing to pursue a transaction with Thoma Bravo and authorized management to grant Thoma Bravo one-day exclusivity extensions through October 9, 2022. The ForgeRock Board instructed the representatives of Wilson Sonsini to continue to negotiate for the inclusion in the merger agreement of a regulatory termination fee payable by Parent.
On October 7, 2022, ForgeRock extended exclusivity with Thoma Bravo until 11:59 p.m., Pacific time, on October 7, 2022.
On October 8, 2022, Mr. Rosch, and Messrs. Golden and Welsh, on behalf of the Strategic Committee, met with senior representatives of Thoma Bravo to negotiate the regulatory provisions in the merger agreement, including the potential inclusion of a regulatory termination fee payable by Parent.
On October 9, 2022, the Strategic Committee met, with representatives of management and Wilson Sonsini in attendance. The Strategic Committee discussed the open points in the merger agreement. The Strategic Committee determined that ForgeRock would accept not including a regulatory termination fee payable by Parent, and seek to finalize the other remaining provisions of the merger agreement.
On October 9, 2022, the ForgeRock Board met, with representatives of management, J.P. Morgan and Wilson Sonsini in attendance. Mr. Golden summarized the status of negotiations with Thoma Bravo with respect to the regulatory provisions, the interim operating covenants and other terms of the draft merger agreement, noting the Strategic Committee’s recommendation that the ForgeRock Board proceed without a regulatory termination fee payable by Parent in the merger agreement. The representatives of Wilson Sonsini reviewed with the members of the ForgeRock Board their fiduciary duties. The representatives of J.P. Morgan reviewed and discussed J.P. Morgan’s financial analysis of the consideration to be paid by Thoma Bravo in the merger, noting that J.P. Morgan was prepared to render its opinion that, as of such date and based upon and subject to the various assumptions, limitations, qualifications and other factors that would be set forth therein, the per share consideration of $23.25 in cash to be paid to the holders of shares of our common stock pursuant to the merger agreement was fair from a financial point of view, to such holders. The representatives of Wilson Sonsini reviewed the remaining key terms of the merger agreement and the equity commitment letter. The ForgeRock Board authorized the representatives of management, J.P. Morgan and Wilson Sonsini to finalize negotiation of the merger agreement with Thoma Bravo, under the supervision of the Strategic Committee and consistent with the terms presented to the ForgeRock Board.
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On October 10, 2022, the merger agreement, equity commitment letter, limited guaranty, voting agreements and other transaction documents were finalized.
Later on October 10, 2022, the representatives of J.P. Morgan delivered, together with a copy of the financial analysis reviewed and discussed by J.P. Morgan with the ForgeRock Board on October 9, 2022, J.P. Morgan’s written opinion to the ForgeRock Board, dated October 10, 2022, that, as of such date, and based upon and subject to the various assumptions, limitations, qualifications and other factors set forth therein, the per share consideration of $23.25 in cash to be paid to the holders of shares of our common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.
On the evening of October 10, 2022, the members of the ForgeRock Board, by unanimous written consent: (1) determined that the merger agreement and the transactions, including the merger, are advisable, fair to and in the best interests of ForgeRock and our stockholders; (2) approved the execution and delivery of the merger agreement by ForgeRock, the performance by ForgeRock of its covenants and other obligations thereunder, and the consummation of the merger upon the terms and subject to the conditions set forth therein; (3) recommended that the stockholders of ForgeRock adopt the merger agreement and approve the transactions contemplated thereby; and (4) directed that the adoption of the merger agreement be submitted for consideration by the stockholders of ForgeRock at a meeting thereof.
Overnight on October 10, 2022, ForgeRock and Thoma Bravo executed the merger agreement and delivered the executed voting agreements, equity commitment letter and limited guaranty. After execution of the transaction agreements, ForgeRock and Thoma Bravo issued a joint press release announcing the entry into the merger agreement before the opening of trading on NYSE on October 11, 2022.
Recommendation of the ForgeRock Board and Reasons for the Merger
Recommendation of the ForgeRock Board
On October 10, 2022, the ForgeRock Board unanimously: (1) determined that the merger agreement and the transactions, including the merger, are advisable, fair to and in the best interests of ForgeRock and its stockholders; (2) approved the execution and delivery of the merger agreement by ForgeRock, the performance by ForgeRock of its covenants and other obligations thereunder, and the consummation of the merger upon the terms and subject to the conditions set forth therein; (3) recommended that the stockholders of ForgeRock adopt the merger agreement and approve the transactions contemplated thereby; and (4) directed that the adoption of the merger agreement be submitted for consideration by the stockholders of ForgeRock at a meeting thereof.
The ForgeRock Board unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by ForgeRock to its named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting, from time to time, to a later date or dates, if necessary or appropriate, 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 ForgeRock Board consulted with ForgeRock management, as well as representatives of each of Wilson Sonsini and J.P. Morgan. In recommending that ForgeRock stockholders vote “FOR” the adoption of the merger agreement, the ForgeRock Board considered and analyzed a number of factors, including the following (which factors are not necessarily presented in order of relative importance). Based on these consultations, considerations and analyses, and the factors discussed below, the ForgeRock Board concluded that entering into the merger agreement was advisable, fair to and in the best interests of ForgeRock and our stockholders.
The ForgeRock Board believed that the following material factors and benefits supported its determination and recommendation:
Business, Financial Condition, Prospects and Execution Risks. The ForgeRock Board considered the current and historical and financial condition, results of operations, business and competitive positioning of ForgeRock, as well as ForgeRock’s prospects and risks if it were to remain an independent company. In particular, the ForgeRock Board considered management’s then current business plan, including the September 2022 business plan. Additional information about the preparation and substance of the
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September 2022 business plan is contained in the section of this proxy statement captioned “—Unaudited Prospective Financial Information.” The ForgeRock Board considered these plans and the potential opportunities that they presented against, among other various execution and other risks to achieving management’s business plan and related uncertainties, including (1) the likelihood that management’s business plan could be achieved in the face of operational and execution risks in the short and long term, including the ability to maintain management’s growth targets; (2) the impact of market, customer and competitive trends on ForgeRock; and (3) market volatility and the general risks related to market conditions that could reduce the price of our Class A common stock. Among the potential risks identified by the ForgeRock Board were:
ForgeRock’s competitive positioning and prospects as an independent company. Included among these risks were consideration of (1) ForgeRock’s size, as well as its financial resources, relative to those of its competitors; (2) new and evolving competitive threats; (3) challenges to acquiring new customers or retaining our existing customers; (4) challenges to attracting and retaining personnel; and (5) other factors affecting the revenues, operating costs and profitability of companies in ForgeRock’s industry generally and other risk factors described in ForgeRock’s other filings with the SEC, as listed in the section of this proxy statement captioned Where You Can Find More Information.
The current market and industry conditions, including international, national and local economic conditions, the current environment in the enterprise identity security industry, the likely effect of these factors on ForgeRock and the execution of ForgeRock’s plans as a standalone public company, and the possibility that market and industry conditions—for ForgeRock and the larger economy— will not improve and could get worse.
The challenges of making investments to achieve long-term growth prospects for a publicly traded company, which is subject to scrutiny based on its quarterly performance. The ForgeRock Board was aware that the price of our Class A common stock could be negatively impacted if ForgeRock failed to meet investor expectations, including if ForgeRock failed to meet its growth objectives.
The historical market prices, volatility and trading information with respect to shares of ForgeRock’s Class A common stock.
