UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
J.D. EDWARDS & COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
(1) Title of each class of securities to which transaction applies: Common
Stock, par value $0.001 per share, of J.D. Edwards & Company (together
with associated stock purchase rights)
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(2) Aggregate number of securities to which transaction
applies: 19,090,028
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): $7.05 plus
0.43 of a share of PeopleSoft, Inc. common stock, par value $0.01 per
share (together with associated preferred stock purchase rights)
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: $ 271,095,579*
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(5) Total fee paid: $21,931.63 previously paid, as described in ** below
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[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $ 166,452.84
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(2) Form, Schedule or Registration Statement No.: Tender Offer Statement
on Schedule TO (the "Schedule TO") and Registration Statement on Form
S-4, No. 33-106269 (the "Registration Statement")
------------------------------------------------------------------------
(3) Filing Party: PeopleSoft, Inc. and Jersey Acquisition Corporation
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(4) Date Filed: June 19, 2003 and subsequently amended
------------------------------------------------------------------------
CALCULATION OF FILING FEE
<Table>
<Caption>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
---------------------- ----------------------
$271,095,579 $21,931.63
</Table>
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* Estimated for purposes of calculating the amount of the filing fee only. This
calculation is based on the number of shares of J.D. Edwards common stock
remaining outstanding after consummation of the recently completed exchange
offer (i.e. 19,090,028 shares) (the "Shares"), and a price per Share of (i)
$7.05, net, in cash, plus (ii) 0.43 of share of PeopleSoft common stock
(together with associated preferred stock purchase rights) and cash in lieu
of fractional shares. The value of the Shares for this purpose was
determined, to the extent of the PeopleSoft common stock to be exchanged, on
the basis of the market value of such PeopleSoft common stock to be
exchanged, computed in accordance with Rule 0-11(a)(4) of the Securities
Exchange Act of 1934 (the "Exchange Act") as the product of (i) $16.63 (the
average of the high and low prices per share of PeopleSoft common stock on
July 25, 2003 as reported by the Nasdaq National Market) and (ii) (A) 0.43
multiplied by (B) 19,090,028 (the number of Shares issuable in the merger).
** The amount of the filing fee, calculated in accordance with Exchange Act Rule
0-11, equals $80.90 per million of the aggregate value of the transaction. In
accordance with Rule 457(b), the filing fee of $21,931.63 is offset by $
166,452.84 previously paid with the filing of the Schedule TO and the
Registration Statement on June 19, 2003. As provided in Exchange Act Rule
0-11(a)(2), only "one fee per transaction" is required to be paid.
Accordingly, no additional fee is due.
J.D. EDWARDS & COMPANY
ONE TECHNOLOGY WAY
DENVER, COLORADO 80237
(303) 334-4000
NOTICE OF ACTION BY WRITTEN CONSENT
July 31, 2003
Dear J.D. Edwards Stockholder:
We are writing to you in connection with the Amended and Restated Agreement
and Plan of Merger and Reorganization (referred to as the "merger agreement"),
dated as of June 16, 2003, among PeopleSoft, Inc., a Delaware corporation
("PeopleSoft"), Jersey Acquisition Corporation, a Delaware corporation and
wholly-owned subsidiary of PeopleSoft ("Jersey Acquisition"), and J.D. Edwards &
Company, a Delaware corporation ("J.D. Edwards"). The merger agreement provides
for the merger of Jersey Acquisition into J.D. Edwards (the "merger").
The board of directors of J.D. Edwards has determined that the terms of the
merger agreement and the merger are advisable, and are fair to, and in the best
interests of, J.D. Edwards stockholders. The board of directors has approved the
terms of the merger and adopted the merger agreement.
The approval of the holders of a majority of the outstanding shares of J.D.
Edwards common stock is required to adopt the merger agreement under Delaware
law. As a result of PeopleSoft's recent purchase of shares of J.D. Edwards
common stock pursuant to PeopleSoft's offer to exchange all outstanding shares
of J.D. Edwards common stock for cash and PeopleSoft common stock, PeopleSoft
currently owns or controls approximately 84.6% of the outstanding common stock
of J.D. Edwards as of July 23, 2003, the record date as defined below.
Accordingly, PeopleSoft through its wholly-owned subsidiary, Jersey Acquisition,
has adopted the merger agreement by executing and delivering a written consent.
Because PeopleSoft owns more than a majority of the outstanding J.D. Edwards
common stock as of the record date, this action by written consent is sufficient
to adopt the merger agreement without the affirmative vote of any other J.D.
Edwards stockholder. Accordingly, your approval is not required and is not being
requested. Neither J.D. Edwards nor PeopleSoft is soliciting proxies from J.D.
Edwards stockholders.
When actions are taken by written consent of less than all of the
stockholders entitled to vote on a matter, Section 228(e) of the Delaware
General Corporation Law, or DGCL, requires prompt notice of the action to those
stockholders who did not vote. THIS NOTICE AND THE INFORMATION STATEMENT
ATTACHED HERETO SHALL CONSTITUTE THE NOTICE OF ACTION BY WRITTEN CONSENT
REQUIRED UNDER SECTION 228(e) OF THE DGCL.
Please read the enclosed information statement carefully. WE ARE NOT ASKING
YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Please do not send in your J.D. Edwards common stock certificates at this
time. If the merger is consummated, you will receive a letter of transmittal and
instructions regarding the surrender of your stock certificates and payment for
your J.D. Edwards shares after the merger becomes effective.
By the duly authorized resolution of the J.D. Edwards board of directors,
the officers of J.D. Edwards have fixed the close of business on July 23, 2003
as the record date for determining the stockholders entitled to notice and this
information statement as well as the number of shares of J.D. Edwards common
stock necessary to adopt the merger agreement. However, under applicable
securities regulations, the merger cannot be completed until 20 business days
after the date of mailing of this information statement
to J.D. Edwards stockholders, and therefore the merger will be completed on or
about August 28, 2003, or as promptly as practicable thereafter.
By order of the Board of Directors,
ANNE S. JORDAN
Vice President, Secretary and Director
J.D. EDWARDS & COMPANY
ONE TECHNOLOGY WAY
DENVER, COLORADO 80237
(303) 334-4000
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This information statement is being furnished to the holders of J.D.
Edwards common stock by J.D. Edwards board of directors in connection with the
Amended and Restated Agreement and Plan of Merger and Reorganization (referred
to as the "merger agreement"), dated as of June 16, 2003, among PeopleSoft,
Jersey Acquisition and J.D. Edwards.
The board of directors of J.D. Edwards has determined that the terms of the
merger agreement and the proposed merger of Jersey Acquisition with and into
J.D. Edwards (referred to as the "merger") pursuant to the merger agreement are
advisable, and are fair to, and in the best interests of, J.D. Edwards
stockholders. A copy of the merger agreement is attached as Annex A to this
information statement.
In accordance with Delaware law, the merger agreement must be approved by
the holders of J.D. Edwards common stock in order for the merger agreement to be
adopted. The affirmative vote or consent of the holders of a majority of the
outstanding shares of J.D. Edwards common stock is required to adopt the merger
agreement. If the merger agreement is adopted and the merger is consummated,
each holder of J.D. Edwards common stock (other than stockholders who validly
perfect appraisal rights under Delaware law or J.D. Edwards or PeopleSoft or
their respective subsidiaries) will be entitled to receive $7.05 per share in
cash plus 0.43 of one share of PeopleSoft's common stock, par value $0.01 per
share (together with associated preferred stock purchase rights).
The merger is part of a two-step transaction pursuant to which PeopleSoft
will acquire J.D. Edwards. The first step was an offer to exchange (referred to
as the "Offer") all of the outstanding capital stock of J.D. Edwards by
PeopleSoft pursuant to PeopleSoft's prospectus in its registration statement
dated June 19, 2003 and amended by Amendment No. 1 on July 3, 2003 and as
declared effective by the Securities and Exchange Commission on July 11, 2003
(as amended, the "Prospectus"). The Offer expired at midnight, New York City
time on Thursday, July 17, 2003. At the expiration of the Offer and after
delivery of guaranteed shares, J.D. Edwards stockholders had validly tendered
and not withdrawn 104,754,894 shares of J.D. Edwards common stock for exchange,
representing approximately 84.6% of the shares of J.D. Edwards common stock then
outstanding. PeopleSoft accepted all J.D. Edwards shares tendered for exchange
at approximately 1:45 a.m., New York City time, on Friday, July 18, 2003.
As a result of the Offer, PeopleSoft currently owns or controls
approximately 84.6% of the outstanding J.D. Edwards common stock as of July 23,
2003, the record date, and has, by written consent of its wholly-owned
subsidiary, Jersey Acquisition adopted the merger agreement. Because PeopleSoft
owns more than a majority of the outstanding J.D. Edwards common stock, this
action by written consent is sufficient to adopt the merger agreement and to
thereby approve and cause the merger without the affirmative vote of any other
J.D. Edwards stockholder. As a result, no other votes are necessary to adopt the
merger agreement, and your approval is not required and is not being requested.
Neither J.D. Edwards nor PeopleSoft is soliciting proxies from J.D. Edwards
stockholders.
When actions are taken by written consent of less than all of the
stockholders entitled to vote on a matter, Section 228(e) of the DGCL requires
prompt notice of the action to those stockholders who did not vote. THIS
INFORMATION STATEMENT SHALL BE CONSIDERED THE NOTICE OF ACTION BY WRITTEN
CONSENT REQUIRED UNDER SECTION 228(e) OF THE DGCL.
Under Section 262 of the DGCL, if a merger is accomplished by written
consent, then either a constituent corporation before the effective date of the
merger, or the surviving corporation within 10 days after the completion of the
merger, must notify each stockholder entitled to appraisal rights of the
approval of the merger and that appraisal rights are available and include in
the notice a copy of Section 262. THIS INFORMATION STATEMENT CONSTITUTES NOTICE
TO YOU OF THE AVAILABILITY OF APPRAISAL RIGHTS UNDER SECTION 262,
A COPY OF WHICH IS ATTACHED AS ANNEX B TO THIS INFORMATION STATEMENT. If you
comply with the requirements of Section 262, you will have the right to seek an
appraisal and to be paid the "fair value" of your shares of J.D. Edwards common
stock at the effective time of the merger (exclusive of any element of value
arising from the accomplishment or expectation of the merger).
Under applicable securities regulations, the merger may not be completed
until 20 business days after the date of mailing of this information statement
to J.D. Edwards stockholders. Therefore, notwithstanding the execution and
delivery of the written consent, the merger will not occur until that time has
elapsed. Furthermore, under Delaware law, PeopleSoft may revoke its written
consent prior to the completion of the merger. PeopleSoft has indicated that it
does not intend to do so. It currently is anticipated that the merger will be
effected on or about August 28, 2003, or as promptly as practicable thereafter.
Please read this information statement carefully, as it contains important
information.
Please do not send in your J.D. Edwards common stock certificates at this
time. If the merger is consummated, you will receive instructions regarding the
surrender of your stock certificates and payment for your J.D. Edwards shares as
promptly as practicable after the merger becomes effective.
By the duly authorized resolution of the J.D. Edwards board of directors,
the officers of J.D. Edwards have fixed the close of business on July 23, 2003
as the record date for determining the stockholders entitled to notice and to
receive this information statement, and for determining the number of shares of
J.D. Edwards common stock outstanding and therefore necessary to adopt the
merger agreement.
This information statement is dated July 31, 2003 and is first being mailed
to J.D. Edwards stockholders on or about July 31, 2003.
TABLE OF CONTENTS
<Table>
SUMMARY..................................................... 1
Contents and Organization of the Information Statement.... 1
Recent Events; Expiration of the Offer.................... 1
Election of Directors..................................... 2
Corporate Information..................................... 2
The Merger Agreement...................................... 2
The Merger................................................ 2
J.D. Edwards' Support of the Merger and Required
Stockholder Approval................................... 2
Interests of Certain Persons in the Merger................ 3
Tax Consequences of the Merger............................ 4
Dissenters' Rights of Appraisal........................... 4
Security Ownership of Certain Beneficial Owners and
Management............................................. 4
Surrender of Certificates and Payment Procedures.......... 6
FORWARD-LOOKING STATEMENTS.................................. 7
ADDITIONAL INFORMATION...................................... 8
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 8
PROSPECTUS(1)
ANNEX A: AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION........................................ A-1
ANNEX B: SECTION 262 APPRAISAL RIGHTS....................... B-1
ANNEX C: DIRECTORS AND EXECUTIVE OFFICERS OF PEOPLESOFT,
INC. AND JERSEY ACQUISITION CORPORATION................... C-1
ANNEX D: SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION
STATEMENT AND AMENDMENTS.................................. D-1
ANNEX E: WRITTEN CONSENT OF STOCKHOLDER..................... E-1
</Table>
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(1) The Prospectus constituting a part of this information statement contains a
separate table of contents reflecting the contents of the Prospectus
i
SUMMARY
The following is a summary of information regarding the merger agreement
and the proposed merger of Jersey Acquisition, a Delaware corporation and
wholly-owned subsidiary of PeopleSoft, with and into J.D. Edwards, with J.D.
Edwards surviving the merger as a wholly-owned subsidiary of PeopleSoft. This
summary is not intended to be exhaustive or complete, and is qualified in its
entirety by the information presented elsewhere in this information statement,
in the annexes hereto and in the other documents referred to in or incorporated
by reference into this information statement. Stockholders should read this
information statement and all of the annexes and other documents referenced or
incorporated herein in their entirety.
CONTENTS AND ORGANIZATION OF THE INFORMATION STATEMENT
This information statement is comprised of this summary section, the
Prospectus and the annexes to this information statement.
You will note that most of the sections in this summary include
cross-references to sections in the Prospectus containing more detailed
information regarding the subject matter of that particular section of this
summary. It is important that you do not read the summary information alone, as
this summary is intended to be read along with the information in the Prospectus
and the annexes attached to this information statement, and is not intended to
summarize or replace the important information about the merger agreement, the
merger and other items included in the Prospectus and the annexes.
RECENT EVENTS; EXPIRATION OF THE OFFER
Certain events contemplated by the merger agreement and described in the
Prospectus have occurred before the date of this information statement.
In particular, the Offer expired at midnight, New York City time on
Thursday, July 17, 2003. At the expiration of the Offer and after delivery of
guaranteed shares, 104,754,894 shares of J.D. Edwards common stock had been
validly tendered for exchange, all of which were accepted for exchange by
PeopleSoft at approximately 1:45 a.m., New York City time, on Friday, July 18,
2003. As a result of such acceptance and exchange, PeopleSoft now owns
approximately 84.6% of the J.D. Edwards common stock outstanding as of July 23,
2003, the record date. The source and amount of funds used to pay the cash
consideration for the J.D. Edwards shares purchased for cash in the Offer and to
be acquired in the merger are described on page 82 of the Prospectus in the
section entitled "The Offer -- Certain Effects of Our Offer and the Merger;
Financing of the Offer and the Merger".
On June 18, 2003, Oracle Corporation ("Oracle") filed a lawsuit against
PeopleSoft, the members of PeopleSoft's board of directors, and J.D. Edwards in
the Delaware Chancery Court. Oracle seeks, among other things, injunctive relief
requiring rescission of the merger agreement. The parties have postponed
scheduling a hearing on this matter. As a result, PeopleSoft is not currently
prevented by this litigation from completing the merger if the conditions to
completing the merger are met.
On June 9, 2003 a purported class action lawsuit was filed in District
Court, County of Jefferson, Colorado by J.D. Edwards stockholders against J.D.
Edwards' directors and officers alleging breaches of fiduciary duty by such
persons and seeking, among other remedies, to enjoin the transactions
contemplated by the merger. In July 2003, J.D. Edwards and the plaintiffs
settled such claims, and the lawsuit was dismissed with prejudice.
On June 12, 2003, J.D. Edwards filed a suit in District Court for the City
and County of Denver, Colorado against Oracle and its wholly owned subsidiary,
Pepper Acquisition Corp., alleging claims for tortious interference with
contract and prospective business relations. The suit seeks, among other things,
compensatory damages of $1.7 billion and an unspecified amount of punitive
damages. Defendants have moved to dismiss J.D. Edwards' complaint. J.D. Edwards'
response to defendants' motion is due on August 11, 2003.
1
ELECTION OF DIRECTORS
As described on page 90 of the Prospectus in the section entitled "The
Merger Agreement -- The Offer; Designation of Directors Upon Acceptance of
Shares," upon the exchange of shares of J.D. Edwards common stock pursuant to
the Offer, PeopleSoft became entitled to designate a number of J.D. Edwards
directors, reflecting PeopleSoft's percentage ownership of the outstanding
common stock of J.D. Edwards. However, as provided in the merger agreement,
until the effective time of the merger, J.D. Edwards board of directors will
continue to have at least two directors who were directors on the date of the
merger agreement and who are not affiliated with PeopleSoft or Jersey
Acquisition. On July 31, 2003, the J.D. Edwards' bylaws were amended to decrease
the number of directors of the J.D. Edwards board of directors from nine to
five. As of July 31, 2003, the J.D. Edwards board of directors consisted of
continuing directors Kathleen J. Cunningham and Delwin D. Hock, and three new
directors designated by PeopleSoft, namely, Craig A. Conway, Kevin T. Parker and
Anne S. Jordan (collectively, the "additional directors"). Information regarding
the additional directors is included in "Directors and Executive Officers of
PeopleSoft, Inc. and Jersey Acquisition Corporation" attached as Annex C to this
information statement. Information regarding the J.D. Edwards continuing
directors is included in J.D. Edwards' Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any subsequent amendments, the "J.D. Edwards
Schedule 14D-9"), which was mailed to J.D. Edwards stockholders together with
the Prospectus and is attached, together with each subsequent amendment thereto,
as Annex D to this information statement, in the section entitled "Directors and
Executive Officers of J.D. Edwards & Company" starting on page D-29.
CORPORATE INFORMATION
Information regarding the corporations involved in the merger is set forth
on pages 2 through 3 and pages 28 through 33 of the Prospectus in the sections
entitled "Summary -- The Companies," "Information About PeopleSoft, Inc." and
"Information About J.D. Edwards & Company," respectively.
THE MERGER AGREEMENT
The merger agreement is described on page 1 and beginning on page 89 of the
Prospectus in the sections entitled "Summary -- The Merger" and "The Merger
Agreement," respectively. The background of the merger agreement is described in
the section entitled "Background of the Offer and the Merger" beginning on page
56 of the Prospectus.
THE MERGER
As described on page 1 and beginning on page 89 of the Prospectus in the
sections entitled "Summary -- The Merger" and "The Merger Agreement," at the
effective time of the merger, holders of J.D. Edwards common stock (other than
stockholders who validly perfect appraisal rights under Delaware law,
PeopleSoft, J.D. Edwards or their respective subsidiaries) will be entitled to
receive $7.05 in cash and 0.43 of a share of PeopleSoft common stock (together
with associated preferred stock purchase rights) for each then outstanding share
of J.D. Edwards common stock.
In addition, as described on page 82 of the Prospectus in the section
entitled "The Offer -- Certain Effects of Our Offer and the Merger," following
the merger, J.D. Edwards will no longer be publicly owned and will no longer
meet the requirements of the Nasdaq National Market for continued listing on the
Nasdaq National Market. In such event, PeopleSoft intends to deregister and
delist the J.D. Edwards common stock from the Nasdaq National Market.
J.D. EDWARDS' SUPPORT OF THE MERGER AND REQUIRED STOCKHOLDER APPROVAL
As described in Item 4 of J.D. Edwards' Schedule 14D-9 attached as Annex D
to this information statement in the section on page D-80 entitled "The
Solicitation or Recommendation," the J.D. Edwards board of directors has
determined that the terms of the merger agreement and the merger are advisable,
and are fair to, and in the best interests of, J.D. Edwards stockholders.
Information about the board's
2
recommendation and the factors considered and the reasons therefor is contained
in the J.D. Edwards Schedule 14D-9 attached as Annex D.
As described on page 76 of the Prospectus in the section entitled "The
Offer -- Purpose of Our Offer; The Merger; Appraisal Rights," the affirmative
vote or written consent of at least a majority of the shares of J.D. Edwards
common stock outstanding is required to adopt the merger agreement. Under
Delaware law and J.D. Edwards' bylaws, such approval may be provided by written
consent and without a meeting of the stockholders. On July 23, 2003, PeopleSoft
through its wholly-owned subsidiary, Jersey Acquisition, which owned 84.6% of
the outstanding J.D. Edwards common stock as of the record date, executed a
written consent adopting the merger agreement to thereby effect the merger when
such merger may be completed in accordance with applicable law. This means that
the merger can occur without your written consent or vote, and there will not be
a special meeting of J.D. Edwards stockholders. A copy of the written
stockholder consent is attached as Annex E to this information statement.
Under applicable securities regulations, the merger may not be completed
until 20 business days after the date of mailing of this information statement
to J.D. Edwards stockholders. Therefore, notwithstanding the execution and
delivery of the written consent, the merger will not occur until that time has
elapsed. Furthermore, under Delaware law, PeopleSoft may revoke its written
consent prior to the completion of the merger. PeopleSoft has indicated that it
does not intend to do so. It currently is anticipated that the merger will be
effected on or about August 28, 2003, or as promptly as practicable thereafter.
When actions are taken by written consent of less than all of the
stockholders entitled to vote on a matter, Section 228(e) of the DGCL requires
prompt notice of the action to those stockholders who did not vote. THIS
INFORMATION STATEMENT SHALL CONSTITUTE THE NOTICE OF ACTION BY WRITTEN CONSENT
REQUIRED UNDER SECTION 228(E) OF THE DGCL.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
As described on page 61 of the Prospectus in the section entitled
"Background of the Offer and the Merger -- Interests of Certain Persons in the
Merger; Change in Control Plan/Severance Agreements," in connection with the
negotiation of the original merger agreement dated as of June 1, 2003, by and
among J. D. Edwards, PeopleSoft and Jersey Acquisition, J.D. Edwards amended its
management change in control plan, which provides for specified severance and
other change in control-related benefits to participants in the plan, and which
covers 197 management employees of J.D. Edwards. The amendments to the plan are
contingent upon the closing of the merger.
In addition, as described on page 62 of the Prospectus in the section
entitled "Background of the Offer and the Merger -- Interests of Certain Persons
in the Merger; Employment Agreements," PeopleSoft and Robert Dutkowsky,
President and Chief Executive Officer of J.D. Edwards, are parties to an
employment agreement providing for, among other things, Mr. Dutkowsky's
employment as a consultant to the surviving corporation for up to six months
after the merger, subject to the completion of the merger. In addition,
PeopleSoft and each of Richard Allen, Vice President, Finance and Administration
and Chief Financial Officer of J.D. Edwards, and Richard Snow, Jr., Vice
President, General Counsel and Secretary of J.D. Edwards, are parties to
employment agreements providing for, among other things, up to six months of
continued employment in their respective pre-merger positions with the
corporation surviving the merger, subject to the completion of the merger. A
total of 47 other employees, including the remainder of the J.D. Edwards
executive officers, have entered into substantially similar offer letters that
amend their employment agreements and provide for such post-merger employment.
Further, as described on page 63 of the Prospectus in the section entitled
"Background of the Offer and the Merger -- Interests of Certain Persons in the
Merger; Acceleration of Stock Options," certain executives and directors of J.D.
Edwards may hold options to acquire shares of J.D. Edwards common stock that may
be cashed-out or converted into options to acquire PeopleSoft stock in the
merger. Under certain J.D. Edwards stock option plans, if an optionholder is
voluntarily terminated as a result of a change in control, the options granted
under such plans are accelerated and become 100% vested.
3
TAX CONSEQUENCES OF THE MERGER
The tax consequences to J.D. Edwards stockholders of the merger are
described on page 8 and beginning on page 85 of the Prospectus in the sections
entitled "Summary -- Material Federal Income Tax Consequences" and "The
Offer -- Material Federal Income Tax Consequences," respectively. You are
encouraged to read those sections in their entirety and to seek the advice of
your own independent tax and other financial advisors as to the tax and other
consequences resulting from the merger.
DISSENTERS' RIGHTS OF APPRAISAL
Under Section 262 of the DGCL, holders of J.D. Edwards common stock who
properly perfect their appraisal rights under Section 262 of the DGCL will have
the right to seek an appraisal and to be paid the "fair value" of their shares
of J.D. Edwards common stock at the effective time of the merger (exclusive of
any element of value arising from the accomplishment or expectation of the
merger). The complete text of Section 262 of the DGCL is attached as Annex B to
this information statement. You are encouraged to read Section 262 in its
entirety and to consult your own independent legal advisors to better understand
any appraisal rights you may have under Delaware law. Please refer to the
sections entitled "Summary -- Appraisal Rights," "The Offer -- Purpose of Our
Offer; The Merger; Appraisal Rights," "The Merger Agreement -- The Merger;
Appraisal Rights," and "Comparison of Rights of Common Stockholders of
PeopleSoft and Common Stockholders of J.D. Edwards -- Appraisal Rights" on pages
5, 77, 91 and 119 of the Prospectus, respectively, for a more thorough
discussion of appraisal rights available to J.D. Edwards stockholders under
Delaware law.
Under Section 262 of the DGCL, where a merger is accomplished by written
consent, then either a constituent corporation before the effective date of the
merger, or the surviving corporation within 10 days after the completion of the
merger, must notify each stockholder entitled to appraisal rights of the
approval of the merger and that appraisal rights are available and include in
the notice a copy of Section 262. This information statement constitutes notice
to you of the availability of appraisal rights under Section 262 with respect to
the merger. J.D. Edwards stockholders who elect to exercise appraisal rights
must deliver a written demand to: J.D. Edwards & Company, Attention: Secretary,
One Technology Way, Denver, CO, 80237, within the time period specified under
Section 262 of the DGCL from the date of mailing of this information statement
and notice, which period may end prior to the completion of the merger.
J.D. Edwards stockholders who consider seeking appraisal should bear in
mind that the "fair value" of their J.D. Edwards common stock determined under
Section 262 could be more than, the same as or less than, the consideration paid
for such stock in the merger if they do seek an appraisal. In addition, J.D.
Edwards stockholders should consider that the opinions of investment banking
firms as to fairness to stockholders from a financial point of view are not
intended to be, and are not binding as, opinions as to the fair value of stock
under Section 262 of the DGCL.
If any stockholder demands appraisal under Section 262 but fails to
perfect, or effectively withdraws or loses, the right to appraisal, that
stockholder's shares of J.D. Edwards common stock automatically will be
converted into the right to receive $7.05 in cash, without interest, plus 0.43
of a share of PeopleSoft common stock (together with associated preferred stock
purchase rights), in accordance with the merger agreement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 23, 2003, the record date, the
names of those persons known to J.D. Edwards to beneficially own 5% or more of
the outstanding J.D. Edwards common stock. The
4
percentages are calculated on the basis of 123,844,922 shares outstanding as of
July 23, 2003, the record date.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<Table>
<Caption>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------------------ -------------------- ----------
PeopleSoft, Inc.(1)..................... 104,754,894 shares acquired pursuant to 84.6%
Jersey Acquisition Corporation(1) the Offer
4460 Hacienda Drive
Pleasanton, CA 94588
</Table>
- ---------------
(1) As reflected in PeopleSoft's Amendment No. 4 to its Schedule TO, filed on
July 28, 2003, which contains PeopleSoft's Amendment No. 2 to its Schedule
13D (the "Schedule TO/Schedule 13D"). As reported on the Schedule
TO/Schedule 13D, in addition to the 104,754,894 shares listed above,
PeopleSoft and Jersey Acquisition may be deemed to be the beneficial owners
of 2,234,759 shares of J.D. Edwards common stock that are issuable upon the
exercise of outstanding options which are exercisable within 60 days of July
18, 2003, under certain irrevocable proxy and voting agreements. PeopleSoft
and Jersey Acquisition have disclaimed beneficial ownership of any such
shares of common stock covered by the irrevocable proxy and voting
agreements not tendered in the Offer and accepted by PeopleSoft.
The following table sets forth, as of July 23, 2003, the number of shares
of J.D. Edwards common stock beneficially owned by each of J.D. Edwards
directors, its Chief Executive Officer and its four most highly compensated
executive officers and all directors and executive officers as a group. The
percentages are calculated on the basis of 123,844,922 shares outstanding as of
July 23, 2003. The percentage owned relating to persons holding options that are
exercisable within 60 days of July 23, 2003 is based on and assumes the exercise
of those options. The address for each person listed is c/o J.D. Edwards &
Company, One Technology Way, Denver, Colorado 80237.
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<Table>
<Caption>
SHARES SUBJECT
SHARES TO OPTIONS
BENEFICIALLY EXERCISABLE PERCENT OF
NAME OWNED WITHIN 60 DAYS CLASS
- ---- ------------ -------------- ----------
Richard E. Allen.......................................... -- 603,959 *
Kathleen J. Cunningham.................................... -- -- --
Robert M. Dutkowsky....................................... -- 618,750 *
Delwin D. Hock............................................ -- 67,314 *
Michael J. Maples......................................... -- 62,312 *
Harry Debes............................................... -- 46,667 *
Richard Mathews........................................... -- 79,354 *
Michael Madden............................................ -- 265,031 *
Directors and Executive Officers as a Group
(12 individuals)........................................ -- 2,110,256 1.7%
</Table>
* Less than 1% of J.D. Edwards common stock
None of the additional directors of J.D. Edwards designated by PeopleSoft
beneficially owns shares of J.D. Edwards common stock.
5
SURRENDER OF CERTIFICATES AND PAYMENT PROCEDURES
Promptly after the effective time of the merger, The Bank of New York, the
exchange agent for the Offer and the merger, will mail a letter of transmittal
and instructions regarding the surrender of J.D. Edwards common stock to each
record holder of outstanding shares of J.D. Edwards common stock. Upon surrender
to the exchange agent of a certificate representing shares of J.D. Edwards
common stock, together with a properly completed and duly executed letter of
transmittal and any other documents that may be required by the exchange agent,
the holder of such surrendered certificate will be entitled to receive $7.05 per
share in cash, without interest, plus 0.43 of a share of PeopleSoft common stock
(together with associated preferred stock purchase rights) for each share of
J.D. Edwards common stock. Until properly surrendered in accordance with such
instructions, each certificate representing a share of J.D. Edwards common stock
will represent for all purposes only the right to receive such amount in cash,
without interest, and shares of PeopleSoft common stock.
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES TO THE EXCHANGE AGENT NOW. Stock
certificates should be sent only after the merger at the times specified in the
letter of transmittal and pursuant to the instructions which will be mailed to
you by the exchange agent promptly after the effective time of the merger.
6
FORWARD-LOOKING STATEMENTS
Certain of the information included in this information statement
(including, without limitation, the information presented in the Prospectus and
in the annexes hereto) and in the documents incorporated herein by reference
contain forward-looking statements concerning non-historical facts or matters
that are subject to risks and uncertainties. These forward-looking statements
may be preceded by, followed by or include the words "believes," "expects,"
"anticipates," "intends," "plans," "projections," "estimates," "may," "will,"
"should," "could" or similar expressions. These forward-looking statements
represent expectations or beliefs of PeopleSoft and J.D. Edwards concerning
future events, many of which are outside of their respective control. Many
possible events or factors could affect the actual financial results and
performance of PeopleSoft and J.D. Edwards before the transaction and of the
combined company after the transaction, and these factors or events could cause
those results or performance to differ significantly from those expressed in the
forward-looking statements. They include, among other things, statements with
respect to: the possibility that the merger may not be completed or that some
aspects of the acquisition transaction may have to be modified to obtain
regulatory approvals; the impact of the Oracle Corporation's tender offer to
purchase all of the outstanding shares of PeopleSoft common stock, referred to
as the Oracle offer; the impact of litigation relating to the Offer, the merger
or the Oracle offer; the successful integration of J.D. Edwards' employees and
technologies and the challenge of achieving anticipated benefits of the merger;
pro forma financial statements and projections of future financial performance;
future sales and earnings; marketing efforts and trends; PeopleSoft's customer
protection program; product acceptance and demand; growth efforts; cost
reduction efforts; cost savings and economies of scale; margin enhancement
efforts; product development efforts; market positioning; operations and results
of the combined company after the merger; and future acquisitions and
dispositions.
We caution that these statements are further qualified by important
factors, in addition to those set forth beginning on page 18 of the Prospectus
in the section entitled "Risk Factors" and elsewhere in the Prospectus and the
documents which are incorporated by reference therein, that could cause actual
results to differ significantly from those in the forward-looking statements. In
addition, additional risk factors related to the Offer, the Oracle offer and the
merger are contained in PeopleSoft's and J.D. Edwards' recent filings with the
Securities and Exchange Commission. Forward-looking statements are not
guarantees of performance. By their nature, they involve risks, uncertainties
and assumptions. The future results and stockholder values of PeopleSoft and
J.D. Edwards may differ significantly from those expressed in these
forward-looking statements. Stockholders are cautioned not to put undue reliance
on any forward-looking statement. Any such statement speaks only as of the date
of this information statement or the date specified in the respective annex, and
in the case of documents incorporated by reference, as of the date of those
documents. Neither PeopleSoft nor J.D. Edwards assumes any obligation to update
or release any revisions to any forward-looking statements, to report any new
information, future event or other circumstances after the date of this
information statement or to reflect the occurrence of unanticipated events,
except as required by law.
7
ADDITIONAL INFORMATION
You can contact Georgeson Shareholder Communications, Inc., the information
agent for the merger, with any questions regarding the merger toll free at (800)
248-2681. Bankers and brokers should contact the information agent at (212)
440-9800. Callers outside North America should call toll free at (866) 324-5899.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
PeopleSoft and J.D. Edwards file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
reports, statements or information that the companies file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-732-0330 for further information on the public reference rooms.
PeopleSoft's and J.D. Edwards' SEC filings are also available to the public from
commercial document retrieval services and at the Internet web site maintained
by the SEC at www.sec.gov.
The SEC allows us to "incorporate by reference" information into this
information statement, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this information
statement, except for any information that is superseded by information that is
included directly in this document. This information statement incorporates by
reference the documents set forth below that PeopleSoft or J.D. Edwards have
previously filed with the SEC. These documents contain important information
about PeopleSoft and J.D. Edwards that stockholders should read in their
entirety.
The following documents filed by PeopleSoft with the SEC are hereby
incorporated by reference into this information statement:
<Table>
<Caption>
PEOPLESOFT, INC. SEC FILINGS (SEC FILE NO. 0-20710) PERIOD
- --------------------------------------------------- ------
Annual Report on Form 10-K...................... Year ended December 31, 2002, as filed on
March 28, 2003
Quarterly Report on Form 10-Q................... Quarter ended March 31, 2003, as filed on May
15, 2003
Current Reports on Form 8-K..................... Filed on April 4, 2003, April 23, 2003, June
2, 2003, June 12, 2003, July 2, 2003, July
14, 2003, July 17, 2003 (Items 5 and 7), July
17, 2003 (Items 7 and 9) and July 28, 2003.
Definitive Proxy Statement on Schedule 14A for 2003
Annual Meeting of Stockholders.................. Filed on April 28, 2003 and amended on May
19, 2003
Registration Statement on Form 8-A.............. Filed on October 7, 1992
The description of PeopleSoft preferred stock
purchase rights contained in Registration Statement
on Form 8-A/A................................... Filed on March 25, 1998
</Table>
8
The following documents filed by J.D. Edwards with the SEC are hereby
incorporated by reference into this information statement:
<Table>
<Caption>
J.D. EDWARDS & COMPANY SEC FILINGS (SEC FILE NO. 0-20710) PERIOD
- --------------------------------------------------------- ------
Annual Report on Form 10-K......................... Year ended October 31, 2002, as filed on
December 6, 2002
Quarterly Reports on Form 10-Q..................... Quarter ended January 31, 2003, as filed on
February 28, 2003 Quarter ended April 30,
2003, as filed on June 4, 2003
Definitive Proxy Statement on Schedule 14A for 2003
Annual Meeting of Stockholders..................... Filed on February 21, 2003
Current Reports on Form 8-K........................ Filed on June 3, 2003 and July 24, 2003
Registration Statement on Form 8-A................. Filed on September 17, 1997
The description of J.D. Edwards preferred stock purchase
rights contained in Registration Statement on Form 8-A... Filed on November 15, 2001, as amended on
June 11, 2003 and June 30, 2003
Schedule 14D-9 Solicitation/Recommendation Statement
under Section 14(d)(4) of the Securities Exchange Act... Filed on June 19, 2003, as amended on June
26, 2003, July 3, 2003, July 8, 2003, July 9,
2003, July 11, 2003, July 14, 2003 and July
16, 2003 and attached as Annex D to this
information statement.
</Table>
All additional documents that PeopleSoft or J.D. Edwards may file with the
SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the
date of this information statement to the effective time of the merger, shall
also be deemed to be incorporated herein by this reference.
Stockholders can obtain any of the documents filed by PeopleSoft with the
SEC which are incorporated by reference from PeopleSoft's website at
www.peoplesoft.com, and stockholders can obtain any of the documents filed by
J.D. Edwards with the SEC which are incorporated by reference from J.D. Edwards'
website at www.jdedwards.com. All of these documents are also available without
charge from the SEC or the SEC's Internet website as described above. Documents
incorporated by reference are available without charge from PeopleSoft and J.D.
Edwards, as the case may be, excluding any exhibits to those filings unless we
have specifically incorporated by reference an exhibit in this information
statement. You may obtain documents incorporated by reference in this
information statement by requesting them in writing or by telephone from us at
the following address:
Georgeson Shareholder Communications Inc.
17 State Street -- 10th Floor
New York, NY 10004
Banks and Brokers Call: 212-440-9800
Outside of North America Call Toll-Free: 866-324-5899
All Others Call Toll-Free: 800-248-2681
THE INFORMATION CONTAINED ON THE RESPECTIVE WEBSITES OF PEOPLESOFT AND J.D.
EDWARDS DOES NOT CONSTITUTE A PART OF THIS INFORMATION STATEMENT.
If you request any incorporated documents from us or our information agent,
they will be mailed to you by first-class mail, or other equally prompt means,
within one business day of receipt of your request.
9
[PEOPLESOFT LOGO]
OFFER TO EXCHANGE
CASH OR SHARES OF COMMON STOCK
OF
PEOPLESOFT
WITH A VALUE EQUAL TO
$7.05 PLUS 0.43 OF A SHARE OF PEOPLESOFT COMMON STOCK,
AT YOUR ELECTION AND SUBJECT TO PRORATION
FOR
EACH OUTSTANDING SHARE OF COMMON STOCK
OF
J.D. EDWARDS & COMPANY
THE OFFER COMMENCED ON THURSDAY, JUNE 19, 2003. THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON THURSDAY, JULY 17, 2003 UNLESS EXTENDED.
On June 16, 2003, we entered into an Amended and Restated Agreement and Plan
of Merger and Reorganization with J.D. Edwards & Company and Jersey Acquisition
Corporation, which we refer to as the merger agreement.
We are offering to exchange cash and a fraction of a share of our common
stock for each outstanding share of J.D. Edwards common stock (including the
associated stock purchase right pursuant to J.D. Edwards' rights agreement) that
is validly tendered and not properly withdrawn. You may make an election to
receive the offer consideration all in cash or all in stock, and you will
receive cash, a fraction of a share of our common stock or a combination of cash
and stock, in each case having a value, on a per share basis, of $7.05 plus 0.43
of a share of PeopleSoft common stock, allocated by prorating the cash and
shares available in the offer among the elections made. Holders of J.D. Edwards
common stock who tender but do not make an election will receive an allocation
of the remaining cash and stock, or a combination of cash and stock, after
allocating the cash and stock among the elections made in the offer. The
election and proration procedures are described in this prospectus. Holders of
J.D. Edwards common stock who do not tender in the offer will receive $7.05 plus
0.43 of a share of PeopleSoft common stock for each share of J.D. Edwards common
stock in the merger following completion of the offer. The value of the cash and
stock consideration to be paid to tendering holders will be determined based
upon the average closing price of PeopleSoft common stock during the five
trading days ending before the second trading day prior to the expiration of the
offer. Two trading days prior to expiration of the offer, we will issue a press
release announcing the value of the cash and stock consideration. You may also
call our information agent, Georgeson Shareholder Communications, toll-free at
(800) 248-2681 if you are in North America and at (866) 324-5899 if you are
outside of North America for information about the offer.
Our obligation to pay for and to exchange our common stock for J.D. Edwards
common stock is subject to the conditions listed under "The Offer -- Conditions
of Our Offer". Our common stock is traded on the Nasdaq National Market under
the symbol "PSFT" and J.D. Edwards common stock is traded on the Nasdaq National
Market under the symbol "JDEC".
THE DATE OF THIS PROSPECTUS IS JULY 11, 2003.
IN CONNECTION WITH THE OFFER, YOU SHOULD CONSIDER THE MATTERS DISCUSSED
UNDER "RISK FACTORS" COMMENCING ON PAGE 18 OF THE ENCLOSED PROSPECTUS. Please
carefully review the entire prospectus, including the merger agreement, which is
attached as Appendix A.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The Dealer Manager for the Offer is:
CITIGROUP
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about PeopleSoft and J.D. Edwards from other documents that are not included in
or delivered with this document. This information is available to you without
charge upon your written or oral request. You may read and copy any reports,
statements or information that the companies file at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-732-0330 for further information on the public reference room.
PeopleSoft's and J.D. Edwards' SEC filings are also available to the public from
commercial document retrieval services and at the Internet web site maintained
by the SEC at www.sec.gov.
You may also request copies of these documents from us, without charge,
excluding all exhibits, unless we have specifically incorporated by reference an
exhibit in this prospectus. Stockholders may obtain documents incorporated by
reference in this prospectus by requesting them in writing or by telephone from
our information agent at the address set forth below. You can also contact our
information agent for answers to your questions regarding the offer.
Georgeson Shareholder Communications Inc.
17 State Street -- 10th Floor
New York, NY 10004
Banks and Brokers Call: 212-440-9800
Outside of North America Call Toll-Free: 866-324-5899
All Others Call Toll-Free: 800-248-2681
PeopleSoft, the PeopleSoft logo and PeopleTools are registered trademarks
of, and Pure Internet Architecture is a trademark of, PeopleSoft, Inc. J.D.
Edwards is a registered trademark of J.D. Edwards & Company. All other products
and service names used are trademarks or registered trademarks of their
respective owners.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
SUMMARY..................................................... 1
SUMMARY SELECTED FINANCIAL DATA............................. 10
PeopleSoft Summary Selected Consolidated Historical
Financial Data......................................... 11
J.D. Edwards Summary Selected Consolidated Historical
Financial Data......................................... 12
Selected Unaudited Pro Forma Condensed Combined Financial
Information............................................ 14
COMPARATIVE PER COMMON SHARE DATA........................... 15
Comparative Per Share Data of PeopleSoft and J.D.
Edwards................................................ 15
COMPARATIVE PER SHARE MARKET PRICE DATA..................... 17
RISK FACTORS................................................ 18
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS... 27
INFORMATION ABOUT PEOPLESOFT, INC........................... 28
Recent Developments....................................... 28
INFORMATION ABOUT J.D. EDWARDS & COMPANY.................... 32
Recent Developments....................................... 32
THE OFFER AND THE MERGER.................................... 34
PEOPLESOFT'S REASONS FOR THE OFFER AND THE MERGER........... 35
Opinion of PeopleSoft's Financial Advisor................. 37
J.D. EDWARDS' REASONS FOR THE OFFER AND THE MERGER.......... 44
Opinion of J.D. Edwards' Financial Advisor................ 47
BACKGROUND OF THE OFFER AND THE MERGER...................... 56
Interests of Certain Persons in the Merger................ 61
THE OFFER................................................... 65
Stockholders List......................................... 66
Timing of Our Offer....................................... 66
Extension, Termination and Amendment...................... 66
Making the Election....................................... 67
Exchange of J.D. Edwards Common Stock; Delivery of Cash
and PeopleSoft Common Stock............................ 67
The Proration Rules....................................... 68
Unvested Restricted Stock................................. 72
Cash Instead of Fractional Shares of PeopleSoft Common
Stock.................................................. 73
Procedures for Tendering.................................. 73
Withdrawal Rights......................................... 74
Guaranteed Delivery....................................... 75
Purpose of Our Offer; The Merger; Appraisal Rights........ 76
Conditions of Our Offer................................... 80
Regulatory Clearances and Approvals....................... 82
Certain Effects of Our Offer and the Merger............... 82
Fees and Expenses......................................... 84
Accounting Treatment of the Transactions.................. 85
Material Federal Income Tax Consequences.................. 85
</Table>
<Table>
<Caption>
PAGE
----
THE MERGER AGREEMENT........................................ 89
The Agreement............................................. 89
The Offer................................................. 89
The Merger................................................ 90
Effective Time and Timing of Closing...................... 91
The Second Merger......................................... 91
The Alternative Double Merger............................. 91
What J.D. Edwards Stockholders Will Receive in the
Merger................................................. 92
Treatment of J.D. Edwards Stock Options................... 93
Representations and Warranties............................ 93
Conduct of Business Pending the Merger.................... 95
Preparation of Registration Statement and Prospectus and
Offer Documents........................................ 98
Offers for Alternative Transactions....................... 99
J.D. Edwards Board of Directors' Recommendation........... 100
Indemnification and Insurance............................. 101
Employee Benefits......................................... 102
J.D. Edwards Stockholder Rights Plan...................... 102
Other Covenants........................................... 102
Conditions to Completion of the Merger.................... 104
Termination............................................... 104
Termination Fee........................................... 105
Amendment and Waiver...................................... 106
Costs and Expenses........................................ 106
AGREEMENTS RELATED TO THE MERGER............................ 107
J.D. Edwards Stockholder Voting Agreements................ 107
PeopleSoft Stockholder Voting Agreements.................. 107
J.D. Edwards Affiliate Agreements......................... 108
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF PEOPLESOFT
AND COMMON STOCKHOLDERS OF J.D. EDWARDS................... 109
Capitalization............................................ 109
Common Stock.............................................. 109
Preferred Stock........................................... 110
Number, Election, Vacancy and Removal of Directors........ 111
Amendments to Charter and By-Laws......................... 111
Stockholder Action........................................ 112
Stockholder Proposals..................................... 112
Special Stockholder Meetings.............................. 113
Limitation of Personal Liability of Directors and
Indemnification........................................ 114
Anti-Takeover Provisions.................................. 115
Rights Plan............................................... 116
Appraisal Rights.......................................... 119
</Table>
ii
<Table>
<Caption>
PAGE
----
ADDITIONAL INFORMATION...................................... 120
Legal Matters............................................. 120
Experts................................................... 120
Where You Can Find Additional Information................. 120
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS................................................ 123
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS...................................... 127
APPENDIX A -- Amended and Restated Agreement and Plan of
Merger and Reorganization................................. A-1
APPENDIX B -- Section 262 of the Delaware General
Corporation Law........................................... B-1
APPENDIX C -- Opinion of PeopleSoft's Financial Advisor,
Citigroup Global Markets, Inc............................. C-1
APPENDIX D -- Opinion of J.D. Edwards' Financial Advisor,
Morgan Stanley & Co. Incorporated......................... D-1
APPENDIX E -- Directors and Executive Officers of
PeopleSoft, Inc. and Jersey Acquisition Corporation....... E-1
</Table>
iii
SUMMARY
This brief summary highlights selected information from this document. It
does not contain all of the information that is important to you. We urge you to
read carefully this entire prospectus and the other documents referred to and
incorporated by reference in this prospectus to fully understand the offer. IN
PARTICULAR, YOU SHOULD READ THE DOCUMENTS ATTACHED TO THIS PROSPECTUS, INCLUDING
THE MERGER AGREEMENT, WHICH IS ATTACHED AS APPENDIX A, SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW, WHICH IS ATTACHED AS APPENDIX B, THE OPINION
OF CITIGROUP GLOBAL MARKETS, PEOPLESOFT'S FINANCIAL ADVISOR, WHICH IS ATTACHED
AS APPENDIX C, THE OPINION OF MORGAN STANLEY & CO. INCORPORATED, J.D. EDWARDS'
FINANCIAL ADVISOR, WHICH IS ATTACHED AS APPENDIX D, AND THE FORMS OF IRREVOCABLE
PROXY AND VOTING AGREEMENT ENTERED INTO IN CONNECTION WITH THE ORIGINAL MERGER
AGREEMENT, WHICH ARE ATTACHED AS EXHIBITS C AND D TO THE MERGER AGREEMENT. For a
guide as to where you can obtain more information on PeopleSoft and J.D.
Edwards, see "Additional Information -- Where You Can Find Additional
Information".
THE OFFER (PAGES 34 AND 65)
PeopleSoft, J.D. Edwards and Jersey Acquisition entered into an Agreement
and Plan of Merger on June 1, 2003, which we refer to as the original merger
agreement. The parties agreed to amend and restate the original merger agreement
to provide for the offer. On June 16, 2003, PeopleSoft, J.D. Edwards and Jersey
Acquisition entered into the Amended and Restated Agreement and Plan of Merger
and Reorganization, which we refer to as the merger agreement. We are making the
offer pursuant to the merger agreement. The merger agreement is attached to this
prospectus as Appendix A.
We propose to acquire J.D. Edwards. We are offering to exchange cash and a
fraction of a share of our common stock for each of your shares of J.D. Edwards
common stock, including the associated stock purchase right pursuant to J.D.
Edwards' rights agreement, validly tendered and not properly withdrawn. You may
make an election to receive the offer consideration all in cash or all in stock.
In exchange for each J.D. Edwards share, you may receive cash, a fraction of a
share of our common stock, or a combination of cash and stock, in each case
having a value of $7.05 plus 0.43 of a share of PeopleSoft common stock,
allocated by prorating the cash and shares available in the offer among the
elections made. If you tender but do not make an election to receive the offer
consideration all in cash or stock, you will receive an allocation of the
remaining cash or stock, or a combination of cash and stock, after allocating
the cash and stock among the elections made in the offer, in each case having a
value of $7.05 plus 0.43 of a share of PeopleSoft common stock. The cash and/or
shares of our common stock that you will receive in exchange for your shares of
J.D. Edwards common stock in the offer will be allocated in accordance with the
election and proration procedures described later in this prospectus.
If you have a preference for receiving cash or shares of our common stock
in exchange for your shares of J.D. Edwards common stock, indicate your
preference when you complete the letter of transmittal. The certificates
representing your shares of J.D. Edwards common stock must accompany the letter
of transmittal in accordance with the instructions therein.
If you receive shares of our common stock in the offer, you will not
receive any fractional shares of our common stock. Instead, you will receive
cash in an amount equal to the market value, determined on the first date on
which J.D. Edwards common stock is accepted in the offer, of any fractional
share you would otherwise have been entitled to receive.
THE MERGER (PAGES 34 AND 89)
We intend, promptly after completion of the offer, for Jersey Acquisition,
our wholly-owned subsidiary, to merge with and into J.D. Edwards. Each share of
J.D. Edwards common stock which has not been exchanged or accepted for exchange
in the offer will be converted in the merger into $7.05 plus 0.43 of a share of
our common stock, without interest, unless you choose to demand appraisal. After
this merger, J.D. Edwards will be merged with and into PeopleSoft or a direct
wholly-owned subsidiary of PeopleSoft in the second merger. In certain
circumstances the offer and the merger would be effected by means of the
alternative double merger structure described in
1
"The Merger Agreement -- The Alternative Double Merger".
We hope to complete the offer and the merger in the third quarter of 2003.
If we acquire 90% or more of the J.D. Edwards common stock in the offer, we
expect to complete the merger shortly after we complete the offer. If we acquire
at least a majority but less than 90% of the shares in the offer, then the first
merger will require J.D. Edwards stockholder approval, and we will complete the
first merger shortly after a special meeting of J.D. Edwards stockholders to
approve the merger or after the J.D. Edwards stockholders act by written consent
to approve the merger, which approval may be obtained by providing our consent
as the majority stockholder of J.D. Edwards. We must also obtain regulatory
clearances prior to completion of the offer and the merger.
We will assume outstanding J.D. Edwards options in the merger. Each option
for a share of J.D. Edwards common stock will become exerciseable for $7.05 plus
0.43 of a share of PeopleSoft common stock. In connection with the merger, J.D.
Edwards stockholders have a right under Delaware law to demand appraisal of
their J.D. Edwards common stock.
THE COMPANIES (PAGES 28 AND 32)
PEOPLESOFT, INC.
4460 Hacienda Drive
Pleasanton, California 94588-8618
(925) 225-3000
We design, develop, market and support a family of enterprise application
software products for use by large and medium-sized organizations worldwide.
These organizations include corporations, educational institutions and national,
state, provincial and local government agencies. We provide enterprise
application software for customer relationship management, human capital
management, financial management and supply chain management, along with a range
of industry-specific products. Within each application suite, we offer embedded
analytics and portal applications. In addition, we offer a suite of products for
application integration and analytic capability, including portal applications,
an integration broker and enterprise warehouse products. Our applications offer
a high degree of flexibility, rapid implementation and scalability across
multiple databases and operating systems. In addition to enterprise application
software, we offer a variety of consulting and training services to our
customers focused on implementing, optimizing and upgrading our software. Today
more than 5,100 organizations in 140 countries run our applications.
Incorporated in Delaware in 1987, we had approximately 8,000 employees
worldwide at May 31, 2003. We had revenues of $1.95 billion for the fiscal year
ended December 31, 2002 and revenues of $460 million for the three months ended
March 31, 2003.
Our common stock is traded on the Nasdaq National Market (symbol: PSFT).
J.D. EDWARDS & COMPANY
One Technology Way
Denver, Colorado 80237
(303) 334-4000
J.D. Edwards develops and markets collaborative enterprise software and
provides consulting, education, and support services to organizations worldwide.
J.D. Edwards' Web-enabled applications are designed to help large and
medium-sized businesses improve their performance. These applications help
customers integrate various aspects of their businesses-from managing
relationships with suppliers, employees, and customers to processing
transactions and analyzing internal business information. Product lines include
enterprise resource planning, customer relationship management, supply chain
management, supplier relationship management, business intelligence, tools and
technology, and collaboration and integration. Customers are in a variety of
industries including manufacturing and distribution, asset-intensive, and
project and service industries. Customers can operate the software on a variety
of computing platforms and databases. J.D. Edwards' consultants use a flexible
implementation methodology and tools to help customers adapt J.D. Edwards'
applications to their operations.
Founded in 1977 as a Colorado corporation and reincorporated in Delaware in
1997, J.D. Edwards develops software that is used by approximately 6,700
mid-market and large customers in more than 110 countries. J.D. Edwards had
nearly 5,000 employees as of April 30, 2003. J.D. Edwards had revenues of $904.5
million for the fiscal year ended October 31, 2002 and
2
revenues of $203.5 million for the three months ended April 30, 2003.
J.D. Edwards common stock is traded on the Nasdaq National Market (symbol:
JDEC).
JERSEY ACQUISITION CORPORATION
4460 Hacienda Drive
Pleasanton, California 94588-8618
(925) 225-3000
Jersey Acquisition is a wholly-owned subsidiary of PeopleSoft recently
formed solely for the purpose of effecting the offer and the merger. It has no
business operations.
RECENT DEVELOPMENTS (PAGES 28 AND 32)
On June 9, 2003, Oracle Corporation commenced a tender offer to purchase
all of our outstanding shares for $16.00 per share which we refer to as the
Oracle Offer. On June 18, 2003, Oracle announced that it had amended its offer
by increasing the purchase price to $19.50 per share. Our board of directors
unanimously rejected both the original offer and amended offer. On June 18,
2003, Oracle also filed a lawsuit against PeopleSoft, the members of its Board
of Directors and J.D. Edwards in the Delaware Chancery Court. Oracle seeks
injunctive, declaratory and rescissory relief. The parties are scheduled to
confer with the court on July 25, 2003 about further scheduling a hearing date,
if necessary. PeopleSoft is therefore not currently prevented from closing the
offer or the merger prior to July 25, 2003 if the respective regulatory and
other conditions are met.
CONDITIONS OF OUR OFFER (PAGE 80)
Our obligation to pay cash and exchange shares of our common stock for J.D.
Edwards shares pursuant to the offer is subject to several conditions, including
among others:
- no law or court order prohibiting or restricting the completion of the
offer or the merger;
- any necessary governmental approvals or requirements having been obtained
or complied with, except where the failure to obtain the approvals would
not have a material adverse effect on us or J.D. Edwards;
- the absence of any obligation on the part of PeopleSoft to sell or to
divest any of its assets or business or to restrict any business
operations to comply with law (including any antitrust or related
requirements regarding the offer), and the absence of any prohibition
against PeopleSoft owning any portion of J.D. Edwards' business or
assets;
- at least a majority of the outstanding J.D. Edwards common stock, on a
modified fully diluted basis, having been validly tendered and not
properly withdrawn;
- waiting periods under applicable antitrust laws having expired or been
terminated;
- the registration statement of which this prospectus is a part having been
declared effective by the SEC;
- J.D. Edwards and PeopleSoft not having breached any representation or
warranty in a manner that would, individually or in the aggregate, have a
material adverse effect on J.D. Edwards or PeopleSoft, as applicable;
- the receipt by PeopleSoft and J.D. Edwards of tax opinions from legal
counsel to the effect that the offer, together with related transactions,
will constitute a reorganization under Section 368(a) of the Internal
Revenue Code, which we refer to as the Code, and/or an exchange under
Section 351 of the Code;
- the shares of our common stock to be issued in the offer being approved
for listing on the Nasdaq National Market;
- J.D. Edwards and PeopleSoft having complied with their respective
covenants and obligations in the merger agreement in all material
respects; and
- no material adverse effect on us or J.D. Edwards (excluding changes
arising from or in connection with, among other things, the Oracle
Offer).
In addition, we may not complete the offer if we have received notice from J.D.
Edwards (that has not been waived or withdrawn) that certain conditions,
including some of the conditions above, as are more fully set forth in this
prospec-
3
tus, have occurred or are continuing at the scheduled expiration of the offer.
TIMING OF OUR OFFER (PAGE 66)
Effectiveness of the registration statement is not necessary for the offer
to commence. The SEC rules permit exchange offers to begin before the related
registration statement has become effective, and we are taking advantage of
those rules with the goal of acquiring J.D. Edwards as quickly as possible. We
cannot, however, accept for exchange any shares tendered in the offer until our
registration statement is declared effective by the SEC and the other conditions
to our offer have been satisfied or, where permissible, waived. The offer will
commence when we mail this prospectus and the related letter of transmittal to
J.D. Edwards stockholders.
Our offer is currently scheduled to expire on July 17, 2003; however, we
will extend our offer from time to time in accordance with the merger agreement
as necessary until all the conditions to the offer have been satisfied or, where
permissible, waived. See "The Offer -- Extension, Termination and Amendment".
EXTENSION, TERMINATION AND AMENDMENT (PAGE 66)
If the conditions to the offer are not satisfied or waived on any scheduled
expiration date of the offer, we will extend the offer at any time for the
shortest time periods we reasonably believe are necessary; provided, that (1) no
single extension may exceed ten business days and (2) we will not be required to
extend the offer beyond November 30, 2003 (which shall be extended to February
28, 2004 in certain circumstances).
During any such extension, all J.D. Edwards common stock previously
tendered and not properly withdrawn will remain subject to the offer, subject to
your right to withdraw your J.D. Edwards common stock.
We reserve the right, in our sole discretion, subject to the provisions of
the merger agreement, at any time or from time to time, to extend the offer for
one or more periods of not more than ten business days as required by any rule
or regulation of the SEC applicable to the offer.
Without the prior written consent of J.D. Edwards, we may not decrease the
total value of the consideration to be paid per share in the offer, change the
form of consideration to be paid, decrease the number of shares of J.D. Edwards
common stock sought in the offer, amend the conditions of the offer set forth in
the merger agreement, impose conditions to the offer in addition to those set
forth in the merger agreement or otherwise amend any material term of the offer
in a manner adverse to the J.D. Edwards stockholders.
We will follow any extension, termination, amendment or delay, as promptly
as practicable, with a public announcement. In the case of an extension, any
such announcement will be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date. Subject to
applicable law, including Rules 14d-4(d) and 14d-6(c) under the Securities
Exchange Act of 1934, or the Exchange Act, which require that any material
change in the information published, sent or given to stockholders in connection
with the offer be promptly sent to stockholders in a manner reasonably designed
to inform stockholders of such change, and without limiting the manner in which
we may choose to make any public announcement, we assume no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
EXCHANGE OF SHARES; DELIVERY OF CASH AND PEOPLESOFT COMMON STOCK (PAGE 67)
On the terms and subject to the conditions of the offer, we will accept for
payment and will pay cash, our common stock or a combination of both for all
J.D. Edwards common stock validly tendered and not properly withdrawn as soon as
we are legally permitted to do so.
WITHDRAWAL RIGHTS (PAGE 74)
Your tender of J.D. Edwards common stock pursuant to the offer is
irrevocable except that J.D. Edwards common stock tendered in the offer may be
withdrawn at any time prior to the expiration and, unless we previously accepted
and paid for your stock pursuant to the offer, may also be withdrawn at any time
after August 18, 2003.
4
PROCEDURE FOR TENDERING SHARES (PAGE 73)
For you to validly tender J.D. Edwards common stock pursuant to our offer,
you must either (a) send a letter of transmittal with your shares or other
documents to the exchange agent, or (b) follow the procedures for guaranteed
delivery. The letter of transmittal or a manually executed facsimile of that
document must be properly completed and duly executed, along with any required
signature guarantees, or an agent's message in connection with a book-entry
transfer, which is explained below, and any other required documents, must be
transmitted to and received by the exchange agent at one of its addresses set
forth on the back cover of this prospectus, and certificates for tendered J.D.
Edwards common stock must be received by the exchange agent at such address, or
the J.D. Edwards common stock must be tendered pursuant to the procedures for
book-entry tender set forth in "The Offer" and a confirmation of receipt of such
tender must be received, in each case before the expiration date. If you are
unable to comply with the requirements for a letter of transmittal, you must
follow the guaranteed delivery procedures set forth in "The Offer -- Guaranteed
Delivery".
APPROVAL OF THE MERGER (PAGE 76)
If at the end of the offer we have received at least a majority on a
modified fully diluted basis, but less than 90%, of the outstanding J.D. Edwards
common stock, we will acquire the remaining outstanding J.D. Edwards stock by
effecting a long-form merger as permitted under Delaware law. This would require
notice to and approval by the J.D. Edwards stockholders, which approval may be
obtained by providing our consent as the majority stockholder of J.D. Edwards.
If at the end of the offer, however, we have received 90% or more of the
then-outstanding J.D. Edwards common stock, we will effect a short-form merger
as permitted under Delaware law, which would not require approval by any other
J.D. Edwards stockholders.
APPRAISAL RIGHTS (PAGES 77 AND 119)
Holders of J.D. Edwards common stock will not be entitled to appraisal
rights in connection with the offer. They will be entitled to such rights in
connection with the merger following completion of the offer under Section 262
of the General Corporation Law of the State of Delaware. The requirements and
procedures for exercising appraisal rights are described in detail in the
section of this prospectus captioned "The Offer --Purpose of Our Offer; the
Merger; Appraisal Rights" beginning on page 76. A copy of the appraisal rights
provisions of the Delaware statute is attached as Appendix B to this prospectus.
Holders of PeopleSoft common stock are not entitled to appraisal rights in
connection with the merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE 17)
Shares of our common stock are listed on the Nasdaq National Market. On May
30, 2003, the last trading day before PeopleSoft and J.D. Edwards announced the
original merger agreement, our common stock closed at $16.39 per share. Shares
of J.D. Edwards common stock are listed on the Nasdaq National Market. On May
30, 2003, J.D. Edwards common stock closed at $11.81 per share. On June 13,
2003, the last trading day before the merger agreement was entered into and
announced, our common stock closed at $16.92 per share and J.D. Edwards common
stock closed at $13.04 per share. On July 11, 2003, the date of this prospectus,
our common stock closed at $17.84 per share, and J.D. Edwards common stock
closed at $14.54 per share. We urge you to obtain current market quotations.
Since all or a portion of each share of J.D. Edwards common stock accepted
in the offer may be exchanged for shares of our common stock, you should
consider our financial condition before you decide to become one of our
stockholders through the offer. In considering our financial condition, you
should review the documents incorporated by reference in this prospectus because
they contain detailed business, financial and other information about us.
OWNERSHIP OF THE COMBINED COMPANY AFTER THE MERGER
Based on the maximum number of shares to be issued in the offer and the
merger, as of the last trading day prior to entering into the merger agreement,
the number of shares of our common stock that may be issued to J.D. Edwards
stock-
5
holders in the offer and the merger will constitute up to approximately 14.2% of
the outstanding common stock of the combined company after the merger on a fully
diluted basis.
CONDITIONS TO THE COMPLETION OF THE MERGER (PAGE 103)
We will complete the merger when all of the conditions to completion of the
merger are satisfied or waived. The obligation of PeopleSoft and Jersey
Acquisition or J.D. Edwards to complete the merger depends on the satisfaction
or waiver of a number of conditions, including, but not limited to, the
following:
- if required by law or by J.D. Edwards' certificate of incorporation, J.D.
Edwards stockholder approval of the merger and merger agreement;
- the absence of any law, injunction or other order issued by a court that
has the effect of restricting or otherwise prohibiting the merger;
- the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, referred to as the
HSR Act, and any other material antitrust laws;
- giving, obtaining or complying with any other necessary governmental or
regulatory notices, approvals or other requirements the absence of which
would have a material adverse effect; and
- the purchase by us of the validly tendered shares of J.D. Edwards common
stock pursuant to the offer.
Where the law permits, either party may choose to waive any of the
conditions.
TERMINATION OF THE MERGER AGREEMENT (PAGE 104)
PeopleSoft, J.D. Edwards and Jersey Acquisition may terminate the merger
agreement by mutual written consent.
Either PeopleSoft and Jersey Acquisition or J.D. Edwards may terminate the
merger agreement, subject to various conditions, if:
- any governmental entity or court issues a nonappealable final order
permanently restraining, enjoining or otherwise prohibiting the offer or
the merger;
- the offer has expired, terminated or been withdrawn without any J.D.
Edwards shares being purchased, and the terminating party's failure to
perform any of its obligations under the merger agreement is not a
principal reason for the failure of PeopleSoft or Jersey Acquisition to
purchase the shares; or
- the offer is not consummated on or before November 30, 2003, which date
will be extended to February 28, 2004 in certain circumstances, and the
failure of the offer to be consummated by such date is not due to the
terminating party's failure to perform any of its obligations under the
merger agreement.
J.D. Edwards may terminate the merger agreement if:
- PeopleSoft, Jersey Acquisition or one of their affiliates fails to
commence the offer on or before the tenth business day following the date
of the initial public announcement of the offer, and J.D. Edwards is not
in breach of certain of its obligations under the merger agreement in a
manner that affects PeopleSoft's or Jersey Acquisition's ability to
commence the offer;
- PeopleSoft or Jersey Acquisition breaches any of its representations or
warranties in the merger agreement, or such representations and
warranties have become untrue, in such a manner that PeopleSoft or Jersey
Acquisition would be incapable of satisfying the condition to the offer
relating to the accuracy of its representations and warranties by
November 30, 2003, which date will be extended to February 28, 2004 in
certain circumstances;
- PeopleSoft or Jersey Acquisition breaches any of its covenants or
obligations contained in the merger agreement in a manner that has a
material adverse effect
6
on us or materially adversely affects or materially delays the completion
of the offer or the merger, and the breach has not been cured within 20
business days after receipt by PeopleSoft or Jersey Acquisition of
written notice of the breach; or
- on a scheduled expiration date, (i) the board of J.D. Edwards shall have
changed its recommendation that the J.D. Edwards stockholders accept the
offer, tender their shares and adopt the merger agreement and the merger
because of a superior proposal and (ii) a majority of the outstanding
J.D. Edwards common stock, on a modified fully diluted basis, shall not
have been validly tendered; provided that (A) the failure of J.D. Edwards
to fulfill its obligations under the merger agreement shall not have been
a principal reason that a majority of the outstanding J.D. Edwards common
stock, on a modified fully diluted basis, shall not have been validly
tendered and (B) J.D. Edwards shall have permitted PeopleSoft to effect
certain extensions of the offer.
PeopleSoft and Jersey Acquisition may terminate the merger agreement if:
- J.D. Edwards breaches any of its representations or warranties in the
merger agreement, or such representations and warranties have become
untrue, in such a manner that it would be incapable of satisfying the
condition to the offer relating to the accuracy of its representations
and warranties by November 30, 2003, which date will be extended to
February 28, 2004 in certain circumstances;
- J.D. Edwards breaches any of its covenants or obligations contained in
the merger agreement in a manner that has a material adverse effect on
J.D. Edwards or materially adversely affects or materially delays the
completion of the offer or the merger, and such breach has not been cured
within 20 business days after receipt by J.D. Edwards of written notice
of the breach;
- prior to the date of acceptance of shares of J.D. Edwards stock pursuant
to the offer, the J.D. Edwards board of directors withdraws, modifies or
fails to make or reconfirm its recommendation to the J.D. Edwards
stockholders that they accept the offer, tender their shares of J.D.
Edwards common stock to Jersey Acquisition and approve the merger
agreement and the merger; or
- J.D. Edwards willfully and materially breaches its non-solicitation
provisions in the merger agreement.
TERMINATION FEES (PAGE 105)
Termination of the offer or the merger under specified circumstances could
result in J.D. Edwards being required to pay us a termination fee in the amount
of $57 million. Under certain other circumstances, J.D. Edwards or PeopleSoft
may be required to pay the other party $5 million as reimbursement for costs and
expenses incurred in connection with the offer or the merger if the merger
agreement is terminated.
RESTRICTION ON SOLICITATION OF ALTERNATIVE PROPOSALS (PAGE 99)
J.D. Edwards has agreed that it will not solicit or encourage the
initiation of any inquiries regarding any acquisition proposals by third
parties. J.D. Edwards may respond to unsolicited superior acquisition proposals
if required by the J.D. Edwards board of directors' fiduciary duties. J.D.
Edwards must promptly notify us if J.D. Edwards receives any other acquisition
proposals.
PEOPLESOFT'S REASONS FOR THE OFFER AND THE MERGER (PAGE 35)
Our board of directors has unanimously approved the offer, the merger
agreement and the merger for the reasons set forth under the caption
"PeopleSoft's Reasons for the Offer and the Merger".
J.D. EDWARDS BOARD RECOMMENDATION (PAGE 100)
The J.D. Edwards board of directors unanimously approved the merger
agreement and recommends that J.D. Edwards stockholders accept the offer, tender
their shares in the offer and approve the merger agreement and the merger.
7
J.D. EDWARDS' REASONS FOR THE OFFER AND THE MERGER (PAGE 44)
The J.D. Edwards board of directors has approved the offer, the merger
agreement and the merger for the reasons set forth under the caption "J.D.
Edwards' Reasons for the Offer and the Merger".
MATERIAL FEDERAL INCOME TAX CONSEQUENCES (PAGE 85)
Completion of the proposed transactions is conditioned upon receipt of
opinions that the transactions will qualify as either a reorganization within
the meaning of Section 368(a) of the Code or a transaction governed by Section
351 of the Code. As a result of such qualification, the tax consequences of the
proposed transactions to the J.D. Edwards stockholders will be as follows:
- J.D. Edwards stockholders who exchange their shares of J.D. Edwards
common stock solely for cash will recognize gain or loss for federal
income tax purposes.
- J.D. Edwards stockholders who exchange their shares of J.D. Edwards
common stock and receive a combination of cash or shares of our common
stock may recognize gain, but not loss, in the exchange.
- J.D. Edwards stockholders who exchange their shares of J.D. Edwards stock
solely for shares of our common stock will not recognize gain or loss for
federal income tax purposes, other than gain or loss attributable to the
receipt of cash in lieu of fractional shares.
If we and J.D. Edwards do not receive opinions that the transactions will
qualify as a reorganization within Section 368(a) of the Code prior to our
acceptance of the shares of J.D. Edwards common stock pursuant to the offer,
then, subject to the receipt of tax opinions that the transactions are governed
by Section 351 of the Code, we will use a structure that we refer to as the
alternative double merger to effect our acquisition of J.D. Edwards. The
alternative double merger would preserve the economic and financial terms set
forth in the merger agreement and is intended to preserve the tax-free treatment
of the stock consideration to be issued in the offer and the merger. For a more
detailed discussion of the alternative double merger structure, see "The Merger
Agreement -- The Alternative Double Merger".
You should read the summary under the caption "The Offer -- Material
Federal Income Tax Consequences" for a more complete discussion of the federal
income tax consequences of the proposed transactions. You should also consult
your own tax advisor with respect to other tax consequences of the proposed
transactions or any special circumstances that may affect the tax treatment to
you of the cash or shares of our common stock that you receive pursuant to the
proposed transactions.
ACCOUNTING TREATMENT (PAGE 85)
We will use the purchase method of accounting for the offer and the merger
with J.D. Edwards under accounting principles generally accepted in the United
States of America.
MANAGEMENT AFTER THE MERGER (PAGES 61, 103 AND 111)
The composition of our current executive management is not expected to
change as a result of the merger, except that Michael J. Maples, a current
director of J.D. Edwards, will be appointed as a Class I director of PeopleSoft
and a member of the board's Corporate Governance/Nominating Committee.
Simultaneous with our entry into the original merger agreement, members of
J.D. Edwards current management signed employment agreements which include
certain incentives for them to remain at J.D. Edwards, as part of PeopleSoft,
after the merger.
CERTAIN EFFECTS OF THE OFFER AND THE MERGER (PAGE 82)
If the merger is completed, J.D. Edwards will no longer be publicly owned.
Even if the merger does not occur, if we purchase all the tendered shares, there
may be so few remaining J.D. Edwards stockholders and publicly held shares of
J.D. Edwards common stock that the J.D. Edwards common stock will no longer be
eligible for quotation on Nasdaq or other securities
8
markets. As a result, there may not be a public trading market for the shares
and J.D. Edwards may cease making filings with the SEC or otherwise cease to be
required to comply with SEC rules relating to publicly held companies.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 61)
Certain J.D. Edwards directors, officers and employee stockholders have
interests in the merger that are different from, or are in addition to, those of
other stockholders. These interests include: current and future employment
arrangements; retention payments upon the closing of the merger; certain
severance benefits; acceleration of the vesting period of certain stock options
held by J.D. Edwards employees if their employment is terminated after the
merger; the post-merger membership on our board of directors of one of the
current directors of J.D. Edwards; and the indemnification of J.D. Edwards
directors and officers against certain liabilities both before and after the
merger. In connection with the original merger agreement, certain amendments to
employment agreements and J.D. Edwards management change in control plan were
completed. The members of the boards of directors of J.D. Edwards and PeopleSoft
knew about these interests and considered them, among other matters, when they
approved the original merger agreement and the merger, and subsequently in
approving the merger agreement.
REGULATORY CLEARANCES AND APPROVALS (PAGE 82)
Our acceptance of the tendered shares of J.D. Edwards common stock in the
offer and completion of the merger is subject to the expiration or termination
of the waiting period under the HSR Act.
TRADING OF COMMON STOCK (PAGE 17)
Our common stock is traded on the Nasdaq National Market under the symbol
"PSFT". J.D. Edwards common stock is traded on the Nasdaq National Market under
the symbol "JDEC". The shares of our common stock issued in connection with the
offer and the merger will be listed on the Nasdaq National Market.
COMPARISON OF RIGHTS OF J.D. EDWARDS STOCKHOLDERS AND PEOPLESOFT STOCKHOLDERS
(PAGE 109)
After acceptance of the shares in the offer and the merger, J.D. Edwards
stockholders will become PeopleSoft stockholders and their rights as
stockholders will be governed by the PeopleSoft certificate of incorporation,
bylaws and rights plan. There are a number of differences between the PeopleSoft
certificate of incorporation, bylaws and rights plan and the J.D. Edwards
certificate of incorporation, bylaws and rights plan described in detail in the
section entitled "Comparison of Rights of Common Stockholders of PeopleSoft and
Common Stockholders of J.D. Edwards".
RISK FACTORS (PAGE 18)
In evaluating whether to tender your shares of J.D. Edwards common stock
pursuant to the offer, you should carefully read this prospectus and, in
particular, you should consider the factors discussed in the section entitled
"Risk Factors" beginning on page 18.
9
SUMMARY SELECTED FINANCIAL DATA
The information in the following tables is based on the PeopleSoft and J.D.
Edwards historical financial information that PeopleSoft and J.D. Edwards have
presented in their prior Securities and Exchange Commission filings which are
incorporated by reference into this prospectus. You should read the selected
financial information in the following tables in connection with the historical
financial information. See "Additional Information -- Where You Can Find
Additional Information".
Our fiscal year ends on December 31 and J.D. Edwards' fiscal year ends on
October 31. Our selected consolidated balance sheet data as of March 31, 2003
and the selected consolidated statement of operations data for the three months
ended March 31, 2003 and 2002 and J.D. Edwards' selected consolidated balance
sheet data as of April 30, 2003 and the selected consolidated statement of
operations data for the three and six-month periods ended April 30, 2003 and
2002 have been derived from unaudited financial statements which are
incorporated by reference in this prospectus and which were prepared in
accordance with accounting principles generally accepted in the United States of
America and with the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
disclosures required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management of PeopleSoft, as to PeopleSoft data presented, and in the opinion of
management of J.D. Edwards, as to the J.D. Edwards data presented, all
adjustments, consisting of normal recurring accruals necessary for a fair
presentation, are included. The results for interim periods presented are not
necessarily indicative of results for the full fiscal year or any future period.
Selected consolidated statement of operations data of J.D. Edwards for the three
months ended April 30, 2003 and 2002 are presented in the following tables in
order to provide for a better comparison to the results of operations of
PeopleSoft's three months ended March 31, 2003 and 2002. Our selected
consolidated balance sheet data as of December 31, 2002 and 2001 and the
selected consolidated statement of operations data for the fiscal years ended
December 31, 2002, 2001 and 2000 and J.D. Edwards' selected consolidated balance
sheet data as of October 31, 2002 and 2001 and the selected consolidated
statement of operations data for the fiscal years ended October 31, 2002, 2001
and 2000 have been derived from audited financial statements incorporated by
reference in this prospectus. Our selected consolidated balance sheet data as of
December 31, 2000, 1999 and 1998 and the selected consolidated statement of
operations data for the fiscal years ended December 31, 1999 and 1998 and J.D.
Edwards' selected consolidated balance sheet data as of October 31, 2000, 1999
and 1998 and the selected consolidated statement of operations data for the
fiscal years ended October 31, 1999 and 1998 have been derived from audited
financial statements not incorporated by reference in this prospectus.
Our audited historical financial statements for the year ended December 31,
2002 were audited by KPMG LLP, independent auditors, and for the years ended
December 31, 2001 and 2000 were audited by Arthur Andersen LLP, independent
auditors, and for the years ended December 31, 1999 and 1998 were audited by
Ernst & Young LLP, independent auditors. See "Additional
Information -- Experts".
J.D. Edwards' audited historical financial statements were audited by
PricewaterhouseCoopers LLP, independent accountants. See "Additional
Information -- Experts".
10
SUMMARY SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA(1)
PEOPLESOFT, INC.
<Table>
<Caption>
FOR THE YEAR FOR THE THREE MONTHS
ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------------------------- -----------------------
2002 2001 2000 1999 1998 2003 2002
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA
Revenues:
License fees........... $ 530,077 $ 645,421 $ 496,115 $ 339,676 $ 664,277 $ 80,841 $ 133,290
Services revenue(2).... 1,411,341 1,370,953 1,153,993 1,105,710 840,426 379,415 342,447
Development and other
services revenue..... 7,530 102,713 122,279 27,632 -- -- 7,530
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues....... $1,948,948 $2,119,087 $1,772,387 $1,473,018 $1,504,703 $ 460,256 $ 483,267
Operating income
(loss)................. $ 252,636 $ 251,972 $ 71,232 $ (238,573) $ 221,064 $ 51,783 $ 60,596
Net income (loss)........ $ 182,589 $ 191,554 $ 145,691 $ (177,765) $ 139,938 $ 38,479 $ 44,544
Diluted income (loss) per
share.................. $ 0.57 $ 0.59 $ 0.48 $ (0.67) $ 0.50 $ 0.12 $ 0.14
Shares used in diluted
per share
computation............ 320,310 323,625 302,916 263,914 281,059 319,831 325,865
</Table>
<Table>
<Caption>
AS OF DECEMBER 31, AS OF MARCH 31,
-------------------------------------------------------------- -----------------------
2002 2001 2000 1999 1998 2003 2002
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA
Working capital.......... $1,574,871 $1,253,202 $ 845,789 $ 607,213 $ 604,149 $1,594,919 $1,392,352
Total assets............. $2,848,563 $2,589,121 $2,024,393 $1,696,568 $1,623,525 $2,883,995 $2,666,928
Long-term obligations.... $ 21,486 $ 17,659 $ 82,623 $ 69,078 $ 69,299 $ 22,086 $ 21,331
Stockholders' equity..... $1,955,612 $1,591,940 $1,024,355 $ 764,619 $ 732,336 $2,034,724 $1,715,554
</Table>
NOTES:
(1) All prior period amounts have been restated to reflect the merger of The
Vantive Corporation with PeopleSoft in December 1999, which was accounted
for using the pooling of interests method of accounting.
(2) All prior period amounts for Services revenue have been restated to reflect
the adoption of Emerging Issues Task Force No. 01-14, "Income Statement
Characterization of Reimbursements Received for 'Out-of-Pocket' Expenses
Incurred," ("EITF 01-14"). EITF 01-14 requires companies to characterize
reimbursements received for out-of-pocket expenses incurred as revenue and
to reclassify prior period financial statements to conform to current year
presentation for comparative purposes.
11
SUMMARY SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
J.D. EDWARDS & COMPANY
<Table>
<Caption>
FOR THE YEAR ENDED OCTOBER 31,
-------------------------------------------------------
2002 2001 2000 1999 1998
-------- --------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA
Revenues:
License fees........................ $227,021 $ 271,869 $ 419,103 $312,817 $386,081
Services(1)......................... 677,436 622,399 603,911 663,043 578,061
-------- --------- ---------- -------- --------
Total revenues................... $904,457 $ 894,268 $1,023,014 $975,860 $964,142
Operating income (loss)(2)............ $ 27,166 $ (51,770) $ (59,511) $(67,221) $106,638
Net income (loss)(3).................. $ 46,193 $(179,753) $ (15,422) $(39,224) $ 74,468
Diluted income (loss) per share....... $ 0.38 $ (1.61) $ (0.14) $ (0.37) $ 0.68
Shares used in diluted income per
share computation................... 121,414 111,778 109,376 105,378 109,993
</Table>
<Table>
<Caption>
AS OF OCTOBER 31,
-------------------------------------------------------
2002 2001 2000 1999 1998
-------- --------- ---------- -------- --------
BALANCE SHEET DATA
Working capital(4).................... $179,180 $ 125,192 $ 157,654 $105,662 $171,378
Total assets.......................... $809,653 $ 661,132 $ 951,041 $940,528 $950,473
Long-term liabilities................. $ 12,271 $ 7,807 $ 11,352 $ 6,431 $ 27,546
Stockholders' equity.................. $441,885 $ 299,059 $ 470,998 $592,720 $583,996
</Table>
<Table>
<Caption>
FOR THE THREE FOR THE SIX
MONTHS ENDED APRIL 30, MONTHS ENDED APRIL 30,
----------------------- -----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA
Revenues:
License fees..................................... $ 43,551 $ 54,070 $ 90,393 $ 98,010
Services(1)...................................... 159,954 169,530 319,042 330,258
-------- -------- -------- --------
Total revenues................................ $203,505 $223,600 $409,435 $428,268
Operating income (loss)............................ $ (2,611) $ 3,513 $ 3,421 $ (1,765)
Net income (loss).................................. $ (393) $ 3,526 $ 6,109 $ (607)
Diluted income (loss) per share.................... $ (0.00) $ 0.03 $ 0.05 $ (0.01)
Shares used in diluted income per share
computation...................................... 120,780 122,723 122,524 117,532
</Table>
<Table>
<Caption>
AS OF APRIL 30,
-------------------
2003 2002
-------- --------
BALANCE SHEET DATA
Working capital(4)................................. $212,723 $132,294
Total assets....................................... $839,615 $765,389
Long-term liabilities.............................. $ 16,322 $ 6,527
Stockholders' equity............................... $475,990 $390,735
</Table>
See accompanying notes on page 13.
12
NOTES:
(1) In fiscal 2002, J.D. Edwards adopted Financial Accounting Standards Board
Emerging Issues Task Force, or EITF, Issue No. 01-14, "Income Statement
Characterization of Reimbursements Received for "Out-of Pocket" Expenses
Incurred". J.D. Edwards' results of operations for prior periods have been
reclassified to conform to the new presentation. In accordance with EITF
Issue No. 01-14, reimbursable expenses have been reflected in services
revenue and cost of services. This change had no effect on operating income
or net income or loss for any periods presented.
(2) J.D. Edwards' business acquisitions resulted in amortization of acquired
intangible assets and the write-off of in-process research and development
totaling $26.9 million, $27.4 million, $25.0 million and $35.6 million in
2002, 2001, 2000 and 1999, respectively. Additionally, during fiscal 2002
and 2001, J.D. Edwards wrote off $0.4 million and $2.5 million,
respectively, for the impairment of acquired workforce related to J.D.
Edwards' business acquisitions. Additionally, in fiscal 2001 and 2000, J.D.
Edwards' board of directors approved two separate global restructuring plans
resulting in charges to operations of approximately $25.6 million and $28.0
million, respectively.
(3) During fiscal 2001, J.D. Edwards recorded income tax expense of $131.4
million primarily as a result of providing a non-cash valuation allowance to
fully offset the net deferred tax asset at October 31, 2001. The deferred
tax benefit may still be used to the extent taxable income is generated in
future periods. During fiscal 2002, J.D. Edwards made an election to
carryback tax net operating losses to the past five prior years under a
recent Code amendment, which resulted in a one-time tax benefit of $18.6
million. Since fiscal 2001, J.D. Edwards' tax expense or benefit primarily
represents the effective tax rate based upon the estimated current local
taxes of J.D. Edwards' international subsidiaries in addition to current
U.S. state and local taxes for the full fiscal year.
(4) During the first quarter of fiscal 2002 and the fourth quarter of fiscal
2001, J.D. Edwards designated $19.4 million and $16.0 million, respectively
of existing collateral as restricted cash and cash equivalents under certain
of J.D. Edwards' lease agreements.
13
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following selected unaudited pro forma condensed combined financial
data combines our historical results for the quarter ended March 31, 2003 and
for the year ended December 31, 2002 with J.D. Edwards' historical results for
the quarter ended April 30, 2003 and the year ended October 31, 2002, giving
effect to the proposed merger under the purchase method of accounting as if it
had occurred as of January 1, 2002 for purposes of the statement of operations
and on March 31, 2003 for balance sheet purposes. Because of different fiscal
period ends, financial data for PeopleSoft as of and for the year ended December
31, 2002 has been combined with financial data for J.D. Edwards as of and for
the year ended October 31, 2002. The financial data for PeopleSoft as of and for
the three months ended March 31, 2003 has been combined with the financial data
for J.D. Edwards as of and for the three months ended April 30, 2003. The
following selected unaudited pro forma condensed combined financial data has
been derived from, and should be read in conjunction with, the "Unaudited Pro
Forma Condensed Combined Financial Statements" and related notes included in
this prospectus (see page 123). You should not rely on the selected unaudited
pro forma condensed combined financial information as being indicative of the
historical results that would have occurred had PeopleSoft and J.D. Edwards been
combined during these time periods or the future results that may be achieved
after the merger.
We expect to incur merger and restructuring costs as a result of combining
our companies, including direct transaction costs, such as investment banking,
legal and accounting fees, and expenses for certain restructuring costs
resulting from the merger. We also anticipate that the merger will provide the
combined company with financial benefits that include reduced operating
expenses. The pro forma Statement of Operations Data, while helpful in
illustrating the financial characteristics of the combined company under one set
of assumptions, does not reflect these expenses or benefits and, accordingly,
does not attempt to predict or suggest future results.
<Table>
<Caption>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, 2003 DECEMBER 31, 2002
------------------ -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA
Total revenues................................... $663,761 $2,853,405
Total costs and expenses......................... 635,022 2,659,520
Operating income................................. 28,739 193,885
Income before provision for income taxes......... 37,860 230,877
Provision for income taxes....................... 12,340 54,934
Net income....................................... 25,520 175,943
PER COMMON SHARE DATA
Basic income per share........................... $ 0.07 $ 0.49
Diluted income per share......................... 0.07 0.47
</Table>
<Table>
<Caption>
AS OF
MARCH 31, 2003
--------------
(IN THOUSANDS)
BALANCE SHEET DATA
Working capital............................................. $ 975,597
Total assets................................................ 4,323,716
Long-term obligations....................................... 26,013
Stockholders' equity........................................ 2,974,696
</Table>
14
COMPARATIVE PER COMMON SHARE DATA
The following table presents the per share information for PeopleSoft and
J.D. Edwards on a historical basis and on an unaudited pro forma combined basis.
The pro forma data gives effect to the merger using the purchase method of
accounting as described in "Unaudited Pro Forma Condensed Combined Financial
Statements" and accompanying notes. The pro forma information is presented as if
the merger was completed on January 1, 2002 for purposes of statement of
operations and on March 31, 2003 for balance sheet purposes. All pro forma
information in this prospectus is unaudited.
The historical book value per common share is computed by dividing
stockholders' equity by the number of shares of common stock outstanding at the
end of the period. The pro forma combined book value per common share is
computed by dividing pro forma stockholders' equity by the pro forma number of
shares of our common stock outstanding at the end of the period. Neither
PeopleSoft nor J.D. Edwards has declared or paid cash dividends on its common
stock.
The information in the following table is based on, and should be read
together with, the PeopleSoft and J.D. Edwards historical financial information
contained in prior Securities and Exchange Commission filings, which are
incorporated herein by reference, and the "Unaudited Pro Forma Condensed
Combined Financial Statements" and accompanying notes.
The unaudited pro forma combined net income per share and book value per
share data is presented for informational purposes only. You should not rely on
this pro forma combined data as being indicative of the consolidated results or
financial condition of PeopleSoft that would have been reported had the merger
been completed as of the dates presented, and you should not regard this data as
representative of the future consolidated results of operations or financial
condition of PeopleSoft.
COMPARATIVE PER SHARE DATA
OF PEOPLESOFT AND J.D. EDWARDS
<Table>
<Caption>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
2003 2002
--------------- ------------
PEOPLESOFT, INC.
HISTORICAL
Net income per common share -- basic........................ $0.12 $0.59
Net income per common share -- diluted...................... 0.12 0.57
Book value per common share at period end................... 6.43 6.23
PRO FORMA COMBINED PER SHARE
Basic net income per common share........................... 0.07 0.49
Diluted net income per common share......................... 0.07 0.47
Book value per common share at period end................... 8.07
</Table>
Historical book value per share for J.D. Edwards is computed by dividing total
stockholders' equity by the number of shares of J.D. Edwards common stock
outstanding at the end of each period. The shares used to compute the
"equivalent pro forma" information were obtained by multiplying the pro forma
combined amounts by the exchange ratio of 0.43 of a share of our common stock to
be issued for each share of J.D. Edwards common stock. Equivalent pro forma book
value per share is computed by dividing pro forma stockholders' equity by the
pro forma number of shares of our common stock outstanding at the end of the
period.
15
<Table>
<Caption>
THREE MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
2003 2002
--------------- -----------
J.D. EDWARDS & COMPANY
HISTORICAL
Net income per common share -- basic........................ $0.00 $0.39
Net income per common share -- diluted...................... 0.00 0.38
Book value per common share at period end................... 3.92 3.70
EQUIVALENT PRO FORMA
Basic net income per common share........................... $0.03 $0.21
Diluted net income per common share......................... 0.03 0.20
Book value per common share at period end................... 3.47
</Table>
16
COMPARATIVE PER SHARE MARKET PRICE DATA
Our common stock and J.D. Edwards common stock are both listed on the
Nasdaq National Market. Our ticker symbol is "PSFT" and J.D. Edwards' ticker
symbol is "JDEC". Our fiscal year ends on December 31. J.D. Edwards' fiscal year
ends on October 31. The following table shows, for the calendar quarters
indicated, based on published financial sources, the high and low sale prices of
shares of our and J.D. Edwards common stock as reported on the Nasdaq National
Market. See J.D. Edwards' annual report on Form 10-K for a presentation of
market price data relating to J.D. Edwards common stock on its fiscal quarter
basis. We urge you to consult publicly available sources for current price
quotations.
<Table>
<Caption>
PEOPLESOFT J.D. EDWARDS
COMMON STOCK COMMON STOCK
--------------- ---------------
HIGH LOW HIGH LOW
------ ------ ------ ------
2003
Third Quarter (through July 11, 2003)............ $18.00 $17.64 $14.60 $14.37
Second Quarter................................... $18.14 $14.55 $14.50 $11.06
First Quarter.................................... 21.71 15.24 14.00 11.03
2002
Fourth Quarter................................... $21.03 $12.07 $14.52 $ 8.55
Third Quarter.................................... 21.30 12.37 14.17 8.49
Second Quarter................................... 37.37 14.77 17.49 8.71
First Quarter.................................... 41.34 27.89 18.21 14.00
2001
Fourth Quarter................................... $42.55 $17.67 $16.64 $ 6.10
Third Quarter.................................... 47.76 17.96 14.07 6.72
Second Quarter................................... 49.23 21.56 14.14 6.89
First Quarter.................................... 52.88 19.00 19.13 8.63
</Table>
As of July 10, 2003, we had approximately 2,348 stockholders of record and J.D.
Edwards had approximately 1,129 stockholders of record.
RECENT CLOSING PRICES
The following table sets forth the closing prices per share of our common
stock and J.D. Edwards common stock, each as reported on the Nasdaq National
Market on May 30, 2003, the last full trading day prior to the announcement of
the original merger agreement, June 13, 2003, the last full trading day prior to
the announcement of the offer and the merger agreement, and July 11, 2003, the
date of this prospectus.
The following table also sets forth the equivalent price per share of J.D.
Edwards common stock, based on a cash consideration of $7.05 per share plus 0.43
multiplied by the closing price of PeopleSoft common stock on the dates shown
below.
<Table>
<Caption>
EQUIVALENT PER SHARE
PRICE OF J.D. EDWARDS
COMMON STOCK WITH
$7.05 IN CASH AND 0.43
PEOPLESOFT J.D. EDWARDS SHARE OF PEOPLESOFT
DATE COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------------- ------------ ------------------- ------------------------
May 30, 2003.................... $16.39 $11.81 $14.10
June 13, 2003................... $16.92 $13.04 $14.33
July 11, 2003................... $17.84 $14.54 $14.72
</Table>
The above tables show only historical and future hypothetical comparisons.
We urge you to obtain current stock price quotations for our and J.D. Edwards
common stock and to review carefully the other information contained in this
prospectus or incorporated by reference into this prospectus in deciding whether
to accept the offer. See the section entitled "Additional Information -- Where
You Can Find Additional Information".
17
RISK FACTORS
In considering whether to tender your shares of J.D. Edwards common stock
pursuant to the offer or to approve the merger, if necessary, you should
carefully consider the following factors, in addition to the other risk factors
incorporated by reference into this prospectus and the other information
contained or incorporated by reference in this prospectus and in the
accompanying Schedule 14D-9 of J.D. Edwards. See "Additional
Information -- Where You Can Find Additional Information" for where you can find
the additional risk factors and other information incorporated by reference.
RISK FACTORS RELATING TO THE OFFER AND THE MERGER
ORACLE CORPORATION'S TENDER OFFER TO PURCHASE ALL OF OUR OUTSTANDING COMMON
STOCK THREATENS TO DISRUPT OUR BUSINESS AND THAT OF J.D. EDWARDS, TO CREATE
DELAY AND UNCERTAINTY IN THE COMPLETION OF OUR OFFER AND MERGER AND TO
MATERIALLY ADVERSELY AFFECT EACH COMPANY'S OR THE COMBINED COMPANY'S OPERATIONS
AND RESULTS.
Oracle Corporation has commenced a cash tender offer, referred to as the
Oracle Offer, to purchase all of our outstanding common stock. The Oracle Offer
involves certain conditions and is accompanied by actions that may delay or
prevent altogether the completion of our offer and merger. At least one of the
conditions of the Oracle Offer will not be satisfied if the terms of the merger
agreement with J.D. Edwards are completed, including the condition against
issuing additional shares of our common stock. Furthermore, we believe that the
Oracle Offer raises significant antitrust concerns that could result in a
lengthy regulatory review process and protracted litigation. On June 30, 2003,
the Department of Justice requested additional information regarding antitrust
matters relating to Oracle's proposed acquisition of PeopleSoft, known as a
"second request". The combination of these factors could cause significant delay
and raise uncertainty about our ability to complete the offer and our merger
with J.D. Edwards. Such delay and uncertainty could have a material adverse
effect on PeopleSoft's and J.D. Edwards' financial condition and operating
results.
Oracle's initial statements that we interpreted to mean that Oracle's
intent was to discontinue the development, sale and support of PeopleSoft
products if the Oracle Offer is successful have adversely impacted and may
continue to adversely impact both our and J.D. Edwards' ability to attract new
customers and have caused and could continue to cause potential or current
customers to defer purchases or to cancel existing orders. Oracle's recent
statements that it would continue to sell and support PeopleSoft products for
some time has resulted in additional confusion for our customers. Moreover, as a
result of the Oracle Offer, certain of our and J.D. Edwards' suppliers,
distributors, and other business partners may seek to change or terminate their
relationships with either company. These actions may adversely affect
PeopleSoft's and J.D. Edwards' respective financial conditions and results of
operations.
As a consequence of the uncertainty surrounding their roles and the
companies' futures, our key employees and those of J.D. Edwards may seek other
employment opportunities. Moreover, the companies' ability to attract and retain
new key management, sales, marketing and technical personnel could be harmed. If
key employees leave as a result of the Oracle Offer, or the companies are unable
to attract or retain qualified personnel, there could be a material adverse
effect on the business and the results of operations for PeopleSoft and J.D.
Edwards.
Responding to the Oracle Offer and Oracle's other efforts to stop the offer
and the merger with J.D. Edwards could be a major distraction for management of
both PeopleSoft and J.D. Edwards and require both companies to incur significant
costs. Management distraction created by the Oracle Offer may also adversely
impact our ability to successfully plan the integration of the combined company.
This distraction could adversely affect our and J.D. Edward's business and
results of operations and could negatively affect the results of the combined
company.
18
THE CONSIDERATION J.D. EDWARDS STOCKHOLDERS RECEIVE IN THE OFFER AND THE MERGER
MAY BE AFFECTED BY THE ORACLE OFFER.
J.D. Edwards stockholders cannot be certain of the form of consideration
they will receive in the offer and the merger. If Oracle succeeds in its
acquisition of PeopleSoft using cash consideration and the proposed business
combination with J.D. Edwards is completed, the consideration paid to J.D.
Edwards stockholders in the offer and the merger will consist of cash in lieu of
the portion of the offer and merger consideration which consists of PeopleSoft
common stock, with a value dependent upon the price paid by Oracle for all
outstanding shares of our common stock. If Oracle succeeds in completing the
Oracle Offer but does not acquire the remaining shares of PeopleSoft common
stock in a merger, then the PeopleSoft stock received by J.D. Edwards
stockholders in the offer and the merger will consist of stock of uncertain
value. Similarly, if PeopleSoft were acquired by another third party, the
portion of the offer and merger consideration represented by shares of
PeopleSoft common stock would consist of the consideration (cash, acquiror stock
or both) paid to PeopleSoft stockholders.
CHANGES IN THE MARKET VALUE OF OUR COMMON STOCK MAY ADVERSELY AFFECT THE VALUE
OF CONSIDERATION THAT YOU RECEIVE FOR YOUR SHARES OF J.D. EDWARDS COMMON
STOCK.
In the offer, J.D. Edwards stockholders will receive cash, a fraction of a
share of PeopleSoft common stock or a combination of cash and stock, in exchange
for each share of J.D. Edwards common stock. Whether a stockholder receives
cash, stock or a combination of cash and stock, the value of the consideration
received will equal the value of $7.05 plus 0.43 of a share of PeopleSoft common
stock for each share of J.D. Edwards common stock. A stockholder who does not
tender in the offer will receive $7.05 plus 0.43 of a share of PeopleSoft common
stock for each share of J.D. Edwards common stock in the merger following
completion of the offer. The market value of our shares fluctuates based upon
general market and economic conditions, our business and prospects and other
factors, as discussed in this prospectus. Because the value of the consideration
depends on the value of our common stock in the offer, the exact value of the
consideration that J.D. Edwards stockholders will receive in the offer and the
merger cannot now be determined.
