Item 8.01. OTHER EVENTS.
Adjournment of Special Meeting
On October 12, 2021, QAD Inc. ("QAD" or the "Company") issued a press release
regarding the adjournment of the special meeting of its stockholders, scheduled
to be held on October 15, 2021 in connection with the Company's previously
announced Merger Agreement (as defined below). A copy of the press release is
attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated
herein by reference.
Additional Supplemental Disclosures
These additional supplemental disclosures are being filed on October 12, 2021
("Additional Supplemental Disclosures"). The following information amends and
supplements, and should be read in conjunction with the Company's definitive
proxy statement, dated September 9, 2021 (as previously supplemented on
September 27, 2021, the "Proxy Statement") relating to the proposed merger of
the Company with and into Project Quick Merger Sub, Inc. ("Merger Sub"), with
the Company surviving the merger as a direct, wholly owned subsidiary of Project
Quick Parent, LLC ("Parent"), pursuant to that certain Agreement and Plan of
Merger, dated June 27, 2021 ("Merger Agreement") (such transaction, the
"Merger"). The information contained in the Additional Supplemental Disclosures
modifies and supersedes any inconsistent information contained in the Proxy
Statement, as supplemented to date.
Except as supplemented or amended by the information contained in the Additional
Supplemental Disclosures, all information set forth in the Proxy Statement, as
previously supplemented on September 27, 2021, remains unchanged. We urge you to
read the Additional Supplemental Disclosures carefully and in their entirety
together with the Proxy Statement and the previous supplement to the Proxy
Statement, all of which are available on the Internet site maintained by the SEC
at http://www.sec.gov, along with other information the Company and Parent file
with the SEC. All page references are to pages in the Proxy Statement, and terms
used below, unless otherwise defined, have the meanings set forth in the Proxy
Statement.
QAD generally denies the allegations in the litigations described in the section
entitled "Litigation Related to the Merger" under the heading "Special Factors"
beginning on page 72 of the Proxy Statement. Pursuant to the Delaware Chancery
Court ruling, as described below, QAD is supplementing its disclosures with the
Additional Supplemental Disclosures set forth below.
The following information amends and supplements the information disclosed in
the Proxy Statement, as previously supplemented on September 27, 2021. For
clarity, new text within amended and restated paragraphs from the Proxy
Statement, is highlighted with bold, underlined text and deleted text within
restated paragraphs from the Proxy Statement, is highlighted with strikethrough
text.
The disclosure in the section entitled "Background of the Merger" under the
heading "Special Factors" beginning on page 21 of the Proxy Statement, as
previously supplemented on September 27, 2021, is hereby amended by deleting the
third paragraph on page 21 and replacing it with:
QAD regularly evaluates strategies for improving its competitive position and
enhancing stockholder value. As part of these evaluations, the QAD Board has,
from time to time, considered various strategic alternatives, such as public
offerings, joint ventures, collaborations and business combinations, including a
possible merger or sale of QAD. From time to time, prior to 2021, QAD directors
and senior management, including Ms. Lopker, the President and founder of QAD,
met with representatives of potential financial advisors with relevant industry
expertise and various private equity firms, including Thoma Bravo. QAD also
received unsolicited indications of interest from third parties.
The disclosure in the section entitled "Background of the Merger" under the
heading "Special Factors" beginning on page 21 of the Proxy Statement, as
previously supplemented on September 27, 2021, is hereby amended by inserting
the following as a new paragraph immediately after the last full paragraph on
page 21:
On or about February 18, 2021, after discussion with the independent directors
of the QAD Board, Mr. Adelson spoke with Mr. Paul Zuber, an operating partner at
Thoma Bravo, who had a meeting with Ms. Lopker in 2019 to discuss private equity
transactions and the industry generally. Mr. Adelson discussed with Mr. Zuber
that QAD was now preparing to start a process to review strategic alternatives,
and that QAD's financial advisor would be in touch with potentially interested
counterparties in the coming weeks. Mr. Adelson said that he and the other
independent directors were encouraging Ms. Lopker to be open to the strategic
review process, including in connection with her estate planning; that current
management was open to potential changes; and that Ms. Lopker may not be
interested in selling her stake in QAD unless a bidder paid a significant
premium, such that her stake would be worth no less than $1 billion.