Results of Strategic Review Process. The merger was the result of a comprehensive strategic review process overseen by the Strategic Committee. The ForgeRock Board considered that, at ForgeRock’s direction, representatives of J.P. Morgan, together with representatives of ForgeRock management and the ForgeRock Board, affirmatively contacted four potential strategic acquirers and four financial sponsors (in addition to Thoma Bravo) concerning their interest in an acquisition of ForgeRock. The ForgeRock Board considered the nature of the engagement by each of these potential acquirers over several weeks and that, of these potential acquirers, only Sponsor A made a proposal for an acquisition of ForgeRock, which was ultimately lower than the per share merger consideration.
Cash Consideration and Certainty of Value. The consideration to be received by our stockholders in the merger consists entirely of cash, which provides certainty of value measured against the ongoing business and financial execution risks of management’s business plan. The receipt of cash consideration eliminates uncertainty and risk for our stockholders related to the continued execution of ForgeRock’s business.
Best Value Reasonably Obtainable. The belief of the ForgeRock Board that the per share merger consideration represents the best value reasonably obtainable for the shares of our common stock, taking into account the ForgeRock Board’s familiarity with the business, operations, prospects, business strategy, assets, liabilities and general financial condition of ForgeRock on a historical and prospective basis. In addition, the ForgeRock Board believed that, measured against the longer-term execution risks described above, the per share merger consideration reflects a fair and favorable price for the shares of our common stock. The ForgeRock Board also considered that the per share merger consideration constitutes (1) a premium of approximately 53% over ForgeRock’s closing share price on October 10, 2022, the last full trading day prior to the transaction announcement, and (2) a premium of approximately 44% over the volume weighted average price of ForgeRock stock for the 30 days ending October 10, 2022.
Potential Strategic Alternatives. The assessment of the ForgeRock Board that none of the possible alternatives to the merger (including the possibility of continuing to operate ForgeRock as an independent
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company or pursuing a different transaction, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to ForgeRock’s 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 J.P. Morgan. The written opinion of J.P. Morgan delivered to the ForgeRock Board, dated October 10, 2022, that, as of such date, and based upon and subject to the various assumptions, limitations, qualifications and other factors set forth therein, the per share consideration of $23.25 in cash to be paid to the holders of our common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders. The opinion is more fully described in the section of this proxy statement captioned “—Opinion of J.P. Morgan Securities LLC” and the full text of the opinion is attached as Annex B to this proxy statement.
Negotiations with Parent and Terms of the Merger Agreement. The terms of the merger agreement, which was the product of arms’-length negotiations, and the belief of the ForgeRock Board that the merger agreement contained terms that provided ForgeRock with a high level of closing certainty. The factors considered included:
ForgeRock’s ability, under certain circumstances, to furnish information to, and conduct negotiations with, third parties regarding alternative acquisition proposals.
The ForgeRock Board’s belief that the terms of the merger agreement would be unlikely to deter third parties from making a superior proposal.
The ForgeRock 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.
ForgeRock’s ability, under certain circumstances, to terminate the merger agreement to enter into an alternative acquisition agreement. In that regard, the ForgeRock Board believed that the termination fee payable by ForgeRock in such instance was reasonable, consistent with or below similar fees payable in comparable transactions, and not preclusive of other offers.
The limited conditions to Parent’s obligation to consummate the merger, making the merger reasonably likely to be consummated.
ForgeRock’s ability, under circumstances specified in the merger agreement and the equity commitment letter, to specifically enforce Parent’s obligation to cause the equity financing to be funded as contemplated by the merger agreement and the equity commitment letter.
The fact that Thoma Bravo agreed to provide a full equity backstop for the full purchase price.
Business Reputation of Thoma Bravo. The ForgeRock Board believed that the business reputation and financial resources of Thoma Bravo were factors that supported the conclusion that a transaction with Parent (which is owned by Thoma Bravo) could be completed quickly and in an orderly manner, and had a substantial likelihood of being consummated successfully.
Appraisal Rights. The appraisal rights in connection with the merger available to our stockholders (including beneficial owners of shares of our common stock) who timely and properly exercise such appraisal rights under the DGCL if certain conditions are met.
The ForgeRock Board also considered a number of uncertainties and risks and other potentially negative factors, including the following:
Regulatory Risks. 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 Parent. In this regard, the ForgeRock Board considered the provisions of the merger agreement related to obtaining the regulatory approvals required to complete the merger, including that the merger agreement did not provide for a regulatory termination fee payable by Parent in the event the merger agreement was terminated in certain circumstances at a time when the applicable required regulatory approvals required to complete the merger had not been obtained.
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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 ForgeRock’s future earnings or growth and will not benefit from any appreciation in value of the surviving corporation following the merger, whether as an independent company or in combination with other Thoma Bravo portfolio companies or assets. The ForgeRock Board also considered the other potential alternative strategies available to ForgeRock as an independent company, which, despite significant uncertainty, had the potential to result in a more successful and valuable company.
No-Shop Restrictions. The restrictions in the merger agreement on ForgeRock’s ability to solicit competing proposals from the date of the merger agreement (subject to certain exceptions to allow the ForgeRock Board to exercise its fiduciary duties and to accept a superior proposal, and then only upon the payment of a termination fee).
Risk Associated with Failure to Consummate the Merger. The possibility that the merger might not be consummated, and if it is not consummated, that: (1) ForgeRock’s 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 ForgeRock during the pendency of the merger; (2) ForgeRock will have incurred significant transaction and other costs; (3) ForgeRock’s continuing business relationships with customers, business partners and employees may be adversely affected; (4) the trading price of our Class A common stock could be adversely affected; (5) the other contractual and legal remedies available to ForgeRock in the event of the termination of the merger agreement may be insufficient, costly to pursue or both; and (6) the failure of the merger to be consummated could result in an adverse perception among our customers, potential customers, employees and investors, which could cause an adverse impact on our operating results.
Parent Liability Limitation. The fact that Parent’s liabilities for monetary damages payable for breaches under the merger agreement, limited guaranty or equity commitment letter are limited to $140.0 million.
Impact of Interim Restrictions on ForgeRock’s Business Pending the Completion of the Merger. The restrictions on our conduct of ForgeRock’s 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, ForgeRock might have pursued.
Effects of the Merger Announcement. The effects of the public announcement of the merger, including the: (1) effects on ForgeRock’s employees, customers, operating results and stock price; (2) impact on ForgeRock’s ability to attract and retain management, sales and marketing and technical personnel; and (3) potential for litigation in connection with the merger.
Termination Fee Payable by ForgeRock. The requirement that ForgeRock pay Parent a termination fee of $60.0 million under certain circumstances following termination of the merger agreement, including if the ForgeRock Board terminates the merger agreement to accept a superior proposal. The ForgeRock Board considered the potentially dampening effect that this termination fee could have on a third party’s interest in making a proposal to acquire ForgeRock.
Taxable Consideration. The receipt of cash in exchange for shares of our common stock in the merger will be a taxable transaction for U.S. federal income tax purposes for many ForgeRock stockholders.
Interests of ForgeRock’s Directors and Executive Officers. Interests that ForgeRock’s directors and executive officers may have in the merger, which may be different from, or in addition to, those of our other stockholders.