There will be no adjustment to the offer or merger consideration for
changes in the market price of either our common stock or J.D. Edwards common
stock. In addition, neither party may terminate, and the J.D. Edwards board may
not change its recommendation, in each case solely because of changes in the
market price of our common stock or J.D. Edwards common stock. The value of the
consideration to be received by J.D. Edwards stockholders in the offer will
depend on the market value of our common stock during a period ending shortly
before the expiration of the offer. As the market price of our common stock
decreases, the value received for each share of J.D. Edwards common stock
decreases. Conversely, as the market price of PeopleSoft common stock increases,
the value received for each share of J.D. Edwards common stock exchanged for our
common stock increases.
The trading price of our common stock has fluctuated significantly in the
past. Changes in our business, operations or prospects or those of J.D. Edwards,
market assessments of the benefits of the merger and of the likelihood that the
offer and the merger will be completed, regulatory considerations, general
market and economic conditions, or other factors may affect the price of our
common stock. Many of these factors are beyond our control. The future trading
price of our common stock is likely to be volatile and could be subject to wide
price fluctuations in response to such factors, including:
- the impact of the pending Oracle Offer or any other proposed acquisition
of us;
- actual or anticipated fluctuations in revenues or operating results,
including revenue or results of operations in any quarter failing to meet
the expectations, published or otherwise, of the investment community by
either us or J.D. Edwards;
- announcements of technological innovations by us, J.D. Edwards or our
competitors;
19
- introduction and success of new products or significant customer wins or
losses by us, J.D. Edwards or our competitors;
- developments with respect to our or J.D. Edwards' intellectual property
rights, including patents, or those of our competitors;
- changes in recommendations or financial estimates by securities analysts;
- fluctuations in demand for and sales of our or J.D. Edwards' products,
which will depend on, among other things, the uncertainty regarding
success of the merger and operations of the combined company, our
customer protection program, the acceptance of our or J.D. Edwards'
products in the marketplace and the general level of spending in the
software industry;
- rumors or dissemination of false and/or misleading information,
particularly through internet chat rooms, instant messaging and other
means of rapid dissemination;
- changes in management;
- proposed and completed acquisitions or other significant transactions by
us, J.D. Edwards or our competitors;
- introduction and success of new products or significant customer wins or
losses by us, J.D. Edwards or our competitors;
- the mix of products and services sold by us or J.D. Edwards;
- the timing, placement and fulfillment of significant orders by us or J.D.
Edwards;
- conditions and trends in the software industry, or consolidation within
the technology industry that may impact our customers, partners,
suppliers or competitors;
- adoption of new accounting standards affecting the software industry;
- acts of war or terrorism; and
- general market conditions.
The price of our common stock at the time that we accept your tendered
shares or at the time of the merger may be higher or lower than its price on the
date of this prospectus. Before tendering your shares of J.D. Edwards common
stock pursuant to the offer, we urge you to obtain current market quotations for
our common stock.
THE MIX OF CONSIDERATION -- CASH AND STOCK -- THAT THE J.D. EDWARDS
STOCKHOLDERS ACTUALLY RECEIVE MAY BE DIFFERENT THAN THE FORM OF CONSIDERATION
THAT SUCH STOCKHOLDERS HAVE ELECTED TO RECEIVE. J.D. EDWARDS STOCKHOLDERS WHO
TENDER IN THE OFFER WILL NOT KNOW THE ACTUAL MIX OF CONSIDERATION THAT THEY
WILL RECEIVE IN THE OFFER BEFORE THE OFFER IS COMPLETED.
The total amount of cash and stock that will be paid to all J.D. Edwards
stockholders in the transactions contemplated by the merger agreement is fixed
and will be allocated among stockholders according to formulas discussed under
"The Offer -- The Proration Rules" on page 68. The amount of cash, stock or
combination of cash and stock that a J.D. Edwards stockholder receives in the
offer will depend on whether the stockholder has submitted an election form,
whether the stockholder has elected to receive the consideration in all stock or
all cash, and the elections made by all other stockholders. It will also depend
on the average closing price of PeopleSoft common stock for the five trading
days ending immediately before the second trading day before the expiration of
the offer. Accordingly, the mix of consideration that a J.D. Edwards stockholder
receives may be different than the mix that the stockholder has elected to
receive. A stockholder that has elected to receive only cash could receive a
combination of cash and stock, and a stockholder that has elected to receive
only stock could receive a combination of stock and cash. Since the allocation
of the consideration cannot be determined until the expiration of the offer,
J.D. Edwards stockholders will not know the actual mix of consideration they
will receive at the time
20
they tender their shares in the offer. A J.D. Edwards stockholder who has
elected to receive only stock with the expectation of having tax-free treatment
and instead receives a combination of cash and stock as a result of the
application of the proration procedures may be required to recognize gain on the
exchange, but will not be permitted to recognize any loss on the exchange, for
U.S. federal income tax purposes. Likewise, a J.D. Edwards stockholder who
elects to receive only cash with the expectation that he or she will recognize a
loss as a result of the offer may receive stock, in which case the loss would
not be recognized. For a more detailed discussion of the federal income tax
consequences of the proposed transaction, see the discussion under the caption
"The Offer -- Material Federal Income Tax Consequences".
THE VALUE THAT ALL J.D. EDWARDS STOCKHOLDERS ARE ENTITLED TO RECEIVE IN THE
OFFER AND MERGER IS INTENDED TO BE THE SAME, REGARDLESS OF WHETHER THEY
RECEIVE CASH OR STOCK. HOWEVER, THE VALUE OF THE CONSIDERATION RECEIVED BY
STOCKHOLDERS MAY DIFFER AT THE TIME THE OFFER CONSIDERATION IS ACTUALLY PAID
BECAUSE OF FLUCTUATION IN THE PEOPLESOFT COMMON STOCK PRICE.
The value of the consideration J.D. Edwards stockholders receive is
intended to be the same whether a stockholder receives cash, PeopleSoft common
stock or a combination of cash and stock. This equivalence is based upon the
average closing price for the five trading days ending immediately before the
second trading day before the expiration of the offer. The market value of
PeopleSoft common stock on the date the offer consideration is paid to a J.D.
Edwards stockholder is likely to be different than the closing stock prices set
forth in this prospectus.
WE MAY NOT SUCCESSFULLY INTEGRATE OUR AND J.D. EDWARDS' BUSINESS OPERATIONS
AFTER THE MERGER. AS A RESULT, WE MAY NOT ACHIEVE THE ANTICIPATED BENEFITS OF
THE MERGER, WHICH COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK.
We entered into the merger agreement with the expectation that the merger
will result in benefits to the combined company. However, these expected
benefits may not be fully realized. The integration of PeopleSoft's and J.D.
Edwards' operations after the merger may be difficult, time consuming and
costly, particularly in light of the technical and complex nature of each
company's products. After completion of the merger, the combined company must
successfully integrate, among other things, certain product and service
offerings, product development, sales and marketing, administrative and customer
service functions, and management information systems. In addition, we will need
to retain the management, key employees, customers, distributors, vendors and
other business partners of both companies. It is possible that these integration
efforts will not be completed as efficiently as planned or will distract
management from the operations of the combined company's business.
The challenges involved in this integration include the following:
- the cost, in terms of both time and expense, of responding to the Oracle
Offer and related litigation;
- managing software development activities to define a combined product
roadmap, ensure timely release of innovative products to market, and to
deliver effective technology integration between solutions coordinating
software development operations in a swift and efficient manner to ensure
timely development of product roadmaps, release of products to market,
and the development of integration and migration processes and tools;
- combining product offerings, platforms and technologies quickly and
effectively;
- demonstrating to our existing and potential customers that the merger
will not result in adverse changes in customer service standards or
business focus;
- retaining key alliances on attractive terms with partners and suppliers;
- coordinating and integrating sales and marketing efforts to effectively
communicate the capabilities of the combined company, cross selling
related products to each other's customers, and managing the combined
sales force to avoid channel conflict;
21
- maintaining employee morale, assimilating key employees and managing an
increased number of employees over large geographic distances;
- creating and effectively implementing uniform standards, controls,
procedures, policies and information systems; and
- retaining or recruiting key personnel.
The execution of these post-merger events will involve considerable risks and
may not be successful. These risks include:
- the potential disruption of the combined company's ongoing business and
distraction of its management;
- the potential strain on the combined company's financial and managerial
controls and reporting systems and procedures;
- unanticipated expenses and potential delays related to integration of the
operations, technology and other resources of the two companies;
- the impairment of relationships with employees, suppliers, customers and
business partners as a result of any integration of new management
personnel;
- the inability to successfully manage the substantially larger and
geographically diverse organization;
- the failure to realize the anticipated synergies from our combination
with J.D. Edwards;
- greater than anticipated costs and expenses related to restructuring,
including employee severance or relocation costs and costs related to
vacating leased facilities; and
- potential unknown liabilities associated with the merger and the combined
operations.
The combined company may not successfully integrate the operations and
technology of PeopleSoft and J.D. Edwards in a timely manner, or at all, and the
combined company may not realize the anticipated benefits of the merger to the
extent, or in the timeframe, anticipated, which could significantly harm our
business and have a material adverse effect on the combined company after the
merger.
J.D. EDWARDS DIRECTORS AND OFFICERS HAVE CONFLICTS OF INTEREST IN RECOMMENDING
THE OFFER AND THE MERGER TO J.D. EDWARDS STOCKHOLDERS.
In considering the recommendation of the J.D. Edwards board of directors to
accept the offer, tender your shares of J.D. Edwards common stock pursuant to
the offer and approve the merger and the merger agreement, you should recognize
that J.D. Edwards directors and officers have interests in the merger that
differ from, or are in addition to, their interests as J.D. Edwards
stockholders. These interests include:
- current and future employment arrangements and retention payments;
- severance benefits if their employment is terminated after the merger;
- acceleration of stock options if their employment is terminated after the
merger;
- PeopleSoft board membership for one current J.D. Edwards director; and
- indemnification of J.D. Edwards directors and officers against certain
liabilities arising both before and after the merger. See "Background of
the Offer and the Merger -- Interests of Certain Persons in the Merger".
22
FAILURE TO COMPLETE THE OFFER COULD BE COSTLY TO J.D. EDWARDS AND ITS
STOCKHOLDERS.
If the merger is not completed for any reason, J.D. Edwards could suffer a
number of consequences that may adversely affect its business, results of
operations and stock price, including the following:
- the market price of J.D. Edwards common stock may decline, assuming that
current market prices reflect a market assumption that the merger will be
completed;
- the benefits expected from becoming a part of a combined company with
PeopleSoft, including the potentially enhanced financial and competitive
position, will not be realized;
- activities relating to the merger and related uncertainties may divert
management's attention from the day-to-day business and cause disruptions
among employees and to relationships with customers and business
partners, thus detracting from J.D. Edwards' ability to grow revenue and
minimize costs and possibly leading to a loss of revenue and market
position that may not be regained if the transaction does not occur;
- difficulty continuing J.D. Edwards' present level of operations,
requiring it to scale back the present level of business and consider
additional reductions in force;
- disruption of its employee, customer and business partner base;
- an inability to take advantage of alternative business opportunities or
effectively respond to competitive pressures; and
- the obligation to pay J.D. Edwards' costs related to the merger, such as
legal, accounting and a portion of the investment banking fees.
In addition, under certain circumstances, the merger agreement provides for
the payment to us by J.D. Edwards of a termination fee of $57 million. In
certain other circumstances, we or J.D. Edwards may be required to pay costs and
expenses of $5 million if the merger agreement is terminated, depending on the
circumstances that result in the termination of the merger agreement. The
obligation to make the termination fee payments may adversely affect the ability
of J.D. Edwards to engage in another transaction and may have an adverse impact
on the financial condition of J.D. Edwards. See "The Merger
Agreement -- Termination Fee".
WHETHER OR NOT THE OFFER AND MERGER ARE COMPLETED, THE ANNOUNCEMENT OF THE
OFFER AND MERGER MAY CAUSE DISRUPTIONS, INCLUDING POTENTIAL LOSS OF CUSTOMERS,
SUPPLIERS AND OTHER BUSINESS PARTNERS, IN THE BUSINESS OF J.D. EDWARDS OR
PEOPLESOFT, WHICH COULD HAVE MATERIAL ADVERSE EFFECTS ON EACH COMPANY'S OR THE
COMBINED COMPANY'S BUSINESS AND OPERATIONS.
Whether or not the offer and the merger are completed, PeopleSoft's and
J.D. Edwards' customers, suppliers, distributors, licensors and other business
partners, in response to the announcement of the offer and the merger, may
adversely change or terminate their relationships with either company or the
combined company, which could have a material adverse effect on the business of
the company concerned. Certain of PeopleSoft's or J.D. Edwards' current or
potential customers may cancel or defer orders for each company's products. In
addition, customers of both companies may expect preferential pricing as a
result of the offer and the merger or the announcement of the offer and the
merger. The announcement of the offer and the merger may also adversely affect
the companies' ability to attract new customers.
Some of the contracts with suppliers, distributors, system integrators,
customers, licensors, facility owners and other business partners require
PeopleSoft or J.D. Edwards to obtain consent from these other parties in
connection with the offer and the merger. If their consent cannot be obtained on
favorable terms, the combined company may incur higher costs related to
replacing suppliers, may suffer a loss of potential future revenue and may lose
rights to facilities or intellectual property that are material to the business
of the combined company.
23
COMPLETION OF THE OFFER MAY BE DELAYED BY THE NEED TO OBTAIN REQUIRED
GOVERNMENTAL APPROVALS, AND PEOPLESOFT AND J.D. EDWARDS MAY NOT BE ABLE TO
OBTAIN SUCH APPROVALS TO COMPLETE THE OFFER OR THE MERGER.
Under the HSR Act, J.D. Edwards shares may not be accepted in the offer and
the merger may not be consummated unless certain filings have been submitted to
the FTC and the Antitrust Division of the Department of Justice and certain
waiting period requirements have been satisfied. PeopleSoft and J.D. Edwards
have made these required filings. In addition, the offer and the merger are
subject to various foreign antitrust laws, some of which require us to make
filings with foreign authorities. There can be no assurance that antitrust
enforcers will allow the transaction to proceed without first seeking additional
information pursuant to a second request or similar process or that approvals
for the transaction will be obtained at all or without materially adverse
restrictions or conditions that would have an adverse effect on the combined
company. In addition, if we would be required to sell or divest any of our
assets or business or prohibited from owning any portion of the J.D. Edwards
business or assets, we are not obligated to complete the offer.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions like the offer and the merger. At any time
before or after the completion of the offer and the merger, the FTC or the
Antitrust Division could take any action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
offer, completion of the merger or seeking the divestiture of substantial assets
of PeopleSoft or J.D. Edwards. In addition, certain private parties as well as
state attorneys general and other antitrust authorities may challenge the
transaction under antitrust laws under certain circumstances. There can be no
assurance that we will receive a favorable result if such a challenge is made.
In addition, the Oracle Offer may also have an effect on the timing and the
results of the review of the offer and the merger by regulatory authorities.
THE SHARES MAY BE ACCEPTED IN THE OFFER AND THE MERGER MAY BE COMPLETED EVEN
THOUGH MATERIAL ADVERSE CHANGES MAY RESULT FROM THE ANNOUNCEMENT OF THE
MERGER, INDUSTRY-WIDE CHANGES AND OTHER CAUSES.
In general, either party may refuse to complete the offer or the merger if
there is a material adverse change affecting the other party before the closing.
However, certain types of changes will not prevent the completion of the offer
or the merger, even if they would have a material adverse effect on PeopleSoft
or J.D. Edwards, including:
- changes that arise in connection with the Oracle Offer or another
acquisition proposal by Oracle;
- changes or conditions generally affecting the industries or segments in
which we and J.D. Edwards operate unless the change or condition has a
materially disproportionate effect on us or J.D. Edwards, as the case may
be;
- changes in general economic, market or political conditions unless the
change has a materially disproportionate effect on us or J.D. Edwards, as
the case may be;
- actual or threatened litigation by Oracle, or stockholders of us or J.D.
Edwards relating to the announcement or completion of the offer or the
merger (unless the offer or the merger is enjoined);
- any disruption of customer, business partner, supplier or employee
relationships that resulted from the announcement of the merger agreement
or the completion of the offer and the merger; and
- changes in our or J.D. Edwards' market price or trading volume, in and of
themselves.
If material adverse changes occur but we must still complete the offer and
the merger, our stock price may suffer. This in turn may reduce the value of the
consideration paid to J.D. Edwards stockholders in the offer and the merger.
24
CHARGES TO EARNINGS RESULTING FROM THE MERGER INCLUDING THE APPLICATION OF THE
PURCHASE METHOD OF ACCOUNTING, AND RESTRUCTURING AND INTEGRATION COSTS MAY
MATERIALLY ADVERSELY AFFECT THE MARKET VALUE OF OUR COMMON STOCK FOLLOWING THE
MERGER.
In accordance with accounting principles generally accepted in the United
States of America, the combined company will account for the merger using the
purchase method of accounting. The combined company will allocate the total
estimated purchase price to J.D. Edwards' net tangible assets, amortizable
intangible assets, and in-process research and development based on their fair
values as of the date of completion of the merger, and record the excess of the
purchase price over those fair values as goodwill. The combined company's
financial results, including earnings per share, could be adversely affected by
a number of financial adjustments required by accounting principles generally
accepted in the United States of America including the following:
- The portion of the estimated purchase price allocated to in-process
research and development will be expensed by the combined company in the
quarter in which the merger is completed.
- The combined company will incur additional amortization expense over the
estimated useful lives of certain of the intangible assets acquired in
connection with the merger during such estimated useful lives.
- To the extent the value of goodwill or intangible assets with indefinite
lives becomes impaired, the combined company may be required to incur
material charges relating to the impairment of those assets.
- The portion of the existing deferred revenues on J.D. Edwards balance
sheet at the closing of the merger which represents maintenance revenue
will be adjusted, based on estimated cost to deliver plus an appropriate
gross margin and the portion of deferred maintenance revenue will be
recorded as goodwill.
We expect to incur costs associated with combining the operations of the
two companies, including transaction fees and other costs related to the offer
and the merger. These costs may be substantial and may include those related to
the severance and stock option acceleration provisions of J.D. Edwards'
management change in control plan, which will result in certain retention
payments after the merger and on the first anniversary of the merger and which
could be triggered by certain actions taken by us after the merger. We also face
potential costs related to employee redeployment or relocation, employee
retention which could include salary increases or bonuses, reorganization or
closure of facilities, relocation and disposition of excess equipment,
termination of contracts with third parties that provide redundant or
conflicting services and other integration costs. We have not yet determined the
amount of these costs. We expect to account for these costs as purchase related
adjustments when the merger is completed, which will decrease our net income and
impact cash balances for the periods in which those adjustments are made.
Each of these charges would negatively impact earnings, which could have a
material adverse effect on the price of our common stock.
LITIGATION RELATED TO THE MERGER AND THE ORACLE OFFER MAY PREVENT OR DELAY THE
PURCHASE OF THE SHARES PURSUANT TO THE OFFER AND THE CLOSING OF THE MERGER,
MAY RESULT IN SIGNIFICANT MONETARY DAMAGES OR MAY OTHERWISE NEGATIVELY IMPACT
THE BUSINESS AND OPERATION OF PEOPLESOFT AND J.D. EDWARDS.
On June 6, 2003, Oracle announced that it intended to commence a cash
tender offer to purchase all of the outstanding shares of PeopleSoft. Thirteen
stockholder lawsuits have been filed against PeopleSoft and certain of our
directors and officers alleging breaches of fiduciary duties by PeopleSoft and
such persons in connection with the Oracle Offer in Delaware and California
state courts. The California stockholder lawsuits have been stayed and a motion
for preliminary injunction has been filed in one of the Delaware stockholder
suits. Two purported class action stockholder lawsuits have also been filed
against
25
J.D. Edwards' directors and officers in Delaware and Colorado state courts
alleging breaches of fiduciary duty by such persons and seeking, among other
remedies, to enjoin the transactions contemplated by the merger. On June 18,
2003, Oracle filed a lawsuit against PeopleSoft, the members of our board and
J.D. Edwards in the Delaware Chancery Court. The lawsuit alleges breaches of
fiduciary duties against us and our board and seeks to enjoin the proposed offer
and merger and to enjoin us from implementing a recently announced customer
protection program. In addition, other potential lawsuits arising out of the
Oracle Offer or the merger could seek to enjoin consummation of the offer or the
merger or, in the alternative, to rescind the merger, as well as monetary
damages. Fluctuation in the price of PeopleSoft or J.D. Edwards common stock may
also expose each company to the risk of securities class-action lawsuits. Even
if such litigation is ultimately proven to lack merit, these actions could
prevent or delay the acceptance of the shares of J.D. Edwards common stock
pursuant to the offer and the closing of the merger. Any conclusion of such
litigation in a manner adverse to PeopleSoft or J.D. Edwards could have a
material adverse effect on each company's businesses, financial condition and
results of operations. In addition, the cost of defending this litigation, even
if resolved favorably, will be substantial. Such litigation could also
substantially divert the attention of management and resources in general.
Furthermore, uncertainties resulting from the initiation and continuation of any
litigation could harm the ability of PeopleSoft and J.D. Edwards to compete in
the marketplace. For a more detailed description of the litigation related to
the merger and the Oracle Offer, see the discussions under the captions
"Information About PeopleSoft, Inc. -- Recent Developments" and "Information
About J.D. Edwards & Company -- Recent Developments".
26
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and other documents to which we refer you contain
"forward-looking statements" concerning non-historical facts or matters that are
subject to risks and uncertainties. These forward-looking statements may be
preceded by, followed by or include the words "believes," "expects,"
"anticipates," "intends," "plans," "projections," "estimates," "may," "will,"
"should," "could" or similar expressions. These forward-looking statements
represent our expectations or beliefs concerning future events, many of which
are outside of our control. Many possible events or factors could affect the
actual financial results and performance of PeopleSoft and J.D. Edwards before
the transaction and of the combined company after the transaction, and these
factors or events could cause those results or performance to differ
significantly from those expressed in our forward-looking statements. They
include, among other things, statements with respect to:
- the possibility that the offer and the merger may not be completed or
that we may have to modify some aspects of the acquisition transaction to
obtain regulatory approvals;
- the impact of litigation relating to the offer, the merger or the Oracle
Offer;
- the impact of the Oracle Offer to purchase all of the outstanding shares
of our common stock;
- the successful integration of J.D. Edwards' employees and technologies
and the challenge of achieving anticipated benefits of the merger;
- pro forma financial statements and projections of future financial
performance;
- future sales and earnings;
- marketing efforts and trends;
- our customer protection program;
- product acceptance and demand;
- growth efforts;
- cost reduction efforts;
- cost savings and economies of scale;
- margin enhancement efforts;
- product development efforts;
- market positioning;
- operations and results of the combined company after the merger; and
- future acquisitions and dispositions.
We caution that these statements are further qualified by important
factors, in addition to those under "Risk Factors" above and elsewhere in this
prospectus and the documents which are incorporated by reference in this
prospectus, that could cause actual results to differ significantly from those
in the forward-looking statements.
Forward-looking statements are not guarantees of performance. By their
nature, they involve risks, uncertainties and assumptions. The future results
and stockholder values of PeopleSoft and J.D. Edwards may differ significantly
from those expressed in these forward-looking statements. Stockholders are
cautioned not to put undue reliance on any forward-looking statement. Any such
statement speaks only as of the date of this prospectus, and in the case of
documents incorporated by reference, as of the date of those documents. We do
not assume any obligation to update or release any revisions to any forward-
looking statements, to report any new information, future event or other
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events, except as required by law.
27
INFORMATION ABOUT PEOPLESOFT, INC.
PeopleSoft designs, develops, markets and supports a family of enterprise
application software products for use throughout large and medium sized
organizations worldwide. These organizations include corporations, educational
institutions and federal, state, provincial and local government agencies. We
provide enterprise application software for customer relationship management,
human capital management, financial management and supply chain management,
along with a range of industry-specific products. Within each application suite,
we offer embedded analytics and portal applications. In addition, we offer a
suite of products for application integration and analytic capability, including
portal applications, an integration broker and enterprise warehouse products.
Our applications offer a high degree of flexibility, rapid implementation and
scalability across multiple databases and operating systems. In addition to
enterprise application software, we offer a variety of consulting and training
services to customers focused on implementing, optimizing and upgrading our
software.
Our strategy is to offer comprehensive applications that enable
organizations to manage critical business processes and analyze and enhance
their relationships with customers, suppliers, employees and partners.
Incorporated in Delaware in 1987, we shipped our first software product, a
human resources management system, in December 1988. In 1992, we introduced the
first of a series of financial management software products, and in 1994, we
introduced the first of a series of supply chain management products. Since that
time, we have introduced several additions to existing product lines, as well as
industry specific software products for, among others, manufacturing, public
sector financial management, public sector human resources management and
student administration solutions for the higher education market.
We began shipping enterprise applications, built entirely on PeopleSoft
Pure Internet Architecture(TM), PeopleSoft 8, in September 2000; the first major
suite of enterprise applications that enables organizations to create a
real-time enterprise, connecting customers, suppliers, employees and partners.
PeopleSoft 8 applications can be accessed anytime and from anywhere with a
standard Internet browser because they do not require software to be installed
on the user's personal computer. Since the release of PeopleSoft 8, we have
continued to develop and release additional products and technology across all
four product areas, Human Capital Management, Customer Relationship Management,
Supply Chain Management and Financial Management Systems, as well as across our
technology platform.
RECENT DEVELOPMENTS
On June 6, 2003, Oracle announced that it intended to commence a cash
tender offer to purchase all of the outstanding shares of PeopleSoft for $16 per
share, or approximately $5.1 billion. On June 8, 2003, our board of directors
discussed Oracle's June 6 announcement and formed a committee of independent
directors, comprised of Frank J. Fanzilli, Jr., Steven D. Goldby, A. George
Battle and Cyril J. Yansouni, to evaluate and assess the terms of the Oracle
Offer, once announced, in consultation with our board of directors' financial
and legal advisors, and make a recommendation to our board. On June 9, 2003,
Oracle and Pepper Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Oracle, filed a Tender Offer Statement on Schedule TO with the SEC
in connection with the Oracle Offer. On June 11, 2003, our board of directors,
including all of the members of the transaction committee, met with our
management and the board's financial and legal advisors to further consider and
discuss the Oracle Offer. After careful consideration, including consultation
with management and the board's financial and legal advisors, the committee
unanimously concluded that the Oracle Offer dramatically undervalued our
company, would undoubtedly face lengthy antitrust scrutiny, with a significant
likelihood that the necessary approval would not be granted, that the delays and
uncertainties created by the Oracle Offer, coupled with Oracle's stated intent
to discontinue our market-leading products, represented a substantial threat to
stockholder value, and that the unsolicited and hostile nature of the Oracle
Offer, combined with Oracle's statements, was designed to disrupt our strong
momentum at significant cost to us and our customers. For these and other
reasons (more fully described in our Solicitation/Recommendation on Schedule
14D-9, as
28
amended, filed with the SEC in response to the Oracle Offer, referred to as our
Schedule 14D-9), the committee determined that the Oracle Offer was not in the
best interests of the stockholders and unanimously recommended to the full board
of directors that the full board, in turn, recommend that our stockholders
reject the Oracle Offer and not tender their shares to Oracle for purchase. The
full board of directors concurred with the committee and, having determined that
the Oracle Offer was not in the best interests of our stockholders, unanimously
recommended that our stockholders reject the Oracle Offer. We publicly announced
the board's recommendation on June 12, 2003.
On June 13, 2003, we filed a suit in the California Superior Court for the
County of Alameda against Oracle and Pepper Acquisition Corp. In that suit, we
allege that in connection with the Oracle Offer, the defendants have engaged in:
(1) unfair trade practices in violation of California's Business and Professions
Code; (2) acts of unlawful interference with our contracts with our customers;
(3) acts of unlawful interference with our relationships with prospective
customers; and (4) acts of unlawful disparagement of our products and services.
We seek an injunction precluding defendants' unfair trade practices and other
unlawful actions, proceeding further with the tender offer, restitution and
damages. On June 17, 2003, Oracle removed the case to federal district court. On
June 19, 2003, the case was remanded to the California Superior Court for the
County of Alameda.
In addition, 13 stockholder lawsuits have been filed against us and certain
of our directors and executive officers alleging breaches of fiduciary duties by
us and such persons and seeking to enjoin transactions contemplated by the
merger. The California stockholder lawsuits have been stayed. A plaintiff in one
of the Delaware stockholder lawsuits has filed a motion for preliminary
injunction.
On June 18, 2003, Oracle announced that it had amended its offer to
purchase all of the outstanding stock of PeopleSoft by increasing the purchase
price from $16.00 to $19.50 per share. After careful consideration, including
consultation with management and the board's financial and legal advisors, the
transaction committee unanimously concluded that the previously stated reasons
for rejecting the Oracle Offer remained and that the offer consideration
undervalued PeopleSoft. As more fully described in our amended Schedule 14D-9,
the committee determined that the Oracle Offer was not in the best interests of
the stockholders and unanimously recommended to the full board that it recommend
that our stockholders reject the Oracle Offer and not tender their shares to
Oracle for purchase. The full board of directors concurred with the committee
and, having determined that the revised Oracle Offer was not in the best
interests of our stockholders, unanimously recommended that our stockholders
reject the revised Oracle Offer. We publicly announced the board's
recommendation on June 20, 2003.
The closing price of PeopleSoft common stock as reported on the Nasdaq
National Market was $16.39 on May 30, 2003 (prior to the announcement of the
original merger agreement with J.D. Edwards and the Oracle Offer), $16.92 on
June 13, 2003 (prior to the announcement of the merger agreement with J.D.
Edwards) and $17.84 on July 11, 2003, with a 52 week range of $11.75 to $22.50
through July 11, 2003. The transaction committee of our board and our full board
do not believe the trading prices of PeopleSoft common stock in recent periods
reflect the value that would be reflected in a sale of PeopleSoft for cash or
for cash and stock in a transaction that does not result in a significant equity
stake in the pro forma company for PeopleSoft stockholders. In reaching this
determination, the transaction committee and our board reviewed, among other
factors and with the input of its financial advisors:
- the present value of potential future market prices for PeopleSoft based
upon different assumptions;
- the pro forma financial impact of the acquisition of J.D. Edwards on
PeopleSoft, including strategic implications and operational benefits;
- the value of the consideration paid in acquisitions of comparable
companies as multiples of financial operating data and compared such
multiples with those reflected in the Oracle Offer; and
- the premiums to market prices paid in acquisitions of comparable
companies as compared to the premium offered in the Oracle Offer.
29
Based upon its review of such factors, our transaction committee and board
concluded that the Oracle Offer severely undervalued PeopleSoft based on its
financial performance and future opportunities.
In evaluating the value of the Oracle Offer to PeopleSoft stockholders, the
transaction committee and the full board considered that the proposed
combination of PeopleSoft and Oracle faces delay as antitrust authorities review
the transaction and a significant likelihood that the transaction may be blocked
as anticompetitive. Further, as the Oracle Offer is conditional and may be
withdrawn at any time in accordance with applicable law and regulations, there
exists additional risk that the proposed transaction may not be completed. The
uncertainties created by the Oracle Offer regarding our business vitality and
future creates risks of loss of customers and employees. If that transaction
were not to be completed after our board recommended to our stockholders that
the Oracle Offer be accepted, the damage to stockholder value could be
significant.
The information and factors considered and reasons cited by the PeopleSoft
board and the transaction committee above is not meant to be exhaustive, but
includes the material information, factors, analyses and reasons considered by
the board and the transaction committee in reaching their respective conclusions
and recommendations. The members of the board and the transaction committee
evaluated the various factors listed above in light of their knowledge of our
business, financial condition and prospects and based upon the advice of the
board's financial and legal advisors. In light of the number and variety of
factors that the board and the transaction committee considered, and the varied
reasons that supported their opinions and conclusions, the members of the board
and the transaction committee did not find it practicable to assign relative
weights to the foregoing factors or reasons. However, the recommendation of the
board of directors and transaction committee was made after considering the
totality of the information and factors involved. In addition, individual
members of the board and the transaction committee may have given different
weight to different factors or reasons described or cited above.
In addition, on June 18, 2003, Oracle filed a lawsuit against us, the
members of our Board of Directors and J.D. Edwards in the Delaware Chancery
Court. The lawsuit alleges breaches of fiduciary duties against us and our board
of directors and seeks injunctive relief requiring (i) rescission of the merger
agreement; (ii) an injunction against the offer; (iii) an order requiring us to
redeem our rights plan or amend the plan to permit the Oracle Offer to proceed;
(iv) an injunction requiring our board to take action to make Section 203 of the
Delaware General Corporation Law, or the DGCL, inapplicable to the Oracle Offer;
and (v) an injunction prohibiting us from implementing a recently announced
customer protection program described below, claimed to be an illegal
anti-takeover device. The claims against J.D. Edwards are based on aiding and
abetting PeopleSoft and the director defendants. PeopleSoft and J.D. Edwards
answered Oracle's complaint on June 26, 2003, denying all substantive claims.
The parties are currently scheduled to confer with the Court on July 25, 2003
about further scheduling a hearing date, if necessary. PeopleSoft is therefore
not currently prevented from closing the offer or the merger prior to July 25,
2003 if the respective regulatory and other conditions are met. PeopleSoft and
J.D. Edwards believe that the Oracle suit is without merit and intend to
vigorously defend this lawsuit as well as other pending litigation relating to
the Oracle Offer and the offer and the merger.
In connection with its unsolicited tender offer to PeopleSoft stockholders,
Oracle has made explicit, well-publicized statements of its intentions with
respect to PeopleSoft's products if its acquisition efforts succeed. We have a
long and distinguished history of providing products and subsequent support
services and establishing long-term relationships with our customers. Customers
purchasing PeopleSoft applications establish long-term relationships with
PeopleSoft which include subsequent development, support and services as a
component of their purchasing decisions. The Oracle statements have caused our
existing and potential customers to express concern over the long-term
availability and support of PeopleSoft products. It is PeopleSoft's policy to
provide support for our products for four years after their general
availability.
To minimize a potential loss of business during the Oracle Offer,
PeopleSoft implemented a program incorporating a contingent change in control
provision to our standard perpetual licensing arrangement which provides
customers purchasing application licenses with financial protection in the event
that an acquiror discontinues the sale, development or support of PeopleSoft
applications within a specified period
30
after an acquisition. That financial protection is in the form of a payment
generally equal to two to five times the total arrangement fees. The multiple
increases as the arrangement fees increase and generally will be paid provided
the following events occur:
- within one year of the contract effective date, PeopleSoft is acquired or
merged, and PeopleSoft is not the acquiror; and
- within two years of the contract effective date, the acquiring company:
(i) announces its intention to discontinue, or discontinues, support
services before the end of the normal support term as defined by
PeopleSoft standard policies, or (ii) announces its intention to stop
licensing PeopleSoft products to new customers, or (iii) announces its
intention not to provide updates or new releases for supportable
products, which would, if PeopleSoft were not acquired or merged with the
acquired company, have been considered updates or new releases under
PeopleSoft standard business policies; and
- the customer requests the payment in writing by December 31, 2005 and has
timely paid for support services in accordance with the terms of the
customer's agreement with PeopleSoft.
Customers retain rights to the licensed products whether or not the
customer protection program payments are implicated. No customer is entitled to
a refund of arrangement fees paid under the customer's contract with PeopleSoft,
but the customer would be entitled to a payment under the customer protection
program if all of the conditions stated above are met.
The program was designed to protect a customer's total investment in
PeopleSoft products. We believe that the customer protection provision has
encouraged customers to go forward with business arrangements despite
uncertainty about the future of PeopleSoft applications in the marketplace that
the Oracle Offer and Oracle's public statements have created. PeopleSoft
believes that security holders benefit from the existence of this program as it
is a means to maintain customer relationships and promote license transactions,
resulting in a benefit to PeopleSoft's business and operating results. These
assurances provided to customers facilitated completing sales transactions,
which preserves the value of PeopleSoft's business for our stockholders.
The program has no current financial statement impact to PeopleSoft. The
contingent liability would only be recognized in the financial statements of
PeopleSoft or its acquiror upon or after the consummation of the business
combination. As of June 30, 2003, the maximum potential amount of future
payments to be made under the program is approximately $391 million based upon
currently available information. PeopleSoft believes the likelihood of the
customer protection program being exercised not to be probable. PeopleSoft hopes
that any acquiror would continue the support and development of our products.
31
INFORMATION ABOUT J.D. EDWARDS & COMPANY
J.D. Edwards develops and markets collaborative enterprise software and
provides consulting, education, and support services. J.D. Edwards' product
offerings are differentiated by a practice of listening to customers, innovating
on their behalf, and delivering solutions as part of a results-oriented
relationship. J.D. Edwards aims to make its customers stronger, enabling them to
solve their most important business challenges. Its software applications help
customers integrate various aspects of their businesses -- from managing
relationships with suppliers, employees, and customers to processing
transactions and analyzing internal business information. J.D. Edwards' systems
manage and store large volumes of diverse business information, providing
customers continuous and simultaneous availability of information to
geographically dispersed employees, customers and suppliers.
J.D. Edwards' product lines include enterprise resource planning, customer
relationship management, supply chain management, supplier relationship
management, business intelligence, tools and technology, and collaboration and
integration. Customers are in a variety of industries including manufacturing
and distribution, asset-intensive, and project and service industries. Customers
can operate J.D. Edwards' software on a variety of computing platforms, and J.D.
Edwards supports several different databases. Recognizing that software must
align with customers' current and future requirements, J.D. Edwards makes its
offerings modular to allow customers to license only the applications necessary
for their business operations.
Consulting, education and support services are available through J.D.
Edwards' direct services organization and through select business partners to
help customers benefit fully from J.D. Edwards software. J.D. Edwards'
consultants use a flexible implementation methodology and tools to help
customers adapt applications to their operations. J.D. Edwards' education
experts conduct training programs to help users become acquainted and proficient
with its systems, and J.D. Edwards' global support teams offer a range of
options, from Web-based self-service to dedicated account management.
J.D. Edwards was founded and incorporated in Colorado in March 1977 and
reincorporated in Delaware in August 1997. J.D. Edwards develops software in 21
languages that is used by approximately 6,700 mid-market and large customers in
more than 110 countries. J.D. Edwards has nearly 5,000 employees in 18 United
States offices and 40 international offices and maintains relationships with
major technology and platform providers, consulting firms and product alliance
partners.
RECENT DEVELOPMENTS
On or about June 9, 2003, a purported class action lawsuit was filed in
District Court, County of Jefferson, Colorado by J.D. Edwards stockholders
against J.D. Edwards' directors and officers alleging breaches of fiduciary duty
by such persons and seeking, among other remedies, to enjoin the transactions
contemplated by the merger. J.D. Edwards believes that the plaintiffs' claims
are wholly without merit and will defend against them vigorously.
In response to the Oracle Offer, on June 12, 2003, J.D. Edwards filed a
suit in California Superior Court in the County of San Mateo against Oracle, its
wholly-owned subsidiary, Pepper Acquisition Corp. and two of Oracle's executives
alleging violations of California's Business and Professions Code Section 17200
et seq., intentional interference with prospective economic advantage and
negligent interference with prospective economic advantage. The suit seeks
compensatory and exemplary damages, as well as preliminary and permanent
injunctive relief enjoining the defendants from proceeding with the Oracle
Offer, taking or attempting to take any other steps to acquire control of us or
J.D. Edwards, and otherwise interfering with the completion of the proposed
acquisition of J.D. Edwards by us. On June 16, 2003, J.D. Edwards filed a motion
for expedited discovery and a preliminary injunction hearing. On June 17, 2003,
Oracle filed a notice of removal of the action to the United States District
Court, Northern District of California, San Francisco/Oakland Division. On June
18, 2003, J.D. Edwards filed a motion to remand the action back to San Mateo
County Superior Court. The United States District Court granted J.D. Edwards'
motion to remand on June 20, 2003.
32
On June 12, 2003, J.D. Edwards filed a suit in District Court for the City
and County of Denver, Colorado, against Oracle and its wholly-owned subsidiary,
Pepper Acquisition Corp., alleging claims for tortious interference with
contract and prospective business relations. The suit seeks, among other things,
compensatory damages of $1.7 billion and an unspecified amount of punitive
damages.
On July 18, 2003, J.D. Edwards was named as a defendant in a lawsuit
brought by Oracle in Delaware Chancery Court as described in "Information About
PeopleSoft, Inc. -- Recent Developments".
On June 30, 2003, a purported shareholder class action was filed against
J.D. Edwards and its board of directors in the Delaware Chancery Court. The
action asserts claims against the J.D. Edwards board of directors for alleged
breaches of fiduciary duties in connection with the merger agreement and seeks,
among other remedies, to enjoin the transactions contemplated by the merger.
J.D. Edwards believes that the plaintiff's claims are wholly without merit and
will defend against them vigorously.
33
THE OFFER AND THE MERGER
The following summary describes the offer and the proposed merger and is
qualified in its entirety by reference to the merger agreement. The merger
agreement is attached as Appendix A to this prospectus, and is incorporated by
reference into this prospectus.
GENERAL
On June 1, 2003, PeopleSoft, J.D. Edwards and Jersey Acquisition, our
wholly-owned subsidiary, entered into the original merger agreement. On June 16,
2003, the parties entered into an amended and restated merger agreement, to
facilitate the consummation of the merger. The merger agreement is designed to
allow PeopleSoft and J.D. Edwards to accelerate the completion of the
transaction, bring forward the benefits of their combination and increase the
accretion to earnings per share for our stockholders.
Our board of directors believes that the merger agreement:
- Reaffirms PeopleSoft's and J.D. Edwards' Commitment to Combine. The
companies believe that the combination of J.D. Edwards and PeopleSoft is
a clear win for stockholders, customers and employees of both companies.
The boards of both companies unanimously approved the merger agreement
and reaffirmed their support for the transaction.
- Accelerates Closing and Minimizes Customer Uncertainty. The companies
believe that the terms of the transaction will minimize customer
uncertainty arising from the Oracle Offer and enable PeopleSoft and J.D.
Edwards to speed their integration plans and the substantial benefits of
the combination.
- Protects and Enhances Stockholder Value. The cash portion of the
consideration increases the certainty of the value of the transaction to
J.D. Edwards stockholders and, at the same time, increases the accretion
to PeopleSoft's earnings per share for the benefit of all stockholders.
The merger agreement provides that, following the acquisition of the shares
of J.D. Edwards pursuant to the offer, Jersey Acquisition will merge with and
into J.D. Edwards with J.D. Edwards continuing as the surviving corporation.
After this first merger, J.D. Edwards will merge with and into PeopleSoft or a
wholly-owned subsidiary of PeopleSoft in a second merger. It is possible,
however, that the acquisition of J.D. Edwards will be effected using an
alternative double merger structure as described in detail in "The Merger
Agreement -- The Alternative Double Merger," below.
The merger agreement provides for us to commence, through Jersey
Acquisition, this offer to exchange all outstanding shares of J.D. Edwards
common stock and the associated stock purchase rights for the right to receive
for each share tendered either cash, a fraction of a share of our common stock
or, in case of proration, a combination of cash and a fraction of a share of our
common stock. Pursuant to the terms of the offer, in exchange for each J.D.
Edwards share, you may receive cash, a fraction of a share of our common stock,
or a combination of cash and stock, in each case having a value of $7.05 plus
0.43 of a share of PeopleSoft common stock, allocated by prorating the cash and
shares available in the offer. See "The Offer -- Making the Election" and "The
Offer -- The Proration Rules". If you tender, but do not make an election to
receive the offer consideration all in cash or all in stock, in exchange for
each J.D. Edwards share, you will receive an allocation of the remaining cash or
stock, or a combination of cash and stock, after allocating the cash and stock
among the elections made in the offer, in each case having a value of $7.05 plus
0.43 of a share of PeopleSoft common stock.
Under the terms of the merger agreement, at the effective time of the
merger, each issued and outstanding share of J.D. Edwards common stock that was
not tendered into the offer and accepted by us in the offer (other than those
shares held by J.D. Edwards or any of its subsidiaries, us or Jersey Acquisition
or any of our wholly-owned subsidiaries and dissenting shares) will be converted
into the right to receive $7.05, net, in cash, and 0.43 of a share of our common
stock, without interest. All shares of J.D. Edwards common stock owned by J.D.
Edwards or any of its subsidiaries, us or Jersey Acquisition or any of our other
wholly owned subsidiaries will be automatically canceled and retired and will
cease to exist.
34
PEOPLESOFT'S REASONS FOR THE OFFER AND THE MERGER
Our board of directors believes that the offer and the merger represent an
opportunity to enhance value for PeopleSoft stockholders. Our strategic intent
is to grow our business and provide our customers with integrated enterprise
solutions through internal development, strategic acquisitions, business
combinations and alliances.
Our board of directors approved the offer and the merger and determined
that the offer and the merger would provide us with increased breadth and depth
across our products, market segments and industry coverage. Our board determined
that J.D. Edwards' expertise in manufacturing and distribution applications
would strengthen our enterprise application suite. In addition, J.D. Edwards'
mid-market focused applications and AS/400 based solutions would be additive to
our Internet-based enterprise application suite resulting in what we believe
will be the broadest suite of integrated software applications serving multiple
market segments. In approving the offer and the merger, our board considered the
following expected benefits:
- Establish Global Position of Scale. We believe that the marketplace for
enterprise application software products is consolidating, and the most
successful companies in this market will be those with the ability to
provide comprehensive solutions to a broad segmentation of customers. The
merger with J.D. Edwards will lead this consolidation creating the number
two enterprise application software vendor with approximately 11,000
customers, 13,000 employees and $2.9 billion in combined revenues. Our
enhanced global reach and resources will allow us to better serve our
joint customers more efficiently.
- Expanded Market Opportunity. After the merger, the combined companies
would offer compelling solutions across a broad range of market segments
from the enterprise to the mid-market. We plan to limit integration risk
and meet customer requirements by maintaining three separate platforms
addressing the enterprise, mid-market and AS/400 markets, all of which
will be sold under one global brand and supported by one global support
infrastructure.
- Complementary Vertical Footprint. J.D. Edwards has a significant
presence with companies in the manufacturing and distribution sectors
including areas such as wholesale distribution, industrial, consumer and
life sciences; and in real estate and construction; and various
asset-intensive industries. When coupled with our existing presence in
service sectors including education, government, financial services,
healthcare, and communications, the combined company will offer
comprehensive solutions to a broad cross-section of industries.
- Expanded Product Coverage and Domain Expertise. While each company has
industry leading product sets, the combined company would leverage unique
product functionality from both companies to enhance the quality of the
broader offerings. The combined company will be able to expand the reach
of current products to new vertical markets, as well as provide new
products to the installed base of the combined company. Additionally, the
combination will also fill key product gaps in each company's respective
stand-alone offerings.
- Significant Financial Benefits. We believe that this transaction will
produce tangible operating synergies and provide meaningful earnings
accretion. We have identified $150-$200 million in targeted synergies
specifically targeting the following opportunities:
- Savings from rationalization of administrative and development
functions;
- Consolidation of purchasing activities;
- Efficiency in sales and services organization;
- Elimination of duplicate facilities; and
- Elimination of redundant infrastructures.
35
- Enhanced Management Team. We and J.D. Edwards each benefit from top
quality management teams that understand our respective market segments.
The combination of our company and J.D. Edwards creates an even more
formidable management team by combining these complementary strengths and
experiences.
- Common Culture and Commitment to Innovation. Our company and J.D.
Edwards have a common culture and business model, based upon a shared
commitment to customer satisfaction, technological leadership and
innovation.
The foregoing discussion of factors considered by our board is not meant to
be exhaustive but includes material factors considered by our board in approving
the offer, the merger agreement and the transactions contemplated by the merger
agreement. Our board did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered in reaching
its determination. Rather, the board made its determination based on the
totality of the information presented to it, and the judgments of individual
members of the board may have been influenced to a greater or lesser degree by
different factors.
In addition to the anticipated benefits outlined above, our board of
directors consulted with our management, as well as its outside legal counsel
and its financial advisors, and considered the following material factors:
- information regarding historical market prices and other information with
respect to our common stock and the J.D. Edwards common stock, and the
financial performance and condition, assets, liabilities, business
operations and prospects of each of our company and J.D. Edwards;
- the prices paid in comparable transactions involving other software and
technology companies, as well as the trading performance for comparable
companies in the industry;
- the financial terms of the offer and the merger, including the proposed
structure as a tax-free reorganization, and the merger consideration;
- the evaluation of our management, financial advisors and legal advisors
relating to the due diligence review that was conducted regarding J.D.
Edwards' business;
- the opinion of Citigroup that, as of the date the merger agreement was
executed and based upon and subject to the various considerations set
forth in the opinion, the consideration to be paid by us was fair, from a
financial point of view, to our company; and
- the interests of the officers and directors of J.D. Edwards in the
merger, including the matters described under "Background of the Offer
and the Merger -- Interests of Certain Persons in the Merger" and the
impact of the offer and the merger on our stockholders, customers and
employees.
Our board of directors also considered potential negative factors relating
to the offer and the merger, including:
- the potentially dilutive effect on our common stock price if revenue and
earnings expectations for us, J.D. Edwards or the combined company are
not met;
- the risk that the benefits sought to be achieved by the offer and the
merger will not be realized;
- the risk that the offer and the merger may not be completed in a timely
manner, if at all, and the reaction of the companies' competitors to the
announcement of the proposed merger;
- the potential loss of key PeopleSoft and J.D. Edwards employees critical
to the ongoing success of our company's and J.D. Edwards' businesses and
to the successful integration of the two companies;
- the potential loss of customers, suppliers and vendors currently relied
upon by the companies;
- difficulties associated with integration of each company's products,
platforms and technologies;
36
- the risk that we will be unable to recruit employees critical to the
ongoing success of the combined company's operations; and
- the other risks and uncertainties discussed above under "Risk Factors"
beginning on page 18 and in the respective companies' SEC filings.
OPINION OF PEOPLESOFT'S FINANCIAL ADVISOR
Citigroup Global Markets Inc. was retained to act as financial advisor to
PeopleSoft in connection with a potential combination transaction with J.D.
Edwards. Pursuant to Citigroup's letter agreement with PeopleSoft dated February
24, 2003, and amended on June 12, 2003, Citigroup rendered an opinion to the
PeopleSoft board of directors on June 15, 2003, to the effect that, based upon
and subject to the considerations and limitations set forth in the opinion,
Citigroup's work described below and other factors it deemed relevant, as of
that date, the consideration to be paid in the offer and merger was fair, from a
financial point of view, to PeopleSoft.
The full text of Citigroup's opinion, which sets forth the assumptions
made, general procedures followed, matters considered and limits on the review
undertaken, is included as Appendix C to this document. The summary of
Citigroup's opinion set forth below is qualified in its entirety by reference to
the full text of the opinion. YOU ARE URGED TO READ CITIGROUP'S OPINION
CAREFULLY AND IN ITS ENTIRETY.
In arriving at its opinion, Citigroup reviewed the original merger
agreement and a draft dated June 15, 2003 of the merger agreement. Citigroup
also held discussions with certain senior officers, directors and other
representatives and advisors of PeopleSoft and certain senior officers and other
representatives and advisors of J.D. Edwards concerning the business, operations
and prospects of PeopleSoft and J.D. Edwards. Citigroup examined certain
publicly available business and financial information relating to PeopleSoft and
J.D. Edwards. Citigroup also reviewed certain financial forecasts and other
information and data relating to PeopleSoft and J.D. Edwards which were provided
to or otherwise discussed with Citigroup by the managements of PeopleSoft and
J.D. Edwards, including information regarding certain strategic implications and
operational benefits anticipated to result from the transaction and information
related to the potential effects of the Oracle Offer. Citigroup reviewed the
financial terms of the transaction as set forth in the merger agreement in
relation to, among other things:
- current and historical market prices and trading volumes of PeopleSoft
common stock and J.D. Edwards common stock;
- the historical and projected earnings and other operating data for
PeopleSoft and J.D. Edwards; and
- the historical and projected capitalization and financial condition of
PeopleSoft and J.D. Edwards.
Citigroup also considered, to the extent publicly available, the financial
terms of certain other similar transactions recently effected that Citigroup
considered relevant in evaluating the transaction and analyzed certain
financial, stock market and other publicly available information relating to the
businesses of other companies whose operations Citigroup considered relevant in
evaluating those of PeopleSoft and J.D. Edwards. Citigroup also evaluated the
pro forma financial impact of the transaction on PeopleSoft. In addition to the
foregoing, Citigroup conducted such other analyses and examinations and
considered such other information and financial, economic and market criteria as
Citigroup deemed appropriate in arriving at its opinion.
In rendering its opinion, Citigroup assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data furnished to or otherwise reviewed by or discussed with it.
With respect to financial forecasts and other information and data provided to
or otherwise reviewed by or discussed with it, Citigroup was advised by the
managements of PeopleSoft and J.D. Edwards that such forecasts and other
information and data had been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the managements of PeopleSoft and
J.D. Edwards as to the future financial performance of PeopleSoft and J.D.
Edwards, and the strategic implications and operational benefits anticipated to
result from the transaction. Citigroup
37
expressed no view with respect to such forecasts and other information and data
or the assumptions on which they were based. Citigroup did not make and was not
provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of PeopleSoft or J.D. Edwards nor did it
make any physical inspection of the properties or assets of PeopleSoft or J.D.
Edwards. Citigroup assumed, and had been advised by PeopleSoft, that the final
terms of the merger agreement would not vary materially from those set forth in
the draft reviewed by Citigroup. It also was assumed by Citigroup, with the
consent of PeopleSoft, that the transaction will be consummated in accordance
with its terms, without waiver, modification or amendment of any material term,
condition or agreement and that, in the course of obtaining the necessary
regulatory or third party approvals and consents for the transaction, no delay,
limitation, restriction or condition will be imposed that would have an adverse
effect on PeopleSoft, J.D. Edwards or the contemplated benefits of the
transaction.
Citigroup did not express any opinion as to what the value of the
PeopleSoft common stock actually will be when issued in the transaction or the
price at which it will trade subsequent to the transaction. Citigroup was not
requested to consider, and its opinion did not address, the relative merits of
the transaction as compared to any alternative business strategies that might
exist for PeopleSoft or the effect of any other transaction in which PeopleSoft
might engage (including the transactions contemplated by the original merger
agreement between PeopleSoft and J.D. Edwards and the transactions contemplated
by the Oracle Offer). Citigroup's opinion necessarily was based on information
available to it, and financial, stock market and other conditions and
circumstances existing and disclosed to it as of the date of its opinion.
CITIGROUP'S ADVISORY SERVICES AND OPINION WERE PROVIDED FOR THE INFORMATION
OF THE PEOPLESOFT BOARD OF DIRECTORS IN ITS EVALUATION OF THE TRANSACTION
BETWEEN PEOPLESOFT AND J.D. EDWARDS AND DO NOT CONSTITUTE A RECOMMENDATION OF
THE TRANSACTION TO ANY PERSON OR FOR ANY PURPOSE.
In connection with rendering its opinion, Citigroup made a presentation to
the PeopleSoft board of directors on June 15, 2003, with respect to the material
analyses performed by Citigroup in evaluating the fairness of the consideration
to be paid by PeopleSoft in the transaction. The following is a summary of that
presentation. The summary includes information presented in tabular format. IN
ORDER TO UNDERSTAND FULLY THE FINANCIAL ANALYSES USED BY CITIGROUP, THESE TABLES
MUST BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT
CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. The following
quantitative information, to the extent it is based on market data, is, except
as otherwise indicated, based on market data as it existed on or prior to June
13, 2003, and is not necessarily indicative of current or future market
conditions.
* * *
HISTORICAL TRADING ANALYSIS
Citigroup reviewed the historical trading prices of PeopleSoft common stock
and J.D. Edwards common stock. On June 13, 2003, the closing price per share of
PeopleSoft common stock was $16.92 and the closing price per share of J.D.
Edwards common stock was $13.04. On June 5, 2003, the last trading day prior to
the announcement of the Oracle Offer, the closing price per share of PeopleSoft
common stock was $15.11 and the closing price per share of J.D. Edwards common
stock was $12.79. On May 30, 2003, the last trading day prior to the
announcement of the execution of the original merger agreement between
PeopleSoft and J.D. Edwards, the closing price per share of PeopleSoft common
stock was $16.39 and the closing price per share of J.D. Edwards common stock
was $11.81. Citigroup further noted that during the 12-month period ended May
30, 2003, the highest trading price per share for J.D. Edwards common stock was
$15.05 and the lowest trading price per share was $8.18.
38
The following tables set forth the low, average and high closing prices per
share for the specified periods ended May 30, 2003.
PEOPLESOFT COMMON STOCK
<Table>
<Caption>
PERIOD LOW AVERAGE HIGH
- ------ ------ ------- ------
10-Trading-Day Period...................................... $14.94 $15.54 $16.39
20-Trading-Day Period...................................... $14.94 $15.90 $16.67
30-Trading-Day Period...................................... $14.94 $15.77 $16.67
60-Trading-Day Period...................................... $14.55 $15.88 $18.28
90-Trading-Day Period...................................... $14.55 $16.68 $20.18
</Table>
J.D. EDWARDS COMMON STOCK
<Table>
<Caption>
PERIOD LOW AVERAGE HIGH
- ------ ------ ------- ------
10-Trading-Day Period...................................... $11.07 $11.47 $12.02
20-Trading-Day Period...................................... $11.07 $11.59 $13.00
30-Trading-Day Period...................................... $11.07 $11.73 $13.00
60-Trading-Day Period...................................... $11.03 $11.71 $13.00
90-Trading-Day Period...................................... $11.03 $11.86 $13.24
</Table>
Citigroup derived implied values for the consideration to be paid by
PeopleSoft in the transaction by adding:
- (a) $7.05, the effective cash consideration to be paid in respect of each
share of J.D. Edwards common stock in the transaction, and
- (b) the product of (i) 0.43, the effective number of shares of PeopleSoft
common stock to be issued in respect of each share of J.D. Edwards common
stock in the transaction, and (ii) various prices per share for
PeopleSoft common stock based on historical trading values.
Using the average closing price per share of PeopleSoft common stock for
the 10-trading-day period ending May 30, 2003 and the highest closing price per
share of PeopleSoft common stock for the 60-trading-day period ending May 30,
2003, Citigroup derived a range for the implied value of the consideration to be
paid by PeopleSoft in the transaction of $13.73 to $14.91 per share of J.D.
Edwards common stock.
COMPARABLE COMPANIES ANALYSIS
Citigroup compared financial, operating and stock market data and
forecasted financial information for selected publicly traded software companies
to similar information for PeopleSoft and J.D. Edwards. The selected comparable
companies considered by Citigroup were:
<Table>
- Siebel Systems, Inc. - Microsoft Corporation
- SAP Corporation - Sage, Inc.
- Oracle Corporation - Lawson Software, Inc.
- Intuit Inc.
</Table>
The forecasted financial information used by Citigroup for all companies in
the course of this analysis was based on information published by First Call
Corporation. First Call Corporation compiles summaries of financial forecasts
published by various investment banking firms. In addition, for PeopleSoft and
J.D. Edwards, Citigroup also considered forecasted financial information
prepared or reviewed by PeopleSoft management.
39
For each of the selected comparable companies, Citigroup derived and
compared, among other things:
- the ratio of each company's firm value to its estimated revenue for each
of calendar years 2003 and 2004; and
- the ratio of the closing price per common share of each company to its
estimated earnings per share (EPS) for each of calendar years 2003 and
2004 and for the next four quarters following announcement of the
transaction beginning with the first quarter ending after June 13, 2003.
For each of the selected comparable companies, Citigroup used the closing
price per common share as of June 13, 2003. For each of PeopleSoft and J.D.
Edwards, Citigroup used the closing price per common share as of May 30, 2003.
Firm value was calculated as the sum of the value of:
- all shares of common stock on a fully-diluted basis valued at the closing
price per share on the relevant date, less any proceeds that would be
received from the exercise of in-the-money options or conversion of
in-the-money securities; plus
- non-convertible indebtedness, out-of-the-money convertible indebtedness
and synthetic leases; plus
- non-convertible preferred stock and out-of-the-money convertible
preferred stock; plus
- minority interest; less
- cash and investments in unconsolidated affiliates.
The following table sets forth the results of these analyses:
<Table>
<Caption>
RANGE MEDIAN MEAN
------------- ------ -----
RATIO OF FIRM VALUE TO:
Estimated Revenue for Calendar Year 2003............. 1.3x - 7.0x 3.8x 3.9x
Estimated Revenue for Calendar Year 2004............. 1.3x - 6.5x 4.0x 3.9x
RATIO OF PRICE TO:
Estimated EPS for Calendar Year 2003................. 20.9x - 77.5x 32.1x 37.4x
Estimated EPS for Next Four Quarters................. 23.9x - 63.8x 32.2x 39.2x
Estimated EPS for Calendar Year 2004................. 19.1x - 47.2x 27.1x 28.7x
</Table>
Applying this information to forecasted information for J.D. Edwards from
Wall Street equity research and management, Citigroup derived a reference range
for the implied equity value per share on a standalone, public-trading basis for
J.D. Edwards common stock of $9.50 to $12.50. Citigroup further noted that this
range neither reflected a control premium nor attributed any value to J.D.
Edwards from the estimated synergies forecasted to result from the transaction.
40
PRECEDENT TRANSACTION ANALYSIS
Citigroup reviewed publicly available information for 12 merger or
acquisition transactions announced since January 1, 2001 involving companies in
the enterprise software business that it deemed appropriate in analyzing the
merger. In each of the precedent transactions the equity value of the acquired
company in the transaction was greater than $200 million. The precedent
transactions considered by Citigroup were the following (in each case, the
acquiror's name is listed first and the acquired company's name is listed
second):
<Table>
- - Veritas Software Corporation/ - IBM/Rational Software - Yahoo! Inc./Inktomi
Precise Software Solutions Ltd. Corporation Corporation
- - Fidelio Acquisition/InterTrust - Microsoft Corporation/ - Fair Isaac Corporation/HNC
Technologies Corporation Placeware Inc. Software Inc.
- - BMC Software, Inc./Remedy - Microsoft Corporation/Rare - VeriSign, Inc./Illuminet
Corporation Ltd. Holdings, Inc.
- - Microsoft Corporation/Navision - NetIQ Corporation/ - NetIQ Corporation/
A/S Webtrends Corporation PentaSafe Security
Technologies Inc.
</Table>
For each precedent transaction, Citigroup derived and compared, among other
things:
- the ratio of the firm value of the acquired company in the transaction
to:
(a) actual revenue of the acquired company for the latest 12 months of
results publicly available prior to the time the transaction was
announced; and
(b) estimated revenue of the acquired company for either the calendar
year of, or the calendar year following, the announcement of the
transaction;
- the ratio of the price per share of the acquired company paid in the
transaction to:
(a) estimated EPS of the acquired company for either the calendar year
in which the transaction was announced or the following calendar year;
(b) estimated EPS of the acquired company for the next four quarters
following announcement of the transaction beginning with the first
quarter ending after the announcement of the transaction; and
(c) estimated EPS of the acquired company for the calendar year
following, or the second year following, the announcement of the
transaction.
With respect to the financial information for the companies involved in the
precedent transactions, Citigroup relied on information from public filings,
company press releases, Securities Data Corp. and Wall Street equity research.
Securities Data Corp. compiles summaries of merger and financing information
published by certain investment banks, market research firms and trade
associations.
The following table sets forth the results of these analyses:
<Table>
<Caption>
RANGE MEDIAN
RATIO OF THE FIRM VALUE OF THE ACQUIRED COMPANY TO: -------------- ------
(a) Estimated revenue for latest 12 months of results
publicly available prior to the time the transaction
was announced......................................... 1.4x - 27.6x 6.0x
(b) Estimated revenue for either the calendar year of, or
the calendar year following, announcement............. 2.3x - 10.9x 5.1x
RATIO OF THE PURCHASE PRICE TO:
(a) Estimated EPS for the calendar year in which the
transaction was announced or following calendar
year.................................................. 30.7x - 106.3x 51.1x
(b) Estimated EPS for the next four quarters.............. 28.5x - 81.8x 45.3x
(c) Estimated EPS for the calendar year or second calendar
year following announcement........................... 25.8x - 63.4x 36.9x
</Table>
41
Based on this information, using both Wall Street equity research and
PeopleSoft management projections for J.D. Edwards, Citigroup derived a
reference range for the implied equity value per share of J.D. Edwards common
stock of $13.00 to $17.00.
Premiums Analysis. Citigroup reviewed the premiums paid with respect to
various trading prices for the stock of the acquired company in each of 21
merger or acquisition transactions announced since May 22, 2000 involving
publicly traded technology companies with equity values above $1 billion for
non-software targets and above $500 million for software targets. The technology
transactions considered by Citigroup were the following (in each case, the
acquiror's name is listed first and the acquired company's name is listed
second):
<Table>
- - Veritas Software -IBM/Rational Software -Logica plc/CMG plc
Corporation/ Precise Corporation
Software Solutions Ltd.
- -eBay Inc./PayPal, Inc. -Microsoft Corporation/ -Fair Isaac Corporation/HNC
Navision A/S Software Inc.
- -Intersil Corporation/Elantec -Synopsys, Inc./Avanti! -VeriSign, Inc./Illuminet
Semiconductor, Inc. Corporation Holdings, Inc.
- -Hewlett-Packard Company/ -Solectron Corporation/C-MAC -Sanmina Corporation/SCI
Compaq Computer Corporation Industries Inc. Systems, Inc.
- - Peregrine Systems, Inc./ - Triquint Semiconductor, - Siemens
Remedy Corporation Inc./ Sawtek, Inc. Corporation/Efficient
Networks, Inc.
- - Schlumberger Limited/Sema - Maxim Integrated Products, - NetIQ Corporation/
plc Inc./Dallas Semiconductor WebTrends Corporation
- - Maxtor Corporation/Quantum - Symantec Corporation/Axent - webMethods, Inc./Active
Corporation Technologies, Inc. Software, Inc.
</Table>
For each of the above transactions in which the consideration was all cash,
Citigroup determined the premium paid in the transaction (at the time of
announcement) to the average closing per share price of the acquired company's
common stock for the one, 10 and 30-trading day periods prior to the
announcement of the transaction. For each of the above transactions in which the
consideration was all stock, Citigroup determined the premium paid in the
transaction (at the time of announcement) to the average exchange ratio
(target's closing price divided by the acquiror's closing price) for the one, 10
and 30-trading day periods prior to the announcement of the transaction. For
each of the above transactions in which the consideration was mixed (cash and
stock), Citigroup determined whether the consideration was predominantly stock
or cash and used the relevant historical premium methodology. The following
table sets the forth the median premiums paid in all the precedent transactions
and in those precedent transactions in which the consideration consisted of all
cash or a combination of cash and the common stock of the acquiror.
<Table>
<Caption>
ACQUIRED COMPANY'S ACQUIRED COMPANY'S
ACQUIRED COMPANY'S AVERAGE PRICE AVERAGE PRICE
PRICE 1-DAY PRIOR TO 10-DAYS PRIOR TO 30-DAYS PRIOR TO
ANNOUNCEMENT ANNOUNCEMENT ANNOUNCEMENT
-------------------- ------------------ ------------------
Median (All Transactions)................ 28.5% 27.8% 29.8%
Median (All Cash or Mixed
Consideration)......................... 29.7% 32.9% 38.0%
</Table>
Using the closing prices of PeopleSoft common stock as of June 13, 2003 and
May 30, 2003 and the effective consideration per share of J.D. Edwards common
stock to be paid in the transaction of 0.430 of a share of PeopleSoft common
stock and $7.05 in cash, Citigroup noted that the implied premiums in the
transaction to the average closing price of J.D. Edwards common stock for the
one, 10 and 30-trading-day
42
periods prior to the respective announcements of the original merger agreement
on June 2, 2003 and the merger agreement on June 16, 2003 would be as set forth
in the following table.
<Table>
<Caption>
J.D. EDWARDS J.D. EDWARDS
J.D. EDWARDS AVERAGE PRICE AVERAGE PRICE
PRICE 1-DAY PRIOR OVER 10-DAYS PRIOR OVER 30-DAYS PRIOR
TO CORRESPONDING TO CORRESPONDING TO CORRESPONDING
ANNOUNCEMENT ANNOUNCEMENT ANNOUNCEMENT
----------------- ------------------ ------------------
Using PeopleSoft's Price as of June 13, 2003 9.9% 24.9% 22.2%
for the Amended Merger......................
Using PeopleSoft's Price as of May 30, 2003 19.4% 16.4% 15.6%
for the Original Merger.....................
</Table>
Based on the premiums paid in the precedent transactions and the historical
trading prices of J.D. Edwards common stock prior to the announcement of the
original merger agreement on June 2, Citigroup derived an implied equity value
per share of J.D. Edwards Common Stock of $15.25 to $17.00.
Pro Forma Earnings Impact Analysis. Citigroup analyzed the pro forma
effect of the transaction on PeopleSoft's forecasted EPS for calendar year 2004
using estimates for EPS published by First Call Corporation and those developed
by PeopleSoft management. Citigroup considered the impact of a range of pre-tax
synergies achieved in the transaction ranging from $50 million to $170 million,
assuming that synergies would be taxed at a 35% rate, and that transaction and
restructuring costs associated with the transaction would be $125 million.
Citigroup further assumed that the foregone pre-tax interest on cash used in the
transaction would be 3%. Citigroup excluded the impact of deferred revenue
writedowns and purchase accounting amortization expected to result from the
transaction. Based on this analysis, Citigroup noted that the transaction would
be accretive to PeopleSoft's forecasted EPS for calendar year 2004 for each
synergy case considered. Citigroup also noted that the transaction would be
dilutive to PeopleSoft's forecasted EPS for calendar year 2004 for each synergy
case considered when including the impact of deferred revenue writedowns and
purchase accounting amortization expected to result from the transaction.
* * *
The preceding discussion is a summary of the material financial analyses
furnished by Citigroup to the PeopleSoft board of directors, but it does not
purport to be a complete description of the analyses performed by Citigroup or
of its presentation to the PeopleSoft board of directors. The preparation of
financial analyses and fairness opinions is a complex process involving
subjective judgments and is not necessarily susceptible to partial analysis or
summary description. Citigroup made no attempt to assign specific weights to
particular analyses or factors considered, but rather made qualitative judgments
as to the significance and relevance of all the analyses and factors considered
and determined to give its fairness opinion as described above. Accordingly,
Citigroup believes that its analyses, and the summary set forth above, must be
considered as a whole, and that selecting portions of the analyses and of the
factors considered by Citigroup, without considering all of the analyses and
factors, could create a misleading or incomplete view of the processes
underlying the analyses conducted by Citigroup and its opinion. With regard to
the comparable companies and precedent transaction analyses summarized above,
Citigroup selected comparable public companies and precedent transactions on the
basis of various factors, including size and similarity of the line of business
of the relevant entities; however, no company utilized in these analyses is
identical to PeopleSoft or J.D. Edwards and no precedent transaction is
identical to the PeopleSoft/J.D. Edwards transaction. As a result, these
analyses are not purely mathematical, but also take into account differences in
financial and operating characteristics of the subject companies and other
factors that could affect the transaction or public trading value of the subject
companies to which PeopleSoft and J.D. Edwards are being compared.
In its analyses, Citigroup made numerous assumptions with respect to
PeopleSoft, J.D. Edwards, industry performance, general business, economic,
market and financial conditions and other matters, many of which are beyond the
control of PeopleSoft and J.D. Edwards. Any estimates contained in Citigroup's
analyses are not necessarily indicative of actual values or predictive of future
results or values, which may
43
be significantly more or less favorable than those suggested by these analyses.
Estimates of values of companies do not purport to be appraisals or necessarily
to reflect the prices at which companies may actually be sold. Because these
estimates are inherently subject to uncertainty, none of PeopleSoft, J.D.
Edwards, the PeopleSoft board of directors, the J.D. Edwards board of directors,
Citigroup or any other person assumes responsibility if future results or actual
values differ materially from the estimates.
Citigroup's analyses were prepared solely as part of Citigroup's analysis
of the fairness of the consideration to be paid in the transaction and were
provided to the PeopleSoft board of directors in that connection. The opinion of
Citigroup was only one of the factors taken into consideration by the PeopleSoft
board of directors in making its determination to approve the merger agreement,
the offer and the merger. See "PeopleSoft's Reasons for the Offer and the
Merger".
Citigroup is an internationally recognized investment banking firm engaged
in, among other things, the valuation of businesses and their securities in
connection with mergers and acquisitions, restructurings, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. PeopleSoft selected Citigroup to act as its
financial advisor on the basis of Citigroup's international reputation and
Citigroup's familiarity with PeopleSoft. In the ordinary course of its business,
Citigroup and its affiliates may actively trade or hold the securities of both
PeopleSoft and J.D. Edwards for its account and for the account of customers
and, accordingly, may at any time hold a long or short position in those
securities. Citigroup and its affiliates, including Citigroup Inc. and its
affiliates, may maintain relationships with PeopleSoft and J.D. Edwards and
their respective affiliates. Citigroup is acting as dealer manager for the
offer. Citigroup is also a customer of PeopleSoft.
Pursuant to its letter agreement with Citigroup, PeopleSoft agreed to pay
Citigroup $1,000,000, which became payable on June 1, 2003, plus an additional
$9,000,000, which will become payable in the event the combination with J.D.
Edwards is completed. PeopleSoft has also agreed to reimburse Citigroup for its
reasonable travel and other out-of-pocket expenses incurred in connection with
its engagement, including the reasonable fees and expenses of its counsel, and
to indemnify Citigroup against specific liabilities and expenses relating to or
arising out of its engagement, including liabilities under the federal
securities laws. In addition, Citigroup has been retained to act as financial
advisor to PeopleSoft in connection with the Oracle Offer and certain potential
transactions related to such offer, and Citigroup will receive fees for such
services.
J.D. EDWARDS' REASONS FOR THE OFFER AND THE MERGER
The J.D. Edwards board of directors believes that the offer and the merger
are advisable, fair to and in the best interest of, J.D. Edwards and the J.D.
Edwards stockholders. At a special meeting of the J.D. Edwards board of
directors held on June 1, 2003, at which the original merger agreement and the
transactions relating thereto were considered and voted upon, the J.D. Edwards
directors unanimously approved the original merger agreement and the merger. On
June 15, 2003, at a special meeting, the J.D. Edwards directors unanimously
approved the offer, the merger agreement and the merger. The directors
unanimously recommend that the holders of shares of J.D. Edwards common stock
accept the offer, tender their shares and approve the merger agreement and the
merger.
In the course of reaching its decision to approve the offer and the merger
agreement, the J.D. Edwards board of directors consulted with J.D. Edwards'
management, as well as its outside legal counsel and its financial advisors, and
identified several potential benefits as reasons for that approval. These
reasons include, among other things:
- the J.D. Edwards board's judgment that the two companies combined will be
stronger than either company standing alone because of their significant
complementary strengths and complementary products:
44
- PeopleSoft is a leader in providing enterprise applications and services
to large enterprises, and J.D. Edwards is a leader in providing
enterprise applications and services to mid-market businesses;
- PeopleSoft has strong human resource products, and J.D. Edwards has
strong manufacturing and distribution products; and
- PeopleSoft is a leading provider to the service industries, such as
financial services, telecommunications, healthcare, government and
education, and J.D. Edwards is a leading provider in manufacturing and
distribution industries, including wholesale distribution, industrial,
consumer and life sciences; asset-intensive industries; and project and
service industries, including construction and real estate;
- the combined company potential to grow by leveraging a stronger global
presence;
- the resulting business should benefit from greater global scale and
expertise, along with an opportunity for increased revenue growth and
increased margins and profits;
- the J.D. Edwards board's judgment that the two companies have similar
cultures, which should assist integration into one combined business;
- that based on the prices of J.D. Edwards and PeopleSoft common stock at
the time the merger agreement was approved by the J.D. Edwards board, the
value offered in the transaction represented a premium over the price of
J.D. Edwards common stock then prevailing in the market; and
- the ability to elect to receive stock consideration provides an
opportunity for J.D. Edwards stockholders to participate in the future
growth in value of the combined company following the merger as
stockholders of PeopleSoft.
In the course of its deliberations, the J.D. Edwards board of directors
considered a number of additional factors relevant to the offer and the merger,
including:
- historical information concerning J.D. Edwards and PeopleSoft and their
respective businesses, financial performance, condition, operations,
technology, management and position in their respective industries, and
information and evaluations regarding the two companies' strengths,
weaknesses and prospects, both before and after giving effect to the
offer and the merger;
- the potential effect on stockholder value of J.D. Edwards continuing as
an independent entity compared to the potential effect of a combination
with PeopleSoft in light of the other possible strategic alternatives the
J.D. Edwards board examined;
- the presentations of J.D. Edwards' financial advisor, Morgan Stanley &
Co. Incorporated, in connection with its opinion (which opinion is
attached to this prospectus as Appendix D) to the effect that, as of June
15, 2003, and subject to the assumptions, qualifications and limitations
set forth in its written opinion, the per share merger consideration to
be paid pursuant to the merger agreement was fair, from a financial point
of view, to holders of J.D. Edwards common stock;
- current financial market conditions and historical market prices,
volatility and trading information for J.D. Edwards common stock and
PeopleSoft common stock, and various factors that might affect the market
value of PeopleSoft common stock in the future;
- the premium represented by the offer consideration and the premiums paid
in other recent transactions that could be viewed as comparable, as well
as the negotiations between J.D. Edwards and PeopleSoft relating to the
offer consideration;
- the alternatives available to J.D. Edwards; and
- the terms of the offer, the merger agreement and related agreements, by
themselves and in comparison to the terms of other transactions, and the
intensive negotiations between PeopleSoft
45
and J.D. Edwards including their negotiations relating to the details of
the merger agreement, including but not limited to, the conditions to the
parties' obligations to complete the offer and the merger, the details of
the "no shop" restrictions on J.D. Edwards and the scope of J.D. Edwards
"fiduciary out" from these restrictions, the parties' termination rights,
the termination fee that J.D. Edwards may be required to pay PeopleSoft
in certain circumstances and the voting agreements.
The potential negative factors the J.D. Edwards board of directors
considered include:
- the fact that a portion of the consideration is based on a fixed exchange
ratio means that the aggregate value of the transaction will fluctuate
subject to the changes in PeopleSoft's trading price in the public
market;
- the fact that pursuant to the merger agreement, J.D. Edwards is required
to obtain PeopleSoft's consent before it can take a variety of actions
between the signing and the closing of the merger;
- the risk that potential benefits and synergies sought in the merger may
not be fully realized, if at all;
- the risk that the operations of J.D. Edwards would be disrupted from
employee uncertainty following announcement of the offer and the merger;
- the risk of potential delay or reduction in customer orders;
- the risk that despite the efforts of the combined company, key technical
and management personnel of J.D. Edwards might not choose to remain
employed by the combined company;
- the possibility that the trading price or value of PeopleSoft common
stock may decrease in the future;
- the adverse effect on J.D. Edwards' business, operating results and
financial condition and the effect on J.D. Edwards' ability to attract
and retain key management, marketing and technical personnel in the event
the offer and the merger were not consummated following public
announcement that the merger agreement had been entered into; and
- various other risks associated with the combined company and the merger,
including those described under the section entitled "Risk Factors"
beginning on page 18 and in the respective companies' SEC filings.
The J.D. Edwards board of directors concluded, however, that many of these
risks could be managed or mitigated by J.D. Edwards or by the combined company
or were unlikely to have a material impact on the offer, the merger or the
combined company, and that, overall, the risks, uncertainties, restrictions and
potentially negative factors associated with the offer and the merger were
outweighed by the potential benefits of the offer and the merger.
The foregoing discussion of factors considered by the J.D. Edwards board of
directors is not meant to be exhaustive but includes the material factors
considered by the board in approving the merger agreement and the transactions
contemplated by the merger agreement and in recommending that stockholders
accept the offer, tender their shares and approve the merger agreement and the
merger. The J.D. Edwards board of directors did not find it practicable to, and
did not, quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination. Rather, the directors made their
respective determination based on the totality of the information presented to
them, and the judgments of individual members of the board may have been
influenced to a greater or lesser degree by different factors. In approving the
merger agreement, the J.D. Edwards board of directors was aware of the interests
of J.D. Edwards' management in the merger, as described in the section entitled
"Background of the Offer and the Merger -- Interests of Certain Persons in the
Merger".
46
OPINION OF J.D. EDWARDS' FINANCIAL ADVISOR
Under an engagement letter dated December 20, 2002 and amended June 15,
2003, J.D. Edwards retained Morgan Stanley & Co. Incorporated to provide it with
financial advisory services and a financial fairness opinion in connection with
the transaction. J.D. Edwards' board of directors selected Morgan Stanley to act
as its financial advisor based on Morgan Stanley's qualifications, expertise and
reputation and its knowledge of the business and affairs of J.D. Edwards. At the
telephonic meeting of the J.D. Edwards board of directors on June 15, 2003,
Morgan Stanley rendered its oral opinion, subsequently confirmed in writing,
that as of June 15, 2003, based upon and subject to the assumptions and
considerations set forth in its opinion, the merger consideration to be received
by holders of shares of J.D. Edwards common stock pursuant to the merger
agreement was fair from a financial point of view to such holders.
THE FULL TEXT OF MORGAN STANLEY'S OPINION, DATED AS OF JUNE 15, 2003, IS
ATTACHED AS ANNEX D HERETO. THE OPINION SETS FORTH, AMONG OTHER THINGS, THE
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE
SCOPE OF THE REVIEW UNDERTAKEN BY MORGAN STANLEY IN RENDERING ITS OPINION. WE
URGE YOU TO READ THE ENTIRE OPINION CAREFULLY. MORGAN STANLEY'S OPINION IS
DIRECTED TO J.D. EDWARDS' BOARD OF DIRECTORS AND ADDRESSES ONLY THE FAIRNESS
FROM A FINANCIAL POINT OF VIEW OF THE MERGER CONSIDERATION TO BE RECEIVED BY
HOLDERS OF SHARES OF J.D. EDWARDS PURSUANT TO THE MERGER AGREEMENT AS OF THE
DATE OF THE OPINION. THE OPINION DOES NOT ADDRESS ANY OTHER ASPECTS OF THE
TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF J.D.
EDWARDS COMMON STOCK AS TO HOW TO TENDER OR ELECT IN CONNECTION WITH THE
TRANSACTION NOR HOW THE STOCKHOLDERS OF J.D. EDWARDS SHOULD VOTE AT THE
STOCKHOLDERS' MEETING, IF ANY, TO BE HELD IN CONNECTION WITH THE TRANSACTION.
THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET FORTH IN THIS DOCUMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION.
In connection with rendering its opinion, Morgan Stanley, among other
things:
- reviewed certain publicly available financial statements and other
business and financial information of J.D. Edwards and PeopleSoft,
respectively;
- reviewed certain internal financial statements and other financial and
operating data concerning J.D. Edwards and PeopleSoft, prepared by the
managements of J.D. Edwards and PeopleSoft, respectively;
- discussed certain strategic, financial and operational benefits
anticipated from the transaction with the managements of J.D. Edwards and
PeopleSoft and reviewed estimates of the strategic, operational and
financial benefits, including, among other things, cost savings
anticipated from the transaction prepared by the managements of J.D.
Edwards and PeopleSoft;
- reviewed the pro forma impact of the transaction on the combined
company's financial performance, including cash earnings per share,
defined as earnings excluding non-cash charges and purchase accounting
adjustments;
- discussed the past and current operations and financial condition and the
prospects of J.D. Edwards and PeopleSoft with senior executives of J.D.
Edwards and PeopleSoft;
- reviewed the reported prices and trading activity for J.D. Edwards common
stock and PeopleSoft common stock;
- compared the financial performance of J.D. Edwards and PeopleSoft and the
prices and trading activity of the J.D. Edwards common stock and
PeopleSoft common stock with that of certain other comparable
publicly-traded companies and their securities;
- reviewed the financial terms, to the extent publicly available, of
certain comparable transactions;
- discussed with the management of J.D. Edwards their strategic rationale
for the transaction and certain alternatives to the transaction;
47
- participated in discussions and negotiations among representatives of
J.D. Edwards, PeopleSoft and their financial and legal advisors;
- reviewed the Offer to Purchase on Schedule TO, dated June 9, 2003, as
amended, filed by Oracle Corporation and discussed the Oracle Offer with
representatives of PeopleSoft, J.D. Edwards and their financial and legal
advisors;
- reviewed the merger agreement, the original merger agreement and certain
related documents; and
- performed such other analyses and considered such other factors as Morgan
Stanley deemed appropriate.
Morgan Stanley assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by it for the purposes
of this opinion. With respect to the internal financial statements, including
certain estimates relating to the financial and operational benefits anticipated
from the transaction, Morgan Stanley assumed that they were reasonably prepared
on bases reflecting the best currently available estimates and judgments of the
future financial performance of J.D. Edwards and PeopleSoft, respectively. In
addition, Morgan Stanley assumed that the transaction will be consummated in
accordance with the terms set forth in the merger agreement, including among
other things, that the transaction will be treated as a tax-free reorganization
pursuant to the Internal Revenue Code of 1986, as amended or a tax free
transaction governed by Section 351 of the Code. Morgan Stanley noted that on
June 6, 2003, Oracle Corporation announced its intention to launch a tender
offer for all outstanding PeopleSoft common stock and filed the Oracle Offer on
June 9, 2003. In addition, Morgan Stanley noted that on June 13, 2003, the board
of directors of PeopleSoft rejected the Oracle Offer.
Morgan Stanley relied upon, without independent verification, the
assessment by the managements of J.D. Edwards and PeopleSoft of: (i) the
strategic, financial and other benefits expected to result from the transaction;
(ii) the timing and risks associated with the integration of J.D. Edwards and
PeopleSoft; and (iii) the validity of, and risks associated with, J.D. Edwards'
and PeopleSoft's existing and future technologies, intellectual property,
products, services and business models. Morgan Stanley has not made any
independent valuation or appraisal of the assets, liabilities or technology of
J.D. Edwards and PeopleSoft, nor was it furnished with any such appraisals.
Morgan Stanley's opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to Morgan
Stanley as of, June 15, 2003. In arriving at its opinion, Morgan Stanley was not
authorized to solicit, and did not solicit, interest from any party with respect
to the acquisition of J.D. Edwards or any of its assets.
The following is a brief summary of the material financial analyses
performed by Morgan Stanley in connection with its oral opinion and the
preparation of its written opinion. Some of these summaries of financial
analyses include information presented in tabular format. In order to fully
understand the financial analyses used by Morgan Stanley, the tables must be
read together with the text of each summary. The tables alone do not constitute
a complete description of the financial analyses.
J.D. EDWARDS
Trading Range. Morgan Stanley reviewed the range of closing prices of J.D.
Edwards common stock for various periods ending on June 13, 2003, the last
trading day prior to the announcement of the amended and restated merger
agreement. Morgan Stanley observed the following:
<Table>
<Caption>
PERIOD ENDING JUNE 13, 2003 RANGE OF CLOSING PRICES
- --------------------------- -----------------------
Last 12 Months.................................. $ 8.49 - $14.52
From May 6, 2003................................ $11.07 - $13.40
</Table>
Morgan Stanley used an implied transaction value per share of J.D. Edwards
common stock of $14.33 based on PeopleSoft's common stock price of $16.92 per
share as of June 13, 2003, the exchange ratio of 0.430 from the amended and
restated merger agreement and $7.05 in cash. Morgan Stanley also used the
"unaffected price" of J.D. Edwards common stock of $11.81, which was the price
of J.D. Edwards
48
common stock on May 30, 2003, the last trading day prior to the announcement of
the original merger agreement.
Morgan Stanley noted that the implied transaction value reflected a 10%
premium to J.D. Edwards' closing price as of June 13, 2003, a 21% premium to the
J.D. Edwards unaffected price and was above the range of closing prices for the
period beginning on May 6, 2003, the date after J.D. Edwards' fiscal year 2003
second quarter earnings pre-announcement for the quarter ended April 30, 2003.
Comparable Company Trading Analysis. Morgan Stanley compared certain
publicly available financial information of J.D. Edwards with publicly available
information for selected companies with businesses comparable to the businesses
of J.D. Edwards. The following table lists these companies:
J.D. EDWARDS
COMPARABLE COMPANIES
--------------------
Intuit, Incorporated
Lawson Software, Incorporated
Oracle Corporation
PeopleSoft, Inc.
Sage Group plc
SAP AG
Siebel Systems, Incorporated
In conducting its analysis, Morgan Stanley applied the relevant financial
multiples of the comparable companies to publicly-available equity research
analyst estimates of various financial statistics for J.D. Edwards, including
cash earnings per share, defined as earnings excluding non-cash charges and
purchase accounting adjustments. Morgan Stanley then estimated the implied value
per share of J.D. Edwards as of June 13, 2003. Morgan Stanley estimated the
following:
<Table>
<Caption>
IMPLIED VALUE
J.D. EDWARDS COMPARABLE COMPANY PER SHARE OF
CALENDAR YEAR FINANCIAL STATISTIC FINANCIAL STATISTIC MULTIPLE RANGE J.D. EDWARDS
- --------------------------------- ------------------- ------------------ --------------
Price to 2003 Estimated Cash
Earnings Per Share................ 75.4x 28.0x - 35.0x $ 4.84 - $6.05
Price to 2004 Estimated Cash
Earnings Per Share................ 36.0x 24.0x - 33.0x $8.69 - $11.95
</Table>
Morgan Stanley noted that the implied transaction value of $14.33 per share
of J.D. Edwards common stock was above the implied share value range for each of
the multiples shown above. Morgan Stanley also noted that the 2003 to 2004 cash
earnings per share growth rates for the selected comparable companies ranged
from 6% to 63%, and the J.D. Edwards 2003 to 2004 cash earnings per share growth
rate was 110%.
No company utilized in the comparable company analysis is identical to J.D.
Edwards. In evaluating the comparable companies, Morgan Stanley made judgments
and assumptions with regard to industry performance, general business, economic,
market and financial conditions and other matters, many of which are beyond the
control of J.D. Edwards, such as the impact of competition on the businesses of
J.D. Edwards and the industry in general, industry growth and the absence of any
material adverse change in the financial condition and prospects of J.D. Edwards
or the industry or in the financial markets in general. Mathematical analysis,
such as determining the average or median, is not in itself a meaningful method
of using comparable company data.
Discounted Equity Value. Morgan Stanley performed an analysis of the
implied present values per share of J.D. Edwards common stock on a standalone
basis based on J.D. Edwards' projected future equity value using equity research
analyst projections that were publicly-available as of June 13, 2003. To
calculate the Discounted Equity Value, Morgan Stanley used the calendar year
2004 earning per share estimates from publicly available equity research
analysts with projected annual growth rates of from 10%
49
to 40% to extrapolate estimates for 2005. Morgan Stanley also used an
illustrative discount rate of 14% which reflected the J.D. Edwards average cost
of capital. Morgan Stanley observed the following:
<Table>
<Caption>
J.D. EDWARDS NEXT CALENDAR IMPLIED VALUE
FINANCIAL YEAR MULTIPLE DISCOUNT PER SHARE OF
CALENDAR YEAR FINANCIAL STATISTIC STATISTIC RANGE RATE J.D. EDWARDS
- --------------------------------- ------------- ------------- -------- --------------
2005 Estimated Cash Earning Per
Share.......................... $0.40 - $0.51 24x - 33x 14% $8.41 - $14.72
</Table>
Morgan Stanley observed that the implied transaction value of $14.33 per
share of J.D. Edwards common stock was near the high end of the estimated
reference range.
Relative Contribution Analysis. Morgan Stanley compared J.D. Edwards and
PeopleSoft stockholders' respective percentage ownership of the combined company
based on the implied exchange ratio to J.D. Edwards' and PeopleSoft's respective
percentage contribution (and the implied ownership based on such contribution)
to the combined company using revenues, gross margins, operating income and cash
net income based on publicly-available equity research analyst estimates. Morgan
Stanley calculated the implied exchange ratio set forth in the merger agreement
as of June 13, 2003 by converting the $7.05 per share cash portion of the offer
into PeopleSoft common stock based on the June 13, 2003 closing price of
PeopleSoft common stock and adding this amount to the per share stock portion of
the offer. The implied exchange ratio based on the closing prices of J.D.
Edwards common stock and PeopleSoft common stock on June 13, 2003 was 0.847.
Morgan Stanley noted that the implied pro forma J.D. Edwards ownership of the
combined company based on the implied exchange ratio of 0.847 was 25%.
<Table>
<Caption>
IMPLIED % PRO FORMA
OWNERSHIP BY
------------------------- IMPLIED VALUE PER
FINANCIAL STATISTIC J.D. EDWARDS PEOPLESOFT J.D. EDWARDS SHARE
- ------------------- ------------ ---------- ------------------
REVENUE
Calendar Year 2002 Actual.................. 26.5% 73.5% $15.86
Calendar Year 2003 Estimated............... 25.8 74.2 $15.33
Calendar Year 2004 Estimated............... 26.0 74.0 $15.52
GROSS PROFIT
Calendar Year 2002 Actual.................. 25.7 74.3 $15.23
Calendar Year 2003 Estimated............... 24.7 75.3 $14.47
Calendar Year 2004 Estimated............... 25.2 74.8 $14.83
OPERATING INCOME
Calendar Year 2002 Actual.................. 17.2 82.8 $ 9.17
Calendar Year 2003 Estimated............... 12.5 87.5 $ 6.34
Calendar Year 2004 Estimated............... 19.1 80.9 $10.40
NET INCOME
Calendar Year 2002 Actual.................. 16.9 83.1 $ 8.97
Calendar Year 2003 Estimated............... 11.3 88.7 $ 5.63
Calendar Year 2004 Estimated............... 19.2 80.8 $10.48
</Table>
Based on the analyses, Morgan Stanley calculated a reference range of $5.63
to $15.86 per share of J.D. Edwards common stock. Morgan Stanley observed that
the implied transaction value of $14.33 was within the reference range based on
this analysis.
Analysis of Selected Precedent Transactions. Morgan Stanley compared
publicly available information for two sets of selected transactions to the
relevant financial statistics for J.D. Edwards. The first set of transactions
consisted of selected transactions in the enterprise software sector. Morgan
Stanley
50
compared publicly available information for the selected transactions to the
relevant financial statistics for J.D. Edwards. The following is a list of these
transactions:
<Table>
<Caption>
SELECTED PRECEDENT ENTERPRISE SOFTWARE TRANSACTIONS (TARGET/ACQUIRER)
- ---------------------------------------------------------------------
Crossworlds Software, Incorporated/International Business Machines
Corporation
HNC Software, Incorporated/Fair, Isaac & Company, Incorporated
Navision AS/Microsoft Corporation
Precise Software Solutions Limited/Veritas Software Corporation
Rational Software Corporation/International Business Machines
Corporation
Remedy Corporation/Peregrine Systems, Incorporated
</Table>
For each precedent transaction, Morgan Stanley analyzed, as of the
announcement date of each transaction, the multiple implied by the transaction
value of the (i) price to J.D. Edwards' last 12 months cash earnings, and (ii)
price to J.D. Edwards' next 12 months estimated cash earnings. Morgan Stanley
observed the following:
<Table>
<Caption>
PRECEDENT J.D. EDWARDS/
TRANSACTION PEOPLESOFT
PRECEDENT TRANSACTION FINANCIAL STATISTIC STATISTIC RANGE FINANCIAL STATISTIC
- ----------------------------------------- --------------- -------------------
Price to Last 12 Months (LTM) Cash Earnings...... 37.2x - 64.8x 53.7x
Price to Next 12 Months (NTM) Cash Earnings...... 27.0x - 43.0x 61.8x
</Table>
Based on the analysis of the selected precedent enterprise software
transactions, Morgan Stanley calculated a reference range for J.D. Edwards
common stock of $10.16 to $17.69 based on the LTM cash earnings of J.D. Edwards,
and Morgan Stanley observed the implied transaction value of $14.33 was within
this range. Morgan Stanley also calculated a reference range of $6.25 to $9.96
based on the NTM cash earnings of J.D. Edwards, and Morgan Stanley observed the
implied transaction value of $14.33 was above this range.
The second set of transactions consisted of selected transactions in the
technology sector in which the target pro-forma ownership in the combined
company was between 20% and 40%. Morgan Stanley noted that the implied pro forma
J.D. Edwards ownership of the combined company based on the implied exchange
ratio of 0.847 was 25%. Morgan Stanley compared publicly available information
for the selected transactions to the relevant financial statistics for J.D.
Edwards. The following is a list of these transactions:
<Table>
<Caption>
SELECTED PRECEDENT TRANSACTIONS (TARGET/ACQUIRER)
- -------------------------------------------------
Allen Telecom, Incorporated/Andrew Corporation
Compaq Computer Corporation/Hewlett Packard Company
Elantec Semiconductor, Incorporated/Intersil Corporation
HNC Software, Incorporated/Fair, Isaac & Company,
Incorporated
Micro General Corporation/Fidelity National Information
Systems, Incorporated
Oak Technology, Incorporated/Zoran Corporation
ONI Systems Corporation/CIENA Corporation
ONTRACK Data International/Kroll, Incorporated
OTG Software, Incorporated/Legato Systems, Incorporated
Sage, Incorporated/Genesis Microchip, Incorporated
Sawtek, Incorporated/TriQuint Semiconductor, Incorporated
SCI Systems, Incorporated/Sanmina Corporation
Spectrian Corporation/REMEC, Incorporated
</Table>
51
For each of these precedent transactions, Morgan Stanley analyzed the
premiums to the one-day price and the 30-day average historical exchange ratio,
prior to the announcement of each precedent transaction. Morgan Stanley observed
the following:
<Table>
<Caption>
TRANSACTION
FINANCIAL STATISTIC
---------------------
PRECEDENT AS OF
TRANSACTION JUNE 13,
PRECEDENT TRANSACTION FINANCIAL STATISTIC STATISTIC RANGE 2003 UNAFFECTED
- ----------------------------------------- --------------- -------- ----------
Premium to the one-day price........................ 12% - 37% 10% 21%
Premium to the 30-day average exchange ratio........ 6% - 55% 13% 19%
</Table>
The J.D. Edwards unaffected price was $11.81 on May 30, 2003, the last
trading day prior to the announcement of the original merger agreement. The
one-day unaffected premium of 21% is calculated as the premium of the implied
transaction value per share of J.D. Edwards common stock of $14.33 based on
PeopleSoft's common stock price of $16.92 per share as of June 13, 2003, the
exchange ratio of 0.430 from the amended and restated merger agreement and $7.05
in cash to the J.D. Edwards unaffected price. The 30-day current premium of 13%
is calculated as the premium of the implied transaction value per share of J.D.
Edwards common stock based in part on the average price of PeopleSoft common
stock for the 30 trading day period ended June 13, 2003, the exchange ratio of
0.430 from the merger agreement and $7.05 in cash to the average price of the
J.D. Edwards common stock for the 30 trading day period ended June 13, 2003. The
30-day unaffected premium of 19% is calculated as the premium of the implied
transaction value per share of J.D. Edwards common stock based in part on the
average price of PeopleSoft common stock for the 30 trading day period ended
June 13, 2003, the exchange ratio of 0.430 from the merger agreement and $7.05
in cash to the average price of the J.D. Edwards common stock for the 30 trading
day period ended May 30, 2003.
Morgan Stanley calculated a reference range for J.D. Edwards common stock
of $13.22 to $16.21 based on the one-day premium to the unaffected price of J.D.
Edwards. Morgan Stanley observed that the implied transaction value of $14.33
was within the range based on this analysis. Morgan Stanley also calculated a
reference range for J.D. Edwards common stock of $12.42 to $18.19 based on the
30-day premium to the unaffected average price of the J.D. Edwards common stock
for the 30 trading day period ended May 30, 2003. Morgan Stanley observed that
the implied transaction value of $14.33 was within the range based on this
analysis.
No company or transaction utilized in the analysis of selected precedent
transactions is identical to J.D. Edwards or PeopleSoft or the transaction. In
evaluating the precedent transactions, Morgan Stanley made judgments and
assumptions with regard to industry performance, general business, market and
financial conditions and other matters, which are beyond the control of J.D.
Edwards and PeopleSoft, such as the impact of competition on the business of
J.D. Edwards, PeopleSoft, or the industry generally, industry growth and the
absence of any adverse material change in the financial condition and prospects
of J.D. Edwards, PeopleSoft or the industry or in the financial markets in
general, which could affect the public trading value of the companies and the
aggregate value of the transactions to which they are being compared.
Accretion/Dilution Analysis: Morgan Stanley analyzed the pro forma impact
of the transaction on PeopleSoft's combined projected cash earnings per share
for the year ending December 31, 2004. In performing this analysis, Morgan
Stanley utilized publicly available equity research analyst estimates for
revenues and cash earnings per share.
