AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "MERGER AGREEMENT"), dated as
of July 8, 1997, is entered into by and between QAD Inc., a California
corporation ("QAD-CALIFORNIA"), and QAD Inc., a Delaware corporation
("QAD-DELAWARE").
RECITALS
1. QAD-California is a corporation duly organized and existing
under the laws of the State of California.
2. QAD-Delaware is a corporation duly organized and existing under
the laws of the State of Delaware.
3. On the date of this Merger Agreement, QAD-California's
authorized capital consists of 155,000,000 shares, consisting of 149,000,000
shares of Class A Common Stock, no par value per share (the "QAD-CALIFORNIA
CLASS A COMMON STOCK"), of which 22,524,234 shares are issued and
outstanding; 1,000,000 shares of Class B Common Stock, no par value per share
(the "QAD-CALIFORNIA CLASS B COMMON STOCK"), of which four shares are issued
and outstanding; and 5,000,000 shares of Preferred Stock, no par value per
share (the "QAD-CALIFORNIA PREFERRED STOCK"), of which none are issued and
outstanding.
4. On the date of this Merger Agreement, QAD-Delaware's authorized
capital consists of 155,000,000 shares of stock, consisting of 149,000,000
shares of Class A Common Stock, par value $.001 per share (the "QAD-DELAWARE
CLASS A COMMON STOCK"), of which none are issued and outstanding; 1,000,000
shares of Class B Common Stock, par value $.001 per share (the "QAD-DELAWARE
CLASS B COMMON STOCK"), of which 1 share is issued and outstanding and owned
by QAD-California; and 5,000,000 shares of preferred stock, par value $.001
per share (the "QAD-DELAWARE PREFERRED STOCK"), of which none are issued and
outstanding.
5. The respective Boards of Directors of QAD-California and
QAD-Delaware have determined that it is advisable and in the best interests
of each such corporation that QAD-California merge with and into QAD-Delaware
upon the terms and subject to the conditions of this Merger Agreement for the
purpose of effecting the reincorporation of QAD-California in the State of
Delaware (the "MERGER").
6. The respective Boards of Directors of QAD-California and
QAD-Delaware have, by resolutions duly adopted, approved this Merger
Agreement. The holders of a majority of the shares of QAD-California Class A
Common Stock outstanding and all of the shares of QAD-California Class B
Common Stock outstanding
have adopted and approved this Merger Agreement, and QAD-California has
adopted and approved this Merger Agreement as the sole stockholder of
QAD-Delaware.
7. The parties intend by this Merger Agreement to effect a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended.
TERMS AND PROVISIONS OF REINCORPORATION
In consideration of the foregoing Recitals and of the following terms
and provisions, and subject to the following conditions, it is agreed:
1. MERGER. The effective time of the Merger (the "EFFECTIVE
TIME") shall occur at the latest of (a) the time and date that shareholders
of QAD-California approve this Merger Agreement and the Merger, (b) the time
and date that a certificate of merger is duly filed with the Secretary of
State of Delaware with respect to the Merger, or (c) the time and date that
the certificate of merger is duly filed with the California Corporation
Commission with respect to the Merger. As of the Effective Time,
QAD-California shall be merged with and into QAD-Delaware, QAD-Delaware shall
be the surviving corporation of the Merger (hereinafter sometimes referred to
as the "SURVIVING CORPORATION"), and the separate corporate existence of
QAD-California shall cease.
2. GOVERNING DOCUMENTS.
a. The Certificate of Incorporation of QAD-Delaware, as it
may be amended or restated subject to applicable law, and as in effect
immediately prior to the Effective Time, shall constitute the Certificate of
Incorporation of the Surviving Corporation without further change or
amendment until thereafter amended in accordance with the provisions thereof
and applicable law.
b. The Bylaws of QAD-Delaware as in effect immediately prior
to the Effective Time shall constitute the Bylaws of the Surviving
Corporation without change or amendment until thereafter amended in
accordance with the provisions thereof and applicable law.
3. OFFICERS AND DIRECTORS. The persons who are officers and
directors of QAD-California immediately prior to the Effective Time shall,
after the Effective Time, be the officers and directors of the Surviving
Corporation, without change until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate of Incorporation
and Bylaws and applicable law. The directors of QAD-California are as
follows: Xxxxxx X. Xxxxxx, Xxxx X. Xxxxxx and Xxxx X. Xxxxxx.