This discussion is not meant to be exhaustive. Rather, it summarizes the material reasons and factors evaluated by the ForgeRock Board in its consideration of the merger. After considering these and other factors, the ForgeRock Board concluded that the potential benefits of entering into the merger agreement outweighed the uncertainties and risks. In light of the variety of factors considered by the ForgeRock Board and the complexity of these factors, the ForgeRock 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 ForgeRock Board applied his or her own personal business judgment to the process and may have assigned different relative weights to the different factors. The ForgeRock Board adopted and approved the merger agreement and the merger,
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and recommended that ForgeRock stockholders adopt the merger agreement, based upon the totality of the information presented to, and considered by, the ForgeRock Board. The explanation of the factors and reasoning set forth above contain forward-looking statements that should be read in conjunction with the section of this proxy statement captioned “Forward-Looking Statements.”
Opinion of J.P. Morgan Securities LLC
Pursuant to an engagement letter, ForgeRock retained J.P. Morgan as its financial advisor in connection with the proposed merger and to deliver a fairness opinion in connection with the proposed merger. ForgeRock decided to engage J.P. Morgan due to, among other things, J.P. Morgan’s familiarity with ForgeRock due to J.P. Morgan’s role as a lead book-running manager in ForgeRock’s initial public offering, as well as J.P. Morgan’s qualifications, extensive expertise, international reputation, knowledge of the industry in which ForgeRock operates and experience in advising similar companies in connection with potential strategic transactions.
At the meeting of the ForgeRock Board on October 9, 2022, representatives of J.P. Morgan presented J.P. Morgan’s financial analysis of the consideration to be paid to the holders of our common stock in the merger to the ForgeRock Board and informed the ForgeRock Board that J.P. Morgan was prepared to render its oral opinion to the ForgeRock Board that, as of such date and based upon and subject to the various assumptions, limitations, qualifications and other factors to be set forth in its written opinion, the per share consideration of $23.25 in cash to be paid to the holders of our common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders. On October 10, 2022, J.P. Morgan delivered its written opinion to the ForgeRock Board, dated October 10, 2022, that, as of such date, and based upon and subject to the various assumptions, limitations, qualifications and other factors set forth in its opinion, the per share consideration of $23.25 in cash to be paid to the holders of our common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.
The full text of the written opinion of J.P. Morgan dated October 10, 2022, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this proxy statement and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. ForgeRock’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the ForgeRock Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the consideration to be paid in the merger and did not address any other aspect of the merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of ForgeRock as to how such stockholder should vote with respect to the proposed merger or any other matter.
In arriving at its opinions, J.P. Morgan, among other things:
reviewed a draft dated October 10, 2022 of the merger agreement;
reviewed certain publicly available business and financial information concerning ForgeRock and the industries in which it operates;
compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration received for such companies;
compared the financial and operating performance of ForgeRock with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of our Class A common stock and certain publicly traded securities of such other companies;
reviewed certain internal financial analyses and forecasts prepared by the management of ForgeRock relating to its business; and
performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.
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In addition, J.P. Morgan held discussions with certain members of the management of ForgeRock with respect to certain aspects of the merger, and the past and current business operations of ForgeRock, the financial condition and future prospects and operations of ForgeRock, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.
In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by ForgeRock or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to J.P. Morgan’s engagement letter with ForgeRock, J.P. Morgan did not assume any obligation to undertake any such independent verification. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of ForgeRock, Parent or Merger Sub under any applicable laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of ForgeRock to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the merger and the other transactions contemplated by the merger agreement will be consummated as described in the merger agreement, and that the definitive merger agreement would not differ in any material respect from the draft thereof furnished to J.P. Morgan. J.P. Morgan also assumed that the representations and warranties made by ForgeRock and Parent in the merger agreement and the related agreements were and will be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to ForgeRock with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on ForgeRock or on the contemplated benefits of the merger.
J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of our common stock in the proposed merger, and J.P. Morgan has expressed no opinion as to (1) the fairness of any consideration to be paid in connection with the merger to the holders of any other class of securities, creditors or other constituencies of ForgeRock, (2) the allocation of the aggregate merger consideration to be paid to all holders of our common stock between the holders of our Class A common stock and our Class B common stock, or the relative fairness of the consideration to the holders of any shares of our common stock or (3) the underlying decision by ForgeRock to engage in the merger. J.P. Morgan also did not express any opinion as to the voting rights associated with the our Class B common stock or any governance or other rights of the holders thereof (and did not take any such rights into account in their analysis). Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed merger, or any class of such persons relative to the consideration to be paid to the holders of our common stock in the proposed merger or with respect to the fairness of any such compensation.
In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodology in rendering its opinion to the ForgeRock Board on October 10, 2022 and contained in the presentation delivered to the ForgeRock Board on October 9, 2022 in anticipation of, and in connection with, the rendering of such opinion. The following is a summary of the material financial analyses undertaken by J.P. Morgan in connection with rendering such opinion and contained in such presentation, and does not purport to be a complete description of the analyses or data presented by J.P. Morgan. 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 J.P. Morgan, 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 J.P. Morgan’s analyses.
Public Trading Multiples
Using publicly available information, J.P. Morgan compared selected financial data of ForgeRock with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to ForgeRock. The companies selected by J.P. Morgan (which we refer to as the “Selected Companies”) were:
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KnowBe4, Inc.
Tenable Holdings, Inc.
Rapid7, Inc.
Okta, Inc.
Elastic N.V.
Varonis Systems, Inc.
CyberArk Software Ltd.
The Selected Companies were chosen because they are publicly traded companies with operations and businesses that, for the purposes of J.P. Morgan’s analysis, may be considered sufficiently similar in certain respects to those of ForgeRock and/or one or more of its businesses. The Selected Companies may be considered similar to ForgeRock or such businesses based on the nature of their assets and operations; however, none of the companies selected is identical or directly comparable to ForgeRock or such businesses, and certain of these companies may have characteristics that are materially different from those of ForgeRock or such businesses. J.P. Morgan’s analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect ForgeRock or such businesses.
Using information obtained from the Selected Companies’ public filings and FactSet Research Systems as of October 7, 2022, J.P. Morgan calculated for each Selected Company the ratio of such company’s firm value (calculated as the market value of the company’s common stock on a fully diluted basis, plus any debt, less cash and cash equivalents) to the equity research analyst estimate for such company’s projected revenue in 2023, calendarized based on a December 31 fiscal year end (which we refer to as the “FV/2023E Revenue”).
Based on the results of this analysis and other factors which J.P. Morgan considered appropriate based on its experience and professional judgment, J.P. Morgan selected a multiple reference range of 4.00x to 7.00x for FV / 2023E Revenue.
J.P. Morgan applied this range to ForgeRock’s estimated revenue for the 2023 fiscal year based on the September 2022 business plan, together with extrapolations of such unaudited prospective financial information for fiscal years 2025 through 2032 prepared by ForgeRock management (as more fully described in the section of this proxy statement captioned “—Unaudited Prospective Financial Information”) to derive a range of firm values for ForgeRock, which was then adjusted to take into account ForgeRock’s net debt totaling $(307.0 million) in the aggregate as of June 30, 2022, to derive a range of implied equity values for ForgeRock. The analysis indicated the following range of implied per share equity value for our common stock, rounded to the nearest $0.05:
 
Implied Per Share
Equity Value
(rounded to the
nearest $0.05)
 
Low
High
FV/2023E Revenue
$14.50
$22.70
The range of implied per share equity value was compared to (1) the closing price per share of our Class A common stock of $15.80 as of October 7, 2022, and (2) the merger consideration of $23.25 per share of our common stock.