Morgan Stanley's analysis indicated that, exclusive of the impact of
potential synergies, the transaction would result in cash earnings per share
dilution of 2% for the year ending December 31, 2004, and the combined company
would have to realize pre-tax synergies of approximately $5 million in the
calendar year ending December 31, 2004 for the transaction to be neutral to the
cash earnings per share. Morgan Stanley also analyzed the impact of a range of
pre-tax synergies on PeopleSoft's combined
52
projected cash earnings per share for the year ending December 31, 2004. Morgan
Stanley's analysis indicated the following:
<Table>
<Caption>
2004 CASH EARNINGS
PER SHARE
ANNUAL RUN RATE SYNERGIES ACCRETION/(DILUTION)
- ------------------------- --------------------
(IN MILLIONS)
$ 0....................................................... (2)%
$ 50....................................................... 11%
$100....................................................... 24%
$150....................................................... 36%
$200....................................................... 49%
</Table>
PEOPLESOFT
Trading Range. Morgan Stanley reviewed the range of closing prices of
PeopleSoft common stock for various periods prior to June 13, 2003, including
April 4, 2003, the date after PeopleSoft's fiscal year 2003 first quarter
earnings pre-announcement for the quarter ended March 31, 2003, and May 30,
2003, the last trading day prior to the announcement of the original merger
agreement. Morgan Stanley observed the following:
<Table>
<Caption>
PERIOD RANGE OF CLOSING PRICES
- ------ -----------------------
Last 12 Months ended June 13, 2003....................... $12.07 - $21.71
From April 4, 2003 to June 13, 2003...................... $14.55 - $17.90
From April 4, 2003 to May 30, 2003....................... $14.55 - $16.67
</Table>
Morgan Stanley also used the "unaffected price" of PeopleSoft common stock
of $16.39, which was the price of PeopleSoft common stock on May 30, 2003, the
last trading day prior to the announcement of the original merger agreement.
Morgan Stanley observed the price per share of PeopleSoft common stock on June
13, 2003 of $16.92 was within or above the range of closing prices for the each
of the periods observed. Morgan Stanley also observed that the unaffected price
of PeopleSoft common stock of $16.39 was within the range of closing prices for
the each of the periods observed.
Comparable Company Trading Analysis. Morgan Stanley compared certain
publicly available financial information of PeopleSoft with publicly available
information for selected companies with businesses comparable to the businesses
of PeopleSoft. The following table lists these companies:
PEOPLESOFT
COMPARABLE COMPANIES
--------------------
Intuit, Incorporated
J.D. Edwards & Company
Lawson Software, Incorporated
Oracle Corporation
Sage Group plc
SAP AG
Siebel Systems, Incorporated
In conducting its analysis, Morgan Stanley applied the relevant financial
multiples of the comparable companies to publicly available equity research
analyst estimates of various financial statistics for PeopleSoft. Morgan Stanley
then estimated the implied value per share of PeopleSoft as of June 13, 2003.
Morgan Stanley estimated the following:
<Table>
<Caption>
COMPARABLE IMPLIED VALUE
CALENDAR YEAR PEOPLESOFT COMPANY PER SHARE OF
FINANCIAL STATISTIC MULTIPLE MULTIPLE RANGE PEOPLESOFT
- ------------------- ---------- -------------- ---------------
Price to 2003 Estimated Cash Earnings Per
Share........................................ 32.2x 28.0x - 35.0x $14.71 - $18.39
Price to 2004 Estimated Cash Earnings Per
Share........................................ 28.2x 24.0x - 33.0x $14.38 - $19.77
</Table>
53
Morgan Stanley noted the price per share of PeopleSoft common stock on June
13, 2003 of $16.92 was within the implied share value range for each of the
multiples shown above, and that the unaffected price of PeopleSoft common stock
of $16.39 was within the implied share value range for each of the multiples
shown above. Morgan Stanley also noted that the 2003 to 2004 cash earnings per
share growth rates for the selected comparable companies ranged from 6% to 110%,
and the PeopleSoft 2003 to 2004 cash earnings per share growth rate was 14%.
No company utilized in the comparable company analysis is identical to
PeopleSoft. In evaluating the comparable companies, Morgan Stanley made
judgments and assumptions with regard to industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of PeopleSoft, such as the impact of competition on the
businesses of PeopleSoft and the industry in general, industry growth and the
absence of any material adverse change in the financial condition and prospects
of PeopleSoft or the industry or in the financial markets in general.
Mathematical analysis, such as determining the average or median, is not in
itself a meaningful method of using comparable company data.
Discounted Equity Value. Morgan Stanley performed an analysis of the
implied present value per share of PeopleSoft common stock on a standalone basis
based on PeopleSoft's projected future equity value using equity research
analyst projections that were publicly-available as of June 13, 2003. To
calculate the Discounted Equity Value, Morgan Stanley used the 2004 cash earning
per share estimate grown at a long-term projected annual growth rate of 12% to
extrapolate estimates for 2005. Morgan Stanley also used an illustrative
discount rate of 16% which reflected the PeopleSoft average cost of capital.
Morgan Stanley observed the following:
<Table>
<Caption>
PEOPLESOFT NEXT CALENDAR IMPLIED VALUE
CALENDAR YEAR FINANCIAL YEAR MULTIPLE DISCOUNT PER SHARE OF
FINANCIAL STATISTIC STATISTIC RANGE RATE PEOPLESOFT
- ------------------- ---------- ------------- -------- ---------------
2005 Estimated Cash Earning Per
Share................................ $0.66 24.0x - 33.0x 16% $13.96 - $19.19
</Table>
Morgan Stanley observed the price per share of PeopleSoft common stock on
June 13, 2003 of $16.92 and the unaffected price of PeopleSoft common stock of
$16.39 were within the estimated reference range.
In connection with the review of the transaction by J.D. Edwards' board of
directors, Morgan Stanley performed a variety of financial and comparative
analyses for purposes of rendering its opinion. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to a partial
analysis or summary description. In arriving at its opinion, Morgan Stanley
considered the results of all of its analyses as a whole and did not attribute
any particular weight to any analysis or factor it considered. Morgan Stanley
believes that selecting any portion of its analyses, without considering all
analyses as a whole, would create an incomplete view of the process underlying
its analyses and opinion. In addition, Morgan Stanley may have given various
analyses and factors more or less weight than other analyses and factors, and
may have deemed various assumptions more or less probable than other
assumptions. As a result, the ranges of valuations resulting from any particular
analysis described above should not be taken to be Morgan Stanley's view of the
actual value of J.D. Edwards or PeopleSoft. In performing its analyses, Morgan
Stanley made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters. Many of these assumptions
are beyond the control of J.D. Edwards or PeopleSoft. Any estimates contained in
Morgan Stanley's analyses are not necessarily indicative of future results or
actual values, which may be significantly more or less favorable than those
suggested by such estimates.
Morgan Stanley conducted the analyses described above solely as part of its
analysis of the fairness of the exchange ratio pursuant to the merger agreement
from a financial point of view and in connection with the delivery of its
opinion dated June 15, 2003 to J.D. Edwards' board of directors. These analyses
do not purport to be appraisals or to reflect the prices at which shares of
common stock of J.D. Edwards or PeopleSoft might actually trade.
The merger consideration to be received by holders of J.D. Edwards common
stock pursuant to the merger agreement was determined through arm's length
negotiations between J.D. Edwards and
54
PeopleSoft and was approved by J.D. Edwards' board of directors. Morgan Stanley
provided advice to J.D. Edwards during these negotiations. Morgan Stanley did
not, however, recommend any specific merger consideration to J.D. Edwards or its
board of directors or that any specific merger consideration constituted the
only appropriate consideration for the transaction.
In addition, Morgan Stanley's opinion and its presentation to J.D. Edwards'
board of directors was one of many factors taken into consideration by J.D.
Edwards' board of directors in deciding to approve the transaction.
Consequently, the analyses as described above should not be viewed as
determinative of the opinion of J.D. Edwards' board of directors with respect to
the exchange ratio or of whether J.D. Edwards' board of directors would have
been willing to agree to different merger consideration.
J.D. Edwards' board of directors retained Morgan Stanley based upon Morgan
Stanley's qualifications, experience and expertise. Morgan Stanley is an
internationally recognized investment banking and advisory firm. Morgan Stanley,
as part of its investment banking and financial advisory business, is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate, estate and other purposes. In the past, Morgan
Stanley and its affiliates have provided financial advisory and financing
services for J.D. Edwards and Oracle and received fees for such services. In
addition in the past, Morgan Stanley and its affiliates have performed financial
advisory services for PeopleSoft, but did not receive fees for the rendering of
these services. In the ordinary course of Morgan Stanley's trading and brokerage
activities, Morgan Stanley or its affiliates may at any time hold long or short
positions, may trade or otherwise effect transactions, for its own account or
for the account of customers in the senior loans, equity and other securities of
J.D. Edwards, PeopleSoft, Oracle or any other parties involved in the
transaction.
Pursuant to an engagement letter dated December 20, 2002, and amended June
15, 2003, J.D. Edwards engaged Morgan Stanley to provide financial advisory
services to J.D. Edwards in connection with this transaction. Pursuant to the
terms of the engagement letter, if the transaction is completed, Morgan Stanley
will receive a fee of approximately $12 million. On June 15, 2003, J.D. Edwards
amended the engagement letter dated December 20, 2002, and agreed to pay Morgan
Stanley an additional fee of $1 million in connection with the amendment to the
original merger agreement and the rendering of Morgan Stanley's opinion as to
the fairness, from a financial point of view, of the consideration to be
received by the holders of shares of J.D. Edwards common stock in the offer and
the merger. J.D. Edwards has agreed to reimburse Morgan Stanley for other
expenses, including attorney's fees, incurred in connection with its engagement
and to indemnify Morgan Stanley and certain related persons against certain
liabilities and expenses relating to or arising out of its engagement.
55
BACKGROUND OF THE OFFER AND THE MERGER
As a regular part of our respective business plans, our company and J.D.
Edwards have from time to time each considered opportunities for expanding and
strengthening our respective technology, products, research and development
capabilities and distribution channels, including strategic acquisitions,
business combinations, investments, licensing and development agreements and
joint ventures.
Although our company and J.D. Edwards did not have any prior business
understandings or relationships, during the past several years, our senior
management and that of J.D. Edwards have made periodic inquiries to each other
regarding whether a strategic transaction between the parties would be mutually
beneficial.
In November 1998, members of our senior management met with members of
senior management of J.D. Edwards to discuss a potential business combination
between our company and J.D. Edwards. During the winter of 2000, and again in
the fall of 2001, additional meetings were held to discuss a potential strategic
transaction between the parties, but no agreements were reached.
On or about June 5, 2002, Craig Conway, PeopleSoft's President and Chief
Executive Officer, contacted Lawrence Ellison, Oracle's Chairman and Chief
Executive Officer, to determine whether Oracle would be interested in selling
its enterprise applications business to PeopleSoft. On that date, Oracle and
PeopleSoft entered into a mutual nondisclosure agreement. On the following day,
June 6, 2002, Ram Gupta, our Executive Vice President, Products and Technology,
Peter Gassner, our Vice President and General Manager, PeopleTools, Rick
Bergquist, our Senior Vice President and Chief Technology Officer, and Kevin
Parker, our Executive Vice President, Finance and Administration and Chief
Financial Officer, met in person with Safra Catz, Executive Vice President of
Oracle, and other representatives of Oracle, to discuss the matter. The parties
were unable to agree on the terms of any potential sale of Oracle's enterprise
applications business to PeopleSoft. Shortly thereafter, Mr. Conway and Mr.
Ellison had a brief telephone conversation in which they concluded that they
could not agree on mutually acceptable terms to such a transaction. There have
been no further discussions between Oracle and PeopleSoft on this subject since
that time.
In October and November 2002, senior members of our management and that of
J.D. Edwards met to further explore a potential transaction between the parties.
On November 25, 2002, the J.D. Edwards board of directors met and explored
options to enhance stockholder value, including, continuing on its then current
track, consolidation with other mid-market players, changing its business model
or pursuing an upstream merger. Robert Dutkowsky, President and Chief Executive
Officer of J.D. Edwards, advised the board of the meetings held with our
company.
On December 18, 2002, a representative of Citigroup, at our request,
presented an overview of the potential business combination with J.D. Edwards to
members of our senior management.
On December 18, 2002, the J.D. Edwards board of directors met and again
explored options to enhance stockholder value and the board authorized further
discussions and due diligence concerning a merger with PeopleSoft. On December
20, 2002, J.D. Edwards engaged Morgan Stanley & Co. Incorporated as J.D.
Edwards' financial advisor in connection with a potential strategic transaction.
On January 28, 2003, the J.D. Edwards board met and representatives of
Morgan Stanley presented an analysis of the current software industry dynamics,
the competitive landscape and strategic alternatives available to J.D. Edwards,
including continuing merger discussions with our company.
On February 2, 2003, members of senior management of both parties met in
Denver, Colorado to further discuss the possible business combination, and on
February 3, 2003, Mr. Dutkowsky reviewed with the board of J.D. Edwards a
summary of those discussions.
From February 4, 2003 to February 24, 2003, our company and J.D. Edwards
exchanged preliminary information regarding valuation.
56
On February 19, 2003, the J.D. Edwards board of directors met with
representatives of Morgan Stanley and reviewed discussions with our company
regarding proposed stock exchange ratios, exchange ratio premiums and the
estimated savings from the cost synergies from the merged operations. After
discussion of strategic alternatives available, the J.D. Edwards board
authorized further discussions with our company.
On February 24, 2003, we formally engaged Citigroup as our financial
advisor in connection with a potential strategic combination with J.D. Edwards.
On February 25, 2003, Mr. Parker reviewed with our board of directors the
status of discussions and the rationale for the merger. A representative of the
law firm of Gibson, Dunn & Crutcher LLP reviewed with the board its legal duties
in considering a transaction of this nature. After discussion, the board
authorized further discussions and diligence concerning a merger with J.D.
Edwards.
During March 2003 discussions continued, but the parties were unable to
come to agreement and terminated discussions in early April.
On May 2, 2003, Messrs. Conway and Dutkowsky held a conversation regarding
a potential strategic transaction.
On May 5, 2003, Mr. Dutkowsky discussed his May 2nd conversation with Mr.
Conway with the J.D. Edwards board of directors in a special telephonic meeting,
and the board authorized management to continue discussions with PeopleSoft
regarding a potential strategic transaction. On May 11, 2003, Messrs. Conway and
Dutkowsky held a telephone conversation and agreed to move forward with merger
negotiations.
During the period commencing on May 12, 2003 through June 1, 2003, the
parties, their financial advisors and their legal counsel conducted intensive
due diligence.
On May 15, 2003, the J.D. Edwards board of directors held a special
telephonic meeting at which the proposed merger was discussed and considered. At
the meeting, J.D. Edwards management and representatives of Morgan Stanley made
presentations to the board regarding the proposed business combination.
Representatives of the law firm of Wilson Sonsini Goodrich & Rosati,
Professional Corporation presented an extensive review of the terms of the
proposed merger. Following the presentations, and after discussion, the J.D.
Edwards board directed management and counsel to pursue further negotiations
regarding the proposed merger and the original merger agreement.
On May 16, 2003, our company and J.D. Edwards executed a new mutual
non-disclosure agreement and, as an inducement for us to commit our time and
resources to perform a due diligence review of J.D. Edwards and enter into
discussions regarding the proposed business combination, J.D. Edwards entered
into a 13-day exclusivity arrangement.
On May 16, 2003, our counsel sent a preliminary draft of the original
merger agreement to J.D. Edwards' counsel. On May 19, 2003, we and J.D. Edwards
executed an addendum to the mutual non-disclosure agreement relating to highly
sensitive competitive information.
On May 19, 2003, our board of directors held a special meeting at which the
proposed merger was discussed and considered. Director Fanzilli was not present
at the meeting due to a family illness. A representative of Gibson, Dunn &
Crutcher LLP was also present at this meeting and reviewed with the directors
their legal duties in considering the proposed merger. At the meeting, our
management and representatives of Citigroup made presentations to the board
regarding J.D. Edwards, the opportunities for a combined company and certain
proposed terms of a business combination. Following the presentations, and after
discussion, our board approved proceeding with diligence and negotiation with
representatives of J.D. Edwards.
On May 20, 2003, senior members of our management and J.D. Edwards'
management, and representatives of Gibson, Dunn & Crutcher LLP, Wilson Sonsini
Goodrich & Rosati, Professional Corporation, Citigroup and Morgan Stanley met to
discuss the proposed original merger agreement at the
57
offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, in Palo
Alto, California. Based on those discussions a new draft of the original merger
agreement was prepared and distributed to the parties.
On May 23, 2003, the J.D. Edwards board of directors held a special meeting
at which the proposed merger was discussed and considered. At the meeting, J.D.
Edwards management and representatives of Morgan Stanley reviewed various issues
with the board regarding the proposed business combination. Representatives of
Wilson Sonsini Goodrich & Rosati, Professional Corporation, presented an
extensive review of the terms of the proposed original merger agreement as well
as the directors' legal duties in considering the proposed merger. Management
made extensive presentations about the results of the due diligence review, the
benefits of the business combination and integration issues.
On May 27, 2003, our board of directors held a regular meeting at which the
proposed merger was discussed and considered. At the meeting, our management and
representatives of Citigroup made presentations to the board regarding the
proposed business combination. A representative of Gibson, Dunn & Crutcher LLP
was also present at this meeting, and presented a summary of the original merger
agreement and the status of negotiations. Management made extensive
presentations concerning J.D. Edwards and integration issues at the meeting.
Citigroup also reviewed issues relating to fairness with the board and gave its
preliminary opinion that, as of that date, the exchange ratio in the original
merger agreement was fair, from a financial point of view, to PeopleSoft.
Following the presentations, and after discussion, our board directed management
and counsel to pursue further negotiations regarding the original merger
agreement and the proposed merger.
On May 28, 2003, the J.D. Edwards board of directors held a special meeting
at which the proposed merger was discussed and considered. At the meeting, J.D.
Edwards management and J.D. Edwards' legal and financial advisors reviewed with
the Board the proposed business combination and the proposed original merger
agreement.
Between May 28, 2003 and May 31, 2003, offers of employment with the
combined company were made by our company to senior management of J.D. Edwards
and the terms of employment were negotiated by the parties. We also discussed
with J.D. Edwards the proposed amendment to its change in control plan and the
J.D. Edwards board amended the plan on June 1, 2003. These amendments were made
in connection with the original merger agreement and were not changed in
connection with the negotiation of the merger agreement. See "Background of the
Offer and the Merger -- Interests of Certain Persons in the Merger".
Our board of directors held a special meeting by conference telephone call
on May 28, 2003 to obtain an update regarding the status of negotiations and to
discuss open issues on the original merger agreement and related documents.
On May 31, 2003, our board of directors held a special telephonic meeting
at which the proposed merger was discussed and considered. At the meeting, our
management and representatives of Citigroup made presentations to the board
regarding the proposed business combination. A representative of Gibson, Dunn &
Crutcher LLP was also present at this meeting. Citigroup presented its fairness
opinion regarding the proposed transaction to the board. The board also
discussed, with the input of management and legal counsel, final remaining open
issues in the original merger agreement. Following the presentations, and after
discussion, our board unanimously approved the original merger agreement and the
transactions contemplated by the original merger agreement in substantially the
form presented to the board and authorized senior members of our management to
finalize and execute the original merger agreement and the other agreements
contemplated thereby on behalf of our company.
On May 31, 2003, counsel for our company and J.D. Edwards' counsel
negotiated the original merger agreement.
On June 1, 2003, the J.D. Edwards board of directors held a special meeting
at which the proposed merger was discussed and considered. At the meeting, J.D.
Edwards management and representatives of Morgan Stanley made presentations to
the board regarding the proposed business combination. Morgan Stanley presented
its financial fairness opinion regarding the consideration to be paid pursuant
to the
58
proposed transaction to the board. Representatives of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, provided a detailed summary of the final terms
of the original merger agreement. Following the presentations, and after
discussion, the J.D. Edwards board unanimously approved the original merger
agreement and the transactions contemplated by the original merger agreement in
substantially the form presented to the board and determined the original merger
agreement to be in the best interests of the J.D. Edwards stockholders and
authorized senior members of its management to finalize and execute the original
merger agreement and the other agreements contemplated thereby on behalf of J.D.
Edwards.
On June 1, 2003, counsel for our company and J.D. Edwards' counsel
finalized the original merger agreement and, thereafter, the original merger
agreement, voting agreements and certain employment agreements were executed by
the relevant parties.
We and J.D. Edwards publicly announced the proposed transaction and its
material terms the early morning of June 2, 2003.
Four days later, on June 6, 2003, Oracle announced its intention to
commence a tender offer beginning on June 9, 2003 for all issued and outstanding
PeopleSoft common stock, which we refer to as the Oracle Offer, at a price of
$16 per share.
Oracle also delivered a letter to PeopleSoft announcing its intention to
commence the Oracle Offer and requesting that the board of directors redeem or
render inapplicable all outstanding preferred stock purchase rights. The letter
also stated that Oracle was prepared to meet with our management to discuss the
Oracle Offer.
On June 6, 2003, we filed a press release regarding the anticipated tender
offer. The release was filed with the SEC as a preliminary communication filed
under cover of Schedule 14D-9.
In response to Oracle's June 6 announcement, PeopleSoft contacted Citigroup
and Goldman, Sachs & Co. to render financial advice to the board of directors in
connection with, among other things, any tender offer commenced by Oracle. In
addition, the board of directors retained Gibson, Dunn & Crutcher LLP to render
legal advice in connection with any such tender offer.
On June 8, 2003, our board of directors and its financial and legal
advisors met to discuss Oracle's June 6 announcements and to establish
procedures for thoroughly and diligently evaluating the terms of the Oracle
Offer, once announced. At that meeting, our board of directors formed a
committee of independent directors which was charged with evaluating the terms
of the Oracle Offer, in consultation with the financial and legal advisors
engaged by our board of directors to render financial advice and legal advice in
connection with, among other things, any tender offer commenced by Oracle. Our
board of directors retained Goldman, Sachs & Co. and Citigroup as its financial
advisors with respect to such matters and we subsequently executed a written
engagement letter with each financial advisor. On June 9, 2003, Oracle and its
subsidiary commenced their tender offer. The Oracle Offer, as described, is
currently pending.
On June 9, 2003, the J.D. Edwards board held a special meeting to discuss
the Oracle Offer, PeopleSoft's response to the tender offer and potential
responses by J.D. Edwards. At the invitation of the J.D. Edwards board,
representatives of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
and Morgan Stanley attended and discussed with the board a range of legal and
strategic issues related to the Oracle Offer, including its potential impact on
the merger. Also on June 9, Oracle delivered a letter to PeopleSoft expressing
concern that we had taken a negative position on the Oracle Offer, reaffirming
its offer to meet with our board of directors and requesting that we redeem our
preferred stock rights plan.
On June 11, 2003, after careful consideration, including consultation with
management and the board's financial and legal advisors, and upon the unanimous
recommendation of the committee of independent directors, our board of directors
unanimously concluded that the Oracle Offer would undoubtedly face lengthy
antitrust scrutiny, with a significant likelihood that the necessary approval
would not be granted, that the delays and uncertainties created by the Oracle
Offer, coupled with Oracle's stated intent to discontinue our market-leading
products, represent a substantial threat to stockholder value, and
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that the unsolicited and hostile nature of the Oracle Offer, combined with
Oracle's statements, was designed to disrupt our strong momentum at significant
cost to us and our employees and customers. For these and other reasons more
fully set forth in our Schedule 14D-9, the board of directors determined that
the Oracle Offer was not in the best interests of our stockholders and
unanimously recommended that our stockholders reject the Oracle Offer and not
tender their shares to Oracle to purchase pursuant to the offer.
At a special meeting on June 11, 2003, our board of directors reaffirmed
its support of the acquisition of J.D. Edwards, and the J.D. Edwards board
reaffirmed its support of the merger at a special telephonic meeting on June 12,
2003. At the direction of our board of directors and J.D. Edwards' board of
directors, from June 13 to June 15, 2003, senior members of our management team
and representatives of Gibson, Dunn & Crutcher LLP, Citigroup and Goldman Sachs
met with senior members of management of J.D. Edwards and representatives of
Wilson Sonsini Goodrich & Rosati, Professional Corporation, and Morgan Stanley
in Palo Alto, California to discuss and negotiate amendments to the original
merger agreement.
At a special meeting held by conference telephone call on June 15, 2003,
our board, by the unanimous vote of the directors, approved the merger agreement
and the transactions contemplated thereby, including the offer and the merger,
and determined that the transactions contemplated by the merger agreement,
including the offer and the merger, were advisable to our stockholders.
Citigroup rendered its opinion that, as of that date and based upon the various
considerations set forth in the opinion, the consideration to be paid by us in
the offer and subsequent merger is fair, from a financial point of view, to
PeopleSoft.
On June 15, 2003, the J.D. Edwards board of directors held a special
telephonic meeting at which the proposed merger agreement, and transactions
contemplated thereby, were discussed and considered. At the meeting, J.D.
Edwards management and representatives of Morgan Stanley and Wilson Sonsini
Goodrich & Rosati, Professional Corporation, made presentations to the board
regarding the proposed merger agreement, and the transactions contemplated
thereby, and the potential impact on J.D. Edwards, the stockholders of J.D.
Edwards and the merger. Morgan Stanley presented its revised fairness opinion
regarding the proposed amended transaction to the board. Representatives of
Wilson Sonsini Goodrich & Rosati, Professional Corporation, provided a detailed
summary of the final terms of the merger agreement, and the transactions
contemplated thereby. Following the presentations, and after discussion, the
J.D. Edwards board unanimously approved the merger agreement and the
transactions contemplated thereby in substantially the form presented to the
board and determined the merger agreement, the offer and the merger to be in the
best interests of the J.D. Edwards stockholders and authorized senior members of
its management to finalize and execute the merger agreement and the other
agreements contemplated thereby on behalf of J.D. Edwards. The J.D. Edwards
board also voted unanimously to recommend that the J.D. Edwards stockholder
accept the offer, tender their shares pursuant to the offer and approve the
merger and the merger agreement.
The merger agreement is designed to allow the two companies to accelerate
the completion of the transaction and bring forward the benefits of their
combination. Our board of directors believes that the transactions contemplated
by the merger agreement provide several benefits to our stockholders, including,
among others:
- the merger agreement reaffirms the commitment of PeopleSoft and J.D.
Edwards to combine;
- the merger agreement provides an opportunity to complete the transaction
in a more timely fashion;
- the amended terms of the transaction will minimize customer uncertainty
arising from the Oracle Offer and enable PeopleSoft and J.D. Edwards to
speed their integration plans and the substantial benefits of the
combination; and
- the cash portion of the consideration reduces the dilution to our
stockholders, increases the certainty of the value of the transaction to
J.D. Edwards stockholders and, at the same time, increases the accretion
to our earnings per share for the benefit of all stockholders.
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We and J.D. Edwards publicly announced the revised transaction, the
anticipated exchange offer and its material terms during the morning of June 16,
2003.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of the J.D. Edwards board of directors
regarding the offer and the merger, J.D. Edwards stockholders should be aware
that the directors and officers of J.D. Edwards have interests in the merger
that differ from those of other stockholders of J.D. Edwards, as described
below. The J.D. Edwards board of directors was aware of these matters and
considered them in approving the original merger agreement and the merger and,
subsequently, the offer and the merger agreement, and recommending that the J.D.
Edwards stockholders accept the offer, tender their shares of J.D. Edwards
common stock and approve the merger and the merger agreement.
In connection with the original merger agreement, each of the directors and
officers of J.D. Edwards entered into a voting agreement with PeopleSoft and
Jersey Acquisition in which he or she agreed, among other things, to vote all
shares of J.D. Edwards common stock beneficially owned by him or her in favor
of, among other things, the merger agreement and the merger and against other
acquisition proposals.
The voting agreements were not changed in connection with the negotiation
of the merger agreement; however, approval of the stockholders of J.D. Edwards
is not required to complete the offer.
Change in Control Plan/Severance Agreements. J.D. Edwards maintains a
management change in control plan, adopted in 1999, which provides for specified
severance and other change in control-related benefits to participants in the
plan. The plan covers 197 management employees. In connection with the approval
of the original merger agreement, the J.D. Edwards board of directors agreed to
amend this plan in certain respects. The amendments to the plan are contingent
upon the closing of the merger. No further amendment to the plan was made or
agreed to in connection with the merger agreement or the offer.
As amended, a participant in the plan is entitled, among other benefits as
described below, to be paid (1) 25% of the severance payment determined as
described below as of the closing, (2) 25% of the severance payment amount if he
or she remains an employee of J.D. Edwards or an affiliate 12 months after
closing, and (3) an additional 50% of the severance payment amount, plus the 25%
otherwise due 12 months after closing if not already paid, if the employee is
involuntarily terminated or is terminated without cause within 15 months of a
change of control. In addition, a participant who is terminated without cause
immediately upon the closing generally will receive the entire severance payment
and other benefits provided under the plan prior to its amendment at that time.
A change in control under the plan includes the consummation of a merger or
consolidation with another company, and would include the proposed merger
between PeopleSoft and J.D. Edwards described in this prospectus. Under the plan
as amended pursuant to the original merger agreement, involuntary termination
includes:
- a significant reduction of the participant's title, duties or
responsibilities relative to those in effect immediately prior to the
reduction excluding any reasonable changes that are the direct and
necessary result of J.D. Edwards becoming a subsidiary in a larger
controlled group of corporations;
- a reduction in the annual base salary or in the maximum dollar amount of
potential annual cash bonuses relative to the annual base salary and
maximum dollar amount of potential annual cash bonuses as in effect
immediately prior to the reduction, unless after the reduction the
participant's annual base salary and potential annual cash bonus remain
within the range of annual salaries and cash bonuses for
similarly-situated employees of PeopleSoft or its affiliates;
- a failure by PeopleSoft to provide the participant with an employee
benefits package that is substantially comparable in the aggregate to the
employee benefits package provided to all employees of PeopleSoft or its
affiliates, including employees of J.D. Edwards as a subsidiary of
PeopleSoft, who are of a similar rank or level as the participant; or
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- the relocation of the participant to a facility or a location more than
50 miles from the participant's then present location, provided that
participant's commute is longer in miles as a result of the relocation
compared to the participant's commute to the current location.
In any event, PeopleSoft would have a 30-day period to cure any purported
involuntary termination, and a participant will not be entitled to severance
benefits unless he or she actually terminates employment with PeopleSoft or its
affiliates.
In addition, a participant in the plan is deemed to be terminated without
cause if he or she is terminated by PeopleSoft or its affiliates other than as
the result of (1) a material act of dishonesty by the participant in connection
with the participant's employment with PeopleSoft or its affiliates; (2) the
participant's conviction of, or plea of nolo contendere to, a felony; (3) the
participant's failure to perform reasonably assigned duties after the
participant has received a written demand for performance which includes
reasonable detail describing his or her nonperformance; (4) the participant's
material breach of his or her obligations as an officer/employee of PeopleSoft
or its affiliates; or (5) the participant's failure to materially comply with
PeopleSoft policies. In any event, a participant would have a 30-day period to
cure any purported event under items (3), (4) or (5) above.
A participant's severance payment under the plan equals the sum of (1) a
specified severance percentage, which is defined as 100%, 200% or 300% of the
sum of the participant's annual base salary and the average of the bonuses
received by such individual over the preceding three years, plus (2) a prorated
portion of his or her quarterly and annual bonus and variable compensation
amount. In addition, a participant who is terminated without cause or who
suffers an involuntary termination within 15 months of closing is entitled to
continuation of specified employee benefits until the earlier of (1) six months
after the date of termination or (2) the date the participant becomes covered by
a comparable plan of another employer and job outplacement services for up to
six months after termination up to $10,000. All payments under the plan are
conditioned upon the participant executing a release of claims in favor of
PeopleSoft and its affiliates. The total potential liability of PeopleSoft under
the plan is approximately $53 million.
Of the 197 participants in the plan, six, including Richard Allen, Harry
Debes, Mark Endry, Michael Madden, Richard Mathews, and Leslie Wyatt, are
entitled to severance percentages of 300%, 43 are entitled to severance
percentages of 200%, and the remaining 148 are entitled to severance percentages
of 100%. In connection with the execution of the original merger agreement,
Robert Dutkowsky, Richard Allen and Richard Snow agreed to amend their
agreements subject to completion of the merger and are entitled to the amount of
severance benefits described immediately below. No further amendments were made
or agreed to in connection with the merger agreement or the offer.
Employment Agreements. Mr. Dutkowsky, President and Chief Executive
Officer of J.D. Edwards, has agreed to amend his employment agreement. He will
continue to serve as a consultant to the surviving corporation for up to six
months after the merger subject to the completion of the merger. In lieu of any
other severance benefits, including those otherwise payable under the management
change in control plan, he will receive cash payments of $650,000 on the closing
of the merger, and $1.95 million at the end of the six-month transition period.
He will be entitled to the acceleration of all of his unvested options and
restricted stock and specified additional payments intended to offset any excise
tax liabilities under Section 280G of the Internal Revenue Code to which Mr.
Dutkowsky may be subject as a result of the severance payments made to him in
connection with the merger. Mr. Dutkowsky will be subject to a non-competition
and non-solicitation agreement during the term of his employment and for a
period of one year following the termination of his employment.
Mr. Allen, Executive Vice President, Finance and Administration, and Chief
Financial Officer of J.D. Edwards, similarly has agreed to amend the employment
agreement described above subject to the completion of the merger and is
expected to be retained for a six-month transition period. He will be entitled
to total cash payments under the plan of approximately $1.8 million, 25% of
which will be payable at closing of the merger and the remaining 75% payable
upon his termination of employment. Mr. Allen
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will be subject to a non-competition and non-solicitation agreement during the
term of his employment and for a period of one year following the termination of
his employment.
Mr. Snow, Vice President, General Counsel and Secretary of J.D. Edwards,
also has agreed to amend his employment agreement described above subject to the
completion of the merger and is expected to be retained for a period of
approximately six months following the closing of the merger. He will be
entitled to total cash payments under the plan of $456,248, 25% of which will be
payable at closing of the merger and the remaining 75% payable upon his
termination of employment. Mr. Snow will be subject to a non-competition and
non-solicitation agreement during the term of his employment and for a period of
one year following the termination of his employment.
A total of 47 other employees, including the remainder of the J.D. Edwards
executive officers, have entered into substantially similar offer letters that
amend their employment agreements. Pursuant to those offer letters, they
generally will be at-will employees of PeopleSoft, will be entitled to benefits
under the plan as described above and may receive additional PeopleSoft options.
These employees will be subject to a non-competition and non-solicitation
agreement during the term of their employment and for a period of one year, and
with regard to the non-solicitation of employees, six months, following their
voluntary termination or termination for cause.
Acceleration of Stock Options. Under the J.D. Edwards 1992 Incentive Stock
Option Plan, 1997 Equity Incentive Plan and 2003 Equity Incentive Plan, if any
individual is involuntarily terminated as a result of the merger or, with regard
to the 1992 Incentive Stock Option Plan and 2003 Equity Incentive Plan, the
offer, and in some cases within specified time periods, the awards granted to
that individual under the plan are accelerated in full and becomes 100% vested.
Under the YOUcentric, Inc. 2000 Equity Compensation Plan, assumed by J.D.
Edwards, if an optionholder is involuntarily terminated within 12 months of a
change of control, including the offer and proposed merger, the options granted
under that plan are accelerated in full and become 100% vested.
Post-Merger Board Membership. As of the effective time of the merger, we
intend to amend our bylaws to increase the size of our board to eight members,
and one of J.D. Edwards' directors, Michael J. Maples, will be designated to
serve as a Class I director of PeopleSoft and a member of our board's Corporate
Governance/Nominating Committee.
Indemnification. The merger agreement provides that, after the effective
time of the merger, to the extent not covered by insurance and as permitted by
law, we shall, or shall cause the surviving corporation to, indemnify and hold
harmless persons who were directors or officers of J.D. Edwards prior to the
effective time of the merger against all liabilities or losses arising out of or
in connection with any claim, demand, action, suit, proceeding or investigation
based or arising in whole or in part out of the fact that the person was a
director or officer of J.D. Edwards (whether or not relating to any matter
existing or occurring at or prior to the effective time of the merger and
whether or not asserted or claimed prior to, at or after the effective time of
the merger), including, to the extent not prohibited by law, indemnification for
negligent acts or omissions by an indemnified person. In addition, we have
agreed to cause the surviving corporation to fulfill and honor all obligations
of J.D. Edwards under any indemnification agreements between J.D. Edwards and
its directors and officers and the indemnification provisions of J.D. Edwards'
certificate of incorporation and bylaws as in effect immediately before the
merger. We also agree not to permit the surviving corporation to merge or
consolidate with any other person unless the surviving corporation will ensure
that the surviving or resulting entity assumes the indemnification obligations
in the merger agreement.
We have agreed to maintain in effect, or cause the surviving corporation to
maintain in effect, for a period of six years after the effective time of the
merger if available, directors' and officers' liability insurance covering those
persons who are covered by J.D. Edwards' directors' and officers' liability
insurance policy as of immediately prior to the effective time of the merger on
terms no less favorable to those persons than those of J.D. Edwards' existing
directors' and officers' liability insurance policy. However, neither we nor the
surviving corporation, as the case may be, is required to expend an amount in
excess of 200% of the current premium paid by J.D. Edwards in any one year. If
the aggregate expenditure
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on coverage exceeds that amount, we will use commercially reasonable efforts to
purchase as much insurance as can be obtained for that amount. Instead of
maintaining the existing insurance, we may cause coverage to be provided under
any policy maintained for the benefit of us or its subsidiaries on terms
materially no less favorable to the intended beneficiaries as the existing
insurance.
Transfers Under Rule 144. The issuance of our common stock in connection
with the offer and the merger will increase the number of shares of our
outstanding common stock and is expected to result in greater share trading
volume, which will affect the Rule 144 volume limitations that apply to
affiliates of the combined company and former affiliates of J.D. Edwards. This
increase in the number of shares of our outstanding common stock may facilitate
broader transfers of shares by affiliates.
As a result of these interests, J.D. Edwards directors and officers may
have reasons for tendering their shares of J.D. Edwards common stock and, if
necessary, voting to adopt the merger agreement and approve the merger that are
not the same as your interests. J.D. Edwards stockholders should consider
whether these interests may have influenced these directors and officers to
support or recommend the offer and the merger.
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THE OFFER
We are offering to exchange cash, a fraction of a share of our common
stock, or a combination of cash and a fraction of a share of our common stock,
in each case having a value, on a per share basis, of $7.05 plus 0.43 of a share
of PeopleSoft common stock, for each outstanding share of J.D. Edwards common
stock, including the associated stock purchase right pursuant to J.D. Edwards'
rights agreement, validly tendered and not properly withdrawn, subject to the
terms and conditions described in this prospectus and the related letter of
transmittal.
You may elect to receive all cash or all PeopleSoft common stock for your
J.D. Edwards common stock. However, the total amount of cash that we will pay in
the offer is fixed at $7.05 multiplied by the number of shares of J.D. Edwards
common stock tendered on the expiration date of the offer. Also, the total
number of shares of our common stock that we will deliver to J.D. Edwards
stockholders in the offer is fixed at 0.43 multiplied by the number of shares of
J.D. Edwards common stock tendered on the expiration date of the offer. If more
cash consideration is elected than the amount of cash available for payment,
there will be a proration, and the J.D. Edwards stockholders who make a cash
election will receive a combination of cash and our common stock. Similarly, if
more stock consideration is elected than the number of shares of our common
stock available for payment based on the number of shares tendered, there will
be a proration, and the shares of J.D. Edwards common stock with respect to
which stock is elected will be exchanged for a combination of our common stock
and cash.
The value of the our common stock delivered in the offer will be determined
by the average closing price of a share of PeopleSoft common stock for the five
trading days ending immediately before the second trading day prior to the
expiration date. Each J.D. Edwards stockholder who tenders shares but does not
properly elect to receive cash or our common stock will receive an allocation of
the remaining cash or stock, or a combination of cash and stock, after
allocating the cash and stock among the elections made in the offer.
The term "expiration date" means 12:00 midnight, New York City time, on
Thursday, July 17, 2003, unless we extend the period of time for which the offer
is open, in which case the term "expiration date" means the latest time and date
on which the offer, as so extended, expires.
J.D. Edwards stockholders can call our information agent, Georgeson
Shareholder Communications Inc., at any time toll-free at 800-248-2681 if you
are in North America and at 866-324-5899 if you are outside North America for
answers to questions regarding the offer.
You will not receive any fractional shares of our common stock. Instead,
you will receive additional cash in an amount equal to the market value,
determined on the first date on which shares of J.D. Edwards common stock are
accepted in the offer, of any fractional shares you would otherwise have been
entitled to receive.
If you are the record owner of your J.D. Edwards common stock and you
tender your shares directly to the exchange agent, you will not be obligated to
pay any charges or expenses of the exchange agent or any brokerage commissions.
If you own your shares through a broker or other nominee, and your broker
tenders the shares on your behalf, your broker may charge you a fee for doing
so. You should consult your broker or nominee to determine whether any charges
will apply.
We are making this offer in order to acquire all of the outstanding shares
of J.D. Edwards common stock, including the associated stock purchase rights
pursuant to J.D. Edwards' rights agreement. We intend, as soon as possible after
completion of the offer, for Jersey Acquisition to merge with and into J.D.
Edwards. The purpose of the merger is to complete the acquisition of all of the
J.D. Edwards common stock not tendered and exchanged pursuant to the offer. In
the merger, each then outstanding share of J.D. Edwards common stock (except for
those shares held by J.D. Edwards or any of its subsidiaries, us or Jersey
Acquisition or any of our other wholly-owned subsidiaries and dissenting shares)
would be converted into $7.05 in cash plus 0.43 of a share of our common stock,
without interest, which is the same average per-share consideration paid to J.D.
Edwards stockholders in the offer.
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Our obligation to exchange cash and shares of our common stock for J.D.
Edwards common stock pursuant to the offer is subject to several conditions
referred to below under "-- Conditions of Our Offer," including the minimum
tender condition and the regulatory approvals condition.
STOCKHOLDERS LIST
We have relied on J.D. Edwards' stockholders list and security position
listings to communicate with J.D. Edwards stockholders and to distribute the
offer. We will send this prospectus, the related letter of transmittal and other
relevant materials to J.D. Edwards stockholders and to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on J.D. Edwards stockholders list or, if applicable,
who are listed as participants in a clearing agency's security position listing.
TIMING OF OUR OFFER
Our offer is scheduled to expire at 12:00 midnight, New York City time on
Thursday, July 17, 2003. For more information, you should read the discussion
under the caption "-- Extension, Termination and Amendment".
EXTENSION, TERMINATION AND AMENDMENT
If the conditions to the offer are not satisfied or waived on any scheduled
expiration date of the offer, we will extend the offer at any time for the
shortest time periods we reasonably believe are necessary; provided, that no
single extension shall exceed ten business days, and we will not be required to
extend the offer beyond November 30, 2003, which date will be extended to
February 28, 2004 in certain circumstances.
During any such extension, all J.D. Edwards common stock previously
tendered and not properly withdrawn will remain subject to the offer, subject to
your right to withdraw your J.D. Edwards common stock. You should read the
discussion under the caption "-- Withdrawal Rights" for more details.
We reserve the right, in our sole discretion, subject to the provisions of
the merger agreement, at any time or from time to time to extend the offer for
one or more periods of not more than ten business days as required by any rule
or regulation of the SEC applicable to the offer.
Subject to the provisions of the merger agreement, we expressly reserve the
right to increase the total value of the consideration to be paid per share in
the offer and, subject to applicable law and regulation, use PeopleSoft parent
holding company common stock as offer consideration if the alternative double
wing merger structure is effected. Without the prior written consent of J.D.
Edwards, we may not decrease the total value of the consideration to be paid per
share in the offer, change the form of consideration to be paid, decrease the
number of shares of J.D. Edwards common stock sought in the offer, amend the
conditions of the offer set forth in the merger agreement, impose conditions to
the offer in addition to those set forth in the merger agreement or otherwise
amend any material term of the offer in a manner adverse to the J.D. Edwards
stockholders.
We will follow any extension, termination, amendment or delay, as promptly
as practicable, with a public announcement. In the case of an extension, any
announcement will be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date. Subject to
applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the offer be promptly sent to
stockholders in a manner reasonably designed to inform stockholders of the
change) and without limiting the manner in which we may choose to make any
public announcement, we assume no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If we make a material change in the terms of our offer or the information
concerning the offer, or if we waive a material condition of the offer, we will
extend the offer to the extent required under the
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Exchange Act. If, prior to the expiration date, we change the percentage of J.D.
Edwards common stock being sought or the consideration offered to you, that
change will apply to all holders whose shares of J.D. Edwards common stock are
accepted for exchange pursuant to our offer. If, at the time notice of that
change is first published, sent or given to you, the offer is scheduled to
expire at any time earlier than the tenth business day from and including the
date that the notice is first so published, sent or given, we will extend the
offer until the expiration of that ten business day period. For purposes of our
offer and the merger, a "business day" means any day other than a day on which
the Nasdaq National Market is closed and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
MAKING THE ELECTION
We have included a letter of transmittal with this prospectus. The letter
of transmittal is used to make the election to receive our common stock, cash
or, in the case of proration, a combination of our common stock and cash, in
exchange for J.D. Edwards common stock tendered pursuant to the offer. You may
elect to receive only cash or only stock, but not both, although you may end up
receiving both cash and our common stock as a result of the proration rules
discussed below. To make an election, you should submit the documents described
below in "-- Exchange of J.D. Edwards Common Stock; Delivery of Cash and
PeopleSoft Common Stock".
The deadline for J.D. Edwards stockholders to make their elections is the
close of business on the last business day (until 12:00 midnight, New York City
time on the expiration date) which is before the date on which we accept J.D.
Edwards common stock for payment and exchange in the offer. Any J.D. Edwards
stockholder may change his or her election prior to the election deadline by:
- submitting to the exchange agent a properly completed and signed revised
letter of transmittal; or
- in the case of stockholders whose shares are held in book-entry form, by
causing a new agent's message with revised election information to be
transmitted through DTC to the exchange agent.
Any holder of J.D. Edwards common stock may revoke his or her election at
any time prior to the election deadline:
- by written notice to the exchange agent; or
- in the case of J.D. Edwards stockholders whose shares are held in
book-entry form, by causing a new agent's message to be transmitted
through the Depository Trust Company, or DTC, to the exchange agent
withdrawing the shares previously deposited and specifying the name and
number of the account at DTC to be credited.
J.D. Edwards stockholders having a preference as to the form of
consideration to be received for their shares of J.D. Edwards common stock
should make an election. We do not make any recommendation as to whether you
should elect to receive cash or our common stock. You must make your own
decision whether to make an election and if so, what election to make.
EXCHANGE OF J.D. EDWARDS COMMON STOCK; DELIVERY OF CASH AND PEOPLESOFT COMMON
STOCK
On the terms and subject to the prior satisfaction or waiver of the
conditions of our offer, including any extension or amendment of the offer, we
will accept for payment and will pay for all J.D. Edwards common stock validly
tendered and not properly withdrawn as soon as we are legally permitted to do so
under applicable law. In all cases, exchange of J.D. Edwards common stock
tendered and accepted for exchange pursuant to the offer will be made only after
timely receipt by the exchange agent of:
- certificates for those shares of J.D. Edwards common stock (or a
confirmation of a book-entry transfer of those shares of J.D. Edwards
common stock in the exchange agent's account at DTC);
- a properly completed and duly executed letter of transmittal (or a
manually signed facsimile of that document) or agent's message, as
described under "-- Procedures for Tendering", if applicable; and
- any other required documents.
67
For purposes of the offer, we will be deemed to have accepted for exchange
shares of J.D. Edwards common stock validly tendered and not properly withdrawn
when we notify the exchange agent of our acceptance of the tenders of those
shares of J.D. Edwards common stock pursuant to the offer. The exchange agent
will act as agent for tendering stockholders for the purpose of receiving our
common stock and cash and any additional payment pursuant to the terms of the
merger agreement from us and transmitting such stock and cash to you. In
exchange for shares of J.D. Edwards common stock tendered pursuant to the offer,
the exchange agent will deliver to the tendering stockholders PeopleSoft common
stock and cash, less the amount of any required withholding taxes, as soon as
practicable after receipt of our notice. You will not receive any interest on
any cash that we pay you, even if there is a delay in making the exchange.
If we do not accept any tendered shares of J.D. Edwards common stock for
exchange pursuant to the terms and conditions of the offer for any reason, or if
certificates are submitted for more shares of J.D. Edwards common stock than are
tendered, we will return certificates for the unexchanged shares of J.D. Edwards
common stock without expense to the tendering stockholder or, in the case of
shares of J.D. Edwards common stock tendered by book-entry transfer of such
shares of J.D. Edwards common stock into the exchange agent's account at DTC
pursuant to the procedures set forth below under the discussion entitled
"-- Procedures for Tendering," those unexchanged shares of J.D. Edwards common
stock will be credited to an account maintained within DTC, as soon as
practicable following expiration or termination of the offer.
If we increase the consideration offered to J.D. Edwards stockholders in
the offer prior to the expiration date, such increased consideration will be
given to all stockholders who tender shares of J.D. Edwards common stock
pursuant to the offer, whether or not the shares of J.D. Edwards common stock
were tendered or accepted for exchange prior to such increase in consideration.
THE PRORATION RULES
The proration rules that will govern the allocation of the cash and stock
consideration in the offer will be applied as set forth in the following
examples. The proration calculations are complex. We have provided below a set
of examples based on certain assumptions to help you understand how the
proration will work. The actual proration will depend upon the mix of elections
and the average closing price of the PeopleSoft common stock applicable on the
expiration of the offer.
KEY ASSUMPTIONS:
For purposes of the examples below, we have assumed the following:
- TOTAL NUMBER OF J.D. EDWARDS SHARES OUTSTANDING = 122,426,664 (BASED ON
SHARES OUTSTANDING AS OF THE DATE OF THE ORIGINAL MERGER AGREEMENT)
- AVERAGE CLOSING PRICE OF PEOPLESOFT COMMON STOCK = $17.00
The average closing price is equal to the average closing price of our
common stock as reported on the Nasdaq National Market for the five consecutive
trading days immediately prior to (and excluding) the second trading day before
the expiration of the offer. The cash offer price is equal to
$7.05 + 0.43 X average closing price. The stock offer price is equal to the cash
offer price divided by the average closing price. In the examples below, the
cash offer price and the stock offer price are as follows:
- RESULTING CASH OFFER PRICE = $7.05 + 0.43 X $17.00 = $14.36
- RESULTING STOCK OFFER PRICE = $14.36 / $17.00 = APPROXIMATELY 0.8447X
68
Assume in the following examples that 95% of J.D. Edwards shares are
tendered. The consideration for distribution in the offer will be as set forth
below.
- The total number of J.D. Edwards shares tendered is
122,426,664 X 95% = 116,305,331.
- The total amount of shares of PeopleSoft common stock that can be issued
to accepted J.D. Edwards shares is 122,426,664 X 0.43 X 95% = 50,011,292
shares.
- The total amount of cash issuable to accepted J.D. Edwards shares is
122,426,664 X $7.05 X 95% =
$819,952,582.
CASE 1: 60% OF THOSE THAT TENDER ELECTED CASH AND 40% OF THOSE THAT TENDER
ELECTED STOCK.*
Resulting Consideration Paid
- Those J.D. Edwards stockholders electing stock receive full consideration
in PeopleSoft common stock.
-- The maximum number of J.D. Edwards shares that could be paid in
stock in the offer is 0.43 X 116,305,331 / 0.8447 = 59,205,981.
-- The number of J.D. Edwards shares electing stock is
116,305,331 X 40% = 46,522,132.
- This number is less than the maximum number of J.D. Edwards
shares that could be paid in stock (46,522,132 < 59,205,981).
- Therefore, every stock-electing J.D. Edwards share will receive
their full consideration in PeopleSoft common stock. Every
stock-electing J.D. Edwards share will receive 0.8447 of a share
of PeopleSoft common stock, which represents a value of $14.36
(0.8447 X $17.00 = $14.36).
- Those J.D. Edwards shares electing cash will receive partial
consideration in cash and partial consideration in PeopleSoft common
stock.
-- The maximum number of J.D. Edwards shares that could be paid in cash
in the offer is $7.05 X 116,305,331 / $14.36 = 57,099,762.
-- The number of J.D. Edwards shares electing cash is
116,305,331 X 60% = 69,783,198.
- This number is greater than the maximum number of J.D. Edwards
shares that could be paid in cash (69,783,198 > 57,099,762).
- Therefore, only 81.8% (57,099,762 / 69,783,198 = 81.8%) of the
requested amount can be delivered as cash consideration to those
J.D. Edwards stockholders electing cash.
-- Each cash-electing share will receive 81.8% of the cash offer price
of $14.36, or $11.75.
-- The remaining consideration must be delivered in PeopleSoft common
stock equal to 0.8447 X (1-0.818) = 0.1535 of a share of PeopleSoft
common stock.
-- Therefore, each cash-electing share will receive 0.1535 of a share of
PeopleSoft common stock in addition to the $11.75 in cash to deliver
the full $14.36 of consideration.
CASE 2: 40% OF THOSE THAT TENDER ELECTED CASH AND 60% OF THOSE THAT TENDER
ELECTED STOCK.*
Resulting Consideration Paid
- Those J.D. Edwards stockholders electing stock receive partial
consideration in PeopleSoft common stock and partial consideration in
cash.
- ---------------
* Note: All calculations are rounded to the nearest whole number. Figures
may not add exactly due to rounding.
69
-- The number of J.D. Edwards shares electing stock is
116,305,331 X 60%, or 69,783,198.
- This number is greater than the maximum number of J.D. Edwards
shares that could be paid in stock (69,783,198 > 59,205,981).
- Every stock-electing J.D. Edwards share will therefore receive a
portion of the full $14.36 consideration in cash.
- Every stock-electing J.D. Edwards share will therefore receive
0.7167 of a share of PeopleSoft common stock
(59,205,981/69,783,198 X stock offer price of 0.8447 = 0.7167)
which represents a value of $12.18 (0.7167 X $17.00 = $12.18).
- The remaining consideration equal to the cash offer price of
$14.36 X (1 - 0.848) = $2.18 must therefore be delivered in cash
in order to meet the required $14.36 value per J.D. Edwards
share.
- Those J.D. Edwards shares electing cash receive full consideration in
cash.
-- The number of tendering J.D. Edwards shares electing cash is
116,305,331 X 40%, or 46,522,132.
- This number is less than the maximum number of J.D. Edwards
shares that could be paid in cash (46,522,132 < 57,099,762).
- Therefore, each cash-electing J.D. Edwards share will receive the
full $14.36 of consideration in cash.
CASE 3: 60% OF THOSE THAT TENDER ELECTED CASH, 20% OF THOSE THAT TENDER ELECTED
STOCK, AND 20% OF THOSE THAT TENDER MADE NO ELECTION.*
Resulting Consideration Paid
- Those J.D. Edwards shares electing stock receive full consideration in
PeopleSoft stock.
-- The number of J.D. Edwards shares tendering and electing stock is
116,305,331 X 20%, or 23,261,066.
-- This number is less than the maximum number of J.D. Edwards shares
that can be paid in stock (23,261,066 < 59,205,981).
-- Therefore, each stock-electing J.D. Edwards share will receive full
consideration in PeopleSoft common stock.
-- For each J.D. Edwards share tendered, 0.8447 of a share of PeopleSoft
common stock will be issued (0.8447 X $17.00) to deliver the full
$14.36 of consideration.
- Those J.D. Edwards shares electing cash receive partial consideration in
cash and partial consideration in PeopleSoft common stock.
-- The number of J.D. Edwards shares electing cash is 116,305,331 X 60%,
or 69,783,198.
-- This number exceeds the maximum number of J.D. Edwards shares that
could be paid in cash (69,783,198 > 57,099,762).
-- Therefore, only 81.8% (57,099,762/69,783,198) of the requested amount
can be delivered as consideration to those J.D. Edwards stockholders
electing cash.
-- Each cash-electing share will receive 81.8% of the cash offer price
of $14.36, or $11.75.
-- The remaining consideration must be delivered in PeopleSoft common
stock equal to 0.8447 X (1 - 0.818) = 0.1535 of a share of PeopleSoft
common stock.
70
-- Each cash-electing share will therefore receive 0.1535 of a share of
PeopleSoft common stock (worth $2.61) in addition to the $11.75 in
cash to deliver the full $14.36 of consideration.
- Tendered but non-electing J.D. Edwards shares receive full consideration
in PeopleSoft common stock.
-- Under this scenario, 23,261,066 J.D. Edwards shares have not elected
a consideration preference (116,305,331 X 20%).
-- Since only 23,261,066 J.D. Edwards shares elected stock, which is
less than 59,205,981, the maximum number of J.D. Edwards shares that
can be paid in stock, then the J.D. Edwards shares who have not made
an election will be treated in the same manner as the stock-electing
J.D. Edwards shares.
-- Those non-electing J.D. Edwards shares will each receive 0.8447 of a
share of PeopleSoft common stock.
CASE 4: 40% OF THOSE THAT TENDER ELECTED CASH, 40% OF THOSE THAT TENDER ELECTED
STOCK, AND 20% OF THOSE THAT TENDER MADE NO ELECTION.*
Resulting Consideration Paid
- Those J.D. Edwards shares electing stock receive full consideration in
PeopleSoft common stock.
-- The number of J.D. Edwards shares tendering and electing stock is
116,305,331 X 40% = 46,522,132.
-- This number is less than the maximum number of J.D. Edwards shares
that can be paid in stock (46,522,132 < 59,205,981), so all those
J.D. Edwards stock-electing shares receive full consideration in
PeopleSoft common stock.
-- For each J.D. Edwards share tendered, 0.8447 of a share of PeopleSoft
common stock will be issued (0.8447 X $17.00) to deliver the full
$14.36 of consideration.
-- The number of shares of PeopleSoft common stock to be issued for
these J.D. Edwards shares is 39,297,245.
- Those J.D. Edwards shares electing cash receive full consideration in
cash.
-- The number of J.D. Edwards shares electing cash is 116,305,331 X 40%
= 46,522,132.
-- This number is less than the maximum number of J.D. Edwards shares
that could be paid in cash (46,522,132 < 57,099,762).
-- Therefore, each cash-electing J.D. Edwards share will receive the
full consideration of $14.36.
-- The amount of cash paid for these J.D. Edwards shares is
$668,057,815.
- Tendered but non-electing J.D. Edwards shares will receive partial
consideration in cash and partial consideration in PeopleSoft common
stock.
-- The number of J.D. Edwards shares who tendered but did not make an
election is 116,305,331 X 20% = 23,261,066.
-- Under this scenario, $151,894,767 in cash remains for issuance
($819,952,582 - $668,057,815).
-- Under this scenario, 10,714,047 shares of PeopleSoft common stock
remain for issuance (50,011,292 - 39,297,245).
71
-- $151,894,761 and 10,714,047 shares of PeopleSoft common stock will
be allocated among the 23,261,066 shares of J.D. Edwards common
stock which have been tendered but for no election was made, as
follows:
-- $151,894,767 / 23,261,066 = $6.53; and
-- 10,714,047 / 23,261,066 = 0.4606 of a share of PeopleSoft
common stock.
-- Therefore, each J.D. Edwards share that has been tendered but for
which no election was made will be exchanged for $6.53 plus 0.4606
of a share of PeopleSoft common stock (with a value of
0.4606 X $17 = $7.83) for a total consideration with a value of
$14.36.
As discussed above, the average closing price for purposes of allocating
the offer consideration will be determined by the average closing price of our
common stock as reported on the Nasdaq National Market for the five consecutive
trading day period ending immediately prior to (and excluding) the second
trading day before the expiration of the offer.
The following table illustrates the allocation of the offer consideration
for different values of our common stock based on the four examples above for
different percentages of cash-electing shares, stock-electing shares and
non-electing shares.
<Table>
<Caption>
60% CASH/40% STOCK-ELECTING SHARES 40% CASH/60% STOCK-ELECTING SHARES
------------------------------------ ------------------------------------
EACH CASH-ELECTING EACH STOCK- EACH CASH-ELECTING EACH STOCK-
AVERAGE CASH STOCK SH. ELECTING SH. SH. ELECTING SH.
CLOSING OFFER OFFER ------------------ --------------- ------------------ ---------------
PRICE PRICE PRICE CASH STOCK CASH STOCK CASH STOCK CASH STOCK
- ------- ------ ----- -------- ------- ------ ------ -------- ------- ------ ------
$10.00 $11.35 1.135x $11.35 0.000x $0.60 1.075x $11.35 0.000x $4.18 0.717x
$11.00 $11.78 1.071x $11.75 0.003x $0.00 1.071x $11.78 0.000x $3.90 0.717x
$12.00 $12.21 1.018x $11.75 0.038x $0.00 1.018x $12.21 0.000x $3.61 0.717x
$13.00 $12.64 0.972x $11.75 0.068x $0.00 0.972x $12.64 0.000x $3.32 0.717x
$14.00 $13.07 0.934x $11.75 0.094x $0.00 0.934x $13.07 0.000x $3.04 0.717x
$15.00 $13.50 0.900x $11.75 0.117x $0.00 0.900x $13.50 0.000x $2.75 0.717x
$16.00 $13.93 0.871x $11.75 0.136x $0.00 0.871x $13.93 0.000x $2.46 0.717x
$17.00 $14.36 0.845x $11.75 0.154x $0.00 0.845x $14.36 0.000x $2.18 0.717x
$18.00 $14.79 0.822x $11.75 0.169x $0.00 0.822x $14.79 0.000x $1.89 0.717x
$19.00 $15.22 0.801x $11.75 0.183x $0.00 0.801x $15.22 0.000x $1.60 0.717x
$20.00 $15.65 0.783x $11.75 0.195x $0.00 0.783x $15.65 0.000x $1.32 0.717x
$21.00 $16.08 0.766x $11.75 0.206x $0.00 0.766x $16.08 0.000x $1.03 0.717x
$22.00 $16.51 0.750x $11.75 0.216x $0.00 0.750x $16.51 0.000x $0.74 0.717x
$23.00 $16.94 0.737x $11.75 0.226x $0.00 0.737x $16.94 0.000x $0.46 0.717x
$24.00 $17.37 0.724x $11.75 0.234x $0.00 0.724x $17.37 0.000x $0.17 0.717x
$25.00 $17.80 0.712x $11.75 0.242x $0.00 0.712x $17.63 0.007x $0.00 0.712x
</Table>
<Table>
<Caption>
60% CASH/20% STOCK/20% NON-ELECTING SHARES 40% CASH/40% STOCK/20% NON-ELECTING SHARES
---------------------------------------------- -----------------------------------------------
EACH CASH- EACH STOCK- EACH NON- EACH CASH- EACH STOCK- EACH NON-
AVERAGE CASH STOCK ELECTING SH. ELECTING SH. ELECTING SH. ELECTING SH. ELECTING SH. ELECTING SH.
CLOSING OFFER OFFER -------------- ------------- ------------- -------------- ------------- --------------
PRICE PRICE PRICE CASH STOCK CASH STOCK CASH STOCK CASH STOCK CASH STOCK CASH STOCK
- ------- ------ ----- ------ ----- ----- ----- ----- ----- ------ ----- ----- ----- ------ -----
$10.00 $11.35 1.135x $11.35 0.000x $0.60 1.075x $0.60 1.075x $11.35 0.000x $0.60 1.075x $12.55 0.000x
$11.00 $11.78 1.071x $11.75 0.003x $0.00 1.071x $0.00 1.071x $11.78 0.000x $0.00 1.071x $11.69 0.008x
$12.00 $12.21 1.018x $11.75 0.038x $0.00 1.018x $0.00 1.018x $12.21 0.000x $0.00 1.018x $10.83 0.115x
$13.00 $12.64 0.972x $11.75 0.068x $0.00 0.972x $0.00 0.972x $12.64 0.000x $0.00 0.972x $ 9.97 0.205x
$14.00 $13.07 0.934x $11.75 0.094x $0.00 0.934x $0.00 0.934x $13.07 0.000x $0.00 0.934x $ 9.11 0.283x
$15.00 $13.50 0.900x $11.75 0.117x $0.00 0.900x $0.00 0.900x $13.50 0.000x $0.00 0.900x $ 8.25 0.350x
$16.00 $13.93 0.871x $11.75 0.136x $0.00 0.871x $0.00 0.871x $13.93 0.000x $0.00 0.871x $ 7.39 0.409x
$17.00 $14.36 0.845x $11.75 0.154x $0.00 0.845x $0.00 0.845x $14.36 0.000x $0.00 0.845x $ 6.53 0.461x
$18.00 $14.79 0.822x $11.75 0.169x $0.00 0.822x $0.00 0.822x $34.79 0.000x $0.00 0.822x $ 5.67 0.507x
$19.00 $15.22 0.801x $11.75 0.183x $0.00 0.801x $0.00 0.801x $15.22 0.000x $0.00 0.801x $ 4.81 0.548x
$20.00 $15.65 0.783x $11.75 0.195x $0.00 0.783x $0.00 0.783x $15.65 0.000x $0.00 0.783x $ 3.95 0.585x
$21.00 $16.08 0.766x $11.75 0.206x $0.00 0.766x $0.00 0.766x $16.08 0.000x $0.00 0.766x $ 3.09 0.619x
$22.00 $16.51 0.750x $11.75 0.216x $0.00 0.750x $0.00 0.750x $16.51 0.000x $0.00 0.750x $ 2.23 0.649x
$23.00 $16.94 0.737x $11.75 0.226x $0.00 0.737x $0.00 0.737x $16.94 0.000x $0.00 0.737x $ 1.37 0.677x
$24.00 $17.37 0.724x $11.75 0.234x $0.00 0.724x $0.00 0.724x $17.37 0.000x $0.00 0.724x $ 0.51 0.703x
$25.00 $17.80 0.712x $11.75 0.242x $0.00 0.712x $0.00 0.712x $17.63 0.007x $0.00 0.712x $ 0.00 0.712x
</Table>
UNVESTED RESTRICTED STOCK
Shares of J.D. Edwards common stock that are tendered but that are subject
to repurchase by J.D. Edwards or forfeiture will be exchanged into cash, shares
of PeopleSoft common stock or a combination of cash and stock, subject to the
proration restrictions discussed above. The restrictions
72
applicable to the J.D. Edwards common stock will continue to apply to the cash
and shares of our common stock received in exchange for the shares of restricted
J.D. Edwards common stock. Restricted J.D. Edwards shares that vest on the first
date on which we accept shares of J.D. Edwards common stock for payment and
exchange in the offer will be treated the same as all other shares of J.D.
Edwards common stock outstanding on the first date on which we accept shares of
J.D. Edwards common stock for payment and exchange in the offer. We will hold
the cash and the certificates representing these shares of restricted PeopleSoft
common stock until such shares and cash are no longer subject to repurchase or
forfeiture. Holders of shares of restricted PeopleSoft common stock will be
entitled to any cash dividends distributed. Any shares of our common stock or
other equity securities issued or distributed by us, including shares issued
upon a stock dividend or split, in respect of restricted shares of our common
stock will be subject to the same restrictions and other terms as the restricted
shares with respect to which the distribution is made. Each holder of restricted
shares will have voting rights with respect to the shares and other voting
securities held by us on its behalf.
CASH INSTEAD OF FRACTIONAL SHARES OF PEOPLESOFT COMMON STOCK
We will not issue certificates representing fractional shares of PeopleSoft
common stock pursuant to the offer. Instead, each tendering stockholder who
would otherwise be entitled to a fractional share of PeopleSoft common stock,
after aggregating all fractional shares of PeopleSoft common stock that would
otherwise be received by the stockholder, will receive cash, rounded up to the
nearest whole cent, in an amount equal to the product obtained by multiplying
that fraction by the closing price for a share of PeopleSoft common stock as
reported on the Nasdaq National Market on the date on which we accept J.D.
Edwards common stock for payment and exchange in the offer.
PROCEDURES FOR TENDERING
For you to validly tender J.D. Edwards common stock pursuant to the offer:
- a properly completed and duly executed letter of transmittal (or manually
executed facsimile of that document), along with any required signature
guarantees, or an agent's message in connection with a book-entry
transfer, and any other required documents, must be transmitted to and
received by the exchange agent at one of its addresses set forth on the
back cover of this prospectus, and certificates for tendered J.D. Edwards
common stock must be received by the exchange agent at such address or
those shares of J.D. Edwards common stock must be tendered pursuant to
the procedures for book-entry tender set forth below (and a confirmation
of receipt of such tender received, which we refer to below as a
book-entry confirmation), in each case before the expiration date, or
- you must comply with the guaranteed delivery procedures set forth below.
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the shares of J.D. Edwards common stock which are
the subject of the book-entry confirmation, that the participant has received
and agrees to be bound by the terms of the letter of transmittal and that we may
enforce that agreement against the participant.
The exchange agent will establish accounts with respect to the J.D. Edwards
common stock at DTC for purposes of the offer within two business days after the
date of this prospectus, and any financial institution that is a participant in
DTC may make book-entry delivery of the J.D. Edwards common stock by causing DTC
to transfer such J.D. Edwards common stock into the exchange agent's account in
accordance with DTC's procedure for the transfer. However, although delivery of
J.D. Edwards common stock may be effected through book-entry at DTC, the letter
of transmittal, or a manually signed facsimile thereof, with any required
signature guarantees, or an agent's message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted to
and received by the exchange agent at one or more of its addresses set forth on
the back cover of this prospectus prior to the expiration date, or the
guaranteed delivery procedures described below must be followed.
73
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which shares of J.D. Edwards common stock are
tendered either by a registered holder of J.D. Edwards common stock who has not
completed the box entitled "Special Issuance Instructions" on the letter of
transmittal or for the account of an eligible institution.
If the certificates for shares of J.D. Edwards common stock are registered
in the name of a person other than the person who signs the letter of
transmittal, or if certificates for unexchanged shares of J.D. Edwards common
stock are to be issued to a person other than the registered holder(s), the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the certificates, with the signature(s) on the certificates or
stock powers guaranteed in the manner we have described above.
THE METHOD OF DELIVERY OF J.D. EDWARDS SHARE CERTIFICATES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT YOUR OPTION AND RISK, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT, INCLUDING, IN THE CASE OF A BOOK-ENTRY
TRANSFER, BY BOOK-ENTRY CONFIRMATION. IF DELIVERY IS BY MAIL, WE RECOMMEND
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED. IN ALL CASES,
YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE TIMELY DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
RECEIVED PURSUANT TO OUR OFFER, YOU MUST PROVIDE THE EXCHANGE AGENT WITH YOUR
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER YOU ARE SUBJECT TO
BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. SOME STOCKHOLDERS (INCLUDING, AMONG
OTHERS, ALL CORPORATIONS AND SOME FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO THESE
BACKUP WITHHOLDING AND REPORTING REQUIREMENTS. IN ORDER FOR A FOREIGN INDIVIDUAL
TO QUALIFY AS AN EXEMPT RECIPIENT, THE STOCKHOLDER MUST SUBMIT A FORM W-8BEN,
SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS.
WITHDRAWAL RIGHTS
Your tender of J.D. Edwards common stock pursuant to the offer is
irrevocable, except that shares of J.D. Edwards common stock tendered pursuant
to the offer may be withdrawn at any time prior to the expiration, and, unless
we have previously paid for and exchanged them pursuant to the offer, may also
be withdrawn at any time after August 18, 2003, 60 calendar days after
commencement of the offer.
For your withdrawal to be effective, the exchange agent must receive from
you a written, telex or facsimile transmission notice of withdrawal at one of
its addresses set forth on the back cover of this prospectus, and your notice
must include your name, address, social security number, the certificate
number(s) and the number of shares of J.D. Edwards common stock to be withdrawn
as well as the name of the registered holder, if it is different from that of
the person who tendered the J.D. Edwards common stock. If shares of J.D. Edwards
common stock have been tendered pursuant to the procedures for book-entry tender
discussed under the caption entitled "Procedures for Tendering," any notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawn shares of J.D. Edwards common stock and must otherwise comply
with DTC's procedures. If certificates have been delivered or otherwise
identified to the exchange agent, the name of the registered holder and the
serial numbers of the particular certificates evidencing the shares of J.D.
Edwards common stock withdrawn must also be furnished to the exchange agent, as
stated above, prior to the physical release of the certificates. We will decide
all questions as to the form and validity, including time of receipt, of any
notice of withdrawal, in our sole discretion, and our decision shall be final
and binding.
A financial institution must guarantee all signatures on the notice of
withdrawal. Most banks, savings and loan associations and brokerage houses are
able to effect these signature guarantees for you. The financial institution
must be a participant in the Securities Transfer Agents Medallion Program, an
"eligible institution," unless those shares of J.D. Edwards common stock have
been tendered for the account of an eligible institution.
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Neither we, the exchange agent, the information agent nor any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or will incur any liability for failure to give any
notification. Any J.D. Edwards common stock properly withdrawn will be deemed
not to have been validly tendered for purposes of our offer. However, you may
retender withdrawn J.D. Edwards common stock by following one of the procedures
discussed under the captions entitled "-- Procedures for Tendering" or
"-- Guaranteed Delivery" at any time prior to the expiration.
GUARANTEED DELIVERY
If you wish to tender J.D. Edwards common stock pursuant to our offer and
your certificates are not immediately available or you cannot deliver the
certificates and all other required documents to the exchange agent prior to the
expiration or cannot complete the procedure for book-entry transfer on a timely
basis, your shares of J.D. Edwards common stock may nevertheless be tendered, so
long as all of the following conditions are satisfied:
- you make your tender by or through an eligible institution;
- a properly completed and duly executed notice of guaranteed delivery,
substantially in the form made available by us, is received by the
exchange agent as provided below on or prior to the expiration; and
- the certificates for all tendered shares of J.D. Edwards common stock, or
a confirmation of a book-entry transfer of such securities into the
exchange agent's account at DTC as described above, in proper form for
transfer, together with a properly completed and duly executed letter of
transmittal, or a manually signed facsimile thereof, with any required
signature guarantees, or, in the case of a book-entry transfer, an
agent's message, and all other documents required by the letter of
transmittal are received by the exchange agent within three Nasdaq
trading days after the date of execution of such notice of guaranteed
delivery.
You may deliver the notice of guaranteed delivery by hand or transmit it by
facsimile transmission or mail to the exchange agent and you must include a
guarantee by an eligible institution in the form set forth in that notice.
In all cases, we will exchange shares of J.D. Edwards common stock tendered
and accepted for exchange pursuant to our offer only after timely receipt by the
exchange agent of certificates for shares of J.D. Edwards common stock, or
timely confirmation of a book-entry transfer of such securities into the
exchange agent's account at DTC as described above, properly completed and duly
executed letter(s) of transmittal, or a manually signed facsimile(s) thereof, or
an agent's message in connection with a book-entry transfer, and any other
required documents.
By executing a letter of transmittal as set forth above, you irrevocably
appoint our designees as your attorneys-in-fact and proxies, each with full
power of substitution, to the full extent of your rights with respect to your
shares of J.D. Edwards common stock tendered and accepted for exchange by us and
with respect to any and all other shares of J.D. Edwards common stock and other
securities issued or issuable in respect of the J.D. Edwards common stock on or
after July 17, 2003. That appointment is effective, and voting rights will be
affected, when and only to the extent that we deposit the shares of PeopleSoft
common stock for shares of J.D. Edwards common stock that you have tendered with
the exchange agent. All such proxies will be considered coupled with an interest
in the tendered J.D. Edwards common stock and therefore will not be revocable.
Upon the effectiveness of such appointment, all prior proxies that you have
given will be revoked, and you may not give any subsequent proxies, and, if
given, they will not be deemed effective. Our designees will, with respect to
the J.D. Edwards common stock for which the appointment is effective, be
empowered, among other things, to exercise all of your voting and other rights
as they, in their sole discretion, deem proper at any annual, special or
adjourned meeting of J.D. Edwards stockholders or otherwise. We reserve the
right to require that, in order for shares of J.D. Edwards common stock to be
deemed validly tendered, immediately upon our exchange of those shares of
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J.D. Edwards common stock, we must be able to exercise full voting rights with
respect to such shares of J.D. Edwards common stock.
We will determine questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of J.D.
Edwards common stock, in our sole discretion, and our determination shall be
final and binding. We reserve the absolute right to reject any and all tenders
of shares of J.D. Edwards common stock that we determine are not in proper form
or the acceptance of or exchange for which may, in the opinion of our counsel,
be unlawful. We expressly reserve the right to increase the exchange ratio or to
make any other changes in the terms and conditions of the offer; provided,
however, that, without J.D. Edwards' consent, no change may be made that changes
the form of consideration to be paid, decreases the price per share or the
number of shares sought in the offer, amends the conditions to the offer as set
forth in the merger agreement, imposes conditions to the offer in addition to
those set forth in the merger agreement, extends the expiration date of the
offer beyond the initial expiration date of the offer, except as provided above,
or makes any other change which is adverse to the holders of the shares. No
tender of shares of J.D. Edwards common stock will be deemed to have been
validly made until all defects and irregularities in tenders of shares of J.D.
Edwards common stock have been cured or waived. Neither we, the exchange agent,
the information agent nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any shares of
J.D. Edwards common stock or will incur any liability for failure to give any
such notification. Our interpretation of the terms and conditions of our offer,
including the letter of transmittal and instructions thereto, will be final and
binding.
The tender of shares of J.D. Edwards common stock pursuant to any of the
procedures described above will constitute a binding agreement between us and
you upon the terms and subject to the conditions of the offer.
PURPOSE OF OUR OFFER; THE MERGER; APPRAISAL RIGHTS
Purpose. We are making the offer and will complete the merger to acquire
all of the outstanding shares of J.D. Edwards common stock. As soon as
practicable after completion of the offer, we will cause Jersey Acquisition to
merge with and into J.D. Edwards, unless we use the alternative double merger
structure described under "The Merger Agreement -- The Alternative Double
Merger". The purpose of the merger is to acquire all shares of J.D. Edwards
common stock not tendered and exchanged pursuant to the offer. In the merger,
each then-outstanding share of J.D. Edwards common stock (except for shares of
J.D. Edwards common stock held by J.D. Edwards or any of its subsidiaries, by us
or Jersey Acquisition or any of our wholly-owned subsidiaries and dissenters'
shares) would be converted into the right to receive the same average per-share
amount of cash and shares of PeopleSoft common stock as is paid in the offer,
with each then-outstanding share of J.D. Edwards common stock entitled to
receive $7.05 plus 0.43 of a share of PeopleSoft common stock.
Approval of the Merger. Under Section 251 of the DGCL, the approval of the
board of directors of J.D. Edwards and the affirmative vote of a majority of its
shares outstanding and entitled to vote are required to approve and adopt the
merger and the merger agreement. The J.D. Edwards board of directors has
previously approved the merger. Accordingly, if we complete the offer (after
satisfaction of the minimum tender condition), we would have a sufficient number
of shares of J.D. Edwards common stock to approve the merger without the
affirmative vote of any other holder of J.D. Edwards common stock. Therefore,
unless the merger is consummated in accordance with the short-form merger
provisions under the DGCL described below (in which case no action by the
stockholders of J.D. Edwards, other than by us, will be required to consummate
the merger), the only remaining corporate action of J.D. Edwards will be the
approval and adoption of the merger agreement by the affirmative vote of the
holders of a majority of the outstanding J.D. Edwards common stock entitled to
vote.
Possible Short-Form Merger. Section 253 of the DGCL would permit the
merger to occur without a vote of J.D. Edwards stockholders, referred to as a
short-form merger, if we were to acquire at least 90% of the outstanding J.D.
Edwards common stock in the offer or otherwise. If, however, we do not acquire
at
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least 90% of the then outstanding J.D. Edwards common stock pursuant to the
offer or otherwise, and a vote of J.D. Edwards stockholders is required under
the DGCL, a longer period of time will be required to effect the merger. We have
agreed in the merger agreement to effect the merger at the earliest practicable
time.
Appraisal Rights. No appraisal rights are available in connection with the
offer.
Holders of J.D. Edwards common stock who do not tender their shares in the
offer and do not vote to approve the merger and accept the same amount of
consideration offered in the merger, and who still hold their shares of J.D.
Edwards common stock at the effective time of the merger, will have the right to
seek an appraisal and to be paid the fair value of their shares of J.D. Edwards
common stock if they properly demand appraisal of their shares. The amount each
holder receives will be judicially determined and paid to such holder, provided
it complies with the provisions of Section 262 of the DGCL, referred to as
"Section 262".
This summary is not intended to be complete and is qualified in its
entirety by reference to Section 262, the text of which is set forth in Annex B
to this prospectus. Any J.D. Edwards stockholder considering demanding appraisal
is advised to consult legal counsel. Appraisal rights, if any, will not be
available unless and until the merger or a similar business combination is
consummated. J.D. Edwards stockholders of record who desire to exercise their
appraisal rights must fully satisfy all of the applicable conditions summarized
below.
If we acquire at least 90% of the J.D. Edwards common stock, then we expect
to effect the merger, whether or not the alternative double merger structure is
used, as a short-form merger pursuant to Section 253 of the DGCL, which does not
require any vote by the stockholders other than us. In such a case, J.D.
Edwards, as the corporation surviving such merger, must mail a notice referred
to as the notice of merger, to the J.D. Edwards stockholders within ten days
after the date such merger is effective. The notice of merger must specify that
the merger has become effective and that appraisal rights are available, and
must include a copy of Section 262 and any other information required by Section
262. Any stockholder wishing to exercise appraisal rights must mail a written
demand for appraisal within 20 days after the date on which the notice of merger
was sent.
If we fail to acquire at least 90% of the J.D. Edwards common stock in the
offer, the merger, whether or not the alternative double merger structure is
used, will be effected as a long-form merger, which requires a stockholder
action on the approval and adoption of the merger agreement. A stockholder
wishing to dissent in a long-form merger must deliver a written demand for
appraisal to the Secretary of J.D. Edwards before the taking of the stockholder
vote or within 20 days of receipt of notice of the taking of such action by
written consent. This written demand for appraisal must be in addition to and
separate from any proxy or vote abstaining from or voting against the approval
and adoption of the merger agreement. Merely voting against, abstaining from
voting, or failing to vote on the merger agreement will not by itself constitute
a demand for appraisal within the meaning of Section 262. In the case of a long-
form merger, any stockholder seeking appraisal rights must hold the shares of
J.D. Edwards common stock for which appraisal is sought on the date such
stockholder makes demand and must continuously hold such shares of J.D. Edwards
common stock through the effective time of the merger, and otherwise comply with
the provisions of Section 262.
In the case of both a short-form merger and a long-form merger, a demand
for appraisal must be executed by or for the stockholder of record, fully and
correctly, as such stockholder's name appears on the stock certificates. If
shares of J.D. Edwards common stock are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, such demand must be executed by the
fiduciary. If shares of J.D. Edwards common stock are owned of record by more
than one person, as in a joint tenancy or tenancy in common, such demand must be
executed by all joint owners. An authorized agent, including an agent for two or
more joint owners, may execute the demand for appraisal for a stockholder of
record; provided, however, the agent must identify the record owner and
expressly disclose the fact that, in exercising the demand, he is acting as
agent for the record owner. A record owner, such as a broker, who holds J.D.
Edwards common stock as a nominee for others, may exercise appraisal rights with
respect to
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the J.D. Edwards common stock held for all or less than all beneficial owners of
J.D. Edwards common stock as to which the holder is the record owner. In such
case the written demand must set forth the number of shares of J.D. Edwards
common stock covered by such demand. Where the number of shares is not expressly
stated, the demand will be presumed to cover all shares of J.D. Edwards common
stock outstanding in the name of such record owner. Beneficial owners who are
not record owners and who intend to exercise appraisal rights should instruct
the record owner to comply strictly with the statutory requirements with respect
to the exercise of appraisal rights before the date of any meeting of
stockholders called to approve the merger in the case of a long-form merger and
within 20 days following the mailing of the notice of merger in the case of a
short-form merger.
Stockholders who elect to exercise appraisal rights must mail or deliver
their written demands to: J.D. Edwards & Company, Attention: Secretary, One
Technology Way, Denver, CO 80237. The written demand for appraisal should
specify the stockholder's name and mailing address, the number of shares of J.D.
Edwards common stock covered by the demand and that the stockholder is thereby
demanding appraisal of such shares. In the case of a long-form merger, J.D.
Edwards must, within ten days after the effective time of the merger, provide
notice of the effective time of the merger to all stockholders who have complied
with Section 262 and have not voted for approval and adoption of the merger
agreement. In the case of a long-form merger, stockholders electing to exercise
their appraisal rights under Section 262 must not have voted for the approval
and adoption of the merger agreement or consented thereto in writing. Voting in
favor of the approval and adoption of the merger agreement, or delivering a
proxy in connection with the stockholders meeting called to approve the merger
agreement (unless the proxy votes against, or expressly abstains from the vote
on, the approval and adoption of the merger agreement), will constitute a waiver
of the stockholder's right of appraisal and will nullify any written demand for
appraisal submitted by the stockholder. Regardless of whether the merger is
effected as a long-form merger or a short-form merger, within 120 days after the
effective time of the merger, any J.D. Edwards stockholder who has complied with
the required conditions of Section 262 and who is otherwise entitled to
appraisal rights may file a petition in the Delaware Court of Chancery demanding
a determination of the fair value of the shares of the dissenting J.D. Edwards
stockholders. We are under no obligation to and have no present intention to
file a petition. Accordingly, it is the obligation of the holders of J.D.
Edwards common stock to initiate all action to perfect their appraisal rights in
respect of their shares within the time prescribed in Section 262.
Within 120 days after the effective time of the merger, any holder of J.D.
Edwards common stock who has complied with the requirements for exercise of
appraisal rights will be entitled, upon written request, to receive from the
surviving corporation a statement setting forth the aggregate number of shares
not voted in favor of the adoption of the merger and with respect to which
demands for appraisal have been received and the aggregate number of holders of
such shares. The statement must be mailed ten days after a written request
therefor has been received by J.D. Edwards or within ten days after the
expiration of the period for delivery of demands for appraisal, whichever is
later.
If a petition for an appraisal is timely filed, and a copy thereof is
served upon it, J.D. Edwards will then be obligated within 20 days to file with
the Delaware Register in Chancery a duly verified list containing the names and
addresses of all stockholders who have demanded an appraisal of their shares and
with whom agreements as to the value of their shares have not been reached.
After notice to those stockholders as required by the court, the Delaware Court
of Chancery is empowered to conduct a hearing on the petition to determine which
stockholders are entitled to appraisal rights. The Delaware Court of Chancery
may require the holders of the shares of J.D. Edwards common stock who demanded
payment for their shares to submit their stock certificates to the Register in
Chancery for notation thereon the pendency of the appraisal proceeding; and if
any stockholder fails to comply with that direction, the Delaware Court of
Chancery may dismiss the proceedings as to that stockholder. After determining
the holders of J.D. Edwards common stock entitled to appraisal, the Delaware
Court of Chancery will appraise the J.D. Edwards common stock owned by such J.D.
Edwards stockholders, determining the fair value of such J.D. Edwards common
stock, together with a fair rate of interest to be paid, if any, upon the amount
determined to be the fair value. In determining fair value, the Delaware Court
of Chancery is to take into
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account all relevant factors. In Weinberger v. UOP, Inc., et al., the Delaware
Supreme Court discussed the factors that could be considered in determining fair
value in an appraisal proceeding, stating that "proof of value by any techniques
or methods which are generally considered acceptable in the financial community
and otherwise admissible in court" should be considered and that "{f}air price
obviously requires consideration of all relevant factors involving the value of
a company." Further, the Delaware Supreme Court stated that in making this
determination of fair value a court must consider "market value, asset value,
dividends, earnings prospects, the nature of the enterprise and any other facts
which were known or which could be ascertained as of the date of merger which
throw any light on future prospects of the merged corporation." The Delaware
Supreme Court has construed Section 262 to mean that "elements of future value,
including the nature of the enterprise, which are known or susceptible of proof
as of the date of the merger and not the product of speculation, may be
considered." However, the court noted that Section 262 provides that fair value
is to be determined "exclusive of any element of value arising from the
accomplishment or expectation of the merger."
J.D. Edwards stockholders who in the future consider seeking appraisal
should have in mind that the fair value of their J.D. Edwards common stock
determined under Section 262 could be more than, the same as, or less than the
consideration paid for such stock in the offer if they do seek appraisal of
their J.D. Edwards common stock, and that opinions of investment banking firms
as to fairness from a financial point of view are not necessarily opinions as to
fair value under Section 262. Moreover, we intend to cause J.D. Edwards, as the
corporation surviving the merger, to argue in any appraisal proceeding that, for
purposes thereof, the "fair value" of the J.D. Edwards common stock is less than
that paid in the offer. The cost of the appraisal proceeding may be determined
by the Delaware Court of Chancery and taxed upon the parties as the Delaware
Court of Chancery deems equitable in the circumstances. Upon application of a
dissenting stockholder, the Delaware Court of Chancery may order that all or a
portion of the expenses incurred by any dissenting stockholder in connection
with the appraisal proceeding, including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts, be charged pro rata
against the value of all J.D. Edwards common stock entitled to appraisal. In the
absence of such a determination or assessment, each party bears its own
expenses. Any J.D. Edwards stockholder who has duly demanded appraisal in
compliance with Section 262 will not, after the effective time of the merger, be
entitled to vote for any purpose the J.D. Edwards common stock subject to such
demand or to receive payment of dividends or other distributions on such J.D.
Edwards common stock, except for dividends or other distributions payable to
stockholders of record at a date prior to the effective time of the merger.
At any time within 60 days after the effective time of the merger, any
former holder of J.D. Edwards common stock will have the right to withdraw his
or her demand for appraisal and to accept the merger consideration paid for such
J.D. Edwards stock. After this period, such holder may withdraw his or her
demand for appraisal only with the consent of J.D. Edwards, as the corporation
surviving the merger. If no petition for appraisal is filed with the Delaware
Court of Chancery within 120 days after the effective time of the merger,
stockholders' rights to appraisal shall cease and all stockholders shall be
entitled to receive the cash consideration paid for the same class or series of
the merger. Inasmuch as J.D. Edwards has no obligation to file such a petition,
and we have no present intention to cause or permit J.D. Edwards to do so, any
stockholder who desires such a petition to be filed is advised to file it on a
timely basis. However, no petition timely filed in the Delaware Court of
Chancery demanding appraisal may be dismissed as to any stockholder without the
approval of the Delaware Court of Chancery, and such approval may be conditioned
upon such terms as the Delaware Court of Chancery deems just. Failure to take
any required step in connection with the exercise of appraisal rights may result
in the termination or waiver of such rights. Appraisal rights cannot be
exercised at this time.
The information set forth above is for informational purposes only with
respect to alternatives available to stockholders if the merger is consummated.
Stockholders who will be entitled to appraisal rights in connection with the
merger will receive additional information concerning appraisal rights and the
procedures to be followed in connection therewith before such stockholders have
to take any action relating thereto. J.D. Edwards stockholders who exchange J.D.
Edwards common stock in the offer will not be entitled to exercise appraisal
rights in connection with the offer but, rather, will receive the consideration
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paid in the offer for such shares. The foregoing summary of appraisal rights of
objecting stockholders under the DGCL does not purport to be a complete
statement of the procedures to be followed by J.D. Edwards stockholders desiring
to exercise any available appraisal rights. The foregoing summary is qualified
in its entirety by reference to Section 262. The preservation and exercise of
appraisal rights require strict adherence to the applicable provisions of the
DGCL. See Appendix B attached to this prospectus.
CONDITIONS OF OUR OFFER
The offer is subject to a number of conditions, which are described below:
Minimum Tender Condition. There must be validly tendered and not properly
withdrawn prior to the expiration of the offer a number of shares of J.D.
Edwards common stock which constitute at least a majority of the total number of
outstanding shares of J.D. Edwards common stock, on a modified fully diluted
basis (as though all options or other securities convertible into or exercisable
or exchangeable for shares of J.D. Edwards common stock with an exercise price
or conversion price of less than $25.00 outstanding and which do not terminate
upon consummation of the offer, to the extent that they would be exercisable as
of the date which is 90 days after the expiration date of the offer, had been so
converted, exercised or exchanged), as of the date that we accept the shares of
J.D. Edwards common stock pursuant to our offer. Based on information supplied
by J.D. Edwards, the number of shares of J.D. Edwards common stock needed to
satisfy the minimum tender condition would have been approximately 66,018,619
assuming that the expiration date was July 10, 2003.
Antitrust Condition. This condition requires that any applicable waiting
periods under the HSR Act or similar statutes or regulations of foreign
jurisdictions have expired or been terminated.
Registration Statement Effectiveness Condition. The registration statement
on Form S-4 of which this prospectus is a part must have become effective under
the Securities Act and not be the subject of any stop order or proceedings
seeking a stop order. We intend to request effectiveness of the registration
statement filed with the SEC shortly before the expiration date of the offer, as
the offer may be extended. If the registration statement has not been declared
effective at the expiration of the offer, we intend to extend the offer and
announce the extension via the Dow Jones News Service no later than 9:00 a.m.,
New York City time on Friday, July 18, 2003, the next business day after the
date the offer is initially scheduled to expire.
Other Conditions of The Offer. In addition to the items discussed above,
the offer is also subject to the condition that, at the scheduled expiration
date of the offer, the following shall have occurred and be continuing:
- there shall not be any statute, rule, regulation or ruling enacted or
enforced by any U.S. court or governmental entity that prohibits,
restrains, enjoins or restricts completion of the offer or the merger;
- in connection with compliance with any applicable law, including the HSR
Act or similar foreign antitrust statutes, we are not required or
construed to be required, to sell or divest any assets, or restricted in
any of our business operations, or be prohibited or limited from owning
any portion of J.D. Edwards' business or assets;
- there shall not be any governmental or regulatory notices, approvals or
other requirements necessary to consummate the offer and the merger and
to operate J.D. Edwards as it was operated prior to the offer, except
where the failure to give, obtain or comply with such notices, approvals
or other requirements would not have a material adverse effect on us or
J.D. Edwards;
- (i) the representations and warranties of J.D. Edwards set forth in the
merger agreement qualified by "material adverse effect" on J.D. Edwards
shall be true and correct and (ii) the other representations and
warranties of J.D. Edwards set forth in the merger agreement shall be
true and correct, as of the date of the merger agreement and the
expiration date of the offer as if made on
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such date, except where failure to be true and correct would not have a
material adverse effect on J.D. Edwards;
- J.D. Edwards shall not have failed to perform its covenants and
obligations required by the merger agreement in all material respects at
or before the first date on which shares of J.D. Edwards common stock are
accepted for payment in the offer;
- the shares of PeopleSoft common stock to be issued in the offer shall
have been approved for listing on the Nasdaq National Market, subject to
official notice of issuance;
- PeopleSoft shall have received an opinion of its counsel that the offer,
the first merger and the second merger together will constitute a
reorganization under the provisions of Section 368(a) of the Code or, if
the alternative double merger structure described below in "The Merger
Agreement -- The Alternative Double Merger" is used, an opinion of its
counsel that the receipt by PeopleSoft stockholders of holding company
common stock will be treated as having occurred pursuant to either a
reorganization as defined in Section 368(a) of the Code and/or a
transaction governed by Section 351(a) of the Code; and
- there shall not have been a material adverse effect on J.D. Edwards.
The conditions to the offer are for our and Jersey Acquisition's sole
benefit and may be asserted by either of Jersey Acquisition or us regardless of
the circumstances giving rise to such conditions or except as to conditions
involving governmental approvals may be waived by us, in whole or in part at any
time and from time to time before the expiration of the offer in our sole
discretion. The failure by us or Jersey Acquisition at any time to exercise any
of the foregoing rights will not be deemed a waiver of any right, the waiver of
such right with respect to any particular facts or circumstances shall not be
deemed a waiver with respect to any other facts or circumstances, and each right
may be asserted at any time and from time to time before the expiration of the
offer.
In addition, we have agreed that we will not accept shares of J.D. Edwards
common stock that are validly tendered pursuant to the offer if J.D. Edwards
gives us notice and has not waived or withdrawn the notice that any the
following events have occurred or are continuing at the scheduled expiration of
the offer:
- there shall be a statute, rule, regulation or ruling enacted, or enforced
by any U.S. court or governmental entity that prohibits, restrains,
enjoins or restricts completion of the offer or the merger;
- in connection with compliance with any applicable law, including the HSR
Act or similar foreign antitrust statutes, we are required to sell or
divest any assets, or are prohibited or limited from owning any portion
of J.D. Edwards' business;
- any governmental or regulatory requirements necessary to consummate the
offer and the merger and to operate J.D. Edwards as it was operated prior
to the offer have not been given, obtained or complied with, except where
such failure would not have a material adverse effect on us;
- the registration statement of which this prospectus is a part has not
become effective under the Securities Act;
- the shares of PeopleSoft common stock to be issued in the offer have not
been approved for listing on the Nasdaq National Market, subject to
official notice of issuance;
- (i) the representations and warranties of our company and Jersey
Acquisition set forth in the merger agreement qualified by "material
adverse effect" on J.D. Edwards shall not be true and correct or (ii) the
other representations and warranties of our company and Jersey
Acquisition set forth in the merger agreement shall not be true and
correct, as of the date of the merger agreement and the expiration date
of the offer as if made on such date, except where failure to be true and
correct would not have a material adverse effect on our company;
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- our company and Jersey Acquisition shall have failed to perform our
covenants and obligations required by the merger agreement in all
material respects at or before the first date on which shares of J.D.
Edwards common stock are accepted for payment in the offer;
- J.D. Edwards shall not have received an opinion of its counsel (or
counsel to PeopleSoft in the event J.D. Edwards' counsel is unable to
render the opinion) that the offer and related transactions together will
constitute a reorganization under the provisions of Section 368(a) of the
Code or, if the alternative double merger structure described below in
"The Merger Agreement -- The Alternative Double Merger" is used, an
opinion of its counsel (or counsel to PeopleSoft in the event J.D.
Edwards' counsel is unable to render the opinion) that the receipt of
holding company common stock and cash by J.D. Edwards stockholders will
be treated as having occurred pursuant to a transaction governed by
Section 351(a) and, if applicable, Section 351(b) of the Code; and
- there shall have been a material adverse effect on our company.
REGULATORY CLEARANCES AND APPROVALS
Under the HSR Act, the shares of J.D. Edwards common stock may not be
accepted and the merger may not be consummated unless certain filings have been
submitted to the FTC and the Antitrust Division of the United States Department
of Justice and certain waiting period requirements have been satisfied.
PeopleSoft and J.D. Edwards have filed notification and report forms under the
HSR Act with the FTC and with the Antitrust Division of the United States
Department of Justice. PeopleSoft and J.D. Edwards also have made pre-merger
filings in Brazil, France and intend to complete filings in any additional
foreign jurisdictions where such filings may be required.
The FTC and the Antitrust Division frequently scrutinize the legality of
transactions like the offer and the merger under the antitrust laws. At any time
before or after the completion of the offer and the merger, the FTC, the
Antitrust Division or foreign governmental authority could take any action under
the antitrust laws as they deem necessary or desirable in the public interest,
including seeking to enjoin the completion of the offer or the merger or seeking
the divestiture of substantial assets of PeopleSoft or J.D. Edwards. In
addition, under certain circumstances, certain private parties, state attorneys
general and other antitrust authorities may challenge the transaction under
antitrust laws.
The parties do not believe that any material antitrust filings are required
in any other jurisdiction, or that such filings have a mandatory waiting period
prior to the completion of the merger, but will make any filings if it is
subsequently determined that they are required.
We believe that the completion of the offer and the merger will not violate
any antitrust laws. However, we cannot assure you that a challenge to the merger
on antitrust grounds will not be made, or, if such a challenge is made, what the
result will be.
We are not aware of any other significant regulatory approvals or actions
that are required for the merger. If any additional governmental approvals or
actions are required, we intend to obtain them. We cannot assure you, however,
that we will be able to obtain any additional approvals or actions.
CERTAIN EFFECTS OF OUR OFFER AND THE MERGER
Reduced Liquidity; Possible Delisting. The purchase of J.D. Edwards common
stock pursuant to the offer will reduce the number of holders of J.D. Edwards
common stock and the number of shares of J.D. Edwards common stock that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining J.D. Edwards common stock held by the public. J.D.
Edwards common stock is included for quotation and principally traded on the
Nasdaq National Market. Depending on the number of shares of J.D. Edwards common
stock acquired pursuant to the offer, following consummation of the offer, J.D.
Edwards common stock may no longer meet the requirements of the Nasdaq for
continued quotation. The requirements of the National Association of Securities
Dealers, referred to as the NASD, for continued inclusion in the Nasdaq, among
other things, require that an issuer have: either (a) at least 750,000 publicly
held shares, held by at least 400 stockholders of round lots, with a market
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value of at least $5 million and a minimum stockholders' equity of $10 million,
and at least two registered and active market makers for the shares or (b) at
least 1,100,000 publicly held shares, held by at least 400 stockholders of round
lots, with a market value of at least $15 million and at least four registered
and active market markers, and either (i) a market capitalization of at least
$50 million or (ii) total assets and total revenue of at least $50 million each
for the most recently completed fiscal year or two of the last three most
recently completed fiscal years. In addition, Nasdaq imposes a minimum bid price
requirement for continued listing.