The disclosure in the section entitled "Directors and Executive Officers of the
Company" under the heading "Other Important Information Regarding the Company"
beginning on page 120 of the Proxy Statement, as previously supplemented on
September 27, 2021, is hereby amended by revising the penultimate paragraph on
page 4 of the Supplemental Disclosures as follows:
One of the operating partners at Thoma Bravo, Mr. Paul Zuber, also serves as a
director of Houlihan Lokey with Mr. Adelson. While Mr. Adelson and Mr. Zuber at
times discussed QAD together, Mr. Adelson did not share material information or
discuss material deal terms with While Mr. Zuber was , who, while involved in
discussions surrounding the Merger as an operating partner, hewas not part of
the Thoma Bravo deal team negotiating the Merger.
The disclosure in the section entitled "Background of the Merger" under the
heading "Special Factors" beginning on page 21 of the Proxy Statement, as
previously supplemented on September 27, 2021, is hereby amended by revising the
second full paragraph on page 4 of the Supplemental Disclosures as follows:
On June 18, 2021, at the direction of the Special Committee, representatives of
Morgan Stanley discussed Thoma Bravo's latest offer with representatives of
Thoma Bravo. During these discussions, and consistent with the direction of the
Special Committee, representatives of Morgan Stanley countered and discussed
thatcommunicated to Thoma Bravo that the Special Committee requested that it
increase its offer price to $92 per share, which Thoma Bravo stated it was not
willing to do, and that Thoma Bravo remain competitive on Ms. Lopker's non-price
terms by offering Ms. Lopker a rollover of up to $300 million and a board seat.
On June 18, 2021, QAD's closing share price of Class A Common Stock was
$72.93. Morgan Stanley also relayed Ms. Lopker's preference for a higher
rollover and a board seat to Thoma Bravo, and suggested that Thoma Bravo remain
competitive on these non-price issues.
The disclosure in the section entitled "Litigation Related to the Merger" under
the heading "Special Factors" beginning on page 72 of the Proxy Statement, as
previously supplemented on September 27, 2021, is hereby amended by deleting the
two paragraphs on pages 72-73 and replacing them with:
Currently, the Company is aware of four (4) cases filed in connection with the
Merger. In Nantahala Capital Partners II L.P. v. QAD Inc., et al., a purported
stockholder class action filed in Delaware Chancery Court on July 2, 2021, the
plaintiff alleges breaches of contract and fiduciary duty against directors
Anton Chilton, Scott Adelson, Kathleen Crusco, and Peter van Cuylenburg (the
"Director Defendants"), and Pamela M. Lopker, as well as a claim for aiding and
abetting a breach of fiduciary duty against Thoma Bravo and certain affiliates
of Thoma Bravo relating to the QAD Board's vote to approve the Merger Agreement.
The complaint names the Company as a defendant to the extent necessary for any
of the relief requested. Plaintiff is seeking, among other things, to enjoin the
Closing of the Merger or, in the alternative, damages, including rescissory
damages. The plaintiff claims that the Contribution and Exchange Agreement
(pursuant to which and immediately prior to the Effective Time, the Lopker
Entities will contribute to Ultimate Parent the Rollover Shares and, in exchange
for such Rollover Shares, Ultimate Parent will issue to the Lopker Entities the
Parent Units) and the Merger Agreement violate Article IV, Section 2.B(d) of
QAD's corporate charter, which provides that holders of Class A Common Stock
receive per Share consideration no less favorable than that received by any
holders of Class B Common Stock in any merger. The plaintiff alleges that Ms.