Selected Transaction Analysis
Using publicly available information, J.P. Morgan reviewed selected transactions (which we refer to as the “Selected Transactions”) involving businesses that, for purposes of J.P. Morgan’s analysis and based on its experience and professional judgment, were considered by J.P. Morgan to be similar to ForgeRock’s business. Specifically, J.P. Morgan reviewed the Selected Transactions set forth in the below table.
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For each of the Selected Transactions, J.P. Morgan calculated the firm value implied by the consideration to be paid for the target company in such transaction as a multiple of published equity research analyst estimates for the target company’s projected revenue for the 12-month period following the announcement of the applicable transaction (which we refer to as the “FV/NTM Revenue”). The following table sets forth each of the Selected Transactions reviewed by J.P. Morgan:
Target
Acquiror
Month/Year Announced
Avalara, Inc.
Vista Equity Partners Management, LLC
August 2022
Ping Identity Holding Corp.
Thoma Bravo, L.P.
August 2022
Zendesk, Inc.
Hellman & Friedman LLC
June 2022
Datto, Inc.
Kaseya Limited
April 2022
SailPoint Technologies, Inc.
Thoma Bravo, L.P.
April 2022
Anaplan, Inc.
Thoma Bravo, L.P.
March 2022
Mandiant, Inc.
Google LLC
March 2022
Medallia, Inc.
Thoma Bravo, L.P.
July 2021
Talend S.A.
Thoma Bravo, L.P.
March 2021
Pluralsight, Inc.
Vista Equity Partners Management, LLC
December 2020
Instructure, Inc.
Thoma Bravo, L.P.
February 2020
Forescout Technologies, Inc.
Advent International Corporation
February 2020
Sophos Group plc
Thoma Bravo, L.P.
October 2019
Carbon Black, Inc.
VMware, Inc.
August 2019
Pivotal Software, Inc.
VMware, Inc.
August 2019
Medidata Solutions, Inc.
Dassault Systèmes SE
June 2019
MINDBODY, Inc.
Vista Equity Partners Management, LLC
December 2018
Apptio, Inc.
Vista Equity Partners Management, LLC
November 2018
Red Hat, Inc.
International Business Machines Corporation
October 2018
SendGrid, Inc.
Twilio Inc.
October 2018
Callidus Software Inc.
SAP America, Inc.
January 2018
Aconex Limited
Oracle Corporation
December 2017
Xactly Corporation
Vista Equity Partners Management, LLC
May 2017
Based on the results of this analysis and other factors which J.P. Morgan considered appropriate based on its experience and professional judgment, J.P. Morgan selected a multiple reference range of 6.0x to 10.0x for FV/NTM Revenue and applied it to ForgeRock’s projected revenue for the 12 months ended June 30, 2023, to derive a range of firm values for ForgeRock, which was then adjusted to take into account ForgeRock’s net debt totaling $(307.0 million) in the aggregate as of June 30, 2022, to derive a range of implied equity values for ForgeRock. This analysis indicated a range of implied equity values per share of our common stock, rounded to the nearest $0.05, of $18.15 to $27.80, which was compared to (1) the closing price per share of our Class A common stock of $15.80 as of October 7, 2022, and (2) the merger consideration of $23.25 per share of our common stock.
Discounted Cash Flow Analysis
J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied fully diluted equity value per share for our common stock. A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” The “unlevered free cash flows,” for purposes of the discounted cash flow analysis, refers to a calculation of the future cash flows generated by an asset without including in such calculation any debt servicing costs. “Present value” refers to the current value of the future cash flows generated by the asset, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the cost of capital and other appropriate factors. “Terminal value” refers to the present value of all future cash flows generated by the asset for periods beyond the projections period.
J.P. Morgan calculated the present value of the future standalone unlevered after-tax free cash flows for fiscal year 2023 through fiscal year 2032 (which we refer to as the “DCF Projection Period”) based upon the September 2022 business plan and the September 2022 extrapolations. J.P. Morgan also calculated a range of terminal values for
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ForgeRock by applying a range of perpetuity growth rates, as provided by management of ForgeRock, ranging from 4.0% to 5.0% of the unlevered free cash flows of ForgeRock during the final year of the DCF Projection Period. The unlevered free cash flows and the range of terminal values were then discounted from December 31 of each year to present values as of December 31, 2022 using a mid-year convention and a range of discount rates from 10.00% to 12.00%. The discount rate range was selected by J.P. Morgan based on J.P. Morgan’s analysis of the weighted average cost of capital for ForgeRock.
Based on the foregoing, these analyses indicated a range of implied equity values per share of our common stock, rounded to the nearest $0.05, of $18.30 to $31.00. The range of implied equity values per share of our common stock were compared to (1) the closing price per share of Class A common stock of $15.80 as of October 7, 2022, and (2) the merger consideration of $23.25 per share of common stock.
Other Information
52-Week Historical Trading Range.
For reference only and not as a component of its fairness analysis, J.P. Morgan reviewed the trading range for the Class A common stock for the 52-week period ended October 7, 2022, which was $11.94 per share to $36.00 per share, and compared that range to (1) the closing price per share of Class A common stock of $15.80 as of October 7, 2022, and (2) the merger consideration of $23.25 per share of our common stock.
Analyst Price Targets.
For reference only and not as a component of its fairness analysis, J.P. Morgan reviewed the publicly available equity research analyst price target range for the Class A common stock as of October 7, 2022, and noted that such price target range was $17.00 per share to $26.00 per share, and compared that price target range to (1) the closing price per share of Class A common stock of $15.80 as of October 7, 2022, and (2) the merger consideration of $23.25 per share of our common stock.
Miscellaneous
The foregoing summary of the material financial analyses undertaken by J.P. Morgan does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of ForgeRock. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.
Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the Selected Companies reviewed as described in the above summary is identical to ForgeRock, and none of the Selected Transactions reviewed was identical to the merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of ForgeRock. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analysis, may be considered similar to the merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to ForgeRock and the transactions compared to the merger.
As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control
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purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise ForgeRock with respect to the merger and deliver an opinion to the ForgeRock Board with respect to the merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with ForgeRock and the industries in which it operates.
J.P. Morgan received a fee from ForgeRock of $3.0 million for delivery of its opinion. ForgeRock has agreed to pay J.P. Morgan a transaction fee equal to 1.30% of the merger consideration upon the closing of the transaction, against which the opinion fee will be credited. In addition, ForgeRock has agreed to reimburse J.P. Morgan for its reasonable, documented and out-of-pocket expenses incurred in connection with its services, including travel costs and the reasonable fees and expenses of outside counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with ForgeRock and certain portfolio companies of Thoma Bravo for which J.P. Morgan and such affiliates have received customary compensation. Such services during such period have included (1) acting as joint lead bookrunner on ForgeRock’s initial public offering in October 2021 and (2) providing debt syndication, equity underwriting and financial advisory services to portfolio companies of Thoma Bravo unrelated to the merger. In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under outstanding credit facilities of portfolio companies of Thoma Bravo, for which it receives customary compensation or other financial benefits. During the two year period preceding the delivery of its opinion ending on October 10, 2022, the aggregate fees recognized by J.P. Morgan from ForgeRock were approximately $6.0 million and from affiliates of Thoma Bravo were approximately $105.0 million. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of ForgeRock, Parent and Thoma Bravo and its portfolio companies for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities or other financial instruments.