The shares might nevertheless continue to be included in Nasdaq with
quotations published in the Nasdaq "additional list" or in one of the "local
lists," but if the number of holders of the shares were to fall below 300, the
number of publicly held shares were to fall below 500,000 or there were not at
least two registered and active market makers for the shares, the NASD's rules
provide that the shares would no longer be "qualified" for Nasdaq reporting and
Nasdaq would cease to provide any quotations. Shares held directly or indirectly
by directors, officers or beneficial owners of more than 10% of the outstanding
shares are not considered as being publicly held for this purpose. If, following
the closing of the offer, the shares of J.D. Edwards no longer meet the
requirements of the NASD for continued inclusion in Nasdaq or in any other tier
of Nasdaq and the shares were no longer included in Nasdaq or in any other tier
of Nasdaq, the market for shares of J.D. Edwards common stock could be adversely
affected.
If the shares no longer meet the requirements of the NASD for continued
inclusion in any tier of Nasdaq, it is possible that the shares would continue
to trade in the over-the-counter market and that price quotations would be
reported by other sources. The extent of the public market for the J.D. Edwards
common stock and the availability of quotations for J.D. Edwards common stock
would, however, depend upon the number of holders of shares remaining at that
time, the interest in maintaining a market in J.D. Edwards common stock on the
part of securities firms, the possible termination of registration of the shares
under the Exchange Act, as described below, and other factors. We cannot predict
whether the reduction in the number of shares of J.D. Edwards common stock that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the J.D. Edwards common stock.
We intend to cause the delisting of the J.D. Edwards common stock from
Nasdaq following consummation of the offer and the merger.
Status As "Margin Securities". The J.D. Edwards common stock are presently
"margin securities" under the regulations of the Federal Reserve Board, which
has the effect, among other things, of allowing brokers to extend credit on the
collateral of J.D. Edwards common stock. Depending on the factors similar to
those described above with respect to listing and market quotations, following
consummation of the offer, the J.D. Edwards common stock may no longer
constitute "margin securities" for the purposes of the Federal Reserve Board's
margin regulations, in which event the J.D. Edwards common stock would be
ineligible as collateral for margin loans made by brokers.
Financing of the Offer and the Merger. The cash necessary to acquire the
J.D. Edwards common stock will come from our working capital. The related fees
and expenses are estimated to be approximately $20 million for the information
agent, the exchange agent, the financial printer, accounting, legal and other
professional fees. Jersey Acquisition will obtain all of such funds from us or
our affiliates. We and our affiliates will provide such funds from existing
resources.
Going Private Transactions. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the merger or another
business combination following the purchase of J.D. Edwards common stock
pursuant to the offer in which we or Jersey Acquisition seek to acquire the
remaining shares not held by it. We believe that Rule 13e-3 will not be
applicable to the merger if it occurs within one year after the consummation of
the offer. Rule 13e-3 requires, among other things, that certain financial
information concerning J.D. Edwards and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the SEC and disclosed to
stockholders before consummation of the transaction.
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Plans for J.D. Edwards. It is expected that following the merger, we will
continue to evaluate the business and operations of J.D. Edwards and we intend
to seek additional information about J.D. Edwards during this period.
Thereafter, we intend to review such information as part of a comprehensive
review of J.D. Edwards' business, operations, capitalization and management with
a view to optimizing J.D. Edwards' potential in conjunction with our businesses.
Registration Under The Exchange Act. J.D. Edwards common stock is
currently registered under the Exchange Act. J.D. Edwards can terminate that
registration upon application to the SEC if the outstanding shares are not
listed on a national securities exchange and if there are fewer than 300 holders
of record of J.D. Edwards common stock. Termination of registration of the J.D.
Edwards common stock under the Exchange Act would reduce the information that
J.D. Edwards must furnish to its stockholders and to the SEC and would make
certain provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) and the requirement of furnishing a proxy statement
in connection with stockholders meetings pursuant to Section 14(a) and the
related requirement of furnishing an annual report to stockholders, no longer
applicable with respect to J.D. Edwards common stock. In addition, if the J.D.
Edwards common stock is no longer registered under the Exchange Act, the
requirements of Rule 13e-3 under the Exchange Act with respect to
"going-private" transactions would no longer be applicable to J.D. Edwards. See
"-- Certain Effects of Our Offer and the Merger -- Going Private Transactions".
Furthermore, the ability of "affiliates" of J.D. Edwards and persons holding
"restricted securities" of J.D. Edwards to dispose of such securities pursuant
to Rule 144 under the Securities Act may be impaired or eliminated. If
registration of the shares under the Exchange Act were terminated, they would no
longer be eligible for Nasdaq reporting or for continued inclusion on the
Federal Reserve Board's list of "margin securities". See "-- Certain Effects of
Our Offer and the Merger -- Status as Margin Securities".
FEES AND EXPENSES
PeopleSoft has retained Citigroup to act as dealer manager in connection
with our offer and to provide various financial advisory services to PeopleSoft
in connection with our offer and merger with J.D. Edwards. In connection with
the transaction, Citigroup rendered a fairness opinion to the PeopleSoft board
of directors on June 15, 2003. The opinion is described below under "Opinion of
PeopleSoft's Financial Advisor". Citigroup will receive fees for these services
as described under "Opinion of PeopleSoft's Financial Advisor," and will be
reimbursed for out-of-pocket expenses, including reasonable expenses of legal
counsel and other advisors. PeopleSoft has agreed to indemnify Citigroup and
related persons against various liabilities and expenses in connection with its
services as dealer manager and financial advisor, including various liabilities
and expenses under U.S. federal securities laws. In addition, Citigroup has been
retained to act as financial advisor to PeopleSoft in connection with the Oracle
Offer and certain potential transactions related to such offer, and Citigroup
will receive fees for such services.
In the ordinary course of its business, Citigroup and its affiliates may
actively trade or hold the securities of both PeopleSoft and J.D. Edwards for
its own account and for the account of customers and, accordingly, may at any
time hold a long or short position in those securities. Citigroup and its
affiliates, including Citigroup Inc. and its affiliates, may maintain
relationships with PeopleSoft and J.D. Edwards and their respective affiliates.
Pursuant to a letter agreement dated June 12, 2003, PeopleSoft engaged
Goldman Sachs to act as its financial advisor in connection with the
contemplated transaction. Pursuant to the terms of this letter agreement,
PeopleSoft agreed to pay Goldman Sachs a transaction fee of $2,500,000, which is
payable upon consummation of the transaction. PeopleSoft has also agreed to
reimburse Goldman Sachs for its reasonable expenses, including attorneys' fees
and disbursements, and to indemnify Goldman Sachs and related persons against
various liabilities, including certain liabilities under the federal securities
laws. In addition, Goldman Sachs has been retained to act as financial advisor
to PeopleSoft in connection with the Oracle Offer and certain potential
transactions related to such offer, and Goldman Sachs will receive fees for such
services.
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We have retained Georgeson Shareholder Communications Inc. as information
agent in connection with the offer. The information agent may contact holders of
J.D. Edwards common stock by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee stockholders to
forward material relating to the offer to beneficial owners of J.D. Edwards
common stock. We will pay the information agent $50,000 for the initial offer
period, $15,000 for each extension, if any, plus an additional amount per
account contacted for these services in addition to reimbursing the information
agent for its reasonable out-of-pocket expenses. We have agreed to indemnify the
information agent against certain liabilities and expenses in connection with
the offer, including certain liabilities under the U.S. federal securities laws.
In addition, we have retained The Bank of New York as the exchange agent.
We will pay the exchange agent reasonable and customary fees for its services in
connection with the offer, will reimburse the exchange agent for its reasonable
out-of-pocket expenses and will indemnify the exchange agent against certain
liabilities and expenses, including certain liabilities under the U.S. federal
securities laws.
Except as set forth above, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of J.D. Edwards common
stock pursuant to the offer. We will reimburse brokers, dealers, commercial
banks and trust companies and other nominees, upon request, for customary
clerical and mailing expenses incurred by them in forwarding offering materials
to their customers.
ACCOUNTING TREATMENT OF THE TRANSACTIONS
PeopleSoft will use the purchase method of accounting for the merger with
J.D. Edwards under accounting principles generally accepted in the United States
of America. Therefore, the purchase price will be allocated to J.D. Edwards
identifiable assets and liabilities based on their estimated fair values at the
time of completion of the merger. Any excess of the purchase price over these
fair values will be accounted for as goodwill. The reported financial condition
and results of operations of PeopleSoft issued after the merger will reflect the
combined company's balances and results after completion of the merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion is the opinion of Gibson, Dunn & Crutcher LLP and
Wilson Sonsini Goodrich & Rosati, Professional Corporation, advisors to
PeopleSoft and J.D. Edwards, respectively, as to the material U.S. federal
income tax consequences of the proposed transactions to J.D. Edwards
stockholders. This discussion is based on the Code, the related Treasury
regulations, administrative interpretations and court decisions, all of which
are subject to change, possibly with retroactive effect. Any such change could
affect the accuracy of the statements and the conclusions discussed below and
the tax consequences of the proposed transaction. This discussion applies only
to J.D. Edwards stockholders that hold their shares of J.D. Edwards common
stock, and will hold the shares of common stock received in exchange for their
shares of J.D. Edwards common stock, as capital assets within the meaning of
Section 1221 of the Code. This discussion does not address all federal income
tax consequences of the proposed transaction that may be relevant to particular
holders, including holders that are subject to special tax rules. Some examples
of holders that are subject to special tax rules are:
- dealers in securities;
- financial institutions;
- insurance companies;
- tax-exempt organizations;
- holders of shares of J.D. Edwards stock as part of a position in a
"straddle" or as part of a "hedging" or "conversion" transaction;
- holders who have a "functional currency" other than the U.S. dollar;
- holders who are foreign persons;
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- holders who own their shares indirectly through partnerships, trusts or
other entities that may be subject to special treatment; and
- holders who acquired their shares of J.D. Edwards common stock through
stock option or stock purchase programs or otherwise as compensation.
In addition, this discussion does not address any consequences arising
under the laws of any state, local or foreign jurisdiction. J.D. EDWARDS
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO SPECIFIC TAX
CONSEQUENCES TO THEM OF THE PROPOSED TRANSACTIONS, INCLUDING THE APPLICABILITY
AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS AND OF CHANGES IN APPLICABLE
TAX LAWS.
Provided that we receive the opinion of Gibson, Dunn & Crutcher LLP and
J.D. Edwards receives the opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, or Gibson, Dunn & Crutcher LLP that this offer, the
merger of Jersey Acquisition, our wholly-owned subsidiary, with and into J.D.
Edwards, and the subsequent merger of J.D. Edwards with and into PeopleSoft or a
wholly-owned subsidiary of PeopleSoft, together constitute a "reorganization"
within the meaning of Section 368(a) of the Code, holders of J.D. Edwards common
stock will receive their consideration either upon the closing of this offer or
upon consummation of the first merger.
Alternatively, if either PeopleSoft or J.D. Edwards is unable to obtain
such an opinion of counsel, the alternative double merger structure described
below under the heading "The Merger Agreement -- The Alternative Double Merger,"
will be used, but only if (i) we receive the opinion of Gibson, Dunn & Crutcher
LLP to the effect that, for federal income tax purposes, the receipt of new
holding company stock by our stockholders in exchange for their shares of
PeopleSoft common stock will be treated as a reorganization under Section 368(a)
of the Code and/or a transaction governed by Section 351(a) of the Code and (ii)
J.D. Edwards receives the opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, or Gibson, Dunn & Crutcher LLP to the effect that, for
federal income tax purposes, the receipt of the new holding company common stock
and cash by J.D. Edwards stockholders in exchange for their shares of J.D.
Edwards common stock will be a transaction governed by Section 351(a) of the
Code and, if applicable, Section 351(b) of the Code.
Holders of J.D. Edwards common stock should note that these opinions of
counsel will be given in reliance on customary representations and assumptions
as to certain factual matters, including that (i) the proposed mergers occur in
the ordinary course after completion of the offer, and (ii) in the event that
the alternative double merger structure is used, PeopleSoft stockholders and
J.D. Edwards stockholders do not, as part of the same plan as the proposed
transaction or pursuant to a pre-existing agreement, dispose of more than 20% of
the holding company stock received by them in the proposed transaction. Also,
the opinions of counsel will not bind the courts or the Internal Revenue
Service, nor will they preclude the Internal Revenue Service from adopting a
position contrary to those expressed in the opinions. Neither J.D. Edwards nor
PeopleSoft intends to obtain a ruling from the Internal Revenue Service with
respect to the federal income tax consequences of the exchange of J.D. Edwards
stock for PeopleSoft or holding company common stock or cash pursuant to the
proposed transactions.
The following are the material federal income tax consequences to J.D.
Edwards stockholders who, consistent with the opinions of counsel referred to
above, receive their cash and shares of PeopleSoft common stock (or shares of
the new holding company stock if the alternative double-merger structure is
used) either pursuant to a transaction constituting a reorganization within the
meaning of Section 368(a) of the Code, or pursuant to a transaction governed by
Section 351(a) of the Code and, if applicable, Section 351(b) of the Code. For
purposes of this section, references to PeopleSoft common stock include a
reference to shares of the new holding company common stock.
The federal income tax consequences of the acquisition to each J.D. Edwards
stockholder will vary depending on whether the J.D. Edwards stockholder receives
cash, stock, or a combination of cash and stock in exchange for the
stockholder's shares of J.D. Edwards common stock. At the time that a J.D.
Edwards stockholder makes an election to receive cash or stock, the stockholder
will not know if, and to what extent, the proration procedures will alter the
mix of consideration to be received. As a result, the
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tax consequences to each stockholder will not be ascertainable with certainty
until the stockholder knows the precise amount of cash or stock that will be
received as a result of the offer.
Holders who Exchange Shares of J.D. Edwards Common Stock Solely for
Cash. Holders of J.D. Edwards common stock who exchange all their shares of
J.D. Edwards common stock solely for cash in our offer will generally recognize
gain or loss equal to the difference between the amount of cash received and the
tax basis for the shares of J.D. Edwards common stock exchanged. The amount and
character of gain or loss will be computed separately for each block of J.D.
Edwards common stock that was purchased by the holder in the same transaction.
Any recognized gain or loss will be capital gain or loss and any such capital
gain or loss will be long term if, as of the date of sale or exchange, such
stockholder has held the shares of J.D. Edwards common stock for more than one
year or will be short term if, as of such date, such stockholder has held the
shares of J.D. Edwards common stock for one year or less.
Holders who Exchange Shares of J.D. Edwards Common Stock Solely for
PeopleSoft Common Stock. Holders of J.D. Edwards common stock who exchange all
of their shares of J.D. Edwards common stock solely for shares of PeopleSoft
common stock in our offer will not recognize gain or loss for United States
federal income tax purposes, except with respect to cash, if any, they receive
in lieu of a fractional share of PeopleSoft common stock. Each holder's
aggregate tax basis in the PeopleSoft common stock received in the offer will be
the same as his or her aggregate tax basis in the J.D. Edwards common stock
surrendered in the offer, decreased by the amount of any tax basis allocable to
any fractional share interest for which cash is received. The holding period of
the PeopleSoft common stock received in the offer by a holder of J.D. Edwards
common stock will include the holding period of J.D. Edwards common stock that
he or she surrendered in the offer. If a J.D. Edwards stockholder has differing
tax bases and/or holding periods in respect of the stockholder's shares of J.D.
Edwards common stock, the stockholder should consult with a tax advisor in order
to identify the tax bases and/or holding periods of the particular shares of
PeopleSoft common stock that the stockholder receives.
Holders who Exchange Shares of J.D. Edwards Common Stock for PeopleSoft
Common Stock and Cash. J.D. Edwards stockholders who exchange shares of J.D.
Edwards common stock for a combination of PeopleSoft common stock and cash will
recognize gain, but not loss, in the exchange. The gain, if any, recognized will
equal the lesser of:
- the amount of cash received in the exchange; and
- the amount of gain realized in the exchange.
The amount of gain that is realized in the exchange will equal the excess of:
- the sum of the cash plus the fair market value of the PeopleSoft common
stock received in the exchange over
- the tax basis of the shares of J.D. Edwards common stock surrendered in
the exchange.
For this purpose, a J.D. Edwards stockholder must calculate gain or loss
separately for each identifiable block of shares of J.D. Edwards stock that such
stockholder surrenders pursuant to the proposed transactions, and a J.D. Edwards
stockholder cannot offset a loss recognized on one block of such shares against
a gain recognized on another block of such shares. Any gain recognized generally
will be treated as capital gain except that if the holder receives cash in this
tender offer or in the first merger and the alternative merger structure is not
used, the holder's gain could be treated as a dividend if the receipt of the
cash has the effect of the distribution of a dividend for United States federal
income tax purposes (under Sections 302 and 356 of the Code). The aggregate tax
basis in the PeopleSoft common stock received pursuant to the proposed
transactions (including the basis in any fractional share for which cash is
received) will be equal to the aggregate tax basis in the J.D. Edwards common
stock surrendered in the transactions, decreased by the amount of cash received
and increased by the amount of gain, if any, recognized or any amount treated as
a dividend. The holding period of the PeopleSoft common stock received in the
proposed transactions by a holder of J.D. Edwards common stock will include the
holding
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period of J.D. Edwards common stock that he or she surrendered in exchange
therefor. Cash received and gain realized in connection with the receipt of cash
in lieu of a fractional share of common stock are not taken into account in
making the computations of gain realized or recognized and basis in the shares
received. Rather, such cash and gain are treated as described below.
The Receipt of Cash in Lieu of a Fractional Share. A holder of J.D.
Edwards common stock who receives cash in lieu of a fractional share of
PeopleSoft common stock will generally recognize gain or loss equal to the
difference between the amount of cash received and his or her tax basis in the
PeopleSoft common stock that is allocable to the fractional share. That gain or
loss generally will constitute capital gain or loss.
Tax Consequences if the Acquisition of J.D. Edwards Does Not Qualify as a
Reorganization under Section 368 of the Code or a Transaction Governed by
Section 351 of the Code. If the Internal Revenue Service determines
successfully that the acquisition of J.D. Edwards does not qualify as a
reorganization within the meaning of Section 368(a) of the Code or a transaction
governed by Section 351 of the Code, J.D. Edwards stockholders would be required
to recognize gain or loss with respect to each share of J.D. Edwards common
stock surrendered in the proposed transactions in an amount equal to the
difference between (a) the sum of the fair market value of any PeopleSoft common
stock and cash received in the proposed transactions and (b) the tax basis of
the shares of J.D. Edwards common stock surrendered in exchange therefor. The
amount and character of gain or loss will be computed separately for each block
of J.D. Edwards common stock that was purchased by the holder in the same
transaction. A J.D. Edwards stockholder's aggregate tax basis in the PeopleSoft
common stock received in the proposed transactions would in this case equal its
fair market value at the time of the closing of the offer or the merger, as
applicable, and the holding period for the PeopleSoft common stock will begin
the day after the closing of the offer or the merger, as applicable.
Information Reporting and Backup Withholding. Certain U.S. holders may be
subject to information reporting with respect to the cash received in exchange
for J.D. Edwards common stock, including cash received instead of a fractional
share interest in shares of PeopleSoft common stock. U.S. holders who are
subject to information reporting and who do not provide appropriate information
when requested may also be subject to backup withholding. Any amount withheld
under such rules is not an additional tax and may be refunded or credited
against such U.S. holders' federal income tax liability, provided that the
required information is properly furnished in a timely manner to the Internal
Revenue Service.
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THE MERGER AGREEMENT
The following summary of the material terms and provisions of the merger
agreement is qualified in its entirety by reference to the merger agreement. The
merger agreement is attached as Appendix A to this prospectus, and is
incorporated by reference into this prospectus. You should read the merger
agreement in its entirety, as it is the legal document governing the offer and
the merger, and the provisions of the merger agreement are complicated and not
easily summarized.
THE AGREEMENT
On June 1, 2003, PeopleSoft, J.D. Edwards and Jersey Acquisition, our
wholly-owned subsidiary, entered into the original merger agreement. On June 16,
2003, the parties entered into an amended and restated merger agreement. We are
making the offer to facilitate the consummation of the merger. The merger
agreement provides that following the acquisition of the shares of J.D. Edwards
pursuant to the offer and the satisfaction or waiver of all other conditions to
the merger described below under "-- Conditions to Completion of the Merger",
Jersey Acquisition will merge with and into J.D. Edwards with J.D. Edwards
continuing in existence as the surviving corporation until the second merger
occurs as described below under "-- The Second Merger".
THE OFFER
Terms of the Offer. The merger agreement provides for us to commence,
through Jersey Acquisition, our wholly-owned subsidiary, this offer to exchange
all outstanding shares of J.D. Edwards common stock and the associated stock
purchase rights pursuant to J.D. Edwards' rights agreement for the right to
receive, on a per share basis, either cash, a fraction of a share of our common
stock or, in the case of proration, a combination of cash and a fraction of our
common stock. Pursuant to the terms of the offer, in exchange for each J.D.
Edwards share, you may receive cash, a fraction of a share of our common stock,
or a combination of cash and stock, in each case having a value of $7.05 plus
0.43 of a share of PeopleSoft common stock, allocated by prorating the cash and
shares available in the offer among the elections made. Both these amounts are
subject to proration, see "The Offer -- Making the Election" and "The
Offer -- The Proration Rules".
Fractional shares of our common stock will not be issued in the offer.
Instead, each tendering stockholder who would otherwise be entitled to a
fractional share (after aggregating all fractional shares of our common stock
that would otherwise be received by the stockholder) will be paid an amount in
cash (rounded up to the nearest whole cent) equal to the product obtained by
multiplying (x) the fractional share interest to which such stockholder would
otherwise be entitled by (y) the closing price for one share of our common stock
as reported on the Nasdaq National Market on the first date on which J.D.
Edwards shares are accepted for payment in the offer.
Conditions to the Offer. You will find a description of the conditions to
our offer in "The Offer -- Conditions to Our Offer".
Mandatory Extensions of The Offer. If the conditions to the offer are not
satisfied or waived on any scheduled expiration date of the offer, we will
extend the offer at any time for the shortest time periods we reasonably believe
are necessary; provided that:
- no single extension will exceed ten business days; and
- we will not be required to extend the offer beyond November 30, 2003 or,
in the event we have not received a government approval, February 28,
2004.
Without the prior written consent of J.D. Edwards, we may not decrease the
total value of the consideration to be paid per share in the offer, change the
form of consideration to be paid, decrease the number of J.D. Edwards shares
sought in the offer, amend the conditions of the offer set forth in the merger
agreement or impose conditions to the offer in addition to those set forth in
the merger agreement.
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Prompt Payment For J.D. Edwards Shares After The Closing Of The Offer. On
the terms and subject to the prior satisfaction or waiver of the conditions of
the offer, we will accept for payment and pay for all J.D. Edwards shares
validly tendered and not properly withdrawn as soon as we are legally permitted
to do so under applicable law. You may find additional information regarding the
exchange of your J.D. Edwards shares in the following sections of this
prospectus: "The Offer -- Exchange of J.D. Edwards Common Stock; Delivery of
Cash and PeopleSoft Common Stock" and "The Offer -- Procedures for Tendering".
Designation of Directors Upon Acceptance of Shares. After completion of
the offer, Jersey Acquisition may designate for appointment or election to the
J.D. Edwards board and each committee of the board, the number of directors as
to reflect our percentage ownership of the outstanding common stock of J.D.
Edwards. Until the effective time of the merger, the J.D. Edwards board will
have at least two directors who were directors on the date of the original
merger agreement and who are not affiliated with PeopleSoft or Jersey
Acquisition. J.D. Edwards will take all actions necessary to effect this
appointment or election.
Until the effective time of the merger, the J.D. Edwards board will
delegate to a committee of the board of J.D. Edwards comprised solely of
independent directors, sole responsibility for:
- amendment or termination of the merger agreement on behalf of J.D.
Edwards;
- waiver of any of J.D. Edwards' rights or remedies under the merger
agreement;
- extension of the time for performance of PeopleSoft's or Jersey
Acquisition's obligations under the merger agreement; or
- enforcement of J.D. Edwards' rights under the merger agreement.
THE MERGER
Following the acceptance of the shares in the offer and in accordance with
the terms of the merger agreement, at the effective time of the merger, each
issued and outstanding share of J.D. Edwards common stock that was not tendered
and accepted by us in the offer (other than those shares held by J.D. Edwards or
any of its subsidiaries, us or Jersey Acquisition or any of our wholly-owned
subsidiaries and dissenting shares) will be converted into the right to receive
$7.05 in cash plus 0.43 of a share of our common stock, without interest and
less any applicable tax withholding. All shares of J.D. Edwards common stock
owned by J.D. Edwards or any of its subsidiaries, PeopleSoft or Jersey
Acquisition or any of our subsidiaries will be automatically canceled and
retired and will cease to exist.
Fractional Shares. Certificates for fractional shares of our common stock
will not be issued in the merger. Each J.D. Edwards stockholder that would
otherwise receive a fractional share will instead receive a cash payment equal
to the value of the fractional share determined by multiplying the fractional
share interest to which that holder would otherwise be entitled (after
aggregating all shares owned by the holder) by the average closing sale prices
for one share of our common stock as reported on the Nasdaq National Market for
the five trading days before the date the merger becomes effective.
Restricted Shares. To the extent that a J.D. Edwards stockholder owns
shares of J.D. Edwards common stock which are subject to repurchase by J.D.
Edwards, or that are otherwise subject to a risk of forfeiture or other
condition under any applicable agreement with J.D. Edwards, the cash and shares
of our common stock received by the J.D. Edwards stockholder in the merger in
exchange for his or her restricted shares of J.D. Edwards common stock will be
subject to repurchase by PeopleSoft on the same terms as governed the shares
before the merger except that the repurchase price for the shares of our common
stock received by the J.D. Edwards stockholder in the merger will be
proportionally adjusted. Cash and certificates representing restricted shares of
our common stock will be held by PeopleSoft until the cash and shares are no
longer subject to repurchase or forteiture. Cash dividends on restricted shares
of our common stock will be distributed to the holder on whose behalf we hold
the restricted shares of our common stock. Any shares of our common stock or
other equity securities issued or distributed by us,
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including shares issued upon a stock dividend or split, in respect of restricted
shares of our common stock will be subject to the same restrictions and other
terms as the restricted shares with respect to which the distribution is made.
Each holder of restricted shares will have voting rights with respect to the
shares and other voting securities held by us on its behalf.
Adjustments. The cash and the exchange ratio of J.D. Edwards stock to our
common stock will be adjusted to reflect the effects of any stock split, stock
dividend, reclassification, recapitalization or the like on J.D. Edwards or our
common stock between June 1, 2003 and the time the merger becomes effective.
Appraisal Rights. Holders of shares of J.D. Edwards common stock that are
issued and outstanding immediately prior to the effective time of the merger,
will be entitled to appraisal rights in accordance with Section 262 of the DGCL.
The shares of J.D. Edwards common stock held by a holder who properly elects
appraisal will not be converted into the right to receive the same per share
consideration paid to the holders of J.D. Edwards shares pursuant to the merger,
and holders of such dissenting shares will be entitled to receive payment of the
appraised value of such dissenting shares in accordance with the provisions of
Section 262, provided that such holders do not fail to perfect or effectively
withdraw or otherwise lose their rights to appraisal and payment under the DGCL.
If, after the effective time of the merger, any such holder fails to perfect or
effectively withdraws or loses such right, such dissenting shares will then be
treated as if they had been converted into and have become exchangeable for, as
of the effective time of the merger, the right to receive per share
consideration equal to $7.05 in cash, plus 0.43 of a share of our common stock,
without interest.
EFFECTIVE TIME AND TIMING OF CLOSING
The merger will be completed and become effective when the certificate of
merger is filed with the Secretary of State of the State of Delaware, or at such
later time as PeopleSoft and J.D. Edwards may agree and as specified in the
certificate of merger, in accordance with Delaware law. The closing of the
merger will take place no later than the second business day after all
conditions to the merger have been satisfied or waived other than conditions
requiring the delivery of certificates or other documents at the closing, or on
such other date as PeopleSoft and J.D. Edwards may agree in writing. We
currently anticipate completion of the merger shortly after we complete the
offer if we acquire 90% or more of the J.D. Edwards common stock in the offer.
The filing of the certificate of merger will take place as soon as practicable
after the satisfaction or waiver of the conditions described below under
"-- Conditions to Completion of the Merger". Following the merger, J.D. Edwards
shall continue as the surviving corporation until the second merger occurs as
described below under "-- The Second Merger".
THE SECOND MERGER
As soon as practicable after the effective time of the merger, we will
cause J.D. Edwards, as the surviving corporation of the merger, to be merged
with and into PeopleSoft or one of our direct wholly-owned subsidiaries, and we
or our subsidiary will continue as the surviving corporation. We refer to this
merger as the second merger. However, we will not effect the merger or the
second merger if on or prior to the date we accept shares of J.D. Edwards common
stock for payment in the offer, we do not receive the opinion of Gibson, Dunn &
Crutcher LLP and J.D. Edwards does not receive the opinion of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, or Gibson, Dunn & Crutcher LLP
that, for federal income tax purposes, the offer, the merger, and the second
merger will constitute a "reorganization" within the meaning of Section 368(a)
of the Code.
THE ALTERNATIVE DOUBLE MERGER
If we and J.D. Edwards do not receive the opinions referred to in the
preceding paragraph prior to our acceptance of the shares of J.D. Edwards common
stock in the offer, then (subject to the receipt of tax
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opinions described below) we will use a structure that we refer to as the
alternative double merger to effectuate our acquisition of J.D. Edwards. Under
this structure:
- Jersey Acquisition or a newly formed subsidiary of PeopleSoft, either of
which we refer to here as the holding company, would acquire the J.D.
Edwards common stock in the offer, and in lieu of PeopleSoft common stock
that would otherwise be issued in the offer, J.D. Edwards stockholders
would receive an equal number of shares of common stock of the holding
company;
- the holding company would form two subsidiaries, the PeopleSoft merger
subsidiary and the J.D. Edwards merger subsidiary;
- the PeopleSoft merger subsidiary would merge with and into PeopleSoft,
shares of PeopleSoft common stock would be exchanged in the merger for
holding company common stock and PeopleSoft would become a wholly-owned
subsidiary of the holding company;
- the J.D. Edwards merger subsidiary would merge with and into J.D.
Edwards, shares of J.D. Edwards common stock that were not tendered in
the offer would be exchanged for cash of $7.05 and 0.43 of a share of
holding company common stock, and J.D. Edwards would become a wholly
owned subsidiary of the holding company; and
- the holding company would be the parent corporation of both PeopleSoft
and J.D. Edwards, and the holding company common stock would be the
publicly traded security substituted for our common stock.
The alternative double merger would preserve the economic and financial
terms set forth in the merger agreement and would be subject to the other terms
and conditions contained in the merger agreement with such modifications to
those terms and conditions required to implement the alternative double merger.
In addition, PeopleSoft and J.D. Edwards have agreed that if the opinions
necessary to effect the original structure are not obtained, then:
- we will use our reasonable efforts to obtain the opinion of counsel that
our stockholders' receipt of common stock of the holding company in
exchange for our common stock will constitute a reorganization within the
meaning of Section 368(a) and/or a transaction governed by Section 351(a)
of the Code; and
- J.D. Edwards will use its reasonable efforts to obtain the opinion of
counsel that the J.D. Edwards stockholders' receipt of common stock of
the holding company in exchange for J.D. Edwards common stock will
constitute a transaction governed by Section 351(a) of the Code and, if
applicable, Section 351(b) of the Code; and
- in the event that J.D. Edwards' counsel is unable to render the opinion
referred to above, our counsel may render the opinion to J.D. Edwards.
Receipt of these opinions is a condition to closing the alternative double
merger.
WHAT J.D. EDWARDS STOCKHOLDERS WILL RECEIVE IN THE MERGER
Bank of New York, or another depository or trust institution of recognized
standing, will act as exchange agent in the merger. Promptly after the merger
becomes effective, the exchange agent will mail a letter of transmittal to each
registered holder of J.D. Edwards common stock. Each holder must properly
complete and deliver such letter to the exchange agent along with his or her
J.D. Edwards share certificates.
After a record holder of shares of J.D. Edwards common stock delivers
certificates for his or her J.D. Edwards common stock for cancellation along
with a properly completed letter of transmittal to the exchange agent, the
exchange agent will deliver to the holder:
- cash in an amount equal to the cash that the holder has a right to
receive in the merger in exchange for his or her shares of J.D. Edwards
common stock;
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- a certificate representing the whole number of shares of our common stock
that the holder has a right to receive in the merger in exchange for his
or her shares of J.D. Edwards common stock; and
- a check in the amount of cash payable instead of any fractional share of
our common stock, if any, plus any unpaid dividends and distributions, if
any, that the holder has the right to receive in the merger.
Certificates for shares of J.D. Edwards common stock surrendered to the
exchange agent will be cancelled. No interest will accrue or be paid on any
amount payable to J.D. Edwards stockholders. In addition, no holder of J.D.
Edwards common stock will receive any dividends or other distributions with
respect to shares of our common stock to which the holder is entitled until that
holder's J.D. Edwards share certificates are surrendered to the exchange agent
with a properly completed letter of transmittal. All amounts otherwise payable
to J.D. Edwards stockholders are subject to applicable tax withholding.
TREATMENT OF J.D. EDWARDS STOCK OPTIONS
Each outstanding option to purchase J.D. Edwards common stock issued
pursuant to J.D. Edwards' 1992 Incentive Stock Option Plan, 1992 Nonqualified
Stock Option Plan, 1997 Employee Stock Purchase Plan, 1997 Equity Incentive
Plan, 1997 Employee Stock Purchase Plan for Non-United States Employees, 2003
J.D. Edwards Equity Incentive Plan, YOUcentric 2000 Equity Compensation Plan or
other agreement, or outstanding warrant to purchase J.D. Edwards common stock
will be converted into an option or warrant, respectively, for $7.05 in cash
plus 0.43 of a share of our common stock, at the same exercise price as in
effect prior to the effective time of the merger.
The replacement options and warrants will have the same terms and
conditions as those under the applicable J.D. Edwards option plans or other
agreements, including provisions with respect to vesting. In the case of
incentive stock options, PeopleSoft will, if necessary and as permitted by
applicable law and regulation, adjust the conversion formula to comply with
Section 424(a) of the Code.
PeopleSoft will file a registration statement with the SEC within ten
business days after the merger becomes effective to register the shares of our
common stock issuable upon exercise of J.D. Edwards stock options assumed in the
merger. PeopleSoft will use all commercially reasonable efforts to maintain the
effectiveness of the registration statement covering these assumed stock options
as long as they remain outstanding.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains a number of representations and warranties
each made by PeopleSoft, Jersey Acquisition and J.D. Edwards, including the
following:
- due organization, valid existence, good standing and qualification to do
business;
- capital structure;
- corporate power and authority to enter into the merger agreement and
authorization, execution, delivery and enforceability of the merger
agreement (in the case of PeopleSoft, power and authority to commence the
offer);
- recommendation of the board of directors concerning the offer and the
merger;
- filing of all required, and accuracy in all material respects of, SEC
reports, including financial statements and the information provided for
inclusion in this prospectus and registration statement;
- compliance of management certifications in periodic reports with the
Sarbanes-Oxley Act of 2002 and, to the knowledge of J.D. Edwards or
PeopleSoft, as applicable, no complaints or claims regarding questionable
accounting or auditing practices, or reporting of a violation or possible
violation of applicable laws;
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- completeness and accuracy in all material respects of the information
supplied by such party for inclusion or incorporation by reference in the
offer documents, the registration statement or the information statement;
- governmental consents and filings required for the offer and the merger;
- absence of conflicts caused by the offer or the merger with corporate
governing documents, contracts or laws;
- absence of violations or breaches of or defaults under corporate
governing documents, contracts or laws;
- absence of undisclosed liabilities outside the ordinary course of
business (in the case of PeopleSoft, other than in connection with the
Oracle Offer);
- absence of certain material adverse changes or other specified
extraordinary events since April 30, 2003 for J.D. Edwards and March 31,
2003 for PeopleSoft (in the case of PeopleSoft, other than in connection
with the Oracle Offer);
- absence of undisclosed material litigation (in the case of PeopleSoft,
other than in connection with the Oracle Offer);
- receipt of fairness opinions from respective financial advisors;
- compliance in all material respects with applicable laws and lack of
pending or threatened governmental investigation of the company;
- employee benefit plans;
- intellectual property;
- absence of any material changes to relationships with major customers and
suppliers;
- finders' or brokers' fees; and
- completeness of representations, warranties and statements made in
documents to be furnished to stockholders to solicit their approval of
the merger.
The merger agreement also contains representations and warranties made
solely by J.D. Edwards, including;
- subsidiaries and investments;
- environmental matters;
- tax matters, including absence of action that would prevent the merger
from constituting a reorganization qualifying under Section 368(a) of the
Code;
- labor and employment matters;
- amendment of the J.D. Edwards Change in Control Plan;
- insurance;
- title to property;
- absence of liens;
- absence of unlawful business practices;
- product warranties;
- material contracts;
- absence of affiliates under Rule 145 of the Securities Act, other than
those disclosed to PeopleSoft;
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- actions taken with respect to J.D. Edwards' rights agreement in
connection with the offer and the merger to avoid triggering of rights
plan;
- interested party transactions; and
- the effect of state takeover laws on the offer and the merger.
The merger agreement also contains representations and warranties made
solely by PeopleSoft and Jersey Acquisition, including:
- validity of shares of our common stock to be issued upon exercise of J.D.
Edwards options assumed by PeopleSoft;
- no prior activities of Jersey Acquisition; and
- sufficient funds available to Jersey Acquisition to enable Jersey
Acquisition to pay cash consideration in the offer and the merger.
The representations and warranties contained in the merger agreement will
not survive the merger or the termination of the merger agreement, but they form
the basis of certain conditions to our and J.D. Edwards' obligations to complete
the offer and the merger, as applicable.
CONDUCT OF BUSINESS PENDING THE MERGER
Covenants of J.D. Edwards. Except as set forth in the merger agreement,
made known in the disclosure schedules or as consented to by us, J.D. Edwards
has agreed that, until the first date we accept the shares of J.D. Edwards
common stock in the offer or the termination of the merger agreement, it will
conduct its and its subsidiaries' business in the ordinary course of business,
consistent with past practices. In addition, J.D. Edwards will seek to preserve
its current business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers,
distributors, lessors, creditors, employees, contractors and others having
business dealings with it, with the intention that its goodwill and ongoing
businesses shall be unimpaired on the date that we accept the shares of J.D.
Edwards common stock in the offer. Without limiting the above, J.D. Edwards has
agreed that it and its subsidiaries will be subject to specific restrictions set
forth in the merger agreement relating to:
- any changes in their charters or bylaws;
- any issuance, sale or delivery of capital stock, including through the
issuance or granting of options, warrants or otherwise, except pursuant
to the exercise of J.D. Edwards stock options granted before the date of
the original merger agreement or up to 320,000 J.D. Edwards stock options
allowed to be granted under the merger agreement to newly hired employees
and up to 160,000 to existing employees;
- any split, combination or reclassification of capital stock, the
declaration or payment of any dividend or distribution or the redemption,
repurchase or acquisition of any securities of J.D. Edwards or any of its
subsidiaries, other than certain repurchases and cancellations of J.D.
Edwards stock options upon an employee's termination;
- any adoption of a plan of merger, complete or partial liquidation,
dissolution, restructuring, recapitalization or other reorganization,
other than the merger with PeopleSoft;
- any changes in corporate structure or ownership of any subsidiary;
- any incurrence or assumption of indebtedness in excess of $1 million
except for trade payables in the ordinary course of business, consistent
with past practices;
- any assumption of obligations of any other person, except for guarantees
of wholly-owned subsidiary obligations in the ordinary course of
business, consistent with past practices;
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- any loans, advances or capital contributions to, or investments in, any
other person, except to subsidiaries or customary loans or advances to
employees in the ordinary course of business, consistent with past
practices;
- any mortgage, pledge or encumbrance of J.D. Edwards' or its subsidiaries'
material assets or properties;
- any bonus payments to employees not participating in the management
change in control plan in excess of $20,000 individually or $500,000 in
the aggregate;
- any execution, adoption, amendment or termination of employment
agreements, any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent or stock purchase agreement, except
for agreements entered into with new hires that do not provide any grant
of options that may accelerate as a result of the transactions
contemplated by the merger agreement and certain other options allowed to
be granted under the original merger agreement, except as required by
applicable law;
- any execution, adoption, amendment or termination of any pension,
retirement, deferred compensation, employment, health, life, or
disability insurance, dependent care, severance or other employee benefit
plan agreement, trust fund or other arrangement for the benefit or
welfare of any director, officer, employee or consultant, except as
required by applicable law;
- any increase in compensation or fringe benefits given to any officer,
director or employee of J.D. Edwards, or any payment of any benefit not
required by any plan and arrangement as in effect as of the date of the
original merger agreement, except as required by applicable law;
- any payment or agreement to pay any severance or termination pay to any
director, officer, employee or consultant of J.D. Edwards, except
payments made pursuant to written agreements outstanding on the date of
the original merger agreement, the terms of which have been disclosed in
the disclosure schedules and copies of which have been provided to
PeopleSoft, or that are required by applicable law;
- any amendment to, addition of any individual to, or increase of any
benefits under, the management change in control plan;
- any voluntary acceleration of the vesting of any J.D. Edwards stock
option as a result of the merger, any other change of control of J.D.
Edwards or otherwise;
- any acquisition, lease or license, of any material assets in a single
transaction or series of related transactions having an aggregate fair
market value in excess of $2 million, or any sale, transfer or other
disposition of any material assets, except the sale of products or
non-exclusive license of software in the ordinary course of business,
consistent with past practices;
- any entry into an exclusive license, distribution, marketing or sales
agreements;
- any entry into any commitment to any person to develop software without
charge or incorporate any software into J.D. Edwards' products;
- any sale, transfer or other disposition of any intellectual property,
other than non-exclusive licenses or sales in the ordinary course of
business, consistent with past practices;
- any grant of "most favored nation" pricing to any person;
- any change of accounting principles, practices or methods, except as
required by a change in law or accounting principles generally accepted
in the United States of America;
- any revaluation of assets or properties, including writing down the value
of assets or writing-off notes or accounts receivable, except in the
ordinary course of business, consistent with past practices, or due to
changes in generally accepted accounting principles that would require
such a revaluation;
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- any acquisition of any corporation, partnership or any division or
business unit of or equity interest in any business organization;
- any entry into any material contract, except in the ordinary course of
business, consistent with past practices;
- any amendment, modification or waiver of any right under any material
contract;
- any modification of standard warranty terms for products or services or
any amendment or modification of any product or service warranties in
effect as of the date of the original merger agreement in a material
manner that is adverse to J.D. Edwards or its subsidiaries;
- any authorization of new or additional capital expenditures, that
individually or in the aggregate exceed $1.1 million in any month, with
any amount by which monthly capital expenditures is less than $1.1
million applied to increase the capital expenditure limit for future
months;
- any making or rescission of any material tax election; any settlement or
compromise of any material tax liability; any entry into any closing or
other agreement with any tax authority with respect to any material tax
liability; any filing of or causing to be filed of any material amended
tax return or any claim for a refund of previously paid taxes; any
agreement to an extension of the statute of limitations on any tax
assessment or determination of taxes; any failure to file any material
tax returns when due and any failure to cause such tax returns when filed
to be materially true, correct and complete; any preparation of, filing
of or failure to file a tax return in a manner that is inconsistent with
similar tax returns filed in prior periods except to the extent required
by applicable law; or any failure to pay taxes when due;
- any settlement or compromise of any pending or threatened legal matter:
- relating to the merger or the merger agreement;
- requiring payment by J.D. Edwards or its subsidiaries of damages in
excess of $1 million;
- that would be material to J.D. Edwards with respect to non-monetary
matters; or
- relating to any intellectual property matters.
- any entry into any licensing, distribution, sponsorship, advertising,
merchant program or other similar contracts, agreements, or obligations
that provide for payments by J.D. Edwards or any subsidiary in an amount
in excess of $1 million over the noncancelable term of the agreement;
- any termination of any material software development project that is
currently ongoing, except pursuant to the terms of existing contracts
with J.D. Edwards customers;
- any failure to make in a timely manner any filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
- any engagement in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by the merger
agreement, except as may be required to fulfill fiduciary duties under
applicable law;
- any knowing taking of any action that would result in a cessation of
trading of shares of J.D. Edwards common stock on the Nasdaq National
Market; and
- any taking or agreement to take any of the above actions and it shall use
all reasonable efforts not to take any action that would make any of the
representations or warranties of J.D. Edwards in the merger agreement
untrue or incorrect.
Notwithstanding the above and certain provisions in the merger agreement,
neither PeopleSoft nor Jersey Acquisition has any right to control J.D. Edwards
operations before completion of the offer, and receipt by PeopleSoft of more
than a majority of outstanding J.D. Edwards common stock.
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Covenants of PeopleSoft. Except as set forth in the merger agreement, made
known in the disclosure schedules, or as consented to by J.D. Edwards, we and
Jersey Acquisition have agreed that, until the completion of the merger or
termination of the merger agreement, it and its subsidiaries will be subject to
specific restrictions set forth in the merger agreement relating to:
- any changes in their charters or bylaws that would reasonably be likely
to adversely affect our common stock;
- any payment of, or setting of a record date prior to the effective date
of the merger relating to, any extraordinary dividend or extraordinary
distribution;
- any knowing taking of any action that would result in the cessation of
trading of shares of our common stock on the Nasdaq National Market;
- any failure to make in a timely manner any filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
- any acquisition of any corporation, partnership or any division or
business unit of or equity interest in any business organization if the
acquisition would be deemed to be a significant acquisition as defined in
the SEC rules or would create a substantial risk of delay in the
termination or expiration of any antitrust waiting period until the
closing of the merger;
- any engagement in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by the merger
agreement; and
- any taking of or agreement to take any of the above actions and it shall
use all reasonable efforts not to take any action that would make any of
the representations or warranties of PeopleSoft in the merger agreement
untrue or incorrect.
PREPARATION OF REGISTRATION STATEMENT AND PROSPECTUS AND OFFER DOCUMENTS
We are obligated to prepare and file a tender offer statement on Schedule
TO with respect to the offer and a registration statement on Form S-4 with the
SEC, of which this prospectus is a part, to register the offer and sale of the
shares of our common stock pursuant to the offer and the merger. We have filed a
tender offer statement on schedule TO with respect to the offer and a
registration statement on Form S-4 to register the shares of our common stock to
be issued in the offer and the merger. We are obligated to have this prospectus
and the tender offer documents disseminated to J.D. Edwards stockholders as
required by applicable federal securities laws. We are obligated to use our
reasonable efforts to have:
- the tender offer documents and this prospectus cleared by the SEC;
- the registration statement declared effective by the SEC; and
- the registration statement remain effective as long as necessary for the
issuance of our common stock in the offer.
As soon as practicable after the commencement of our offer, J.D. Edwards is
obligated to prepare and file a Solicitation/Recommendation Statement on
Schedule 14D-9 with the SEC, containing a recommendation to the J.D. Edwards
stockholders to accept the offer, tender their shares of J.D. Edwards common
stock in the offer, and adopt the merger agreement and the merger. J.D. Edwards
has filed a Solicitation/Recommendation on Schedule 14D-9 regarding the offer.
PeopleSoft and J.D. Edwards are obligated to provide each other with copies
of any written comments and advise the other party as to any oral comments
received from the SEC regarding this prospectus, the registration statement or
any of the tender offer documents. In addition, both PeopleSoft and J.D. Edwards
will provide the other with a reasonable opportunity to review and comment on
any amendment or supplement to this prospectus, the registration statement or
any of the tender offer documents before the amendment or supplement is filed
with the SEC. We will promptly advise J.D. Edwards after we receive
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notice of the effectiveness of the registration statement, or any stop order or
suspension of the qualification of our common stock issuable in the offer.
If, prior to the consummation of the offer, either PeopleSoft or J.D.
Edwards obtains information that causes this prospectus, the registration
statement or any of the tender offer documents to contain a misstatement of
material fact or to fail to contain any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading if not included in an amendment thereto, the party obtaining the
knowledge is obligated to promptly notify the other party. Thereafter,
PeopleSoft and J.D. Edwards will cooperate in filing with the SEC any amendment
or supplement required by law and providing such information to the stockholders
of each company.
OFFERS FOR ALTERNATIVE TRANSACTIONS
J.D. Edwards has agreed to cease, and to cause its subsidiaries and
affiliates to cease, any discussions or negotiations with other persons as to a
possible third party acquisition proposal, as defined below. In addition, J.D.
Edwards has agreed to promptly request each person that has executed a
confidentiality agreement with J.D. Edwards in connection with its consideration
of acquiring J.D. Edwards or any of its subsidiaries, to either return or
destroy any confidential information delivered by J.D. Edwards, and, if
requested by us, to enforce such person's obligation to do so. J.D. Edwards has
also agreed not to:
- encourage, solicit, participate in or initiate any discussions or
negotiations regarding a third party acquisition proposal, as defined
below and subject to the exception described below;
- provide any information about J.D. Edwards or its subsidiaries in
connection with a third party acquisition proposal; or
- enter into any agreement regarding any third party acquisition.
However, if J.D. Edwards receives an unsolicited bona fide written third
party acquisition proposal, J.D. Edwards may, after promptly giving us advance
written notice thereof:
- furnish information with respect to J.D. Edwards of the same type and
scope that J.D. Edwards provided to us prior to the date of the merger
agreement and any additional information that the third party requests,
but only if J.D. Edwards is permitted to, and does in fact, supply such
additional information to us, in each case pursuant to a confidentiality
agreement in substantially the same form as was executed by PeopleSoft
prior to the execution of the merger agreement; and
- participate in discussions and negotiations regarding the third party
acquisition proposal;
but only if the J.D. Edwards board of directors has determined in good faith:
- after consultation with legal counsel, that it is necessary to do so to
comply with its fiduciary duties to J.D. Edwards stockholders; and
- based on consultation with Morgan Stanley, that the proposal is from a
third party that is capable of consummating a superior proposal;
and only for so long as the J.D. Edwards board so determines in good faith that
its actions are reasonably likely to lead to a superior proposal.
A "third party acquisition proposal" includes any proposal, other than the
offer and the merger, relating to:
- any merger, consolidation, share exchange, business combination,
recapitalization or other similar transaction or series of related
transactions involving J.D. Edwards or any of its subsidiaries, other
than the offer or the merger between PeopleSoft and J.D. Edwards, in
which the stockholders of J.D. Edwards immediately preceding such
transaction hold, directly or indirectly, less than 90% of the equity
interests in the surviving or resulting entity of such transaction or in
any parent entity immediately following the transaction;
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- any sale, lease, exchange, transfer or other disposition including by way
of merger, consolidation or exchange, in a single transaction or a series
of related transactions, of the assets of J.D. Edwards or any of its
subsidiaries constituting 10% or more of the consolidated assets, or
accounting for 10% or more of the consolidated revenues of J.D. Edwards;
- any tender offer, exchange offer or similar transactions or series of
related transactions, other than in connection with the merger, made by
any person involving J.D. Edwards common stock constituting 10% or more
of J.D. Edwards common stock;
- the acquisition by any person other than us or any of our affiliates of
beneficial ownership or the formation of any group to acquire beneficial
ownership of more than 10% of J.D. Edwards common stock or the common
stock of any of its subsidiaries; or
- any other substantially similar transaction or series of related
transactions that reasonably could be expected to result in the
acquisition of a controlling interest in J.D. Edwards.
A "superior proposal" means a bona fide third party acquisition proposal:
- to acquire, directly or indirectly, for consideration consisting solely
of cash and/or publicly-traded securities, including securities that will
become publicly-traded upon completion of the superior proposal
transaction, 85% of the shares of then outstanding J.D. Edwards common
stock or all or substantially all of the assets of J.D. Edwards.
- that contains terms and conditions that the J.D. Edwards board determines
in good faith by a majority vote, after consultation with Morgan Stanley
or another financial advisor of nationally recognized reputation, to be
more favorable to J.D. Edwards stockholders than the offer and the
merger;
- that J.D. Edwards' board determines in its good faith judgment by a
majority vote, after consultation with Morgan Stanley or another
financial advisor of nationally recognized reputation and its legal
counsel, to be reasonably capable of being completed taking into account
all legal, financial, regulatory and other aspects of the proposal and
the person making the proposal;
- that does not contain a "right of first refusal" or "right of first
offer" with respect to any counter-proposal that we might make; or
- that does not contain any "due diligence" condition and for which any
financing upon which it is conditioned is committed.
J.D. Edwards has agreed to notify us promptly, and in any event within one
day of learning of the receipt thereof, of the receipt of any third party
acquisition proposal and of any request for confidential information made in
connection with a third party acquisition proposal. The notice must include the
terms and conditions of the third party acquisition proposal and the identity of
the party submitting the proposal. J.D. Edwards has agreed to provide a copy of
any written agreements, proposals or other materials it receives from any such
person or group or its representatives to us, and to promptly, or within one
day, advise us of any material modifications thereto.
J.D. EDWARDS BOARD OF DIRECTORS' RECOMMENDATION
Pursuant to the terms of the merger agreement, the J.D. Edwards board of
directors has recommended that its stockholders accept the offer and tender
their shares of J.D. Edwards common stock in the offer and adopt the merger
agreement and the merger. The J.D. Edwards board of directors also agreed that
it would not:
- withdraw, modify or qualify its recommendation of the offer and the
merger in a manner adverse to us or take any action or make any statement
in connection with J.D. Edwards' stockholder meeting inconsistent with
such recommendation; or
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- approve or recommend, or cause or permit J.D. Edwards to enter into any
letter of intent, agreement or obligation with respect to, any third
party acquisition proposal.
However, if J.D. Edwards' board of directors determines in good faith by
majority vote before the date we accept shares of J.D. Edwards stock in the
offer, after consultation with and consideration of the advice of outside legal
counsel, that it is required to make a change in J.D. Edwards' recommendation
with respect to the offer and the merger to comply with its fiduciary duties,
then the J.D. Edwards board of directors may recommend a superior proposal, but
only if all of the following conditions are satisfied:
- the J.D. Edwards board of directors provides us written notice of the
superior proposal, specifying the material terms and conditions of the
superior proposal and identifying the person making the superior
proposal; and
- we do not, within five business days after receipt of the notice of a
superior proposal, make an offer that the J.D. Edwards board determines
in good faith by majority vote, after consultation with and consideration
of the written advice of Morgan Stanley or another financial advisor of
nationally-recognized reputation, to be at least as favorable to the J.D.
Edwards stockholders as the superior proposal.
The merger agreement permits J.D. Edwards to comply with its fiduciary
duties or with Rule 14e-2 or Rule 14d-9 under the Exchange Act as to required
disclosure in connection with receipt of any third party acquisition proposal or
otherwise; provided that any such disclosure must indicate that J.D. Edwards'
board of directors will not take any action that is inconsistent with its
obligations in the merger agreement.
INDEMNIFICATION AND INSURANCE
The merger agreement provides that, after the effective time of the merger,
to the extent permitted by law, the surviving corporation will indemnify and
hold harmless persons who were directors or officers of J.D. Edwards prior to
the effective time of the merger against all liabilities or losses arising out
of or in connection with any claim, demand, action, suit, proceeding or
investigation based or arising in whole or in part out of the fact that the
person was a director or officer of J.D. Edwards, whether or not relating to any
matter existing or occurring at or prior to the effective time of the merger and
whether or not asserted or claimed prior to, at or after the effective time of
the merger, including, to the extent not prohibited by law, indemnification for
negligent acts or omissions by an indemnified person. These indemnification
obligations are not intended to make us a co-insurer or excess insurer for
insurance policies for such liabilities or losses. In addition, we have agreed
to cause the surviving corporation to fulfill and honor all obligations of J.D.
Edwards under any indemnification agreements between J.D. Edwards and its
directors and officers and the indemnification provisions of J.D. Edwards'
certificate of incorporation and bylaws as in effect immediately prior to the
effective date of the merger. We also agree to not permit the surviving
corporation to merge or consolidate with any other person unless the surviving
corporation will ensure that the surviving or resulting entity assumes the
indemnification obligations in the merger agreement.
We have agreed to maintain, or cause the surviving corporation to maintain,
in effect, for a period of six years after the effective time of the merger if
available, directors' and officers' liability insurance covering those persons
who are covered by J.D. Edwards' directors' and officers' liability insurance
policy as of immediately prior to the effective time of the merger on terms no
less favorable to those persons than those of J.D. Edwards' existing directors'
and officers' liability insurance policy. However, neither we nor the surviving
corporation, as the case may be, is required to expend an amount in excess of
200% of the current premium paid by J.D. Edwards in any one year. If the
aggregate expenditure on coverage exceeds that amount, we will use commercially
reasonable efforts to purchase as much insurance as can be obtained for that
amount. Instead of maintaining the existing insurance, we may cause coverage to
be provided under any policy maintained for the benefit of PeopleSoft or our
subsidiaries on terms no less favorable to the intended beneficiaries as the
existing insurance.
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EMPLOYEE BENEFITS
After completion of the merger, we will arrange for each participant in the
J.D. Edwards employee plans who becomes an employee of ours or any of our
subsidiaries or affiliates after the merger, along with his or her dependents,
to be eligible for the same benefits in the aggregate as those received by our
employees with similar positions and responsibilities and qualifications;
however, through December 31, 2003 we may continue an existing J.D. Edwards plan
rather than providing benefits under a corresponding PeopleSoft plan. In
addition, each participant in the J.D. Edwards employee plans will generally
receive credit for all benefits purposes for years of service with J.D. Edwards,
its subsidiaries and its predecessors prior to completion of the merger, to the
extent permitted by law and the plans governing the benefits, as reasonably
amended as permitted by law, and we will, to the extent possible under such
plans, as amended to the extent necessary as permitted by law, waive any
pre-existing condition, eligibility limitations, evidence of insurability
requirements and waiting periods under any PeopleSoft employee benefit plans
with respect to the employees and their dependents.
We also agree that, from and after the merger, J.D. Edwards employees who
become employees of ours or any of our subsidiaries may participate in the
employee stock purchase plan sponsored by us, subject to the terms and
conditions of the plan, and that service with J.D. Edwards will be treated as
service with us or our subsidiaries for determining eligibility of J.D. Edwards'
employees under our employee stock purchase plan. We will create a special
offering period under the plan to enable J.D. Edwards employees who become
employees of ours or any of our subsidiaries to participate in the plan within
30 days after the closing of the merger.
J.D. EDWARDS STOCKHOLDER RIGHTS PLAN
J.D. Edwards agreed to take all further action to the extent necessary,
including amending the J.D. Edwards rights agreement, to ensure that following
or as a result of the offer or the merger or the execution of the merger
agreement or the voting agreements:
- no person will be deemed to be an acquiring person under the J.D. Edwards
rights plan;
- no person will have the ability to exercise any J.D. Edwards rights under
the J.D. Edwards rights agreement;
- no J.D. Edwards rights will have separated from the shares of J.D.
Edwards common stock to which they are attached or become exercisable;
and
- J.D. Edwards will not have the right to exchange any J.D. Edwards rights
for shares of J.D. Edwards common stock, pursuant to the J.D Edwards
rights agreement or otherwise.
In addition, J.D. Edwards has agreed that, except in connection with the
foregoing, the J.D. Edwards board will not, without our prior written consent,
amend the J.D. Edwards rights agreement or take any action with respect to, or
make any determination under, the J.D. Edwards rights agreement, including a
redemption of the J.D. Edwards rights, in each case, to facilitate any third
party acquisition proposal with respect to J.D. Edwards. The merger agreement
permits J.D. Edwards to take certain specified actions under the rights
agreement.
OTHER COVENANTS
PeopleSoft and J.D. Edwards have also agreed to:
- use commercially reasonable efforts to cause their respective auditors to
deliver comfort letters of usual scope to the other party unless waived;
- provide information reasonably requested by the other party;
- hold in confidence all documents and information furnished to it by or on
behalf of the other party in connection with the transactions
contemplated by the agreement;
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- use commercially reasonable efforts to take all action reasonably
necessary to consummate the offer and the merger, including cooperating
in the preparation of the tender offer documents, the registration
statement and prospectus, the information statement, and any filings that
may be required under the HSR Act or any other foreign antitrust or
competition laws or regulations, obtaining the necessary and proper
consents of third parties and governmental entities, contesting any legal
proceedings relating to the offer or the merger, and taking any actions
specified in the disclosure schedules;
- consult with one another and mutually agree upon any press releases
issued, except as required by law, court process, pursuant to any listing
agreement with any national securities exchange or the Nasdaq National
Market or following a change by J.D. Edwards of its recommendation of the
offer and the merger;
- provide notice to each other regarding:
- any event that has caused or would be likely to cause any
representation or warranty in the merger agreement to become untrue or
inaccurate in any material respect at or prior to the effective time of
the merger by delivery of supplements to the company's disclosure
schedules; or
- any failure to comply with or satisfy any covenant, condition or
agreement in any material respect; and
- make a good faith attempt to obtain the opinions required for closing of
the offer and the two related mergers or, subject to the receipt of the
required opinions, to implement the alternative double merger.
J.D. Edwards has agreed to:
- use commercially reasonable efforts to obtain a letter agreement from all
J.D. Edwards affiliates and persons who may be deemed to be J.D. Edwards
affiliates regarding compliance with Rule 145 of the Securities Act;
- provide PeopleSoft with access to its employees;
- take all actions necessary to amend, merge, freeze or terminate certain
of its employee plans, as requested in writing by PeopleSoft; and
- grant such approvals and take such actions as may be necessary to
consummate the transactions described in the merger agreement as promptly
as practicable to eliminate or minimize the effects of any takeover
statute that may be applicable to such transactions.
We have agreed to:
- use commercially reasonable efforts to cause the shares of our common
stock to be issued in the offer and the merger and to be reserved for
issuance upon exercise of J.D. Edwards stock options to be approved for
listing on the Nasdaq National Market, subject to official notice of
issuance, prior to the acceptance of the shares of J.D. Edwards common
stock in the offer;
- appoint Michael J. Maples to our board as a member of Class I and our
Corporate Governance/Nominating Committee as of the effective time of
the merger or, if he is unwilling or unable to serve, another reasonably
acceptable person designated by J.D. Edwards; and
- cause certain actions of our board or an appropriate committee of our
board to be taken to allow the receipt of our stock and options in
exchange for J.D. Edwards stock and options in the merger to be exempt
under Section 16 of the Exchange Act.
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CONDITIONS TO COMPLETION OF THE MERGER
Neither we nor J.D. Edwards will be required to complete the merger unless:
- J.D. Edwards stockholders approve and adopt the merger agreement if
approval is required by applicable law or the J.D. Edwards certificate of
incorporation to complete the merger;
- no law, injunction or other order issued by a court exists that has the
effect of restricting or otherwise prohibiting the merger;
- the waiting period under the HSR Act or any other material foreign,
federal or state antitrust, competition or fair trade law has expired or
terminated;
- any other necessary governmental or regulatory notices, approvals or
other requirements have been given, obtained or complied with, except
where the failure to be given, obtained or complied with would have no
material adverse effect on us or J.D. Edwards; and
- we or our affiliates have purchased shares of J.D. Edwards common stock
in the offer.
We cannot assure you that all of the conditions to completing the merger
will be satisfied or waived.
TERMINATION
The merger agreement may be terminated at any time before completion of the
merger in a number of different ways. The merger agreement may be terminated by
mutual written consent duly authorized by the boards of directors of PeopleSoft,
J.D. Edwards and Jersey Acquisition.
The merger agreement may also be terminated by either PeopleSoft and Jersey
Acquisition or J.D. Edwards if:
- any governmental entity or court issues a nonappealable final order
permanently restraining, enjoining or otherwise prohibiting the offer or
the merger;
- the offer has expired, terminated or been withdrawn without any J.D.
Edwards shares being purchased, and the terminating party's failure to
perform any of its obligations under the merger agreement is not a
principal reason for the failure of PeopleSoft or Jersey Acquisition to
purchase the shares; or
- we have not accepted shares of J.D. Edwards common stock in the offer by
November 30, 2003, which date will be extended to February 28, 2004 in
certain circumstances, and the failure to accept shares by such date is
not due to the breach of the merger agreement by the terminating party.
J.D. Edwards alone may terminate the merger agreement if:
- PeopleSoft, Jersey Acquisition or one of their affiliates fails to
commence the offer on or before the tenth business day following the date
of the initial public announcement of the offer; and J.D. Edwards is not
in breach of its obligations to recommend the merger and the offer to its
stockholders or to file the Solicitation/Recommendation Schedule 14D-9 in
a manner that affects PeopleSoft's or Jersey Acquisition's ability to
commence the offer and the merger agreement;
- PeopleSoft or Jersey Acquisition breaches any of its representations or
warranties in the merger agreement, or such representations and
warranties have become untrue, in such a manner that it would be
incapable of satisfying the condition of the offer relating to the
accuracy of its representations and warranties by November 30, 2003,
which date will be extended to February 28, 2004 in certain
circumstances;
- PeopleSoft or Jersey Acquisition breaches any of its covenants in the
merger agreement in a manner that has a material adverse effect on
PeopleSoft or materially adversely affects or materially delays the
completion of the offer or the merger, and such breach has not been cured
within
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20 business days after receipt by PeopleSoft or Jersey Acquisition of
written notice of the breach; or
- on a scheduled expiration date, (i) the board of J.D. Edwards shall have
changed its recommendation that the J.D. Edwards stockholders accept the
offer, tender their shares and adopt the merger agreement and the merger
because of a superior proposal and (ii) a majority of the outstanding
J.D. Edwards common stock, on a modified fully diluted basis, shall not
have been validly tendered; provided that (A) the failure of J.D. Edwards
to fulfill its obligations under the merger agreement shall not have been
a principal reason that a majority of the outstanding J.D. Edwards common
stock, on a modified fully diluted basis, shall not have been validly
tendered and (B) J.D. Edwards shall have permitted PeopleSoft to effect
certain extensions of the offer.
PeopleSoft and Jersey Acquisition alone may terminate the merger agreement,
subject to various conditions if:
- J.D. Edwards has breached any of its representations or warranties in the
merger agreement, or any of its representations or warranties have become
untrue, in such a manner that it could not satisfy the condition of the
offer relating to the accuracy of its representations and warranties by
November 30, 2003, which date will be extended to February 28, 2004 in
certain circumstances;
- J.D. Edwards breaches any of its covenants or obligations contained in
the merger agreement in a manner that has a material adverse effect on
J.D. Edwards or materially adversely affects or materially delays the
completion of the offer or the merger and, such breach has not been cured
within 20 business days after receipt by J.D. Edwards of written notice
of the breach; or
- J.D. Edwards willfully and materially breaches the non-solicitation
provisions in the merger agreement.
Should any of these potential grounds for termination occur, our and J.D.
Edwards' board of directors may or may not exercise their respective rights to
terminate the merger agreement.
TERMINATION FEE
J.D. Edwards has agreed to pay us a fee of $57 million in liquidated
damages if the merger agreement is terminated pursuant to any one of the
circumstances described below:
- we terminate because the J.D. Edwards board of directors changes its
recommendation that the J.D. Edwards stockholders accept the offer,
tender their shares and adopt the merger agreement and the merger,
whether or not permitted by the terms of the merger agreement;
- we terminate because J.D. Edwards willfully and materially breaches the
non-solicitation provisions in the merger agreement; or
- J.D. Edwards terminates after receiving a superior proposal, making a
change in its recommendation regarding the offer and the merger, and
permitting us to extend the offer after which the minimum condition to
complete the offer has not been obtained.
Payment of the termination fee is required under these circumstances
whether or not J.D. Edwards stockholders have approved the merger agreement.
So long as PeopleSoft and Jersey Acquisition have not breached their
respective obligations under the merger agreement in a manner permitting J.D.
Edwards to terminate the merger agreement, in addition to any other remedies
available to PeopleSoft, Jersey Acquisition and their affiliates, excluding the
termination fee described above, J.D. Edwards has agreed to pay PeopleSoft $5
million as reimbursement for the costs, fees and expenses incurred by
PeopleSoft, Jersey Acquisition or their affiliates if PeopleSoft and Jersey
Acquisition terminate the agreement pursuant to any of the circumstances
described below:
- J.D. Edwards breaches any of its representations or warranties in the
merger agreement, or any of its representations or warranties have become
untrue, in such a manner that it could not satisfy the
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condition of the offer relating to the accuracy of its representations
and warranties by November 30, 2003, which date will be extended to
February 28, 2004 in certain circumstances; or
- J.D. Edwards breaches any of its covenants or obligations contained in
the merger agreement in a manner that has a material adverse effect on
J.D. Edwards or materially adversely affects or materially delays the
completion of the offer or the merger and, such breach has not been cured
within 20 business days after receipt by J.D. Edwards of written notice
of the breach.
So long as J.D. Edwards has not breached its obligations under the merger
agreement in a manner permitting us to terminate the agreement, in addition to
any other remedies available to J.D. Edwards and its affiliates, we have agreed
to pay J.D. Edwards $5 million as reimbursement for the costs, fees and expenses
incurred by J.D. Edwards or its affiliates if J.D. Edwards terminates the
agreement pursuant to any of the circumstances described below:
- PeopleSoft or Jersey Acquisition breaches any of its representations or
warranties in the merger agreement, or their representations and
warranties have become untrue, in such a manner that it could not satisfy
the condition of the offer relating to the accuracy of its
representations and warranties by November 30, 2003, which date will be
extended to February 28, 2004 in certain circumstances; or
- PeopleSoft or Jersey Acquisition breaches any of its covenants in the
merger agreement in a manner that has a material adverse effect on us or
materially adversely affects or materially delays the completion of the
offer or the merger, and such breach has not been cured within 20
business days after receipt by PeopleSoft or Jersey Acquisition of
written notice of the breach.
AMENDMENT AND WAIVER
PeopleSoft, Jersey Acquisition and J.D. Edwards may amend the merger
agreement in writing at any time, but after approval of the merger agreement by
the J.D. Edwards stockholders, if necessary, the companies may not make any
amendment that by law requires further approval by the J.D. Edwards stockholders
without the required further approval of those stockholders.
At any time before the effective time of the merger, each party may, in
writing and as permitted by law:
- extend the time for the performance of any obligations or other acts of
the other party;
- waive any inaccuracies in the representations and warranties of the other
party contained in the merger agreement or in any document, certificate
or writing delivered pursuant to the merger agreement; or
- waive compliance by the other party with any of the agreements or
conditions contained in the merger agreement.
COSTS AND EXPENSES
In general, except for the termination fee and the reimbursement fees
described above, all costs and expenses incurred in connection with the merger
and the merger agreement will be paid by the party incurring the expenses.
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AGREEMENTS RELATED TO THE MERGER
The following is a summary of the material terms and provisions of certain
agreements related to the merger agreement, including the J.D. Edwards Voting
Agreements, the form of which is attached as Exhibit C to the merger agreement,
which is attached to this prospectus as Appendix A, the PeopleSoft Voting
Agreements, the form of which is attached as Exhibit D to the merger agreement,
which is attached to this prospectus as Appendix A, and the J.D. Edwards
Affiliate Agreements, the form of which is attached as Exhibit B to the merger
agreement, which is attached to this prospectus as Appendix A. The discussion of
each such related agreement is qualified in its entirety by reference to the
full text of such agreement, which agreements are incorporated by reference into
this prospectus.
J.D. EDWARDS STOCKHOLDER VOTING AGREEMENTS
AGREEMENT TO VOTE
In connection with the original merger agreement, each of the J.D. Edwards
directors and executive officers, including Richard E. Allen, Kathleen J.
Cunningham, Harry Debes, Robert M. Dutkowsky, Gerald Harrison, Delwin D. Hock,
Michael Madden, Michael J. Maples, Richard Mathews, Trygve E. Myhren, Robert C.
Newman, Pamela Saxton, David Siebert, Richard Snow, Jr., and Leslie Wyatt,
entered into a voting agreement with PeopleSoft and Jersey Acquisition. Each
agreed to vote his or her shares of J.D. Edwards common stock, if necessary:
- in favor of the merger agreement and the transactions contemplated
thereby;
- against any action that would likely result in conditions of PeopleSoft
or Jersey Acquisition obligations to complete the merger not to be
fulfilled; and
- against any third party acquisition proposal, as defined in the merger
agreement and as discussed under "The Merger Agreement -- Offers for
Alternative Transactions," and against an election of a group of
individuals to replace a majority of the present members of the J.D.
Edwards board. Each stockholder also granted Jersey Acquisition an
irrevocable proxy to vote his or her shares of J.D. Edwards common stock,
including additional shares of J.D. Edwards common stock he or she
subsequently acquires, in favor of the merger and against any alternative
transaction or replacement of board members as described above.
Completion of the offer does not require the approval of the J.D. Edwards
stockholders.
TRANSFER RESTRICTIONS
The voting agreement, subject to certain exceptions, restricts or limits
the ability of each stockholder that is a party to the agreement to sell,
transfer, pledge, assign or otherwise dispose of or grant any proxies with
respect to any of his or her shares of J.D. Edwards common stock, or to agree to
do the foregoing, other than with our prior written consent.
TERMINATION
The irrevocable proxy and voting agreements will terminate upon the earlier
to occur of:
- completion of the merger; and
- termination of the merger agreement.
PEOPLESOFT STOCKHOLDER VOTING AGREEMENTS
AGREEMENT TO VOTE
In connection with the original merger agreement, each of our directors and
executive officers, including A. George Battle, Aneel Bhusri, Nanci Caldwell,
Craig A. Conway, Guy E. Dubois, David A. Duffield, Frank J. Fanzilli, Jr.,
Steven D. Goldby, Michael Gregoire, Ram Gupta, Anne S. Jordan,
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Kevin T. Parker, W. Philip Wilmington, and Cyril J. Yansouni, entered into a
voting agreement with J.D. Edwards. Each agreed to vote his or her shares of our
common stock, if necessary:
- in favor of the merger agreement and the transactions contemplated
thereby;
- against any action that would likely result in conditions of J.D. Edwards
obligations to complete the merger not to be fulfilled; and
- against election of a group of individuals to replace a majority of the
present members of our board. Each stockholder has granted J.D. Edwards
an irrevocable proxy to vote his or her shares of our common stock,
including additional shares of our common stock he or she subsequently
acquires, in favor of the merger and against replacement of board members
as described above.
Completion of the offer does not require the approval of the PeopleSoft
stockholders.
TRANSFER RESTRICTIONS
The voting agreement, subject to certain exceptions, restricts or limits
the ability of each stockholder that is a party to the agreement to sell,
transfer, pledge, assign or otherwise dispose of or grant any proxies with
respect to any of his or her shares of our common stock, or to agree to do the
foregoing, other than with J.D. Edwards' prior written consent.
TERMINATION
The irrevocable proxy and voting agreements will terminate upon the earlier
to occur of:
- completion of the merger; and
- termination of the merger agreement.
J.D. EDWARDS AFFILIATE AGREEMENTS
In connection with the original merger agreement, each of the J.D. Edwards
directors and executive officers, including Richard E. Allen, Kathleen J.
Cunningham, Harry Debes, Robert M. Dutkowsky, Gerald Harrison, Delwin D. Hock,
Michael Madden, Michael J. Maples, Richard Mathews, Trygve E. Myhren, Robert C.
Newman, Pamela Saxton, David Siebert, Richard Snow, Jr., and Leslie Wyatt have
entered into an affiliate agreement with PeopleSoft. Pursuant to the affiliate
agreements, the officers and directors of J.D. Edwards acknowledge the resale
restrictions imposed by Rule 145 and, to the extent applicable, Rule 144 under
the Securities Act on shares of our common stock received by them in the merger.
In accordance with the affiliate agreements, PeopleSoft will be entitled to
place appropriate legends on these J.D. Edwards stockholders' certificates
evidencing any of our common stock received by them and to issue stop transfer
instructions to the transfer agent for the shares of our common stock. The form
of affiliate agreement is attached as Exhibit B to the merger agreement. J.D.
Edwards has also agreed to use reasonable commercial efforts to cause each
person who may become an affiliate after the date of the merger agreement to
execute an affiliate agreement before the effective time of the merger.
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COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF PEOPLESOFT AND
COMMON STOCKHOLDERS OF J.D. EDWARDS
PeopleSoft and J.D. Edwards are each Delaware corporations. The rights of
stockholders of each company are generally governed by the Delaware General
Corporation Law and each company's respective certificate of incorporation and
bylaws. Upon completion of the merger, J.D. Edwards stockholders will become
PeopleSoft stockholders, and our restated certificate of incorporation, as
amended, and bylaws will govern the rights of former J.D. Edwards stockholders.
The following description summarizes the material differences that may
affect the rights of the stockholders of PeopleSoft and J.D. Edwards, but does
not purport to be a complete statement of all those differences, or a complete
description of the specific provisions referred to in this summary. Stockholders
should carefully read the relevant provisions of the Delaware General
Corporation Law and our and J.D. Edwards' respective certificates of
incorporation and bylaws. For more information on how to obtain these documents,
see "Additional Information -- Where You Can Find Additional Information".
CAPITALIZATION
PeopleSoft. The authorized capital stock of PeopleSoft consists of
700,000,000 shares of common stock, $0.01 par value, and 2,000,000 shares of
preferred stock, $0.01 par value.
J.D. Edwards. The authorized capital stock of J.D. Edwards consists of
300,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of
preferred stock, $0.001 par value.
COMMON STOCK
PeopleSoft Common Stock. As of July 10, 2003 there were approximately
318,776,024 shares of our common stock outstanding held of record by
approximately 2,348 persons. Our common stock is listed on the Nasdaq National
Market under the symbol "PSFT". Our common stockholders are entitled to one vote
per share on all matters to be voted upon by PeopleSoft stockholders. PeopleSoft
stockholders are not permitted to cumulate their votes with respect to the
election of directors. Subject to the preferences of any outstanding preferred
stock, our common stockholders are entitled to receive ratably dividends, if
any, as our board of directors may declare from time to time out of funds
legally available for dividend payments. In the event of a liquidation,
dissolution or winding up of PeopleSoft, our common stockholders share ratably
in all assets remaining after payment of liabilities and any preferential
liquidation rights of any outstanding preferred stock. Our common stock has no
preemptive or conversion rights or other subscription rights nor do redemption
or sinking fund provisions apply to our common stock. All outstanding shares of
our common stock are fully paid and non-assessable, and the shares of our common
stock to be outstanding after the merger will be fully paid and non-assessable.
Boston Equiserv LLC is the transfer agent and registrar for our common stock.
Boston Equiserv's address is 150 Royal Street, Canton, MA 02021.
J.D. Edwards Common Stock. As of July 10, 2003 there were approximately
123,400,618 shares of J.D. Edwards common stock outstanding held of record by
approximately 1,129 persons. J.D. Edwards common stock is listed on the Nasdaq
National Market under the symbol "JDEC". J.D. Edwards common stockholders are
entitled to one vote per share on all matters to be voted upon by J.D. Edwards
stockholders. J.D. Edwards stockholders are not permitted to cumulate their
votes with respect to the election of directors. Subject to the preferences of
any outstanding preferred stock, J.D. Edwards common stockholders are entitled
to receive ratably dividends, if any, as the J.D. Edwards board of directors may
declare from time to time out of funds legally available for dividend payments.
In the event of a liquidation, dissolution or winding up of J.D. Edwards, J.D.
Edwards common stockholders share ratably in all assets remaining after payment
of liabilities and any preferential liquidation rights of any outstanding
preferred stock. The J.D. Edwards common stock has no preemptive or conversion
rights or other subscription rights nor do redemption or sinking fund provisions
apply to the J.D. Edwards common stock. All outstanding shares of J.D. Edwards
common stock are fully paid and non-assessable. Computershare
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Trust Co., Inc. is the transfer agent and registrar for the J.D. Edwards common
stock. Computershare's address is 12039 West Alameda Parkway, Lakewood, CO
80228.
PREFERRED STOCK
PeopleSoft Preferred Stock. The PeopleSoft board of directors may issue
shares of PeopleSoft preferred stock in one or more series and, subject to the
Delaware General Corporation Law, may:
- fix the rights, preferences, privileges and restrictions of any series;
and
- from time to time, by filing a certificate pursuant to the Delaware
General Corporation Law, specify the number of shares and designation of
any series.
PeopleSoft currently has designated 1,000,000 shares of Series A
participating preferred stock, none of which is outstanding as of the date of
this prospectus. The PeopleSoft Series A participating preferred stock is
issuable in connection with our rights plan, discussed below. Holders of
PeopleSoft Series A participating preferred stock will be entitled to quarterly
cash dividends when, as and if declared by our board of directors out of legally
available funds, subject to any superior rights of other preferred stockholders,
upon declaration of cash dividends on our common stock. Each outstanding share
of our Series A participating preferred stock will have 1,000 votes per share on
all matters submitted to a vote of our stockholders, voting as a single class
with the our common stock, except as otherwise provided by law. Upon any
liquidation, dissolution or winding up of PeopleSoft, holders of PeopleSoft
Series A participating preferred stock will be entitled to receive an aggregate
amount per share equal to 1,000 times the aggregate amount to be distributed per
share to holders of shares of our common stock plus an amount equal to any
accrued and unpaid dividends on the shares of PeopleSoft Series A participating
preferred stock. In any consolidation, merger, combination or other transaction
involving an exchange of our common stock, the shares of Series A participating
preferred stock will be similarly exchanged or changed in an amount per share
equal to 1,000 times the aggregate amount of consideration into which or for
which each share of our common stock is changed or exchanged. The PeopleSoft
Series A participating preferred stock is not redeemable and will rank junior to
all other series of PeopleSoft preferred stock unless the terms of any other
series provides otherwise.
Although PeopleSoft currently does not intend to do so, our board of
directors may issue PeopleSoft preferred stock with voting, liquidation,
dividend, conversion and other rights which could negatively affect the voting
power or other rights of our common stockholders without the approval of our
common stockholders. Any issuance of our preferred stock may delay or prevent a
change in control of our company.
J.D. Edwards Preferred Stock. The J.D. Edwards board of directors may
issue shares of J.D. Edwards preferred stock in one or more series and, subject
to the Delaware General Corporation Law, may determine the voting powers, fix
the designations, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions of each series of
J.D. Edwards preferred stock. The J.D. Edwards board of directors may also
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued series of J.D. Edwards preferred stock
and to fix the number of shares and the designation of any series of J.D.
Edwards preferred stock. The J.D. Edwards board of directors, within the limits
and restrictions stated in any resolution or resolutions of the J.D. Edwards
board of directors originally fixing the number of shares constituting any
series, may increase or decrease, but not below the number of shares in any such
series then outstanding, the number of shares of any series subsequent to the
issue of shares of that series.
J.D. Edwards currently has designated 300,000 shares of Series A
participating preferred stock, none of which are outstanding as of the date of
this prospectus. The J.D. Edwards Series A participating preferred stock is
issuable in connection with J.D. Edwards' rights plan, discussed below. The
terms of the J.D. Edwards Series A participating preferred stock are
substantially similar to those of the PeopleSoft Series A participating
preferred stock. As part of the merger agreement, J.D. Edwards has made certain
covenants intended to ensure that the J.D. Edwards rights plan does not apply to
the offer, merger or the
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voting agreements, that PeopleSoft will not be deemed to be a 15% acquiror under
the J.D. Edwards rights plan, and that the offer, the merger and voting
agreements do not result in the issuance of any shares of J.D. Edwards Series A
participating preferred stock.
NUMBER, ELECTION, VACANCY AND REMOVAL OF DIRECTORS
Delaware General Corporation Law. Under the Delaware General Corporation
Law, the board of directors must have at least one director. A majority of the
directors in office can fill any vacancy or newly created directorship. A
director may be removed with or without cause by a majority of the shares
entitled to vote at an election of the directors. However, if the board is
divided into classes, unless the certificate of incorporation provides
otherwise, a director may only be removed for cause. The board may fill any
vacancy created for any reason.
PeopleSoft. Our bylaws provide for our board to consist of seven members.
The PeopleSoft restated certificate of incorporation provides that our board be
divided into two classes, composed of three and four directors, respectively,
with staggered two-year terms. Directors may only be removed for cause and by an
affirmative vote of not less than two-thirds of the total outstanding shares of
our common stock. Board vacancies and newly created directorships may be filled
by the affirmative vote of a majority of the directors then in office. In
connection with the merger, PeopleSoft has agreed to take all requisite action
to appoint Michael J. Maples to our board of directors as a Class I director as
of the effective time of the merger.
J.D. Edwards. J.D. Edwards' bylaws provide for the J.D. Edwards board to
consist of nine members. The J.D. Edwards amended and restated certificate of
incorporation provides that the J.D. Edwards board be divided into three
classes, nearly equal in size, with staggered three-year terms. The Delaware
General Corporation Law provides that, unless the certificate of incorporation
provides otherwise, directors of a corporation having a staggered board may only
be removed for cause. Directors elected by the holders of a particular class or
series of stock may be removed without cause only by the vote of the holders of
a majority of that class or series of stock. Board vacancies and newly created
directorships may be filled by the affirmative vote of a majority of the
remaining directors, although less than a quorum. Directorships to be filled by
a particular class or series of stock may be filled only by directors elected by
such class or series of stock, unless there are none, in which case such a
director may be elected by a majority of the remaining directors. There is
currently only one class of J.D. Edwards capital stock outstanding.
AMENDMENTS TO CHARTER AND BY-LAWS
Delaware General Corporation Law. Under the Delaware General Corporation
Law, an amendment to a corporation's certificate of incorporation requires
approval by both the board of directors and a majority of the shares entitled to
vote, unless a different proportion is provided for in the corporation's
certificate of incorporation. If the amendment increases or decreases the
aggregate number of authorized shares of a class, then the outstanding shares of
the class shall be entitled to vote on the amendment whether or not entitled to
vote thereon by the certificate of incorporation. If the corporation's stock is
divided into classes, then a majority of each class entitled to vote on the
amendment as a class must approve the amendment, unless a different proportion
is provided by the corporation's certificate of incorporation. After a
corporation has received any payment for any of its stock, its stockholders have
the power to adopt, amend or repeal bylaws. However, a corporation may, in its
certificate of incorporation, confer this power to its directors.
PeopleSoft. Our restated certificate of incorporation, as amended,
provides that the approval of at least 66 2/3% of the total number of votes of
the outstanding shares entitled to vote in the election of directors must
approve any amendment to the provisions of the certificate relating to:
- removal of a director;
- the classified board and indemnification of directors, officers,
employees or agents; or
- certain amendments to the bylaws, discussed below.
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Subject to the rights of our stockholders, our board may make, amend or
repeal our bylaws. Our certificate of incorporation provides that at least
66 2/3% of the total number of votes of the outstanding shares entitled to vote
in the election of directors must approve any amendment by the stockholders to
the special meeting provision, the advance notice of stockholder nominees
provision and the advance notice of stockholder business provision of our
bylaws.
J.D. Edwards. J.D. Edwards' amended and restated certificate of
incorporation may be amended by J.D. Edwards in accordance with applicable law.
J.D. Edwards' amended and restated certificate of incorporation has conferred
the power to make, alter, amend or repeal the J.D. Edwards bylaws on its board
of directors, subject to the rights of J.D. Edwards stockholders.
STOCKHOLDER ACTION
PeopleSoft. Generally, the vote of a majority of the shares present and
entitled to vote at a duly called and held meeting is the act of our
stockholders. As discussed under the previous subheading, certain amendments to
our restated certificate of incorporation and bylaws require the approval of a
supermajority of the issued and outstanding capital stock entitled to vote on
the relevant proposal. The PeopleSoft restated certificate of incorporation
provides that for so long as the company has a class of stock registered under
the Exchange Act, any action required or permitted to be taken by stockholders
must be effected at a duly called annual or special meeting and may not be
effected by written consent.
J.D. Edwards. The vote of a majority of the shares present and entitled to
vote at a duly called and held meeting is the act of the J.D. Edwards
stockholders. J.D. Edwards stockholder action may be taken by written consent of
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Prompt notice
of the taking of the corporate action without a meeting by less than unanimous
written consent must be given to those stockholders who did not consent in
writing.
STOCKHOLDER PROPOSALS
PeopleSoft. Our bylaws require that to nominate directors for election at
a stockholder meeting, a stockholder must give notice in writing not less than
20 days nor more than 60 days before the meeting of his or her intent to bring
the nomination before the meeting. If less than 30 days notice of the meeting is
given by PeopleSoft, the stockholder's notice must be received no later than ten
days after the date of the meeting is first publicly announced. The
stockholder's notice must state:
- the name and address, as they appear on the corporate books of
PeopleSoft, of the stockholder and the name, age, principal occupation or
employment and business and residence address of each nominee;
- the class and number of shares of PeopleSoft stock owned beneficially by
the stockholder and each nominee;
- a description of all arrangements or understandings between the
stockholder and each nominee and any other persons (naming the persons)
pursuant to which each nomination will be made or relating to the
nomination;
- any other information relating to each nominee that is required by law to
be disclosed in solicitations of proxies for elections of directors; and
- each nominee's written consent to being nominated and to serving as
director if elected.
Our bylaws require that to bring other business before an annual
stockholder meeting, a stockholder must give notice in writing not less than 45
days before the anniversary of the date on which PeopleSoft first mailed its
proxy materials for the prior year's meeting. If the annual meeting will be more
than 30 days earlier or later than the anniversary of the prior year's meeting,
then our board will determine a
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reasonable date by which the stockholder's notice must be delivered, which date
must be publicized at least ten days in advance. The stockholder's notice must
state:
- a brief description of the business to be brought before the meeting, the
reasons for conducting the business at the meeting and any material
interest of the stockholder in the business;
- the name and address of the stockholder proposing the business;
- the class and number of shares of PeopleSoft stock owned beneficially by
the stockholder who seeks to bring the action and the beneficial owners,
if any, on whose behalf the nomination or proposal is made; and
- any other information that is required by law to be provided by the
stockholder in his or her capacity as proponent of a stockholder
proposal.
J.D. Edwards. The J.D. Edwards bylaws provide that to bring proper
nominations for the election of directors or other business before an annual
stockholder meeting, a stockholder must give written notice not less than 60
days before the meeting, unless the stockholder did not receive at least 60 days
notice of the meeting, in which case the stockholder's notice must be delivered
within seven days of receipt of the notice. The stockholder notice must state as
to each matter the stockholder proposes to bring before the annual meeting:
- the name and address, as they appear on the J.D. Edwards corporate books,
of the stockholder who intends to bring the action;
- the class and number of shares of J.D. Edwards stock owned beneficially
by the stockholder who seeks to bring the action;
- a brief description of the business desired to be brought before the
meeting, the reasons for conducting the business at the meeting and any
material interest of the stockholder in the action; and
- any other information that is required to be provided by the stockholder
pursuant to the proxy rules of the SEC.
For the purpose of nominating directors for election at a stockholder
meeting, the stockholder's notice must also state:
- the name, age, business address and residence address of the nominee;
- the principal occupation or employment of the nominee;
- the class and number of shares of the corporation which are beneficially
owned by the nominee;
- a description of all arrangements or understandings between the
nominating stockholder and the nominee and any other persons (naming the
persons) pursuant to which each nomination is to be made; and
- any other information relating to the nominee required to be disclosed by
the proxy rules of the SEC, including each nominee's written consent to
being nominated and to serving as a director if nominated.
SPECIAL STOCKHOLDER MEETINGS
Delaware General Corporation Law. Under the Delaware General Corporation
Law, a special meeting of a corporation's stockholders may be called by its
board or by any other person authorized by the corporation's certificate of
incorporation or bylaws. All stockholders of record entitled to vote must
receive notice of all stockholder meetings not less than ten, nor more than 60
days before, the date of the stockholder meeting.
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PeopleSoft. The PeopleSoft bylaws provide that only the board of
directors, the Chairman of the Board or the President can call a special meeting
of our stockholders. No business may be transacted at a special meeting of the
stockholders other than that stated in the notice of the meeting. All
stockholders of record entitled to vote must receive notice of all stockholder
meetings not less than ten, nor more than 60, days before the date of the
stockholder meeting.
J.D. Edwards. The J.D. Edwards bylaws provide that only the board of
directors, the Chairman of the Board or the President can call a special meeting
of the J.D. Edwards stockholders. No business may be transacted at a special
meeting of the stockholders other than that stated in the notice of the meeting.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND INDEMNIFICATION
Delaware General Corporation Law. Under the Delaware General Corporation
Law, a corporation may include a provision in its certificate of incorporation
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for certain monetary damages resulting from breaches of
fiduciary duties. Specifically, the corporation may indemnify any director,
officer, employee or agent of the corporation for expenses, monetary damages,
fines and settlement amounts to the extent the person:
- acted in good faith;
- acted in a manner he or she believed to be in the best interests of the
corporation; and
- with respect to any criminal action, had no reasonable cause to believe
the conduct was unlawful.
However, no provision can eliminate or limit director liability for any:
- breach of his or her duty of loyalty to the corporation or its
stockholders;
- act or omission not in good faith or involving intentional misconduct or
a knowing violation of the law;
- violation of Section 174 of the Delaware General Corporation Law
regarding unlawful payment of dividends or unlawful stock purchases or
redemptions;
- transaction from which the director received any improper personal
benefit; or
- act or omission that took place before the date of adoption of the
provision in the certificate of incorporation eliminating or limiting the
liability of a director for breaches of fiduciary duties.
Indemnification is also not permitted if the person is held liable to the
corporation or its stockholders, except to the extent that an appropriate court
concludes that the person is fairly and reasonably entitled to indemnification
for those expenses that the court deems proper.
PeopleSoft. The PeopleSoft restated certificate of incorporation
eliminates the personal liability of, and provides a right to indemnification
to, each of the current and former directors and officers of PeopleSoft to the
fullest extent authorized or permitted by Delaware General Corporation Law, as
described above. However, if the Delaware General Corporation Law is amended to
further eliminate or limit director liability, then the indemnification provided
shall be expanded to the fullest extent permitted by the Delaware General
Corporation Law, as amended. PeopleSoft will advance fees for defense of
indemnified persons, upon receipt of an undertaking that the advance will be
repaid if it is ultimately determined that the person is not entitled to
indemnification. The PeopleSoft bylaws also permit our board of directors to
provide for indemnification of employees and agents of PeopleSoft with the same
scope and effect as the indemnification provided for directors and officers.
This right to indemnification is not exclusive of any other right the director,
officer, employee or agent may have.
Even if PeopleSoft is prohibited from indemnifying such person under
Delaware General Corporation Law, it may maintain insurance at the corporation's
expense to protect itself and any director, officer, employee or agent against
the expense, liability or loss. In that regard, PeopleSoft has agreed to
maintain after the effective time of the merger certain insurance with respect
to indemnification obligations to which J.D. Edwards directors and officers may
become entitled.
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J.D. Edwards. The J.D. Edwards amended and restated certificate of
incorporation eliminates the personal liability of, and provides a right to
indemnification to, each of its current and former directors and officers to the
fullest extent authorized or permitted by Delaware General Corporation Law, as
described above. However, if the Delaware General Corporation Law is amended to
further eliminate or limit director liability, then the indemnification provided
shall be expanded to the fullest extent permitted by the Delaware General
Corporation Law as amended. J.D. Edwards will advance fees for defense of an
indemnified director or officer, upon receipt of an undertaking that the advance
will be repaid if it is ultimately determined that the director or officer is
not entitled to indemnification. The J.D. Edwards amended and restated
certificate of incorporation and bylaws also permit J.D. Edwards' board of
directors to provide for indemnification of employees and agents of J.D. Edwards
with the same scope and effect as the indemnification provided for directors and
officers, provided that J.D. Edwards is not required to advance fees for the
defense of indemnified employees or agents. This right to indemnification is not
exclusive of any other right the director, officer, employee or agent may have.
Even if J.D. Edwards is prohibited from indemnifying a person under
Delaware General Corporation Law, it may maintain insurance at the corporation's
expense to protect itself and any director, officer, employee or agent against
an expense, liability or loss.
ANTI-TAKEOVER PROVISIONS
Delaware General Corporation Law. Section 203 of the Delaware General
Corporation Law is an anti-takeover law that generally prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years following the date the
person became an interested stockholder, unless:
- prior to the date of the transaction, the board of directors of the
corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder;
- the stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes
of determining the number of shares outstanding (but not the interested
stockholder's holdings) (a) shares owned by persons who are directors and
also officers, and (b) shares subject to employee stock plans in which
employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer; or
- on or subsequent to the date of the transaction, the business combination
is approved by the board and authorized at an annual or special meeting
of stockholders, and not by written consent, by the affirmative vote of
at least 66 2/3% of the outstanding voting stock which is not owned by
the interested stockholder.
Generally, a "business combination" includes a merger, asset or stock sale,
or other transaction resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns or, within three years prior to the
determination of interested stockholder status, owned 15% or more of a
corporation's outstanding voting securities.
PeopleSoft. PeopleSoft, as a publicly held Delaware corporation, is
generally subject to Section 203 of the Delaware General Corporation Law. In
addition, PeopleSoft has put in place certain mechanisms that may make an
acquisition of PeopleSoft by tender offer, a proxy contest or otherwise more
difficult:
- PeopleSoft has a rights plan, discussed below, which is designed to
protect and maximize the value of the outstanding equity interests in
PeopleSoft in the event of an unsolicited attempt by an acquirer to take
over PeopleSoft in a manner or on terms not approved by our board.
- As discussed above, our board is divided into two classes, with staggered
two-year terms. The classification of our board makes it more difficult
for PeopleSoft stockholders to replace our board and for another party to
obtain control of PeopleSoft by replacing the board. In addition,
directors
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may be removed only for cause by the affirmative vote, at a regular or
special meeting of stockholders, the notice of which contained a notice
of the proposal to remove any such director, of at least two-thirds of
the outstanding voting stock of PeopleSoft entitled to vote thereon.
Since our board has the power to retain and discharge officers of
PeopleSoft, these provisions could also make it more difficult for
stockholders or another party to effect a change in management.
- For so long as the company has a class of stock registered under the
Exchange Act, stockholder action can be taken only at an annual or
special meeting of stockholders and may not be taken by written consent.
- An affirmative vote of the holders of at least two-thirds of the
outstanding voting stock of PeopleSoft is required to amend the
provisions in our governing documents regarding removal of a director;
the classified board; indemnification of directors, officers, employees
or agents; or any of the provisions in the bylaws regarding special
meetings of the stockholders, the advance notice of stockholder nominees
and advance notice of stockholder business.
J.D. Edwards. J.D. Edwards, like PeopleSoft, is generally subject to
Section 203 of the Delaware General Corporation Law. In addition, J.D. Edwards
has put in place certain mechanisms that could make an acquisition of J.D.
Edwards by tender offer, a proxy contest or otherwise more difficult:
- J.D. Edwards has a rights plan, discussed below, which is designed to
protect and maximize the value of the outstanding equity interests in
J.D. Edwards in the event of an unsolicited attempt by an acquirer to
take over J.D. Edwards in a manner or on terms not approved by the J.D.
Edwards board.
- As discussed above, J.D. Edwards' board is divided into three classes,
with staggered three-year terms. The classification of the J.D. Edwards
board makes it more difficult for J.D. Edwards stockholders to replace
the J.D. Edwards board and for another party to obtain control of J.D.
Edwards by replacing the board. J.D. Edwards directors may be removed
only for cause, by a vote of a majority of the outstanding shares
entitled to vote. Since the J.D. Edwards board has the power to retain
and discharge officers of PeopleSoft, these provisions could also make it
more difficult for stockholders or another party to effect a change in
management.
RIGHTS PLAN
Generally. PeopleSoft and J.D. Edwards maintain substantially similar
stockholder rights plans that are designed to protect their respective
stockholders from attempts to acquire control of the company without the
approval of the company's board and prevent abusive tactics from potential
acquirers that do not treat all stockholders fairly.
The rights issued under each of the plans are not currently exercisable or
transferable, and no separate certificates evidencing such rights will be
distributed, unless certain events, described below, occur. Although neither
PeopleSoft nor J.D. Edwards intended the rights plans to prevent a takeover of
either company, the plans may cause substantial dilution to certain persons or
groups that beneficially acquire 20% or more, in our case, or 15% or more, in
J.D. Edwards' case, of the respective company's common stock, unless the rights
issuable under the plan are first redeemed by the respective companies' boards
of directors. A summary of the key provisions of the plans is provided below.
PeopleSoft. PeopleSoft adopted a stockholders rights plan in 1995, which
was amended in 1997, pursuant to which our board declared a dividend of one
PeopleSoft right for each outstanding share of our common stock. BankBoston,
N.A. has been appointed to serve as rights agent. Each PeopleSoft right entitles
the registered holder to purchase one one-thousandth of a share of PeopleSoft
Series A participating preferred stock at a price of $190, subject to
adjustment. The terms of the PeopleSoft rights are fully described in the
PeopleSoft rights agreement between PeopleSoft and the rights agent.