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4. NAME. The name of the Surviving Corporation shall continue to
be QAD Inc.
5. SUCCESSION. At the Effective Time, the separate corporate
existence of QAD-California shall cease, and the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public or
private nature and be subject to all the restrictions, disabilities and
duties of QAD-California; and all property, real, personal and mixed, and all
debts due to QAD-California on whatever account, as well as for share
subscriptions and all other things in action, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Corporation as they were of
QAD-California, and the title to any real estate vested by deed or otherwise
shall not revert or be in any way impaired by reason of the Merger; but all
rights of creditors and liens upon any property of QAD-California shall be
preserved unimpaired, and all debts, liabilities and duties of QAD-California
shall thenceforth attach to the Surviving Corporation and may be enforced
against it to the same extent as if such debts, liabilities and duties had
been incurred or contracted by it; PROVIDED, HOWEVER, that such liens upon
property of QAD-California will be limited to the property affected thereby
immediately prior to the Merger. All corporate acts, plans, policies,
agreements, arrangements, approvals and authorizations of QAD-California, its
shareholders, Board of Directors and committees thereof, officers and agents
which were valid and effective immediately prior to the Effective Time, shall
be taken for all purposes as the acts, plans, policies, agreements,
arrangements, approvals and authorizations of the Surviving Corporation and
shall be as effective and binding thereon as the same were with respect to
QAD-California.
6. FURTHER ASSURANCES. From time to time, as and when required or
requested by the Surviving Corporation or by its successors and assigns,
there shall be executed and delivered on behalf of QAD-California such deeds,
assignments and other instruments, and there shall be taken or caused to be
taken by it all such further and other action, as shall be appropriate or
necessary in order to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation the title to and possession of all property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of QAD-California and otherwise to carry out the purposes of this
Merger Agreement, and the officers and directors of the Surviving Corporation
are fully authorized in the name and on behalf of QAD-California or
otherwise, to take any and all such action and to execute and deliver any and
all such deeds, assignments and other instruments.
7. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
a. Each share of QAD-California Class A Common Stock
outstanding immediately prior to the Effective Time shall be converted into,
and shall
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become, one fully paid and nonassessable share of QAD-Delaware Class A Common
Stock.
b. Each share of QAD-California Class B Common Stock
outstanding immediately prior to the Effective Time shall be converted into,
and shall become, one fully paid and nonassessable share of QAD-Delaware
Class B Common Stock.
c. The 1 share of QAD-Delaware Class B Common Stock issued
and outstanding in the name of QAD-California shall be cancelled and retired,
and no payment shall be made with respect thereto, and such share shall
resume the status of an authorized and unissued share of QAD-Delaware Class B
Common Stock.
8. STOCK CERTIFICATES. At and after the Effective Time, any
outstanding certificates which immediately prior to the Effective Time
represented shares of QAD-California Class A Common Stock or QAD-California
Class B Common Stock shall be deemed for all purposes to evidence ownership
of, and to represent shares of, QAD-Delaware Class A Common Stock or
QAD-Delaware Class B Common Stock, respectively, into which such shares of
QAD-California formerly represented by such certificates have been converted
as herein provided. The registered owner on the books and records of
QAD-California or its transfer agent of any such outstanding stock whether
certificated or not shall have and be entitled to exercise any voting or
other rights with respect to and to receive any dividends and other
distributions upon the shares of QAD-Delaware Class A Common Stock or
QAD-Delaware Class B Common Stock evidenced by such outstanding shares as
above provided.
9. OPTIONS; STOCK GRANTS. Each right in or to, or option to
purchase, shares of QAD-California Class A Common Stock granted under any of
the QAD-California Non-Qualified Stock Option Agreements (the "OPTION
AGREEMENTS") which are outstanding immediately prior to the Effective Time
(collectively, the "Options"), and any shares of QAD-California Class A
Common Stock granted under the 1994 Stock Ownership Program (the "STOCK
PROGRAM") which, as of the Effective Time, have not yet vested (the "UNVESTED
SHARES"), shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and/or become a right in or to, or
an option to purchase at the same option price per share, as the case may be,
the same number of shares of QAD-Delaware Common Stock, upon the same terms
and subject to the same conditions as set forth in their respective Option
Agreements or in the Stock Program as in effect at the Effective Time. A
number of shares of QAD-Delaware Common Stock shall be reserved for purposes
of the Option Agreements that is equal to the number of shares of
QAD-California Class A Common Stock that could have been purchased pursuant
to the Options (assuming all Options were exercised) as of the Effective
Time. A number of shares of QAD-Delaware Common Stock shall be reserved for
purposes of the Stock Program that is equal to the number of Unvested Shares
as of the Effective Time. As of the Effective Time, the Surviving
Corporation hereby assumes
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each of the Option Agreements and the Stock Program and all obligations of
QAD-California thereunder including the outstanding rights or options or
portions thereof granted pursuant to the Option Agreements or the Stock
Program.