Unaudited Prospective Financial Information
Other than in connection with our regular earnings press releases and related investor materials, we do not, as a matter of course, make public projections as to our future financial performance, due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. However, ForgeRock management regularly prepares, and the ForgeRock Board regularly evaluates, prospective financial information as to ForgeRock’s future performance as part of its budget planning and long-term business plan. ForgeRock management regularly makes and reviews with the ForgeRock Board updates to its business plan, including to reflect actual results and trends and changes in ForgeRock’s performance and the industry in which it operates.
During the period in which it was engaged in discussions with Thoma Bravo and certain other parties with respect to a potential transaction, and as part of our strategic planning process and evaluation of strategic alternatives (including continuing as an independent company), ForgeRock management prepared and reviewed with the Strategic Committee and the ForgeRock Board various unaudited forward-looking financial information for fiscal years 2022 through 2024 as part of ForgeRock management’s business plan, including the unaudited prospective financial information summarized below. The tables below summarizes the (1) unaudited prospective financial information for fiscal years 2022 through 2024 included in our business plan as reviewed with the ForgeRock Board in June 2022, which financial information is referred to as the “June 2022 business plan,” (2) unaudited prospective financial information for fiscal years 2022 through 2024 included in our business plan as updated by ForgeRock management as of, and reviewed with the ForgeRock Board in, July, 2022, which financial information is referred to as the “July 2022 business plan” and (3) unaudited prospective financial information for fiscal years 2022 through 2024 included in our business plan as updated by ForgeRock management as of, and reviewed with the ForgeRock Board in, September, 2022, which financial information is referred to as the “September 2022 business plan,” together with extrapolations of such unaudited prospective financial information for fiscal years 2025 through 2032 prepared by ForgeRock management for use by J.P. Morgan in connection with its financial analyses for the purpose of rendering an opinion to the ForgeRock Board as to the fairness, from a financial point of view, of the consideration to be paid to the holders of our common stock (as described in more detail in the section of this proxy statement captioned “—Opinion of J.P. Morgan Securities LLC”), which extrapolations are referred to as the “September 2022 extrapolations.” For purposes of this proxy statement, we refer to the June 2022 business plan, the July 2022 business plan, the September 2022 business plan and the September 2022 extrapolations, collectively, as the “unaudited prospective financial information.” The unaudited prospective financial information was
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prepared for internal use only and not for public disclosure and was provided by ForgeRock management to the Strategic Committee and the ForgeRock Board for the purposes of considering, analyzing and evaluating the merger and strategic alternatives thereto. At the direction of the ForgeRock Board, the September 2022 business plan and the September 2022 extrapolations were also provided to, and approved for use by, J.P. Morgan for purposes of performing its financial analyses in connection with rendering its opinion to the ForgeRock Board as to the fairness, from a financial point of view, of the consideration to be paid to the holders of our common stock (as more fully described in the section of this proxy statement captioned “—Opinion of J.P. Morgan Securities LLC”). In addition, certain of the unaudited prospective financial information was provided to Thoma Bravo prior to the execution of the merger agreement, and to certain other potential counterparties to a potential strategic transaction involving ForgeRock, as part of discussions and to assist in their respective due diligence review during ForgeRock’s outreach process to solicit interest regarding a potential strategic transaction. For more information on the preparation and use of the unaudited prospective financial information, please see the sections of this proxy statement captioned “—Background of the Merger” and “—Opinion of J.P. Morgan Securities LLC.”
The unaudited prospective financial information was developed by ForgeRock management as then-current estimates of our future financial performance as an independent company, without giving effect to the merger, including any impact of the negotiation or execution of the merger agreement or the merger, the expenses that have already and will be incurred in connection with completing the merger, or any changes to ForgeRock’s operations or strategy that may be implemented in connection with the pendency of, or following the consummation of, the merger. The unaudited prospective financial information also does not consider the effect of any failure of the merger to be completed; it should not be viewed as accurate or continuing in that context.
The unaudited prospective financial information constitutes forward-looking statements. The unaudited prospective financial information is not included in this proxy statement to influence any decision on whether to vote for the merger proposal or any other proposal presented at the special meeting, but rather is included in this proxy statement to give stockholders access to certain non-public information that was provided to the Strategic Committee, the ForgeRock Board and ForgeRock’s financial advisor for the purposes described above, as well as to Thoma Bravo and certain other potential counterparties to a potential strategic transaction involving ForgeRock. By including the unaudited prospective financial information in this proxy statement, none of ForgeRock, J.P. Morgan or any person has made or makes any representation to any person regarding our ultimate performance as compared to the information contained in the unaudited prospective financial information. The inclusion of the unaudited prospective financial information should not be regarded as an indication that the ForgeRock Board, the Strategic Committee, ForgeRock, ForgeRock’s management or J.P. Morgan or any other person considered, or now considers, them to be necessarily predictive of actual future results, and they should not be relied on as such. Further, the inclusion of the unaudited prospective financial information in this proxy statement does not constitute an admission or representation by ForgeRock that the information presented is material. There can be no assurance that the prospective results will be realized or that actual results of ForgeRock will not be materially lower or higher than estimated. The unaudited prospective financial information has not been updated or revised to reflect information or results either as of or after the date of this proxy statement. ForgeRock may report results of operations for periods included in the unaudited prospective financial information that were or will be completed following the preparation of the unaudited prospective financial information. Stockholders and investors are urged to refer to ForgeRock’s periodic filings with the SEC for information on ForgeRock’s actual historical results.
The unaudited prospective financial information was 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 unaudited prospective financial information was not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. The unaudited prospective financial information included in this proxy statement has been prepared by, and is the responsibility of, ForgeRock’s management. ForgeRock’s independent registered public accounting firm, Ernst & Young LLP, has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the unaudited prospective financial information and, accordingly, they do not express an opinion or any other form of assurance with respect thereto. The Ernst & Young LLP report incorporated by reference in this proxy statement relates solely to ForgeRock’s previously issued financial statements. It does not extend to the unaudited prospective financial information and should not be read to do so.
Although the unaudited prospective financial information is presented with numerical specificity, it reflects numerous assumptions and estimates as to future events made by ForgeRock management that ForgeRock management
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believed in good faith were reasonable at the time the unaudited prospective financial information was prepared, including with respect to growth rates; market share; market size and conditions; products and product mix; contract duration expansion; renewal rates; annualized recurring revenue; operating expenses; margins; and net working capital. ForgeRock’s ability to achieve the financial results contemplated by the unaudited prospective financial information will be affected by our ability to achieve our strategic goals, objectives and targets over the applicable periods, and will be subject to operational and execution risks associated therewith. The unaudited prospective financial information reflects assumptions as to certain business decisions that are subject to change. Important factors that may affect actual results and cause the unaudited prospective financial information not to be achieved include, among others, (1) general economic conditions and disruptions in the financial, debt, capital, credit, securities and foreign exchange markets; (2) our ability to continue and effectively manage our growth; (3) our ability to continue to innovate in response to rapid technological change, evolving industry standards, and changing customer needs, requirements or preferences; (4) compliance with laws and regulations relevant to ForgeRock’s business, many of which are evolving; (5) competitive pressures in the identity security industry, especially from larger, well-established companies; (6) our ability to efficiently acquire new customers, retain our existing customers or expand the level of adoption of our platform with our existing customers; (7) our ability to attract, integrate and retain qualified personnel; and (8) our relationships with our partners, including the software or services from third parties used in our business. Additional factors that may impact us or our business can be found in the various risk factors included in our periodic filings with the SEC. All of these factors are difficult to predict, and many of them are outside of our control. As a result, there can be no assurance that the unaudited prospective financial information will be realized, and actual results may be materially better or worse than those contained in the unaudited prospective financial information. 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 unaudited prospective financial information may differ from publicized analyst estimates and forecasts. You should evaluate the unaudited prospective financial information, if at all, in conjunction with our historical financial statements and other information regarding ForgeRock contained in our public filings with the SEC. The unaudited prospective financial information may not be consistent with ForgeRock’s historical operating data as a result of the assumptions detailed above. Except to the extent required by applicable federal securities laws, we do not intend to update or otherwise revise the unaudited prospective financial information to reflect circumstances existing after the date that such information was prepared or to reflect the occurrence of future events.