Distribution Date. Until the distribution date under the rights agreement,
described below, the PeopleSoft rights attach to and trade only together with
the shares of our common stock. The PeopleSoft
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rights will separate from shares of our common stock and become exercisable, and
certificates representing the rights will be issued, upon the earlier of the
following events, which we refer to as the distribution date:
- ten days after public announcement that a person or group of affiliated
or associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of our outstanding common stock,
referred to as a triggering event; or
- ten days, or such later date as our board may determine, after the
announcement or commencement of a tender offer or exchange offer that
would result in a person or group having beneficial ownership of 20% or
more of the outstanding shares of our common stock.
Any person or group of affiliated or associated persons who beneficially
owns 20% of the outstanding shares of our common stock, other than us and
certain of our affiliates, is referred to as a 20% acquirer.
At the meeting of our board on June 11, 2003, the board took action, as
permitted under the rights agreement, to postpone the distribution date, which
otherwise would have been triggered ten days after Oracle commenced its tender
offer for the shares of our common stock, for purposes of the Oracle Offer only,
to that time immediately preceding consummation of any transaction or series of
related transactions in which a person (as defined in the rights agreement)
becomes or will likely become (as determined by our board), a 20% acquirer.
Issuance of Rights Certificates; Expiration of Rights. After the
distribution date, rights certificates will be mailed to recordholders of our
common stock as of the distribution date. The PeopleSoft rights will expire on
the earliest of:
- February 15, 2005; or
- redemption or exchange of the PeopleSoft rights.
Exercise of the Rights. Following the distribution date, and until one of
the further events described below occurs, PeopleSoft rights will entitle the
holder to receive, for payment of the rights purchase price of $190, one
one-thousandth of a share of the our Series A participating preferred stock. For
a description of our Series A participating preferred stock, refer to the
subheading entitled "Preferred Stock -- PeopleSoft Preferred Stock" above. If a
triggering event has occurred, we may, at the option of our board, instead
substitute cash, assets or other securities for Series A participating preferred
stock issuable upon exercise of PeopleSoft rights. Furthermore, upon the
occurrence of a triggering event, any rights held by a 20% acquirer will be
void.
Unless the PeopleSoft rights are earlier redeemed, after a triggering event
occurs, each holder of a PeopleSoft right, other than a 20% acquirer, whose
rights will be void, will have the right to receive, upon exercise and payment
of the rights purchase price, our common stock having a value equal to two times
the rights purchase price; provided that if we do not have the sufficient common
stock available to for all PeopleSoft rights to be exercised and our board
determines it to be necessary or appropriate and not contrary to the interests
of PeopleSoft rights holders, cash, assets or other securities may be
substituted for common stock.
Unless the PeopleSoft rights are earlier redeemed, if, after a triggering
event,
- PeopleSoft is acquired in a merger or other business combination
transaction, or
- 50% or more of our consolidated assets or earning power are sold other
than in the ordinary course of business,
each outstanding PeopleSoft right, other than PeopleSoft rights owned by the 20%
acquirer, will become exercisable for shares of common stock of the acquiring
company with a value equal to two times the rights exercise price.
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Exchange and Redemption. At any time prior to a triggering event, our
board may exchange all or part of the then outstanding rights for rights of
substantially equivalent value, as it determines reasonably and in good faith
based upon the advice of one or more nationally recognized investment banking
firms.
At any time after a triggering event and before the acquisition by such 20%
acquirer of 50% or more of our outstanding common stock, our board may exchange
the PeopleSoft rights, other than rights owned by the 20% acquirer, in whole or
in part, at an exchange ratio of one share of our common stock per right. Upon
an action by our board ordering an exchange, the rights will terminate and the
holders of the rights will be entitled only to receive shares of common stock in
accordance with the exchange ratio. If we do not have the sufficient common
stock available for all PeopleSoft rights to be exchanged, our board may, at its
option, exchange rights for cash, assets or other securities instead of for
common stock.
At any time before the earlier of the tenth day following acquisition by a
20% acquirer and February 15, 2005, our board may redeem the rights in whole,
but not part, for $0.01 per right, as adjusted, payable in cash or shares of our
common stock based on the market price of the common stock. Following our
board's order of redemption, the rights will terminate and the holders of the
rights will be entitled only to receive the determined redemption price.
Fractional Shares. No fractional portion less than integral multiples of
one share of our common stock will be issued upon exercise or exchange of a
right. In place of the issuance of a fractional share, a cash adjustment will be
made based on the market price of our common stock on the last trading date
before the date of exercise or exchange.
Amendment of Rights Agreement. The PeopleSoft rights agreement may be
supplemented or amended by our board before a distribution date without the
approval of holders of PeopleSoft rights. After a distribution date, the
PeopleSoft rights agreement may be amended by our board to cure any ambiguity,
defect or inconsistency, to make changes that do not adversely affect the
interests of holders of PeopleSoft rights, other than a 20% acquirer, or to
shorten or lengthen any time period under the PeopleSoft rights agreement to
protect, enhance or clarify the rights and/or benefits of rights holders, other
than a 20% acquirer; except no amendment to adjust the time period governing
redemption may be made when the PeopleSoft rights are not redeemable.
Rights and Preferences of the PeopleSoft Series A Preferred Stock. The
PeopleSoft Series A participating preferred stock is only issuable in connection
with the PeopleSoft rights plan. For a description of the PeopleSoft Series A
participating preferred stock, refer to the subheading entitled "Preferred
Stock -- PeopleSoft Preferred Stock" above.
This description of the PeopleSoft rights plan is qualified by reference to
our rights agreement, which is incorporated by reference in this prospectus. See
"Additional Information -- Where You Can Find Additional Information".
J.D. Edwards. J.D. Edwards adopted its stockholders rights plan in 2001.
The rights agent under the plan is Computershare Trust Company, Inc. Pursuant to
the rights plan, J.D. Edwards' board declared a dividend of one right for each
outstanding share of J.D. Edwards common stock. Each J.D. Edwards right entitles
the registered holder to purchase one one-thousandth of a share of J.D. Edwards
Series A participating preferred stock at a price of $75, subject to adjustment.
The terms of the J.D. Edwards rights are fully described in the J.D. Edwards
rights agreement between J.D. Edwards and the rights agent. As noted above, the
J.D. Edwards rights plan is substantially identical to the PeopleSoft rights
plan. Notable differences from the PeopleSoft rights plan include:
- the plan expires on November 26, 2011 or upon redemption or exchange as
opposed to our plan, which expires on February 15, 2005;
- the exercise price is $75 per one one-thousandth of a share of J.D.
Edwards Series A participating preferred stock; PeopleSoft has a price
per share of $190;
- the J.D. Edwards plan contains a 15% acquirer threshold rather than 20%;
and
118
- The J.D. Edwards plan allows more time for redemption and the redemption
price is $0.001 per right, which, like PeopleSoft, reflects the par value
of the stock being redeemed.
The description of the J.D. Edwards rights is qualified by reference to
J.D. Edwards rights plan, which is incorporated by reference in this prospectus.
See "Additional Information -- Where You Can Find Additional Information".
APPRAISAL RIGHTS
Delaware General Corporation Law. Under the Delaware General Corporation
Law, dissenters' appraisal rights are available to a corporation's stockholders
in connection with certain mergers and consolidations. Under the Delaware
General Corporation Law, any J.D. Edwards stockholder who does not wish to
accept the consideration provided for in the merger agreement has the right to
demand appraisal of, and to be paid the fair market value for, his or her shares
of J.D. Edwards common stock. The value of the J.D. Edwards common stock for
this purpose will exclude any element of value arising from the consummation of
the merger.
For any J.D. Edwards stockholder to exercise his or her right to an
appraisal, the stockholder must deliver to J.D. Edwards a written demand for an
appraisal of his or her shares of PeopleSoft common stock as provided by the
Delaware General Corporation Law. Appendix B contains Section 262 of the
Delaware General Corporation Law which addresses appraisal rights.
J.D. Edwards stockholders should particularly note the following:
- simply not tendering shares of J.D. Edwards common stock in the offer and
voting against the approval and adoption of the merger agreement will not
be considered a demand for appraisal rights;
- a J.D. Edwards stockholder who fails to timely send a demand to the
Corporate Secretary at One Technology Way, Denver, CO 80237, will lose
his or her right to an appraisal; and
- stockholders who have not tendered their shares in the offer and vote for
the approval and adoption of the merger agreement, if necessary, will not
have appraisal rights.
119
ADDITIONAL INFORMATION
LEGAL MATTERS
Gibson, Dunn & Crutcher LLP, counsel to PeopleSoft, has passed upon the
validity of our common stock to be issued in connection with the offer and the
merger. Gibson, Dunn & Crutcher LLP and Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel to J.D. Edwards, have each rendered an opinion
concerning the federal income tax consequences of the offer and the merger.
EXPERTS
The consolidated financial statements of PeopleSoft and its subsidiaries as
of December 31, 2002, and for the year ended December 31, 2002, have been
incorporated by reference in this prospectus and registration statement in
reliance upon the report of KPMG LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
Although PeopleSoft dismissed Arthur Andersen LLP as its independent public
accountants effective June 5, 2002 and engaged the services of KPMG LLP as its
independent auditors, the consolidated financial statements of PeopleSoft, Inc.
and its subsidiaries at December 31, 2001, and for each of the two years in the
period ended December 31, 2001 included in this prospectus have been audited by
Arthur Andersen LLP. After reasonable efforts, PeopleSoft has not been able to
obtain the written consent of Arthur Andersen LLP to our naming it as an expert
and the incorporation by reference of its audit report for the financial
statements of PeopleSoft at December 31, 2001 and for each of the two years in
the period ended December, 2001 into this prospectus. The requirement to obtain
such consent has been dispensed with in reliance on Rule 437a under the
Securities Act. The absence of such consent may limit recovery by investors on
certain claims, including the inability of investors to assert claims against
Arthur Andersen LLP under Section 11 of the Securities Act for any untrue
statements of a material fact contained, or any omissions to state a material
fact required to be stated, in those audited financial statements. In addition,
the ability of Arthur Andersen LLP to satisfy any claims, including claims
arising from Arthur Andersen's LLP provision of auditing and other services to
PeopleSoft, may be limited.
The consolidated financial statements incorporated in this prospectus and
registration statement by reference to the Annual Report on Form 10-K of J.D.
Edwards & Company as of October 31, 2002 and 2001 and for each of the three
years ended October 31, 2002 have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
PeopleSoft and J.D. Edwards file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
reports, statements or information that the companies file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-732-0330 for further information on the public reference rooms.
Our and J.D. Edwards' SEC filings are also available to the public from
commercial document retrieval services and at the Internet web site maintained
by the SEC at www.sec.gov.
We have filed with the SEC a registration statement on Form S-4 to register
with the SEC the shares of our common stock to be issued to J.D. Edwards
stockholders in the offer and the merger. This prospectus is a part of that
registration statement and constitutes a prospectus of PeopleSoft. In addition,
we also filed with the SEC a statement on Schedule TO pursuant to Rule 14d-3
under the Exchange Act to furnish certain information about the offer.
J.D. Edwards has filed with the SEC a Solicitation/Recommendation Schedule
14D-9 regarding the offer.
As allowed by SEC rules, this prospectus does not contain all the
information you can find in our registration statement or the exhibits to the
registration statement. The SEC allows us to "incorporate by
120
reference" information into this prospectus, which means that we can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is deemed to
be part of this prospectus, except for any information that is superseded by
information that is included directly in this document. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about us and
our financial condition.
<Table>
<Caption>
PEOPLESOFT, INC. SEC FILINGS
(SEC FILE NO. 0-20710) PERIOD
- ---------------------------- ------
Annual Report on Form 10-K................... Year ended December 31, 2002, as filed on
March 28, 2003
Quarterly Report on Form 10-Q................ Quarter ended March 31, 2003, as filed on May
15, 2003
Current Reports on Form 8-K.................. Filed on April 4, 2003, April 23, 2003, June
2, 2003, June 12, 2003 and July 2, 2003
Definitive Proxy Statement on Schedule 14A
for 2003 Annual Meeting of Stockholders.... Filed on April 28, 2003 and amended on May
19, 2003
Registration Statement on Form 8-A........... Filed on October 7, 1992
The description of PeopleSoft preferred stock
purchase rights contained in Registration
Statement on Form 8-A/A.................... Filed on March 25, 1998
</Table>
<Table>
<Caption>
J.D. EDWARDS & COMPANY SEC FILINGS
(SEC FILE NO. 000-23091) PERIOD
- ---------------------------------- ------
Annual Report on Form 10-K................... Year ended October 31, 2002, as filed on
December 6, 2002
Quarterly Reports on Form 10-Q............... Quarter ended January 31, 2003, as filed on
February 28, 2003 Quarter ended April 30,
2003, as filed on June 4, 2003
Definitive Proxy Statement on Schedule 14A
for 2003 Annual Meeting of Stockholders.... Filed on February 21, 2003
Current Reports on Form 8-K.................. Filed on June 3, 2003
Registration Statement on Form 8-A........... Filed on September 17, 1997
The description of J.D. Edwards preferred
stock purchase rights contained in
Registration Statement on Form 8-A......... Filed on November 15, 2001, as amended on
June 11, 2003 and June 30, 2003
</Table>
All additional documents that PeopleSoft or J.D. Edwards may file with the
SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934
after the date of this prospectus and prior to the earliest of the date of the
merger following completion of the offer or the earlier termination of the
merger agreement, shall also be deemed to be incorporated by reference.
We have supplied all information contained or incorporated by reference in
this prospectus relating to us and J.D. Edwards has supplied all such
information relating to J.D. Edwards.
You can obtain any of the documents we are incorporating by reference
through us, the SEC or the SEC's Internet website as described above. Documents
incorporated by reference are available from us without charge, excluding all
exhibits unless we have specifically incorporated by reference an exhibit in
121
this prospectus. You may obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone from us at the
following address:
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc.
17 State Street -- 10th Floor
New York, NY 10004
Banks and Brokers Call: 212-440-9800
Outside of North America Call Toll-Free: 866-324-5899
All Others Call Toll-Free: 800-248-2681
THE INFORMATION CONTAINED ON THE WEBSITES OF PEOPLESOFT AND J.D. EDWARDS
DOES NOT CONSTITUTE A PART OF THIS PROSPECTUS.
If you request any incorporated documents from us, we will cause them to be
mailed to you by first-class mail, or other equally prompt means, within one
business day of receipt of your request.
You should rely only on the information contained or incorporated by
reference in this prospectus to decide whether to accept the offer. We have not
authorized anyone to provide you with information that is different from what is
contained in this prospectus. You should not assume that the information
contained in the prospectus is accurate as of any date other than the date on
the front of this prospectus unless the information specifically indicates that
another date applies, and neither the mailing of this prospectus to the
stockholders nor the issuance of shares of our common stock pursuant to the
offer or in the merger shall create any implication to the contrary.
122
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
give effect to the proposed merger of PeopleSoft, Inc. ("PeopleSoft") and J.D.
Edwards & Company ("J.D. Edwards"). We are proposing to acquire all of the
outstanding J.D. Edwards stock in exchange for cash and PeopleSoft stock
estimated to be valued at $2.0 billion. Our merger with J.D. Edwards will be
accounted for using the purchase method of accounting and, accordingly, the
assets acquired and liabilities assumed will be recorded at their fair values as
of the date of the merger. Our fiscal year ends on December 31 of each year.
J.D. Edwards' fiscal year ends on October 31 of each year.
The unaudited pro forma condensed combined balance sheet gives effect to
the merger of PeopleSoft and J.D. Edwards as if it occurred as of March 31, 2003
and combines the unaudited condensed balance sheet of PeopleSoft as of March 31,
2003 and the unaudited condensed balance sheet of J.D. Edwards as of April 30,
2003. The unaudited pro forma condensed combined balance sheet reflects the
issuance of 0.43 shares of PeopleSoft common stock plus $7.05 in exchange for
each share of J.D. Edwards common stock as provided in the merger agreement. The
unaudited pro forma condensed combined statement of operations for the year
ended December 31, 2002 combines the historical results for PeopleSoft for the
year ended December 31, 2002 and the historical results for J.D. Edwards for the
year ended October 31, 2002, as if the merger had occurred on January 1, 2002.
The unaudited pro forma condensed combined statement of operations for the
three months ended March 31, 2003 combines the historical results for PeopleSoft
for the three months ended March 31, 2003 and the historical results for J.D.
Edwards for the three months ended April 30, 2003 as if the merger of PeopleSoft
and J.D. Edwards had occurred on January 1, 2002.
The unaudited pro forma condensed combined financial statements presented
are based on the assumptions and adjustments described in the accompanying
notes. The unaudited pro forma condensed combined statement of operations is
presented for illustrative purposes and does not purport to represent what our
results of operations actually would have been if the events described above had
occurred as of the dates indicated or what such results would be for any future
periods. The unaudited pro forma condensed combined financial statements, and
the accompanying notes, should be read in conjunction with the historical
financial statements and related notes of PeopleSoft and J.D. Edwards included
in the applicable company's annual report on Form 10-K and quarterly reports on
Form 10-Q incorporated by reference in this prospectus.
123
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2003
(IN THOUSANDS)
<Table>
<Caption>
HISTORICAL
-------------------------------
PEOPLESOFT J.D. EDWARDS PRO FORMA PRO FORMA
MARCH 31, 2003 APRIL 30, 2003 ADJUSTMENTS COMBINED
-------------- -------------- ----------- ----------
ASSETS
Current assets:
Cash and cash equivalents......... $ 239,031 $340,610 $ (189,031)(A) $ 390,610
Short-term investments............ 1,693,811 11,945 (669,225)(A) 1,036,531
Accounts receivable, net.......... 313,450 179,602 -- 493,052
Prepaid and other current
assets.......................... 87,559 27,869 69,300(B) 184,728
---------- -------- ---------- ----------
Total current assets.............. 2,333,851 560,026 (788,956) 2,104,921
Property & equipment, net............ 288,135 72,458 -- 360,593
Capitalized software, net............ 39,890 72,816 (72,816)(C) 194,590
154,700(D)
Goodwill............................. 54,366 79,918 (79,918)(C) 1,103,945
1,049,579(D)
Other assets......................... 167,753 54,397 (142,953)(B) 559,667
(2,030)(C)
482,500(D)
---------- -------- ---------- ----------
Total assets...................... $2,883,995 $839,615 $ 600,106 $4,323,716
========== ======== ========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities..................... $ 283,112 $125,349 $ 20,000(E) $ 608,627
166(F)
180,000(G)
Short-term deferred revenues...... 455,820 221,954 (221,954)(H) 520,697
64,877(I)
---------- -------- ---------- ----------
Total current liabilities......... 738,932 347,303 43,089 1,129,324
Long-term deferred revenue and other
long-term liabilities............. 110,339 16,322 (12,395)(H) 219,696
3,061(I)
102,369(B)
---------- -------- ---------- ----------
Total liabilities................. 849,271 363,625 136,124 1,349,020
Stockholders' equity:
Common stock...................... 3,176 122 (122)(J) 3,793
617(K)
Additional paid-in capital........ 1,416,744 500,685 (500,685)(J) 2,394,399
987,162(K)
(166)(F)
(9,341)(K)
Treasury stock.................... (35,654) (11,497) 11,497(J) (35,654)
Retained earnings (deficit)....... 638,282 (4,773) 4,773(J) 599,982
(38,300)(K)
Accumulated other comprehensive
income (loss)................... 12,176 (8,547) 8,547(J) 12,176
---------- -------- ---------- ----------
Total stockholders' equity........ 2,034,724 475,990 463,982 2,974,696
---------- -------- ---------- ----------
Total liabilities & stockholders'
equity.......................... $2,883,995 $839,615 $ 600,106 $4,323,716
========== ======== ========== ==========
</Table>
See accompanying notes to unaudited pro forma condensed combined financial
statements
For explanations of pro forma adjustments, see pages 131 and 132
124
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(IN THOUSANDS EXCEPT PER SHARE DATA)
<Table>
<Caption>
HISTORICAL
-------------------------------
PEOPLESOFT J.D. EDWARDS PRO FORMA PRO FORMA
MARCH 31, 2003 APRIL 30, 2003 ADJUSTMENTS COMBINED
-------------- -------------- ----------- ---------
REVENUES:
License fees.............................. $ 80,841 $ 43,551 $ -- $124,392
Services revenue.......................... 379,415 159,954 539,369
-------- -------- --------- --------
Total revenues.......................... 460,256 203,505 -- 663,761
COSTS AND EXPENSES:
Cost of license fees...................... 8,726 8,569 (4,121)(L) 20,914
7,735 (M)
5 (N)
Cost of services.......................... 163,469 77,463 451 (N) 241,383
Sales and marketing....................... 119,558 63,148 251 (N) 182,957
Product development....................... 83,705 32,433 302 (N) 116,440
General and administrative................ 33,015 22,198 159 (N) 55,372
Restructuring, acquisition and other...... -- 2,305 (701)(O) 17,956
(1,483)(P)
(121)(Q)
17,956 (R)
-------- -------- --------- --------
Total costs and expenses................ 408,473 206,116 20,433 635,022
-------- -------- --------- --------
Operating income (loss)................... 51,783 (2,611) (20,433) 28,739
Other income, net......................... 6,966 2,155 -- 9,121
-------- -------- --------- --------
Income (loss) before income taxes......... 58,749 (456) (20,433) 37,860
Provision (benefit from) for income
taxes................................... 20,270 (63) (7,867)(S) 12,340
-------- -------- --------- --------
Net income (loss)......................... $ 38,479 $ (393) $ (12,566) $ 25,520
======== ======== ========= ========
Basic income (loss) per share............. $ 0.12 $ (0.00) $ 0.07
Shares used............................... 314,782 120,780 366,717
Diluted income (loss) per share........... $ 0.12 $ (0.00) $ 0.07
Shares used............................... 319,831 120,780 372,598
</Table>
See accompanying notes to unaudited pro forma condensed combined financial
statements
For explanations of pro forma adjustments, see pages 131 and 132
125
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(IN THOUSANDS EXCEPT PER SHARE DATA)
<Table>
<Caption>
HISTORICAL
------------------------------------
PEOPLESOFT J.D. EDWARDS PRO FORMA PRO FORMA
DECEMBER 31, 2002 OCTOBER 31, 2002 ADJUSTMENTS COMBINED
----------------- ---------------- ----------- ----------
REVENUES
License fees........................ $ 530,077 $227,021 $ -- $ 757,098
Services revenue.................... 1,411,341 677,436 -- 2,088,777
Development and other services...... 7,530 -- -- 7,530
---------- -------- -------- ----------
Total revenues.................... 1,948,948 904,457 -- 2,853,405
COSTS AND EXPENSES
Cost of license fees................ 45,142 34,762 (16,159)(L) 94,704
30,940(M)
19(N)
Cost of services.................... 661,083 324,850 1,803(N) 987,736
Cost of development and other
services.......................... 6,755 -- -- 6,755
Sales and marketing................. 514,800 275,566 1,004(N) 791,370
Product development................. 341,187 123,292 1,210(N) 465,689
General and administrative.......... 117,070 90,418 635(N) 208,123
Restructuring, acquisition and
other............................. 10,275 28,403 (9,032)(O) 105,143
(11,942)(P)
(1,283)(Q)
88,722(R)
---------- -------- -------- ----------
Total costs and expenses.......... 1,696,312 877,291 85,917 2,659,520
---------- -------- -------- ----------
Operating income.................... 252,636 27,166 (85,917) 193,885
Other income, net................... 30,600 6,392 -- 36,992
---------- -------- -------- ----------
Income before income taxes.......... 283,236 33,558 (85,917) 230,877
Provision (benefit from) for income
taxes............................. 100,647 (12,635) (33,078)(S) 54,934
---------- -------- -------- ----------
Net income.......................... $ 182,589 $ 46,193 $(52,839) $ 175,943
========== ======== ======== ==========
Basic income per share.............. $ 0.59 $ 0.39 $ 0.49
Shares used......................... 310,777 118,305 361,648
Diluted income per share............ $ 0.57 $ 0.38 $ 0.47
Shares used......................... 320,310 121,414 372,518
</Table>
See accompanying notes to unaudited pro forma condensed combined financial
statements
For explanations of pro forma adjustments, see pages 131 and 132
126
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma condensed combined balance sheet is based on
historical balance sheets of PeopleSoft, Inc. ("PeopleSoft") and J.D. Edwards &
Company ("J.D. Edwards") and has been prepared to reflect the merger as if it
had been consummated on March 31, 2003.
The unaudited pro forma condensed combined statements of operations combine
the results of operations of PeopleSoft for its fiscal year ended December 31,
2002 and for the three months ended March 31, 2003 with the results of
operations of J.D. Edwards for its fiscal year ended October 31, 2002 and the
three months ended April 30, 2003. The results of operations of J.D. Edwards for
the three months ended January 31, 2003 have been omitted from the pro forma
presentation in order to present the same number of months for both companies in
the interim unaudited pro forma condensed combined statement of operations. J.D.
Edwards' results of operations for the three months ended April 30, 2003 are
presented in order to provide for a better comparison to the results of
operations of PeopleSoft for the three months ended March 31, 2003. The
unaudited pro forma condensed combined statements of operations have been
prepared to reflect the merger as if it had occurred on January 1, 2002.
You should not rely on the selected unaudited pro forma condensed combined
financial information as being indicative of the historical results that would
have occurred had PeopleSoft and J.D. Edwards been combined during these time
periods or the future results that may be achieved after the merger.
On a combined basis, there were no transactions between PeopleSoft and J.D.
Edwards during the periods presented.
There are no significant differences between the accounting policies of
PeopleSoft and J.D. Edwards.
The pro forma combined provision for income taxes and the pro forma
combined balances of deferred taxes may not represent the amounts that would
have resulted had PeopleSoft and J.D. Edwards filed consolidated income tax
returns during the periods presented.
2. PRELIMINARY PURCHASE PRICE
The unaudited pro forma combined condensed financial statements reflect an
estimated purchase price of approximately $2.0 billion. The preliminary fair
value of PeopleSoft common stock to be issued was determined using an average
price of $17.05, which was the average closing price of PeopleSoft common stock
for a few days before and after the amended terms of the merger were agreed to
and announced.
The estimated purchase price assumes that all J.D. Edwards stockholders
will receive consideration of 0.43 of a share of PeopleSoft common stock plus
$7.05 in cash for each of J.D. Edwards' 121,738,415 outstanding shares of common
stock, which is based on the number of shares outstanding as of June 13, 2003.
The estimated purchase price also assumes that all J.D. Edwards stock
options will be exchanged on a 1.0 to 0.43 basis for PeopleSoft stock options,
plus a right to receive $7.05 in cash upon exercise of the PeopleSoft option.
PeopleSoft used $17.05 as the per share price in calculating the value of
options using the Black-Scholes option pricing model. The following assumptions
were used to determine the fair value of the assumed options: estimated
contractual life of 5.1 years, risk-free interest rate of 1.98%, expected
volatility of 0.912 and no expected dividend yield. For the unvested options
assumed, the portion of the intrinsic value applicable to the remaining vesting
period is recorded as deferred compensation and will be expensed over the
remaining vesting period.
The actual number of shares of PeopleSoft common stock to be issued and
J.D. Edwards stock options to be assumed will be based on the actual number of
J.D. Edwards common shares and stock options outstanding at the closing date
assuming that all stockholders of J.D. Edwards were to receive the
127
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
consideration of 0.43 of a share of PeopleSoft common stock plus cash of $7.05
for each common share of J.D. Edwards outstanding as of the closing date of the
merger.
The estimated acquisition-related costs consist primarily of investment
banking, legal and accounting fees, printing costs and other external costs
directly related to the merger.
The final purchase price is dependent on the actual number of J.D. Edwards
common shares exchanged, the actual number of options assumed, and actual merger
costs. The final purchase price will be determined upon completion of the
merger. The estimated total purchase price of the proposed J.D. Edwards merger
is as follows:
Preliminary Purchase Price
<Table>
<Caption>
(IN THOUSANDS)
Cash consideration.......................................... $ 858,256
Fair value of estimated PeopleSoft common stock to be
issued.................................................... 892,525
Estimated fair value of J.D. Edwards options to be assumed
less $9,341 representing the portion of the intrinsic
value of J.D. Edwards' unvested options applicable to the
remaining vesting period.................................. 95,254
Restructuring costs......................................... 180,000
Acquisition-related costs................................... 20,000
----------
Aggregate preliminary purchase price........................ $2,046,035
==========
</Table>
PeopleSoft is only in the preliminary stages of determining its
restructuring costs and other acquisition-related costs and currently estimates
it will incur costs in connection with the transaction in the range of $175
million to $225 million. Such costs include the direct transaction costs of $20
million, consisting primarily of business consulting fees paid to investment
bankers, legal and accounting fees and expenses, and $155 million to $205
million for certain restructuring costs resulting from the merger related to
facilities closures, severance and other costs. Management of PeopleSoft is
still assessing and refining estimates of the costs associated with the
integration planning and the ultimate amount of the related costs is not yet
known.
3. PRELIMINARY PURCHASE PRICE ALLOCATION
Under the purchase method of accounting, the total estimated purchase price
will be allocated to J.D. Edwards' net tangible and identifiable intangible
assets based upon their estimated fair values as of the date of completion of
the merger. The excess of the purchase price over the net tangible and
identifiable intangible assets will be recorded as goodwill. Based upon the
estimated purchase price and preliminary valuation, the following represents the
preliminary allocation of the aggregate purchase price to the acquired net
assets of J.D. Edwards as of April 30, 2003.
<Table>
<Caption>
(IN THOUSANDS)
Net tangible assets......................................... $ 487,637
Goodwill.................................................... 1,049,579
Identifiable intangible assets.............................. 637,200
Unearned stock-based compensation........................... 9,341
Deferred taxes on acquired identifiable intangible assets
and restructuring costs................................... (176,022)
In-process research and development......................... 38,300
----------
Aggregate preliminary purchase price........................ $2,046,035
==========
</Table>
128
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The preliminary allocation of the purchase price was based upon a
preliminary valuation, as described below, and management's estimates and
assumptions are subject to change upon the finalization of the valuation.
Net tangible assets were valued at their respective carrying amounts as
management believes that these amounts approximate their current fair values.
J.D. Edwards' net tangible assets were $487.6 million as of April 30, 2003,
excluding goodwill and other intangible assets of $154.8 million, and a
reduction in deferred revenue of $166.4 million.
The pro forma condensed combined balance sheet reflects a $166.4 million
reduction of J.D. Edwards' deferred revenue balance as of April 30, 2003,
resulting in lower service revenue as the maintenance revenue is recognized in
future periods compared to the amount of service revenue J.D. Edwards and
PeopleSoft would have aggregately recognized in the same period absent the
merger. For purposes of the pro forma condensed combined statements of
operations, PeopleSoft has not shown a reduced amount of service revenue as this
impact is non-recurring in nature.
Goodwill represents the excess of the purchase price over the fair value of
tangible and identifiable intangible assets acquired. The unaudited pro forma
condensed combined statements of operations do not reflect the amortization of
goodwill acquired in the merger consistent with the guidance in Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.
PeopleSoft's management valued the identifiable intangible assets to be
acquired using a preliminary appraisal. Identifiable intangible assets consist
of (in thousands):
<Table>
<Caption>
ESTIMATED
ESTIMATED ANNUAL
IDENTIFIABLE INTANGIBLE ASSETS FAIR VALUE USEFUL LIFE AMORTIZATION
- ------------------------------ ---------- ----------- ------------
Developed technology....................................... $154,700 5 yrs $30,940
Patented technology........................................ 56,100 5 yrs 11,220
Customer contracts......................................... 135,400 5 yrs 27,080
Maintenance agreements and related relationships........... 246,100 8.8 yrs 27,922
Consulting contracts....................................... 16,900 6 mos 16,900
Tradenames and trademarks.................................. 28,000 5 yrs 5,600
--------
$637,200
========
</Table>
Deferred taxes totaling $176 million on acquired identifiable intangible
assets and restructuring costs were computed as follows (In thousands):
<Table>
<Caption>
DEFERRED
STATUTORY TAX ASSET
AMOUNT TAX RATE (LIABILITY)
-------- --------- -----------
Identifiable intangible assets....................... $637,200 38.5% $ (245,322)
Restructuring costs.................................. 180,000 38.5% 69,300
-----------
$ (176,022)
===========
</Table>
In order to value purchased in-process research and development (IPR&D),
research projects in areas for which technological feasibility had not been
established were identified. The value of these projects was determined by
estimating the expected cash flows from the projects once commercially viable
and, discounting the net cash flows back to their present value, using the
adjusted discount rates based on the percentage of completion of the completed
research and development projects.
Net Cash Flows. The net cash flows from the identified projects are based
on PeopleSoft's estimates of revenues, cost of sales, research and development
costs, selling, general and administrative costs, royalty
129
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
costs and income taxes from those projects. These revenue estimates are based on
the assumptions mentioned below. The research and development costs included in
the model reflect costs to sustain projects, but exclude costs to bring
in-process projects to technological feasibility.
The estimated revenues are based on management projections of each
in-process project and the business projections were compared and found to be in
line with industry analysts' forecasts of growth in substantially all of the
relevant markets.
These projections are based on PeopleSoft's management estimates of market
size and growth, expected trends in technology and the nature and expected
timing of new project introductions by J.D. Edwards.
Discount Rate. Discounting the net cash flows back to their present value
is based on the industry weighted average cost of capital ("WACC"). PeopleSoft
believes the industry WACC is approximately 12% to 14%. The discount rate used
in discounting the net cash flows from IPR&D is 25%. The discount rate used is
higher than the industry WACC due to inherent uncertainties surrounding the
successful development of the IPR&D, market acceptance of the technology, the
useful life of such technology and the uncertainty of technological advances
which could potentially impact the estimates described above.
If the projects discussed above are not successfully developed, the sales
and profitability of the combined company may be adversely affected in future
periods.
PeopleSoft's management has estimated that $38.3 million of the purchase
price represents purchased in-process technology that has not yet reached
technological feasibility and has no alternative future use. This amount will be
expensed as a non-recurring, non-tax deductible charge upon consummation of the
merger. This amount has been reflected as a reduction to stockholders' equity
and has not been included in the pro forma combined statement of operations due
to its nonrecurring nature.
The value assigned to purchased in-process technology will be modified upon
consummation of the merger. The valuation methodology will incorporate a
"percentage of completion" approach.
4. PRO FORMA NET INCOME PER SHARE
The PeopleSoft unaudited pro forma combined condensed statements of
operations have been prepared as if the proposed merger had occurred as of
January 1, 2002. The pro forma basic and diluted income per share are based on
the weighted average number of shares of PeopleSoft common stock outstanding
during each period and the number of shares of PeopleSoft common stock to be
issued in connection with the merger, plus net J.D. Edwards options assumed in
connection with the merger using an assumed conversion ratio of 0.43 PeopleSoft
stock option for each J.D. Edwards stock option exchanged using the treasury
stock method. The following table shows the adjusted pro forma combined basic
and diluted shares at the end of the period presented (in thousands):
<Table>
<Caption>
PEOPLESOFT ADJUSTMENTS, NEW PRO FORMA COMBINED
WEIGHTED AVERAGE EQUIVALENT WEIGHTED AVERAGE
SHARES PEOPLESOFT SHARES SHARES
---------------- ----------------- ------------------
Shares outstanding as of 12/31/02
Basic..................................... 310,777 50,871(a) 361,648
Diluted................................... 320,310 52,208(b) 372,518
</Table>
130
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
- ---------------
(a) Assuming that all J.D. Edwards stockholders were to receive the
consideration of 0.43 shares of PeopleSoft common stock for each outstanding
common share of J.D. Edwards as of December 31, 2002, the following shares
of PeopleSoft would have been issued:
<Table>
Number of J.D. Edwards outstanding shares................... 118,305
Conversion ratio............................................ 0.43
-------
PeopleSoft shares to be issued for J.D. Edwards outstanding
shares.................................................... 50,871
</Table>
(b) Estimated impact of the J.D. Edwards stock options to be assumed:
<Table>
PeopleSoft shares to be issued for J.D. Edwards outstanding
shares.................................................... 50,871
-----------
Potential common shares using the treasury method........... 1,337
-----------
Pro forma diluted share adjustment for the year ended
December 31, 2002......................................... 52,208
===========
</Table>
<Table>
<Caption>
PEOPLESOFT ADJUSTMENTS, NEW PRO FORMA COMBINED
WEIGHTED AVERAGE EQUIVALENT WEIGHTED AVERAGE
SHARES PEOPLESOFT SHARES SHARES
---------------- ----------------- ------------------
Shares outstanding as of 03/31/03
Basic..................................... 314,782 51,935(a) 366,717
Diluted................................... 319,831 52,767(b) 372,598
</Table>
- ---------------
(a) Assuming that all J.D. Edwards stockholders were to receive the
consideration of 0.43 shares of PeopleSoft common stock for each outstanding
common share of J.D. Edwards as of March 31, 2003, the following shares of
PeopleSoft would have been issued:
<Table>
Number of J.D. Edwards outstanding shares................... 120,780
Conversion ratio............................................ 0.43
-------
PeopleSoft shares to be issued for J.D. Edwards outstanding
shares.................................................... 51,935
</Table>
(b) Estimated impact of the J.D. Edwards share options to be assumed:
<Table>
PeopleSoft shares to be issued for J.D. Edwards outstanding
shares.................................................... 51,935
------
Potential common shares using the treasury method........... 832
------
Pro forma diluted share count for the period ended March 31,
2003...................................................... 52,767
======
</Table>
5. PRO FORMA ADJUSTMENTS
The following pro forma adjustments are based on preliminary estimates
which may change as additional information is obtained:
(A) To record cash paid as part of the proposed merger, using the assumed
number of J.D. Edwards common shares outstanding of 121,738,415 multiplied
by $7.05 per share.
(B) To record the adjustment for deferred tax assets and liabilities related to
restructuring costs and identifiable intangible assets.
(C) To eliminate J.D. Edwards existing capitalized intangible assets and
goodwill.
(D) To record the intangible assets and goodwill related to the proposed
merger.
(E) To accrue for acquisition related costs related to investment banking, legal
and accounting fees, printing costs, and other.
(F) To record out of pocket registration fees.
131
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(G) To record restructuring costs.
(H) To eliminate J.D. Edwards deferred revenue.
(I) To record deferred revenue based on estimated costs and an appropriate
profit margin to perform the services related to J.D. Edwards deferred
maintenance contracts.
(J) To eliminate J.D. Edwards stockholders' equity accounts
(K) To record stockholders' equity related to the proposed merger including
$38,300,000 related to IPR&D and $9,341,000 of deferred compensation.
(L) To eliminate J.D. Edwards' amortization of capitalized software as all
intangible assets would have been eliminated had the acquisition occurred on
January 1, 2002.
(M)To record amortization expenses related to capitalized software to be
acquired as part of the proposed merger.
(N) To record the amortization of stock-based compensation.
(O) To eliminate J.D. Edwards' amortization and write-off of acquired software
as all intangible assets would have been eliminated had the acquisition
occurred on January 1, 2002.
(P) To eliminate J.D. Edwards' amortization and write-off of other acquired
intangibles as all intangible assets would have been eliminated had the
acquisition occurred on January 1, 2002.
(Q) To eliminate J.D. Edwards' acquisition related deferred compensation as all
deferred compensation would have been eliminated had the acquisition
occurred on January 1, 2002.
(R) To record amortization expenses related to intangible assets to be acquired
as part of the proposed merger.
(S) To record an income tax impact on the non-tax pro forma adjustments at
PeopleSoft's statutory tax rate of 38.5%.
132
ANNEX A
TO THE INFORMATION STATEMENT
133
EXECUTION VERSION
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
DATED AS OF JUNE 16, 2003
BY AND AMONG
PEOPLESOFT, INC.,
J.D. EDWARDS & COMPANY
AND
JERSEY ACQUISITION CORPORATION
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
ARTICLE 1 THE OFFER AND THE MERGER............................................. A-2
Section 1.1. The Offer................................................... A-2
Section 1.2. Company Actions............................................. A-6
Section 1.3. Directors................................................... A-7
Section 1.4. The Merger.................................................. A-8
Section 1.5. Effective Time.............................................. A-8
Section 1.6. Closing of the Merger....................................... A-8
Section 1.7. Effects of the Merger....................................... A-8
Section 1.8. Certificate of Incorporation and Bylaws..................... A-8
Section 1.9. Directors................................................... A-9
Section 1.10. Officers.................................................... A-9
Section 1.11. Stockholders' Vote on Merger................................ A-9
Section 1.12. Merger Without Meeting of Stockholders...................... A-9
Section 1.13. Conversion of Shares........................................ A-9
Section 1.14. Exchange of Certificates.................................... A-10
Section 1.15. Stock Options............................................... A-12
Section 1.16. Withholding Rights.......................................... A-13
Section 1.17. Dissenting Shares........................................... A-13
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ A-13
Section 2.1. Organization and Qualification; Subsidiaries; Investments... A-13
Section 2.2. Capitalization of the Company and its Subsidiaries.......... A-14
Section 2.3. Authority Relative to this Agreement; Recommendation........ A-15
Section 2.4. SEC Reports; Financial Statements; Sarbanes-Oxley Act
Compliance.................................................. A-15
Section 2.5. Information Supplied........................................ A-16
Section 2.6. Consents and Approvals; No Violations....................... A-17
Section 2.7. No Default.................................................. A-17
Section 2.8. No Undisclosed Liabilities; Absence of Changes.............. A-17
Section 2.9. Litigation.................................................. A-18
Section 2.10. Compliance with Applicable Law.............................. A-19
Section 2.11. Employee Benefits........................................... A-19
Section 2.12. Labor and Employment Matters................................ A-22
Section 2.13. Environmental Laws and Regulations.......................... A-23
Section 2.14. Taxes....................................................... A-24
Section 2.15. Intellectual Property....................................... A-26
Section 2.16. Insurance................................................... A-28
Section 2.17. Title to Properties; Absence of Liens and Encumbrances...... A-28
Section 2.18. Certain Business Practices.................................. A-29
Section 2.19. Product Warranties.......................................... A-29
Section 2.20. Material Contracts.......................................... A-29
Section 2.21. Suppliers and Customers..................................... A-31
Section 2.22. Affiliates.................................................. A-31
Section 2.23. Opinion of Financial Advisor................................ A-31
</Table>
A-i
<Table>
<Caption>
PAGE
----
Section 2.24. Brokers..................................................... A-31
Section 2.25. Company Rights Agreement.................................... A-31
Section 2.26. Takeover Statutes........................................... A-31
Section 2.27. Interested Party Transactions............................... A-32
Section 2.28. Representations Complete.................................... A-32
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION.............
A-32
Section 3.1. Organization................................................ A-32
Section 3.2. Capitalization of Parent and its Subsidiaries............... A-32
Section 3.3. Authority Relative to this Agreement........................ A-33
Section 3.4. Parent Common Stock......................................... A-34
Section 3.5. SEC Reports; Financial Statements........................... A-34
Section 3.6. Information Supplied........................................ A-34
Section 3.7. Consents and Approvals; No Violations....................... A-35
Section 3.8. No Default.................................................. A-35
Section 3.9. Litigation.................................................. A-35
Section 3.10. Opinion of Financial Advisor................................ A-36
Section 3.11. Brokers..................................................... A-36
Section 3.12. No Prior Activities......................................... A-36
Section 3.13. No Undisclosed Liabilities; Absence of Changes.............. A-36
Section 3.14. Compliance with Applicable Law.............................. A-36
Section 3.15. Suppliers and Customers..................................... A-36
Section 3.16. Parent Employee Benefit Matters............................. A-37
Section 3.17. Parent Intellectual Property................................ A-37
Section 3.18. Financing................................................... A-37
Section 3.19. Representations Complete.................................... A-37
ARTICLE 4 COVENANTS............................................................ A-38
Section 4.1. Conduct of Business......................................... A-38
Section 4.2. Intentionally Deleted....................................... A-41
Section 4.3. No Solicitation or Negotiation.............................. A-42
Section 4.4. Comfort Letters............................................. A-43
Section 4.5. Nasdaq National Market...................................... A-44
Section 4.6. Access to Information....................................... A-44
Section 4.7. Certain Filings; Reasonable Efforts......................... A-44
Section 4.8. Public Announcements........................................ A-45
Section 4.9. Indemnification and Directors' and Officers' Insurance...... A-45
Section 4.10. Notification of Certain Matters; Additions to and
Modification of Disclosure Schedules........................ A-46
Section 4.11. Affiliates.................................................. A-47
Section 4.12. Access to Company Employees................................. A-47
Section 4.13. Company Compensation and Benefit Plans...................... A-47
Section 4.14. Employee Benefits........................................... A-47
Section 4.15. Takeover Statutes........................................... A-48
Section 4.16. Company Rights Agreement.................................... A-48
</Table>
A-ii
<Table>
<Caption>
PAGE
----
Section 4.17. Parent Board of Directors................................... A-48
Section 4.18. Section 16 Matters.......................................... A-48
Section 4.19. Second Merger............................................... A-49
Section 4.20. Alternative Double Merger................................... A-49
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER............................. A-50
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger...................................................... A-50
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER....................................... A-50
Section 6.1. Termination................................................. A-50
Section 6.2. Effect of Termination....................................... A-52
Section 6.3. Fees and Expenses........................................... A-52
Section 6.4. Amendment................................................... A-53
Section 6.5. Extension; Waiver........................................... A-53
ARTICLE 7 MISCELLANEOUS........................................................ A-53
Section 7.1. Nonsurvival of Representations and Warranties............... A-53
Section 7.2. Entire Agreement; Assignment................................ A-53
Section 7.3. Validity.................................................... A-53
Section 7.4. Notices..................................................... A-53
Section 7.5. Governing Law and Venue; Waiver of Jury Trial............... A-55
Section 7.6. Descriptive Headings........................................ A-55
Section 7.7. Parties in Interest......................................... A-55
Section 7.8. Certain Definitions......................................... A-55
Section 7.9. Personal Liability.......................................... A-58
Section 7.10. Specific Performance........................................ A-58
Section 7.11. Counterparts................................................ A-58
</Table>
TABLE OF EXHIBITS
Exhibit A..................... Form of Certificate of Merger
Exhibit B..................... Form of Affiliate Agreement
Exhibit C..................... Form of Company Voting Agreement
Exhibit D..................... Form of Parent Voting Agreement
Annex A....................... Stockholders of Company that executed Voting
Agreements
Annex B....................... Stockholders of Parent that executed Voting
Agreements
Annex C....................... Conditions to the Offer
A-iii
TABLE OF DEFINED TERMS
<Table>
<Caption>
TERM CROSS REFERENCE IN AGREEMENT PAGE
- ---- ---------------------------- ----
Acceptance Date......................................... Section 7.8(a)................. 74
Acquiring Person........................................ Section 2.25................... 41
Acquisition............................................. Preamble....................... 1
affiliate............................................... Section 7.8(b)................. 74
Agent's Message......................................... Section 1.1(e)(vii)............ 6
Agreement............................................... Preamble....................... 1
Alternative Double Merger Structure..................... Section 4.20................... 66
Amendment Execution Date................................ Preamble....................... 1
Applicable Law.......................................... Section 7.8(c)................. 74
Average Closing Price................................... Section 1.1(e)(x)(G)........... 7
business day............................................ Section 7.8(d)................. 74
capital stock........................................... Section 7.8(e)................. 74
Cash Electing Shares.................................... Section 1.1(c)(i).............. 4
Cash Offer Price........................................ Section 1.1(e)(x)(E)........... 7
Cash Proration Factor................................... Section 1.1(e)(x)(A)........... 6
Certificate of Merger................................... Section 1.5.................... 10
Certificates............................................ Section 1.14(b)................ 14
Change in Control Plan.................................. Section 2.11(l)................ 29
Change in the Company Recommendation.................... Section 4.3(b)................. 57
Closing Date............................................ Section 1.6.................... 11
Closing................................................. Section 1.6.................... 11
Closing Tax Opinions.................................... Section 4.19................... 65
Committee............................................... Section 1.3.................... 10
Company Acquisition Proposal............................ Section 7.8(f)................. 74
Company Affiliates...................................... Section 2.22................... 41
Company Board........................................... Section 2.3(a)................. 20
Company Disclosure...................................... Schedule Article 2............. 17
Company Employee Plan................................... Section 2.11(a)(iii)........... 25
Company Fairness Opinion................................ Section 2.23................... 41
Company Financial Advisor............................... Section 2.23................... 41
Company Insider......................................... Section 4.18................... 65
Company IP.............................................. Section 7.8(g)................. 75
Company Licensed IP..................................... Section 7.8(h)................. 75
Company Merger Subsidiary............................... Section 4.20................... 66
Company Owned IP........................................ Section 7.8(i)................. 75
Company Participants.................................... Section 4.14(a)................ 63
Company Permits......................................... Section 2.10................... 25
Company Plans........................................... Section 1.15(a)................ 16
Company................................................. Preamble....................... 1
Company Preferred Stock................................. Section 2.2(a)................. 19
Company Registered IP................................... Section 7.8(j)................. 75
Company Rights Agreement................................ Section 2.2(a)................. 19
Company Rights.......................................... Section 1.1(a)................. 2
</Table>
A-iv
<Table>
<Caption>
TERM CROSS REFERENCE IN AGREEMENT PAGE
- ---- ---------------------------- ----
Company SEC Reports..................................... Section 2.4(a)................. 20
Company Securities...................................... Section 2.2(a)................. 19
Company Stock Option or Options......................... Section 1.15(a)................ 16
Company Voting Agreements............................... Preamble....................... 2
Contract................................................ Section 2.20(a)................ 38
DGCL.................................................... Section 1.2(a)................. 8
Dissenting Common Stock................................. Section 1.17................... 17
Distribution Date....................................... Section 2.25................... 42
DOL..................................................... Section 2.11(b)................ 26
DTC..................................................... Section 1.1(e)(vii)............ 6
Effective Time.......................................... Section 1.5.................... 11
Employee Agreement...................................... Section 2.11(a)(v)............. 25
Employee................................................ Section 2.11(a)(iv)............ 25
Employment Agreements................................... Preamble....................... 2
End User Agreements..................................... Section 2.20(c)(ii)............ 40
Environmental Laws...................................... Section 2.13(a)................ 31
ERISA Affiliate......................................... Section 2.11(a)(ii)............ 25
ERISA................................................... Section 2.11(a)(i)............. 25
Exchange Act............................................ Section 1.1(a)................. 2
Exchange Agent.......................................... Section 1.14(a)................ 13
Exchange Fund........................................... Section 1.14(a)................ 14
Exchange Ratio.......................................... Section 1.13(b)................ 13
Expiration Date......................................... Section 1.1(b)................. 3
Final Date.............................................. Section 6.1(b)(iii)............ 68
Financial Statements.................................... Section 2.4(a)................. 21
First Extension......................................... Section 6.1(b)(iv)............. 69
Form of Election........................................ Section 1.1(e)(vii)............ 6
fully diluted basis..................................... Annex C........................ 82
Governmental Entity..................................... Section 2.6.................... 22
Hazardous Material...................................... Section 2.13(a)................ 31
Holding Company Common Stock............................ Section 4.20................... 66
Holding Company......................................... Section 4.20................... 66
HSR Act................................................. Section 2.6.................... 22
incentive stock options................................. Section 1.15(a)................ 16
include or including.................................... Section 7.8(m)................. 75
include, without limitation,............................ Section 7.8(m)................. 75
including, without limitation,.......................... Section 7.8(m)................. 75
Indemnified Liabilities................................. Section 4.9(a)................. 61
Indemnified Persons..................................... Section 4.9(a)................. 61
Independent Directors................................... Section 1.3.................... 10
Information Statement................................... Section 1.11(i)................ 12
Insurance Policies...................................... Section 2.16................... 37
Insured Parties......................................... Section 4.9(c)................. 61
Intellectual Property................................... Section 7.8(k)................. 75
</Table>
A-v
<Table>
<Caption>
TERM CROSS REFERENCE IN AGREEMENT PAGE
- ---- ---------------------------- ----
IRS..................................................... Section 2.11(a)(vi)............ 26
ISOs.................................................... Section 1.15(a)................ 16
knowledge or known...................................... Section 7.8(l)................. 75
Lease Documents......................................... Section 2.17(a)................ 38
License-In Agreement.................................... Section 2.15(b)................ 34
Lien.................................................... Section 7.8(n)................. 75
Material Adverse Effect on Parent....................... Section 7.8(p)................. 76
Material Adverse Effect on the Company.................. Section 7.8(o)................. 76
Material Contract....................................... Section 2.20(a)................ 38
Material Contracts...................................... Section 2.20(a)................ 38
Maximum Number of Cash Paid Shares...................... Section 1.1(e)(x)(B)........... 6
Maximum Number of Stock Exchange Shares................. Section 1.1(e)(x)(C)........... 6
Merger Consideration.................................... Section 1.13(a)................ 13
Merger.................................................. Preamble....................... 1
Minimum Condition....................................... Annex C........................ 82
Multiemployer Plan...................................... Section 2.11(a)(vii)........... 26
Multiple Employer Plan.................................. Section 2.11(a)(viii).......... 26
Nondisclosure Agreement................................. Section 4.6(c)................. 59
Non-Electing Shares..................................... Section 1.1(c)(i).............. 4
Notice of Superior Proposal............................. Section 4.3(b)................. 57
Offer Documents......................................... Section 1.1(c)................. 3
Offer Price............................................. Preamble....................... 1
Offer................................................... Section 1.1(a)................. 2
Offer to Purchase....................................... Section 1.1(b)................. 3
Original Agreement...................................... Preamble....................... 1
Other Interests......................................... Section 2.1(c)................. 18
Parent Benefit Plans.................................... Section 3.16(a)................ 49
Parent Common Stock..................................... Section 1.13(a)................ 13
Parent Disclosure....................................... Schedule Article 3............. 43
Parent ESPP............................................. Section 4.14(b)................ 64
Parent Fairness Opinion................................. Section 3.10................... 47
Parent Financial Advisor................................ Section 3.10................... 47
Parent Merger Subsidiary................................ Section 4.20................... 66
Parent Permits.......................................... Section 3.14................... 48
Parent Plans............................................ Section 3.2(a)................. 43
Parent.................................................. Preamble....................... 1
Parent Rights Agreement................................. Section 3.2(a)................. 44
Parent Rights........................................... Section 3.2(a)................. 44
Parent SEC Reports...................................... Section 3.5(a)................. 45
Parent Securities....................................... Section 3.2(a)................. 44
Parent Technology License............................... Section 3.17................... 49
Parent Voting Agreements................................ Preamble....................... 2
Pension Plan............................................ Section 2.11(a)(ix)............ 26
Per Share Cash Amount................................... Section 1.13(a)................ 13
</Table>
A-vi
<Table>
<Caption>
TERM CROSS REFERENCE IN AGREEMENT PAGE
- ---- ---------------------------- ----
person.................................................. Section 7.8(q)................. 77
Proceeding.............................................. Section 7.8(r)................. 77
Qualifying Amendment.................................... Section 7.8(s)................. 77
Registered Intellectual Property........................ Section 7.8(t)................. 77
Restricted Company Share................................ Section 1.1(g)................. 7
Restricted Parent Shares................................ Section 1.1(g)................. 7
Rights Plan............................................. Section 1.2(a)................. 8
S-4..................................................... Section 1.1(c)................. 3
Sarbanes-Oxley Act...................................... Section 2.4(c)................. 21
Schedule 14D-9.......................................... Section 1.2(b)................. 8
Schedule TO............................................. Section 1.1(c)................. 3
SEC..................................................... Section 1.1(c)................. 3
Second Merger........................................... Preamble....................... 1
Section 16 Information.................................. Section 4.18................... 65
Securities Act.......................................... Section 1.1(c)................. 3
Share................................................... Section 1.13(a)................ 12
Shares.................................................. Section 1.13(a)................ 12
Shrinkwrap Software..................................... Section 2.15(b)................ 34
Significant Parent Product.............................. Section 3.17................... 49
Stock Electing Shares................................... Section 1.1(c)(i).............. 4
Stock Offer Price....................................... Section 1.1(e)(x)(F)........... 7
Stock Proration Factor.................................. Section 1.1(e)(x)(D)........... 6
Subsidiary.............................................. Section 2.1(a)................. 18
Superior Proposal....................................... Section 4.3(c)................. 58
Surviving Corporation................................... Section 1.4.................... 10
Tax or Taxes............................................ Section 2.14(a)(i)............. 32
Tax Return.............................................. Section 2.14(a)(ii)............ 32
the date hereof......................................... Preamble....................... 1
Third Party Acquisition Proposal........................ Section 4.3(c)................. 57
Third Party............................................. Section 4.3(c)................. 58
Triggering Event........................................ Section 2.25................... 42
Welfare Plan............................................ Section 2.11(a)(x)............. 26
</Table>
A-vii
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(this "AGREEMENT") dated as of June 16, 2003, is by and among PeopleSoft, Inc.,
a Delaware corporation ("PARENT"), J.D. Edwards & Company, a Delaware
corporation (the "COMPANY"), and Jersey Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Parent ("ACQUISITION"), to amend
and restate in its entirety the Agreement and Plan of Merger, dated as of June
1, 2003 (the "ORIGINAL AGREEMENT") between Parent, the Company and Acquisition.
Upon execution of this Agreement, the Original Agreement shall be deemed amended
and restated, and this Agreement shall supercede the original terms thereof as
stated herein. All references to "THE DATE HEREOF" or words to that effect shall
be deemed to refer to June 1, 2003 and references to the "AMENDMENT EXECUTION
DATE" shall mean June 16, 2003.
WHEREAS, in light of circumstances occurring after the Original Agreement
was entered into, the parties have agreed to amend and restate the Original
Agreement in accordance with the terms and subject to the conditions hereof;
WHEREAS, to facilitate the consummation of the merger between the Company
and Acquisition, Parent and the Company have proposed the acquisition of all of
the outstanding common stock (together with the associated rights) of the
Company at a price (such price or such higher price per Share as may be paid in
the Offer, being referred to herein as the "OFFER PRICE") consisting of (i)
$7.05 in cash, and (ii) that number of shares of common stock of Parent equal to
the Exchange Ratio, subject to the election in Section 1.1(e);
WHEREAS, after the acquisition of the Shares described in the preceding
clause, and pursuant to the plan specified in this Agreement, Acquisition will
merge with and into the Company (the "MERGER"), with the Company surviving the
Merger as a wholly owned subsidiary of Parent;
WHEREAS, subject to the possible adoption of an Alternative Double Merger
Structure as set forth herein, as soon as practicable following the Merger,
Parent shall, and shall cause the Company to, adopt an agreement and plan of
merger and reorganization whereby the Company will merge with and into Parent or
a direct wholly owned subsidiary of Parent, and, if applicable, with such
subsidiary surviving the merger as a wholly owned subsidiary of Parent (the
"SECOND MERGER");
WHEREAS, the Boards of Directors of the Company and Acquisition have each
unanimously (i) determined that the Offer and the Merger, as contemplated by
this Agreement are advisable to and fair and in the best interests of their
respective corporations and stockholders, and (ii) approved the Offer and the
Merger upon the terms and subject to the conditions set forth in this Agreement
and the Board of Directors of Parent has unanimously approved the Offer and the
Merger upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the stockholders of the Company set forth on Annex A hereto have
executed and delivered to Parent irrevocable proxy and voting agreements (the
"COMPANY VOTING AGREEMENTS"), in the form of Exhibit C as an inducement to
Parent to enter into the Original Agreement;
WHEREAS, the stockholders of Parent set forth on Annex B hereto have
executed and delivered to the Company irrevocable proxy and voting agreements
(the "PARENT VOTING AGREEMENTS"), in the form of Exhibit D as an inducement to
the Company to enter into the Original Agreement; and
WHEREAS, certain officers and employees of the Company have entered into
employment and noncompetition agreements (the "EMPLOYMENT AGREEMENTS"),
effective upon consummation of the Merger, as an inducement to Parent to enter
into the Original Agreement.
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NOW, THEREFOR, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE OFFER AND THE MERGER
SECTION 1.1. The Offer.
(a) Provided this Agreement shall not have been terminated in accordance
with Section 6.1, as promptly as practicable and in any event within ten (10)
business days after the Amendment Execution Date, Parent or Acquisition shall,
and Parent shall cause Acquisition to, as the first step in completing the
Merger, commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT")), an offer (the "OFFER") to
purchase all shares of the issued and outstanding common stock of the Company,
together with the associated rights issued pursuant to the Rights Plan (as
defined herein) (the "COMPANY RIGHTS") for the Offer Price, subject only to the
conditions set forth in Annex C hereto; provided, however, that Parent may
designate itself or another wholly owned Subsidiary of Parent as the bidder
(within the meaning of Rule 14d-1(g)(2) under the Exchange Act) in the Offer, in
which case reference herein to Acquisition shall be deemed to apply to such
Subsidiary, as appropriate. Except where the context otherwise requires, all
references herein to Shares or the Company's common stock shall include the
associated Company Rights. The Company shall not tender Shares held by it or by
any of its Subsidiaries pursuant to the Offer. Parent or Acquisition shall, and
Parent shall cause Acquisition to, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares tendered as soon as it is legally permitted to do so under
Applicable Law. The obligations of Parent or Acquisition to consummate the Offer
and to accept for payment and to pay for any Shares validly tendered on or prior
to the expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex C hereto. Notwithstanding anything to the contrary
set forth herein, no certificates or scrip representing fractional shares of
Parent Common Stock shall be issued in connection with the Offer, and in lieu
thereof, each tendering stockholder who would otherwise be entitled to a
fractional share of Parent Common Stock in the Offer (after aggregating all
fractional shares of Parent Common Stock that otherwise would be received by
such stockholder) will be paid an amount in cash (without interest and rounded
up to the nearest whole cent) equal to the product obtained by multiplying (x)
the fractional share interest to which such stockholder would otherwise be
entitled by (y) the closing price for one share of Parent Common Stock as
reported on the Nasdaq National Market on the Acceptance Date.
(b) The Offer shall be made by means of an offer to purchase and exchange
(the "OFFER TO PURCHASE") containing the terms set forth in this Agreement and
the conditions set forth in Annex C hereto and providing for an initial
expiration date (as may be extended as provided in this clause (b), the
"EXPIRATION DATE") of twenty (20) business days (as defined in Rule 14d-1 under
the Exchange Act) from the date of commencement of the Offer. Without the prior
written consent of the Company, Parent and Acquisition shall not, and Parent
shall cause Acquisition not to, decrease the Offer Price, change the form of
consideration to be paid, decrease the number of Shares sought, amend the
conditions to the Offer set forth in Annex C, impose conditions to the Offer in
addition to those set forth in Annex C, or otherwise amend any other material
term of the Offer in a manner materially adverse to the holders of Shares.
Notwithstanding the foregoing, without the consent of the Company, Parent or
Acquisition shall be entitled to and shall, and Parent shall cause Acquisition
to, extend the Offer at any time for the shortest time periods that it
reasonably believes are necessary, if at the initial Expiration Date, or any
extension thereof, any condition to the Offer is not satisfied or waived,
provided that (i) no single extension shall exceed ten (10) business days and
(ii) neither Parent nor Acquisition shall be required to extend the Offer beyond
the Final Date.
(c) As soon as practicable after the Amendment Execution Date, Parent shall
prepare and file with the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as
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amended, and the SEC's rules and regulations promulgated thereunder (the
"SECURITIES ACT") a registration statement on Form S-4 (the "S-4") to register
the offer and sale of Parent Common Stock pursuant to the Offer. The S-4 will
include a preliminary prospectus containing the information required under Rule
14d-4(b) promulgated under the Exchange Act. The Company shall provide Parent
and Acquisition all information reasonably requested by Parent or Acquisition
for inclusion in the Offer Documents and any exhibits or annexes thereto. As
soon as practicable, but not later than the date of commencement of the Offer,
Parent shall (i) file with the SEC a Tender Offer Statement on Schedule TO (the
"SCHEDULE TO") with respect to the Offer, which will comply in all material
respects with the provisions of, and satisfy in all material respects the
requirements of, such Schedule TO and all applicable federal securities laws,
and will contain or incorporate by reference all or part of the S-4 and the form
of the related letter of transmittal (such documents, together with the
preliminary or final prospectus included in the S-4 and any supplements or
amendments thereto, collectively the "OFFER DOCUMENTS") and (ii) cause the Offer
Documents to be disseminated to holders of Shares. Parent and the Company each
agree promptly to correct any information provided by it for use in the S-4 or
the Offer Documents if and to the extent that it shall be, or shall have become
false or misleading in any material respect. Parent agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Parent shall use all reasonable
efforts to have the S-4 declared effective under the Securities Act as promptly
as practicable after its filing and to maintain such effectiveness for so long
as shall be required for the issuance of Parent Common Stock pursuant to the
Offer. Following the time the S-4 is declared effective, Parent shall file the
final prospectus included therein under Rule 424(b) promulgated pursuant to the
Securities Act.
(d) No filing of, or amendment or supplement to, or correspondence to the
SEC or its staff with respect to, the S-4, the Schedule TO or the Offer
Documents will be made by the Company, Parent or Acquisition, without providing
the other party and its counsel a reasonable opportunity to review and comment
thereon. In addition, Parent shall, and shall cause Acquisition to, provide the
Company and its counsel in writing with any comments that Parent, Acquisition or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments and with copies of any written
responses and telephonic notification of any verbal responses by Parent,
Acquisition or their counsel. Parent will advise the Company promptly after it
receives notice that the S-4 and any supplement or amendment that has been filed
have become effective, of the issuance of any stop order, or of the suspension
of the qualification of the Parent Common Stock issuable in connection with the
Offer for offering or sale in any jurisdiction. If at any time prior to the time
of consummation of the Offer, any information relating to the Company or Parent,
or any of their respective affiliates, officers or directors, should be
discovered by the Company or Parent and which should be set forth in an
amendment or supplement to the S-4 so that any of such documents would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party that discovers such information
shall promptly notify the other party and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by Applicable Law, disseminated to the stockholders of the
Company.
(e) (i) Each holder of Shares validly tendered and not withdrawn pursuant
to the Offer accepted by Parent or Acquisition for exchange on the Acceptance
Date shall be entitled to elect to receive the Offer Price in respect of such
tendered Shares in the form of either the Cash Offer Price or the Stock Offer
Price; provided, that, the letter of transmittal with respect to the Offer
provided by the Exchange Agent shall require that each holder shall elect either
the Cash Offer Price (such electing shares, "CASH ELECTING SHARES") or the Stock
Offer Price (such electing shares, "STOCK ELECTING SHARES") for all Shares
tendered by such holder. To the extent that a holder has validly tendered, and
not withdrawn, such tendered Shares, but has not indicated in the transmittal
letter whether to elect the Cash Offer Price or the Stock Offer Price, the
shares will be deemed to be non-electing and shall not constitute Cash Electing
Shares or Stock Electing Shares (all such shares, "NON-ELECTING SHARES").
Notwithstanding anything in this Agreement to the contrary: (i) the number of
Shares that Parent or Acquisition will be obligated to acquire in exchange
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for the Cash Offer Price shall not exceed the Maximum Number of Cash Paid
Shares; and (ii) the number of Shares that Parent or Acquisition will be
obligated to acquire in exchange for the Stock Offer Price shall not exceed the
Maximum Number of Stock Exchange Shares.
(ii) If the number of Cash Electing Shares exceeds the Maximum Number of
Cash Paid Shares on the Acceptance Date, (1) each Stock Electing Share and
Non-Electing Share shall be converted into the right to receive that number of
shares of Parent Common Stock equal to the Stock Offer Price; and (2) each Cash
Electing Share shall be converted into the right to receive (I) cash equal to
the product of (x) the Cash Offer Price and (y) the Cash Proration Factor and
(II) that number of shares of Parent Common Stock equal to the product of (x)
the Stock Offer Price and (y) the difference of one minus the Cash Proration
Factor.
(iii) If the number of Stock Electing Shares exceeds the Maximum Number of
Stock Exchange Shares on the Acceptance Date, (1) each Cash Electing Share and
Non-Electing Share shall be converted into the right to receive cash equal to
the Cash Offer Price; and (2) each Stock Electing Share shall be converted into
the right to receive (I) that number of shares of Parent Common Stock equal to
the product of (x) the Stock Offer Price and (y) the Stock Proration Factor and
(II) cash equal to the product of (x) the Cash Offer Price and (y) the
difference of one minus the Stock Proration Factor.
(iv) In the event that neither Section 1.1(e)(ii) nor 1.1(e)(iii) is
applicable, (1) each Cash Electing Share shall be converted into the right to
receive cash equal to the Cash Offer Price, (2) each Stock Electing Share shall
be converted into the right to receive that number of shares of Parent Common
Stock equal to the Stock Offer Price, and (3) each Non-Electing Share shall be
converted into the right to receive a prorated combination of the remaining cash
and shares of Parent Common Stock available for distribution after allocation
has been made for the Cash Electing Shares and the Stock Electing Shares set
forth in clauses (1) and (2) of this Section 1.1(e).
(v) If, between the date of this Agreement and the Acceptance Date, the
outstanding shares of Parent Common Stock or the Shares shall have been changed
into a different number of shares or a different class by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, including, without limitation, the right to receive cash in
connection with an acquisition of Parent, then the Cash Offer Price, the Stock
Offer Price and any other applicable numbers or amounts shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
(vi) The Exchange Agent shall make all computations as to the allocation
and the proration contemplated by this Section 1.1(e), and any such computation
shall be conclusive and binding on the Company stockholders. Parent, Acquisition
and the Company may agree to make such rules as are consistent with the Offer
and this Section 1.1(e) for the implementation of the provisions of this Section
1.1(e) as shall be necessary or desirable to fully effect such provisions.
(vii) All elections in accordance with this Section 1.1(e) shall be made on
a form designed for that purpose and mutually acceptable to the Company and
Acquisition included in the letter of transmittal delivered by the Exchange
Agent (which shall specify that risk of loss of accompanying Certificates shall
pass only upon delivery thereof to the Exchange Agent and that title thereto
shall pass following such delivery if and when the Effective Time shall occur)
(a "FORM OF ELECTION") and mailed to holders of record of Shares in connection
with the commencement of the Offer or, in the case of Shares held in book-entry
form, through transmission of an Agent's Message (as hereinafter defined). The
term ("AGENT'S MESSAGE") means a message transmitted by the Depository Trust
Company ("DTC") and received by the Exchange Agent and forming part of the
confirmation of a book-entry transfer which states that DTC has received an
express acknowledgment from a participant transmitting the Shares, sets forth
the election being made with respect to such shares and states that such
participant has agreed to be bound by the terms of the Form of Election with
respect to such shares. Parent and Acquisition will have the discretion, which
it may delegate in whole or in part to the Exchange Agent, to reasonably
determine whether Forms of Election have been properly completed, signed and
submitted or revoked and to disregard immaterial defects in Forms of Election,
or, in the case of Shares held in book-entry form,
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whether an Agent's Message has properly been received or whether any
modifications of the procedures set forth in this Section 1.1(e)(vii) or in
Section 1.1(e)(viii) are necessary to comply with the requirements of DTC. The
decision of Parent and Acquisition (or the Exchange Agent, as applicable) in
such matters shall be conclusive and binding on the holders of Shares.
(viii) An Election must be made at the time of tenders by a holder of
Shares in order to be effective in the Offer.
(ix) For the purposes of this Agreement, the Shares validly tendered by a
holder of Shares who does not submit an Election prior to the Acceptance Date
shall be deemed to be Non-Electing Shares. If Parent, Acquisition or the
Exchange Agent, as applicable, shall determine that any purported election was
not properly made, such purported election shall be deemed to be of no force and
effect, and the shares with respect to which such purported election was made
shall, for purposes hereof, be deemed to be Non-Electing Shares. Neither Parent
nor Acquisition, nor the Exchange Agent, as applicable, shall have any
obligation to inform any holder of Shares of any defect in the making of an
election.
(x) For purposes of this Section 1.1(e), the following terms shall have the
respective meanings set forth below:
(A) "CASH PRORATION FACTOR" means (x) the Maximum Number of Cash Paid
Shares divided by (y) the total number of Cash Electing Shares.
(B) "MAXIMUM NUMBER OF CASH PAID SHARES" means (x) the product of
$7.05 multiplied by the total number of Shares validly tendered and not
withdrawn as of the Expiration Date divided by (y) Cash Offer Price.
(C) "MAXIMUM NUMBER OF STOCK EXCHANGE SHARES" means (x) the product of
0.430 multiplied by the total number of Shares validly tendered and not
withdrawn as of the Expiration Date divided by (y) Stock Offer Price.
(D) "STOCK PRORATION FACTOR" means (x) the Maximum Number of Stock
Exchange Shares divided by (y) the total number of Stock Electing Shares.
(E) "CASH OFFER PRICE" means (x) $7.05 plus (y) 0.430 multiplied by
the Average Closing Price.
(F) "STOCK OFFER PRICE" means Cash Offer Price divided by the Average
Closing Price.
(G) "AVERAGE CLOSING PRICE" means the average of the closing trading
prices for one share of Parent Common Stock as reported on the Nasdaq
National Market for the five (5) trading day period ending immediately
prior to (and excluding) the second trading day before the Expiration Date.
(xi) Except with respect to payments made in lieu of issuing fractional
shares of Parent Common Stock:
(A) The total number of shares of Parent Common Stock issuable in the
Offer shall equal (x) the total number of Shares validly tendered and not
withdrawn as of the Expiration Date multiplied by (y) the Exchange Ratio.
(B) The total cash consideration payable in the Offer shall equal (x)
the total number of Shares validly tendered and not withdrawn as of the
Expiration Date multiplied by (y) $7.05.
(f) Parent shall issue or provide to Acquisition all of the shares of
Parent Common Stock necessary in connection with the exchange of any Shares to
satisfy Acquisition's obligations pursuant to the Offer and the Merger. Parent
shall provide or cause to be provided to Acquisition all of the funds necessary
in connection with the purchase of any Shares to satisfy Acquisition's
obligations pursuant to the Offer and the Merger.
(g) Each Share validly tendered for exchange that is subject to repurchase
by the Company, or that is otherwise subject to a risk of forfeiture or other
condition under any applicable restricted stock purchase
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agreement or other agreement with the Company, issued and outstanding
immediately prior to the Acceptance Date (each a "RESTRICTED COMPANY SHARE")
shall be exchanged as set forth in this Article 1, with any shares of Parent
Common Stock and cash consideration becoming subject to forfeiture to, or
repurchase by, Parent on the same terms as governed such Restricted Company
Shares prior to the Offer ("RESTRICTED PARENT SHARES"). Cash and certificates
representing the Restricted Parent Shares shall be held by Parent until such
shares and cash are no longer subject to repurchase or forfeiture. Cash
dividends on Restricted Parent Shares will be distributed to the holder of such
Restricted Parent Shares on whose behalf the Restricted Parent Shares are being
held by Parent. Any shares of Parent Common Stock or other equity securities
issued or distributed by Parent, including shares issued upon a stock dividend
or split, in respect of Restricted Parent Shares (which remain restricted at the
time of such distribution) will be subject to the same restrictions and other
terms as the Restricted Parent Share with respect to which the distribution is
made. Each holder of Restricted Parent Shares will have voting rights with
respect to Restricted Parent Shares (and other voting securities) held by Parent
on its behalf.
SECTION 1.2. Company Actions.
(a) The Company hereby approves of and consents to the Offer and represents
that its Board of Directors, at a meeting duly called and held, has (i)
unanimously adopted resolutions approving and declaring advisable this Agreement
(including all terms and conditions set forth herein) and the transactions
contemplated hereby, including the Offer and the Merger and all of the
transactions contemplated thereby, determining that the Merger is advisable and
that the terms of the Offer and the Merger are fair to, and in the best
interests of, the Company's stockholders, (ii) unanimously resolved to recommend
that the stockholders of the Company accept the Offer, tender their Shares
thereunder to Acquisition and adopt this Agreement and the Merger; provided,
that such recommendation may be withdrawn, modified or amended by the Company's
Board of Directors, subject to the terms and conditions hereof and (iii) taken
all action necessary so that the Company's Preferred Stock Rights Agreement,
dated as of October 22, 2001, between the Company and Computershare Trust
Company, Inc. as rights agent, as amended (as so amended, the "RIGHTS PLAN"), is
and, through the Effective Time, will be inapplicable to Parent and Acquisition,
this Agreement, the Merger and the transactions contemplated hereby, and will
have taken all such necessary action in connection with the Offer within one
business day of the Amendment Execution Date. The Company represents that
Section 203 of the Delaware General Corporation Law (the "DGCL") is inapplicable
to the Offer, the Merger and transactions contemplated hereby. The Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
its Board of Directors described in clauses (i) and (ii) of this Section 1.2(a).
(b) Concurrently with the commencement of the Offer or as promptly
thereafter as practicable, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto and including the exhibits thereto, the
"SCHEDULE 14D-9"), which shall contain the recommendation referred to in clause
(ii) of Section 1.2(a) hereof unless such recommendation has been withdrawn, or
as such recommendation has been modified or amended, in each case in accordance
with the provisions of this Agreement. Parent and Acquisition shall provide the
Company all information reasonably requested by the Company for inclusion in the
Schedule 14D-9 and any exhibits or annexes thereto. The Schedule 14D-9 shall
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or Acquisition for inclusion in the Schedule 14D-9. The
Company further shall take all steps necessary to cause the Schedule 14D-9 to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws, and shall mail
such Schedule 14D-9 to the stockholders of the Company promptly after
commencement of the Offer, together with the initial mailing of the Offer to
Purchase. Each of the Company, on the one hand, and Parent and the Acquisition,
on the other hand, shall promptly correct any information provided by it for use
in the Schedule 14D-9 if
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and to the extent that it shall have become false and misleading in any material
respect and the Company further shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. The Company shall provide Parent,
Acquisition and their counsel a reasonable opportunity to review and comment
upon the Schedule 14D-9 and any correction or amendment thereto prior to the
filing thereof with the SEC. In addition, the Company shall provide Parent,
Acquisition and their counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt of such comments and with copies of any written responses
and telephonic notification of any verbal responses by the Company or its
counsel.
(c) In connection with the Offer, the Company shall promptly furnish or
cause to be furnished to Parent or Acquisition mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
promptly furnish Parent or Acquisition with such additional information,
including updated lists of stockholders, mailing labels and security position
listings, and such other information and assistance as Parent or Acquisition or
its agents may reasonably request in communicating the Offer to the stockholders
of the Company. Except for such steps as are necessary to disseminate the Offer
Documents and subject to the requirements of Applicable Law, Parent shall, and
shall cause Acquisition and each of Acquisition's and Parent's respective
affiliates, associates, employees, agents and advisors to, hold in confidence
the information contained in any of such labels and lists and the additional
information referred to in the preceding sentence, shall use such information
only in connection with the Offer and the Merger, and, if this Agreement is
terminated, shall upon request of the Company deliver or cause to be delivered
to the Company all copies of such information then in its possession or control
or the possession or control of its agents or representatives.
SECTION 1.3. Directors. Effective upon the Acceptance Date of Shares
pursuant to the Offer, and from time to time thereafter as Shares are acquired
by Acquisition, Parent or their respective affiliates, Acquisition shall be
entitled to designate upon written notice to the Company for appointment or
election such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as will give Parent or Acquisition, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors of the Company equal to that number of directors which equals the
product of (i) the total number of directors on the Board of Directors of the
Company (giving effect to the directors appointed or elected pursuant to this
sentence and including current directors serving as officers of the Company) and
(ii) the percentage that the aggregate number of Shares beneficially owned by
Parent, Acquisition or any of their respective affiliates (including for
purposes of this Section 1.3 such Shares as are accepted for payment pursuant to
the Offer, but excluding Shares held by the Company or any of its Subsidiaries)
bears to the total number of Shares then issued and outstanding. At such times,
if requested by Parent or Acquisition, and subject to Applicable Law and the
rules of the Nasdaq National Market, the Company will use its best efforts to
cause each committee of the Board of Directors of the Company and the Board of
Directors of each Subsidiary of the Company to include persons designated by
Parent or Acquisition constituting the same percentage of each such committee
and the Board of Directors of each subsidiary of the Company as Parent's or
Acquisition's designees are of the Board of Directors of the Company. The
Company shall, upon request by Parent or Acquisition, promptly increase the size
of the Board of Directors of the Company and/or exercise its best efforts to
secure the resignations of such number of Directors as is necessary to enable
Parent's or Acquisition's designees to be elected to the Board of Directors of
the Company in accordance with the terms of this Section 1.3 and subject to
Applicable Law, shall cause Acquisition's designees to be so elected; provided,
however, that if Parent's or Acquisition's designees are appointed or elected to
the Board of Directors of the Company, until the Effective Time, the Board of
Directors of the Company shall have at least two (2) directors who are directors
on the Amendment Execution Date and who are neither officers of the Company nor
designees, affiliates or associates (within the meaning of the federal
securities laws) of Parent or the Acquisition prior to the Amendment Execution
Date (one or more of such directors, the "INDEPENDENT DIRECTORS"); provided,
further, that if less than two (2) Independent Directors remain, the remaining
Independent Directors (if any) or if no Independent Directors remain, the other
directors shall designate
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persons to fill the vacancies who shall not be either officers of the Company or
designees, stockholders, affiliates or associates of Parent, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
Subject to Applicable Law, the Company shall promptly take all action necessary
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this Section 1.3 and shall
include in the Schedule 14D-9 mailed to stockholders of the Company promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Parent or Acquisition has not theretofore
designated directors) such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3. Parent and Acquisition
will supply the Company and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to
the contrary, during the period after the election or appointment of directors
designated by Parent or Acquisition pursuant to this Section 1.3 but prior to
the Effective Time, the Board of Directors of the Company shall, to the fullest
extent permitted by Applicable Law, delegate to a committee of the Board of
Directors of the Company comprised solely of the Independent Directors (the
"COMMITTEE"), the sole responsibility for (i) the amendment or termination of
this Agreement (in either case in accordance with this Agreement) on behalf of
the Company, (ii) the waiver of any of the Company's rights or remedies
hereunder, (iii) the extension of the time for performance of Parent's or
Acquisition's obligations hereunder, or (iv) the assertion or enforcement of the
Company's rights under this Agreement.
SECTION 1.4. The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the DGCL,
Acquisition shall be merged with and into the Company. Following the Merger, the
separate corporate existence of Acquisition shall cease and the Company shall
continue as the surviving corporation (the "SURVIVING CORPORATION") until a
Second Merger occurs in accordance with Section 4.19.
SECTION 1.5. Effective Time. Upon the terms and subject to the conditions
set forth in this Agreement, on the Closing Date, a Certificate of Merger
substantially in the form of Exhibit A (the "CERTIFICATE OF MERGER") shall be
duly executed and acknowledged by the Company and thereafter delivered to the
Secretary of State of the State of Delaware for filing pursuant to Section 251
of the DGCL. The Merger shall become effective at such time as a properly
executed copy of the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware in accordance with Section 251 of the DGCL or
such later time as Parent and the Company may agree upon and as set forth in the
Certificate of Merger (the time the Merger becomes effective being referred to
herein as the "EFFECTIVE TIME").
SECTION 1.6. Closing of the Merger. The closing of the Merger (the
"CLOSING") will take place at a time and on a date (the "CLOSING DATE") to be
specified by the parties, which shall be no later than the second business day
after satisfaction (or waiver) of the latest to occur of the conditions set
forth in Article 5 except for such conditions which may only be satisfied by
delivery of documents or certificates at the Closing, at the offices of Gibson,
Dunn & Crutcher LLP, One Montgomery Street, San Francisco, California 94104,
unless another time, date or place is agreed to in writing by the parties
hereto.
SECTION 1.7. Effects of the Merger. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.8. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of the Surviving Corporation shall be amended to read the same as
the Certificate of Incorporation of Acquisition in effect at the Effective Time,
and shall be the Certificate of Incorporation of the Surviving Corporation until
amended in accordance with Applicable Law; provided, however, that at the
Effective Time, Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended and restated in its
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entirety to read as following: "The name of this corporation is J.D. Edwards &
Company." The bylaws of the Surviving Corporation shall be amended as necessary
to read the same as the bylaws of Acquisition in effect at the Effective Time
until amended in accordance with Applicable Law.
SECTION 1.9. Directors. The directors of Acquisition at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and bylaws of the
Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
SECTION 1.10. Officers. The officers of Acquisition at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 1.11. Stockholders' Vote on Merger. If a stockholder vote is
required by Applicable Law in order to consummate the Merger, the Company,
acting through its Board of Directors, shall, in accordance with Applicable Law
as soon as practicable following the acceptance for payment and purchase of
Shares by Acquisition pursuant to the Offer for the purpose of considering and
taking action upon the Merger and this Agreement:
(i) in conjunction with Parent, prepare and file with the SEC an
Information Statement pursuant to Regulation 14C (the "INFORMATION
STATEMENT") in connection with approval of the Merger by written consent of
the stockholders and use its reasonable efforts (x) to respond promptly to
any comments made by the SEC with respect to the Information Statement, (y)
to cause the Information Statement to be mailed to its stockholders and (z)
to obtain the necessary approvals of the Merger and this Agreement by its
stockholders;
(ii) Parent shall provide the Company with the information concerning
Parent and Acquisition required to be included in the Information
Statement. Parent shall vote, or cause to be voted, or shall approve an
action by written consent all of the Shares then owned by it, Acquisition
or any of Parent's or Acquisition's respective subsidiaries and affiliates
(including, without limitation, all shares acquired on the Acceptance Date)
in favor of the approval of the Merger and the adoption of this Agreement;
and
(iii) The Company shall provide to Parent and its counsel a reasonable
opportunity to review and comment upon the Information Statement prior to
the filing thereof with the SEC. In addition, the Company shall provide to
Parent and its counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the
Information Statement promptly after receipt of such comments and with
copies of any written responses and telephonic notification of any verbal
responses by the Company or its counsel. No filing of, or amendment or
supplement to, or written correspondence to the SEC or its staff with
respect to, the Information Statement will be made by the Company without
providing Parent its counsel a reasonable opportunity to review and comment
thereon.
SECTION 1.12. Merger Without Meeting of Stockholders. In the event that
Parent, Acquisition or any other Subsidiary of Parent, shall acquire at least
ninety percent (90%) of the then-outstanding Shares pursuant to the Offer or
otherwise, each of the parties hereto shall take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Section 253 (in lieu of Section 251) of the DGCL.
SECTION 1.13. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value $0.001 per
share, of the Company (each a "SHARE" and, collectively, the "SHARES") issued
and outstanding immediately prior to the Effective Time (other than (i) Shares
held in the Company's treasury and (ii) Shares held by Parent or Acquisition)
shall, by virtue of the Merger and without any action on the part of
Acquisition, the
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Company or the holder thereof, be converted into and shall become the right to
receive $7.05 in cash (the "PER SHARE CASH AMOUNT") plus a number of fully paid
and nonassessable shares of common stock, par value $0.01 per share, of Parent
("PARENT COMMON STOCK") equal the Exchange Ratio (such amount of cash and stock
together, the "MERGER CONSIDERATION"). Unless the context otherwise requires,
each reference in this Agreement to shares of Parent Common Stock and to the
Shares shall include the associated Parent Rights and associated Company Rights,
respectively. Notwithstanding the foregoing, if, between the date of this
Agreement and the Effective Time, the outstanding shares of Parent Common Stock
or the Shares shall have been changed into a different number of shares or a
different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, including, without
limitation, the right to receive cash in connection with an acquisition of
Parent, then the Per Share Cash Amount and the Exchange Ratio shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(b) The "EXCHANGE RATIO" shall be 0.430.
(c) At the Effective Time, each outstanding share of the common stock,
$0.001 par value per share, of Acquisition shall be converted into one share of
common stock, $0.001 per share, of the Surviving Corporation.
(d) At the Effective Time, each Share held in the treasury of the Company
and each Share held by Parent or Acquisition immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of
Acquisition, the Company or the holder thereof, be canceled, retired and cease
to exist, and no shares of Parent Common Stock shall be delivered with respect
thereto.
(e) Each Restricted Company Share issued and outstanding immediately prior
to the Effective Time shall be exchanged pursuant to Section 1.13(e) into the
Merger Consideration, subject to forfeiture to, or repurchase by, Parent on the
same terms and at the same price as governed such Restricted Company Shares
prior to the Merger Restricted Parent Shares. The cash and certificates
representing the Restricted Parent Shares shall be held by Parent until such
shares are no longer subject to repurchase or forfeiture. Cash dividends on
Restricted Parent Shares will be distributed to the holder of such Restricted
Parent Shares on whose behalf the Restricted Parent Shares are being held by
Parent. Any shares of Parent Common Stock or other equity securities issued or
distributed by Parent, including shares issued upon a stock dividend or split,
in respect of Restricted Parent Shares (which remain restricted at the time of
such distribution) will be subject to the same restrictions and other terms as
the Restricted Parent Share with respect to which the distribution is made. Each
holder of Restricted Parent Shares will have voting rights with respect to
Restricted Parent Shares (and other voting securities) held by Parent on its
behalf.
SECTION 1.14. Exchange of Certificates.
(a) Promptly following the Effective Time, as required by subsections (b)
and (c) below, Parent shall deliver to its transfer agent, or a depository or
trust institution of recognized standing selected by Parent and reasonably
satisfactory to the Company (the "EXCHANGE AGENT") for the benefit of the
holders of Shares for exchange in accordance with this Article 1: (i)
certificates representing the appropriate number of shares of Parent Common
Stock issuable pursuant to Section 1.13, (ii) cash in an amount equal to the Per
Share Cash Amount multiplied by the number of Shares issued and outstanding
immediately prior to the Effective Time, and (iii) cash to be paid in lieu of
fractional shares of Parent Common Stock (such shares of Parent Common Stock and
such cash are hereinafter referred to as the "EXCHANGE FUND"), in exchange for
outstanding Shares.
(b) Parent shall use commercially reasonable efforts to cause the Exchange
Agent, promptly after the Effective Time (and in no event later than five (5)
business days following the Effective Time), to mail to each holder of record of
a certificate or certificates that immediately prior to the Effective Time
represented outstanding Shares (the "CERTIFICATES") and whose Shares were
converted into the right to receive shares of Parent Common Stock pursuant to
Section 1.13: (i) a letter of transmittal (which shall specify that delivery
shall be effected and risk of loss and title to the Certificates shall pass only
upon
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delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other customary provisions as Parent and the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent Common
Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor (A) a check
representing the Per Share Cash Amount that such holder has the right to receive
pursuant to this Article I, (B) a certificate representing that number of whole
shares of Parent Common Stock that such holder has the right to receive pursuant
to the provisions of this Article I, and, if applicable, (C) a check
representing the cash consideration to which such holder may be entitled on
account of a fractional share of Parent Common Stock that such holder has the
right to receive pursuant to the provisions of this Article 1, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, the Merger Consideration may be issued to a transferee if the
Certificate representing such Shares is presented to the Exchange Agent
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 1.14, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration as contemplated by this
Section 1.14.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment shall be paid to any such holder pursuant to Section 1.14(f), until the
holder of record of such Certificate shall surrender such Certificate. Subject
to the effect of Applicable Law, following surrender of any such Certificate
there shall be paid (in addition to the Merger Consideration) to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor without interest (i) the amount of any cash payable
in lieu of a fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 1.14(f) and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to the number of fractional shares of Parent Common Stock for which such
holder received cash in lieu of fractional shares and (ii) at the appropriate
payment date the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
(d) If any Certificate for Shares shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange therefor upon the making
of an affidavit of that fact by the holder thereof such shares of Parent Common
Stock and cash in lieu of fractional shares, if any, as may be required pursuant
to this Agreement; provided, however, that Parent or the Exchange Agent may, in
its discretion, require the delivery of a bond or indemnity reasonably
satisfactory to Parent and the Exchange Agent.
(e) The Merger Consideration issued and paid upon the surrender for
exchange of Shares in accordance with the terms hereof (including any cash paid
pursuant to Section 1.14(c) or 1.14(f)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such Shares and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article 1.
(f) No fractions of a share of Parent Common Stock shall be issued in the
Merger, but in lieu thereof each holder of Shares otherwise entitled to a
fraction of a share of Parent Common Stock shall upon surrender of his or her
Certificate or Certificates be entitled to receive an amount of cash (without
interest) determined by multiplying the average closing sale prices for one
share of Parent Common Stock as reported on the Nasdaq National Market for the
five (5) trading days prior to the Effective Time by the fractional share
interest to which such holder would otherwise be entitled (after aggregating all
shares owned by such holder). The parties acknowledge that payment of the cash
consideration in lieu of issuing
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fractional shares was not separately bargained for consideration, but merely
represents a mechanical rounding off for purposes of simplifying the corporate
and accounting complexities that would otherwise be caused by the issuance of
fractional shares.
(g) Any portion of the Exchange Fund that remains undistributed to the
stockholders of the Company upon the expiration of twelve (12) months after the
Effective Time shall be delivered to Parent upon demand, and any stockholders of
the Company who have not theretofore complied with this Article 1 shall
thereafter look only to Parent for payment of their claim for Merger
Consideration, and any applicable dividends or distributions with respect to
Parent Common Stock.
(h) Neither Parent nor the Company shall be liable to any holder of Shares
for shares of Parent Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official pursuant
to any applicable abandoned property, escheat or similar Applicable Law.
SECTION 1.15. Stock Options.
(a) At the Effective Time, each outstanding option, warrant or other right
to purchase Shares (a "COMPANY STOCK OPTION" or collectively, "COMPANY STOCK
OPTIONS") issued pursuant to the Company's 1992 Incentive Stock Option Plan,
1992 Nonqualified Stock Option Plan, 1997 Employee Stock Purchase Plan, 1997
Equity Incentive Plan, 1997 Employee Stock Purchase Plan for Non-United States
Employees, 2003 J.D. Edwards & Company Equity Incentive Plan, YOUcentric 2000
Equity Compensation Plan or other agreement or arrangement, whether vested or
unvested, shall be converted as of the Effective Time into an option, warrant or
right, as applicable, to purchase shares of Parent Common Stock in accordance
with this Section 1.15. All plans or agreements described above pursuant to
which any Company Stock Option has been issued or may be issued other than
outstanding warrants or rights are referred to collectively as the "COMPANY
PLANS." At the Effective Time, each Company Stock Option to purchase one Share
so converted shall be deemed to constitute an option to acquire, on the same
terms and conditions as were applicable to such Company Stock Option as set
forth in the applicable Company Plan and the agreement(s) evidencing the grant
thereof immediately prior to the Effective Time, including provisions with
respect to vesting, (i) a number of shares of Parent Common Stock equal to the
Exchange Ratio and (ii) the Per Share Cash Amount, at the same exercise price as
in effect prior to the Effective Time; provided, however, that in the case of
any option to which Section 421 of the Code applies by reason of its
qualification under Section 422 through Section 424 of the Code ("INCENTIVE
STOCK OPTIONS" or "ISOS"), to the extent permitted by Applicable Law, the option
price, the number of shares purchasable pursuant to such option and the terms
and conditions of exercise of such option shall be determined so as to comply
with Section 424(a) of the Code and it is the intention of the parties that such
options will qualify as incentive stock options following the Effective Time.
(b) As soon as practicable (but in no event later than thirty (30) days)
after the Effective Time, Parent shall deliver to the holders of Company Stock
Options appropriate notices setting forth such holders' rights pursuant to the
applicable Company Plan and that the agreements evidencing the grants of such
options shall continue in effect on the same terms and conditions (subject to
the adjustments required by this Section 1.15 after giving effect to the
Merger).
(c) At or before the Effective Time, Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of Company Stock Options assumed in accordance
with this Section 1.15. Within ten (10) business days after the Effective Time,
Parent shall file a registration statement on Form S-8 (or any successor or
other appropriate forms) with respect to the shares of Parent Common Stock
subject to any Company Stock Options held by all persons with respect to whom
registration on Form S-8 is available and shall use all commercially reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
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(d) At or before the Effective Time, the Company shall cause to be effected
any necessary amendments to the Company Plans to give effect to the foregoing
provisions of this Section 1.15.
SECTION 1.16. Withholding Rights. Each of the Company, the Surviving
Corporation and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable to any person pursuant to this Article 1 such
amounts as it is required to deduct and withhold with respect to the making of
such payment under any provision of federal, state, local or foreign tax law. To
the extent that amounts are so withheld by the Company, the Surviving
Corporation or Parent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Shares in respect of which such deduction and withholding was made by the
Company, the Surviving Corporation or Parent, as the case may be.
SECTION 1.17. Dissenting Shares. Notwithstanding any provision of this
Agreement to the contrary, if and to the extent required by the DGCL, Shares
which are issued and outstanding immediately prior to the Effective Time and
which are held by holders of such Shares who have properly exercised appraisal
rights with respect thereto (the "DISSENTING COMMON STOCK") in accordance with
Section 262 of the DGCL, shall not be converted into the right to receive the
Merger Consideration, and holders of such shares of Dissenting Common Stock
shall be entitled to receive payment of the appraised value of such shares of
Dissenting Common Stock in accordance with the provisions of Section 262 of the
DGCL unless and until such holders fail to perfect or effectively withdraw or
otherwise lose their rights to appraisal and payment under the DGCL. If, after
the Effective Time, any such holder fails to perfect or effectively withdraws or
loses such right, such shares of Dissenting Common Stock shall thereupon be
treated as if they had been converted into and to have become exchangeable for,
at the Effective Time, the right to receive the Merger Consideration, without
any interest thereon. The Company shall give Parent prompt notice of any demands
received by the Company for appraisals of shares of Dissenting Common Stock.
Notwithstanding anything to the contrary contained in this Section 1.17, if (i)
the Merger is rescinded or abandoned or (ii) the stockholders of the Company
revoke the authority to effect the Merger, then the right of any stockholder to
be paid the fair value of such stockholder's Dissenting Common Stock pursuant to
Section 262 of the DGCL shall cease. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisals or offer to settle or settle any such demands, and Parent shall
have the right to participate in all negotiations and proceedings with respect
to such demands.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The representations and warranties set forth below have not been changed or
updated from the Original Agreement except for changes in Sections 2.3, 2.5,
2.23 and 2.25 to reflect changes in the consideration and form of the
transactions contemplated hereby. The Company hereby represents and warrants to
each of Parent and Acquisition, subject to the exceptions set forth in the
Disclosure Schedule (the "COMPANY DISCLOSURE SCHEDULE") delivered by the Company
simultaneously with the execution hereof (which Company Disclosure Schedule
shall specifically identify the specific Section or subsection, as applicable,
to which each such exception relates), that:
SECTION 2.1. Organization and Qualification; Subsidiaries; Investments.
(a) Section 2.1(a) of the Company Disclosure Schedule sets forth a true and
complete list of each person in which the Company owns, directly or indirectly,
50% or more of the voting interests or of which the Company otherwise has the
right to direct the management (each, a "SUBSIDIARY") together with the
jurisdiction of incorporation or organization of each Subsidiary and the
percentage of each Subsidiary's outstanding capital stock or other equity
interests owned directly or indirectly by the Company. All of the outstanding
capital stock or other ownership interests of each Subsidiary is owned by the
Company, directly or indirectly, free and clear of any Lien or any other
limitation or restriction. Each of the Company and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
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jurisdiction of its incorporation or organization and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted except where any failure of any Subsidiary to be
so organized, existing and in good standing could be cured by a ministerial
filing or payment of a fee or tax. The Company has made available to Parent and
Acquisition accurate and complete copies of the Certificate of Incorporation and
bylaws or comparable other governing documents, each as in full force and effect
on the date hereof, of the Company and each of its Significant Subsidiaries (as
such term is defined in Rule 1-02 of Regulation S-X of the SEC). Other than as
specified in Section 2.1(a) of the Company Disclosure Schedule, the Company has
no operating Subsidiaries other than those incorporated in a state of the United
States.
(b) Each of the Company and its Subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
(c) Section 2.1(c) of the Company Disclosure Schedule sets forth a true and
complete list, as of the date hereof, of each equity investment (including
obligations that are convertible into equity securities) made by the Company or
any Subsidiary in any person (including the percentage ownership as of the most
recent practicable date for which the Company or such Subsidiary has
capitalization information for such entity and any management rights granted to
the Company or any such Subsidiary) other than the Subsidiaries ("OTHER
INTERESTS"). The Other Interests are owned directly or indirectly by the Company
free and clear of all Liens.