Lopker and the Director Defendants breached Article IV, Section 2.B(d) of QAD's
corporate charter, that Ms. Lopker's participation in the separate Contribution
and Exchange Agreement with Thoma Bravo breached her fiduciary duties to the
Company, that the Director Defendants' approval of the Merger breached their
fiduciary duties to the Company, and that Thoma Bravo and its affiliates aided
and abetted those breaches. In a supplement to their complaint, filed on August
16, 2021, plaintiff alleges that the Director Defendants and Ms. Lopker breached
their fiduciary duties by disseminating a false, misleading, and materially
incomplete Proxy, and that Thoma Bravo aided and abetted those breaches.
Specifically, plaintiff claims that the Proxy, issued on August 2, 2021,
provides an inaccurate description of the events leading to the Merger and the
consideration that Ms. Lopker will receive in connection with the Merger. The
Court ordered that the case proceed on an expedited basis, and, on October 1,
2021, held a hearing on plaintiff's motion for a preliminary injunction. On
October 8, 2021, the Court ordered a limited injunction for at least twenty days
after the Company issued two corrective disclosures, which the Company made on
Form 8-K filed on October 12, 2021, and otherwise denied plaintiff's motion. The
Company believes the plaintiff's claims are without any merit.
On August 5 and 6, 2021, purported shareholders of the Company filed two
complaints in the District Court of the Southern District of New York, captioned
Stein v. QAD Inc., et. al., 1:21-cv-06856 and Whitfield v. QAD, Inc., et. al.,
1:21-cv-06674, both naming the Company and members of its board of directors as
defendants. On September 3, 2021, a purported shareholder of the Company filed a
complaint in the District Court of the Eastern District of New York,
captioned Parmar v. QAD Inc., et al., 1:21-cv-04974, naming the Company and
members of its board of directors as defendants. All three actions
assertedfederal securities claims under Sections 14(a) and 20(a) of the Exchange
Act and related provisions for alleged failures to disclose material
information, and seek to enjoin or rescind the Merger with Thoma Bravo and a
request for an award of attorneys' and experts' fees and damages. On October 4,
2021, plaintiffs in the Stein and Whitfield actions voluntarily dismissed both
cases without prejudice. The Company believes that the remaining Parmar case is
without any merit.
Exhibit No. Description
99.1 Press Release of QAD Inc., dated October 12, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
Important information for investors and stockholders
This communication is being made in respect of the Merger involving the Company
and Parent, an affiliate of Thoma Bravo, L.P. In connection with the Merger, the
Company filed a definitive proxy statement on September 9, 2021 with the SEC and
intends to file any additional relevant materials with the SEC. Promptly after
filing its definitive proxy statement with the SEC, the Company mailed the
definitive proxy statement and a proxy card to each stockholder of the Company
entitled to vote at the special meeting relating to the Merger. This
communication is not a substitute for the proxy statement or any other document
that the Company may file with the SEC or send to its stockholders in connection
with the Merger. The materials filed and to be filed by the Company will be made
available to the Company's investors and stockholders at no expense to them and
copies may be obtained free of charge on the Company's website at www.qad.com.
In addition, all of those materials will be available at no charge on the SEC's
website at www.sec.gov. Investors and stockholders of the Company are urged to
read the proxy statement and the other relevant materials when they become
available before making any voting or investment decision with respect to the
Merger because they contain important information about the Company and the
Merger.
The Company and its directors, executive officers, other members of its
management and employees may be deemed to be participants in the solicitation of
proxies of the Company stockholders in connection with the Merger under SEC
rules. Investors and stockholders may obtain more detailed information regarding
the names, affiliations and interests of the Company's executive officers and
directors in the solicitation by reading the Company's definitive proxy
statement and other relevant materials that will be filed with the SEC in
connection with the Merger when they become available. Information concerning
the interests of the Company's participants in the solicitation, which may, in
some cases, be different than those of the Company's stockholders generally, is
set forth in the definitive proxy statement relating to the Merger.