Because the unaudited prospective financial information reflects estimates and judgments, it is susceptible to sensitivities and assumptions, as well as to multiple interpretations based on actual experience and business developments. The unaudited prospective financial information also covers multiple years, and such information by its nature becomes less predictive with each succeeding year. The unaudited prospective financial information is not, and should not be considered to be, a guarantee of future operating results. Further, the unaudited prospective financial information is not fact and should not be relied upon as being necessarily indicative of our future results or for purposes of making any investment decision.
Certain of the financial measures included in the unaudited prospective financial information are non-GAAP financial measures (which we refer to as the “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. Please refer to our other filings with the SEC for additional information on how we calculate non-GAAP financial measures, including ARR (annualized recurring revenue). 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 unaudited prospective financial information, are excluded from the definition of “non-GAAP financial measures” under applicable SEC rules and regulations. As a result, the unaudited prospective financial information is 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 provided to or relied upon by the Strategic Committee, the ForgeRock Board, J.P. Morgan, or any other person. Accordingly, no reconciliation of the financial measures included in the unaudited prospective financial information is provided in this proxy statement.
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The following table presents a summary of the June 2022 business plan. ForgeRock management made various assumptions when preparing the June 2022 business plan, including (1) 34% year-over-year growth in ARR for fiscal years 2023 and 2024; (2) for purposes of estimating revenues over the estimated periods, a continued shift in the revenue mix from self-managed revenue to SaaS revenue; and (3) for purposes of estimating expenses over the estimated periods, increasing cloud infrastructure and hosting costs, continued gradual improvement of professional services margin, primarily driven by higher professional services utilization and higher professional services revenue and revenue growth outpacing operating expense growth.
 
Fiscal year ending December 31
(dollars in millions)
2022E
2023E
2024E
ARR(1)
$249
$334
$449
Total Revenue
$221
$300
$387
Operating Margin(2)
(14.3)%
(3.4)%
5.5%
(1)
ARR is defined as Annualized Recurring Revenue, or the annualized value of all contractual subscription agreements as of the end of the specified period.
(2)
Operating Margin (non-GAAP) is defined as GAAP operating (loss) / profit, adjusted to exclude stock-based compensation expense, as a percentage of Total Revenue.
The following table presents a summary of the July 2022 business plan. The July 2022 business plan was updated by ForgeRock management to reflect ForgeRock’s results through the second quarter of 2022 and business trends as of the time it was prepared. ForgeRock management made various assumptions when preparing the July 2022 business plan, including 34% year-over-year growth in ARR for fiscal year 2023, 35% year-over-year growth in ARR for fiscal year 2024 and other revenue and expense assumptions generally consistent with the June 2022 business plan.
 
Fiscal year ending December 31
(dollars in millions)
2022E
2023E
2024E
ARR(1)
$237
$318
$430
Total Revenue
$214
$279
$364
Operating Margin(2)
(14.1)%
(6.5)%
4.4%
(1)
ARR is defined as Annualized Recurring Revenue, or the annualized value of all contractual subscription agreements as of the end of the specified period.
(2)
Operating Margin (non-GAAP) is defined as GAAP operating (loss) / profit, adjusted to exclude stock-based compensation expense, as a percentage of Total Revenue.
The following table presents a summary of the September 2022 business plan, together with the September 2022 extrapolations. The September 2022 business plan and the September 2022 extrapolations included estimated Unlevered Free Cash Flow for fiscal years 2023 through 2032 prepared by ForgeRock management for use by J.P. Morgan in connection with its opinion delivered to the ForgeRock Board as to the fairness, from a financial point of view, of the consideration to be paid to the holders of our common stock and related financial analyses (as described in more detail in the section of this proxy statement captioned “—Opinion of J.P. Morgan Securities LLC”). The September 2022 business plan was updated by ForgeRock management to reflect ForgeRock’s results through the third quarter of 2022 and business trends as of the time it was prepared. ForgeRock management made various assumptions when preparing the unaudited prospective financial information for fiscal years 2022 through 2024 included in the September 2022 business plan, including 32% year-over-year growth in ARR for fiscal years 2023 and 2024 and other revenue and expense assumptions generally consistent with the July 2022 business plan. The extrapolations of such unaudited prospective financial information for fiscal years 2025 through 2032 included in the September 2022 extrapolations were prepared using various assumptions, including (1) deceleration in year-over-year growth in Total Revenue from 29% to 15% from fiscal years 2025 through 2032; (2) gross margins in fiscal years 2025 through 2032 consistent with estimates for fiscal years 2023 and 2024; and (3) over the extrapolated period, revenue growth outpacing operating expense growth.
 
Fiscal year ending December 31
(dollars in millions)
2022E
2023E
2024E
2025E
2026E
2027E
2028E
2029E
2030E
2031E
2032E
ARR(1)
$235
$311
$411
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
Total Revenue
$214
$275
$356
$460
$575
$718
$862
$1,035
$1,241
$1,428
$1,642
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Fiscal year ending December 31
(dollars in millions)
2022E
2023E
2024E
2025E
2026E
2027E
2028E
2029E
2030E
2031E
2032E
Gross Profit(2)
$177
$223
$288
$372
$466
$582
$698
$838
$1,006
$1,156
$1,330
Operating (Loss) / Profit(3)
$(31)
$(17)
$11
$31
$60
$101
$153
$222
$312
$411
$534
Plus: Depreciation & Amortization(4)
(5)
1
2
2
2
3
3
4
5
5
6
Less: Stock-Based Compensation(6)
(5)
(45)
(52)
(64)
(76)
(90)
(103)
(116)
(130)
(140)
(150)
Less: Cash Taxes(7)
(5)
(2)
(3)
(4)
(4)
(7)
(9)
(13)
(29)
(55)
(94)
Less: Capital Expenditures(8)
(5)
(1)
(1)
(2)
(2)
(3)
(3)
(4)
(4)
(5)
(6)
Plus: (Increases) / Decreases in Net Working Capital(9)
(5)
(8)
(4)
(9)
(9)
(12)
(12)
(14)
(17)
(15)
(18)
Plus: Other(10)
(5)
(3)
(3)
(3)
(4)
(5)
(6)
(8)
(9)
(11)
(12)
Unlevered Free Cash Flow(11)
(5)
$(75)
$(51)
$(49)
$(34)
$(13)
$23
$71
$126
$191
$260
(1)
ARR is defined as Annualized Recurring Revenue, or the annualized value of all contractual subscription agreements as of the end of the specified period. The unaudited prospective financial information as of September 2022 did not include extrapolations of ARR for fiscal years 2025 through 2032.