SECTION 2.2. Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of (i) Three
Hundred Million (300,000,000) Shares, of which, as of May 28, 2003, One Hundred
Twenty-Two Million Four Hundred Twenty-Six Thousand Six Hundred Sixty-Four
(122,426,664) Shares were issued and outstanding; and (ii) Five Million
(5,000,000) shares of preferred stock, par value $0.001 per share ("COMPANY
PREFERRED STOCK"), none of which are outstanding as of the date hereof. All of
the outstanding Shares have been validly issued and are fully paid,
nonassessable and free of preemptive rights. As of May 28, 2003, an aggregate of
Thirty-One Million Nine Hundred Sixty-Six Thousand Two Hundred Sixty-Nine
(31,966,269) Shares were reserved for issuance of which Twenty-Two Million
Forty-Five Thousand Three Hundred and One (22,045,301) Shares were issuable upon
or otherwise deliverable in connection with the exercise of outstanding Company
Stock Options issued pursuant to the Company Plans. Between May 28, 2003 and the
date hereof, no shares of the Company's capital stock have been issued other
than pursuant to the exercise of Company Stock Options already in existence on
such first date, and between May 28, 2003 and the date hereof, no stock options
have been granted. Except as set forth above and for the stockholder rights
Company Rights issued pursuant to that certain Preferred Stock Rights Agreement,
dated as of October 22, 2001, as amended, between the Company and Computershare
Trust Company, Inc., as Rights Agent (the "COMPANY RIGHTS AGREEMENT"), as of the
date hereof, there are outstanding (i) no shares of capital stock or other
voting securities of the Company, (ii) no securities of the Company or any
Subsidiary convertible into or exchangeable or exercisable for, shares of
capital stock or other voting securities of the Company or any Subsidiary, (iii)
no options, warrants or other rights to acquire from the Company or any
Subsidiary, and no obligations of the Company or any Subsidiary to issue any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or other voting securities of the Company or
any Subsidiary, and (iv) no equity equivalent interests in the ownership or
earnings of the Company or any Subsidiary or other similar rights. All of the
outstanding Shares and Company Stock Options (collectively "COMPANY SECURITIES")
were issued in compliance with the Securities Act of 1933, as amended in the
Securities Act, and applicable state securities laws. As of the date hereof,
except with respect to the Restricted Company Shares, there are no outstanding
rights or obligations of the Company or any Subsidiary to repurchase, redeem or
otherwise acquire any outstanding shares of its capital stock or other ownership
interests. Other than the Company Voting Agreements, there are no stockholder
agreements, voting trusts or other arrangements or understandings to which the
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Company, the Company Board or any Subsidiary is a party, and to the Company's
knowledge, there are no other agreements, voting trusts or other arrangements or
understandings, relating to the voting or registration of any shares of capital
stock or other voting securities of the Company or any Subsidiary. Other than
treasury stock as described in the Financial Statements, no Shares, Company
Preferred Stock or Company Stock Options are owned by the Company or any
Subsidiary. The Company has provided to Parent a true and complete list of all
holders of outstanding Restricted Company Shares or Company Stock Options, the
exercise or vesting schedule, the exercise price per share, and the term of each
Restricted Company Share or Company Stock Option, as applicable and in the case
of Company Stock Options, whether such option is a nonqualified stock option or
incentive stock option, and any restrictions on the Company's right to
repurchase of the Shares underlying the options, and whether or not, to the
Company's knowledge, an election under Section 83(b) of the Code is in effect
with respect to such Shares that are Restricted Company Shares, in each case as
of the date hereof. None of the terms of the Company Stock Options or Restricted
Company Shares provides for accelerated vesting as a result of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby. Other than as disclosed in the Company's SEC Reports filed on or before
the date hereof, since the Company's initial public offering, the Company has
not granted Company Stock Options to employees or consultants under any Company
Plan at an exercise price of less than the fair market value per Share at the
time of grant as determined in good faith by the Company Board.
(b) The Company Rights and the Shares constitute the only classes of equity
securities of the Company or its Subsidiaries registered or required to be
registered under the Exchange Act.
SECTION 2.3. Authority Relative to this Agreement; Recommendation.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement, and, subject to obtaining the approval of holders of
a majority of the Shares of the Company's common stock prior to consummation of
the Merger in accordance with Section 251 of the DGCL, if so required, to
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by the Board of Directors of the Company (the "COMPANY BOARD"), and,
except for obtaining the approval of its stockholders as contemplated by Section
1.11 hereof, if required by the DGCL, no other corporate action on the part of
the Company is necessary to authorize the execution and delivery by the Company
of this Agreement and the consummation by it of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Acquisition, constitutes the valid, legal and binding agreement of the
Company, enforceable against the Company in accordance with its terms, subject
to any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights generally or to
general principles of equity.
(b) Without limiting the generality of the foregoing, the Company Board has
unanimously (i) determined that the Merger is advisable and that the terms of
the Offer and the Merger and fair to, and in the best interests of the Company
and the Company's stockholders and (ii) approved this Agreement, the Offer and
the Merger and the other transactions contemplated hereby, (iii) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares thereunder to Acquisition and approve and adopt this Agreement, the
Merger and the other transactions contemplated hereby, and (iv) has not
withdrawn or modified such approval or resolution to recommend (except as
otherwise permitted in this Agreement).
SECTION 2.4. SEC Reports; Financial Statements; Sarbanes-Oxley Act
Compliance.
(a) The Company has filed all required forms, reports and documents
("COMPANY SEC REPORTS") with the SEC since October 31, 1999, each of which
complied at the time of filing in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each Applicable Law as
in effect on the dates such forms, reports and documents were filed. None of
such Company SEC Reports, including any financial statements or schedules
included or incorporated by reference therein, contained
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when filed any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading, except to the extent superseded or
amended by a Company SEC Report filed subsequently and prior to the date hereof.
The consolidated financial statements of the Company included in the Company SEC
Reports (the "FINANCIAL STATEMENTS") fairly presented in all material respects,
in conformity with United States generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes thereto
and except that unaudited statements do not contain footnotes in substance or
form required to the extent permitted by Form 10-Q of the Exchange Act), the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended, except that the unaudited interim financial
statements of the Company contained in the Company's Quarterly Report on Form
10-Q for the quarter ended January 31, 2003 were subject to normal adjustments
that are not expected to be material in amount.
(b) The Company has heretofore made, and hereafter will make, available to
Acquisition or Parent a complete and correct copy of any amendments or
modifications that are required to be filed with or submitted to the SEC but
have not yet been filed with or submitted to the SEC to agreements, documents or
other instruments that previously had been filed with or submitted to the SEC by
the Company pursuant to the Exchange Act.
(c) Each required form, report and document containing financial statements
that has been filed with or submitted to the SEC since July 31, 2002, was
accompanied by the certifications required to be filed or submitted by the
Company's chief executive officer and chief financial officer pursuant to the
Sarbanes-Oxley Act of 2002 (the "SARBANES-OXLEY ACT"), and at the time of filing
or submission of each such certification, such certification was true and
accurate and complied with the Sarbanes-Oxley Act and the rules and regulations
promulgated thereunder.
(d) Since October 31, 1999, neither the Company nor any Subsidiary nor, to
the Company's knowledge, any director, officer, employee, auditor, accountant or
representative of the Company or any Subsidiary has received or otherwise had or
obtained knowledge of any complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or any Subsidiary or their respective
internal accounting controls, including any complaint, allegation, assertion or
claim that the Company or any Subsidiary has engaged in questionable accounting
or auditing practices. No attorney representing the Company or any Subsidiary,
whether or not employed by the Company or any Subsidiary, has reported evidence
of a material violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or agents
to the Company Board or any committee thereof or to any director or officer of
the Company.
(e) To the knowledge of the Company, no employee of the Company or any
Subsidiary has provided or is providing information to any law enforcement
agency regarding the commission or possible commission of any crime or the
violation or possible violation of any Applicable Law. Neither the Company nor
any Subsidiary nor any officer, employee, contractor, subcontractor or agent of
the Company or any such Subsidiary has discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against an employee of
the Company or any Subsidiary in the terms and conditions of employment because
of any act of such employee described in 18 U.S.C. Section 1514A(a).
SECTION 2.5. Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in (i)
Offer Documents; (ii) the S-4 will, at the time the S-4 is filed with the SEC
and at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
or (iii) the Information Statement relating to the written consent of the
Company's stockholders approving the Merger, if required, will, at the date
mailed to stockholders of the Company and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
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statements therein in light of the circumstances under which they are made not
misleading. The Schedule 14D-9 and the Information Statement will comply, as of
its mailing date, as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder. Notwithstanding the
foregoing, the Company makes no representation, warranty or covenant with
respect to any information supplied or required to be supplied by Parent or
Acquisition which is contained in or omitted from any of the foregoing documents
or which is incorporated by reference therein.
SECTION 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under
applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, the rules and regulations of the Nasdaq National
Market, and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), any filings under similar competition or merger notification
laws or regulations of foreign Governmental Entities, and the filing and
recordation of the Certificate of Merger as required by the DGCL, no material
filing with or notice to and no material permit, authorization, consent or
approval of any United States (federal, state or local) or foreign court or
tribunal, or administrative, governmental or regulatory body, agency or
authority (each a "GOVERNMENTAL ENTITY") is necessary for the execution and
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby. Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (i) conflict with or result in a
breach of any provision of the respective Certificate of Incorporation or bylaws
(or similar governing documents) of the Company or any Subsidiary, (ii) result
in a violation or breach of or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any Material Contract or (iii) violate any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any Subsidiary or any of their respective properties or assets.
SECTION 2.7. No Default. Neither the Company nor any Subsidiary is in (i)
breach, default or violation (and no event has occurred that with notice or the
lapse of time, or both, would constitute a breach, default or violation) of any
term, condition or provision of its Certificate of Incorporation or bylaws (or
similar governing documents), (ii) breach, default or violation (and no event
has occurred that with notice or the lapse of time, or both, would constitute a
breach, default or violation) of any material term, condition or provision of
(A) any material note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any
Subsidiary is now a party or by which it or any of its properties or assets may
be bound or (B) any material order, writ, injunction, decree, law, statute, rule
or regulation applicable to the Company or any Subsidiary or any of its
properties or assets.
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed in the Company SEC Reports filed on or before the
date hereof or as reflected on the consolidated balance sheet of the Company for
the quarter ended April 30, 2003), a true and correct copy of which has been
provided to Parent, other than liabilities or obligations to suppliers, vendors,
employees and landlords incurred in the ordinary and usual course of such
business consistent with past practices, neither the Company nor any Subsidiary
has any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by United States generally
accepted accounting principles to be reflected on a consolidated balance sheet
of the Company (including the notes thereto). Except for the negotiation and
execution of this Agreement, between April 30, 2003 and the date hereof, the
Company and each Subsidiary have conducted their respective businesses in all
material respects only in, and have not engaged in any material transaction
other than according to, the ordinary and usual course of such businesses
consistent with past practices, and there has not been any:
(a) Material Adverse Effect on the Company;
(b) damage, destruction or other casualty loss with respect to any
asset or property owned, leased or otherwise used by the Company or any
Subsidiary and having a value at the time of the incident of Two Million
Dollars ($2,000,000) or more, whether or not covered by insurance;
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(c) declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of the Company or any
Subsidiary, repurchase, redemption or other acquisition by the Company or
any Subsidiary of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any
Subsidiary except for repurchases from individuals following their
termination of service required by the terms of their pre-existing stock
option or purchase agreements;
(d) other than amendment of the Company Rights Plan pursuant to
Sections 2.25 and 4.16 hereof, amendment of any term of any outstanding
security of the Company or any Subsidiary;
(e) incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts not in excess of One Million
Dollars ($1,000,000);
(f) creation or assumption by the Company or any Subsidiary of any
Lien on any asset or property with a value of One Million Dollars
($1,000,000) or more;
(g) loan, advance or capital contribution made by the Company or any
Subsidiary to, or investment in, any person other than (i) loans or
advances to employees in connection with business-related travel, in each
case made in the ordinary course of business consistent with past
practices, (ii) loans, advances or capital contributions or investments by
the Company to or in any wholly-owned Subsidiary, by any wholly-owned
Subsidiary in the Company or, by any wholly-owned Subsidiary in any other
wholly-owned Subsidiary, and (iii) the Other Interests;
(h) transaction or binding commitment made, or any Contract entered
into, by the Company or any Subsidiary relating to its assets or business
(including the acquisition or disposition of any assets or property) or any
relinquishment by the Company or any Subsidiary of any Contract or other
right, in either case, having a stated contract amount or otherwise
potentially involving Company or Subsidiary obligations or entitlements
with a value of One Million Dollars ($1,000,000) or more (other than
Contracts with customers and suppliers entered into in the ordinary course
of business, consistent with past practices);
(i) labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any Subsidiary, or any lockouts,
strikes, work stoppages or, to the knowledge of the Company, any threats
thereof or any slowdowns or threats thereof by or with respect to such
employees;
(j) exclusive license, distribution, marketing or sales agreement
entered into or any agreement to enter into any exclusive license,
distribution, marketing or sales agreement;
(k) commitment to any person to (i) develop software without charge or
(ii) incorporate any software into any of the Company's products;
(l) change by the Company in any of its accounting principles,
practices or methods; or
(m) increase in the compensation payable or that could become payable
by the Company or any Subsidiary to (i) officers of the Company or any
Subsidiary or (ii) any employee of the Company or any Subsidiary whose
annual cash compensation is One Hundred Thousand Dollars ($100,000) or
more.
SECTION 2.9. Litigation. Except as disclosed in the Company SEC Reports
filed on or before the date hereof, there are no suits, actions, proceedings,
investigations or material claims pending or, to the knowledge of the Company,
any credible threat thereof against the Company, its Subsidiaries or any of
their respective properties or assets before any Governmental Entity. Except as
disclosed in the Company SEC Reports filed on or before the date hereof, neither
the Company nor any Subsidiary is subject to any outstanding order, writ,
injunction or decree of any Governmental Entity that reasonably could be
expected to result in any loss, expense, charge, assessment, levy, fine or other
liability being imposed upon or
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incurred by the Company or such Subsidiary exceeding One Million Dollars
($1,000,000) or that reasonably could be expected to prevent the consummation of
the transactions contemplated hereby.
SECTION 2.10. Compliance with Applicable Law. Except as disclosed in the
Company SEC Reports, each of the Company and Subsidiaries holds all material
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (collectively, the "COMPANY PERMITS"). Except as disclosed in the
Company SEC Reports filed on or before the date hereof, each of the Company and
Subsidiaries has materially complied, and is in material compliance with, the
terms of the Company Permits. Except as disclosed in the Company SEC Reports
filed on or before the date hereof, the businesses of the Company and each
Subsidiary have been and are being conducted in material compliance with all
material Applicable Laws. Except as disclosed in the Company SEC Reports filed
on or before the date hereof, no investigation or review by any Governmental
Entity with respect to the Company or any Subsidiary is pending or, to the
knowledge of the Company, threatened.
SECTION 2.11. Employee Benefits.
(a) Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
(i) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended;
(ii) "ERISA AFFILIATE" means any other person or entity under common
control with the Company within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations thereunder;
(iii) "COMPANY EMPLOYEE PLAN" refers to any material plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, stock option, stock purchase,
stock bonus, performance awards, membership interest or membership
interest-related awards, retirement, health, life, disability insurance,
dependent care, retirement, medical, fringe benefits or other employee
benefits or remuneration of any kind, funded or unfunded, written or
unwritten, including without limitation each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA that is or has within the last
three (3) years been maintained, contributed to, or required to be
contributed to, by the Company or any ERISA Affiliate for the benefit of
any Employee and pursuant to which the Company or any ERISA Affiliate has
or may have any material liability whether contingent or otherwise;
(iv) "EMPLOYEE" means any current or former employee, director, or
officer of the Company or any Subsidiary;
(v) "EMPLOYEE AGREEMENT" refers to each management, employment (other
than offer letters that do not alter "at will" employment relationships and
do not create any other binding obligation on the Company other than
setting initial compensation and rights to participate in standard
benefits), severance, or consulting agreement or contract as to which
obligations of the Company either currently or in the future are greater or
could reasonably be expected to be greater than Fifty Thousand Dollars
($50,000) and each relocation, repatriation, expatriation, visa, work
permit or similar agreement or contract between the Company or any
Subsidiary and any Employee or consultant, as to which obligations of the
Company either currently or in the future are greater or could reasonably
be expected to be greater than Ten Thousand Dollars ($10,000);
(vi) "IRS" means the Internal Revenue Service;
(vii) "MULTIEMPLOYER PLAN" means any "Pension Plan" (as defined below)
which is a "multiemployer plan," as defined in Section 3(37) of ERISA;
(viii) "MULTIPLE EMPLOYER PLAN" means any "Pension Plan" (as defined
below) which is a "multiple employer plan," as defined in Section 4063 or
4064 of ERISA;
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(ix) "PENSION PLAN" refers to each Company Employee Plan which is an
"employee pension benefit plan," within the meaning of Section 3(2) of
ERISA; and
(x) "WELFARE PLAN" refers to each Company Employee Plan which is a
welfare plan as defined in ERISA Section 3(1).
(b) Company Employee Plans and Employee Agreements. Section 2.11(b) of the
Company Disclosure Schedule contains an accurate and complete list of each
Company Employee Plan and each Employee Agreement other than Employee Agreements
with Employees located in foreign countries that (A) are customary or required
by local law and (B) contain only customary and/or legally required terms. The
Company has never orally or in writing represented, promised or contracted to
any Employee to maintain or sponsor any Company Employee Plan other than those
listed in Section 2.11(b) of the Company Disclosure Schedule. The Company has
also made available to Parent complete and correct copies of (i) the most recent
plan documents, related trust documents, adoption agreements, summary plan
descriptions, and all amendments thereto for each Company Employee Plan; (ii)
the most recent annual reports on Form 5500 filed with the IRS with respect to
each Company Employee Plan where such report is required; (iii) each group
annuity contract, insurance policy, service agreement, and other material
agreement or policy related to any Company Employee Plan; (iv) the most recent
annual nondiscrimination test reports for each Company Employee Plan; (v) the
most recent actuarial and audit reports for each Pension Plan; (vi) all IRS
determination letters and rulings received by the Company and, for the last
three years, copies of all correspondence to or from the IRS, Pension Benefit
Guaranty Corporation or the Department of Labor ("DOL") with respect to any
proceeding involving any Company Employee Plan; (vii) all material
communications to any Employee relating to any Company Employee Plan, or in each
case, relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any Liability to the Company; and (viii) the most
recent registration statement and prospectus prepared in connection with each
Company Employee Plan.
(c) Employee Plan Compliance. (i) Each Company Employee Plan has been
established and maintained in all material respects in accordance with its terms
and all Applicable Laws, including without limitation ERISA and the Code; (ii)
no "prohibited transaction," within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred with respect to any Company Employee Plan
that could subject the Company, any Subsidiary or any Employee to any material
liability; (iii) no Employee of the Company has committed a material breach of
any responsibility or obligation imposed upon fiduciaries by Title I of ERISA
with respect to any Company Employee Plan; (iv) there are no Proceedings
pending, or, to the Company's knowledge, threatened or reasonably anticipated
(other than routine claims for benefits) with respect to any Company Employee
Plan or with respect to the assets of any Company Employee Plan which could
reasonably be expected to result in a material liability to the Company or any
Company Employee Plan; (v) other than the Company Plans (including outstanding
Company Stock Options thereunder) or the Company's Management Change in Control
Plan, each Company Employee Plan can be amended, terminated or otherwise
discontinued in accordance with its terms, without material Liability to the
Company, Parent or any of their respective ERISA Affiliates (other than as
required by Applicable Law, amounts for accrued benefits and administration or
contract expenses incurred in a termination event); (vi) there are no inquiries,
investigations, audits or Proceedings pending or, to the Company's knowledge,
threatened by the IRS or DOL with respect to any Company Employee Plan or any
related trust; (vii) neither the Company nor any ERISA Affiliate is subject to
any penalty or tax with respect to any Company Employee Plan under Sections 4975
through 4980B of the Code; (viii) each Pension Plan that is intended to be
qualified under Section 401(a) of the Code is and has received a favorable
determination, notification, advisory and/or opinion letter with respect to such
status from the IRS or has time remaining to apply under applicable Treasury
Regulation or IRS pronouncement for a determination, notification, advisory
and/or opinion letter and to make any necessary amendments, and to the Company's
knowledge, no event has occurred and no condition or circumstance has existed or
exists which may reasonably be expected to result in the disqualification of
such Pension Plan; (ix) there is no violation of any reporting or disclosure
requirements imposed by ERISA or the Code with respect to any Company
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Employee Plan that could result in a material Liability to the Company; (x) all
contributions required to be made to any Company Employee Plan pursuant to
Section 412 of the Code (without regard to any waivers of such requirements) or
the terms of the Employee Plan, have been made on or before their due dates
(including any contractual or statutory grace periods); (xi) neither Company nor
any ERISA Affiliate is, nor could any of them reasonably expect to be, subject
to (A) a security interest pursuant to Section 412(f) of the Code or (B) a lien
pursuant to Section 412(n) of the Code or Section 4068 or 302(f) of ERISA; (xii)
no event has occurred and there exists no condition or set of circumstances
which could reasonably be anticipated to result in any material Liability to the
Parent, the Company or its ERISA Affiliates with respect to any Company Employee
Plan except to provide benefits in accordance with the terms of each such
Company Employee Plan; and (xiii) with respect to each Company Employee Plan,
all payments due from the Company or an ERISA Affiliate to date have been made
and all amounts properly accrued to date as liabilities of the Company which
have not been paid have been properly recorded on the books of the Company and
are reflected in the Financial Statements.
(d) Pension Plans. At no time has the Company or its ERISA Affiliates
maintained a Pension Plan subject to Code Section 412 or ERISA Section 302.
(e) Multiemployer and Multiple Employer Plans. At no time has the Company
or its ERISA Affiliates (which for this purpose includes any entity that has
been an ERISA Affiliate of the Company) within the last seven (7) years
contributed to or been required to contribute to any Multiemployer Plan or
Multiple Employer Plan.
(f) Post-Employment Obligations. No Company Employee Plan provides, or has
any Liability to provide, life insurance, medical or other employee welfare
benefits to any Employee upon his or her retirement or termination of employment
for any reason, except (i) as may be required by statute, (ii) for benefits the
full cost of which are borne by Employees of the Company (or such Employees'
beneficiaries or dependents), (iii) for death or disability benefits under any
Pension Plan, or (iv) for life insurance benefits for any Employee who dies
while in service with the Company.
(g) Welfare Plans. With respect to any Welfare Plans maintained by the
Company or its ERISA Affiliates, the Company and its ERISA Affiliates have
complied in all material respects with the provisions of Sections 4980B, 9801
and 9802 of the Code.
(h) Plan Expenses and Amendment. Since the beginning of the current plan
year of any Company Employee Plan, no event has occurred and no condition or
circumstance has existed that could result in a material increase in the
benefits under such Company Employee Plan maintained by Company or any
Subsidiary from the level of benefits for the most recently completed plan year
of such Company Employee Plan. No insurance policy nor any other contract or
agreement affecting any Company Employee Plan requires or permits a retroactive
increase in premiums or payments due thereunder (other than any claims for
benefits under any self-funded Company Employee Plan). All amendments and
actions required to bring each of the Company Employee Plans into conformity
with all of the applicable provisions of ERISA and other Applicable Law have
been made or taken except to the extent that such amendments or actions are not
required by Applicable Law to be made or taken until a date after the Closing
Date and are disclosed on Section 2.11(h) of the Company Disclosure Schedule or
will be provided to Parent within fourteen (14) days of the date hereof.
(i) Effect of Transaction.
(i) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that
will or may result in any material payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any officer or employee of the Company.
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(ii) No payment or benefit which will or may be made by the Company or
Parent or any of their respective affiliates with respect to any Employee
will be characterized as an "excess parachute payment," within the meaning
of Section 280G(b)(1) of the Code.
(j) Foreign Plans. Any Company Employee Plan which is subject to any laws,
regulations, or jurisdiction outside the United States is in material compliance
with the requirements of such laws.
(k) Leased Employees and Independent Contractors. No "leased employee," as
that term is defined in Section 414(n) of the Code, or any other person who is
not classified as a common law employee of the Company is eligible to
participate in, nor does such person participate in, any Company Employee Plan,
and, to the Company's knowledge, no retroactive participation in any Company
Employee Plan would result due to reclassification of such an individual as a
common law employee of the Company or an ERISA Affiliate. The exclusion of any
such individual from any Company Employee Plan would not reasonably be expected
to cause any Company Employee Plan which is intended to be qualified under Code
Section 401(a) to lose such qualification, nor, to the Company's knowledge, does
the exclusion of any such individual violate the terms of any Company Employee
Plan.
(l) Change of Control Plan. The Company has executed the amendment to the
J.D. Edwards & Company Management Change In Control Plan (the "CHANGE IN CONTROL
PLAN") attached as Section 2.11(l) of the Company Disclosure Schedule and such
amendment was duly and validly authorized and immediately prior to the Effective
Time will be in full force and effect.
SECTION 2.12. Labor and Employment Matters.
(a) No collective bargaining agreement exists that is binding on the
Company or any Subsidiary. Neither the Company nor any Subsidiary has received
notice that any petition has been filed or proceeding instituted by an employee
or group of employees of the Company or any Subsidiary with the National Labor
Relations Board seeking recognition of a bargaining representative, and no such
petition or proceeding is pending or, to the Company's knowledge, threatened.
(b) (i) There is no (A) labor strike, dispute or stoppage pending or, to
the Company's knowledge, threatened or (B) to the Company's knowledge, slowdown
pending or threatened against the Company or any Subsidiary; and
(ii) Neither the Company nor any Subsidiary has received in the last
forty-eight (48) months any written demand letters, civil rights charges,
suits or drafts of suits, administrative or other claims made by any of its
employees which are or could be material.
(c) All individuals who are performing consulting or other services for the
Company or any Subsidiary are or were correctly classified by the Company as
either "independent contractors" or "employees" as the case may be, and, at the
Closing Date, will qualify for such classification, except as would not result
in material harm to the Company.
(d) Section 2.12(d) of the Company Disclosure Schedule contains a list of
the name of each officer, employee and independent contractor of the Company and
each Subsidiary, together with such person's position or function, annual base
salary or wages and any incentives or bonus arrangement with respect to such
person. The Company has provided to Parent or its counsel all Form 1099s filed
with the IRS for the past three (3) years. As of the date hereof, the Company
has not received any information that would lead it to believe that any such
person will or may cease to be engaged by the Company or applicable Subsidiary
for any reason, including because of the consummation of the transactions
contemplated by this Agreement.
(e) The Company and each Subsidiary (and, to the Company's knowledge, each
of the Company's and each Subsidiary's material subcontractors) is in compliance
with all Applicable Laws governing or relating to employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to employees.
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(f) The Company and each Subsidiary have in all material respects withheld
and reported all amounts required by law or by agreement to be withheld and
reported with respect to wages, salaries and other payments to employees.
(g) There are no pending or, to the knowledge of the Company, threatened
claims or actions against the Company or any Subsidiary under any worker's
compensation policy or long-term disability policy.
(h) The Company is not liable for any material payment to any trust or
other fund or to any Governmental Authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practices).
(i) To the Company's knowledge, the Company has not been threatened with
any claim for discrimination or harassment, including sexual harassment.
(j) Section 2.12(j) of the Company Disclosure Schedule sets forth a
complete and correct list of all employees holding visas issued by the United
States, listing each such employee by name and type of visa. All other employees
of the Company and each Subsidiary working in the United States and subject to
United States immigration laws are citizens of the United States. To the
Company's knowledge, each employee of the Company and each Subsidiary (whether
employed within or outside of the United States) possesses all applicable
passports, visas or other applicable work authorizations with respect to the
location at which they are employed or with respect to which they travel on
behalf of the Company or any Subsidiary, and has complied with all applicable
immigration and similar laws.
(k) Neither the Company nor any Subsidiary is bound by any agreement, nor
has either taken or omitted to take any action, that restricts its ability to
terminate the employment of any of its employees at any time without payment or
other liability.
(l) The Company has furnished or made available to Parent a list and
description of all policies and guidelines of the Company and each Subsidiary
concerning employment practices, working conditions, hours and other employment
matters. The Company and each Subsidiary (and to the knowledge of the Company,
each of the Company's and its Subsidiaries' material subcontractors) is in
material compliance with all such policies and guidelines.
SECTION 2.13. Environmental Laws and Regulations.
(a) The term "ENVIRONMENTAL LAWS" means any applicable federal, state,
local or foreign law, statute, treaty, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, decree or injunction relating to:
(i) Releases (as defined in 42 U.S.C. sec. 9601(22)) or threatened Releases of
Hazardous Material into the environment, (ii) the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material, (iii) the health or safety of employees in the workplace,
(iv) protecting or restoring natural resources or (v) the environment. The term
"HAZARDOUS MATERIAL" means (i) "hazardous substances" (as defined in 42 U.S.C.
sec. 9601(14)), including "hazardous waste" as defined in 42 U.S.C. sec. 6903,
(ii) petroleum, including crude oil and any fractions thereof, (iii) natural
gas, synthetic gas and any mixtures thereof, (iv) asbestos and/or asbestos
containing materials, (v) PCBs or materials containing PCBs, (vi) any material
regulated as a medical waste, (vii) lead containing paint, and (viii)
radioactive materials, but Hazardous Material does not include office and
janitorial supplies properly maintained.
(b) (i) During the period of ownership or operation by the Company and its
Subsidiaries of any of their current or previously owned or leased properties,
there have been no Releases of Hazardous Material by the Company or any
Subsidiary in, on, under or affecting such properties or any surrounding site
which could reasonably be expected to subject the Company to material liability;
(ii) the Company does not have any knowledge of the presence of any Hazardous
Material in, on, under, or affecting such properties or any surrounding site
which could reasonably be expected to subject the Company to material liability;
(iii) none of the Company or any Subsidiary has disposed of any Hazardous
Material in a manner that has led, or reasonably could be expected to lead, to a
Release which could reasonably be expected to
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subject the Company to material liability; (iv) since January 1, 1995, none of
the Company or any Subsidiary has received any written notice of, or entered
into any order, settlement or decree, or become legally responsible for through
agreement, succession, assignment or other means, relating to: (A) any violation
of any Environmental Laws by the Company or any Subsidiary or the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any alleged violation
of Environmental Laws by the Company or any Subsidiary or (B) the response to or
remediation of Hazardous Material at or arising from any of the Company's or any
Subsidiary's properties; (v) other than non-compliance or violations that
individually or in the aggregate could not reasonably be expected to result in a
fine, penalty or other liability in excess of $50,000, the Company and all
Subsidiaries are in material compliance with all Environmental Laws and there
have been no material violations of any Environmental Laws by the Company or any
Subsidiary; (vi) the Company does not have any knowledge of any fact that is
reasonably likely to result in material liability to the Company under any
Environmental Law or which could reasonably be expected to prevent the Company
or any Subsidiary from complying with Environmental Laws; and (vii) other than
non-compliance or violations that individually or in the aggregate could not
reasonably be expected to result in a fine, penalty or other liability in excess
of $50,000, each of the Company and each Subsidiary has obtained and is in
material compliance with all approvals, authorizations, certificates, consents,
licenses, orders and permits or other similar authorizations of all Governmental
Entities, or from any other person, that are required under any Environmental
Law applicable to the owned or leased properties of the Company or any
Subsidiary.
SECTION 2.14. Taxes.
(a) Definitions. For purposes of this Agreement:
(i) the term "TAX" (including "TAXES") means (A) all federal, state,
local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties and other
taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts with
respect thereto, (B) any liability for payment of amounts described in
clause (A) whether as a result of transferee liability, of being a member
of an affiliated, consolidated, combined or unitary group for any period,
or otherwise through operation of law, and (C) any liability for the
payment of amounts described in clauses (A) or (B) as a result of any tax
sharing, tax indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other person; and
(ii) the term "TAX RETURN" means any return, declaration, report,
statement, information statement and other document filed or required to be
filed with respect to Taxes, including any claims for refunds of Taxes and
any amendments or supplements of any of the foregoing.
(b) (i) The Company and its Subsidiaries have duly and timely filed all Tax
Returns required to be filed; and (ii) all Tax Returns that have been filed by
the Company and its Subsidiaries are complete and accurate, except to the extent
any Taxes pertaining to the inaccuracy of clauses (i) and (ii), in the
aggregate, would not be material. None of the Tax Returns filed by the Company
or any of its Subsidiaries was required to contain (in order to avoid the
imposition of a penalty and determined without regard to disclosure that may be
made after the filing of the original Tax Return) a disclosure statement under
Section 6662 of the Code (or any predecessor provision or comparable provision
of state, local or foreign law). The Company and its Subsidiaries have complied
in all material respects with all Applicable Laws relating to intercompany
transactions and transfer pricing.
(c) Except with respect to Taxes that, in the aggregate, would not be
material, (i) the Company and its Subsidiaries have timely withheld and paid all
Taxes that were required to have been withheld or have become due or payable,
respectively, and have adequately provided in accordance with GAAP in the
financial statements included in the Company SEC Reports filed on or before the
date hereof for all Taxes (whether or not shown on any Tax Return) accrued
through the date of such Company SEC Reports; and
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(ii) all Taxes of the Company and its Subsidiaries accrued following the end of
the most recent period covered by the Company SEC Reports have been incurred in
the ordinary course of business of the Company consistent with past practices
and have been paid when due in the ordinary course of business consistent with
past practices.
(d) No claim for assessment or collection of Taxes is presently being
asserted against the Company or its Subsidiaries, other than claims that, in the
aggregate, are not material, and neither the Company nor any of its Subsidiaries
is a party to any pending action, proceeding, audit or investigation by any
governmental taxing authority, nor does the Company have knowledge of any such
threatened action, proceeding, audit or investigation. The Company has no
knowledge of any contingent liabilities for Taxes that, in the aggregate,
materially exceed the aggregate reserves therefor reflected in the balance sheet
included in the Company SEC Reports.
(e) Neither the Company nor any Subsidiary (nor any predecessor thereof)
(A) is a party to or bound by any closing agreement, offer in compromise or any
other agreement with any Tax authority, (B) is a party to a plan or agreement
that could give rise to remuneration the deduction for which could be disallowed
under Section 162(m) of the Code, or (C) has ever been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code. To the knowledge of the Company, each Company Stock Option identified as
an incentive stock option in the list provided to Parent pursuant to Section
2.2(a) hereof, and each stock purchase right issued under an employee stock
purchase plan (or similar plan) has at all times since the issuance of such
Company Stock Option or stock purchase right qualified for taxation under
Section 421 through 423 of the Code. There are no (1) adjustments under Section
481 of the Code or any similar adjustments with respect to the Company or any
Subsidiary (or their predecessors) that will be effective for any period ending
after the Closing, (2) outstanding waivers or outstanding extensions of the
statute of limitations in effect with respect to Taxes for which the Company or
any Subsidiary could be held liable, or (3) grants of power of attorney to any
person in effect with respect to Taxes for which the Company or any Subsidiary
would be liable.
(f) Except as provided in this Agreement, neither the Company nor any of
its affiliates has taken or agreed to take any action that would prevent the
Merger from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code.
(g) Neither the Company nor any Subsidiary is a party to or bound by any
obligation under any Tax sharing, Tax allocation, Tax indemnity or similar
agreement or arrangement.
(h) Neither the Company nor any Subsidiary is a "consenting corporation"
within the meaning of Section 341(f) of the Code.
(i) Neither the Company nor any Subsidiary has been a "distributing
corporation" or a "controlled corporation" in connection with a distribution
intended or purported to be governed by Section 355 of the Code.
(j) No Subsidiary of the Company that is not a United States person, as
defined in the Code, is or at any time has been a passive foreign investment
company within the meaning of Section 1297 of the Code, and neither the Company
nor any Subsidiary is a stockholder, directly or indirectly, in a passive
foreign investment company. No Subsidiary of the Company that is not a United
States person as defined in the Code (x) is, or at any time has been, engaged in
the conduct of a trade or business within the United States or treated as or
considered to be so engaged or (y) has, or at any time has had, an investment in
"United States property" within the meaning of Section 956(c) of the Code.
Neither the Company nor any Subsidiary is, or at any time has been, impacted by
(A) the dual consolidated loss provisions of the Section 1503(d) of the Code,
(B) the overall foreign loss provisions of Section 904(f) of the Code, or (C)
the recharacterization provisions of Section 952(c)(2) of the Code.
(k) No more than 5% of the outstanding capital stock of the Company
constitutes Restricted Company Shares.
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SECTION 2.15. Intellectual Property.
(a) Section 2.15(a) of the Company Disclosure Schedule accurately
identifies all Company Registered IP and all unregistered trademarks currently
used by the Company or any Subsidiary, which unregistered trademarks are used on
or in relation to a product or service of Company which accounts individually
for more than $500,000 of revenue annually, indicating for each item thereof the
beneficial owner thereof and, if different, the record owner thereof, the
applicable registration, issuance or other identifying number, the date of
registration, issuance or filing, as applicable. In the case of any Company
Registered IP in which a person other than the Company or any Subsidiary holds
an ownership interest, Section 2.15(a) of the Company Disclosure Schedule
identifies such person and accurately describes the extent of such interest. No
person has an ownership interest in any copyright of the Company that would
entitle them to exploit the copyright without the Company's consent.
(b) "SHRINKWRAP SOFTWARE" means "off-the-shelf" computer software
applications, other than Company Owned IP, that are generally available to all
interested purchasers and licensees on standard terms and conditions. Section
2.15(b) of the Company Disclosure Schedule accurately (i) identifies all Company
Licensed IP (A) that is incorporated in Company's products provided to customers
or provided to customers in connection with products or services of the Company;
(B) is "resold" or sublicensed to customers by the Company; (C) that is used by
the Company as a development tool, excluding Shrinkwrap Software, or (D) is
material to the Company's business and is not covered under (A), (B) or (C), and
is not Shrinkwrap Software; (ii) identifies the license or other agreement or
understanding pursuant to which such Company Licensed IP is being licensed to or
used by the Company or any Subsidiary (each, a "LICENSE-IN AGREEMENT"); and
(iii) sets forth a complete and accurate list of the amount of any remaining
unused prepaid royalty and identifies those License-In Agreements under which
royalty or license fee (excluding fees for maintenance and support), may become
payable by the Company or such Subsidiary, as applicable, thereunder by reason
of the passage of time, use or exploitation of the Intellectual Property
licensed thereunder. The rights licensed under each License-In Agreement shall
be exercisable by the Surviving Corporation on and after the Closing to the same
extent and at the same cost as the Company or such Subsidiary, as applicable,
prior to the Closing and no party granting such rights has given formal written
notice to the Company or, to the Company's knowledge, threatened that it intends
to terminate such License-In Agreement prior to the expiration thereof in
accordance with its terms.
(c) The Company or one of its Subsidiaries has good and valid title to all
of the Company Owned IP, including without limitation all Company Registered IP
identified in Section 2.15(a) of the Company Disclosure Schedule, free and clear
of any Liens, and, to the Company's knowledge, (i) the Company Registered IP is
valid and (ii) the Company has the right to enforce the Company Owned IP against
third parties. Neither the Company nor any Subsidiary is obligated to make any
payment to any person in connection with the manufacture, use, sale,
importation, distribution, display, modification or other exploitation of any
Company Owned IP or any of the Company's products. The Company or any
Subsidiary, as applicable, is free to make, use, modify, copy, distribute, sell,
license, import, export and otherwise exploit all Company Owned IP on an
exclusive basis subject to any nonexclusive (w) end-user licenses granted to
customers; (x) distribution rights granted to resellers or distributors in the
ordinary course of business; (y) nondisclosure or confidentiality agreements
pursuant to which any person has been granted access to Company Owned IP but not
the right to exploit such Company Owned IP; or (z) partner agreements based on
the Company's standard form of partner agreement. No current or former employee,
officer, director, stockholder, consultant or independent contractor has any
valid right, claim or interest in or with respect to any Company IP which would
impair or which could give rise to the impairment of the Company's use,
distribution, license or other exploitation of the Company IP.
(d) The Company and each Subsidiary have taken reasonable measures and
precautions necessary to protect, preserve and maintain the confidentiality and
secrecy of all trade secrets and other confidential information material to the
Company's business and otherwise to maintain and protect the value of all
Company Owned IP. Neither the Company nor any Subsidiary has disclosed or
delivered or permitted to be disclosed or delivered to any person, and no person
(other than employees or consultants of the
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Company and its Subsidiaries which need such information in the course of their
employment) has access to or has any rights with respect to, trade secrets and
other confidential information material to the Company's business, the source
code or any portion or aspect of the source code material to the Company's
business, or any proprietary information or algorithm contained in any source
code of any software material to the Company's business that comprises Company
Owned IP, other than (i) instances where such trade secrets, confidential
information and source code has been disclosed subject to an agreement with any
person pursuant to which such person is required to maintain the confidentiality
thereof, or (ii) other circumstances in which disclosure was made and the
Company promptly acted to mitigate and prevent any further disclosure. Without
limiting the generality of the foregoing, the Company has, and since 1993 has
had, a policy of requiring each employee of the Company or any Subsidiary, and
each independent contractor, who is involved in, or who contributes to, the
creation or development of any of the Company's products or Company Owned IP to
execute and deliver an agreement, substantially similar to the forms of
agreement delivered by the Company to Parent, assigning to the Company full
right, title and interest in and to what they create or develop in the scope of
their employment or assignment, as applicable. The Company substantially
complies, and during the time period referenced above has substantially
complied, with such policy. No event has occurred, and no circumstance or
condition exists, that with or without notice or lapse of time will, or could
reasonably be expected to, result in the disclosure or delivery to any person of
source code, or any portion or aspect of source code, currently maintained in
escrow.
(e) (i) None of the Company Owned IP or any of the Company's products or
services or the Intellectual Property used by the Company in its operations
which is not Company Licensed IP or Shrinkwrap Software, infringe,
misappropriate, violate, dilute or constitute the unauthorized use of any
Intellectual Property of any third party and neither the Company nor any
Subsidiary has received (A) any notice or claim either oral or written in the
past three (3) years asserting or suggesting that any such infringement,
misappropriation, violation, dilution or unauthorized use is or may be occurring
or has or may have occurred, or (B) any written notice or claim since the time
of the Company's initial public offering asserting or suggesting that any such
infringement, misappropriation, violation, dilution or unauthorized use is or
may be occurring or has or may have occurred that would be material to the
business and operations of the Company. No Proceeding is pending or, to the
Company's knowledge, threatened, nor is there any pending claim or demand which
challenges the ownership, legality, validity, enforceability, use, exploitation
or modification by the Company or any Subsidiary of such Company Owned IP. No
Company Owned IP is subject to any outstanding order, judgment, decree, or
stipulation restricting the use thereof by the Company or any Subsidiary or, in
the case of any Intellectual Property licensed to others, restricting the sale,
transfer, assignment or licensing thereof by the Company or such Subsidiary to
any person.
(ii) To the Company's knowledge, the Company Licensed IP does not
infringe, misappropriate, violate, dilute or constitute the unauthorized
use of any Intellectual Property of any third party.
(iii) The Company has the right to grant the licenses it grants in the
course of its business.
(iv) To the knowledge of the Company, the Company has the right to
conduct its business as it is currently conducted.
(f) All Company Registered IP is (i) to the Company's knowledge, valid,
enforceable to the full extent permitted by the jurisdiction in which it is
registered and in full force and effect, and (ii) all maintenance, annuity and
other fees due in respect of such Company Registered IP have been fully paid and
all filings applicable thereto have been properly made except with respect to
Company Registered IP that the Company has made a reasonable business judgment
not to pursue protection or not to maintain. No trademark included in the
Company Registered IP is now involved in any opposition or cancellation
proceeding and no trademark that is currently used by the Company has been
involved in any opposition or cancellation proceeding. No patent or patent
application included in the Company Registered IP is now involved in any
interference, reissue or reexamination proceeding.
A-27
(g) To the knowledge of the Company, no person is infringing or
misappropriating any Company Owned IP in any material respect or making any
unlawful use of any products of the Company in any material respect. Neither the
Company nor any Subsidiary has initiated and is maintaining before a court or in
an arbitration proceeding claims or causes of action against other persons for
infringement by such persons of Company Owned IP (including claims for past
infringement of Intellectual Property). Neither the Company nor any Subsidiary
has, during the twelve (12) month period prior to the date hereof, threatened in
a writing sent by the Company's legal department or outside counsel to initiate
such proceeding.
(h) No Company Owned IP and, to the Company's knowledge, no Company
Licensed IP, incorporated into or used in conjunction with any product, system,
program or software module that is or was used in or material to (or that
relates to) the assets of the Company or any Subsidiary contains any "back
door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
software routines or hardware components designed to permit unauthorized access
or to disable or erase software, hardware or data without the consent of the
user.
(i) None of the software products of the Company or any Subsidiary is, in
whole or in part, subject to the provisions of any open source or other source
code license agreement that (i) requires the distribution of source code in
connection with the distribution of the licensed software in object code form;
(ii) prohibits or limits the Company or any Subsidiary from charging a fee or
receiving consideration in connection with sublicensing or distributing such
licensed software (whether in source code or object code form); or (iii) allows
a customer or requires that a customer have the right to decompile, disassemble
or otherwise reverse engineer the software by its terms and not by operation of
law.
SECTION 2.16. Insurance. Each of the insurance policies maintained by the
Company and each Subsidiary (the "INSURANCE POLICIES") is in full force and
effect and is valid, outstanding and enforceable, and all premiums due thereon
have been paid in full, or if not yet due and payable, reserved by the Company
on its unaudited balance sheet as of April 30, 2003 in accordance with United
States generally accepted accounting principles. True and complete copies of all
Insurance Policies have been delivered or made available to Parent. None of the
Insurance Policies will terminate or lapse (or be affected in any other
materially adverse manner) by reason of the execution and delivery of, or
consummation of any of the transactions contemplated by, this Agreement. Each of
the Company and each Subsidiary has complied in all material respects with the
provisions of each Insurance Policy under which it is the insured party. No
insurer under any Insurance Policy has canceled or generally disclaimed
liability under any such policy or, to the Company's knowledge, indicated any
intent to do so or not to renew any such policy. All material claims of the
Company or any Subsidiary under the Insurance Policies have been filed in a
timely fashion.
SECTION 2.17. Title to Properties; Absence of Liens and Encumbrances.
(a) Neither the Company nor any Subsidiary has an ownership interest in any
real property, nor has it ever had an ownership interest in any real property.
Section 2.17 of the Company Disclosure Schedule sets forth a complete and
accurate list of all real property currently leased or subleased by the Company
or any Subsidiary, with the name of the lessor and the date of the lease,
sublease, assignment of the lease, any guaranty given or leasing commissions
payable by the Company or any Subsidiary in connection therewith and each
amendment to any of the foregoing (collectively, the "LEASE DOCUMENTS"). True,
correct and complete copies of all Lease Documents have been delivered or made
available to Parent or Parent's counsel. All such current leases and subleases
are in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
material default or event of default (or event which, with notice or lapse of
time, or both, would constitute a default) by the Company or any Subsidiary or,
to the Company's knowledge, by the other party to such lease or sublease, or
person in the chain of title to such leased premises.
(b) Each of the Company and Subsidiaries has good and valid title to, or,
in the case of leased properties and assets, valid leasehold or subleasehold
interests in, all of its properties and assets, tangible and intangible, real,
personal and mixed, used or held for use in its business, free and clear of any
Liens,
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except for such imperfections of title, if any, that do not materially interfere
with the present value of the subject property. For purposes of this Section
2.17 only, the terms "property" and "assets" do not include Intellectual
Property.
SECTION 2.18. Certain Business Practices. None of the Company, any
Subsidiary or, to the Company's knowledge, any directors or officers, agents or
employees of the Company or any Subsidiary, has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iii) made any payment in the nature of criminal bribery.
SECTION 2.19. Product Warranties. Section 2.19 of the Company Disclosure
Schedule sets forth complete and accurate copies of the forms of written
warranties and guaranties by the Company or any Subsidiary utilized with respect
to its products or services. There have not been any material deviations from
such warranties and guaranties that would obligate the Company or any Subsidiary
to provide products or services in any form or manner not consistent with the
relevant specifications for such products or services, and none of the Company,
any Subsidiary or any of their respective salespeople, employees, distributors
and agents is authorized to undertake obligations to any customer or to other
third parties in excess of such warranties or guaranties.
SECTION 2.20. Material Contracts.
(a) Section 2.20(a) of the Company Disclosure Schedule sets forth a
complete and accurate list of all written or oral contracts, agreements, notes,
bonds, indentures, mortgages, guarantees, options, leases, licenses, sales and
purchase orders, warranties, commitments and other instruments of any kind (each
a "CONTRACT"), to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary, is otherwise bound, as follows (each a "MATERIAL
CONTRACT" and, collectively, the "MATERIAL CONTRACTS"):
(i) each "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) with respect to the Company and
its Subsidiaries;
(ii) each Contract of the Company or any Subsidiary other than with a
customer pursuant to which the Company or any Subsidiary received (or was
entitled to receive) or paid (or was purportedly obligated to pay) Two
Million Dollars ($2,000,000) or more in the twelve (12) month period ended
April 30, 2003 (provided such Contract remains in effect as of the date
hereof);
(iii) each customer contract in effect on the date of this Agreement
under which the Company or any Subsidiary (A) received in the twelve (12)
month period ended April 30, 2003 or is entitled to receive thereafter (1)
One Million Dollars ($1,000,000) or more for products and (2) a fixed
amount to be paid in exchange for the provision of services or (B) commits
to any person after the date hereof to (1) develop software without charge
or (2) incorporate any software into any of the Company's products;
(iv) each Contract that requires payment by or to the Company after
April 30, 2003 of One Million Dollars ($1,000,000) or more (provided such
Contract is not by its terms cancelable by the Company or any Subsidiary on
60 days or less notice);
(v) each Contract containing noncompetition restrictions, including
any covenant limiting the right of the Company or its Subsidiaries to
engage in any line of business or compete with any person in any line of
business, including any geographic limitations;
(vi) each Contract that either individually or in the aggregate is
material to any line of business of the Company or any Subsidiary that
requires any consent or other action by any person for, or will be subject
to default, termination, material repricing or other renegotiation, or
cancellation because of, the transactions contemplated hereby;
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(vii) other than Shrinkwrap Software, each Contract that either
individually or in the aggregate, if terminated or expired, would
materially impair or prevent Company's ability to (A) develop, use, sell,
distribute or manufacture any products or services provided to customers in
the twelve (12) months ending April 30, 2003; (B) enter a line of business
currently contemplated by Company or any Subsidiary; or (C) conduct
internal operations in substantially the same manner and with the
substantially same cost structure as conducted by Company in the (12)
months ending April 30, 2003;
(viii) each Contract for distribution of the products of the Company
or any Subsidiary through distributors or other channels for resale or
license to, or use by, end users;
(ix) each Contract of the Company or any Subsidiary relating to, and
evidences of, indebtedness for borrowed money or the deferred purchase
price of property (whether incurred, assumed, guaranteed or secured by any
asset) in excess of One Million Dollars ($1,000,000) (excluding any
equipment leases involving aggregate annual payments of less than
$1,000,000 per lease);
(x) each Contract relating to any legal entity in the nature of a
partnership, limited liability company, or joint venture, in which the
Company owns more than 25% of the voting rights, or a material strategic
alliance;
(xi) each Contract that requires the Company or any Subsidiary to
grant "most favored customer" pricing to any other person;
(xii) each Contract which could prohibit the consummation of the
transactions contemplated by this Agreement; and
(xiii) each material Contract with any present director or executive
officer of the Company or any of its Subsidiaries or any stockholder who
owns or controls ten percent (10%) or more of the Shares (other than
Employee Agreements), provided that any agreement that requires the payment
of $60,000 per annum shall be deemed to be material.
(b) (i) Each Material Contract is a legal, valid and binding obligation of
the Company or a Subsidiary and, to the Company's knowledge, each other person
who is a party thereto, enforceable against the Company or such Subsidiary and
to the Company's knowledge, each such other person in accordance with its terms;
(ii) neither the Company or any Subsidiary nor, to the Company's knowledge, any
other party thereto is in material default any Material Contract; and (iii)
neither the Company nor any Subsidiary is a party to any Material Contract that,
to the Company's knowledge, the Company or such Subsidiary does not have the
present ability to fully perform.
(c) Neither the Company nor any Subsidiary is a party to or otherwise bound
by:
(i) any fidelity or surety bond or completion bond except as required
pursuant to Section 412 of ERISA;
(ii) other than the money back guarantees contained in license
agreements to the Company's end user customers ("END USER AGREEMENTS"), any
Contract pursuant to which the Company or any Subsidiary has agreed to
provide liquidated damages in excess of $500,000 individually or $5,000,000
in the aggregate for failure to meet performance or quality milestones;
(iii) other than End User Agreements or agreements with sales agents
or distributors of the Company's products, any Contract pursuant to which
the Company or any Subsidiary has agreed to provide (A) indemnification
other than routine indemnification to a third party in the ordinary course
consistent with past practices (other than this Agreement) or (B) guaranty
to a third party (other than this Agreement);
(iv) any Contract relating to the acquisition of assets, property or
any interest in any business enterprise having a value in excess of One
Million Dollars ($1,000,000) or disposition of assets, property or any
interest in any business enterprise outside the ordinary course of the
Company's or any Subsidiary's business and where the consideration is not
Shares;
A-30
(v) any material joint marketing or development Contract; or
(vi) any agreement pursuant to which the Company has granted or may
grant in the future, to any party any source code which is Company Owned IP
or Company Licensed IP, a license or option or other right to use or
acquire source code other than source code licenses contained in each End
User Agreement, or agreement with sales agents or distributors of the
Company's products, all forms of which have been provided to Parent.
SECTION 2.21. Suppliers and Customers. The documents and information
supplied by the Company to Parent or any of its representatives with respect to
relationships and volumes of business done with the Company's or any
Subsidiary's significant suppliers and customers are accurate in all material
respects. During the last twelve (12) months, neither the Company nor any
Subsidiary has received any written notices of termination or written threats of
termination from any of the ten (10) largest suppliers or the twenty-five (25)
largest customers of the Company and its Subsidiaries, taken as a whole.
SECTION 2.22. Affiliates. Except for the directors and executive officers
of the Company, each of whom is listed in Section 2.22 of the Company Disclosure
Schedule, there are no persons who, to the knowledge of the Company, may be
deemed to be affiliates of the Company under Rule 145 of the Securities Act
("COMPANY AFFILIATES").
Section 2.23. Opinion of Financial Advisor. Morgan Stanley & Co.
Incorporated (the "COMPANY FINANCIAL ADVISOR") has delivered to the Company
Board its opinion to the effect that as of the date such opinion was delivered,
the consideration to be received in the Offer and the Merger is fair, from a
financial point of view, to the holders of Shares (the "COMPANY FAIRNESS
OPINION"). The Company has been authorized by the Company Financial Advisor to
permit, subject to the prior review and consent by the Company Financial Advisor
(such consent not to be unreasonably withheld), the inclusion of the Company
Fairness Opinion (or a reference thereto) in the Offer Documents, the S-4 and
the Joint Proxy Statement/Prospectus. As of the date hereof, such opinion has
not been withdrawn, revoked or modified. A true and complete copy of the Company
Fairness Opinion will be delivered to Parent promptly after receipt of written
confirmation thereof.
SECTION 2.24. Brokers. No broker, finder or investment banker (other than
the Company Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
SECTION 2.25. Company Rights Agreement. The Company has amended the
Company Rights Agreement (a copy of which such amendment has been provided to
Parent prior to the date hereof) so that the entering into of this Agreement and
the Company Voting Agreements, and the consummation of the transactions
contemplated hereby and thereby, do not and will not on the date hereof or as
the result of the passage of time (i) result in any person being deemed to be an
"ACQUIRING PERSON" (as defined in the Company Rights Agreement); (ii) result in
the ability of any person to exercise any Company Rights under the Company
Rights Agreement; (iii) enable or require the Company Rights to separate from
the Shares to which they are attached or to be triggered or become exercisable;
or (iv) enable the Company to exchange any Company Rights for Shares, pursuant
to Section 24 of the Company Rights Agreement or otherwise. No "DISTRIBUTION
DATE" or "TRIGGERING EVENT" (as such terms are defined in the Company Rights
Agreement) has occurred or will occur as a result of the entering into of this
Agreement and the Company Voting Agreements. Copies of the Company Rights
Agreement, and all amendments thereto, have previously been made available to
Parent.
SECTION 2.26. Takeover Statutes. The Company Board has taken all actions
so that the restrictions contained in Section 203 of the DGCL applicable to a
"business combination" (as defined in such Section 203), and any other similar
Applicable Law, will not apply to Parent or Acquisition with respect to the
execution, delivery or performance of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby.
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SECTION 2.27. Interested Party Transactions. No director, officer or
other affiliate of the Company has or has had, directly or indirectly, (i) an
economic interest in any person that has furnished or sold, or furnishes or
sells, services or products that the Company or any Subsidiary furnishes or
sells, or proposes to furnish or sell; (ii) an economic interest in any person
that purchases from or sells or furnishes to, the Company or any Subsidiary, any
goods or services; (iii) a beneficial interest in any Contract included in
Section 2.15 or 2.20 of the Company Disclosure Schedule; or (iv) any contractual
or other arrangement with the Company or any Subsidiary; provided, however, that
ownership of no more than one percent (1%) of the outstanding voting stock of a
publicly traded corporation shall not be deemed an "economic interest in any
person" for purposes of this Section 2.27.
SECTION 2.28. Representations Complete. The representations and
warranties made by the Company in this Agreement, the statements made in any
Schedules or certificates furnished by the Company pursuant to this Agreement,
and the statements made by the Company in any documents mailed, delivered or
furnished to the stockholders of Parent or the Company in connection with
soliciting their proxy or consent to this Agreement and the Merger, do not
contain and will not contain, as of their respective dates and as of the
Effective Time, any untrue statement of a material fact, nor do they omit or
will they omit, as of their respective dates or as of the Effective Time, to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which they were made,
not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
The representations and warranties set forth below have not been changed or
updated from the Original Agreement except for changes in Sections 3.3, 3.6,
3.7, 3.9, 3.10, 3.13 and 3.18 to reflect changes in the consideration and form
of the transactions contemplated hereby and to reflect certain actions arising
from a hostile tender offer for the Parent commenced by Oracle Corporation.
Parent and Acquisition hereby represent and warrant to the Company, subject to
the exceptions set forth in the Disclosure Schedule (the "PARENT DISCLOSURE
SCHEDULE") delivered by Parent simultaneously with the execution hereof (which
Parent Disclosure Schedule shall specifically identify the specific Section or
subsection, as applicable, to which each such exception relates) that:
SECTION 3.1. Organization.
(a) Each of Parent and Acquisition is duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
power and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted. Parent has made available to the Company
complete and accurate copies of the Certificates of Incorporation and bylaws as
in full force and effect on the date hereof, of Parent and Acquisition.
(b) Each of Parent and Acquisition is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
SECTION 3.2. Capitalization of Parent and its Subsidiaries.
(a) The authorized capital stock of the Parent consists of (i) Seven
Hundred Million (700,000,000) shares of Parent Common Stock, of which, as of May
27, 2003, Three Hundred Sixteen Million Six Hundred Five Thousand Nine Hundred
Forty-One (316,605,941) shares of Parent Common Stock were issued and
outstanding; and (ii) Two Million (2,000,000) shares of preferred stock, par
value $0.01 per share, none of which are outstanding. All of the outstanding
shares of Parent Common Stock have been validly issued and are fully paid,
nonassessable and free of preemptive rights. As of May 27, 2003, an
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aggregate of Ninety-Nine Million Six Hundred Six Thousand Seven Hundred
Thirty-Eight (99,606,738) shares of Parent Common Stock were reserved for
issuance of which Eighty-Two Million Five Hundred Forty Thousand Thirty-Nine
(82,540,039) shares of Parent Common Stock were issuable upon or otherwise
deliverable in connection with the exercise of outstanding options to purchase
Parent Common Stock issued pursuant to the following plans ("PARENT PLANS"):
Amended and Restated 1989 Stock Plan, 1992 Employee Stock Purchase Plan, Amended
and Restated 2001 Stock Plan, 2000 Nonstatutory Stock Option Plan, PeopleSoft
Inc. 2003 Directors Stock Plan, Teamscape Corporation 1998 Stock Plan,
SkillsVillage, Inc. 1999 Stock Plan, Advance Planning Solutions, Inc. 1998 Stock
Plan, Intrepid Systems, Inc. 1992 Stock Option Plan, Red Pepper Software Company
1993 Stock Option Plan, Trimark Technologies, Inc. 1993 Stock Option Plan,
Trimark Technologies, Inc. Employee and Consultants Stock Option Plan 1995,
Trimark Technologies Directors and Executive Officers Non-Statutory Stock Option
Plan 1998, Trimark Technologies Directors and Executive Officers Stock Option
Plan 1995, The Vantive Corporation Amended and Restated 1991 Stock Option Plan,
The Vantive Corporation 1997 Nonstatutory Stock Option Plan. Between May 27,
2003 and the date hereof, no shares of the Parent's capital stock have been
issued other than pursuant to options already in existence on such first date
issued under Parent Plans, and between May 27, 2003 and the date hereof, no
stock options have been granted. Except as set forth above and for the rights
(the "PARENT RIGHTS") issued pursuant to Parent's First Amended and Restated
Preferred Share Rights Agreement, effective as of December 16, 1997, between
Parent and BankBoston, N.A. (the "PARENT RIGHTS AGREEMENT"), as of the date
hereof, there are outstanding (i) no shares of capital stock or other voting
securities of Parent, (ii) no securities of Parent or any of its subsidiaries
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities of Parent, (iii) no options, warrants or other rights to
acquire from Parent or any of its subsidiaries, and, except as described in the
Parent SEC Reports, no obligations of Parent or any of its subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or other voting securities of
Parent, and (iv) no equity equivalent interests in the ownership or earnings of
the Parent or other similar rights (collectively "PARENT SECURITIES"). As of the
date hereof, there are no outstanding rights or obligations of the Parent or any
of its subsidiaries to repurchase, redeem or otherwise acquire any Parent
Securities. Other than the Parent Voting Agreements, there are no stockholder
agreements, voting trusts or other arrangements or understandings to which
Parent is a party or by which it is bound relating to the voting or registration
of any shares of capital stock or other voting securities of Parent.
(b) The Parent Rights and Parent Common Stock constitute the only classes
of equity securities of Parent or its subsidiaries registered or required to be
registered under the Exchange Act.
SECTION 3.3. Authority Relative to this Agreement.
(a) Each of Parent and Acquisition has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Acquisition and by Parent as the sole
stockholder of Acquisition, and no other corporate proceedings on the part of
Parent or Acquisition are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and assuming the due
authorization, execution and delivery hereof by the Company, constitutes a
valid, legal and binding agreement of each of Parent and Acquisition enforceable
against each of Parent and Acquisition in accordance with its terms, subject to
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights generally or to
general principles of equity.
(b) Without limiting the generality of the foregoing, the Parent Board has
unanimously (i) approved this Agreement, the Offer, the Merger and the other
transactions contemplated hereby, and (ii) has not withdrawn or modified such
approval.
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SECTION 3.4. Parent Common Stock. The shares of Parent Common Stock to be
issued upon exercise of Company Stock Options assumed by Parent hereunder will,
when issued and delivered in accordance with this Agreement, be duly authorized,
validly issued, fully paid and non-assessable and issued in compliance with
federal and state securities laws. Parent has reserved the shares of Parent
Common Stock to be issued upon exercise of Company Stock Options assumed by
Parent pursuant hereto.
SECTION 3.5. SEC Reports; Financial Statements.
(a) Parent has filed all required forms, reports and documents ("PARENT SEC
REPORTS") with the SEC since December 31, 1999, each of which complied at the
time of filing in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, each law as in effect on the dates such
forms, reports and documents were filed. None of such Parent SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, contained when filed any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein in light
of the circumstances under which they were made not misleading, except to the
extent superseded or amended by a Parent SEC Report filed subsequently and prior
to the date hereof. The consolidated financial statements of Parent included in
the Parent SEC Reports fairly present in conformity with United States generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto) the consolidated financial position of Parent
and its consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended.
(b) Parent has heretofore made, and hereafter will make, available to the
Company a complete and correct copy of any amendments or modifications that are
required to be filed with or submitted to the SEC but have not yet been filed
with or submitted to the SEC to agreements, documents or other instruments that
previously had been filed with or submitted to the SEC by Parent pursuant to the
Exchange Act.
(c) Each required form, report and document containing financial statements
that has been filed with or submitted to the SEC since July 31, 2002, was
accompanied by the certifications required to be filed or submitted by Parent's
chief executive officer and chief financial officer pursuant to the
Sarbanes-Oxley Act, and at the time of filing or submission of each such
certification, such certification was true and accurate and complied with the
Sarbanes-Oxley Act and the rules and regulations promulgated thereunder.
(d) Since December 31, 1999, neither Parent nor any of its subsidiaries
nor, to Parent's knowledge, any director, officer, employee, auditor, accountant
or representative of Parent or any of its subsidiaries has received or otherwise
had or obtained knowledge of any complaint, allegation, assertion or claim,
whether written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of Parent or any of its subsidiaries or
their respective internal accounting controls, including any complaint,
allegation, assertion or claim that Parent or any of its subsidiaries has
engaged in questionable accounting or auditing practices. No attorney
representing Parent or any of its subsidiaries, whether or not employed by
Parent or any of its subsidiaries, has reported evidence of a material violation
of securities laws, breach of fiduciary duty or similar violation by Parent or
any of its officers, directors, employees or agents to the Parent Board or any
committee thereof or to any director or officer of Parent.
(e) To the knowledge of Parent, no employee of Parent or any of its
subsidiaries has provided or is providing information to any law enforcement
agency regarding the commission or possible commission of any crime or the
violation or possible violation of any Applicable Law. Neither Parent nor any of
its subsidiaries nor any officer, employee, contractor, subcontractor or agent
of Parent or any such subsidiary has discharged, demoted, suspended, threatened,
harassed or in any other manner discriminated against an employee of Parent or
any of its subsidiaries in the terms and conditions of employment because of any
act of such employee described in 18 U.S.C. Section 1514A(a).
SECTION 3.6. Information Supplied. None of the information supplied or to
be supplied by Parent or Acquisition for inclusion or incorporation by reference
in (i) the Offer Documents; (ii) the S-4 will, at the time the S-4 is filed with
the SEC and at the time it becomes effective under the Securities Act,
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contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) the Information Statement will, at the date mailed to
stockholders of the Company and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein in light of
the circumstances under which they are made not misleading. Each of the Offer
Documents, the S-4 and the Information Statement will comply, as of its mailing
date, as to form in all material respects the provisions of the Exchange Act and
the rules and regulations thereunder. Notwithstanding the foregoing, Parent
makes no representation, warranty or covenant with respect to any information
supplied or required to be supplied by the Company which is contained in or
omitted from any of the foregoing documents or which is incorporated by
reference therein.
SECTION 3.7. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under and
other applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, the rules and regulations of the Nasdaq National
Market, the HSR Act, and any filings under similar competition or merger
notification laws or regulations of foreign Governmental Entities and the filing
and recordation of the Certificate of Merger as required by the DGCL, no
material filing with or notice to, and no material permit, authorization,
consent or approval of any Governmental Entity is necessary for the execution
and delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby. Neither the
execution, delivery and performance of this Agreement by Parent or Acquisition
nor the consummation by Parent or Acquisition of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or bylaws (or similar governing
documents) of Parent or Acquisition, (ii) result in a violation or breach of or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or Lien) under any of the terms, conditions or provisions of any material note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or Acquisition or any of Parent's other
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, or (iii) violate any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent or
Acquisition or any of Parent's other subsidiaries or any of their respective
properties or assets.
SECTION 3.8. No Default. Neither Parent nor any of its subsidiaries is in
(i) breach, default or violation (and no event has occurred that with notice or
the lapse of time, or both, would constitute a breach, default or violation) of
any term, condition or provision of its Certificate of Incorporation or bylaws
(or similar governing documents), or (ii) material breach, default or violation
(and no event has occurred that with notice or the lapse of time, or both, would
constitute a breach, default or violation) of any term, condition or provision
of (a) any material note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent nor any of its
subsidiaries is now a party or by which it or any of its properties or assets
may be bound, or (b) any material order, writ, injunction, decree, law, statute,
rule or regulation applicable to Parent nor any of its subsidiaries or any of
its properties or assets.
SECTION 3.9. Litigation. Except as disclosed in the Parent SEC Reports
filed on or before the date hereof, and except for litigation arising from the
tender offer by Oracle Corporation, there is no suit, action, proceeding,
investigation or material claim pending or, to the knowledge of Parent, any
credible threat thereof, against Parent or any of its subsidiaries or any of
their respective properties or assets before any Governmental Entity. Except as
disclosed in the Parent SEC Reports filed on or before the date hereof, neither
Parent nor any of its subsidiaries is subject to any outstanding order, writ,
injunction or decree of any Governmental Entity that reasonably could be
expected to result in any loss, expense, charge, assessment, levy, fine or other
liability being imposed upon or incurred by the Parent or such subsidiary
exceeding One Million Dollars ($1,000,000) or that reasonably could be expected
to prevent the consummation of the transactions contemplated hereby.
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SECTION 3.10. Opinion of Financial Advisor. Citigroup Global Markets (the
"PARENT FINANCIAL ADVISOR") has delivered to the Parent Board its opinion to the
effect that, as of the date such opinion was delivered, the consideration to be
paid in the Offer and the Merger is fair, from a financial point of view, to
Parent (the "PARENT FAIRNESS OPINION"). Parent has been authorized by the Parent
Financial Advisor to permit the inclusion of the Parent Fairness Opinion (or,
subject to the prior review and approval of the Parent Financial Advisor (such
approval not to be unreasonably withheld), a reference thereto) in the Offer,
the S-4 and the Joint Proxy Statement/Prospectus. Such opinion has not been
withdrawn, revoked or modified as of the date hereof. A true and complete copy
of the Parent Fairness Opinion will be delivered to the Company promptly after
receipt of written confirmation thereof.
SECTION 3.11. Brokers. No broker, finder or investment banker (other than
the Parent Financial Advisor) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Acquisition.
SECTION 3.12. No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation, execution
and consummation of this Agreement and the transactions contemplated hereby,
Acquisition has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind or entered into any agreement or
arrangement with any person.
SECTION 3.13. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed by Parent in the Parent SEC Reports filed on or
before the date hereof other than (i) liabilities in connection with litigation
arising from the tender offer by Oracle Corporation and (ii) liabilities or
obligations to suppliers, vendors, employees and landlords incurred in the
ordinary and usual course of such business consistent with past practices,
neither Parent nor any of its subsidiaries has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by United States generally accepted accounting principles to be
reflected on a consolidated balance sheet of Parent (including the notes
thereto). Except for the negotiation and execution of the Original Agreement and
this Agreement and actions taken in response to the tender offer by Oracle
Corporation, between March 31, 2003 and the date hereof, the Parent and each of
its subsidiaries have conducted their respective businesses in all material
respects only in, and have not engaged in any material transaction other than
according to, the ordinary and usual course of such business consistent with
past practices, and there has not been any Material Adverse Effect on Parent.
SECTION 3.14. Compliance with Applicable Law. Except as disclosed in the
Parent SEC Reports filed on or before the date hereof, each of Parent and its
subsidiaries holds all material permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (collectively, the "PARENT PERMITS"). Except as
disclosed in the Parent SEC Reports filed on or before the date hereof, Parent
and its subsidiaries have materially complied, and are in material compliance
with, the terms of Parent Permits. Except as disclosed in the Parent SEC
Reports, the businesses of Parent and its subsidiaries have been and are being
conducted in material compliance with all material Applicable Laws. Except as
disclosed in the Parent SEC Reports filed on or before the date hereof, no
investigation or review by any Governmental Entity with respect to Parent or any
of its subsidiaries is pending or, to the knowledge of Parent, threatened.
SECTION 3.15. Suppliers and Customers. The documents and information
supplied by Parent to the Company or any of its representatives with respect to
relationships and volumes of business done with Parent's or any of its
subsidiaries' significant suppliers and customers are accurate in all material
respects. During the last twelve (12) months, neither Parent nor any or its
subsidiaries has received any written notices of termination or written threats
of termination from any of the ten (10) largest suppliers or the twenty-five
(25) largest customers of Parent and its subsidiaries, taken as a whole.
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SECTION 3.16. Parent Employee Benefit Matters.
(a) Section 3.16(a) of the Parent Disclosure Schedule lists, with respect
to employees in the United States of Parent and, to the knowledge of Parent and
its subsidiaries, all employee benefit plans (as defined in Section 3(3) of
ERISA) and all bonus, stock option, stock purchase, restricted stock, long term
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, change in control, and severance agreements,
to which Parent or any of its subsidiaries is a party, with respect to which
Parent or any of its subsidiaries has any obligation or which are maintained,
contributed to or sponsored by Parent or any of its subsidiaries for the benefit
of any current or former employee, officer or director of Parent or any of its
subsidiaries (collectively, the "PARENT BENEFIT PLANS"), other than plans,
programs, arrangements or agreements that are not material. Copies or summaries
of each material Parent Benefit Plan have been made available to the Company.
Neither Parent nor any of its subsidiaries has any written commitment to create,
adopt or amend any material employee benefit plan, program, arrangement or
agreement, other than any immaterial modification or any modification or change
required by Applicable Law.
(b) Each Parent Benefit Plan is now in all respects in compliance with its
terms and with the requirements of all applicable laws and regulations,
including, without limitation, ERISA and the Code, except where any
non-compliance would not reasonably be likely, individually or in the aggregate,
to have a Material Adverse Effect on Parent. To the knowledge of Parent, no
action, claim or proceeding is pending or threatened with respect to any Parent
Benefit Plan, other than claims for benefits in the ordinary course and other
than such actions, claims or proceedings that could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.17. Parent Intellectual Property. Parent (or one of its
subsidiaries) owns all of the Intellectual Property, or has obtained the right
to use all of the Intellectual Property that is not owned by it, that is used in
any material respect in Parent's businesses as currently conducted. The products
marketed, sold or licensed to customers by Parent and its subsidiaries,
exclusive of the Intellectual Property licensed from third parties, and all
Intellectual Property owned by Parent (or one of its subsidiaries) and used in
any material respect in Parent's businesses as currently conducted, do not
infringe upon, violate or constitute the unauthorized use of any valid and
enforceable rights owned or controlled by any third party, including any
Intellectual Property of any third party. To Parent's knowledge, the
Intellectual Property it has licensed from third parties, and used in any
material respect in Parent's businesses as currently conducted, does not
infringe upon, violate or constitute the unauthorized use of any valid and
enforceable rights owned or controlled by any other third party. To Parent's
knowledge, no Significant Parent Product contains any material defects, the
costs of which to repair or replace (or otherwise cure pursuant to a contractual
obligation to a customer) would result in a Material Adverse Effect on Parent.
Parent has received no formal written notice terminating or threatening the
termination of any Parent Technology License due to Parent's breach thereof. For
the purposes of this Section 3.17, "SIGNIFICANT PARENT PRODUCT" means any
product sold by Parent to third party end users that accounts for a substantial
portion of Parent's revenue and "PARENT TECHNOLOGY LICENSE" means any technology
license between Parent and any third party which allows Parent to embed
technology in a Significant Parent Product.
SECTION 3.18. Financing. Parent and Acquisition collectively have and
will have at the Acceptance Date and at the Effective Time, and Parent will make
available to Acquisition, sufficient funds to enable Acquisition to pay that
portion of the Offer Price and Merger Consideration to be paid in cash for all
outstanding Shares purchased pursuant to the Offer or the Merger and to perform
Parent's and Acquisition's obligations under this Agreement.
SECTION 3.19. Representations Complete. The representations and
warranties made by Parent and Acquisition in this Agreement, the statements made
in any certificates furnished by Parent and Acquisition pursuant to this
Agreement, and the statements made by Parent and Acquisition in any documents
mailed, delivered or furnished to the stockholders of Parent and the Company in
connection with soliciting their proxy or consent to this Agreement and the
Merger, do not contain and will not contain, as of their
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respective dates and as of the Effective Time, any untrue statement of a
material fact, nor do they omit or will they omit, as of their respective dates
or as of the Effective Time, to state any material fact necessary in order to
make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE 4
COVENANTS
SECTION 4.1. Conduct of Business.
(a) Conduct of Business of the Company. Subject to the Company's
compliance with Section 1.3, and except (i) as expressly contemplated by this
Agreement, (ii) as described in Section 4.1 of the Company Disclosure Schedule,
or (iii) to the extent that Parent shall otherwise consent in writing (such
consent or declination to consent not to be unreasonably delayed), during the
period from the date hereof to the earlier of the Acceptance Date and the
termination of this Agreement in accordance with its terms, the Company shall,
and shall cause each Subsidiary to, conduct its operations in the ordinary
course of business consistent with past practices and, to the extent consistent
therewith, and with no less diligence and effort than would be applied in the
absence of this Agreement, seek to preserve intact its current business
organizations, keep available the service of its current officers and employees
and preserve its relationships with customers, suppliers, distributors, lessors,
creditors, employees, contractors and others having business dealings with it
with the intention that its goodwill and ongoing businesses shall be unimpaired
at the Acceptance Date. Without limiting the generality of the foregoing, except
as otherwise expressly provided in this Agreement and except as described in
Section 4.1 of the Company Disclosure Schedule, prior to the Acceptance Date,
neither the Company nor any Subsidiary shall, without the prior written consent
(such consent or declination to consent not to be unreasonably delayed) of
Parent:
(i) amend its Certificate of Incorporation or bylaws (or other similar
governing instrument);
(ii) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), or alter or amend the terms of, any stock of any class or any
other debt or equity securities or equity equivalents (including any stock
options or stock appreciation rights) except for (A) the issuance and sale
of Shares pursuant to options granted under the Company Plans prior to the
date hereof, (B) options granted under Company Plans to purchase Shares to
new hires of the Company or any Subsidiary up to an aggregate maximum
amount of Three Hundred Twenty Thousand (320,000) Shares subject to
options, provided that no such options may be issued that will provide for
acceleration as a result of the consummation of the transactions
contemplated by this Agreement whether or not in connection with any other
event, including termination of employment, (C) options granted under
Company Plans to purchase Shares to current employees in connection with
any adjustments or promotions on a basis consistent with past practices of
the Company up to a maximum of Ten Thousand (10,000) Shares subject to
options individually and an aggregate maximum of One Hundred Sixty Thousand
(160,000) Shares subject to options, provided that no such options may be
issued that will provide for acceleration as a result of the consummation
of the transactions contemplated by this Agreement whether or not in
connection with any other event, including termination of employment;
(iii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, make any other actual, constructive or deemed distribution
in respect of its capital stock or otherwise make any payments to
stockholders in their capacity as such, or redeem or otherwise acquire any
of its securities or any securities of any Subsidiary (other than the
repurchase of Restricted Company Shares and cancellation of Company Stock
Options at repurchase price that is less than the last quoted sales price
of the Shares on the Nasdaq National Market following termination of
employment with, or provision of services to, the Company or any
Subsidiary);
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(iv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization (other than the Merger);
(v) alter through merger, liquidation, reorganization, restructuring
or any other fashion the corporate structure of any Subsidiary (other than
any wholly owned Subsidiary or foreign Subsidiary that would be wholly
owned but for a nominal number of director or similar shares being owned by
a foreign national as required by the law of the jurisdiction of such
foreign Subsidiary's organization);
(vi) (A) incur or assume any long-term or short-term debt or issue any
debt securities in excess of One Million Dollars ($1,000,000) or trade
payables arising in the ordinary course of business consistent with past
practices; (B) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person except for obligations of any Subsidiary
incurred in the ordinary course of business consistent with past practices;
(C) make any loans, advances or capital contributions to or investments in
any other person (other than to a Subsidiary or customary loans or advances
to employees in each case in the ordinary course of business consistent
with past practices); (D) pledge or otherwise subject to any Lien shares of
capital stock of the Company or any Subsidiary or any of the Other
Interests; or (E) mortgage or pledge any of its material properties or
assets, tangible or intangible, or create or suffer to exist any new
material Lien (or any increase or expansion of the scope of any existing
Lien) thereupon other than as a result of modifications to synthetic lease
agreements outstanding on the date hereof;
(vii) except as may be permitted by clause (viii) below or as may be
required by Applicable Law, (A) enter into, adopt, make, amend in any
manner or terminate any employment agreement or any bonus payments other
than bonus payments to any person who is not a participant under the Change
in Control Plan and that are not in excess of Twenty Thousand Dollars
($20,000) individually or Five Hundred Thousand Dollars ($500,000) in the
aggregate, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement other than (x) offer letters to new
hires provided that no such offer letter shall provide (1) for the grant of
options under Company Plans that will provide for acceleration, or (2)
provide any severance rights, in either case as a result of the
transactions contemplated by this Agreement whether or not in connection
with any other event, including termination of employment, or alter any "at
will" employment relationship and (y) options under Company Plans to
purchase Shares permitted by clause (ii), or (B) enter into, adopt amend in
any manner or terminate any pension, retirement, deferred compensation,
employment, health, life, or disability insurance, dependent care,
severance or other employee benefit plan agreement, trust, fund or other
arrangement for the benefit or welfare of any director, officer, employee
or consultant in any manner or (C) increase in any manner the compensation
or fringe benefits of any director, officer or employee or pay any benefit
not required by any plan and arrangement as in effect as of the date hereof
(including the granting of stock options, restricted stock, stock
appreciation rights or performance units);
(viii) (A) pay or agree to pay any severance or termination pay to any
director, officer, employee or consultant, except payments (1) made
pursuant to written agreements outstanding on the date hereof or the
Company's written policy in existence on the date hereof, the terms of
which are in all material respects completely and correctly disclosed on
Section 4.1(a)(viii) of the Company Disclosure Schedule and copies of which
have been provided to Parent, (2) that are set forth in Section
4.1(a)(viii) of the Company Disclosure Schedule with respect to the
termination of employees or consultants or (3) as required by Applicable
Law or (B) amend or agree to amend the Change in Control Plan, add any
individual to the coverage of the Change in Control Plan or increase any
person's benefits under the Change in Control Plan;
(ix) exercise its discretion with respect to or otherwise voluntarily
accelerate the vesting of any Company Stock Option as a result of the
Merger, any other change of control of the Company (as defined in the
Company Plans) or otherwise;
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(x) (A) except as permitted by clause (xiii)(E) below, purchase,
acquire, lease or license-in any material assets in any single transaction
or series of related transactions having a fair market value in excess of
Two Million Dollars ($2,000,000) in the aggregate, or sell, transfer or
otherwise dispose of any material assets other than sales of its products
and other non-exclusive licenses of software in the ordinary course of
business consistent with past practices; (B) enter into any exclusive
license, distribution, marketing or sales agreements; (C) enter into any
commitment to any person to (1) develop software without charge or (2)
incorporate any software into any of the Company's products; (D) sell,
transfer or otherwise dispose of any Intellectual Property other than sales
of its products and other non-exclusive licenses that are in the ordinary
course of business and consistent with past practices; or (E) grant "most
favored nation" pricing to any Person;
(xi) except as may be required as a result of a change in Applicable
Law or in United States generally accepted accounting principles, change
any of the accounting principles, practices or methods used by it;
(xii) revalue any of its assets or properties, including writing down
the value of assets or writing-off notes or accounts receivable, other than
in the ordinary course of business consistent with past practices or due to
changes in GAAP requiring such revaluation that are adopted after the date
hereof;
(xiii) (A) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other person or division or
business unit thereof or any equity interest therein; (B) enter into any
contract or agreement that would be material to the Company and its
Subsidiaries, taken as a whole other than customer contracts in the
ordinary course of business consistent with past practices; (C) amend,
modify or waive any right under any Material Contract of the Company or any
Subsidiary; (D) modify its standard warranty terms for its products or
services or amend or modify any product or service warranties in effect as
of the date hereof in any material manner that is adverse to the Company or
any Subsidiary; or (E) authorize any additional or new capital expenditure
or expenditures that individually or in the aggregate are in excess of One
Million One Hundred Thousand Dollars ($1,100,000) per month, provided that
the amount by which capital expenditures in any month shall be less than
One Million One Hundred Thousand Dollars ($1,100,000) shall be carried over
to future months to increase the maximum that may be spent on capital
expenditures in such future months;
(xiv) make or rescind any material election relating to Taxes or
settle or compromise any material Tax liability or enter into any closing
or other agreement with any Tax authority with respect to any material tax
liability; or file or cause to be filed any material amended Tax Return,
file or cause to be filed any claim for refund of Taxes previously paid, or
agree to an extension of a statute of limitations with respect to the
assessment or determination of Taxes;
(xv) fail to file any material Tax Returns when due, fail to cause
such Tax Returns when filed to be materially true, correct and complete,
prepare or fail to file any Tax Return in a manner inconsistent with past
practices in preparing or filing similar Tax Returns in prior periods or,
on any such Tax Return of the Company, take any position, make any
election, or adopt any method that is inconsistent with positions taken,
elections made or methods used in preparing or filing similar Tax Returns
in prior periods, in each case, except to the extent required by Applicable
Law, or fail to pay any material Taxes when due;
(xvi) settle or compromise any pending or threatened suit, action or
claim that (A) relates to the transactions contemplated hereby or (B) the
settlement or compromise of which would involves more than One Million
Dollars ($1,000,000) or that would otherwise be material to the Company
with respect to non-monetary matters and its Subsidiaries or relates to any
Intellectual Property matters;
(xvii) enter into any licensing, distribution, sponsorship,
advertising, merchant program or other similar contracts, agreements, or
obligations which provide for payments by the Company or any
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Subsidiary in an amount in excess of One Million Dollars ($1,000,000) over
the noncancelable term of the agreement;
(xviii) terminate any material software development project that is
currently ongoing, except pursuant to the terms of existing contracts with
customers;
(xix) fail to make in a timely manner any filings with the SEC
required under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder;
(xx) subject to Section 4.3 hereof, engage in any action with the
intent to directly or indirectly adversely impact any of the transactions
contemplated by this Agreement;
(xxi) knowingly take any action that would result in a failure to
maintain trading of the Shares on the Nasdaq National Market; or
(xxii) take or agree in writing or otherwise to take any of the
actions described in Sections 4.1(i) through 4.1(xxi) (and it shall use all
reasonable efforts not to take any action that would make any of the
representations or warranties of the Company contained in this Agreement
untrue or incorrect).
(b) Conduct of Business of Parent. Except (i) as expressly contemplated by
this Agreement, (ii) as described in Section 4.2 of the Parent Disclosure
Schedule, or (iii) to the extent that Company shall otherwise consent in writing
(such consent or declination to consent not to be unreasonably delayed), during
the period from the date hereof to the earlier of the Effective Time and the
termination of this Agreement in accordance with its terms, prior to the
Effective Time, Parent and its subsidiaries shall collectively conduct their
operations in the ordinary course of business consistent with past practices,
and without limiting the generality of the foregoing neither Parent nor
Acquisition will:
(i) amend its Certificate of Incorporation or bylaws (or other similar
governing instrument) in a manner that would reasonably be likely to
adversely affect the Parent Common Stock;
(ii) pay or set a record date prior to the Effective Date relating to
any extraordinary dividend or extraordinary distribution;
(iii) knowingly take any action that would result in a failure to
maintain trading of Parent Common Stock on the Nasdaq National Market;
(iv) fail to make in a timely manner any filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
(v) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other person or division or
business unit thereof or any equity interest therein if such acquisition
(A) would be deemed to be a significant acquisition as defined in Rule
11-01(b)(1) of Regulation S-X, or (B) would create a substantial risk of
delay in the termination or expiration of any waiting period applicable to
the Merger under the HSR Act, provided that the limitations contained in
this clause (B) shall not apply to any transaction closing after the
termination or expiration of any waiting period applicable to the Merger
under the HSR Act;
(vi) engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(vii) take or agree in writing or otherwise to take any of the actions
described in Sections 4.1(b)(i) through 4.1(b)(vi) (and it shall use all
reasonable efforts not to take any action that would make any of the
representations or warranties of Parent contained in this Agreement untrue
or incorrect).
SECTION 4.2. Intentionally Deleted.
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SECTION 4.3. No Solicitation or Negotiation.
(a) The Company, its Subsidiaries and other affiliates and their respective
officers, directors, representatives (including the Company Financial Advisor or
any other investment banker and any attorneys and accountants) shall, and the
Company shall use all reasonable efforts to cause its and its Subsidiaries' and
other affiliates' respective non-officer employees with managerial
responsibilities and agents to, immediately cease any discussions or
negotiations with any parties with respect to any Third Party Acquisition
Proposal. The Company also agrees promptly to request each person that has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring (whether by merger, acquisition of stock or assets or
otherwise) the Company or any Subsidiary, if any, to return (or if permitted by
the applicable confidentiality agreement, destroy) all confidential information
heretofore furnished to such person by or on behalf of the Company or any
Subsidiary and, if requested by Parent, to enforce such person's obligation to
do so. Neither the Company nor any Subsidiary or other affiliates shall, nor
shall the Company authorize or permit any of its or their respective officers,
directors or representatives to, and the Company shall use all reasonable
efforts to cause its and its Subsidiaries' and other affiliates' respective
non-officer employees with managerial responsibilities and agents not to,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with or provide any information to or enter into any
agreement with any person or group (other than Parent and Acquisition or any
designees of Parent and Acquisition) concerning any Third Party Acquisition
Proposal; provided, however, that if the Company Board determines in good faith,
after consultation with legal counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under the DGCL,
the Company may, in response to an unsolicited written Third Party Acquisition
Proposal that the Company Board determines in good faith, based on consultation
with the Company Financial Advisor, is from a Third Party that is capable of
consummating a Superior Proposal and only for so long as the Board of Directors
so determines in good faith that its actions are reasonably likely to lead to a
Superior Proposal, (i) furnish only to any Third Party pursuant to a
confidentiality agreement in a form substantially similar to the Nondisclosure
Agreement (A) the information with respect to the Company of the same type and
scope that the Company provided to Parent prior to the date hereof and (B) any
such additional information that such Third Party requests, but only if the
Company is permitted, and does in fact, simultaneously furnish such additional
information to Parent, and (ii) participate in discussions and negotiations
regarding such Third Party Acquisition Proposal; provided, further, that nothing
herein shall prevent the Company Board from taking and disclosing to the
Company's stockholders a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender or exchange offer.
The Company shall promptly (and in any event within one (1) day after the
Company attains knowledge thereof) (x) notify Parent in the event the Company or
any Subsidiary or other affiliates or any of their respective officers,
directors, employees and agents receives any Third Party Acquisition Proposal,
including the terms and conditions thereof and the identity of the party
submitting such proposal, and any request for confidential information made in
connection with a Third Party Acquisition Proposal, (y) provide a copy of any
written agreements, proposals or other materials the Company receives from any
such person or group (or its representatives), and (z) promptly, and in any
event within one (1) day, advise Parent of any material modifications thereto.
(b) Except as set forth in this Section 4.3(b), the Company Board shall not
make a change in its recommendation that the stockholders of the Company accept
the offer, tender their Shares thereunder to Acquisition and adopt this
Agreement and the Merger (a "CHANGE IN THE COMPANY RECOMMENDATION") or approve
or recommend, or cause or permit the Company to enter into any letter of intent,
agreement or obligation with respect to, any Third Party Acquisition Proposal.
Notwithstanding the foregoing, if the Company Board by a majority vote
determines in its good faith judgment prior to the Acceptance Date, after
consultation with outside legal counsel, that it is required to make a Change in
the Company Recommendation in order to comply with its fiduciary duties, the
Company Board may recommend a Superior Proposal, but only (i) after providing
written notice to Parent (a "NOTICE OF SUPERIOR PROPOSAL") advising Parent that
the Company Board has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal and identifying the person making
such Superior Proposal and (ii) if Parent does not, within five (5) days of
Parent's receipt of the Notice of Superior Proposal, make
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an offer that the Company Board by a majority vote determines in its good faith
judgment (after consultation with the Company Financial Advisor or another
financial advisor of nationally recognized reputation) to be at least as
favorable to the Company's stockholders as such Superior Proposal. Any
disclosure that the Company Board may be compelled to make with respect to the
receipt of a Third Party Acquisition Proposal or otherwise in order to comply
with its fiduciary duties or Rule 14d-9 or 14e-2 will not constitute a violation
of this Agreement, provided that such disclosure states that no action will be
taken by the Company Board in violation of this Section 4.3(b).
(c) For the purposes of this Agreement, "THIRD PARTY ACQUISITION PROPOSAL"
means, other than in connection with the Offer and the Merger or as otherwise
specifically contemplated by this Agreement, any proposal relating to (i) any
merger, consolidation, share exchange, business combination, recapitalization or
other similar transaction or series of related transactions involving the
Company or any Subsidiary other than the Offer and the Merger in which the
stockholders of the Company immediately preceding such transaction hold,
directly or indirectly, less than ninety percent (90%) of the equity interests
in the surviving or resulting entity of such transaction or in any parent entity
immediately following such transaction; (ii) any sale, lease, exchange, transfer
or other disposition (including by way of merger, consolidation or exchange), in
a single transaction or a series of related transactions, of the assets of the
Company or any Subsidiary constituting ten percent (10%) or more of the
consolidated assets of the Company or accounting for ten percent (10%) or more
of the consolidated revenues of the Company; (iii) any tender offer, exchange
offer or similar transactions or series of related transactions made by any
person involving the Company's common stock constituting ten percent (10%) or
more of the Company's common stock; (iv) the acquisition by any person (other
than Parent or any of its affiliates) of beneficial ownership (as determined
pursuant to Rule 13d-3 of the Exchange Act) or the formation of any group (as
defined in Section 13(d) of the Exchange Act) to acquire beneficial ownership
(as determined pursuant to Rule 13d-3 of the Exchange Act) of more than ten
percent (10%) of the Company's common stock or the common stock of any
Subsidiary of the Company; or (v) any other substantially similar transaction or
series of related transactions that reasonably could be expected to result in
the acquisition of a controlling interest in the Company. For purposes of this
Agreement, a "THIRD PARTY" means a person (which includes a "person" as such
term is defined in Section 13(d)(3) of the Exchange Act) other than Parent,
Acquisition or any affiliate thereof. For purposes of this Agreement, a
"SUPERIOR PROPOSAL" means any bona fide Third Party Acquisition Proposal (1) to
acquire, directly or indirectly, for consideration consisting solely of cash
and/or publicly-traded securities (including securities that will be
publicly-traded immediately upon the consummation of such Superior Proposal),
eighty-five percent (85%) of the Shares then outstanding, or all or
substantially all of the assets of the Company, (2) that contains terms and
conditions that the Company Board by a majority vote determines in good faith
(after consultation with the Company Financial Advisor or another financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Offer and the Merger, (3) that the Company Board
by a majority vote determines in its good faith judgment (after consultation
with the Company Financial Advisor or another financial advisor of nationally
recognized reputation and its legal counsel) to be reasonably capable of being
completed (taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal), (4) that does not
contain a "right of first refusal" or "right of first offer" with respect to any
counter-proposal that Parent might make, and (5) that does not contain any "due
diligence" condition and for which any financing upon which it is conditioned is
committed.
SECTION 4.4. Comfort Letters.
(a) The Company shall use commercially reasonable efforts to cause
PricewaterhouseCoopers LLP to deliver a letter dated not more than five days
prior to the date on which the S-4 shall become effective and addressed to
itself and Parent and their respective Boards of Directors in form and substance
reasonably satisfactory to Parent and customary in scope and substance for
agreed-upon procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the S-4
and the Information Statement.
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(b) Parent shall use commercially reasonable efforts to cause KPMG LLP to
deliver a letter dated not more than five days prior to the date on which the
S-4 shall become effective and addressed to itself and the Company and their
respective Boards of Directors in form and substance reasonably satisfactory to
the Company and customary in scope and substance for agreed-upon procedures
letters delivered by independent accountants in connection with registration
statements and proxy statements similar to the S-4 and the Information
Statement.
SECTION 4.5. Nasdaq National Market. Parent shall use commercially
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Offer and the Merger and the shares of Parent Common Stock to be reserved
for issuance upon exercise of Company Stock Options to be approved for listing
on the Nasdaq National Market, subject to official notice of issuance, prior to
the Acceptance Date.
SECTION 4.6. Access to Information.
(a) Between the date hereof and the earlier of the Acceptance Date or the
termination of this Agreement in accordance with its terms, the Company will,
and will cause each Subsidiary to use commercially reasonable efforts to, give
Parent and its authorized representatives (including Parent's external auditors)
reasonable access to all employees, plants, offices, warehouses and other
facilities and to all books and records and personnel files of current employees
of the Company and any Subsidiary as Parent may reasonably require, and will
cause its officers and each Subsidiary to furnish Parent with such financial and
operating data and other information with respect to the business and properties
of the Company and any Subsidiary as Parent may from time to time reasonably
request. Between the date hereof and the Effective Time, Parent shall make
available to the Company, as reasonably requested by the Company, a designated
officer of Parent to answer questions and make available such information and
documents regarding Parent as is reasonably requested by the Company taking into
account the nature of the transactions contemplated by this Agreement. Such
access shall be subject to the granting party's reasonable security measures and
insurance requirements and shall not include the right to perform "invasive"
testing, but shall include the right of Parent to do a financial statement
(including balance sheet) review prior to the Effective Time.
(b) Between the date hereof and the earlier of the termination of this
Agreement in accordance with its terms and the Acceptance Date, the parties
shall furnish to each other within two (2) business days following preparation
thereof (and in any event within thirty (30) business days after the end of each
fiscal quarter) an unaudited balance sheet as of the end of such quarter and the
related statements of earnings, stockholders' equity (deficit) and cash flows
for the quarter then ended, all of such financial statements to be prepared in
accordance with United States generally accepted accounting principles in
conformity with the practices consistently applied by the Company or Parent, as
the case may be, with respect to such financial statements.
(c) Each of the parties hereto will hold, and will cause its consultants
and advisers to hold, in confidence all documents and information furnished to
it by or on behalf of another party to this Agreement in connection with the
transactions contemplated by this Agreement pursuant to the terms of that
certain Mutual Nondisclosure Agreement entered into between the Company and
Parent dated as of May 16, 2003 (the "NONDISCLOSURE AGREEMENT").
SECTION 4.7. Certain Filings; Reasonable Efforts.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use commercially reasonable efforts to take or cause to
be taken all action and to do or cause to be done all things reasonably
necessary, proper or advisable under Applicable Law to consummate and make
effective the transactions contemplated by this Agreement, including using
commercially reasonable efforts to do the following: (i) cooperate in the
preparation and filing of the Offer Documents, the S-4 and the Information
Statement and any amendments thereto, any filings that may be required under the
HSR Act and similar competition or merger notification laws or regulations of
foreign Governmental Entities; (ii) obtain consents of all third parties and
Governmental Entities (other than as provided in clause (i) above) necessary,
proper, advisable or reasonably requested by Parent or the Company, for the
A-44
consummation of the transactions contemplated by this Agreement (but subject to
the last sentence of Section 4.8(b) below); (iii) contest any legal proceeding
relating to the Offer or the Merger; (iv) take such actions as set forth on
Section 4.7(a) of the Company Disclosure Schedule; and (v) execute any
additional instruments necessary to consummate the transactions contemplated
hereby. Subject to the terms and conditions of this Agreement, Parent and
Acquisition agree to use all reasonable efforts to cause the Effective Time to
occur as soon as practicable after the Acceptance Date. The Company agrees to
use, and to cause each Subsidiary to use, all reasonable efforts to encourage
their respective employees to accept any offers of employment extended by
Parent. If, at any time after the Acceptance Date or the Effective Time, any
further action is necessary to carry out the purposes of this Agreement the
proper officers and directors of each party hereto shall take all such necessary
action.
(b) Parent and the Company will use commercially reasonable efforts to
consult and cooperate with one another, and consider in good faith the views of
one another, in connection with any analyses, appearances, presentations,
letters, white papers, memoranda, briefs, arguments, opinions or proposals made
or submitted by or on behalf of any party hereto in connection with proceedings
under or relating to the HSR Act or any other foreign, federal, or state
antitrust, competition, or fair trade law. In this regard, but without
limitation, each party hereto shall use commercially reasonable efforts to
promptly inform the other of any material communication between such party and
the Federal Trade Commission, the Antitrust Division of the United States
Department of Justice, or any other federal, foreign or state antitrust or
competition Governmental Entity regarding the transactions contemplated herein.
Nothing in the Agreement, however, shall require or be construed to require any
party hereto, in order to obtain the consent or successful termination of any
review of any such Governmental Entity regarding the transactions contemplated
hereby, to (i) sell or hold separate, or agree to sell or hold separate, before
or after the Acceptance Date or the Effective Time, any assets, businesses or
any interests in any assets of businesses, of Parent, the Company or any of
their respective affiliates (or to consent to any sale, or agreement to sell, by
Parent or the Company, of any assets or businesses, or any interests in any
assets or businesses), or any change in or restriction on the operation by
Parent or the Company of any assets or businesses, or (ii) enter into any
agreement or be bound by any obligation that, in Parent's good faith judgment,
may have an adverse effect on the benefits to Parent of the transactions
contemplated by this Agreement.