10. OTHER EMPLOYEE BENEFIT PLANS. As of the Effective Time, the
Surviving Corporation hereby assumes all obligations of QAD-California under
any and all employee benefit plans in effect as of the Effective Time or with
respect to which employee rights or accrued benefits are outstanding as of
the Effective Time.
11. CONDITION. The consummation of the Merger and related
transactions are subject to satisfaction of the following conditions prior to
the Effective Time:
a. All necessary action shall have been taken to authorize
the execution, delivery and performance of the Merger Agreement by
QAD-California and QAD-Delaware.
b. All regulatory approvals necessary or desirable in
connection with the consummation of the Merger and the transaction
contemplated thereby shall have been obtained.
c. No suit, action, proceeding or other litigation shall have
been commenced or threatened to be commenced which, in the opinion of
QAD-California or QAD-Delaware would pose a material restriction on or impair
consummation of the Merger, performance of this Merger Agreement or the
conduct of the business of QAD-Delaware after the Effective Time, or create a
risk of subjecting QAD-California or QAD-Delaware, or their respective
shareholders, officers or directors, to material damages, costs, liability or
other relief in connection with the Merger or this Merger Agreement.
12. ACCOUNTING MATTERS. QAD-Delaware agrees that upon the
Effective Time, the assets, liabilities, reserves and accounts of
QAD-California and QAD-Delaware shall be taken up or continued on the books
of QAD-Delaware in the amounts at which such assets, liabilities, reserves
and accounts shall have been carried on the books of QAD-California and
QAD-Delaware immediately prior to the Effective Time, subject to such
adjustments, and such elimination of intercompany items, as may be
appropriate to give effect to the Merger.
13. GOVERNING LAW. This Merger Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable
to contracts entered into and to be performed wholly within the State of
California, except to the extent that the laws of the State of Delaware are
mandatorily applicable to the Merger.
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14. AMENDMENT. Subject to applicable law and subject to the rights
of QAD-California's shareholders further to approve any amendment which would
have a material adverse effect on such shareholders, this Merger Agreement
may be amended, modified or supplemented by written agreement of the parties
hereto at any time prior to the Effective Time with respect to any of the
terms contained herein.
15. DEFERRAL OR ABANDONMENT. At any time prior to the Effective
Time, this Merger Agreement may be terminated and the Merger may be abandoned
or the time of consummation of the Merger may be deferred for a reasonable
time by the Board of Directors of either QAD-California or QAD-Delaware, or
both, notwithstanding approval of this Merger Agreement by the shareholders
of QAD-California or the shareholders of QAD-Delaware, or both, if
circumstances arise which, in the opinion of the Board of Directors of
QAD-California or QAD-Delaware, make the Merger inadvisable or such deferral
of the time of consummation advisable.
16. COUNTERPARTS. This Merger Agreement may be executed in any
number of counterparts each of which when taken alone shall constitute an
original instrument and when taken together shall constitute one and the same
Agreement.
17. ASSURANCE. QAD-California and QAD-Delaware agree to execute
any and all documents, and to perform such other acts, which may be necessary
or expedient to further the purposes of this Merger Agreement.
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IN WITNESS WHEREOF, QAD-California and QAD-Delaware have caused this
Merger Agreement to be signed by their respective duly authorized officers
and delivered this 8th day of July, 1997.
QAD Inc.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx
Chairman of the Board and President
ATTEST:
By: /s/ Xxxx X. Xxxxxx
-------------------------
Xxxx X. Xxxxxx
Secretary
QAD Inc.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Chairman of the Board and President
ATTEST:
By: /s/ Xxxx X. Xxxxxx
-------------------------
Xxxx X. Xxxxxx
Secretary
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