(2)
Gross Profit (non-GAAP) is defined as GAAP gross profit, adjusted to exclude stock-based compensation expense.
(3)
Operating (Loss) / Profit (non-GAAP) is defined as GAAP operating (loss) / profit, adjusted to exclude stock-based compensation expense.
(4)
Depreciation & Amortization is calculated using the straight-line method in amounts sufficient to write-off depreciable assets over their estimated useful lives. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the period of the lease term.
(5)
The unaudited prospective financial information as of September 2022 did not include estimates for fiscal year 2022.
(6)
Stock-Based Compensation is defined as the expense for all stock-based compensation awards made to employees, nonemployees and directors.
(7)
Cash Taxes is defined as the estimated cash payments primarily for income taxes related to U.S. federal and state income taxes and income taxes in foreign jurisdictions in which ForgeRock conducts business.
(8)
Capital Expenditures is defined as the cash outflow associated with the acquisition of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale.
(9)
Net Working Capital is defined as current assets minus current liabilities. The change in net working capital represents the period over period difference.
(10)
Other, which includes the cash impact of foreign exchange adjustments to working capital, is estimated at less than one percent of revenue in each year.
(11)
Unlevered Free Cash Flow (less stock-based compensation expenses) is calculated as GAAP operating income, subtracting the impact of cash taxes (including the impact of cash tax savings from NOLs) and capital expenditures, adding the impact of depreciation and amortization (including amortization of intangibles) and adding or subtracting, as applicable, changes in net working capital. The unaudited prospective financial information as of September 2022 did not include estimates of Unlevered Free Cash Flow for fiscal year 2022.
Interests of ForgeRock’s Directors and Executive Officers in the Merger
When considering the recommendation of the ForgeRock 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. Additionally, concurrently with the execution of the merger agreement, our directors and certain of their affiliated funds, in each case in their capacities as stockholders of ForgeRock, entered into the voting agreements with Parent and ForgeRock. The voting agreements obligate these persons (including, in some instances, affiliated venture funds) to vote their respective shares of our common stock in favor of the adoption of the merger agreement and against any competing transaction. 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 ForgeRock Board was aware of and considered these interests to the extent that they existed at the time, among other matters. These interests are more fully described below.
Insurance and Indemnification of Directors and Executive Officers
Pursuant to the terms of the merger agreement, directors and officers of ForgeRock will be entitled to certain ongoing indemnification and insurance coverage, including under directors’ and officers’ liability insurance policies. For more information, see the section of this proxy statement captioned “The Merger Agreement—Indemnification and Insurance.”
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Treatment of Equity Awards
Treatment of ForgeRock Restricted Stock Units
As of October 6, 2022, there were outstanding awards of ForgeRock RSUs (or portions thereof) that cover an aggregate of 4,237,523 shares of our common stock, of which ForgeRock RSUs covering an aggregate of 86,841 shares of our common stock were held by our current non-employee directors and of which ForgeRock RSUs covering an aggregate of 762,090 shares of our common stock were held by our current executive officers.
At the effective time of the merger, each vested ForgeRock RSU will be cancelled and converted into the right to receive an amount in cash equal in value to (1) the total number of shares of our Class A common stock or Class B common stock subject to such vested ForgeRock RSU immediately prior to the effective time or the merger, multiplied by (2) the per share price, without interest and less applicable withholding taxes.
At the effective time of the merger, each unvested ForgeRock RSU will be cancelled and converted into the contingent right to receive from Parent or the surviving corporation a Converted Cash Award equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to such unvested ForgeRock RSU immediately prior to the effective time of the merger, multiplied by (2) the per share price, without interest and less applicable withholding taxes. Except as otherwise provided in the merger agreement, each Converted Cash Award will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding unvested ForgeRock RSU immediately prior to the effective time of the merger, provided that terms rendered inoperable by the transactions contemplated by the transaction documents entered into connection with the merger will no longer have any force or effect.
Treatment of ForgeRock Options
As of October 6, 2022, there were outstanding ForgeRock options to purchase an aggregate of 11,661,319 shares of our common stock with an exercise price below the per share price, of which ForgeRock options to purchase an aggregate of 292,957 shares of our common stock were held by our current non-employee directors and of which ForgeRock options to purchase an aggregate of 6,104,778 shares of our common stock were held by our current executive officers.
At the effective time of the merger, each vested ForgeRock option will be cancelled and converted into the right to receive an amount in cash equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to the vested ForgeRock option multiplied by (2) the excess, if any, of the per share price over the per share exercise price of such vested ForgeRock option, without interest and less applicable withholding taxes.
At the effective time of the merger each unvested ForgeRock option will be converted into the contingent right to receive from Parent or the surviving corporation a Converted Cash Award equal to (1) the total number of shares of our Class A common stock or Class B common stock subject to such unvested ForgeRock option immediately prior to the effective time of the merger, multiplied by (2) the excess, if any, of the per share price over the per share exercise price per of such unvested ForgeRock option, without interest and less applicable withholding taxes. Except as otherwise provided in the merger agreement, each such Converted Cash Award will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding unvested ForgeRock option immediately prior to the effective time of the merger.
Any underwater ForgeRock option will be cancelled at the effective time of the merger for no consideration or payment.
Treatment of the ESPP
From the date of the merger agreement, we have taken and will take all actions necessary to (1) provide that no new individuals will be permitted to enroll in the ESPP; (2) make any adjustment that may be necessary or advisable to reflect the shortened offering period or purchase period, but otherwise treat such shortened offering period or purchase period as a fully effective and completed offering period or purchase period for all purposes pursuant to the ESPP; (3) not allow any increase in the amount of participants’ payroll deduction elections under the ESPP during the offering period or purchase period that is in effect on date of the merger agreement; (4) cause the exercise (as of no later than one business day prior to the date on which the effective time occurs) of each outstanding purchase
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right pursuant to the ESPP (but otherwise no other of our Class A common stock under the ESPP will be issued); (5) provide that no further offering period or purchase period will commence pursuant to the ESPP, and if the effective time of the merger would otherwise occur before the end of the Current Purchase Period, shorten the Current Purchase Period as of a specified trading day at least ten days prior to the date on which the effective time of the merger occurs; and (6) not extend the Current Purchase Period. Immediately prior to and effective as of the effective time of the merger (but subject to the consummation of the merger), we will terminate the ESPP and no further rights will be granted or exercised under the ESPP after such termination. Of our executive officers, three currently participate in the ESPP. Our non-employee directors are not eligible to participate in the ESPP.
Equity Interests of ForgeRock’s Directors and Executive Officers
The following table sets forth for each person who has been a ForgeRock executive officer or member of the ForgeRock Board at any time since the beginning of ForgeRock’s 2021 fiscal year, (1) the number of shares of our Class A common and Class B common stock directly held; (2) the number of shares of our common stock subject to his or her in-the-money ForgeRock options; and (3) the number of shares of our common stock subject to his or her ForgeRock RSUs, assuming the following and such additional assumptions set forth in the footnotes to the table:
the ForgeRock options and ForgeRock RSUs include those that would be outstanding as of October 31, 2022 (which, solely for purposes of this proxy statement, is the assumed closing date of the merger), in accordance with their regular vesting schedules and assuming continued service by the individual through such date; and
that the values of these shares of our common stock and equity awards are equal to the per share price of $23.25 (minus any applicable exercise price in the case of the in-the-money ForgeRock options).