Forward-looking statements
All statements and assumptions in this communication that do not directly and
exclusively relate to historical facts could be deemed "forward-looking
statements." Forward-looking statements are often identified by the use of words
such as "anticipates," "believes," "estimates," "expects," "may," "could,"
"should," "forecast," "goal," "intends," "objective," "plans," "projects,"
"strategy," "target" and "will" and similar words and terms or variations of
such. These statements represent current intentions, expectations, beliefs or
projections, and no assurance can be given that the results described in such
statements will be achieved. Forward-looking statements include, among other
things, statements about the potential benefits of the Merger; the prospective
performance and outlook of the Company's business, performance and
opportunities; the ability of the parties to complete the Merger and the
expected timing of completion of the Merger; as well as any assumptions
underlying any of the foregoing. Such statements are subject to numerous
assumptions, risks, uncertainties and other factors that could cause actual
results to differ materially from those described in such statements, many of
which are outside of the Company's control. Important factors that could cause
actual results to differ materially from those described in forward-looking
statements include, but are not limited to, (i) the ability to obtain the
requisite approval from stockholders of the Company, (ii) uncertainties as to
the timing of the Merger; (iii) the risk that the Merger may not be completed in
a timely manner or at all; (iv) the possibility that competing offers or
acquisition proposals for the Company will be made; (v) the possibility that any
or all of the various conditions to the consummation of the Merger may not be
satisfied or waived; (vi) the occurrence of any event, change or other
circumstance that could give rise to the termination of the Merger Agreement,
including in circumstances that would require the Company to pay a Company
Termination Fee or other expenses; (vii) the effect of the pendency of the
Merger on the Company's ability to retain and hire key personnel, its ability to
maintain relationships with its customers, suppliers and others with whom it
does business, its business generally or its stock price; (viii) risks related
to diverting management's attention from the Company's ongoing business
operations; (ix) various risks related to health epidemics, pandemics and
similar outbreaks, such as the COVID-19 pandemic, which may have material
adverse effects on the Company's business, financial position, results of
operations and/or cash flows; (x) adverse economic, market or geo-political
conditions that may disrupt the Company's business and cloud service offerings,
including defects and disruptions in the Company's services, ability to properly
manage cloud service offerings, reliance on third party hosting and other
service providers, and exposure to liability and loss from security breaches;
(xi) uncertainties as to demand for the Company's products, including cloud
service, licenses, services and maintenance; (xii) the possibility of pressure
to make concessions on pricing and changes in the Company's pricing models;
(xiii) risks related to the protection of the Company's intellectual property;
(xiv) changes in the Company's dependence on third party suppliers and other
third party relationships, including sales, services and marketing channels;
(xv) changes in the Company's revenue, earnings, operating expenses and margins;
(xvi) the reliability of the Company's financial forecasts and estimates of the
costs and benefits of transactions; (xvii) the Company's ability to leverage
changes in technology; (xviii) risks related to defects in the Company's
software products and services; (xix) changes in third party opinions about the
Company; (xx) changes in competition in the Company's industry; (xxi) delays in
sales; (xxii) timely and effective integration of newly acquired businesses;
(xxiii) changes in economic conditions in the Company's vertical markets and
worldwide; (xxiv) fluctuations in exchange rates; and (xxv) other factors as set
forth from time to time in the Company's filings with the SEC, including its
Annual Report on Form 10-K for the fiscal year ended January 31, 2021, as may be
updated or supplemented by any subsequent Quarterly Reports on Form 10-Q or
other filings with the SEC. Readers are cautioned not to place undue reliance on
such statements which speak only as of the date they are made. The Company does
not undertake any obligation to update or release any revisions to any
forward-looking statement or to report any events or circumstances after the
date of this communication or to reflect the occurrence of unanticipated events
except as required by law.
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QAD INC. 