SECTION 4.8. Public Announcements. Parent, Acquisition and the Company
shall consult with each other and shall mutually agree upon any press release or
public announcement relating to the transactions contemplated by this Agreement
and shall not issue any such press release or make any such public announcement
prior to such consultation and agreement, except (a) as may be required by
Applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or the Nasdaq National Market,
in which case the party proposing to issue such press release or make such
public announcement shall use all reasonable efforts to consult in good faith
with the other party before issuing any such press release or making any such
public announcement, or (b) following a Change in the Company's Recommendation,
after which no such consultation or agreement shall be required.
SECTION 4.9. Indemnification and Directors' and Officers' Insurance.
(a) After the Effective Time, Parent shall cause the Surviving Corporation
to indemnify and hold harmless (and shall also advance expenses as incurred to
the fullest extent permitted under Applicable Law to), each person who is now or
has been prior to the date hereof or who becomes prior to the Effective Time an
officer or director of the Company or any Subsidiary (the "INDEMNIFIED PERSONS")
against (i) all losses, claims, damages, costs, expenses (including counsel fees
and expenses), settlement, payments or liabilities arising out of or in
connection with any claim, demand, action, suit, proceeding or investigation
based in whole or in part on or arising in whole or in part out of the fact that
such person is or was an officer or director of the Company or any Subsidiary,
whether or not pertaining to any matter existing or occurring at or prior to the
Effective Time and whether or not asserted or claimed prior to or at or after
the Effective Time ("INDEMNIFIED LIABILITIES"); and (ii) all Indemnified
Liabilities based in whole or in part on or arising in whole or in part out of
or pertaining to this Agreement or the transactions
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contemplated hereby, in each case to the fullest extent required or permitted
under Applicable Law. Nothing contained herein shall make Parent, Acquisition,
the Company or the Surviving Corporation, an insurer, a co-insurer or an excess
insurer in respect of any insurance policies which may provide coverage for
Indemnified Liabilities, nor shall this Section 4.9 relieve the obligations of
any insurer in respect thereto. The parties hereto intend, to the extent not
prohibited by Applicable Law, that the indemnification provided for in this
Section 4.9 shall apply without limitation to negligent acts or omissions by an
Indemnified Person. Each Indemnified Person is intended to be a third party
beneficiary of this Section 4.9 and may specifically enforce its terms. This
Section 4.9 shall not limit or otherwise adversely affect any rights any
Indemnified Person may have under any agreement with the Company or under the
Company's Certificate of Incorporation or bylaws as presently in effect.
(b) From and after the Effective Time, Parent shall cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the Company
pursuant to any indemnification agreements between the Company and its directors
and officers as of or prior to the date hereof (or indemnification agreements in
the Company's customary form for directors joining the Company Board prior to
the Effective Time) and any indemnification provisions under the Company's
certificate of incorporation or bylaws as in effect immediately prior to the
Effective Time.
(c) For a period of six years after the Effective Time, Parent will
maintain or cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who, as of
immediately prior to the Effective Time, are covered by the Company's directors'
and officers' liability insurance policy (the "INSURED PARTIES") on terms no
less favorable to the Insured Parties than those of the Company's present
directors' and officers' liability insurance policy; provided, however, that in
no event will Parent or the Surviving Corporation be required to expend on an
annual basis in excess of 200% of the annual premium currently paid by the
Company for such coverage; provided further, that notwithstanding the foregoing,
in the event such coverage is no longer available (or is only available for an
amount in excess of 200% of the annual premium currently paid by the Company for
such coverage), Parent shall nevertheless use its commercially reasonable
efforts to provide such coverage as may be obtained for such 200% amount;
provided further, that, in lieu of maintaining such existing insurance as
provided above, Parent, at its election, may cause coverage to be provided under
any policy maintained for the benefit of Parent or any of its subsidiaries, so
long as the terms are no less favorable to the intended beneficiaries thereof
than such existing insurance.
(d) Parent will not, nor will Parent permit the Surviving Corporation to
merge or consolidate with any other Person or sell all or substantially all of
Parent's or such subsidiary's assets unless Parent or the Surviving Corporation
will ensure that the surviving or resulting entity assumes the obligations
imposed by this Section 4.9.
SECTION 4.10. Notification of Certain Matters; Additions to and
Modification of Disclosure Schedules. The Company shall give prompt notice to
Parent and Acquisition, and Parent and Acquisition shall give prompt notice to
the Company (such notice by delivery of supplements to the Company Disclosure
Schedule or the Parent Disclosure Schedule, as applicable), of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which has caused or would be likely to cause any representation or warranty
contained in this Agreement by such first party to be untrue or inaccurate in
any material respect at or prior to the Effective Time, and (ii) any material
failure by the Company, Parent or Acquisition, as the case may be, to comply
with or satisfy in any material respect any covenant condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 4.10 shall not cure such breach
or non-compliance, be deemed to constitute an exception to the representations
and warranties under Article 2 or Article 3, or limit or otherwise affect the
remedies available hereunder to the party receiving such notice, provided,
further, that any addition to Section 2.1(a) of the Company Disclosure Schedule
disclosing a Subsidiary acquired or organized after the date hereof, Section
2.1(c) of the Company Disclosure Schedule disclosing any investment made after
the date hereof, Section 2.11(b) disclosing any Company Employee Plan adopted
after the date hereof or any Employee Agreement entered into after the date
hereof, Section 2.11(h) of the Company Disclosure Schedule disclosing amendments
or actions within fourteen
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days of the date hereof as provided therein, Section 2.12(d) of the Company
Disclosure Schedule disclosing any newly hired employee or change in current
employee's circumstances occurring after the date hereof, Section 2.12(j) of the
Company Disclosure Schedule disclosing any employing obtaining any visa or
losing any visa after the date hereof, Section 2.15(a) of the Company Disclosure
Schedule disclosing any Company Registered IP or unregistered trademarks
acquired or registered after the date hereof, Section 2.15(b) of the Company
Disclosure Schedule disclosing any Company Licensed IP acquired or licensed
after the date hereof, Section 2.17 of the Company Disclosure Schedule
disclosing any real property acquired or leased after the date hereof, Section
2.19 of the Company Disclosure Schedule disclosing any new product warranties
made by the Company after the date hereof, Section 2.20(a) of the Company
Disclosure Schedule disclosing any Material Contract entered into after the date
hereof, Section 2.22 of the Company Disclosure Schedule disclosing any person
who becomes a Company Affiliate after the date hereof, or Section 3.16 of the
Parent Disclosure Schedule disclosing any Parent benefit plan adopted after the
date hereof or deleting any Parent benefit plan cancelled after the date hereof
shall not be deemed to constitute a breach of the related representation or
warranty, provided further that such disclosure referred to in the immediately
preceding proviso shall not limit or otherwise affect the remedies available
hereunder to either party to the extent that the action, event, occurrence or
agreement disclosed was in violation or breach of this Agreement, including
Section 4.1.
SECTION 4.11. Affiliates. The Company shall use commercially reasonable
efforts to obtain from all Company Affiliates, and from any person who may be
deemed to have become a Company Affiliate after the date of this Agreement and
on or prior to the Acceptance Date, a letter agreement substantially in the form
of Exhibit B hereto as soon as practicable. Parent shall not be required to
maintain the effectiveness of the S-4 for the purpose of resale of shares of
Parent Common Stock by stockholders of the Company who may be affiliates of the
Company or Parent pursuant to Rule 145 under the Securities Act.
SECTION 4.12. Access to Company Employees. The Company agrees to provide,
and to cause each Subsidiary to provide, Parent with reasonable access to its
employees under procedures to be agreed upon by Parent and the Company during
normal working hours following the date of this Agreement, to among other
things, deliver offers of continued employment and to provide information to
such employees about Parent. All communications by Parent with Company employees
shall be conducted in a manner that does not disrupt or interfere with the
Company's efficient and orderly operation of its business.
SECTION 4.13. Company Compensation and Benefit Plans. The Company agrees
to take all actions necessary to amend, merge, freeze or terminate any or all
Company Employee Plans intended to constitute a Code Section 401(k) arrangement,
the 1997 Employee Stock Purchase Plan, the 1997 Employee Stock Purchase Plan for
Non-United States Employees and any other employee stock purchase plan effective
at or immediately prior to the Closing Date, each as requested in writing by
Parent no later than five (5) business days prior to the Closing Date (thirty
(30) days prior to the Closing Date with respect to the 1997 Employee Stock
Purchase Plan, the 1997 Employee Stock Purchase Plan for Non-United States
Employees and any other employee stock purchase plan).
SECTION 4.14. Employee Benefits.
(a) Following the Closing Date, Parent shall arrange for each participant
in the Company Employee Plans (the "COMPANY PARTICIPANTS") (including without
limitation all dependents) who becomes a Parent employee (or an employee of any
Parent subsidiary or affiliate) after the Closing Date to be eligible for the
same benefits in the aggregate as those received by Parent employees with
similar positions and responsibilities and qualifications; provided, however,
that through December 31, 2003 Parent may instead, at its option, continue a
Company Employee Plan in lieu of providing benefits under a corresponding Parent
Benefit Plan. Each Company Participant shall, to the extent permitted by law,
the plan governing the benefits (as reasonably amended to accomplish the
following to the extent permissible under Applicable Law) and applicable tax
qualification requirements, and subject to any applicable break in service or
similar rule, receive credit for all purposes including, without limitation, for
eligibility to participate, amount of matching contributions, and vesting under
Parent Benefit Plans for years of service with the Company (and its Subsidiaries
and predecessors) prior to the Closing Date. If applicable and to
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the extent possible under Parent's existing plans (as reasonably amended to the
extent necessary in accordance with applicable Applicable Law), Parent shall
cause any and all pre-existing condition (or actively at work or similar)
limitations, eligibility waiting periods and evidence of insurability
requirements under any Parent Benefit Plans to be waived with respect to such
Company Participants and their eligible dependents and shall provide them with
credit for any co-payments, deductibles, and offsets (or similar payments) made
during the plan year including the Closing Date for the purposes of satisfying
any applicable deductible, out-of-pocket, or similar requirements under any
Parent Benefit Plans in which they are eligible to participate after the Closing
Date.
(b) Parent agrees that, from and after the Closing Date, the Company
employees who become employees of Parent or any of its subsidiaries may
participate in the employee stock purchase plan sponsored by Parent (the "PARENT
ESPP"), subject to the terms and conditions of the Parent ESPP, and that service
with the Company shall be treated as service with Parent or its subsidiaries for
determining eligibility of the Company's employees under the Parent ESPP. Unless
Parent elects to continue the 1997 Employee Stock Purchase Plan or the 1997
Employee Stock Purchase Plan for Non-United States Employees, Parent agrees to
create a special offering period under the Parent ESPP so that the Company
employees who become employees of Parent or any of its subsidiaries can
participate in the Parent ESPP within thirty (30) days from the Closing Date.
SECTION 4.15. Takeover Statutes. If any Takeover Statute or any similar
statute, law, rule or regulation in any State of the United States (including
under the DGCL or any other law of the State of Delaware) is or may become
applicable to the Offer or the Merger or any of the other transactions
contemplated by this Agreement, the Company and the Company Board shall promptly
grant such approvals and take such lawful actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement, the Offer or by the Merger and otherwise take
such lawful actions to eliminate or minimize the effects of such statute, law,
rule or regulation, on such transactions.
SECTION 4.16. Company Rights Agreement. The Company Board shall take all
further action (in addition to that referenced in Section 2.25) to the extent
necessary (including amending the Company Rights Agreement) in order to ensure
that following or as a result of the Offer, or the execution of this Agreement
or the Company Voting Agreements, or the consummation of the transactions
contemplated hereby and thereby, (i) no person shall be deemed to be an
Acquiring Person; (ii) no person shall have the ability to exercise any Company
Rights under the Company Rights Agreement; (iii) no Company Rights shall have
separated from the Shares to which they are attached or become exercisable; and
(iv) the Company shall not have the right to exchange any Company Rights for
Shares, pursuant to Section 24 of the Company Rights Agreement or otherwise.
Except in connection with the foregoing sentence, the Company Board shall not,
without the prior written consent of Parent, (i) amend the Company Rights
Agreement, or (ii) take any action with respect to, or make any determination
under, the Company Rights Agreement, including a redemption of the Company
Rights, in each case in order to facilitate any Third Party Acquisition Proposal
with respect to the Company; provided, however, that notwithstanding anything to
the contrary in this Agreement, the Company Board may (i) amend the Company
Rights Agreement solely for the purpose of extending the Distribution Date
thereunder to that time immediately prior to the consummation of an unsolicited
exchange or tender offer by a third party and (ii) take any action in connection
with the Company Rights Agreement that is required by order of a court of
competent jurisdiction.
SECTION 4.17. Parent Board of Directors. Parent shall take all requisite
action to appoint Mr. Michael J. Maples to the Parent Board as a member of Class
I and as a member of the Corporate Governance/Nominating Committee as of the
Effective Time, provided that if Mr. Maples is unable or unwilling to serve on
the Parent Board at the Effective Time, Parent shall instead take all requisite
action to appoint such other person as the Company may designate and who is
reasonably acceptable to Parent.
SECTION 4.18. Section 16 Matters. If the Company delivers the Section 16
Information to Parent at least 10 business days prior to the Effective Time,
then, prior to the Effective Time, the Parent Board,
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or an appropriate committee of non-employee directors thereof, shall adopt a
resolution consistent with the interpretative guidance of the SEC so that (i)
the assumption of the Company Stock Options held by Company Insiders in the
Merger, and (ii) the receipt by Company Insiders of Parent Common Stock in
exchange for Shares pursuant to the Merger, shall in each case be an exempt
transaction for purposes of Section 16 of the Exchange Act. For purposes of this
Section 4.18, (1) "COMPANY INSIDER" shall mean any officer or director of the
Company who may become a covered person of Parent for purposes of Section 16 of
the Exchange Act and (2) "SECTION 16 INFORMATION" shall mean the following
information for each Company Insider: (A) the number of Shares held by such
individual and expected to be exchanged for shares of Parent Common Stock in the
Merger; and (B) the number of Company Stock Options held by such individual and
expected to be converted into options to purchase shares of Parent Common Stock
in connection with the Merger.
SECTION 4.19. Second Merger. As soon as practicable after the Effective
Time, Parent shall adopt and shall cause the Surviving Corporation to adopt an
agreement and plan of merger and reorganization pursuant to which the Surviving
Corporation shall be merged with and into Parent or, at Parent's election, a
direct wholly owned subsidiary of Parent, with Parent or such subsidiary being
the surviving corporation of such merger. Notwithstanding the foregoing, Parent
and the Surviving Corporation shall not cause the Second Merger to be effected
unless Parent and the Company have received, on or prior to the Acceptance Date,
an opinion of Gibson Dunn & Crutcher LLP, counsel to Parent, and an opinion of
Wilson Sonsini Goodrich and Rosati, Professional Corporation, counsel to the
Company, reasonably satisfactory to Parent and the Company, respectively (the
"CLOSING TAX OPINIONS"), that the Offer, the Merger and the Second Merger
together will constitute a reorganization under the provisions of Section 368(a)
of the Code. The Closing Tax Opinions may rely on customary representations as
reasonably requested by such counsel and on typical assumptions. Parent,
Acquisition, and the Company agree to provide to such counsel such
representations as such counsel reasonably requests in connection with rendering
such opinions; provided however, that the opinions set forth in the Closing Tax
Opinions shall not be conditioned on any representations or assumptions related
to the value of Parent Common Stock after the Acceptance Date. It is intended
that, absent a change in facts or law subsequent to the date hereof that
prevents Parent or the Company from obtaining such opinions, the Second Merger
shall occur and that the acquisition of the Shares pursuant to the Offer,
followed by the Merger and the Second Merger, together qualify as a
reorganization under the provisions of Section 368(a) of the Code, and that this
Agreement constitute a "plan of reorganization" within the meaning of section
1.368-2(g) of the regulations promulgated under the Code. In the event that
counsel for the Company is unable to render a Closing Tax Opinion, the opinion
condition of this section 4.19 shall be deemed satisfied if counsel for Parent
renders a Closing Tax Opinion to the Company.
SECTION 4.20. Alternative Double Merger. The parties agree that each will
make a good faith attempt to obtain the tax opinions referred to in Section
4.19. If for any reason the tax opinion conditions in Section 4.19 are not
satisfied on or prior to the Acceptance Date, the parties shall, subject to the
receipt of tax opinions as described below, implement the Alternative Double
Merger Structure on the terms and conditions contained in this Agreement
(preserving the economic and financial terms of this Agreement) with such
modifications to such terms and conditions as are required to implement such
structure. The "ALTERNATIVE DOUBLE MERGER STRUCTURE" means a structure whereby
the following shall occur: (i) Parent will cause Acquisition (or another entity
formed by Parent solely to effect the Alternative Double Merger Structure)
("HOLDING COMPANY") to form two wholly-owned subsidiaries under the DGCL
("PARENT MERGER SUBSIDIARY" and "COMPANY MERGER SUBSIDIARY," respectively); (ii)
Parent and the Company will cause Parent Merger Subsidiary and Company Merger
Subsidiary and, if applicable, Holding Company, to become parties to this
Agreement and to execute and deliver all documents required by the DGCL to
authorize and adopt this Agreement; (iii) in lieu of shares of Parent Common
Stock, an equal number of shares of shares of common stock of Holding Company,
together with associated rights similar in all material respects to the Parent
Rights ("HOLDING COMPANY COMMON STOCK") shall be issued as the stock portion of
the Offer Price and the Merger Consideration, and appropriate conforming changes
shall be made to this Agreement; (iv) at the Acceptance Date, Parent Merger
Subsidiary shall be merged with and into Parent in accordance with the DGCL,
whereupon the separate existence of Parent Merger Subsidiary
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shall cease, stockholders of Parent shall receive one share of Holding Company
Common Stock in exchange for each share of Parent Common Stock and Parent shall
be the surviving corporation and a wholly owned subsidiary of Holding Company;
and (v) at the Effective Time, Company Merger Subsidiary shall be merged with
and into the Company in accordance with the DGCL, whereupon the separate
existence of Company Merger Subsidiary shall cease, and the Company shall be the
surviving corporation and a wholly owned subsidiary of Holding Company. It is
intended that (i) the receipt of Holding Company Common Stock by the holders of
Parent Common Stock in exchange for their shares of Parent Common Stock will be
treated as having occurred pursuant to either a reorganization as defined in
Section 368(a) of the Code and/or a transaction governed by Section 351(a) of
the Code, and Parent will use its commercially reasonable efforts to obtain the
opinion of its counsel to that effect, and (ii) the receipt of Holding Company
Common Stock and cash by the holders of the Company's common stock in exchange
for their shares of Company common stock will be treated as having occurred
pursuant to a transaction governed by Section 351(a) and, if applicable, Section
351(b) of the Code, and Company will use its commercially reasonable efforts to
obtain the opinion of its counsel to that effect. In the event counsel for the
Company is unable to render the opinion referred to above, the opinion condition
of this Section 4.20 shall be deemed satisfied if counsel for Parent renders an
opinion to the Company.
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been duly approved by the requisite vote
of the holders of Company common stock, if required by Applicable Law and
the Company Certificate of Incorporation, in order to consummate the
Merger;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States federal or state court or United States federal or state
Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR Act or
any other material foreign, federal or state antitrust, competition or fair
trade law shall have terminated or expired;
(d) any governmental or regulatory notices, approvals or other
requirements necessary to consummate the transactions contemplated hereby
and to operate the Surviving Corporation after the Effective Time in all
material respects as it was operated prior thereto (other than under the
HSR Act or any other material foreign, federal or state antitrust,
competition or fair trade law) shall have been given, obtained or complied
with, as applicable except where the failure to be given, obtained or
complied with shall not have a Material Adverse Effect on the Company or a
Material Adverse Effect on the Parent; and
(e) Parent, Acquisition or their affiliates shall have purchased
Shares pursuant to the Offer.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time whether before or after
approval and adoption thereof by the Company's stockholders:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent, Acquisition and the Company;
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(b) by Parent and Acquisition or the Company if:
(i) any court of competent jurisdiction in the United States or
other United States federal or state Governmental Entity shall have
issued a final order, decree or ruling, or taken any other final action,
restraining, enjoining or otherwise prohibiting the Offer or the Merger
and such order, decree, ruling or other action is or shall have become
nonappealable; or
(ii) the Offer shall have expired, terminated or been withdrawn
pursuant to its terms without any Shares having been purchased;
provided, that the right to terminate this Agreement under this Section
6.1(b)(ii) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been a principal reason for the
failure of Parent or Acquisition to purchase Shares in the Offer; or
(iii) the Acceptance Date has not occurred by November 30, 2003
which date shall be extended to February 28, 2004 if the Acceptance Date
shall not have occurred as a result of a failure to satisfy the
conditions set forth in clause (ii) of Annex C (as appropriate, the
"FINAL DATE"); provided that no party may terminate this Agreement
pursuant to this clause (ii) if such party's failure to fulfill any of
its obligations under this Agreement shall have been a principal reason
that the Acceptance Date shall not have occurred on or before said date.
(c) by the Company if:
(i) if Parent, Acquisition or any of their Affiliates shall have
failed to commence the Offer on or prior to the tenth (10th) business
day following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to
this Section 6.1(c)(i) if the Company is in breach of Section 1.2 of
this Agreement in a manner that affects Parent's or Acquisition's
ability to commence the Offer;
(ii) (A) there shall have been a breach of any representation or
warranty on the part of Parent or Acquisition set forth in this
Agreement or if any representation or warranty of Parent or Acquisition
shall have become untrue such that the conditions set forth in clause
II.(c) of Annex C would be incapable of being satisfied by the Final
Date; or
(iii) there shall have been a breach by Parent or Acquisition of
any of their respective covenants or agreements hereunder having a
Material Adverse Effect on Parent or materially adversely affecting (or
materially delaying) the consummation of the Offer or the Merger, and
Parent or Acquisition, as the case may be, has not cured such breach
within twenty (20) business days after written notice by the Company
thereof;
(d) by Parent and Acquisition if:
(i) there shall have been a breach of any representation or
warranty on the part of the Company set forth in this Agreement or if
any representation or warranty of the Company shall have become untrue,
such that the conditions set forth in clause I.(e) of Annex C would be
incapable of being satisfied by the Final Date; or
(ii) there shall have been a breach by the Company of one or more
of its covenants or agreements hereunder having, in the aggregate, a
Material Adverse Effect on the Company or materially adversely affecting
(or materially delaying) the consummation of the Offer or the Merger,
and the Company has not cured such breach within twenty (20) business
days after written notice by Parent or Acquisition thereof.
(e) by Parent and Acquisition, if the Company shall have, prior to the
Acceptance Date, but subject to the Company's compliance with Section 1.3:
(i) effected a Change in the Company Recommendation, whether or not
permitted by the terms hereof; or
(ii) willfully and materially breached its obligations under
Section 4.3;
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provided, that if the Company sends a notice of its intention to terminate this
Agreement pursuant to Section 6.1(c), the sending of such notice in and of
itself shall not be deemed to be a breach or default by the Company that would
permit Parent to terminate this Agreement pursuant to this Section 6.1(e).
(f) by the Company, on a scheduled Expiration Date at which time there
shall have been made a Change in the Company Recommendation as a result of
a Superior Proposal and the Minimum Condition shall not have been
satisfied; provided, that, the failure of Company to fulfill any of its
obligations under this Agreement shall not have been a principal reason
that the Minimum Condition shall not have been satisfied; provided,
further, that, the Company shall have first permitted Parent to effect a
single extension of the Offer for one period of no more than twenty (20)
business days (the "FIRST EXTENSION") after the Change in the Company
Recommendation; and provided, further, that if the Minimum Condition is not
satisfied upon the expiration of the First Extension, the Company shall
have permitted Parent to effect an additional extension or extension(s) of
the Offer for no more than ten (10) business days per period if Parent
shall have made, and there is continuing at the scheduled Expiration Date
for such respective period, a proposal by Parent to the Company or its
stockholders which is no less favorable than the Superior Proposal.
Notwithstanding the foregoing, the Company may not terminate this Agreement
pursuant to this Section 6.1(f) if the Company is in breach of Section 4.3
with respect to such Superior Proposal, such Change in the Company
Recommendation or a Third Party Acquisition Proposal made by the person
making the Superior Proposal or its affiliates.
SECTION 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto, or any of its affiliates, directors, officers or stockholders
other than the provisions of this Section 6.2 and Sections 4.6(c) and 6.3 and
all of Article 7 with the exception of Sections 7.8 and Section 7.10 hereof.
Nothing contained in this Section 6.2 shall relieve any party from liability for
any breach of this Agreement prior to such termination.
SECTION 6.3. Fees and Expenses.
(a) If this Agreement is terminated pursuant to Section 6.1(e) or 6.1(f),
Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Acquisition for such damages, the Company shall pay to Parent the amount of
Fifty-Seven Million Dollars ($57,000,000) as liquidated damages within one (1)
business day of the termination of this Agreement pursuant to Section 6.1(e) or
6.1(f). It is specifically agreed that the amount to be paid pursuant to this
Section 6.3(a) represents liquidated damages and not a penalty.
(b) Upon the termination of this Agreement pursuant to Section 6.1(d), in
addition to any other remedies that Parent, Acquisition or their affiliates may
have as a result of such termination (including pursuant to Section 6.3(a)), the
Company shall pay to Parent the amount of Five Million Dollars ($5,000,000) as
reimbursement for the costs, fees and expenses incurred by any of them or on
their behalf in connection with this Agreement, the Offer, the Merger and the
consummation of all transactions contemplated by this Agreement (including fees
payable to investment bankers, counsel to any of the foregoing and accountants);
provided that no breach by Parent or Acquisition shall have occurred that
(either then or upon the passage of time as provided in Section 6.1(c)(iii))
would permit the Company to terminate this Agreement pursuant to Section 6.1(c).
(c) Upon the termination of this Agreement pursuant to Section 6.1(c), in
addition to any other remedies that the Company or its affiliates may have as a
result of such termination, Parent shall pay to the Company the amount of Five
Million Dollars ($5,000,000) as reimbursement for the costs, fees and expenses
incurred by any of them or on their behalf in connection with this Agreement,
the Merger and the consummation of all transactions contemplated by this
Agreement (including fees payable to investment bankers, counsel to any of the
foregoing and accountants); provided no breach by the Company shall have
occurred that (either then or upon the passage of time as provided in Section
6(d)(ii)) would permit Parent to terminate this Agreement pursuant to Section
6.1(d).
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(d) Except as specifically provided in this Section 6.3, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
SECTION 6.4. Amendment. This Agreement may be amended by action taken by
the Company, Parent and Acquisition at any time before or after approval of the
Merger by the stockholders of the Company but after any such approval no
amendment shall be made that requires the approval of such stockholders under
Applicable Law without such approval. This Agreement (including, subject to
Section 4.10, the Company Disclosure Schedule and the Parent Disclosure
Schedule) may be amended only by an instrument in writing signed on behalf of
the parties hereto.
SECTION 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto, or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.
SECTION 7.2. Entire Agreement; Assignment. This Agreement (including the
Company Disclosure Schedule and the Parent Disclosure Schedule) and the
Nondisclosure Agreement (a) constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all other prior
and contemporaneous agreements and understandings both written and oral between
the parties with respect to the subject matter hereof, including, without
limitation, the Original Agreement, and (b) shall not be assigned by operation
of law or otherwise; provided, however, that Acquisition may assign any or all
of its rights and obligations under this Agreement to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve
Acquisition of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 7.3. Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
SECTION 7.4. Notices. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed given if delivered
personally, sent by facsimile, sent by nationally-recognized overnight courier
or mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the addresses set forth below or to such other
address as the party to whom notice is to be given may have furnished to the
other parties hereto in writing in accordance herewith. Any such notice or
communication shall be deemed to have been delivered and received (A) in the
case of personal delivery, on the date of such delivery, (B) in the case of
facsimile, on the date sent if confirmation of receipt is received and such
notice is also promptly mailed by registered or certified mail (return receipt
requested), (C) in the case of a nationally-recognized overnight courier in
circumstances under which such courier guarantees next business day delivery, on
the next business day after the date
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when sent, and (D) in the case of mailing, on the third business day following
that on which the piece of mail containing such communication is posted:
if to Parent or Acquisition: PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, California 94588
Facsimile: (925) 694-5550
Attention: Anne S. Jordan
and
PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, California 94588
Facsimile: (925) 694-5152
Attention: Kevin T. Parker
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Facsimile: (415) 986-5309
Attention: Douglas D. Smith
Peter T. Heilmann
if to the Company to: J.D. Edwards & Company
One Technology Way
Denver, CO 80237
Facsimile: (303) 334-4693
Attention: Richard G. Snow, Jr.
and
J.D. Edwards & Company
One Technology Way
Denver, CO 80237
Facsimile: (303) 334-1077
Attention: Richard E. Allen
with a copy to: Wilson Sonsini Goodrich & Rosati,
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Facsimile: (650) 493-6811
Attention: Herbert P. Fockler
and
Wilson Sonsini Goodrich & Rosati,
Professional Corporation
One Market
Spear Tower, Suite 3300
San Francisco, CA 94105
Facsimile: (415) 947-2099
Attention: Steve L. Camahort
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
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SECTION 7.5. Governing Law and Venue; Waiver of Jury Trial.
(a) This Agreement shall be deemed to be made in and in all respects shall
be interpreted, construed and governed by and in accordance with the law of the
state of Delaware without regard to the conflict of Applicable Law principles
thereof. The parties hereby irrevocably and unconditionally submit to the
exclusive jurisdiction of the courts of the Court of Chancery of Delaware and
the Federal courts of the United States of America located in the State of
Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Delaware State
or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 7.4 or in such other
manner as may be permitted by Applicable Law, shall be valid and sufficient
service thereof.
(b) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity.
(c) Each party acknowledges and agrees that any controversy which may arise
under this Agreement is likely to involve complicated and difficult issues, and
therefor each such party hereby irrevocably and unconditionally waives any right
such party may have to a trial by jury in respect of any litigation directly or
indirectly arising out of or relating to this Agreement or the transactions
contemplated by this Agreement. Each party certifies and acknowledges that (i)
no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each such
party makes this waiver voluntarily, and (iv) each such party has been induced
to enter into this Agreement by, among other things, the waivers and
certifications in this Section 7.5.
SECTION 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as expressly provided herein, nothing in this
Agreement is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement nor shall any such person be entitled to assert any claim hereunder.
In no event shall this Agreement constitute a third party beneficiary contract.
SECTION 7.8. Certain Definitions. For the purposes of this Agreement the
term:
(a) "ACCEPTANCE DATE" means the first date on which Parent or
Acquisition accepts for payment all shares of Company common stock validly
tendered and not withdrawn pursuant to the Offer.
(b) "AFFILIATE" means (except as otherwise provided in Sections 2.22
and 4.11) a person that, directly or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with
the first-mentioned person;
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(c) "APPLICABLE LAW" means, with respect to any person, any domestic
or foreign, federal, state or local statute, law, ordinance, rule,
regulation, order, writ, injunction, judgment, decree or other requirement
of any Governmental Entity existing as of the date hereof or as of the
Effective Time applicable to such person or any of its respective
properties, assets, officers, directors, employees, consultants or agents;
(d) "BUSINESS DAY" means any day other than a day on which the Nasdaq
National Market is closed;
(e) "CAPITAL STOCK" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(f) "COMPANY ACQUISITION PROPOSAL" means (i) any merger,
consolidation, share exchange, business combination, recapitalization or
other similar transaction or series of related transactions involving the
Company or any Subsidiary in which the stockholders of the Company
immediately preceding such transaction hold, directly or indirectly, less
than sixty percent (60%) of the equity interests in the surviving or
resulting entity of such transaction or in any parent entity immediately
following such transaction; (ii) any sale, lease, exchange, transfer or
other disposition (including by way of merger, consolidation or exchange),
in a single transaction or a series of related transactions, of the assets
of the Company (whether directly or indirectly, including through the
acquisition of one or more Subsidiaries or such Subsidiaries' assets)
constituting forty percent (40%) or more of the consolidated assets of the
Company or accounting for forty percent (40%) or more of the consolidated
revenues of the Company; (iii) any tender offer, exchange offer or similar
transactions or series of related transactions made by any person involving
the Company's common stock constituting forty percent (40%) or more of the
Company's common stock; (iv) the acquisition by any person of beneficial
ownership (as determined pursuant to Rule 13d-3 of the Exchange Act) of
more than forty percent (40%) of the Company's common stock; or (v) any
other substantially similar transaction or series of related transactions
that if consummated would result in the acquisition of a forty percent
(40%) or greater interest in the Company;
(g) "COMPANY IP" means any Company Licensed IP or Company Owned IP;
(h) "COMPANY LICENSED IP" means any Intellectual Property that is
owned by any other person and that is licensed to, used or distributed by
the Company or any Subsidiary;
(i) "COMPANY OWNED IP" means any Intellectual Property owned (in whole
or in part) by the Company or any Subsidiary;
(j) "COMPANY REGISTERED IP" means any Registered Intellectual Property
owned (in whole or in part) by the Company or any Subsidiary;
(k) "INTELLECTUAL PROPERTY" means any patent, patent application,
trademark (whether registered or unregistered), trademark application,
trade name, fictitious business name, service mark (whether registered or
unregistered), service mark application, domain name, copyright (whether
registered or unregistered), copyright application, mask work, mask work
application, trade secret, know-how, customer list, franchise, system,
computer software, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset;
(l) "KNOWLEDGE" or "KNOWN" means, with respect to any matter in
question, the actual knowledge of such matter of (i) any member of the
Board of Directors; or (ii) any employee or officer listed on Section 7.8
of the Company Disclosure Schedule or Section 7.8 of the Parent Disclosure
Schedule, as applicable; of the Company or any Subsidiary, or Parent or any
of its subsidiaries, as the case may be, and each of such persons shall be
deemed to have actual knowledge of all books and records to which he or she
has reasonable access;
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(m) "INCLUDE" or "INCLUDING" means "INCLUDE, WITHOUT LIMITATION" or
"INCLUDING, WITHOUT LIMITATION," as the case may be, and the language
following "include" or "including" shall not be deemed to set forth an
exhaustive list;
(n) "LIEN" means any mortgage, lien, pledge, hypothecation, charge,
security interest, encumbrance, equity, trust, equitable interest, claim,
preference, right of possession, lease, tenancy, license, encroachment,
covenant, infringement, interference, order, proxy, option, right of first
refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature including any restriction on
the transfer of any asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute
of ownership of any asset; provided, however, that the term "Lien" shall
not include (i) statutory liens for Taxes, which are not yet due and
payable or are being contested in good faith by appropriate proceedings and
disclosed in Section 2.14(d) of the Company Disclosure Schedule, (ii)
statutory or common law liens to secure landlords, lessors or renters under
leases or rental agreements confined to the premises rented, (iii) deposits
or pledges made in connection with, or to secure payment of, workers'
compensation, unemployment insurance, old age pension or other social
security programs mandated under Applicable Law, (iv) statutory or common
law liens in favor of carriers, warehousemen, mechanics and materialmen to
secure claims for labor, materials or supplies and other like liens, and
(v) restrictions on transfer of securities imposed by applicable state and
federal securities laws;
(o) "MATERIAL ADVERSE EFFECT ON THE COMPANY" means any circumstance,
change in, or effect on the Company and its Subsidiaries, taken as a whole,
that is, or is reasonably likely in the future to be, materially adverse to
the financial condition, earnings, results of operations, or the business
or operations (financial or otherwise), of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company to perform
its obligations hereunder, excluding any such circumstance, change or
effect to the extent resulting from or arising in connection with (i)
changes or conditions generally affecting the industries or segments in
which the Company operates, (ii) changes in general economic, market or
political conditions which, in the case of (i) or (ii), does not have a
materially disproportionate effect (relative to other industry
participants) on the Company, (iii) any litigation brought or threatened by
stockholders of the Company (whether on behalf of the Company or otherwise)
in respect of the announcement of this Agreement or the consummation of the
Offer or Merger, (iv) any disruption of customer, business partner,
supplier or employee relationships that resulted from the announcement of
this Agreement or the consummation of the Offer or Merger, to the extent so
attributable; provided, that any reduction in the market price or trading
volume of the Company's publicly traded common stock shall not be deemed to
constitute a Material Adverse Effect on the Company (it being understood
that the foregoing shall not prevent Parent from asserting that any
underlying cause of such reduction independently constitutes such a
Material Adverse Effect on the Company), or (v) the tender offer or other
acquisition proposal by Oracle Corporation for Parent;
(p) "MATERIAL ADVERSE EFFECT ON PARENT" means any circumstance, change
in, or effect on Parent and its subsidiaries, taken as a whole, that is, or
is reasonably likely in the future to be, materially adverse to the
financial condition, earnings, results of operations, or the business or
operations (financial or otherwise), of Parent and its subsidiaries, taken
as a whole, or on the ability of the Parent to perform its obligations
hereunder, excluding any such circumstance, change or effect to the extent
resulting from or arising in connection with (i) changes or conditions
generally affecting the industries or segments in which the Parent
operates, (ii) changes in general economic, market or political conditions
which, in the case of (i) or (ii), does not have a materially
disproportionate effect (relative to other industry participants) on the
Parent, (iii) any litigation brought or threatened by stockholders of the
Parent (whether on behalf of the Parent or otherwise) in respect of the
announcement of this Agreement or the consummation of the Offer or Merger,
(iv) any disruption of customer, business partner, supplier or employee
relationships that resulted from the announcement of
A-57
this Agreement or the consummation of the Offer or Merger, to the extent so
attributable; provided, that any reduction in the market price or trading
volume of Parent's publicly traded common stock shall not be deemed to
constitute a Material Adverse Effect on Parent (it being understood that
the foregoing shall not prevent the Company from asserting that any
underlying cause of such reduction independently constitutes such a
Material Adverse Effect on Parent), or (v) the tender offer or other
acquisition proposal by Oracle Corporation for Parent;
(q) "PERSON" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity including any Governmental Entity;
(r) "PROCEEDING" means any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding and any informal proceeding), prosecution, contest,
hearing, inquiry, inquest, audit, examination or investigation commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Entity or any arbitrator or arbitration panel;
(s) "QUALIFYING AMENDMENT" means an amendment or supplement to the
Joint Proxy Statement/Prospectus or S-4 (including by incorporation by
reference) to the extent it contains (a) a Change in the Company
Recommendation, (b) a statement of the reasons of Company Board for making
such Change in the Company Recommendation, and (c) additional information
reasonably related to the foregoing; and
(t) "REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents, including applications therefor;
(ii) registered trademarks, applications to register trademarks, including
intent-to-use applications, or other registrations or applications related
to trademarks; (iii) copyrights registrations and applications to register
copyrights; (iv) registered mask works and applications to register mask
works; and (v) any other intellectual property that is the subject of an
application, certificate, filing, registration or other document issued by,
filed with, or recorded by, any state, government or other public legal
authority at any time.
SECTION 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company or Parent or Acquisition or
any officer, director, employee, agent, representative or investor of any party
hereto.
SECTION 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties, for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder; provided, however, that if a party
hereto receives all payments and reimbursements of expenses to which it is
entitled pursuant to Section 6.3(a), (b) or (c) it shall not be entitled to
specific performance to compel the consummation of the Merger.
SECTION 7.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
(Remainder of page intentionally left blank)
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
PeopleSoft, Inc.
By: /s/ CRAIG A. CONWAY
------------------------------------
Name: Craig A. Conway
Title: President and Chief
Executive Officer
Date: June 16, 2003
J.D. Edwards & Company
By: /s/ ROBERT M. DUTKOWSKY
------------------------------------
Name: Robert M. Dutkowsky
Title: President and Chief
Executive Officer
Date: June 16, 2003
Jersey Acquisition Corporation
By: /s/ KEVIN T. PARKER
------------------------------------
Name: Kevin T. Parker
Title: President
Date: June 16, 2003
(SIGNATURE PAGE TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION BY AND AMONG PEOPLESOFT, INC., J.D. EDWARDS & COMPANY AND
JERSEY ACQUISITION CORPORATION)
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ANNEX A
STOCKHOLDERS OF COMPANY THAT EXECUTED VOTING AGREEMENTS
Richard E. Allen
Kathleen J. Cunningham
Harry Debes
Robert M. Dutkowsky
Gerald Harrison
Delwin D. Hock
Michael Madden
Michael J. Maples
Richard Mathews
Trygve E. Myhren
Robert C. Newman
Pamela Saxton
David Siebert
Richard Snow, Jr.
Leslie Wyatt
A-60
ANNEX B
STOCKHOLDERS OF PARENT THAT EXECUTED VOTING AGREEMENTS
A. George "Skip" Battle
Aneel Bhusri
Nanci Caldwell
Craig A. Conway
Guy E. Dubois
David A. Duffield
Frank J. Fanzilli, Jr.
Steven D. Goldby
Michael Gregoire
Ram Gupta
Anne S. Jordan
Kevin T. Parker
W. Philip Wilmington
Cyril J. Yansouni
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ANNEX C
CONDITIONS TO THE OFFER
I. CONDITIONS TO CONSUMMATION OF THE OFFER OF PARENT AND ACQUISITION
Notwithstanding any other provision of the Offer (subject to the provisions
of the Agreement), as a first step in effectuating a merger between Parent or
Acquisition and Company qualifying as a tax-free reorganization under Section
368(a) of the Code and/or a transaction described in Section 351 of the Code, as
applicable, Parent and Acquisition shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) under the Exchange Act (relating to the Parent's or Acquisition's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, if (i) there shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares which would
constitute at least a majority of the Shares outstanding on a fully-diluted
basis on the date of purchase (on a "FULLY-DILUTED BASIS" meaning the number of
Shares outstanding, together with the Shares which the Company may be required
to issue pursuant to Company Stock Options with an exercise or conversion price
on the Amendment Execution Date of less than $25.00 outstanding at that date and
which do not terminate upon consummation of the Offer under Company Plans or
otherwise, to the extent such Company Stock Options would be vested or
exercisable as of the date which is ninety (90) days after the scheduled
Expiration Date), when aggregated with any Shares owned by Parent, Acquisition
or an affiliate of Parent or Acquisition (the "MINIMUM CONDITION"), (ii) any
applicable waiting period under the HSR Act or under any other material foreign,
federal or state antitrust, competition or fair trade law, shall have expired or
terminated prior to the expiration of the Offer, or (iii) at any time on or
after the Amendment Execution Date, and before the time of acceptance of Shares
for payment pursuant to the Offer, any of the following events are continuing at
a scheduled Expiration Date:
(a) a statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States federal or state court or United States federal or state
Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Offer or the Merger;
(b) in connection with the compliance by Parent or Acquisition with
any Applicable Law (including the HSR Act or any other material foreign,
federal or state antitrust, competition or fair trade law), Parent shall be
(i) required, or be construed to be required, to sell or divest any assets
or business or to restrict any business operations, or (ii) prohibited from
owning, and a limitation shall be imposed on Parent's ownership of, any
portion of the Company's business or assets;
(c) any governmental or regulatory notices, approvals or other
requirements necessary to consummate the transactions contemplated hereby
and to operate the Surviving Corporation after the Acceptance Date in all
material respects as it was operated prior thereto (other than under the
HSR Act or any other material foreign, federal or state antitrust,
competition or fair trade law) shall not have been given, obtained or
complied with, as applicable except where the failure to be given, obtained
or complied with shall not have a Material Adverse Effect on the Company or
a Material Adverse Effect on Parent;
(d) the S-4 shall not have become effective under the Securities Act
or shall be the subject of any stop order or proceedings seeking a stop
order;
(e) the failure of (i) each of the representations and warranties
qualified by "Material Adverse Effect on the Company" to be true and
correct as of the date of the Agreement and as of the scheduled Expiration
Date as though made on and as of the scheduled Expiration Date, and (ii)
each of the representations and warranties of the Company set forth in the
Agreement and not qualified by "Material Adverse Effect on the Company",
disregarding all qualifications and exceptions contained therein relating
to materiality, to be true and correct as of the date of the Agreement and
as of the
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scheduled Expiration Date as though made on and as of the scheduled
Expiration Date (except to the extent that such representations and
warranties speak as of another date, in which case such representations and
warranties shall be true and correct as of such other date), except where
the failure of such representations and warranties to be true and correct
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company;
(f) Parent shall not have received a Closing Tax Opinion from its
counsel, or, if applicable, the opinion of its counsel referred to in
Section 4.20 of the Agreement;
(g) failure of the covenants and obligations of the Company to have
been performed pursuant to the terms of the Agreement in all material
respects at or before the Acceptance Date;
(h) the shares of Parent Common Stock to be issued in the Offer shall
not have been approved for listing on the Nasdaq National Market, subject
to official notice of issuance; or
(i) subject to each of the disclosures in the Company Disclosure
Schedule, there shall have been a Material Adverse Effect on the Company.
The foregoing conditions are for the sole benefit of Parent and Acquisition
and may be asserted by either of them regardless or the circumstances giving
rise to such conditions or may be waived by Parent or Acquisition, in whole or
in part at any time and from time to time in the sole discretion of Parent or
Acquisition. The failure by Parent or Acquisition at any time to exercise any of
the foregoing rights will not be deemed a waiver of any right, the waiver of
such right with respect to any particular facts or circumstances shall not be
deemed a waiver with respect to any other facts or circumstances, and each right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
II. CONDITIONS TO CONSUMMATION OF THE OFFER OF THE COMPANY
To the extent permitted by Applicable Law, Parent and Acquisition shall not
consummate the Offer if, before the time of acceptance of Shares for payment
pursuant to the Offer, the Company shall have provided to Parent and Acquisition
notice of, and not waived or withdrawn such notice of, any of the following
events which are continuing at a scheduled Expiration Date:
(a) a statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States federal or state court or United States federal or state
Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Offer or the Merger;
(b) in connection with the compliance by Parent or Acquisition with
any Applicable Law (including the HSR Act or any other material foreign,
federal or state antitrust, competition or fair trade law), Parent shall be
(i) required, or be construed to be required, to sell or divest any assets
or business or to restrict any business operations, or (ii) prohibited from
owning, and a limitation shall be imposed on Parent's ownership of, any
portion of the Company's business or assets;
(c) any governmental or regulatory notices, approvals or other
requirements necessary to consummate the transactions contemplated hereby
and to operate the Surviving Corporation after the Acceptance Date in all
material respects as it was operated prior thereto (other than under the
HSR Act or any other material foreign, federal or state antitrust,
competition or fair trade law) shall not have been given, obtained or
complied with, as applicable except where the failure to be given, obtained
or complied with shall not have a Material Adverse Effect on the Company or
a Material Adverse Effect on Parent;
(d) the S-4 shall not have become effective under the Securities Act
and shall be the subject of any stop order or proceedings seeking a stop
order;
(e) the failure of (i) each of the representations and warranties
qualified by "Material Adverse Effect on Parent" to be true and correct as
of the date of the Agreement and as of the scheduled Expiration Date as
though made on and as of the scheduled Expiration Date, and (y) each of the
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representations and warranties of Parent and Acquisition set forth in the
Agreement and not qualified by "Material Adverse Effect on Parent",
disregarding all qualifications and exceptions contained therein relating
to materiality, to be true and correct as of the date of the Agreement and
as of the scheduled Expiration Date as though made on and as of the
scheduled Expiration Date (except to the extent that such representations
and warranties speak as of another date, in which case such representations
and warranties shall be true and correct as of such other date), except
where the failure of such representations and warranties to be true and
correct would not, individually or in the aggregate, have a Material
Adverse Effect on Parent;
(f) The Company shall not have received a Closing Tax Opinion from its
counsel (or counsel for Parent in the event counsel for the Company in
unable to render a Closing Tax Opinion), or, if applicable, Company shall
not have received an opinion of its counsel referred to in Section 4.20 of
the Agreement (or counsel for Parent in the event counsel for the Company
is unable to render its opinion);
(g) the failure of the covenants and obligations of Parent and
Acquisition pursuant to the terms of the Agreement to have been duly
performed in all material respects at or before the Acceptance Date;
(h) the shares of Parent Common Stock to be issued in the Offer shall
not have been approved for listing on the Nasdaq National Market, subject
to official notice of issuance; or
(i) subject to each of the disclosures in the Parent Disclosure
Schedule, there shall have been a Material Adverse Effect on Parent.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
to the tendering stockholders.
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ANNEX B
TO THE INFORMATION STATEMENT
SECTION 262 APPRAISAL RIGHTS
Section 262 of the Delaware General Corporation Law states:
sec. 262 Appraisal Rights
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title will be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights will be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to sec.
251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263 or sec.
264 of this title:
(1) Provided, however, that no appraisal rights under this section
will be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the national Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights will be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section will be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
B-1
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights will
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section will be available for the shares
of any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and will include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation will notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, then either a constituent corporation before the
effective date of the merger or consolidation or the surviving or resulting
corporation within 10 days thereafter shall notify each of the holders of
any class or series of stock of such constituent corporation who are
entitled to appraisal rights of the approval of the merger or consolidation
and that appraisal rights are available for any or all shares of such class
or series of stock of such constituent corporation, and shall include in
such notice a copy of this section. Such notice may, and, if given on or
after the effective date of the merger or consolidation, shall, also notify
such stockholder of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date
of mailing of such notice, demand in writing from the surviving or
resulting corporation the appraisal of such holder's shares. Such demand
will be sufficient if it reasonably informs the corporation of the identity
of the stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given,
B-2
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If
no record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement will be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof will be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by one or more publications at
least one week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may
B-3
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
will cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery will be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
B-4
ANNEX C
TO THE INFORMATION STATEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF PEOPLESOFT, INC.
AND JERSEY ACQUISITION CORPORATION
DIRECTORS AND EXECUTIVE OFFICERS OF PEOPLESOFT, INC. ("PEOPLESOFT")
Set forth in the table below are the names and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of, each of the directors and
executive officers of PeopleSoft. Unless otherwise indicated, each director's or
executive officer's business address is 4460 Hacienda Drive, Pleasanton, CA
94588, which address is PeopleSoft, Inc.'s business address. All directors and
executive officers are United States citizens except as indicated below.
DIRECTORS
(INCLUDING EXECUTIVE OFFICERS WHO ARE DIRECTORS)
<Table>
<Caption>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ----------------------------------
A. George "Skip" Battle................... 59 Director since December 1995. Chief Executive
Ask Jeeves, Inc. Officer and Director, Ask Jeeves, Inc., an Internet
5858 Horton Street, Suite 350 search engine company. Senior Fellow at the Aspen
Emeryville, CA 94608 Institute, an international research firm. From
1968 until his retirement in June 1995, A. George
"Skip" Battle served in various roles of increasing
responsibility with Andersen Consulting. At the
time of his retirement, Mr. Battle was Managing
Partner of Market Development and was serving as a
member of Andersen Consulting's Executive
Committee, Global Management Council and Partner
Income Committee. Mr. Battle holds a B.A. degree in
economics with highest distinction from Dartmouth
College and an M.B.A. degree from the Stanford
Business School where he held McCarthy and
University Fellowships. Mr. Battle is the Chairman
of the Board of Directors of Fair Isaac Company and
is a director of Barra, Inc. He is also a director
of three mutual funds: Masters Select Equity,
Masters Select Value and Masters Select
International.
Aneel Bhusri.............................. 37 Director since March 1999. General Partner,
Greylock Management Corporation Greylock Management Corporation, an early stage
755 Page Mill Road, Suite A100 venture capital firm. Aneel Bhusri joined
Palo Alto, CA 94304 PeopleSoft in 1993, serving in a variety of
management positions, most recently Senior Vice
President, Product Strategy, Marketing and Business
Development from June 1998 to January 1999. Prior
to joining PeopleSoft, Mr. Bhusri served as an
associate at Norwest Venture Partners and spent
several years in Morgan Stanley's corporate finance
organization working with the firm's high-tech
clients. He holds a B.S. degree in electrical
engineering and economics from Brown University and
an M.B.A. degree from Stanford University. In
addition to PeopleSoft, Mr. Bhusri is a director of
Marimba, Inc., Brience, Inc., PolyServe, Inc., Cape
Clear, Data Domain, Pertigo and Corio, Inc.
</Table>
C-1
<Table>
<Caption>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ----------------------------------
Craig A. Conway........................... 48 President, Chief Executive Officer and Director.
Craig A. Conway joined PeopleSoft in May 1999 as
President, Chief Operating Officer and director,
and was promoted to Chief Executive Officer in
September 1999. From 1996 to 1999, Mr. Conway was
President and Chief Executive Officer of OneTouch
Systems, a leader in the field of interactive
broadcast networks. From 1993 to 1996, Mr. Conway
served as President and Chief Executive Officer for
TGV Software, Inc., an early developer of IP
network protocols and applications for corporate
intranets and the Internet. Prior to that time, Mr.
Conway spent eight years at Oracle Corporation in a
variety of senior management roles, most recently
as an Executive Vice President. Mr. Conway
graduated from State University of New York with a
B.S. degree in computer science and mathematics.
David A. Duffield......................... 62 Chairman of the Board of Directors. David A.
Duffield is a founder of PeopleSoft and has served
as Chairman of the Board since PeopleSoft's
incorporation in 1987. He also served as Chief
Executive Officer from August 1987 through
September 1999 and President from August 1987
through May 1999. Prior to founding PeopleSoft, he
was a founder and Chairman of the Board of
Integral, a vendor of human resource and financial
applications software, from 1972 through 1987.
During a portion of that time, Mr. Duffield also
served as Integral's Chief Executive Officer. Mr.
Duffield was the co-founder of Information
Associates (now a subsidiary of Systems and
Computer Technology), where he was employed between
1968 and 1972. Prior to that Mr. Duffield worked at
International Business Machines Corporation
("IBM"), a computer systems manufacturer, as a
marketing representative and systems engineer. He
holds a B.S. degree in electrical engineering and
an M.B.A. degree from Cornell University.
Frank J. Fanzilli, Jr. ................... 46 Director since May 2001. Frank J. Fanzilli, Jr. was
Retired. Managing Director and the Chief Information Officer
of Credit Suisse First Boston, an investment
banking firm, until his retirement in March of
2002. Mr. Fanzilli joined the First Boston
Corporation in 1985 as an Analyst in the
Information Services Department and held a variety
of positions within Information Technology,
including Head of European Information Services and
Head of Global Application Development. Prior to
joining Credit Suisse First Boston, Mr. Fanzilli
spent seven years at IBM where he managed systems
engineering and software development for Fortune 50
accounts. Mr. Fanzilli received a B.S. degree in
management, cum laude, from Fairfield University
and an M.B.A. degree in finance, with distinction,
from New York University, where he was the Marcos
Nadler Scholar. Mr. Fanzilli is a director of
CommVault, Inc. and Interwoven, Inc.
</Table>
C-2
<Table>
<Caption>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ----------------------------------
Steven D. Goldby.......................... 63 Director since February 2000. Chairman and Chief
Symyx Technologies, Inc. Executive Officer, Symyx Technologies, Inc., a
3100 Central Expressway leading company applying combinatorial methods to
Santa Clara, CA 95051 materials science, since July 1998. Prior to
joining Symyx, Steven D. Goldby served for more
than ten years as Chairman of the Board and Chief
Executive Officer of MDL Information Systems, Inc.,
a biotechnology software company. Before joining
MDL, Mr. Goldby held various management positions,
including Senior Vice President, at ALZA
Corporation, from 1968 to 1973, and was President
of Dynapol, a specialty chemical company, from 1973
to 1981. Mr. Goldby holds a B.S. degree in
chemistry from the University of North Carolina and
a J.D. degree from Georgetown University Law
Center.
Cyril J. Yansouni......................... 61 Director since 1991. Cyril Yansouni was Chairman of
Retired. the Board of Read-Rite Corporation, a supplier of
citizen of Belgium magnetic recording heads for data storage drives,
until June 17, 2003. From March 1991 to June 2000,
he served as both Chairman of the Board of
Directors and Chief Executive Officer of Read-Rite
Corporation. Prior to joining Read-Rite
Corporation, Mr. Yansouni was with Unisys
Corporation, a manufacturer of computer systems,
from 1988 to 1991, where he served in various
senior management capacities, most recently as an
Executive Vice President. From 1986 to 1988, Mr.
Yansouni was President of Convergent Technologies,
a manufacturer of computer systems that was
acquired by Unisys Corporation in December 1988.
From 1967 to 1986, Mr. Yansouni was employed by
Hewlett-Packard Company, where he served in a
variety of technical and management positions, most
recently as Vice President and General Manager of
the Personal Computer Group. Mr. Yansouni received
his B.S. degree in electrical and mechanical
engineering from the University of Louvain, Belgium
and his M.S. degree in electrical engineering from
Stanford University. Mr. Yansouni serves as
Chairman of the Board of Directors of Scion
Photonics, Inc.
Michael J. Maples......................... 60 Director since July 18, 2003. Michael J. Maples has
Retired. been a director of J.D. Edwards & Company since
January 1997. Mr. Maples has been retired since
July 1995 and is currently operating a ranch. From
April 1988 to July 1995, Mr. Maples held various
management positions at Microsoft Corporation, most
recently as Executive Vice President of the
Worldwide Products Group. Prior to that, he served
as a Director of Software Strategy for IBM. Mr.
Maples holds a B.S. in electrical engineering from
Oklahoma University and an M.B.A. from Oklahoma
City University. He is a member of the Board of
Directors of Lexmark International, Inc. and NetIQ
Corporation.
</Table>
C-3
EXECUTIVE OFFICERS
<Table>
<Caption>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ---------------------------------------------------
Nanci Caldwell............................ 45 Executive Vice President, Chief Marketing Officer.
citizen of Canada Nanci Caldwell joined PeopleSoft in 2001 as Senior
Vice President and Chief Marketing Officer. In
January 2002, Ms. Caldwell was promoted to
Executive Vice President and Chief Marketing
Officer. Prior to joining PeopleSoft, Ms. Caldwell
worked for Hewlett-Packard Company from 1982 to
2001, where she held a number of senior management
roles, including: Vice President of Marketing -- HP
Services, Vice President of North American Sales
and Vice President of Worldwide Enterprise
Marketing and Global Alliances. Ms. Caldwell earned
a degree in Psychology from Canada's Queen's
University and completed the University of Western
Ontario's Executive Marketing Management program.
Guy Dubois................................ 48 Executive Vice President, International. Guy Dubois
citizen of France joined PeopleSoft in 1999. Prior to being promoted
to Executive Vice President, International, in
January 2000, Mr. Dubois served as Executive Vice
President and General Manager, International of The
Vantive Corporation. From 1995 to 1999, Mr. Dubois
was Vice President and General Manager of the
Europe, Middle East, Africa operations of Sybase
Inc. From 1994 to 1995, Mr. Dubois was Vice
President of Southern Europe at Sybase. Prior to
that, he was Deputy Managing Director of Digital
Equipment Corporation France. Mr. Dubois attended
Lille University in France where he received a
master of sciences and technology degree and an
engineer degree.
Michael Gregoire.......................... 37 Executive Vice President, PeopleSoft Global
citizen of Canada Services. Michael Gregoire joined PeopleSoft in
2000 as Senior Vice President, PeopleSoft
Consulting, North America. In January 2003, he was
promoted to Executive Vice President, PeopleSoft
Global Services, and is in charge of all of
PeopleSoft's professional services and training.
Prior to his employment at PeopleSoft, Mr. Gregoire
spent 13 years at Electronic Data Systems
Corporation, where he held a variety of management
positions, most recently Managing Director of
Services for the Global Financial Markets Group.
Mr. Gregoire has a Bachelor of Science degree in
physics and computing from Wilfred Laurier
University in Ontario, Canada, and an MBA from
California Coast University. He is a graduate of
the Thunderbird American School for International
Business, International Executive Program. Mr.
Gregoire serves on the Board of Directors of the
Association of Management Consulting Firms ("AMCF")
in New York City.
</Table>
C-4
<Table>
<Caption>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ---------------------------------------------------
Ram Gupta................................. 40 Executive Vice President, Products and Technology.
Ram Gupta joined PeopleSoft in 2000 as Executive
Vice President of Products and Technology. Prior to
joining PeopleSoft, he was Senior Vice President
and General Manager for Healtheon/WebMD
Corporation, from 1997 to 2000. Before working at
Healtheon/WebMD Corporation, Mr. Gupta was the
director of the Multimedia Networking Group at
Silicon Graphics, from 1994 to 1997. Before that he
worked in various management roles at IBM and
Philips. Mr. Gupta received a master's degree in
computer science from the University of
Massachusetts.
Anne S. Jordan............................ 51 Senior Vice President, General Counsel and
Secretary. Anne S. Jordan joined PeopleSoft in 1999
as Senior Vice President, General Counsel and
Secretary. Prior to joining PeopleSoft, Ms. Jordan
was Vice President, Administration and General
Counsel for Sega of America, Inc., from 1994 to
1999. Prior to 1994, she was a partner in Carr &
Ferrell and held positions as Vice President and
General Counsel for Worlds of Wonder, Inc.,
Assistant General Counsel for Dole Foods, Inc., and
corporate counsel for Beatrice Companies, Inc. and
Gould Inc. Ms. Jordan received a bachelor's degree
from Northwestern University and a J.D. from DePaul
University.
Kevin T. Parker........................... 43 Executive Vice President, Finance and
Administration, Chief Financial Officer. Kevin T.
Parker joined PeopleSoft in 2000 as Senior Vice
President and Chief Financial Officer. In January
2002, Mr. Parker was promoted to Executive Vice
President of Finance and Administration, Chief
Financial Officer. Prior to joining PeopleSoft, Mr.
Parker served as Senior Vice President and Chief
Financial Officer from 1999 to 2000 for Aspect
Communications Corporation, a customer relationship
management software company. From 1996 to 1999, Mr.
Parker was Senior Vice President of Finance and
Administration at Fujitsu Computer Products of
America. Previous posts include Chief Financial
Officer, Controller and other financial management
positions at Standard Microsystems, O'Neil Data
Systems, Toshiba America Information Systems,
CalComp and Price Waterhouse. Mr. Parker attended
Clarkson University where he received a bachelor's
degree in Accounting.
</Table>
C-5
<Table>
<Caption>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ---------------------------------------------------
W. Philip Wilmington...................... 44 Executive Vice President, Americas. Phil Wilmington
joined PeopleSoft in 1992. Before being promoted to
his current position as Executive Vice President,
Americas, Mr. Wilmington held various positions
including President of the Services Division, Vice
President of Emerging Markets, General Manager of
the Financial Services business unit, and General
Manager of the Midwest Region. Prior to joining
PeopleSoft, Mr. Wilmington served as Executive Vice
President of Field Operations at Trinet, Inc. and
as Vice President of Sales and Operations at
Tesseract Corporation. Mr. Wilmington received a
bachelor's degree in Marketing and Business
Administration from Bradley University.
</Table>
DIRECTORS AND EXECUTIVE OFFICERS OF JERSEY ACQUISITION CORPORATION
("ACQUISITION")
Set forth in the table below are the names and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of, each of the directors and
executive officers of Acquisition. Unless otherwise indicated, each director's
or executive officer's business address is 4460 Hacienda Drive, Pleasanton, CA
94588, which address is PeopleSoft, Inc.'s business address. All directors and
executive officers are United States citizens.
<Table>
<Caption>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ----------------------------------
Anne S. Jordan............................ 51 Vice President, Secretary and Director. Senior Vice
President, General Counsel and Secretary,
PeopleSoft. Anne S. Jordan joined PeopleSoft in
1999 as Senior Vice President, General Counsel and
Corporate Secretary. Prior to joining PeopleSoft,
Ms. Jordan was Vice President, Administration and
General Counsel for Sega of America, Inc., from
1994 to 1999. Prior to 1994, she was a partner in
Carr & Ferrell and held positions as Vice President
and General Counsel for Worlds of Wonder, Inc.,
Assistant General Counsel for Dole Foods, Inc., and
corporate counsel for Beatrice Companies, Inc. and
Gould Inc. Ms. Jordan received a bachelor's degree
from Northwestern University and a J.D. from DePaul
University.
</Table>
C-6
<Table>
<Caption>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT BUSINESS ADDRESS AGE AND FIVE YEAR EMPLOYMENT HISTORY
- --------------------------------- --- ----------------------------------
Kevin T. Parker........................... 43 President, Chief Financial Officer and Director.
Executive Vice President, Finance and
Administration, Chief Financial Officer,
PeopleSoft. Kevin T. Parker joined PeopleSoft in
2000 as Senior Vice President and Chief Financial
Officer. In January 2002, Mr. Parker was promoted
to Executive Vice President of Finance and
Administration, Chief Financial Officer. Prior to
joining PeopleSoft, Mr. Parker served as Senior
Vice President and Chief Financial Officer from
1999 to 2000 for Aspect Communications Corporation,
a customer relationship management software
company. From 1996 to 1999, Mr. Parker was Senior
Vice President of Finance and Administration at
Fujitsu Computer Products of America. Previous
posts include Chief Financial Officer, Controller
and other financial management positions at
Standard Microsystems, O'Neil Data Systems, Toshiba
America Information Systems, CalComp and Price
Waterhouse. Mr. Parker attended Clarkson University
where he received a bachelor's degree in
Accounting.
Robin L. Washington....................... 40 Senior Vice President of Finance and Corporate
Controller. Senior Vice President of Finance and
Corporate Controller, PeopleSoft. Robin L.
Washington joined PeopleSoft in August 1996 and has
held a variety of senior finance positions. Prior
to joining PeopleSoft, Ms. Washington held a
variety of financial management positions for
Tandem Computers, Inc., from 1987 to 1996. Previous
posts include positions at the Federal Reserve Bank
and Deloitte & Touche. She is also a Certified
Public Accountant. Ms. Washington received a
bachelor's degree in Business Administration from
the University of Michigan and an MBA from
Pepperdine University.
</Table>
C-7
ANNEX D -- PART I
TO THE INFORMATION STATEMENT
D-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
J.D. EDWARDS & COMPANY
(Name of Subject Company)
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
---------------------
281667105
(CUSIP Number of Class of Securities)
---------------------
Robert M. Dutkowsky
President and Chief Executive Officer
J.D. Edwards & Company
One Technology Way
Denver, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
COPIES TO:
---------------------
Herbert P. Fockler
Steve L. Camahort
Jose F. Macias
Jon C. Avina
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-2
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is J.D. Edwards & Company, a Delaware
corporation ("J.D. Edwards" or the "Company"). The address of the principal
executive office of the Company is One Technology Way, Denver, Colorado 80237,
and its telephone number is (303) 334-4000.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-9"
or "Statement") relates is the common stock, $0.001 par value, of the Company
(including the associated stock purchase rights pursuant to J.D. Edwards' rights
agreement) (the "Common Stock"). Unless the context otherwise requires, as used
herein, the term "Shares" shall mean shares of Common Stock. As of May 28, 2002,
there were 122,426,664 Shares issued and outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
The filing person of this Statement is the subject company, J.D. Edwards.
The business address and telephone number of J.D. Edwards are as set forth in
Item 1 above.
This Statement relates to the offer by PeopleSoft, Inc., a Delaware
corporation ("PeopleSoft"), through its wholly owned subsidiary, Jersey
Acquisition Corporation, a Delaware Corporation (the "Purchaser"), disclosed in
a Tender Offer Statement on Schedule TO (the "Schedule TO"), dated June 19,
2003, to exchange each outstanding Share for (i) cash, (ii) a fraction of a
share of PeopleSoft common stock, par value $0.01 per share ("PeopleSoft Common
Stock") or (iii) a combination of cash and PeopleSoft Common Stock, in each case
having a value, on a per share basis of $7.05 plus 0.43 of a share of PeopleSoft
Common Stock, allocated by prorating the cash and shares of PeopleSoft Common
Stock available in the offer among the elections made by J.D. Edwards
stockholders, upon the terms and subject to the conditions set forth in the
prospectus contained in the registration statement on Form S-4 filed by
PeopleSoft with the Securities and Exchange Commission (the "SEC") on June 19,
2003 (the "Prospectus") and in the related Letter of Transmittal. Holders of
Shares may elect to receive the offer consideration all in cash or PeopleSoft
Common Stock for their J.D. Edwards Common Stock. Holders of Shares who tender
but do not make an election will receive an allocation of the remaining cash and
PeopleSoft Common Stock, or a combination of cash and stock, after allocating
the cash and PeopleSoft Common Stock among the elections made in the offer. The
election and proration procedures are described below and in the Prospectus.
Holders of Shares who do not tender in the offer will receive $7.05 plus 0.43 of
a share of PeopleSoft Common Stock for each Share in the merger following
completion of the offer. The value of the stock consideration to be paid to
tendering holders of Shares will be determined by the average closing price of a
share of PeopleSoft Common Stock for the five trading days ending immediately
before the second trading day prior to the expiration date. Two trading days
prior to expiration of the offer, PeopleSoft will issue a press release
announcing the value of the cash and stock consideration.
The offer is being made pursuant to the Amended and Restated Agreement and
Plan of Merger and Reorganization, dated as of June 16, 2003 (the "Merger
Agreement"). The Merger Agreement provides that, following the acquisition of
the shares of J.D. Edwards pursuant to the offer the Purchaser will merge with
and into J.D. Edwards with J.D. Edwards continuing in existence as the surviving
corporation. After the first merger, J.D. Edwards will merge with and into
PeopleSoft or a wholly owned subsidiary of PeopleSoft in a second merger. It is
possible, however, that the acquisition of J.D. Edwards will be effected using
an alternative structure as described in the section entitled "The Merger
Agreement -- The Alternative Double Merger" in the Prospectus, which is
incorporated herein by reference.
Under the terms of the Merger Agreement, at the effective time of the
merger, each issued and outstanding Share that was not tendered into the offer
and accepted by PeopleSoft in the offer (other than those shares held by J.D.
Edwards or any of its subsidiaries, PeopleSoft or the Purchaser or any of
PeopleSoft's wholly owned subsidiaries and dissenting shares) will be converted
into the right to receive $7.05, net, in cash, and 0.43 shares of PeopleSoft
Common Stock, without interest. All Shares owned by
D-3
J.D. Edwards or any of its subsidiaries, PeopleSoft or the Purchaser or any of
PeopleSoft's other wholly owned subsidiaries will be automatically canceled and
retired and will cease to exist.
MAKING THE ELECTION AND THE PRORATION RULES
Making the Election. PeopleSoft has included a Letter of Transmittal with
the Prospectus. The Letter of Transmittal is used to make the election to
receive PeopleSoft Common Stock, cash, or, in the case of proration, a
combination of PeopleSoft Common Stock and cash in exchange for Shares tendered
pursuant to the offer. See the section of the Prospectus entitled "The
Offer -- Making the Election," which is incorporated herein by reference, for
more information.
The Proration Rules. The proration rules that will govern the allocation
of the cash and stock consideration in the offer and the subsequent merger will
be applied as set forth in the following examples. The proration calculations
are complex, PeopleSoft has provided a set of examples based on certain
assumptions to help you understand how the proration will work. The actual
proration will depend upon the mix of elections and the average closing price of
the PeopleSoft Common Stock.
KEY ASSUMPTIONS:
- TOTAL NUMBER OF SHARES OUTSTANDING, AS OF THE MERGER
AGREEMENT = 122,426,664
- MAXIMUM NUMBER OF PEOPLESOFT COMMON STOCK ISSUABLE (FOR 100% OF
SHARES) = 0.43 X 122,426,664 = 52,643,466
- TOTAL AMOUNT OF CASH ISSUABLE (FOR 100% OF
SHARES) = 122,426,664 X $7.05 = $863,107,981
- AVERAGE CLOSING PRICE OF PEOPLESOFT COMMON STOCK = $17.00
- RESULTING CASH OFFER PRICE = $7.05 + 0.43 X $17.00 = $14.36
- RESULTING STOCK OFFER PRICE = $14.36 / $17.00 = APPROXIMATELY 0.8447X
The average closing price is equal to the average closing price of
PeopleSoft Common Stock as reported on the Nasdaq National Market for the five
consecutive trading days immediately prior to (and excluding) the second trading
day before the expiration of the offer. The cash offer price is equal to
$7.05 + 0.43 X average closing price. The stock offer price is equal to the cash
offer price divided by the average closing price.
Assume in the following examples that 95% of the Shares are tendered. The
consideration for distribution in the offer will be set forth below.
- The total number of Shares tendered is 122,426,664 X 95% = 116,305,331.
- The total amount of shares of PeopleSoft Common Stock that can be issued
to accepted Shares = 122,426,664 X 0.43 X 95% is 50,011,292 shares.
- The total amount of cash issuable to accepted
Shares is 122,426,664 X $7.05 X 95% = $819,952,582.
CASE 1: 60% OF THOSE THAT TENDER ELECTED CASH AND 40% OF THOSE THAT TENDER
ELECTED STOCK.*
Resulting Consideration Paid
- Those J.D. Edwards shareholders electing stock receive full consideration
in PeopleSoft Common Stock.
-- The maximum number of Shares that could be paid in stock in the
offer is 0.43 X 116,305,331 / 0.8447 = 59,205,981.
-- The number of Shares electing stock is
116,305,331 X 40% = 46,522,132.
- This number is less than the maximum number of Shares that could
be paid in stock (46,522,132 < 59,205,981).
D-4
* Note: All calculations are rounded to the nearest whole number. Figures may
not add exactly due to rounding.
- As a result, every stock-electing Share receives its full
consideration in PeopleSoft Common Stock. Every stock-electing
Share will receive, 0.8447 of a share of PeopleSoft Common Stock,
which represents a value of $14.36 (0.8447 X $17.00 = $14.36).
- Those Shares electing cash will receive partial consideration in cash and
partial consideration in PeopleSoft Common Stock.
-- The maximum number of Shares that could be paid in cash in the offer
is $7.05 X 116,305,331 / $14.36 = 57,099,762.
-- The number of Shares electing cash is 116,305,331 X 60% = 69,783,198.
- The number of Shares electing cash (69,783,198) exceeds the maximum
number of Shares that could be paid in cash (57,099,762).
- Therefore, only 81.8% (57,099,762 / 69,783,198 = 81.8%) of the
requested amount can be delivered as cash consideration to those
J.D. Edwards stockholders electing cash.
-- Each cash-electing share will receive 81.8% of the cash offer price
of $14.36, or $11.75.
-- The remaining consideration must be delivered in PeopleSoft Common
Stock equal to 0.8447 X (1-0.818) = 0.1535 of a share of PeopleSoft
Common Stock.
-- Each cash electing share will receive 0.1535 of a share of PeopleSoft
Common Stock in addition to the $11.75 in cash to deliver the full
$14.36 of consideration.
CASE 2: 40% OF THOSE THAT TENDER ELECTED CASH AND 60% OF THOSE THAT TENDER
ELECTED STOCK.*
Resulting Consideration Paid
- Those Shares electing stock receive partial consideration in PeopleSoft
Common Stock and partial consideration in cash.
-- The number of Shares electing stock is 116,305,331 X 60%, or
69,783,198.
- This number is greater than the maximum number of Shares that
could be paid stock (69,783,198 > 59,205,981).
- Every stock-electing Share will therefore receive a portion of
the full $14.36 consideration in cash.
- Every stock-electing Share will therefore receive 0.7167 of a
share of PeopleSoft Common Stock (59,205,981 / 69,783,198 X stock
offer price of 0.8447 = 0.7167) which represents a value of
$12.18 (0.7167 X $17.00 = $12.18).
- The remaining consideration equal to the cash offer price of
$14.36 X (1 - 0.848) = $2.18 must therefore be delivered in cash
in order to meet the required $14.36 value per Share.
- Those Shares electing cash receive full consideration in cash.
-- The number of tendering Shares electing cash is 116,305,331 X 40%,
or 46,522,132.
- This number is less than the maximum number of Shares that could
be paid in cash (46,522,132 < 57,099,762).
- Therefore, each cash-electing Share will receive the full $14.36
of consideration in cash.
D-5
CASE 3: 60% OF THOSE THAT TENDER ELECTED CASH, 20% OF THOSE THAT TENDER ELECTED
STOCK, AND 20% OF THOSE THAT TENDER MADE NO ELECTION.*
Resulting Consideration Paid
- Those Shares electing stock receive full consideration in PeopleSoft
stock.
-- The number of Shares tendering and electing stock is
116,305,331 X 20%, or 23,261,066.
-- This number is less than the maximum number of Shares that can be
paid in stock (23,261,066 < 59,205,98 ), so all those stock-electing
Shares receive full consideration in PeopleSoft Common Stock.
-- For each Share tendered, 0.8447 of a share of PeopleSoft Common Stock
will be issued (0.8447 X $17.00) to deliver the full $14.36 of
consideration.
- Those Shares electing cash receive partial consideration in cash and
partial consideration in PeopleSoft Common Stock.
-- The number of Shares electing cash is 116,305,331 X 60%, or
69,783,198.
-- This number exceeds the maximum number of Shares that could be paid
in cash (69,783,198 > 57,099,762).
-- Therefore, only 81.8% (57,099,762/69,783,198) of the requested amount
can be delivered as consideration to those J.D. Edwards stockholders
electing cash.
-- Each cash-electing Share will receive 81.8% of the cash offer price
of $14.36, or $11.75.
-- The remaining consideration must be delivered in PeopleSoft Common
Stock equal to 0.8447 X (1 - 0.818) = 0.1535 of a PeopleSoft Common
Stock.
-- Each cash-electing Share will therefore receive 0.1535 of a share of
PeopleSoft Common Stock (worth $2.61) in addition to the $11.75 in
cash to deliver the full $14.36 of consideration.
- Tendered but non-electing Shares receive full consideration in PeopleSoft
Common Stock.
-- Under this scenario, 23,261,066 Shares have not elected a
consideration preference (116,305,331 X 20%).
-- Those non-electing Shares will each receive 0.8447 of a share of
PeopleSoft Common Stock.
CASE 4: 40% OF THOSE THAT TENDER ELECTED CASH, 40% OF THOSE THAT TENDER ELECTED
STOCK, AND 20% OF THOSE THAT TENDER MADE NO ELECTION.*
Resulting Consideration Paid
- Those Shares electing stock receive full consideration in PeopleSoft
Common Stock.
-- The number of Shares tendering and electing stock is
116,305,331 X 40% = 46,522,132.
-- This number is less than the maximum number of Shares that can be
paid in stock (46,522,132 < 59,205,981), so all those stock-electing
Shares receive full consideration in PeopleSoft Common Stock.
-- For each Share tendered, 0.8447 of a new PeopleSoft share will be
issued (0.8447 X $17.00) to deliver the full $14.36 of consideration.
-- The number of PeopleSoft Common Stock to be issued for these Shares
is 39,297,245.
- Those Shares electing cash receive full consideration in cash.
-- The number of Shares electing cash is 116,305,331 X 40%, or
46,522,132.
D-6
-- This number is less than the maximum number of Shares that could be
paid in cash (46,522,132 < 57,099,762).
-- Therefore each cash-electing Share will receive the full
consideration of $14.36 in cash.
-- The amount of cash paid for these Shares is $668,057,815.
- Tendered but non-electing Shares receive partial consideration in cash
and partial consideration in PeopleSoft Common Stock.
-- The number of Shares who tendered but did not make an election is
116,305,331 X 20% = 23,261,066.
-- Under this scenario, $151,894,762 in cash remains for issuance
($819,952,582 - $668,057,815).
-- Under this scenario, 10,714,047 shares of PeopleSoft Common Stock
remain for issuance (50,011,292 - 39,297,245).
-- $151,894,761 and 10,714,047 shares of PeopleSoft Common Stock will
be allocated among the 23,261,066 Shares which have been tendered
but no election was made, as follows:
-- $151,894,767 / 23,261,066 = $6.53; and
-- 10,714,047 / 23,261,066 = 0.4606 of a share of PeopleSoft Common
Stock.
-- Therefore, each Share that has been tendered but for which no
election was made will be exchanged for $6.53 plus 0.4606 of a
share of PeopleSoft Common Stock (with a value of 0.4606 X
$17 = $7.83) for a total consideration with a value of $14.36.
As discussed above, the average closing price for purposes of allocating
the offer consideration will be determined by the average closing price of
PeopleSoft Common Stock as reported on the Nasdaq National Market for the five
consecutive trading day period ending immediately prior to (and excluding) the
second trading day before the expiration of the offer.
The following table illustrates the allocation of the offer consideration
for the different values of PeopleSoft Common Stock based on the four examples
above for the different percentages of cash-electing shares, stock-electing
shares and non-electing shares.
<Table>
<Caption>
60% CASH/40% STOCK-ELECTING SHARES 40% CASH/60% STOCK-ELECTING SHARES
------------------------------------ ------------------------------------
EACH CASH-ELECTING EACH STOCK- EACH CASH-ELECTING EACH STOCK-
AVERAGE CASH STOCK SH. ELECTING SH. SH. ELECTING SH.
CLOSING OFFER OFFER ------------------ --------------- ------------------ ---------------
PRICE PRICE PRICE CASH STOCK CASH STOCK CASH STOCK CASH STOCK
- ------- ------ ----- -------- ------- ------ ------ -------- ------- ------ ------
$10.00 $11.35 1.135x $11.35 0.000x $0.60 1.075x $11.35 0.000x $4.18 0.717x
$11.00 $11.78 1.071x $11.75 0.003x $0.00 1.071x $11.78 0.000x $3.90 0.717x
$12.00 $12.21 1.018x $11.75 0.038x $0.00 1.018x $12.21 0.000x $3.61 0.717x
$13.00 $12.64 0.972x $11.75 0.068x $0.00 0.972x $12.64 0.000x $3.32 0.717x
$14.00 $13.07 0.934x $11.75 0.094x $0.00 0.934x $13.07 0.000x $3.04 0.717x
$15.00 $13.50 0.900x $11.75 0.117x $0.00 0.900x $13.50 0.000x $2.75 0.717x
$16.00 $13.93 0.871x $11.75 0.136x $0.00 0.871x $13.93 0.000x $2.46 0.717x
$17.00 $14.36 0.845x $11.75 0.154x $0.00 0.845x $14.36 0.000x $2.18 0.717x
$18.00 $14.79 0.822x $11.75 0.169x $0.00 0.822x $14.79 0.000x $1.89 0.717x
$19.00 $15.22 0.801x $11.75 0.183x $0.00 0.801x $15.22 0.000x $1.60 0.717x
$20.00 $15.65 0.783x $11.75 0.195x $0.00 0.783x $15.65 0.000x $1.32 0.717x
$21.00 $16.08 0.766x $11.75 0.206x $0.00 0.766x $16.08 0.000x $1.03 0.717x
$22.00 $16.51 0.750x $11.75 0.216x $0.00 0.750x $16.51 0.000x $0.74 0.717x
$23.00 $16.94 0.737x $11.75 0.226x $0.00 0.737x $16.94 0.000x $0.46 0.717x
$24.00 $17.37 0.724x $11.75 0.234x $0.00 0.724x $17.37 0.000x $0.17 0.717x
$25.00 $17.80 0.712x $11.75 0.242x $0.00 0.712x $17.63 0.007x $0.00 0.712x
</Table>
D-7
<Table>
<Caption>
60% CASH/20% STOCK/20% NON-ELECTING SHARES
--------------------------------------------------------------------
EACH STOCK-ELECTING
AVERAGE CASH STOCK EACH CASH-ELECTING SH. SH. EACH NON-ELECTING SH.
CLOSING OFFER OFFER ---------------------- ------------------- ---------------------
PRICE PRICE PRICE CASH STOCK CASH STOCK CASH STOCK
- ------- ------ ----- ---------- --------- -------- -------- --------- ---------
$10.00 $11.35 1.135x $11.35 0.000x $0.60 1.075x $0.60 1.075x
$11.00 $11.78 1.071x $11.75 0.003x $0.00 1.071x $0.00 1.071x
$12.00 $12.21 1.018x $11.75 0.038x $0.00 1.018x $0.00 1.018x
$13.00 $12.64 0.972x $11.75 0.068x $0.00 0.972x $0.00 0.972x
$14.00 $13.07 0.934x $11.75 0.094x $0.00 0.934x $0.00 0.934x
$15.00 $13.50 0.900x $11.75 0.117x $0.00 0.900x $0.00 0.900x
$16.00 $13.93 0.871x $11.75 0.136x $0.00 0.871x $0.00 0.871x
$17.00 $14.36 0.845x $11.75 0.154x $0.00 0.845x $0.00 0.845x
$18.00 $14.79 0.822x $11.75 0.169x $0.00 0.822x $0.00 0.822x
$19.00 $15.22 0.801x $11.75 0.183x $0.00 0.801x $0.00 0.801x
$20.00 $15.65 0.783x $11.75 0.195x $0.00 0.783x $0.00 0.783x
$21.00 $16.08 0.766x $11.75 0.206x $0.00 0.766x $0.00 0.766x
$22.00 $16.51 0.750x $11.75 0.216x $0.00 0.750x $0.00 0.750x
$23.00 $16.94 0.737x $11.75 0.226x $0.00 0.737x $0.00 0.737x
$24.00 $17.37 0.724x $11.75 0.234x $0.00 0.724x $0.00 0.724x
$25.00 $17.80 0.712x $11.75 0.242x $0.00 0.712x $0.00 0.712x
</Table>
The Schedule TO states that the principal executive offices of PeopleSoft
and the Purchaser are located at 4460 Hacienda Drive, Pleasanton, California,
94588.
ITEM 3. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates with certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Rule 14f-1 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") that is attached as Annex A and Exhibit (a)(4) hereto (the "Information
Statement") and are incorporated herein by reference. Except as described or
referred to herein and in Annex A, to the knowledge of the Company, as of the
date hereof, there are no material agreements, arrangements or understandings,
or any actual or potential conflicts of interest, between the Company or its
affiliates and (1) the Company, its executive officers, directors or affiliates
or (2) PeopleSoft or the Purchaser, their respective officers, directors or
affiliates.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of the Company
(the "Board of Directors" or "Board") set forth in Item 4 below, the Company's
stockholders should be aware that certain executive officers of the Company and
certain members of the Board of Directors have interests in the merger, which
are described herein and in Annex A hereto, that differ from those of other
stockholders of J.D. Edwards, as described below. The Board of Directors was
aware of these matters and considered them in approving the original merger
agreement and the merger and, subsequently, the offer and the Merger Agreement,
and recommending that the J.D. Edwards stockholders accept the offer, tender
their Shares and approve the merger and the Merger Agreement.
In connection with the original merger agreement, each of the directors and
executive officers of J.D. Edwards entered into a voting agreement with
PeopleSoft and the Purchaser in which he or she has agreed, among other things,
to vote all Shares beneficially owned by him or her in favor of, among other
things, the Merger Agreement and the merger and against other acquisition
proposals. The voting agreements were not changed in connection with the
negotiation of the Merger Agreement; however, approval of the stockholders of
J.D. Edwards is not required to complete the offer.
Change in Control Plan/Severance Agreements. J.D. Edwards maintains a
management change in control plan, adopted in 1999, which provides for specified
severance and other change in control-related benefits to participants in the
plan. The plan covers 197 management employees. In connection with the approval
of the original merger agreement, the Board of Directors agreed to amend this
plan in certain respects. The amendments to the plan are contingent upon the
closing of the merger. No further amendment to the plan was made or agreed to in
connection with the Merger Agreement.
D-8
As amended, a participant in the plan is entitled, among other benefits as
described below, to be paid (1) 25% of the severance payment determined as
described below as of the closing, (2) 25% of the severance payment amount if he
or she remains an employee of J.D. Edwards or an affiliate 12 months after
closing, and (3) an additional 50% of the severance payment amount, plus the 25%
otherwise due 12 months after closing if not already paid, if the employee is
involuntarily terminated or is terminated without cause within 15 months of a
change of control. In addition, a participant who is terminated without cause
immediately upon the closing generally will receive the entire severance payment
and other benefits provided under the plan prior to its amendment at that time.
A change in control under the plan includes the consummation of a merger or
consolidation with another company, and would include the proposed merger
between PeopleSoft and J.D. Edwards described in the Prospectus. Under the plan
as amended pursuant to the original merger agreement, involuntary termination
includes:
- a significant reduction of the participant's title, duties or
responsibilities relative to those in effect immediately prior to the
reduction excluding any reasonable changes that are the direct and
necessary result of J.D. Edwards becoming a subsidiary in a larger
controlled group of corporations;
- a reduction in the annual base salary or in the maximum dollar amount of
potential annual cash bonuses relative to the annual base salary and
maximum dollar amount of potential annual cash bonuses as in effect
immediately prior to the reduction, unless after the reduction the
participant's annual base salary and potential annual cash bonus remain
within the range of annual salaries and cash bonuses for
similarly-situated employees of PeopleSoft or its affiliates;
- a failure by PeopleSoft to provide the participant with an employee
benefits package that is substantially comparable in the aggregate to the
employee benefits package provided to all employees of PeopleSoft or its
affiliates who are of a similar rank or level as the participant; or
- the relocation of the participant to a facility or a location more than
50 miles from the participant's then present location, provided that
participant's commute is longer in miles as a result of the relocation
compared to the participant's commute to the current location.
In any event, PeopleSoft would have a 30-day period to cure any purported
involuntary termination, and a participant will not be entitled to severance
benefits unless he or she actually terminates employment with PeopleSoft.
In addition, a participant in the plan is deemed to be terminated without
cause if he or she is terminated by PeopleSoft other than as the result of (1) a
material act of dishonesty by the participant in connection with the
participant's employment with PeopleSoft; (2) the participant's conviction of,
or plea of nolo contendere to, a felony; (3) the participant's failure to
perform reasonably assigned duties after the participant has received a written
demand for performance which includes reasonable detail describing his or her
nonperformance; (4) the participant's material breach of his or her obligations
as an officer/employee of PeopleSoft; or (5) the participant's failure to
materially comply with PeopleSoft's policies. In any event, a participant would
have a 30-day period to cure any purported event under (3), (4) or (5) above.
A participant's severance payment under the plan equals the sum of (1) a
specified severance percentage, which is defined as 100%, 200% or 300% of the
sum of the participant's annual base salary and the average of the bonuses
received by such individual over the preceding three years, plus (2) a prorated
portion of his or her quarterly and annual bonus and variable compensation
amount. In addition, a participant who is terminated without cause or who
suffers an involuntary termination within 15 months of closing is entitled to
continuation of specified employee benefits until the earlier of (1) six months
after the date of termination or (2) the date the participant becomes covered by
a comparable plan of another employer and job outplacement services for up to
six months after termination up to $10,000. All payments under the plan are
conditioned upon the participant executing a release of claims in favor of
PeopleSoft and its affiliates. The total potential liability of PeopleSoft under
the plan is approximately $53 million.
D-9
Of the 197 participants in the plan, six, including Richard Allen, Harry
Debes, Mark Endry, Michael Madden, Richard Mathews, and Leslie Wyatt, are
entitled to severance percentages of 300%, 43 are entitled to severance
percentages of 200% and the remaining 148 are entitled to severance percentages
of 100%. In connection with the execution of the original merger agreement,
Robert Dutkowsky, Richard Allen and Richard Snow agreed to amend their
agreements subject to the completion of the merger and are entitled to the
amount of severance benefits described immediately below.
Employment Agreements. Mr. Dutkowsky, President and Chief Executive
Officer of J.D. Edwards, has agreed to amend his employment agreement. He will
continue to serve as a consultant to the surviving corporation for up to six
months after the merger subject to the completion of the merger. In lieu of any
other severance benefits, including those otherwise payable under the management
change in control plan, he will receive cash payments of $650,000 on the closing
of the merger, and $1.95 million at the end of the six-month transition period.
He will be entitled to the acceleration of all of his unvested options and
restricted stock and specified additional payments intended to offset any excise
tax liabilities under Section 280G of the Internal Revenue Code to which Mr.
Dutkowsky may be subject as a result of the severance payments made to him in
connection with the merger. Mr. Dutkowsky will be subject to a PeopleSoft
non-competition and non-solicitation agreement during the term of his employment
and for a period of one year following the termination of his employment
Mr. Allen, Executive Vice President, Finance and Administration, and Chief
Financial Officer of J.D. Edwards, similarly has agreed to amend the employment
agreement subject to the completion of the merger and is expected to be retained
for a six-month transition period. He will be entitled to total cash payments
under the plan of approximately $1.8 million, 25% of which will be payable at
closing of the merger and the remaining 75% payable upon his termination of
employment. Mr. Allen will be subject to a PeopleSoft non-competition and
non-solicitation agreement during the term of his employment and for a period of
one year following the termination of his employment.
Mr. Snow, Vice President, General Counsel and Secretary of J.D. Edwards,
also has agreed to amend his employment agreement described above subject to the
completion of the merger and is expected to be retained for a period of
approximately six months following the closing. He will be entitled to total
cash payments under the plan of $456,248, 25% of which will be payable at
closing of the merger and the remaining 75% payable upon his termination of
employment. Mr. Snow will be subject to a PeopleSoft non-competition and
non-solicitation agreement during the term of his employment and for a period of
one year following the termination of his employment.
A total of 47 other employees, including the remainder of the J.D. Edwards
executive officers, have entered into substantially similar offer letters that
amend their employment agreements. Pursuant to those offer letters, they
generally will be at-will employees of PeopleSoft, will be entitled to benefits
under the plan as described above, may receive additional PeopleSoft options and
will be subject to the standard PeopleSoft non-competition and non-solicitation
agreement during the term of their employment and for a period of one year, and
with regard to the non-solicitation of employees, six months following their
voluntary termination or termination for cause.
Acceleration of Stock Options. Under the J.D. Edwards 1992 Incentive Stock
Option Plan, 1997 Equity Incentive Plan and 2003 Equity Incentive Plan, if any
individual is involuntarily terminated as a result of the merger, the awards
granted to that individual under the plan are accelerated in full and becomes
100% vested. Under the YOUcentric, Inc. 2000 Equity Compensation Plan, assumed
by J.D. Edwards, if an optionholder is involuntarily terminated within 12 months
of a change of control, including the proposed merger, the options granted under
that plan are accelerated in full and become 100% vested.
Post-Merger Board Membership. As of the effective time of the merger,
PeopleSoft will amend its Bylaws to increase the size of its board to eight
members, and one of J.D. Edwards' directors, Michael J. Maples, will be
designated to serve as a Class I director of PeopleSoft and a member of the
PeopleSoft's board's Corporate Governance/Nominating Committee.
D-10
Indemnification. The Merger Agreement provides that, after the effective
time of the merger, to the extent not covered by insurance and as permitted by
law, PeopleSoft shall, or shall cause the surviving corporation to, indemnify
and hold harmless persons who were directors or officers of J.D. Edwards prior
to the effective time of the merger against all liabilities or losses arising
out of or in connection with any claim, demand, action, suit, proceeding or
investigation based or arising in whole or in part out of the fact that the
person was a director or officer of J.D. Edwards (whether or not relating to any
matter existing or occurring at or prior to the effective time of the merger and
whether or not asserted or claimed prior to, at or after the effective time of
the merger), including, to the extent not prohibited by law, indemnification for
negligent acts or omissions by an indemnified person. In addition, PeopleSoft
has agreed to cause the surviving corporation to fulfill and honor all
obligations of J.D. Edwards under any indemnification agreements between J.D.
Edwards and its directors and officers and the indemnification provisions of
J.D. Edwards' certificate of incorporation and bylaws as in effect immediately
before the merger. PeopleSoft also agrees not to permit the surviving
corporation to merge or consolidate with any other person unless the surviving
corporation will ensure that the surviving or resulting entity assumes the
indemnification obligations in the Merger Agreement.
PeopleSoft has agreed to maintain in effect, or cause the surviving
corporation to maintain in effect, for a period of six years after the effective
time of the merger if available, directors' and officers' liability insurance
covering those persons who are covered by J.D. Edwards' directors' and officers'
liability insurance policy as of immediately prior to the effective time of the
merger, on terms no less favorable to those persons than those of J.D. Edwards'
existing directors' and officers' liability insurance policy. However, neither
PeopleSoft nor the surviving corporation, as the case may be, is required to
expend an amount in excess of 200% of the current premium paid by J.D. Edwards
in any one year. If the aggregate expenditure on coverage exceeds that amount,
PeopleSoft will use commercially reasonable efforts to purchase as much
insurance as can be obtained for that amount. Instead of maintaining the
existing insurance, PeopleSoft may cause coverage to be provided under any
policy maintained for the benefit of PeopleSoft or its subsidiaries on terms
materially no less favorable to the intended beneficiaries as the existing
insurance.
Transfers Under Rule 144. The issuance of PeopleSoft Common Stock in
connection with the offer and the merger will increase the number of shares of
outstanding PeopleSoft Common Stock and is expected to result in greater share
trading volume, which will affect the Rule 144 volume limitations that apply to
affiliates of the combined company and former affiliates of J.D. Edwards. This
increase in the number of shares of outstanding PeopleSoft Common Stock may
facilitate broader transfers of shares by affiliates.
As a result of these interests, J.D. Edwards directors and officers may
have reasons for tendering their Shares and, if voting to adopt the Merger
Agreement and approve the merger that are not the same as J.D. Edwards
stockholders' interests. J.D. Edwards stockholders should consider whether these
interests may have influenced these directors and officers to support or
recommend the offer and the merger.
THE MERGER AGREEMENT
A summary of the material terms of the Merger Agreement in the section
entitled "The Merger Agreement" in the Prospectus attached as Exhibit (a)(1) to
this Statement and is incorporated herein by reference. The summary is qualified
in its entirety by reference to the complete text of the Merger Agreement, which
has been filed as Exhibit (e)(1) hereto and is incorporated herein by reference.
AGREEMENTS RELATED TO THE MERGER
A summary of the material terms of the J.D. Edwards Stockholder Voting
Agreements, the form of which is attached as Exhibit C to the Merger Agreement
and the J.D. Edwards Affiliate Agreements, the form of which is attached as
Exhibit B to the Merger Agreement in the section entitled "Agreements Related to
the Merger" in the Prospectus attached as Exhibit (a)(1) to this Statement and
is incorporated herein by reference. The summary is qualified in its entirety by
reference to the complete text of the
D-11
agreements, which have been filed as part of Exhibit (e)(1) hereto and is
incorporated herein by reference.
EXISTING INDEMNIFICATION; DIRECTORS AND OFFICERS' INSURANCE
The J.D. Edwards amended and restated certificate of incorporation
eliminates the personal liability of, and provides a right to indemnification
to, each of the current and former directors and officers to the fullest extent
authorized or permitted by Delaware General Corporation Law. However, if the
Delaware General Corporation Law is amended to further eliminate or limit
director liability, then the indemnification provided shall be expanded to the
fullest extent permitted by the Delaware General Corporation Law as amended.
J.D. Edwards will advance fees for defense of an indemnified director or
officer, upon receipt of an undertaking that the advance will be repaid if it is
ultimately determined that the director or officer is not entitled to
indemnification. The J.D. Edwards amended and restated certificate of
incorporation and bylaws also permit the Board of Directors to provide for
indemnification of employees and agents of J.D. Edwards with the same scope and
effect as the indemnification provided for directors and officers, provided that
J.D. Edwards is not required to advance fees for the defense of indemnified
employees or agents. This right to indemnification is not exclusive of any other
right the director, officer, employee or agent may have.
Even if J.D. Edwards is prohibited from indemnifying a person under
Delaware General Corporation Law, it may maintain insurance at the corporation's
expense to protect itself and any director, officer, employee or agent against
an expense, liability or loss.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(A) SOLICITATION/RECOMMENDATION
At a meeting held on June 15, 2003, the members of the Board of Directors
voted to approve the Merger Agreement and the transactions contemplated thereby,
including the offer and the merger, and determined that the Merger Agreement,
the offer and the merger are fair to and in the best interests of the
stockholders of J.D. Edwards. The Board also authorized the senior members of
the Company's management to finalize and execute the Merger Agreement on behalf
of the Company. The J.D. Edwards directors unanimously voted to recommend that
the J.D. Edwards stockholders accept the offer. A letter to J.D. Edwards'
stockholders communicating the Board's recommendation is filed as Exhibit (a)(3)
hereto and is incorporated herein by reference.
(B) BACKGROUND OF THE OFFER; REASONS FOR RECOMMENDATION
BACKGROUND OF THE OFFER
As a regular part of their business plans, PeopleSoft and J.D. Edwards have
from time to time each considered opportunities for expanding and strengthening
their respective technology, products, research and development capabilities and
distribution channels, including strategic acquisitions, business combinations,
investments, licensing and development agreements and joint ventures.
Although PeopleSoft and J.D. Edwards did not have any prior business
understandings or relationships, during the past several years, PeopleSoft's
senior management and that of J.D. Edwards have made periodic inquiries to each
other regarding whether a strategic transaction between the parties would be
mutually beneficial.
In November 1998, members of PeopleSoft's senior management met with
members of senior management of J.D. Edwards to discuss a potential business
combination between PeopleSoft and J.D. Edwards. During the winter of 2000, and
again in the fall of 2001, additional meetings were held to discuss a potential
strategic transaction between the parties, but no agreements were reached.