 
Shares of Common
Stock Held Directly(1)
In-the-Money Vested
ForgeRock Options(2)
In-the-Money
Unvested ForgeRock
Options(3)
ForgeRock RSUs(4)
Name
Number of
Shares
(#)
Value of
Shares
($)
Number of
Shares
Subject to
Vested
Portion
(#)
Value of
Shares
Subject to
Vested
Portion
($)
Number of
Shares
Subject to
Unvested
Portion
(#)
Value of
Shares
Subject to
Unvested
Portion
($)
Number of
Shares
(#)
Value
($)
Total
($)
Francis Rosch
195,331
4,541,446
3,177,545
61,233,511
433,334
7,098,261
321,088
7,465,296
73,240,253
John Fernandez
133,210
3,097,133
631,609
13,111,775
196,042
3,611,094
147,323
3,425,260
19,634,167
Peter Angstadt
569,133
11,043,480
49,833
933,926
121,654
2,828,456
13,871,936
Peter Barker
389,104
7,566,457
35,417
652,381
121,654
2,828,456
10,394,912
Sam Fleischmann
2,000
46,500
186,614
3,558,323
36,375
889,692
50,371
1,171,126
4,775,949
David DeWalt(5)
555,505
12,915,491
12,915,491
Johanna Flower
550
12,788
19,766
136,385
43,484
300,040
10,706
248,915
398,087
Bruce Golden
980
22,785
11,384
264,678
287,463
Arun Mathew
502
11,672
10,560
245,520
257,192
Paul Madera(6)
22,042
512,477
512,477
Alex Ott
889,757
20,686,850
10,880
252,960
20,939,810
Jeff Parks
567
13,183
10,756
250,077
263,260
Rinki Sethi
567
13,183
19,766
136,385
43,484
300,040
10,756
250,077
399,645
Maria Walker
712
16,554
121,375
2,250,293
45,082
835,820
10,756
250,077
2,516,924
Warren Weiss
518
12,044
10,608
246,636
258,680
Dave Welsh
(1)
Represents shares of our Class A or Class B common stock directly held by the individual as of October 6, 2022, plus any shares of our Class A or Class B common stock subject to ForgeRock’s RSUs that are scheduled to vest and be settled before October 31, 2022 (without regard to any change in control-related accelerated vesting). The amounts shown are determined assuming that no individual disposed of shares of our common stock from October 6, 2022, through October 31, 2022, and that the ForgeRock RSUs scheduled to vest and be settled prior to October 31, 2022, were settled. The number of shares shown does not include shares of our common stock that the executive officer may purchase after the date of the merger agreement under the ESPP. For additional information regarding the treatment of our ESPP in the merger, see the section of this proxy statement captioned “—Interests of ForgeRock’s Directors and Executive Officers in the Merger—Treatment of Equity-Based Awards.” For additional information regarding beneficial ownership of common stock, see the section of this proxy statement captioned “Security Ownership of Certain Beneficial Owners and Management.”
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(2)
Represents outstanding vested in-the-money ForgeRock options held by the individual. All options held by the individuals named in the table above are in-the-money, and all such options are vested as of October 31, 2022. The values shown are determined as the excess of (i) the total number of vested shares of our Class A or Class B common stock subject to such ForgeRock options multiplied by the per share price, over (ii) the aggregate exercise price for such ForgeRock options.
(3)
Represents outstanding unvested in-the-money ForgeRock options held by the individual. All options held by the individuals named in the table above are in-the-money, and all such options are not scheduled to vest on or before October 31, 2022. The values shown are determined as the excess of (i) the total number of vested shares of our Class A or Class B common stock subject to such ForgeRock options multiplied by the per share price, over (ii) the aggregate exercise price for such ForgeRock options.
(4)
Represents outstanding ForgeRock RSUs that are not scheduled to vest on or before October 31, 2022. The values shown with respect to ForgeRock RSUs are determined as the product of the per share merger consideration, multiplied by the total number of shares of our Class A or Class B common stock subject to ForgeRock RSUs. As described further in the sections of this proxy statement captioned “—Interests of ForgeRock’s Directors and Executive Officers in the Merger—Treatment of Equity-Based Awards—2012 Equity Incentive Plan” and “—Interests of ForgeRock’s Directors and Executive Officers in the Merger—Treatment of Equity-Based Awards—Non-Employee Director Equity Awards” ForgeRock’s RSUs outstanding as of the date of the closing of the merger (which date, solely for purposes of this proxy statement, is assumed to be October 31, 2022) that are held by ForgeRock’s non-employee directors will accelerate vesting in full. In addition, each of the ForgeRock executive officers is eligible for vesting acceleration of his or her ForgeRock RSUs in connection with certain qualifying terminations of employment under the Severance Policy. For additional information regarding the ForgeRock RSUs for our named executive officers, see the section of this proxy statement captioned “—Interests of ForgeRock’s Directors and Executive Officers in the Merger—Golden Parachute Compensation.”
(5)
Mr. DeWalt served as a member of the ForgeRock Board until May 2022. To ForgeRock's knowledge, as of the date of his departure, Mr. DeWalt held 555,505 shares of our Class B common stock.
(6)
Mr. Madera served as a member of the ForgeRock Board until May 2022. To ForgeRock's knowledge, as of the date of his departure, Mr. Madera held 22,042 shares of our Class B common stock.
Change in Control and Severance Benefits Under Existing Relationships
Non-Employee Director Equity Awards
We have granted certain stock-based awards such as stock options and RSUs under our 2021 Equity Incentive Plan (which we refer to as the “2021 Plan”) and the 2012 Equity Incentive Plan, as amended, that are outstanding and held by our non-employee directors and executive officers, including pursuant to our Outside Director Compensation Policy that are held by our non-employee directors. Pursuant to the 2021 Plan and the Outside Director Compensation Policy, equity awards granted to our non-employee directors will accelerate vesting upon a “change in control.” The closing of the merger will be a “change of control” within the meaning of our 2021 Plan and Outside Director Compensation Policy. In accordance with the terms of the merger agreement, any stock-based award granted after the date of the merger agreement will have monthly vesting and not be entitled to acceleration.
Severance Policy
Effective July 1, 2021, our board of directors approved the following change of control and severance benefits for our current executive officers and other key employees, pursuant to the Severance Policy.
Under the Severance Policy, if we terminate an executive officer’s employment other than for cause, death or disability or the named executive officer resigns for good reason, as such terms are defined in the Severance Policy, during the period from three months prior to until 12 months following a change of control, as defined in the Severance Policy, with such period being referred to as the change of control period, such named executive officer will be eligible to receive the following severance benefits, less applicable tax withholdings:
100% of the executive officer’s then-outstanding and unvested time-based equity awards will become vested and exercisable;
a lump sum cash amount equal to 12 months (18 months for Mr. Rosch) of the executive officer’s base salary;
a lump sum cash amount equal to 100% of the executive officer’s target annual bonus (150% for Mr. Rosch); and
payment or reimbursement of continued health coverage for the named executive officer and the executive officer’s dependents under COBRA for a period of up to 12 months (18 months for Mr. Rosch).
To receive the severance benefits upon a qualifying termination, whether or not in connection with a change of control, a named executive officer must sign and not revoke our standard separation agreement and release of claims within the timeframe set forth in the Severance Policy.
If any of the payments provided for under the Severance Policy or otherwise payable to a named executive officer would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and would be subject
59