On or about June 5, 2002, Craig Conway contacted Larry Ellison, Oracle
Corporation's Chairman and Chief Executive Officer to determine whether Oracle
would be interested in selling its enterprise
D-12
applications business to PeopleSoft. On that date, Oracle and PeopleSoft entered
into a mutual nondisclosure agreement. On the following day, June 6, 2002, Ram
Gupta, Peter Gassner, Rick Bergquist and Kevin Parker, PeopleSoft's Chief
Financial Officer, met in person with Safra Cruz, the Executive Vice President
of Oracle, and other representatives of Oracle, to discuss the matter. The
parties were unable to agree on the terms of any potential sale of Oracle's
enterprise applications business to PeopleSoft. Shortly thereafter, Mr. Conway
and Mr. Ellison had a brief telephone conversation in which they concluded that
they could not agree on mutually acceptable terms to such a transaction. There
have been no further discussions between Oracle and PeopleSoft on this subject
since that time.
In October and November 2002, senior members of PeopleSoft's management and
that of J.D. Edwards met to further explore a potential transaction between the
parties.
On November 25, 2002, the Board of Directors met and explored options to
enhance stockholder value, including, continuing on its then current track,
consolidation with other mid-market players, changing its business model or
pursuing an upstream merger. Mr. Dutkowsky advised the Board of the meetings
held with PeopleSoft.
On December 18, 2002, a representative of Citigroup, at PeopleSoft's
request, presented an overview of the potential business combination with J.D.
Edwards to members of PeopleSoft's senior management.
On December 18, 2002, the Board of Directors met and again explored options
to enhance stockholder value and the board authorized further discussions and
due diligence concerning a merger with PeopleSoft. On December 20, 2002, J.D.
Edwards engaged Morgan Stanley & Co. Incorporated as J.D. Edwards' financial
advisor in connection with a potential strategic transaction.
On January 28, 2003, the Board met and representatives of Morgan Stanley
presented an analysis of the current software industry dynamics, the competitive
landscape and strategic alternatives available to J.D. Edwards, including
continuing merger discussions with PeopleSoft.
On February 2, 2003, members of senior management of both parties met in
Denver, Colorado to further discuss the possible business combination, and on
February 3, 2003, Mr. Dutkowsky reviewed with the Board a summary of those
discussions.
From February 4, 2003 to February 24, 2003, PeopleSoft and J.D. Edwards
exchanged preliminary information regarding valuation.
On February 19, 2003, the Board of Directors met with representatives of
Morgan Stanley and reviewed discussions with PeopleSoft regarding proposed the
stock exchange ratios, the exchange ratio premiums and the estimated savings
from the cost synergies from the merged operations. After discussion of
strategic alternatives available the Board authorized further discussions with
PeopleSoft.
On February 24, 2003, PeopleSoft formally engaged Citigroup as its
financial advisor in connection with a potential strategic combination with J.D.
Edwards.
On February 25, 2003, Mr. Parker reviewed with PeopleSoft's board of
directors the status of discussions and the rationale for the merger. A
representative of the law firm of Gibson, Dunn & Crutcher LLP reviewed with the
board its legal duties in considering a transaction of this nature. After
discussion, the board authorized further discussions and diligence concerning a
merger with J.D. Edwards.
During March 2003 discussions continued, but the parties were unable to
come to agreement and terminated discussions in early April.
On May 2, 2003, Messrs. Conway and Dutkowsky held a conversation regarding
a potential strategic transaction.
On May 5, 2003, Mr. Dutkowsky discussed his May 2nd conversation with Mr.
Conway with the Board of Directors in a special telephonic meeting, and the
Board authorized management to continue discussions with PeopleSoft regarding a
potential strategic transaction. On May 11, 2003, Messrs. Conway and Dutkowsky
held a telephone conversation and agreed to move forward with merger
negotiations.
D-13
During the period commencing on May 12, 2003 through June 1, 2003, the
parties, their financial advisors and their legal counsel conducted intensive
due diligence.
On May 15, 2003, the Board of Directors held a special telephonic meeting
at which the proposed merger was discussed and considered. At the meeting, J.D.
Edwards management and representatives of Morgan Stanley made presentations to
the Board regarding the proposed business combination. Representatives of the
law firm of Wilson Sonsini Goodrich & Rosati, Professional Corporation presented
an extensive review of the terms of the proposed merger. Following the
presentations, and after discussion, the Board directed management and counsel
to pursue further negotiations regarding the proposed merger and a merger
agreement.
On May 16, 2003, PeopleSoft and J.D. Edwards executed a new mutual
non-disclosure agreement and, as an inducement for PeopleSoft to commit its time
and resources to perform a due diligence review of J.D. Edwards and enter into
discussions regarding the proposed business combination, J.D. Edwards entered
into a 13-day exclusivity arrangement.
On May 16, 2003, PeopleSoft's counsel sent a preliminary draft merger
agreement to J.D. Edwards' counsel. On May 19, 2003, we and J.D. Edwards
executed an addendum to the mutual non-disclosure agreement relating to highly
sensitive competitive information.
On May 19, 2003, PeopleSoft's board of directors held a special meeting at
which the proposed merger was discussed and considered. Director Fanzilli was
not present at the meeting due to a family illness. A representative of Gibson,
Dunn & Crutcher LLP was also present at this meeting and reviewed with the
directors their legal duties in considering the proposed merger. At the meeting,
PeopleSoft's management and representatives of Citigroup Global Markets made
presentations to the board regarding J.D. Edwards, the opportunities for a
combined company and certain proposed terms of a business combination. Following
the presentations, and after discussion, PeopleSoft's board approved proceeding
with diligence and negotiation with representatives of J.D. Edwards.
On May 20, 2003, senior members of PeopleSoft's management and J.D.
Edwards' management, and representatives of Gibson, Dunn & Crutcher LLP, Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Citigroup and Morgan
Stanley met to discuss the proposed merger agreement at the offices of Wilson
Sonsini Goodrich & Rosati, Professional Corporation in Palo Alto, California.
Based on those discussions a new draft of the merger agreement was prepared and
distributed to the parties.
On May 23, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and representatives of Morgan Stanley reviewed various issues with to
the Board regarding the proposed business combination. Representatives of Wilson
Sonsini Goodrich & Rosati, Professional Corporation presented an extensive
review of the terms of the proposed merger agreement as well as the directors'
legal duties in considering the proposed merger. Management made extensive
presentations about the results of the due diligence review, the benefits of the
business combination and integration issues.
On May 27, 2003, PeopleSoft's board of directors held a regular meeting at
which the proposed merger was discussed and considered. At the meeting,
PeopleSoft's management and representatives of Citigroup made presentations to
the board regarding the proposed business combination. A representative of
Gibson, Dunn & Crutcher LLP was also present at this meeting, and presented a
summary of the merger agreement and the status of negotiations. Management made
extensive presentations concerning J.D. Edwards and integration issues at the
meeting. Citigroup also reviewed issues relating to fairness with the board and
gave its preliminary opinion that, as of that date, the exchange ratio in the
original merger agreement was fair, from a financial point of view, to
PeopleSoft. Following the presentations, and after discussion, PeopleSoft's
board directed management and counsel to pursue further negotiations regarding
the merger agreement and the proposed merger.
On May 28, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and J.D. Edwards' legal and
D-14
financial advisors reviewed with the Board the proposed business combination and
the proposed merger agreement.
Between May 28, 2003 and May 31, 2003, offers of employment with the
combined company were made by PeopleSoft to senior management of J.D. Edwards
and the terms of employment were negotiated by the parties. PeopleSoft also
discussed with J.D. Edwards the proposed amendment to its change in control plan
and the Board amended the plan on June 1, 2003. These amendments were made in
connection with the original merger agreement and were not changed in connection
with the negotiation of the merger agreement. See the section of the Prospectus
entitled "The Offer -- Interests of Certain Persons in the Offer."
PeopleSoft's board of directors held a special meeting by conference
telephone call on May 28, 2003 to obtain an update regarding the status of
negotiations and to discuss open issues on the merger agreement and related
documents.
On May 31, 2003, PeopleSoft's board of directors held a special telephonic
meeting at which the proposed merger was discussed and considered. At the
meeting, PeopleSoft's management and representatives of Citigroup made
presentations to the board regarding the proposed business combination. A
representative of Gibson, Dunn & Crutcher LLP was also present at this meeting.
Citigroup presented its fairness opinion regarding the proposed transaction to
the board. The board also discussed, with the input of management and legal
counsel, final remaining open issues in the merger agreement. Following the
presentations, and after discussion, PeopleSoft's board unanimously approved the
merger agreement and the transactions contemplated by the merger agreement in
substantially the form presented to the board and authorized senior members of
PeopleSoft's management to finalize and execute the merger agreement and the
other agreements contemplated thereby on behalf of our company.
On May 31, 2003, counsel for PeopleSoft and J.D. Edwards' counsel
negotiated the merger agreement.
On June 1, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and representatives of Morgan Stanley made presentations to the Board
regarding the proposed business combination. Morgan Stanley presented its
financial fairness opinion regarding the consideration to be paid pursuant to
the proposed transaction to the Board. Representatives of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, provided a detailed summary of the
final terms of the merger agreement. Following the presentations, and after
discussion, the Board unanimously approved the merger agreement and the
transactions contemplated by the merger agreement in substantially the form
presented to the Board and determined the merger agreement to be in the best
interests of the J.D. Edwards stockholders and authorized senior members of the
Board to finalize and execute the merger agreement and the other agreements
contemplated thereby on behalf of J.D. Edwards.
On June 1, 2003, counsel for PeopleSoft and J.D. Edwards' counsel finalized
the merger agreement and, thereafter, the merger agreement, voting agreements
and certain employment agreements were executed by the relevant parties.
PeopleSoft and J.D. Edwards publicly announced the proposed transaction and
its material terms at approximately 4:30 a.m., Pacific time, on June 2, 2003.
Four days later, on June 6, 2003, Oracle Corporation announced its
intention to commence a tender offer beginning on June 9, 2003 for all issued
and outstanding PeopleSoft Common Stock, which is referred to as the "Oracle
offer," at a price of $16 per share.
Oracle also delivered a letter to PeopleSoft announcing its intention to
commence the tender offer and requesting that the board of directors redeem or
render inapplicable all outstanding preferred stock purchase rights. The letter
also stated that Oracle was prepared to meet with PeopleSoft's management to
discuss the Oracle offer.
D-15
On June 6, 2003, PeopleSoft filed a press release regarding the anticipated
tender offer. The release was filed with the SEC as a preliminary communication
filed under cover of Schedule 14D-9.
In response to Oracle's June 6 announcement, PeopleSoft contacted Citigroup
and Goldman, Sachs & Co. to render financial advice to the board of directors in
connection with, among other things, any tender offer commenced by Oracle. In
addition, the board of directors retained Gibson, Dunn & Crutcher LLP to render
legal advice in connection with any such tender offer.
On June 8, 2003, PeopleSoft's board of directors and its financial and
legal advisors met to discuss Oracle's June 6 announcements and to establish
procedures for thoroughly and diligently evaluating the terms of the Oracle
offer, once announced. At that meeting, PeopleSoft's board of directors formed a
committee of independent directors which was charged with evaluating the terms
of the Oracle offer, in consultation with the financial and legal advisors
engaged by PeopleSoft's board of directors to render financial advice and legal
advice in connection with, among other things, any tender offer commenced by
Oracle. PeopleSoft's board of directors retained Goldman, Sachs & Co. and
Citigroup as its financial advisors with respect to such matters and PeopleSoft
subsequently executed a written engagement letter with each financial advisor.
On June 8, 2003, Oracle and its subsidiary commenced their tender offer. The
Oracle offer is currently pending and the expiration date of the Oracle offer is
July 7, 2003.
On June 9, 2003, the Board held a special meeting to discuss the Oracle
tender offer, PeopleSoft's response to the tender offer and potential responses
by J.D. Edwards. At the invitation of the Board, representatives of Wilson
Sonsini Goodrich & Rosati, Professional Corporation and Morgan Stanley attended
and discussed with the Board a range of legal and strategic issues related to
Oracle's tender offer, including its potential impact on the merger. Also on
June 9, Oracle delivered a letter to PeopleSoft expressing concern that we had
taken a negative position on the offer reaffirming its offer to meet with our
board of directors and requesting that we redeem our preferred stock rights
plan.
On June 11, 2003, after careful consideration, including consultation with
management and the board's financial and legal advisors, and upon the unanimous
recommendation of the committee of independent directors, PeopleSoft's board of
directors unanimously concluded that the Oracle offer would undoubtedly face
lengthy antitrust scrutiny, with a significant likelihood that the necessary
approval would not be granted, that the delays and uncertainties created by the
Oracle offer, coupled with Oracle's stated intent to discontinue PeopleSoft's
market-leading products, represent a substantial threat to stockholder value,
and that the unsolicited and hostile nature of the Oracle offer, combined with
Oracle's statements, was designed to disrupt PeopleSoft's strong momentum at
significant cost to PeopleSoft and its employees and customers. For these and
other reasons more fully set forth in PeopleSoft's Schedule 14D-9, the board of
directors determined that the Oracle offer was not in the best interests of
PeopleSoft's stockholders and unanimously recommended that PeopleSoft's
stockholders reject the Oracle offer and not tender their shares to Oracle to
purchase pursuant to the offer.
At a special meeting held by conference telephone call on June 11, 2003,
PeopleSoft's board of directors reaffirmed its support of the acquisition of
J.D. Edwards, and the Board reaffirmed its support of the merger at a special
telephonic meeting on June 12, 2003. At the direction of PeopleSoft's board of
directors and J.D. Edwards' board of directors, from June 12 to June 15, 2003,
senior members of PeopleSoft's management team and representatives of Gibson,
Dunn & Crutcher LLP, Citigroup and Goldman Sachs met with senior members of
management of J.D. Edwards and representatives of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, and Morgan Stanley in Palo Alto, California to
discuss and negotiate an amended merger agreement.
At a special meeting held by conference telephone call on June 15, 2003,
PeopleSoft's board, by the unanimous vote of the directors, approved the Merger
Agreement and the transactions contemplated thereby, including the offer and the
merger, and determined that the transactions contemplated by the Merger
Agreement, including the offer and the merger, were fair to and in the best
interests of PeopleSoft's stockholders. Citigroup rendered its opinion that, as
of that date and based upon the various considerations set forth in the opinion,
the consideration to be paid by PeopleSoft in the offer and subsequent merger is
fair, from a financial point of view, to PeopleSoft.
D-16
On June 15, 2003, the Board of Directors held a special telephonic meeting
at which the proposed Merger Agreement, and transactions contemplated thereby,
were discussed and considered at the meeting, J.D. Edwards management and
representatives of Morgan Stanley and Wilson Sonsini Goodrich & Rosati,
Professional Corporation, made presentations to the Board regarding the proposed
amended merger agreement, and the transactions contemplated thereby, and the
potential impact on J.D. Edwards, the stockholders of J.D. Edwards and the
merger. Morgan Stanley presented its revised fairness opinion regarding the
proposed amended transaction to the Board. Representatives of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, provided a detailed summary of the
final terms of the amended merger agreement, and the transactions contemplated
thereby. Following the presentations, and after discussion, the Board
unanimously approved the amended merger agreement and the transactions
contemplated thereby in substantially the form presented to the Board and
determined the amended merger agreement, the offer and the merger to be in the
best interests of the J.D. Edwards stockholders and authorized senior members of
its management to finalize and execute the amended merger agreement and the
other agreements contemplated thereby on behalf of J.D. Edwards. The Board also
voted unanimously to recommend that the J.D. Edwards stockholder accept the
offer and tender their Shares pursuant to the offer.
The Merger Agreement is designed to allow the two companies to accelerate
the completion of the transaction and bring forward the benefits of their
combination. PeopleSoft's board of directors believes that the transactions
contemplated by the amended merger agreement provide several benefits to its
stockholders, including, among others:
- the Merger Agreement reaffirms the commitment of PeopleSoft and J.D.
Edwards to combine;
- the Merger Agreement provides an opportunity to complete the transaction
in a more timely fashion;
- the amended terms of the transaction will minimize customer uncertainty
arising from Oracle's offer and enable PeopleSoft and J.D. Edwards to
speed their integration plans and the substantial benefits of the
combination; and
- the cash portion of the consideration reduces the dilution to
PeopleSoft's stockholders, increases the certainty of the value of the
transaction to J.D. Edwards stockholders and, at the same time, increases
the accretion to PeopleSoft's earnings per share for the benefit of all
stockholders.
J.D. EDWARDS' REASONS FOR THE OFFER AND THE MERGER
The Board of Directors believes that the offer and the merger are
advisable, fair to and in the best interest of, J.D. Edwards and the J.D.
Edwards stockholders. At a special meeting of the Board of Directors held on
June 1, 2003, at which the original merger agreement and the transactions
relating thereto were considered and voted upon, the J.D. Edwards directors
unanimously approved the original merger agreement and the merger. On June 15,
2003, at a special meeting, the J.D. Edwards' directors unanimously approved the
offer, the Merger Agreement and the merger. The directors unanimously recommend
that the holders of Shares accept the offer, tender their Shares and approve the
Merger Agreement and the merger.
In the course of reaching its decision to approve the offer and the Merger
Agreement, the Board of Directors consulted with J.D. Edwards' management, as
well as its outside legal counsel and its financial advisors, and considered the
following material factors:
- the Board's judgment that the two companies have significant
complementary strengths and complementary products:
- PeopleSoft is a leader in providing enterprise applications and services
to large enterprises, and J.D. Edwards is a leader in providing
enterprise applications and services to mid-market businesses;
D-17
- PeopleSoft has strong human resource products, and J.D. Edwards has
strong manufacturing and distribution products;
- PeopleSoft is a leading provider to the service industries, such as
financial services, telecommunications, healthcare, government and
education, and J.D. Edwards is a leading provider in manufacturing and
distribution industries, including wholesale distribution, industrial,
consumer and life sciences; asset-intensive industries; and project and
service industries, including construction and real estate;
- the combined company's potential to grow by leveraging a strong global
presence;
- the resulting business has greater global scale and expertise, along with
the opportunity for increased revenue growth and increased margins and
profits;
- the Board's judgment that the two companies have similar cultures;
- that based on the prices of J.D. Edwards and PeopleSoft Common Stock at
the time the Merger Agreement was approved by the Board, the premium of
the transaction value offered over the price of J.D. Edwards Common Stock
then prevailing in the market; and
- the ability to elect to receive stock consideration provides an
opportunity for J.D. Edwards stockholders to participate in the future
growth in value of the combined company following the merger as
stockholders of PeopleSoft.
In the course of its deliberations, the Board of Directors considered a
number of additional factors relevant to the offer and the merger, including:
- historical information concerning J.D. Edwards and PeopleSoft and their
respective businesses, financial performance, condition, operations,
technology, management and position in their respective industries, and
information and evaluations regarding the two companies' strengths,
weaknesses and prospects, both before and after giving effect to the
offer and the merger;
- the potential effect on stockholder value of J.D. Edwards continuing as
an independent entity compared to the potential effect of a combination
with PeopleSoft in light of the other possible strategic alternatives the
Board examined;
- the presentations of J.D. Edwards' financial advisor, Morgan Stanley &
Co. Incorporated, in connection with its opinion (which opinion is
attached to this Statement as Annex B) to the effect that, as of June 15,
2003, and subject to the assumptions to be paid pursuant to the Merger
Agreement, qualifications and limitations set forth in its written
opinion, the per share merger consideration to be paid pursuant to the
Merger Agreement was fair, from a financial point of view, to holders of
J.D. Edwards Common Stock;
- current financial market conditions and historical market prices,
volatility and trading information for J.D. Edwards Common Stock and
PeopleSoft Common Stock, and various factors that might affect the market
value of PeopleSoft Common Stock in the future;
- the premium represented by the offer consideration and the premiums paid
in other recent transactions that could be viewed as comparable, as well
as the negotiations between J.D. Edwards and PeopleSoft relating to the
offer consideration;
- the alternatives available to J.D. Edwards; and
- the terms of the offer, the Merger Agreement and related agreements, by
themselves and in comparison to the terms of other transactions, and the
intensive negotiations between PeopleSoft and J.D. Edwards including
their negotiations relating to the details of the Merger Agreement,
including but not limited to, the conditions to the parties' obligations
to complete the offer and the merger, the details of the "no shop"
restrictions on J.D. Edwards and the scope of J.D. Edwards "fiduciary
out" from these restrictions, the parties' termination rights, the
termination fee that
D-18
J.D. Edwards may be required to pay PeopleSoft in certain circumstances
and the voting agreements.
The potential negative factors the Board of Directors considered include:
- the fact that a portion of the consideration is based on a fixed exchange
ratio means that the aggregate value of the transaction will fluctuate
subject to the changes in PeopleSoft's trading price in the public
market;
- the fact that pursuant to the Merger Agreement, J.D. Edwards is required
to obtain PeopleSoft's consent before it can take a variety of actions
between the signing and the closing of the merger;
- the risk that potential benefits and synergies sought in the merger may
not be fully realized, if at all;
- the risk that the operations of J.D. Edwards would be disrupted from
employee uncertainty following announcement of the offer and the merger;
- the risk of potential delay or reduction in customer orders;
- the risk that despite the efforts of the combined company, key technical
and management personnel of J.D. Edwards might not choose to remain
employed by the combined company;
- the possibility that the trading price or value of PeopleSoft's Common
Stock may decrease in the future;
- the adverse effect on J.D. Edwards' business, operating results and
financial condition and the effect on J.D. Edwards' ability to attract
and retain key management, marketing and technical personnel, in the
event the offer and the merger were not consummated following public
announcement that the Merger Agreement had been entered into; and
- various other risks associated with the businesses of J.D. Edwards,
PeopleSoft and the combined company and the merger, including those
described under the section entitled "Risk Factors" in the Prospectus.
The Board of Directors concluded, however, that many of these risks could
be managed or mitigated by J.D. Edwards or by the combined company or were
unlikely to have a material impact on the offer, the merger or the combined
company, and that, overall, the risks, uncertainties, restrictions and
potentially negative factors associated with the offer and the merger were
outweighed by the potential benefits of the offer and the merger.
The foregoing discussion of factors considered by the Board of Directors is
not meant to be exhaustive but includes the material factors considered by the
board in approving the Merger Agreement and the transactions contemplated by the
Merger Agreement and in recommending that stockholders accept the offer, tender
their Shares and approve the Merger Agreement and the merger. The Board of
Directors did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. Rather, the Board made their respective determination based on
the totality of the information presented to them, and the judgments of
individual members of the Board may have been influenced to a greater or lesser
degree by different factors. In approving the Merger Agreement, the Board of
Directors was aware of the interests of J.D. Edwards' management in the merger,
as described in the section of the Prospectus entitled "The Merger -- Interests
of Certain Persons in the Merger."
D-19
OPINION OF J.D. EDWARDS' FINANCIAL ADVISOR
A description of the opinion of J.D. Edwards' financial advisor is included
in the Prospectus in the section entitled "J.D. Edwards' Reasons for the Offer
and the Merger -- Opinion of J.D. Edwards' Financial Advisor," which is
incorporated herein by reference.
(C) INTENT TO TENDER
To J.D. Edwards' knowledge after reasonable inquiry, all of J.D. Edwards'
executive officers and directors currently intend to tender all Shares
beneficially owned by them pursuant to the offer except to the extent that the
tender would violate applicable securities laws and except to the extent that
the tender would give rise to liability under Section 16(b) of the Securities
Exchange Act of 1934, as amended, as advised by counsel. The foregoing does not
include any Shares over which, or with respect to which, any such executive
officer or director acts in a fiduciary or representative capacity or is subject
to the instructions of a third party with respect to such tender. See also
"Agreements Related to the Merger" under Item 3.
J.D. Edwards will not tender any Shares held by it in the offer. Pursuant
to the Merger Agreement, any Shares held by J.D. Edwards will be cancelled at
the effective time of the merger.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
A summary of the material provisions of the agreement between J.D. Edwards
and Morgan Stanley, in its capacity as the Company's financial advisor, is
included in the Prospectus in the section entitled "J.D. Edwards' Reasons for
the Offer and the Merger -- Opinion of J.D. Edwards' Financial Advisor," which
is incorporated herein by reference.
A summary of the material provisions of the agreement between PeopleSoft
and Georgeson Shareholder Communications Inc., in its capacity as information
agent, is included in the Prospectus in the section entitled "The Offer -- Fees
and Expenses," which is incorporated herein by reference.
The Bank of New York is the exchange agent for the offer and will be
responsible for the operation of the tender and exchange of holders of Shares. A
summary of the material provisions of the agreement between PeopleSoft and the
Bank of New York is included in the Prospectus in the section entitled "The
Offer -- Fees and Expenses," which is incorporated herein by reference. See the
sections of the Prospectus entitled "The Offer -- Exchange of J.D. Edwards
Shares; Delivery of Cash and PeopleSoft Common Stock" and "The
Offer -- Procedures for Tendering" for a description of the exchange agent and
its role in the offer.
Except as set forth above, neither J.D. Edwards nor any person acting on
its behalf has employed, retained or compensated, or currently intends to
employ, retain or compensate, any person to make solicitations or
recommendations to J.D. Edwards's stockholders on its behalf with respect to the
offer or the merger.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
Except as set forth in the chart below, no transactions in Shares during
the past 60 days have been effected by J.D. Edwards or, to the best of J.D.
Edwards's knowledge, by any executive officer, director, affiliate or subsidiary
of J.D. Edwards.
<Table>
<Caption>
NUMBER
TRANSACTION OF PER SHARE WHERE AND HOW
NAME DATE SHARES SALE PRICE TRANSACTION EFFECTED
- ---- ----------- ------ ---------- --------------------
Michael J. Maples............................. 5/20/03 2,032 11.14) Option grant
(exercise
price
</Table>
D-20
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
Except as described or referred to in this Statement, no negotiation is
being undertaken or engaged in by J.D. Edwards in response to the offer that
relates to or would result in (1) a tender offer or other acquisition of the
Shares by J.D. Edwards, any of its subsidiaries or any other person, (2) an
extraordinary transaction, such as a merger, reorganization, or liquidation
involving J.D. Edwards or any of its subsidiaries, (3) a purchase, sale or
transfer of a material amount of assets by J.D. Edwards or any of its
subsidiaries or (4) any material change in the present dividend rate or policy,
or indebtedness or capitalization of J.D. Edwards.
Except as described or referred to in this Statement, there are no
transactions, resolutions of the J.D. Edwards Board, agreements in principle, or
signed contracts entered into in response to the Offer that would relate to one
or more of the matters referred to in the preceding paragraph.
ITEM 8. ADDITIONAL INFORMATION
RECENT DEVELOPMENTS
On June 6, 2003, Oracle Corporation announced that it intended to commence
a cash tender offer to purchase all of the outstanding shares of PeopleSoft for
$16 per share, or approximately $5.1 billion. On June 8, 2003, PeopleSoft's
board of directors discussed Oracle's June 6 announcement and formed a committee
of non-management directors, comprised of Frank J. Fanzilli, Jr., Steven D.
Goldby, A. George Battle and Cyril J. Yansouni, to evaluate and assess the terms
of Oracle's tender offer, once announced, in consultation with PeopleSoft's
board of directors' financial and legal advisors, and make a recommendation to
its board. On June 9, 2003, Oracle Corporation and Pepper Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Oracle, filed a Tender Offer
Statement on Schedule TO with the SEC in connection with the Oracle offer. On
June 11, 2003, PeopleSoft's board of directors, including all of the members of
the transaction committee, met with management and the board's financial and
legal advisors to further consider and discuss the Oracle offer. After careful
consideration, including consultation with management and the board's financial
and legal advisors, the committee unanimously concluded that the Oracle offer
would undoubtedly face lengthy antitrust scrutiny, with a significant likelihood
that the necessary approval would not be granted, that the delays and
uncertainties created by Oracle's tender offer, coupled with Oracle's stated
intent to discontinue our market-leading products, represented a substantial
threat to stockholder value, and that the unsolicited and hostile nature of
Oracle's tender offer, combined with Oracle's statements, was designed to
disrupt our strong momentum at significant cost to PeopleSoft and its customers.
For these and other reasons more fully described in PeopleSoft's Solicitation/
Recommendation on Schedule 14D-9, the committee determined that the Oracle offer
was not in the best interests of the stockholders and unanimously recommended to
the full board of directors that the full board, in turn, recommend that
PeopleSoft's stockholders reject the Oracle tender offer and not tender their
shares to Oracle for purchase. The full board of directors concurred with the
committee and, having determined that the Oracle tender offer was not in the
best interests of the stockholders and unanimously recommended that PeopleSoft's
stockholders reject the offer. PeopleSoft publicly announced the board's
recommendation on June 12, 2003.
On June 9, 2003 a putative class action lawsuit was filed in District
Court, County of Jefferson, Colorado by J.D. Edwards stockholders against J.D.
Edwards' directors and officers alleging breaches of fiduciary duty by such
persons and seeking to enjoin the transactions contemplated by the merger.
In response to the Oracle offer, on June 12, 2003, J.D. Edwards filed a
suit in California Superior Court in the County of San Mateo against Oracle
Corporation, Pepper Acquisition Corp. and two of Oracle's executives alleging
violations of California's Business and Professions Code Section 17200 et seq.,
intentional interference with prospective economic advantage and negligent
interference with prospective economic advantage. The suit seeks compensatory
and exemplary damages, as well as preliminary and permanent injunctive relief
enjoining the defendants from proceeding with Oracle's proposed tender offer,
taking or attempting to take any other steps to acquire control of PeopleSoft or
J.D. Edwards, and otherwise interfering with the completion of the proposed
acquisition of J.D. Edwards by PeopleSoft.
D-21
On June 12, 2003, J.D. Edwards filed a suit in District Court for the City and
County of Denver, Colorado against Oracle Corporation and its wholly owned
subsidiary, Pepper Acquisition Corp., alleging claims for tortious interference
with contract and prospective business relations. The suit seeks, among other
things, compensatory damages of $1.7 billion and an unspecified amount of
punitive damages. Oracle's proposed tender offer, the defendants have engaged
in: (i) unfair trade practices in violation of California's Business and
Professions Code; (ii) acts of unlawful interference with PeopleSoft's contracts
with its customers; (iii) acts of unlawful interference with PeopleSoft's
relationships with its prospective customers; and (iv) acts of unlawful
disparagement of PeopleSoft's products and services. PeopleSoft seeks an
injunction precluding defendants' unfair trade practices and other unlawful
actions, proceeding further with the tender offer, restitution and damages.
On July 18, 2003, J.D. Edwards was named as a defendant in a lawsuit
brought by Oracle Corporation in Delaware Chancery Court as described in
"Information About PeopleSoft, Inc. -- Recent Developments."
In addition, ten stockholder lawsuits have been filed against PeopleSoft
and certain of its directors and executive officers alleging breaches of
fiduciary duties by PeopleSoft and such persons and seeking to enjoin
transactions contemplated by the merger. The California stockholder lawsuits
have been stayed. A plaintiff in one of the Delaware stockholder lawsuits has
filed a motion for preliminary injunction.
On June 18, 2003, Oracle Corporation announced that it had amended its
offer to purchase all of the outstanding stock of PeopleSoft by increasing the
purchase price from $16.00 to $19.50 per share. PeopleSoft has issued a press
release encouraging its stockholders not to take any action with respect to
Oracle's amended offer, pending consideration of the amended offer by the board
of directors of PeopleSoft. In addition, Oracle Corporation filed a lawsuit
against PeopleSoft, the members of its board of directors and J.D. Edwards in
the Delaware Chancery Court. The lawsuit alleges breaches of fiduciary duties
against PeopleSoft and its board of directors and seeks injunctive relief
requiring (i) rescission of the Merger Agreement; (ii) an injunction against the
offer; an order requiring PeopleSoft to redeem its rights plan or amend the plan
to permit the Oracle offer to proceed; (iii) an injunction requiring the
PeopleSoft board to take action to make Section 203 of the Delaware General
Corporation Law inapplicable to the Oracle offer; and (iv) an injunction
prohibiting PeopleSoft from implementing a recently announced customer
protection program. The claims against J.D. Edwards are based on aiding and
abetting PeopleSoft and the director defendants. A hearing on a motion for
preliminary injunction is presently scheduled for July 2003. PeopleSoft and J.D.
Edwards believe that the Oracle suit is without merit and intends to vigorously
defend this lawsuit as well as other pending litigation relating to the Oracle
offer and the offer and the merger.
DELAWARE GENERAL CORPORATION LAW
Short Form Merger. Under the Delaware General Corporation Law ("DGCL"), if
the Purchaser acquires, pursuant to the offer or otherwise, at least 90% of the
outstanding Shares, the Purchaser will be able to effect the Merger after
consummation of the Offer without the approval of the Company's stockholders.
However, if the Purchaser does not acquire at least 90% of the Shares pursuant
to the offer or otherwise and a vote of the Company's stockholders is required
under the DGCL, a significantly longer period of time will be required to effect
the Merger. Assuming that the Purchaser acquires at least 90% of the outstanding
Shares, Purchaser will be able to approve the Merger without the vote of any
other stockholder and the Merger Agreement requires Purchaser and PeopleSoft to
vote all Shares held by them in favor of the Merger if a stockholder vote is
required.
Appraisal Rights. Under the DGCL, dissenters' appraisal rights are
available to a corporation's stockholders in connection with certain mergers and
consolidations. Under the DGCL, any J.D. Edwards stockholder who does not wish
to accept the consideration provided for in the Merger Agreement has the right
to demand appraisal of, and to be paid the fair market value for, his or her
Shares.
D-22
REGULATORY CLEARANCES AND APPROVALS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
the Shares may not be accepted and the merger may not be consummated unless
certain filings have been submitted to the FTC and the Antitrust Division of the
United States Department of Justice and certain waiting period requirements have
been satisfied. PeopleSoft and J.D. Edwards have filed notification and report
forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with the
FTC and with the Antitrust Division of the United States Department of Justice.
PeopleSoft and J.D. Edwards also have made or intend to make pre-merger filings
in France and Brazil in any additional foreign jurisdictions where such filings
may be required.
SECTION 14(f) INFORMATION; PURCHASER'S DESIGNATION OF PERSONS TO BE ELECTED TO
THE BOARD OF DIRECTORS.
The Information Statement attached as Annex A to this Schedule 14D-9 is
being furnished in connection with the possible designation by Purchaser,
pursuant to the terms of the Merger Agreement, of certain persons to be elected
to the Board of Directors other than at a meeting of the J.D. Edwards's
stockholders.
INCORPORATION BY REFERENCE
The information contained in all of the Exhibits referred to in Item 9
below is incorporated herein by reference.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
The following exhibits are filed herewith:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(1) Prospectus, dated June 19, 2003 (incorporated by reference
to the prospectus included in the registration statement on
Form S-4 of PeopleSoft, Inc. filed on June 19, 2003).
(a)(2) Letter of Transmittal (incorporated by reference to Exhibit
99.7 to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003 ).
(a)(3) Letter to holders of Common Stock of J.D. Edwards & Company,
dated June 19, 2003.*
(a)(4) Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder
(incorporated by reference and attached hereto as Annex A).*
(a)(5) Joint Press Release of J.D. Edwards & Company and
PeopleSoft, Inc., dated June 1, 2003 (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on June 2, 2003).
(a)(6) Press release of J.D. Edwards & Company, dated June 9, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 9, 2003).
(a)(7) Press Release of J.D. Edwards & Company, dated June 12, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 12, 2003).
(a)(8) Press Release of J.D. Edwards & Company, dated June 13, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 13, 2003).
(a)(9) Press Release of PeopleSoft, Inc., dated June 13, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 13, 2003).
(a)(10) Complaint of Oracle Corporation against PeopleSoft, Inc.,
Craig A. Conway, David A. Duffield, Aneel Bhusri, Steven D.
Goldby, A. George Blatte, Frank J. Fanzilli, Cyril J.
Yansouri and J.D. Edwards & Company filed on June 18, 2003
in the Court of Chancery of the State of Delaware.
(a)(11) Joint Press Release of J.D. Edwards & Company and
PeopleSoft, Inc., dated June 16, 2003 (incorporated by
reference to J.D. Edwards' Schedule 14D-9, filed June 16,
2003).
</Table>
D-23
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(e)(1) Amended and Restated Agreement and Plan of Merger and
Reorganization among PeopleSoft, Inc., Jersey Acquisition
Corporation and J.D. Edwards & Company, dated as of June 16,
2003 (incorporated by reference to Annex A to the
registration statement on Form S-4 of PeopleSoft, Inc. filed
on June 19, 2003).
(e)(2) Form of Stockholder Voting Agreement, dated as of June 16,
2003, among PeopleSoft, Inc. and certain stockholders of
J.D. Edwards & Company (incorporated by reference to Exhibit
C to Annex A to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003).
(e)(3) Form of Affiliate Agreement, dated as of June 16, 2003,
among PeopleSoft, Inc. and certain affiliates of J.D.
Edwards & Company (incorporated by reference to Exhibit B to
Annex A to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003).
(e)(4) Opinion of Morgan Stanley to the Board of Directors of J.D.
Edwards & Company, dated June 15, 2003 (included as Annex B
to this Schedule 14D-9).*
(e)(5) Amended Management Change in Control Plan of J.D. Edwards &
Company.
(e)(6) Amended Employment Agreement between J.D. Edwards & Company
and Robert Dutkowsky, dated June 1, 2003.
(e)(7) Amended Employment Agreement between J.D. Edwards & Company
and Richard Allen, dated June 1, 2003.
(e)(8) Amended Employment Agreement between J.D. Edwards & Company
and Richard Snow, dated June 1, 2003.
(e)(9) Form of Offer Letter for Certain Key Executive Officers of
J.D. Edwards & Company.
(e)(10) Form of Offer Letter for Certain Employees of J.D. Edwards &
Company.
(e)(11) J.D. Edwards & Company 1992 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.16 to J.D. Edwards
& Company's registration statement on Form S-1).
(e)(12) J.D. Edwards & Company 1997 Equity Incentive Plan
(incorporated by reference to Exhibit 10.21 to J.D. Edwards
& Company's registration statement on Form S-1).
(e)(13) J.D. Edwards & Company 2003 Equity Incentive Plan
(incorporated by reference to Appendix B to J.D. Edwards &
Company's 2003 Definitive Proxy Statement for its Annual
Meeting of Stockholders).
(e)(14) Form of Indemnification Agreement between J.D. Edwards &
Company and its Officers and Directors (incorporated by
reference to Exhibit 10.16 to J.D. Edwards & Company's
registration statement on Form S-1).
(e)(15) Form of Management Change in Control Plan, participated in
by J.D. Edwards & Company's executive officers (incorporated
by reference to Exhibit 10.15 for J.D. Edwards & Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 2000).
(e)(16) Employment Agreement, dated January 2, 2002, between by J.D.
Edwards & Company and Robert M. Dutkowsky (incorporated by
reference to Exhibit 10.15 for J.D. Edwards & Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 2001).
</Table>
- ---------------
* Included in copies mailed to stockholders of J.D. Edwards.
D-24
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Richard G. Snow, Jr.
Vice President, General Counsel
and Secretary
Date: June 19, 2003
D-25
ANNEX A
J.D. EDWARDS & COMPANY
ONE TECHNOLOGY WAY
DENVER, CO 80237-3000
(303) 334-4000
---------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
GENERAL
This Information Statement is being mailed on or about June 19, 2003, as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 ("Schedule
14D-9") to holders of shares of common stock, $0.001 par value per share, of
J.D. Edwards & Company, a Delaware corporation ("J.D. Edwards" or the "Company")
(the "Shares"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in Schedule 14D-9, which (including the
exhibits thereto) is incorporated by reference herein. This Information
Statement is being provided in connection with the possible appointment of
persons designated by PeopleSoft, Inc., a Delaware corporation ("PeopleSoft"),
or Jersey Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of PeopleSoft ("Purchaser"), to at least a majority of the seats on
the Board of Directors of the Company (the "Board"). Such designation is to be
made pursuant to Section 1.3 of the Amended and Restated Agreement and Plan of
Merger and Reorganization, dated as of June 16, 2003 (the "Merger Agreement"),
among PeopleSoft, Purchaser and the Company, attached hereto as Exhibit(e)(1).
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE
NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION.
Pursuant to the Merger Agreement, on June 19, 2003, Purchaser will commence
a tender offer to acquire all of the issued and outstanding Shares. The offer is
scheduled to expire at midnight, on July 17, 2003, unless the offer is extended.
Following the successful completion of the offer, upon approval by a stockholder
vote, if required, and subject to certain other conditions, Purchaser will be
merged with and into the Company and the Company shall become a wholly owned
subsidiary of PeopleSoft. After the first merger, J.D. Edwards will merge with
and into PeopleSoft or a wholly owned subsidiary of PeopleSoft in a second
merger. It is possible, however, that the acquisition of J.D. Edwards will be
effected using an alternative structure. The Merger Agreement, a copy of which
is filed as Exhibit(e)(1) to Schedule 14D-9, is incorporated herein by
reference.
The information contained in this Information Statement concerning
PeopleSoft, Purchaser and the designees of Purchaser to the Board has been
furnished to the Company by PeopleSoft, and the Company assumes no
responsibility for the accuracy or completeness of such information.
THE PEOPLESOFT DESIGNEES
If Purchaser purchases at least a majority of the outstanding Shares
pursuant to the Offer, the Merger Agreement provides that Purchaser will be
entitled to designate a number of directors to the Board sufficient to give
Purchaser proportionate representation on the Board ("Purchaser's Proportionate
Representation"). The Purchaser's Proportionate Representation will be equal to
that number of directors (rounded up to the next whole number) that equals the
product of the total number of directors on the Board multiplied by the
percentage that the aggregate number of Shares purchased by Purchaser bears to
the number of Shares issued and outstanding. Upon request by Purchaser, the
Company will increase the
D-26
size of the Board or use its best efforts to secure the resignations of the
number of directors necessary to provide Purchaser with Purchaser's
Proportionate Representation and will cause Purchaser's designees to be so
elected; provided, however, that until the Effective Time of the Merger, the
Board will have at least two directors (the "Independent Directors") who are
directors as of the signing of the Merger Agreement (or failing the availability
of one or both such directors, designees of the Board) and who are neither
officers of the Company nor designees, affiliates or associates of PeopleSoft or
the Purchaser.
PeopleSoft and Purchaser have advised the Company that Purchaser's
designees to the Board (the "PeopleSoft Designees") will be among the persons
listed in Appendix E attached to the Prospectus. Appendix E includes the name,
address, principal occupation or employment and five-year employment history
with respect to each such person. PeopleSoft and Purchaser have advised the
Company that each of the persons listed in Appendix E has consented to serve as
a director of the Company if appointed or elected. PeopleSoft and Purchaser have
advised the Company that none of these persons currently is a director of, or
holds any positions with, the Company. PeopleSoft and Purchaser have advised the
Company that, to their knowledge, none of the persons listed on Appendix E or
any of their affiliates beneficially owns any equity securities or rights to
acquire any such securities of the Company, nor has any such person been
involved in any transaction with the Company or any of its directors, executive
officers or affiliates that is required to be disclosed pursuant to the rules
and regulations of the Securities and Exchange Commission (the "SEC") other than
with respect to transactions between PeopleSoft, Purchaser and the Company that
have been described in Schedule TO or Schedule 14D-9.
PeopleSoft and Purchaser have advised the Company that, to the knowledge of
PeopleSoft and Purchaser, none of the persons listed on Appendix E is an adverse
party to the Company in any material legal proceedings or has a material
interest that is adverse to the Company in any such proceedings. PeopleSoft and
Purchaser have also advised the Company that, to the knowledge of PeopleSoft and
Purchaser, none of the persons listed in Appendix E was, during the last five
years, convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was, or is, subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws or is involved in any other legal
proceeding which is required to be disclosed under Item 401(f) of Regulation S-K
promulgated by the SEC.
It is expected that the PeopleSoft Designees will assume office following
the acceptance for purchase by Purchaser of the specified minimum number of
Shares pursuant to the offer. The directors of Purchaser immediately prior to
the effective time shall be the directors and officers of the surviving
corporation at the effective time, each to hold office in accordance with the
certificate of incorporation and by-laws of the surviving corporation until
successors are duly elected or appointed and qualified.
INFORMATION CONCERNING THE SHARES
The Shares are the only securities outstanding having the right to vote for
the election of the Company's directors at a stockholder meeting if one were to
be held. Each Share entitles its record holder to one vote. As of the close of
business on May 28, 2003, there were 122,426,664 Shares issued and outstanding.
INFORMATION CONCERNING J.D. EDWARDS
J.D. Edwards was incorporated in Colorado in 1977 and reincorporated in
Delaware in 1997.
D-27
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Shares as of May 28, 2003, by the following individuals or
groups:
- each person, or group of affiliated persons, known by the Company to
beneficially own more than 5% of our outstanding stock;
- each the Company's current directors;
- the Company's Chief Executive Officer and each of its four most highly
compensated executive officers in the fiscal year ended October 31, 2002;
- each of the other current executive officers of the Company; and
- all of the Company's executive officers and directors as a group.
The number and percentage of Shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rule, beneficial ownership includes any Shares as to which the individual or
entity has voting power or investment power and any Shares that the individual
has the right to acquire within 60 days of May 28, 2003 through the exercise of
any stock option or other right. Unless otherwise indicated in the footnotes,
each person or entity has sole voting and investment power (or shares such
powers with his or her spouse) with respect to the Shares shown as beneficially
owned. Except as otherwise noted, the address for each stockholder on this table
is c/o J.D. Edwards & Company, One Technology Way, Denver, Colorado 80237-3000.
The percentage of beneficial ownership is based on 122,426,664 Shares
outstanding as of May 28, 2003.
<Table>
<Caption>
OPTIONS
EXERCISABLE TOTAL SHARES PERCENT
SHARES WITHIN 60 BENEFICIALLY BENEFICIALLY
NAME ACTUALLY HELD DAYS(1)(2) OWNED(1) OWNED
- ---- ------------- ----------- ------------ ------------
Richard E. Allen(3)........................... 341,748 601,150 942,898 *
Kathleen J. Cunningham........................ -- -- -- *
Harry Debes................................... 2,740 43,333 46,073 *
Robert M. Dutkowsky........................... -- 634,375(4) 634,375 *
Gerald Harrison............................... 11,540 66,584 78,124 *
Delwin D. Hock................................ 15,240 66,584 81,824 *
Michael J. Maples............................. 25,870 60,646 86,516 *
Trygve E. Myhren.............................. 20,040 56,584 76,624 *
Robert C. Newman(5)........................... 7,426,854 -- 7,426,854 6.07%
Leslie Wyatt.................................. 2,862 30,000 32,862 *
Richard Matthews.............................. -- 70,019 70,019 *
David Siebert................................. 4,357 113,913 118,270 *
Michael Madden................................ 5,477 258,271 263,748 *
Pamela Saxton................................. 23,559 107,048 130,607 *
Richard Snow, Jr.............................. 4,656 123,256 127,912 *
All directors and executive officers as a
group (15 Persons including those Named
above)...................................... 7,884,943 2,231,763 10,116,706 8.26%
</Table>
- ---------------
* Less than 1% of the Company's Common Stock
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934 and the
information is not necessarily indicative of beneficial
D-28
ownership for any other purpose. Under this rule, beneficial ownership
includes any shares as to which the individual or entity has voting power or
investment power and any shares which the individual has the right to
acquire within 60 days after May 28, 2003 through the exercise of any stock
option or other right. Unless otherwise indicated in the footnotes, each
person or entity has sole voting and investment power or shares voting and
investment power with his or her spouse with respect to the shares shown as
beneficially owned.
(2) The amounts shown in this column represent shares of J.D. Edwards Common
Stock that each person has the right to acquire as a result of the exercise
of stock options within 60 days after May 28, 2003.
(3) Includes 299,011 shares held by the Allen Family Trust, 21,660 shares held
by the Allen Family charitable Lead Trust, 3,200 shares held by the Allen
Family Foundation, and 14,000 shares held of record by Mr. Allen's children.
(4) Includes options to purchase 84,375 shares of common stock and 50,000 shares
of common stock underlying restricted stock purchase rights granted to Mr.
Dutkowsky for which the repurchase rights have lapsed.
(5) Includes 4,651,619 shares held by Newkop Investments L.L.P., a company
affiliated with Mr. Newman, 191,804 shares held of record by Mr. Newman's
wife in each of the Judith Newman Grantor Retained Annuity Trusts 3 and 4,
and 191,804 shares held of record by Mr. Newman in each of the Robert Newman
Grantor Retained Annuity Trusts 3 and 4.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since December of 1998, Jones Lang LaSalle has represented the Company in
certain real estate transactions, including as tenant representative in locating
field offices and providing project management services for tenant build out of
certain field offices. Ryan S. Cunningham, the stepson of Kathy Cunningham, who
joined the Board of Directors in November 2002, is an employee of Jones Day, a
division of Jones Lang LaSalle, in the Denver office. The broker services
provided by the Jones Lang LaSalle division for which Ms. Cunningham's step son
is employed are not paid for directly by the Company, but are reimbursed out of
a sharing of commissions with the landlord's broker. Ms. Cunningham has not
participated in any Board discussions with respect to the Jones Lang LaSalle
relationship in the past, nor will she participate in any future discussions.
Any future transactions between the Company and any director or executive
officer will be subject to approval by a majority of the disinterested members
of the Board.
DIRECTORS AND EXECUTIVE OFFICERS OF J.D. EDWARDS & COMPANY
GENERAL
J.D. Edwards currently has eight members on the Board with one vacancy. The
Board is divided into three classes with each director serving a three-year term
and one class being elected at each year's Annual Meeting of Stockholders. There
are no family relationships among any of J.D. Edwards's directors or executive
officers. Executive officers serve at the discretion of the Board.
The following table and notes set forth the names, ages, positions held
with J.D. Edwards and certain other information of all Company directors and
executive officers as of the date of this Information Statement:
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Robert T. Dutkowsky(4)................. 48 Chairman of the Board, President and Chief Executive
Officer
Gerald Harrison(1)(4).................. 71 Director
Delwin Hock(1)(4)...................... 68 Director
</Table>
D-29
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Richard E. Allen(3).................... 46 Director, Executive Vice President, Finance and
Administration, and Chief Financial Officer
Kathleen J. Cunningham(1)(3)........... 56 Director
Robert C. Newman(3)(4)................. 59 Director
Michael J. Maples(2)................... 60 Director
Trygve E. Myhren(2)(3)................. 66 Director
Leslie Wyatt........................... 53 Senior Vice President and Chief Marketing Officer
Harry Debes............................ 52 Senior Vice President, Americas Sales and Consulting
Services
Richard Mathews........................ 38 Senior Vice President, International Sales and
Consulting Services
David Siebert.......................... 45 Group Vice President, WorldSoftware
Michael Madden......................... 40 Senior Vice President, Software Engineering and Chief
Technology Officer
Pamela Saxton.......................... 50 Vice President of Finance, Corporate Controller and
Chief Accounting Officer
Richard Snow, Jr. ..................... 58 Vice President, General Counsel and Secretary
</Table>
- ---------------
(1) Member of the Audit Committee of the Board.
(2) Member of the Compensation Committee of the Board.
(3) Member of the Finance Committee of the Board.
(4) Member of the Governance and Nominations Committee of the Board.
Robert M. Dutkowsky has been President and Chief Executive Officer and a
member of the Board of Directors of the Company since January 2002. He has
served as Chairman of the Board since March 2002. Mr. Dutkowsky joined J.D.
Edwards from Teradyne, Inc., where he served as President of its Assembly Test
Division from October through December 2001. From April 2000 through October
2001, Mr. Dutkowsky was Chairman, President, and Chief Executive Officer of
GenRad, Inc., which was acquired by Teradyne in October 2001. Prior to joining
GenRad in 2000, Mr. Dutkowsky was with EMC, where he served as Executive Vice
President responsible for global sales, marketing, alliances, and customer
service from October 1997 until its acquisition of Data General in 1999. He
served as President of Data General in 1999 after its acquisition by EMC.
Previously, Mr. Dutkowsky held management positions at IBM during his 20-year
employment with that company. Mr. Dutkowsky holds a B.S. degree in Industrial
and Labor Relations from Cornell University. He is a member of the Board of
Directors of Network Associates, Inc.
Gerald Harrison has served on the Board of Directors of J.D. Edwards since
January 1997. He has been engaged in private research and writing since 1984.
From 1982 to 1984, he was President and Chief Executive Officer of Stearns-Roger
World Corporation, an engineering and construction firm, and for 14 years prior
to that, he served in various other positions. Mr. Harrison holds an L.L.B. from
the University of Colorado School of Law.
Delwin D. Hock has served on the Board of Directors of J.D. Edwards since
March 1997. He has been self-employed as a business consultant and private
investor since July 1997. He retired from his positions as Chief Executive
Officer of Public Service Company of Colorado, a utility services company, in
January 1996 and as Chairman of the Board of Directors in July 1997. From
September 1962 to January 1996, Mr. Hock held various management positions with
the Public Service Company, including Chief Financial Officer, President and
Chief Operating Officer, President and Chief Executive Officer, and Chairman.
Mr. Hock received his B.S. in accounting from the University of Colorado. He is
a member of the Board of Directors of Allied Motion Technologies, Inc. and
American Century Investors.
D-30
Richard E. Allen has served on the Board of Directors of J.D. Edwards since
September 1991. Mr. Allen has been Executive Vice President, Finance and
Administration, since May 2000. He has served as Chief Financial Officer and
Assistant Secretary of J.D. Edwards since January 1990. Prior to his promotion
to Executive Vice President, Mr. Allen served as Senior Vice President, Finance
and Administration, from November 1997 through April 2000, as Vice President,
Finance and Administration, from January 1990 through October 1997, and as
Treasurer from January 1990 to April 2000. Mr. Allen acted as Controller of J.D.
Edwards from August 1985 to September 1994 and as Secretary from March 1986 to
January 1990. Mr. Allen holds a B.S. in Business Administration from Colorado
State University, and is a member of the Board of Directors of World Technology
Services, Inc.
Kathleen J. Cunningham has served on the Board of Directors of J.D. Edwards
since November 2002. Ms. Cunningham has been retired since August 2001. Ms.
Cunningham has held various senior executive positions with several high
technology companies, both publicly traded and privately held. She served as
Chief Financial Officer, Treasurer and Assistant Corporate Secretary of
Requisite Technology, Inc. from May 1999 to August 2001. From April 1992 to
April 1999, Ms. Cunningham acted as Chief Operating Officer, Chief Financial
Officer, Treasurer and Assistant Corporate Secretary of NxTrend Technology, Inc.
Ms. Cunningham was Vice President Finance and Administration, Chief Financial
Officer, Treasurer, and Assistant Corporate Secretary of Spatial Technology,
Inc. from 1987 to 1991. Ms. Cunningham served as Vice President Finance, Chief
Financial Officer and Treasurer of U.S. West Information Systems, Inc. from 1985
through 1987, and as Director and Assistant Treasurer, Financial Planning and
Cash Management for U.S. West, Inc. from 1983 to 1985. Prior to her tenure with
U.S. West, Ms. Cunningham acted as Vice President, Financial Planning and Vice
President, Financial Institutions, for Intrawest Financial Corporation from 1981
to 1983, and from 1974 to 1981 she served as Senior Vice President, Chief
Financial Officer, Treasurer and Assistant Corporate Secretary of GEFCO. Ms.
Cunningham received a B.A. in economics and political science from the
University of Wisconsin at Madison and an M.B.A. in Finance from the University
of Denver.
Robert C. Newman is one of the co-founders of the Company. He has been a
member of the Board of Directors of J.D. Edwards since August 1978. He is
currently on staff as a professor at the University of Denver and manages
private investments through his firm, Greenwood Gulch Ventures LLC. From August
1978 until June 1997, he served in a number of management roles with J.D.
Edwards, including Vice President of Complementary Technologies and Managing
Director of J.D. Edwards & Company, Ltd. (U.K.). Dr. Newman holds a B.S. in
industrial engineering from the University of California, Berkeley, an M.B.A.
from the University of California, Los Angeles, and a Ph.D. in management from
Golden Gate University.
Michael J. Maples has been a director of J.D. Edwards since January 1997.
Mr. Maples has been retired since July 1995 and is currently operating a ranch.
From April 1988 to July 1995, Mr. Maples held various management positions at
Microsoft Corporation, most recently as Executive Vice President of the
Worldwide Products Group. Prior to that, he served as a Director of Software
Strategy for IBM. Mr. Maples holds a B.S. in electrical engineering from
Oklahoma University and an M.B.A. from Oklahoma City University. He is a member
of the Board of Directors of Lexmark International, Inc. and NetIQ Corporation.
Trygve E. Myhren has been a director of J.D. Edwards since January 1997. He
is currently President of Myhren Media, Inc., a private investment firm
concentrating in media, telecommunications and software, and other enabling
technology. He is also a special limited partner of Megunticook Partners, LLC,
which manages early stage venture funds. From November 1990 to March 1996, he
served as President of The Providence Journal Company, a company that owned and
managed newspapers, broadcast television stations, cable television systems,
programming networks, and interactive and multimedia ventures. During this same
time, he was also Chief Executive Officer of King Holdings, an owner and manager
of broadcast and cable television properties. From 1981 to 1988, Mr. Myhren
served as Chairman and Chief Executive Officer of American Television and
Communications Corporation, a publicly traded subsidiary of Time, Inc. During
1986 and 1987, Mr. Myhren also served as Chairman of the National Cable
Television Association. Mr. Myhren has a B.A. in political science and
philosophy
D-31
from Dartmouth College and an M.B.A. from the Amos Tuck School of Business
Administration at Dartmouth College. He is a member of the Board of Directors of
Advanced Marketing Services, Inc. and Dreyfus Founders Funds.
Leslie Wyatt has been Senior Vice President and Chief Marketing Officer
since February 2001. Mr. Wyatt most recently served as Senior Vice President,
Worldwide Marketing, of Harbinger Corporation, an e-commerce software provider
from October 1997 to January 2001. Before that he held various positions during
his 17-year employment at Texas Instruments, including Director of Strategic
Marketing for Texas Instruments Software. Mr. Wyatt holds a B.S. in software
design from Arizona State University and an M.S. in computer science from
Arizona State University.
Harry Debes has been Senior Vice President, Americas Sales and Consulting
Services, since August 2001. From May 2001 until August 2001, Mr. Debes served
as a consultant to J.D. Edwards. Mr. Debes joined J.D. Edwards from GEAC
Enterprise Solutions Americas, where he served as President of GEAC Americas
from March 1999 to May 2001. Prior to that, he spent more than eight years as
the managing director for GEAC Americas' Asia Pacific business. Mr. Debes holds
a B.A. in history from the University of Toronto and an M.B.A. with an
accounting major from McMaster University.
Richard Mathews has been Senior Vice President, International, since May
2001. From March 2000 to May 2001 he was Vice President and Managing Director of
J.D. Edwards Australia Pty Limited. He served as Chief Operating Officer, J.D.
Edwards New Zealand Limited, from November 1, 1998, until its acquisition by
J.D. Edwards in February 2000 and as General Manager of J.D. Edwards New Zealand
Limited from September 1994 through October 1998. Mr. Mathews holds a bachelor
of commerce in accounting and a B.S. in mathematics from the University of Otago
in New Zealand.
David Siebert has been Group Vice President, WorldSoftware, since June
2001. Mr. Siebert served as Group Vice President of Channel Operations from June
2000 to June 2001. From November 1997 to June 2000, he was Business Unit
Director of the United States Central area. From May 1996 to November 1997, he
was Industry Marketing Director and Director of Worldwide Marketing Consulting.
Mr. Siebert holds a B.A. in business administration from Bethel College and an
M.B.A. in operations management from DePaul University.
Michael Madden has been Senior Vice President, Software Engineering, since
January 2003 and Chief Technology Officer since August 2000. Prior to his
promotion to Senior Vice President, Mr. Madden served as Group Vice President
from September 2001 to January 2003. Prior to becoming Group Vice President, Mr.
Madden served as Vice President, Development Technologies, and Director of
Run-Time Technology and Design Tools. Mr. Madden joined J.D. Edwards in June
1998, coming from Digital Equipment Corporation, where he had spent the prior 12
years in various capacities, ending with a leadership position for DEC's mobile
computing offerings. He holds a master's degree in electrical engineering and a
bachelor's degree in applied mathematics, both from the University of New
Hampshire.
Pamela Saxton has been Vice President of Finance, Controller, and Chief
Accounting Officer since joining J.D. Edwards in September 1994. Ms. Saxton
spent the prior 20 years in various financial management positions with global
public companies, including Cyprus Amax Minerals Company, Amax Gold Inc., and
Petro-Lewis Corporation. Ms. Saxton holds a B.S. in accounting from the
University of Colorado.
Richard Snow, Jr., has been Vice President, General Counsel, and Secretary
since joining J.D. Edwards in January 1990. He holds a B.S. in business
administration from the University of California, Berkeley, and a J.D. from
California Western University Law School.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met, either in person or by telephone, 28 times
during fiscal 2002, including 11 full Board meetings and 17 committee meetings.
Overall attendance at the Board and committee meetings was 94%. Attendance was
at least 82% for each director.
D-32
The Board of Directors has Audit, Compensation, Finance, and Governance and
Nominations Committees.
The Audit Committee reviews and reports to the Board on the quality and
performance of both the internal and external accountants and auditors, the
reliability of financial information, and the adequacy of financial controls and
policies. The committee also initiates and approves changes in any of these
areas when necessary. All members of the Audit Committee are independent (as
independence is defined in Rule 4200(a)(15) of the National Association of
Securities Dealers, Inc. listing standards). The Audit Committee Report for
fiscal 2002 and a copy of the Amended and Restated Audit Committee Charter were
included as Appendix A to the Company's Proxy Statement for its Annual Meeting
of Stockholders. The Audit Committee held seven meetings in fiscal 2002.
The Compensation Committee reviews and reports to the Board on compensation
and personnel policies and plans, including management development and
succession plans, employee compensation and benefits, and administration of
stock plans. The Compensation Committee held seven meetings in fiscal 2002.
The Finance Committee reviews and reports to the Board on J.D. Edwards'
capital structure, capital expenditures, financing arrangements, risk
management, and long range financial planning. The Compensation Committee held
one meeting in fiscal 2002.
The Governance and Nominations Committee acts on behalf of the Board in
between Board meetings on matters regarding corporate governance and nominations
for membership to the Board. The Committee then reports any actions taken at the
next regular Board meeting. The purpose of the Committee is to ensure that the
Board of Directors is properly constituted to meet its fiduciary obligations to
shareholders and the Company and that the Company has and follows appropriate
governance standards. The Compensation Committee held two meetings in fiscal
2002.
D-33
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning total
compensation received by the Chief Executive Officers and each of the other four
most highly compensated executive officers who served in those capacities during
fiscal 2002, or the Named Executive Officers, for services rendered to J.D.
Edwards during the last three fiscal years. Robert M. Dutkowsky was appointed by
the Board of Directors to the positions of President and Chief Executive Officer
as of January 2, 2002, replacing C. Edward McVaney. Information pertaining to
the Named Executive Officers' Employment Agreements with the Company is provided
below under the heading "Agreements with Certain Executive Officers."
<Table>
<Caption>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ---------------------------
SECURITIES
BASE OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS COMPENSATION
- --------------------------- ---- -------- -------- ------------ ------------ ---------- ------------
Richard E. Allen, Executive Vice 2002 $346,000 $710,630(1) -- -- -- --
President and Chief Financial 2001 331,000 24,450 -- -- 84,800 --
Officer............................ 2000 297,815 57,289 -- -- 250,000 --
John H. Bonde, Former Executive 2002 $500,000 $202,000 -- $ 237,400(3) -- --
Vice President and Chief 2001 371,212 -- $ 5,122 -- 250,000 --
Operating Officer(2)............... -- -- -- -- -- -- --
Harry Debes, Senior Vice President, 2002 $350,000 $145,500 -- -- -- --
Americas Sales(4).................. 2001 72,917 131,250 -- -- 80,000 $118,086(5)
-- -- -- -- -- -- --
Robert M. Dutkowsky, President and 2002 $539,205 $487,500 $181,119(7) $1,589,000(8) 1,600,000 --
Chief Executive Officer and -- -- -- -- -- -- --
Chairman(6)........................ -- -- -- -- -- -- --
Michael R. Madden, Senior Vice 2002 $290,000 $149,200(9) -- -- -- --
President, Software Engineering 2001 278,750 108,750 -- -- 38,500 --
and Chief Technology Officer....... 2000 211,083 106,644 -- -- 243,000 --
C. Edward McVaney, Former 2002 $ 24,620 -- -- -- -- $125,000(10)
President and Chief Executive 2001 120,000 $ 4,800 -- -- -- --
Officer and Chairman............... 2000 120,000 -- -- -- -- --
</Table>
- ---------------
(1) Includes Stay Bonus paid to Mr. Allen under the terms of his Employment
Agreement in consideration for his remaining in the employment of the
Company for the Initial Employment Term of 2 years. See description of Mr.
Allen's Employment Agreement under "Agreements with Certain Executive
Officers."
(2) Mr. Bonde assumed the positions of Executive Vice President and Chief
Operating Officer of the Company during fiscal 2001. Mr. Bonde received no
compensation from the Company prior to that time. Mr. Bonde resigned from
the Company as of December 31, 2002.
(3) As of October 31, 2002, Mr. Bonde held restricted stock purchase rights
with respect to 20,000 shares of Company Common Stock, valued at $237,000.
The Company waived all restrictions related to the sale of the stock by Mr.
Bonde pursuant to the terms of his Separation Agreement, effective as of
December 31, 2002.
(4) Mr. Debes assumed the position of Senior Vice President, Americas during
fiscal 2001. Mr. Debes provided services to the Company on a consulting
basis from May 20, 2001 through August 15, 2001. Mr. Debes was neither an
employee nor a consultant to the Company and received no compensation from
the Company prior to May 2001.
(5) Compensation paid to Mr. Debes from May 20, 2001 through August 15, 2001
for services provided to the Company on a consulting basis.
(6) Mr. Dutkowsky assumed the positions of President and Chief Executive
Officer of the Company during fiscal 2002. Mr. Dutkowsky received no
compensation from the Company prior to that time.
D-34
(7) Includes $80,411 reimbursed to Mr. Dutkowsky for payment of taxes, and
$90,708 reimbursed to Mr. Dutkowsky for payment of commuting and related
expenses, and $10,000 reimbursed to Mr. Dutkowsky for payment of legal
fees.
(8) As of October 31, 2002, Mr. Dutkowsky held restricted stock purchase rights
with respect to 100,000 shares of Company Common Stock, valued at
$1,185,000. My. Dutkowsky may purchase the restricted stock for $.01 per
share. The restrictions lapsed as to 50,000 shares on January 2, 2003, and
will lapse as to 50,000 shares on January 2, 2004.
(9) Includes Retention Bonus paid to Mr. Madden under the terms of his
Employment Agreement in consideration for his remaining in the employment
of the Company for the initial term of 3 years.
(10) Amount paid to Mr. McVaney pursuant to an arrangement in connection with
his resignation as President and Chief Executive Officer in January 2002.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, as to the Named Executive Officers,
information concerning stock options granted during fiscal 2002.
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------- AT ASSUMED ANNUAL RATES OF
PERCENT OF STOCK PRICE APPRECIATION FOR
NO. OF TOTAL OPTIONS OPTION TERM(4)
SECURITIES GRANTED TO -----------------------------
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE PER EXPIRATION
NAME GRANTED(1) YEAR(2) SHARE DATE(3) 5% 10%
- ---- ---------- ------------- --------- ---------- ------------- -------------
Richard E. Allen.......... -- -- -- -- -- --
John H. Bonde............. -- -- -- -- -- --
Harry Debes............... -- -- -- -- -- --
Robert M. Dutkowsky(5).... 500,000 16.10% $15.90 1/2/10 $3,795,771 $9,091,531
1,100,000 35.43% 15.90 1/2/10 8,350,696 20,001,368
Michael R. Madden......... -- -- -- -- -- --
C. Edward McVaney......... -- -- -- -- -- --
</Table>
- ---------------
(1) The options in this table are nonqualified stock options granted under the
J.D. Edwards 1997 Equity Incentive Plan and have exercise prices equal to
the closing price of J.D. Edwards Common Stock on the date of grant. Except
as otherwise noted, all options have 8-year terms and vest 25% on the first
anniversary date of the grant and 1/48th each month thereafter.
(2) J.D. Edwards granted options to purchase 3,104,752 shares of Common Stock to
employees in fiscal 2002.
(3) The options in this table may terminate before their expiration as a result
of the termination of the optionee's status as an employee or upon the
optionee's disability or death.
(4) Under rules promulgated by the SEC, the amounts in these two columns
represent the hypothetical gain or option spread that would exist for the
options in this table based on an assumed stock price appreciation from the
date of grant until the end of the options' eight-year term at assumed
annual rates of 5% and 10%. The 5% and 10% assumed annual rates of
appreciation are specified in SEC rules and do not represent J.D. Edwards'
estimate or projection of future stock price growth. There can be no
assurance that the actual stock price appreciation over the 8-year option
term will be at the assumed 5% and 10% annual rates of compounded stock
appreciation or at any other defined rate.
(5) See discussion of Mr. Dutkowsky's Employment Agreement under "Agreements
with Certain Executive Officers" for a description of the terms of Mr.
Dutkowsky's stock option grants.
D-35
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, as to the Named Executive Officers, certain
stock option information concerning the number of shares subject to both
exercisable and unexercisable stock options and the value of the options as of
October 31, 2002.
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Richard E. Allen......... 0 0 578,687 63,934 $1,688,386 $ 0
John H. Bonde............ 0 0 62,500 187,500 0 0
Harry Debes.............. 0 0 28,333 51,667 24,366 44,433
Robert M. Dutkowsky...... 0 0 429,688 1,170,312 0 0
Michael R. Madden........ 0 0 204,427 90,073 49,300 32,300
C. Edward McVaney........ -- -- -- -- -- --
</Table>
- ---------------
(1) Based on the fair market value of J.D. Edwards Common Stock at fiscal year
end ($11.86) less the exercise price payable for the shares.
DIRECTOR COMPENSATION
J.D. Edwards compensates each of its directors who is not an employee of
J.D. Edwards or its subsidiaries as follows:
- $15,000 per year as an annual retainer.
- $1,500 for each Board meeting attended.
- $500 for each Board conference call attended.
- $1,500 for each committee meeting attended (directors do not receive a
fee for a committee meeting attended that is held in conjunction with a
Board meeting).
- Committee chairmen received an additional $5,000.
Additionally, non-employee directors may elect to receive stock options,
instead of the cash amounts described above, to purchase shares of J.D. Edwards
common stock having a fair market value equal to the cash compensation they
otherwise would have received. Only one non-employee director in fiscal 2002
elected to receive stock options in lieu of cash compensation. Non-employee
directors are also reimbursed for expenses incurred in attending meetings. J.D.
Edwards does not separately compensate directors who are employees of J.D.
Edwards or its subsidiaries.
J.D. Edwards also grants each non-employee director non-qualified stock
options to purchase 35,000 shares of J.D. Edwards common stock at the Annual
Meeting at which the director is first elected to the Board and non-qualified
stock options to purchase 10,000 shares of J.D. Edwards common stock each
successive year he or she remains a director. Under the 1997 J.D. Edwards Equity
Incentive Plan (the "1997 Plan"), these shares vest 25% on the first anniversary
date of the grant and 1/48 each month thereafter. Vesting continues whether or
not a non-employee director remains on the Board, and the options remain
exercisable for their full term of 8 years. The exercise price for all options
granted to non-employee directors is equal to the closing price of the common
stock on the date of grant. Non-employee directors are also eligible to receive
discretionary grants under the 1997 Plan. No discretionary grants were made to
directors during fiscal 2002. See Proposal No. 2, "Approval of the 2003 J.D.
Edwards & Company Equity Incentive Plan," for a description of the terms of
options to be granted under the proposed 2003 J.D. Edwards & Company Equity
Incentive Plan, if approved by stockholders.
D-36
AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
J.D. Edwards entered into an Employment Agreement with Richard E. Allen
("Mr. Allen"), dated August 1, 2000 but effective as of May 1, 2000, for an
initial term (the "Initial Employment Term") of two years, which automatically
renewed for an additional term of one year on May 1, 2002. Under the terms of
his renewed agreement, Mr. Allen serves as Executive Vice President, Finance and
Administration and Chief Financial Officer. Mr. Allen receives an annual base
salary of $346,000 as well as annual bonus compensation of up to seventy-five
percent (75%) of his base salary based upon achievement of certain objectives
determined and approved by the Compensation Committee of the Board. Mr. Allen
was awarded stock options to purchase 225,000 shares of J.D. Edwards common
stock, at an exercise price of $13.0625 per share, the closing price of the
common stock as of the date of the grant, when he initially entered into his
Employment Agreement with the Company. Those options vested one hundred percent
(100%) on May 1, 2002. Upon completion of the Initial Employment Term during
fiscal 2002, Mr. Allen received a Stay Bonus equal to 100% of his on target
earnings for the first year of the Initial Employment Term. Mr. Allen is
entitled to severance payments in the event of his termination of employment for
reasons other than for Cause, as defined in his Agreement. His Agreement will
automatically renew for successive one-year periods unless either J.D. Edwards
or Mr. Allen provides the other with written notice of intent not to renew no
later than 30 days prior to the end of any period. Salary and bonus
compensation, as well as subsequent option grants, if any, for renewal periods
will be established by a written addendum to Mr. Allen's Employment Agreement to
be approved by the Compensation Committee of the Board.
J.D. Edwards entered into an Employment Agreement with Harry Debes ("Mr.
Debes"), dated May 4, 2001 but effective as of August 16, 2001. Under the terms
of his Agreement, Mr. Debes serves as Senior Vice President, Americas Sales and
Consulting Services. Mr. Debes receives an annual base salary of $350,000, along
with certain bonus compensation of up to seventy-five percent (75%) of his base
salary based upon achievement of certain objectives determined and approved by
the Compensation Committee of the Board. Mr. Debes was awarded stock options to
purchase 80,000 shares of J.D. Edwards common stock on May 14, 2001, at an
exercise price of $11.00 per share, the closing price of the common stock as of
the date of the grant. In addition, Mr. Debes is entitled to receive a grant of
options to purchase 50,000 shares of common stock, to be granted at fair market
value, on the first day on which the price of J.D. Edwards common stock is at or
above $24.00, as well as a grant of options to purchase 50,000 shares of common
stock, to be granted at fair market value, on the first day on which the stock
price is at or above $36.00. In the event Mr. Debes' employment with the Company
terminates, all unvested options will be immediately forfeited, and Mr. Debes
will have a period of three months following termination of employment to
exercise any vested, but unexercised, options. Mr. Debes is eligible to
participate in all employee benefits provided by the Company. In the event Mr.
Debes' employment is terminated by the Company for Performance or Disability, as
defined in his Agreement, Mr. Debes will be entitled to receive severance pay in
the amount of his then current twelve months base salary, conditioned upon Mr.
Debes signing a Separation Agreement with the Company in the form appended to
his Employment Agreement. Should Mr. Debes voluntarily resign or be terminated
for cause, as defined in his Employment Agreement, he will not be entitled to
any severance pay. Mr. Debes' Agreement will automatically renew for successive
one-year periods unless either J.D. Edwards or Mr. Debes provides the other with
written notice of intent not to renew no later than 30 days prior to the end of
any period.
J.D. Edwards entered into an Employment Agreement with Robert M. Dutkowsky
("Mr. Dutkowsky"), dated and effective as of January 2, 2002, for a term of not
less than two years. Under the terms of his Agreement, Mr. Dutkowsky serves as
the President and Chief Executive Officer of the Company. Mr. Dutkowsky was
appointed to the Board of Directors as of January 2, 2002, and was appointed
Chairman of the Board at the Annual Meeting on March 26, 2002. Mr. Dutkowsky
receives an annual base salary of $650,000, as well as bonus compensation of up
to one hundred percent (100%) of his annual base salary, contingent upon Mr.
Dutkowsky's continued employment with the Company and achievement of certain
objectives determined and approved by the Compensation Committee of the Board.
Mr. Dutkowsky received guaranteed bonus payments of $162,500 on each of March
31, June 30,
D-37
September 30, and December 31, 2002. In the event of Mr. Dutkowsky's death or
disability, as defined in the Employment Agreement, or in the event he is
terminated without cause, also as defined in his Agreement, Mr. Dutkowsky will
receive certain guaranteed bonus payments. Mr. Dutkowsky was awarded stock
options to purchase 1,100,000 shares of J.D. Edwards common stock on January 2,
2002, which vest as follows: (a) 275,000 on January 2, 2002; and (b) 17,187.5 on
the last day of each month, beginning in February, 2002. Mr. Dutkowsky was also
awarded additional stock options to purchase 500,000 shares of J.D. Edwards
common stock on January 2, 2002, which vest in full on the fifth anniversary of
the effective date of the Agreement, or will vest earlier as follows: (a)
250,000 on the date on which the average fair market value of J.D. Edwards
common stock, as defined in the Agreement, over any sixty consecutive trading
days has reached (or exceeded) two times the original per share exercise price
of the stock options; and (b) 250,000 on the date on which the average fair
market value over any sixty consecutive trading days has reached (or exceeded)
three times the original per share exercise price of the stock options. The
exercise price of all of the above stock options is $15.90 per share, the
closing price of the common stock as of the date of the grant. In addition, Mr.
Dutkowsky was granted a right to purchase 100,000 shares of restricted common
stock of the Company at a price of $.01 per share. The restrictions on Mr.
Dutkowsky's restricted stock lapsed as to 50,000 shares on January 2, 2003, and
the restrictions on the remaining 50,000 shares will lapse on January 2, 2004.
Vesting is contingent upon his continued employment with the Company. If Mr.
Dutkowsky voluntarily resigns from employment with the Company or is terminated
for Cause as defined in his Agreement at any time during the initial employment
term, his unvested stock options will be cancelled as of the date of his
resignation or termination and Mr. Dutkowsky will have the right to exercise
only those options which are vested as of the date of his resignation or
termination. If Mr. Dutkowsky's employment is terminated by the Company without
Cause or because of Mr. Dutkowsky's death or disability, all of his vested stock
options and restricted stock, as well as any stock options or restricted stock
that are due to vest within one year after such termination of employment, will
become vested on the date of termination. In addition, if any of the share price
goals of the stock options are attained within sixty days after such termination
of employment, then the applicable stock options will vest on the date the goals
are attained. Finally, if Mr. Dutkowsky's employment is terminated without Cause
in connection with a Change in Control, as defined in his Agreement, all of Mr.
Dutkowsky's unvested stock options will fully vest and the restrictions on his
restricted stock will lapse on the date of termination of his employment. Mr.
Dutkowsky will have a pe riod of six months following his termination of
employment within which to exercise his vested stock options. Mr. Dutkowsky may
participate in all employee benefits provided by the Company. Mr. Dutkowsky will
be entitled to receive severance pay in an amount equal to two years of his then
current base salary and two years of his Target Bonus, as defined in his
Agreement, in the event his employment is terminated without Cause, contingent
upon his entering into a Separation Agreement in the form appended to his
Employment Agreement.
J.D. Edwards entered into an Employment Agreement with Michael R. Madden
("Mr. Madden"), effective as of August 1, 2000 (the "Effective Date"), for a
period of not less than three years. Under the terms of his Employment
Agreement, Mr. Madden serves as Senior Vice President, Software Engineering and
Chief Technology Officer. Mr. Madden receives an annual base salary of $290,000,
as well as certain bonus compensation of up to 40% of his base salary contingent
upon his achievement of certain objectives as determined by the Compensation
Committee of the Board. In addition, under the terms of the Employment
Agreement, the Company agreed to pay a total Retention Bonus of $275,000 to Mr.
Madden, payable incrementally over the term of his Agreement as follows: 25%
upon execution of the Agreement by Mr. Madden and 25% on each of the first,
second, and third anniversaries of the Effective Date. Mr. Madden was awarded
stock options to purchase 150,000 shares of J.D. Edwards common stock when he
initially entered into his Employment Agreement with the Company, at an exercise
price of $13.063 per share, the closing price of the common stock as of the date
of the grant. Those options vested 25% on the Effective Date, and have continued
to vest at a rate of 1/36 per month thereafter. Mr. Madden is eligible to
participate in all employee benefits provided by the Company to its employees.
Mr. Madden is entitled to receive severance payments in the amount of one year's
then current base salary in the event of termination of his employment for
Performance or Disability, as defined in his Agreement. If
D-38
Mr. Madden's employment is terminated other than for Cause, Performance, or
Disability, each as defined in his Agreement, he will be entitled to receive
severance pay equal to one year's base salary and bonus compensation. Mr.
Madden's Agreement will automatically renew for successive one-year periods
unless either J.D. Edwards or Mr. Madden provides the other with written notice
of intent not to renew no later than 30 days prior to the end of any period.
J.D. Edwards maintains a Management Change in Control Plan in which the
executive officers participate. The Company's Management Change in Control Plan
provides for severance payments to be made to participants under circumstances
which, following a change in control of J.D. Edwards, as defined in the Plan,
are deemed to be an involuntary termination of such participant's employment
with J.D. Edwards. The severance payments are determined based upon a formula
that takes into account each participant's annual compensation at the time of
involuntary termination and the average bonus received by a participant over the
preceding three years.
REPORT OF THE J.D. EDWARDS & COMPANY BOARD OF DIRECTORS
COMPENSATION COMMITTEE FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002
The Compensation Committee of the Board has responsibility to review and
report to the Board on compensation and personnel policies, programs and plans,
including management development and succession plans, employee compensation and
benefits, and administration of stock plans. The purpose of this report is to
summarize the principles, specific program objectives, and other factors
considered by the Committee in reaching its determinations regarding executive
compensation.
EXECUTIVE COMPENSATION POLICIES
The objectives of J.D. Edwards' executive compensation program are to:
- Attract, retain, and motivate highly qualified executive talent.
- Reward executives based on J.D. Edwards' performance.
- Align the compensation and interests of executive officers with the
long-term interests of J.D. Edwards stockholders.
The Company's executive compensation program consists of base salary, cash
bonuses, long-term incentives in the form of stock options and restricted stock
purchase rights, and the benefit programs generally available to all full-time
employees.
The Compensation Committee reviews the base salaries of executive officers
annually. In its recommendation of base salary adjustments, the Committee
considers individual performance and experience, relative scope of
responsibility, and company performance, as well as the base salaries paid to
other executives in the competitive marketplace.
J.D. Edwards offers a Company Bonus Plan (the "Bonus Plan"), an annual
profit sharing plan designed to reward employees with bonus compensation of up
to a certain predetermined percentage of their base compensation when profits
exceed predefined thresholds. Under this Bonus Plan, participants are eligible
to receive bonus awards equal to a certain percentage of their base
compensation. The funding of the pool for this Bonus Plan is contingent upon the
Company's achievement of certain predefined quarterly and annual profit margin
thresholds. Funding is 50% formula driven and 50% discretionary. The Bonus Plan
pool was funded and bonuses were paid at 50% for fiscal 2002 based upon
achievement of profit margin thresholds.
The Compensation Committee has approved a Performance Based Bonus Plan
effective November 1, 2002, subject to approval of the stockholders of the
Company at the Annual Meeting. Under this Performance Plan, incentive
compensation paid would be performance based for purposes of exemption from the
limitations of Section 162(m) of the Internal Revenue Code, as amended (the
"Code").
D-39
Ownership of J.D. Edwards common stock is a key and fundamental element of
executive compensation. Executive officers, as well as other employees, are
eligible to receive stock option and restricted stock purchase rights grants
under the J.D. Edwards 1997 Equity Incentive Plan. This plan permits the Board
or the Compensation Committee to grant stock options to officers and employees
on terms the Board or the Committee may determine. Options granted generally
have a term of 8 years and vest 25% at the end of the first year and 1/48th each
month thereafter until fully vested four years from the date of grant. Options
to purchase a total of 3,104,752 shares were granted to employees in fiscal
2002.
The Compensation Committee has approved a new 2003 Equity Incentive Plan,
subject to approval of the stockholders of the Company at the Annual Meeting. If
the stockholders approve the 2003 Equity Incentive Plan, it will replace the
Company's 1997 Equity Incentive Plan, which will be terminated except with
respect to outstanding awards previously granted thereunder.
The J.D. Edwards 1997 Employee Stock Purchase Plans for U.S. and Non-U.S.
Employees permit employees to acquire J.D. Edwards common stock through payroll
deductions and promote broad-based equity participation throughout the company.
The Committee believes that the stock plans align the interests of employees
with the long-term interests of stockholders.
J.D. Edwards maintains the J.D. Edwards & Company Retirement Savings Plan
to provide retirement benefits to its employees. The 401(k) portion of the
Retirement Savings Plan provides benefits through tax deferred salary deductions
for its U.S. employees who meet certain eligibility requirements. J.D. Edwards
generally matches 50% of an employee's eligible contributions up to a maximum
match of 3% of eligible compensation. This match is discretionary. The profit
sharing contribution portion of the Retirement Savings Plan is designed to be
invested primarily in J.D. Edwards common stock for the benefit of the U.S.
employees. Company contributions are determined by the Board, in its discretion,
and, if made, may be in the form of cash or J.D. Edwards common stock.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 2002
Robert M. Dutkowsky has served as President and Chief Executive Officer of
J.D. Edwards since January 2, 2002. Mr. Dutkowsky earned a base salary of
$539,205 in fiscal 2002, which took into consideration factors including his
performance and experience, scope of responsibility, and comparable salaries
paid in the competitive marketplace. Mr. Dutkowsky received $487,500 in cash
incentives in fiscal 2002, which were conditioned upon his continued employment
with the Company. The Company also reimbursed Mr. Dutkowsky for certain
expenses. See "Summary Compensation Table," for further details of the
compensation paid to Mr. Dutkowsky during fiscal 2002. Mr. Dutkowsky received
grants of stock options and restricted stock purchase rights as part of his
Employment Agreement with the Company. The terms of the stock option and
restricted stock purchase rights grants are detailed in the discussion of Mr.
Dutkowsky's Employment Agreement, under the heading "Agreements with Certain
Executive Officers." Mr. Dutkowsky did not participate in the Company's annual
grant of stock options which occurred in December 2002. Also, during fiscal
2002, C. Edward McVaney served as President and Chief Executive Officer from
November 1, 2001 until January 2, 2002. Mr. McVaney earned a base salary of
$24,620 for the portion of fiscal 2002 during which he served. Mr. McVaney did
not participate in J.D. Edwards' bonus incentive compensation plan. Mr. McVaney
received no option grants during fiscal 2002. Mr. McVaney resigned from his
positions as President and Chief Executive Officer of the Company as of January
2, 2002 and received separation pay of $125,000.
Respectfully submitted by the members of the Compensation Committee of the
Board of Directors.
Trygve Myhren, Chairman
Michael J. Maples
D-40
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
J.D. Edwards' Compensation Committee was formed to review and report to the
Board on compensation and personnel policies, programs and plans, including
management development and succession plans, employee compensation and benefits,
and administration of stock plans. The Committee is currently composed of Mr.
Myhren and Mr. Maples. No interlocking relationship exists between any member of
the Board or Compensation Committee and the board of directors or compensation
committee of any other company, nor has any interlocking relationship existed in
the past.
D-41
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to stockholders on
J.D. Edwards common stock with the cumulative total return of the S&P 500 Index
and the Morgan Stanley Technology Index. The graph assumes that $100 was
invested on October 31, 1997 in J.D. Edwards common stock, the S&P 500 Index,
and the Morgan Stanley Technology Index, including reinvestment of dividends. No
dividends have been declared or paid on J.D. Edwards common stock. Note that
historic stock price performance is not necessarily indicative of future stock
price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG J.D. EDWARDS & COMPANY, THE S&P 500 INDEX
AND THE MORGAN STANLEY TECHNOLOGY INDEX
(STOCK PERFORMANCE GRAPH)
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires J.D. Edwards'
directors, executive officers, and holders of more than 10% of J.D. Edwards
common stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of J.D. Edwards. Except as described below, based solely upon
a review of reports submitted and representations made to J.D. Edwards, we
believe that, during fiscal 2002, our executive officers, directors and 10%
stockholders complied with all applicable Section 16(a) filing requirements
except that Mr. Mathews filed one late report on Form 4 detailing option
exercises and sales which occurred in March 2002, Mr. McVaney filed one late
report on Form 5 detailing sales which took place in February and March 2002,
and Jan Zapapas, a former director of the Company, filed an Initial Statement of
Beneficial Ownership on Form 3 late in July 2002.
D-42
ANNEX D -- PART II
TO THE INFORMATION STATEMENT
D-43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
J.D. EDWARDS & COMPANY
(Name of Subject Company)
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
---------------------
281667105
(CUSIP Number of Class of Securities)
---------------------
Robert M. Dutkowsky
President and Chief Executive Officer
J.D. Edwards & Company
One Technology Way
Denver, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
COPIES TO:
---------------------
Herbert P. Fockler
Steve L. Camahort
Jose F. Macias
Jon C. Avina
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-44
This Amendment No. 1 to Schedule 14D-9 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 of J.D. Edwards &
Company filed with the Securities and Exchange Commission on June 19, 2003.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS.
The following exhibit is filed herewith:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(11) Series of Messages to Employees and Transcripts of
Multimedia Presentations made available on J.D. Edwards'
website (incorporated by reference to J.D. Edwards' filing
pursuant to Rule 425 under the Securities Act on June 25,
2003).
</Table>
D-45
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Name: Richard G. Snow, Jr.
Title: Vice President, General
Counsel and Secretary
Date: June 26, 2003
D-46
ANNEX D -- PART III
TO THE INFORMATION STATEMENT
D-47
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
J.D. EDWARDS & COMPANY
(Name of Subject Company)
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
281667105
(CUSIP Number of Class of Securities)
ROBERT M. DUTKOWSKY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
J.D. EDWARDS & COMPANY
ONE TECHNOLOGY WAY
DENVER, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
---------------------
COPIES TO:
HERBERT P. FOCKLER
STEVE L. CAMAHORT
JOSE F. MACIAS
JON C. AVINA
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
<Table>
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY
COMMUNICATIONS MADE BEFORE THE COMMENCEMENT OF A TENDER
OFFER
</Table>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-48
PURPOSE OF AMENDMENT
The purpose of this amendment is to amend and supplement Items 2, 4, 8 and
9 in the Solicitation/ Recommendation Statement on Schedule 14D-9 previously
filed by J.D. Edwards & Company ("J.D. Edwards" or the "Company") on June 19,
2003 and subsequently amended June 26, 2003 (the "Statement"). Capitalized terms
used but not otherwise defined herein have the meanings ascribed to such terms
in the Statement.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
The information under the heading "Making the Election and The Proration
Rules" in Item 2 is hereby amended and restated as follows:
Making the Election. PeopleSoft has included a Letter of Transmittal with
the Prospectus. The Letter of Transmittal is used to make the election to
receive PeopleSoft Common Stock, cash, or, in the case of proration, a
combination of PeopleSoft Common Stock and cash in exchange for Shares tendered
pursuant to the offer. See the section of the Prospectus entitled "The
Offer -- Making the Election," which is incorporated herein by reference, for
more information.
The Proration Rules. The proration rules that will govern the allocation
of the cash and stock consideration in the offer will be applied as set forth in
the following examples. The proration calculations are complex, and PeopleSoft
has provided a set of examples based on certain assumptions to help you
understand how the proration will work. The actual proration will depend upon
the mix of elections and the average closing price of the PeopleSoft Common
Stock applicable on the expiration of the offer.
KEY ASSUMPTIONS:
For purposes of the examples below, we have assumed the following:
- TOTAL NUMBER OF SHARES OUTSTANDING = 122,426,664 (BASED ON SHARES
OUTSTANDING AS OF THE DATE OF THE MERGER AGREEMENT)
- AVERAGE CLOSING PRICE OF PEOPLESOFT COMMON STOCK = $17.00
The average closing price is equal to the average closing price of
PeopleSoft Common Stock as reported on the Nasdaq National Market for the five
consecutive trading days immediately prior to (and excluding) the second trading
day before the expiration of the offer. The cash offer price is equal to
$7.05 + 0.43 X average closing price. The stock offer price is equal to the cash
offer price divided by the average closing price. In the examples below, the
cash offer price and the stock offer price are as follows:
- RESULTING CASH OFFER PRICE = $7.05 + 0.43 X $17.00 = $14.36
- RESULTING STOCK OFFER PRICE = $14.36 / $17.00 = APPROXIMATELY 0.8447X
Assume in the following examples that 95% of the Shares are tendered. The
consideration for distribution in the offer will be as set forth below.
- The total number of Shares tendered is 122,426,664 X 95% = 116,305,331.
- The total amount of shares of PeopleSoft Common Stock that can be issued
to accepted Shares is 122,426,664 X 0.43 X 95% = 50,011,292 shares.
- The total amount of cash issuable to accepted Shares is
122,426,664 X $7.05 X 95% = $819,952,582.
D-49
CASE 1: 60% OF THOSE THAT TENDER ELECTED CASH AND 40% OF THOSE THAT TENDER
ELECTED STOCK.*
Resulting Consideration Paid
- Those J.D. Edwards stockholders electing stock receive full consideration
in PeopleSoft Common Stock.
-- The maximum number of Shares that could be paid in stock in the
offer is 0.43 X 116,305,331 / 0.8447 = 59,205,981.
-- The number of Shares electing stock is
116,305,331 X 40% = 46,522,132.
- This number is less than the maximum number of Shares that could
be paid in stock (46,522,132 < 59,205,981).
- Therefore, every stock-electing Share receives its full
consideration in PeopleSoft Common Stock. Every stock-electing
Share will receive 0.8447 of a share of PeopleSoft Common Stock,
which represents a value of $14.36 (0.8447 X $17.00 = $14.36).
- Those Shares electing cash will receive partial consideration in cash and
partial consideration in PeopleSoft Common Stock.
-- The maximum number of Shares that could be paid in cash in the offer
is $7.05 X 116,305,331 / $14.36 = 57,099,762.
-- The number of Shares electing cash is 116,305,331 X 60% = 69,783,198.
- This number is greater than the maximum number of Shares that could
be paid in cash (69,783,198 > 57,099,762).
- Therefore, only 81.8% (57,099,762 / 69,783,198 = 81.8%) of the
requested amount can be delivered as cash consideration to those
J.D. Edwards stockholders electing cash.
-- Each cash-electing Share will receive 81.8% of the cash offer price
of $14.36, or $11.75.
-- The remaining consideration must be delivered in PeopleSoft Common
Stock equal to 0.8447 X (1-0.818) = 0.1535 of a share of PeopleSoft
Common Stock.
-- Therefore, each cash-electing Share will receive 0.1535 of a share of
PeopleSoft Common Stock in addition to the $11.75 in cash to deliver
the full $14.36 of consideration.
CASE 2: 40% OF THOSE THAT TENDER ELECTED CASH AND 60% OF THOSE THAT TENDER
ELECTED STOCK.*
Resulting Consideration Paid
- Those Shares electing stock receive partial consideration in PeopleSoft
Common Stock and partial consideration in cash.
-- The number of Shares electing stock is 116,305,331 X 60%, or
69,783,198.
- This number is greater than the maximum number of Shares that
could be paid in stock (69,783,198 > 59,205,981).
- Every stock-electing Share will therefore receive a portion of
the full $14.36 consideration in cash.
- Every stock-electing Share will therefore receive 0.7167 of a
share of PeopleSoft Common Stock (59,205,981/69,783,198 X stock
offer price of 0.8447 = 0.7167) which represents a value of
$12.18 (0.7167 X $17.00 = $12.18).
- ---------------
* Note: All calculations are rounded to the nearest whole number. Figures
may not add exactly due to rounding.
D-50
- The remaining consideration equal to the cash offer price of
$14.36 X (1 - 0.848) = $2.18 must therefore be delivered in cash
in order to meet the required $14.36 value per Share.
- Those Shares electing cash receive full consideration in cash.
-- The number of tendering Shares electing cash is 116,305,331 X 40%,
or 46,522,132.
- This number is less than the maximum number of Shares that could
be paid in cash (46,522,132 < 57,099,762).
- Therefore, each cash-electing Share will receive the full $14.36
of consideration in cash.
CASE 3: 60% OF THOSE THAT TENDER ELECTED CASH, 20% OF THOSE THAT TENDER ELECTED
STOCK, AND 20% OF THOSE THAT TENDER MADE NO ELECTION.*
Resulting Consideration Paid
- Those Shares electing stock receive full consideration in PeopleSoft
Common Stock.
-- The number of Shares tendering and electing stock is
116,305,331 X 20%, or 23,261,066.
-- This number is less than the maximum number of Shares that can be
paid in stock (23,261,066 < 59,205,981).
-- Therefore, each stock-electing Share will receive full consideration
in PeopleSoft Common Stock.
-- For each Share tendered, 0.8447 of a share of PeopleSoft Common Stock
will be issued (0.8447 X $17.00) to deliver the full $14.36 of
consideration.
- Those Shares electing cash receive partial consideration in cash and
partial consideration in PeopleSoft Common Stock.
-- The number of Shares electing cash is 116,305,331 X 60%, or
69,783,198.
-- This number exceeds the maximum number of Shares that could be paid
in cash (69,783,198 > 57,099,762).
-- Therefore, only 81.8% (57,099,762/69,783,198) of the requested amount
can be delivered as consideration to those J.D. Edwards stockholders
electing cash.
-- Each cash-electing Share will receive 81.8% of the cash offer price
of $14.36, or $11.75.
-- The remaining consideration must be delivered in PeopleSoft Common
Stock equal to 0.8447 X (1 - 0.818) = 0.1535 of a share of PeopleSoft
Common Stock.
-- Each cash-electing Share will therefore receive 0.1535 of a share of
PeopleSoft Common Stock (worth $2.61) in addition to the $11.75 in
cash to deliver the full $14.36 of consideration.
- Tendered but non-electing Shares receive full consideration in PeopleSoft
Common Stock.
-- Under this scenario, 23,261,066 Shares have not elected a
consideration preference (116,305,331 X 20%).
-- Since only 23,261,066 Shares elected stock, which is less than
59,205,981, the maximum number of Shares that can be paid in stock,
then the Shares who have not made an election will be treated in the
same manner as the stock-electing Shares.
-- Those non-electing Shares will each receive 0.8447 of a share of
PeopleSoft Common Stock.
D-51
CASE 4: 40% OF THOSE THAT TENDER ELECTED CASH, 40% OF THOSE THAT TENDER ELECTED
STOCK, AND 20% OF THOSE THAT TENDER MADE NO ELECTION.*
Resulting Consideration Paid
- Those Shares electing stock receive full consideration in PeopleSoft
Common Stock.
-- The number of Shares tendering and electing stock is
116,305,331 X 40% = 46,522,132.
-- This number is less than the maximum number of Shares that can be
paid in stock (46,522,132 < 59,205,981), so all those stock-electing
Shares receive full consideration in PeopleSoft Common Stock.
-- For each Share tendered, 0.8447 of a share of PeopleSoft Common Stock
will be issued (0.8447 X $17.00) to deliver the full $14.36 of
consideration.
-- The number of shares of PeopleSoft Common Stock to be issued for
these Shares is 39,297,245.
- Those Shares electing cash receive full consideration in cash.
-- The number of Shares electing cash is 116,305,331 X 40% = 46,522,132.
-- This number is less than the maximum number of Shares that could be
paid in cash (46,522,132 < 57,099,762).
-- Therefore, each cash-electing Share will receive the full
consideration of $14.36.
-- The amount of cash paid for these Shares is $668,057,815.00.
- Tendered but non-electing Shares will receive partial consideration in
cash and partial consideration in PeopleSoft Common Stock.
-- The number of Shares who tendered but did not make an election is
116,305,331 X 20% = 23,261,066.
-- Under this scenario, $151,894,767 in cash remains for issuance
($819,952,582 - $668,057,815).
-- Under this scenario, 10,714,047 shares of PeopleSoft Common Stock
remain for issuance (50,011,292 - 39,297,245).
-- $151,894,761 and 10,714,047 shares of PeopleSoft Common Stock will be
allocated among the 23,261,066 Shares which have been tendered but
for no election was made, as follows:
-- $151,894,767 / 23,261,066 = $6.53; and
-- 10,714,047 / 23,261,066 = 0.4606 of a share of PeopleSoft Common
Stock.
-- Therefore, each Share that has been tendered but for which no
election was made will be exchanged for $6.53 plus 0.4606 of a share
of PeopleSoft Common Stock (with a value of 0.4606 X $17 = $7.83) for
a total consideration with a value of $14.36.
As discussed above, the average closing price for purposes of allocating
the offer consideration will be determined by the average closing price of
PeopleSoft Common Stock as reported on the Nasdaq National Market for the five
consecutive trading day period ending immediately prior to (and excluding) the
second trading day before the expiration of the offer.
D-52
The following table illustrates the allocation of the offer consideration
for different values of PeopleSoft Common Stock based on the four examples above
for different percentages of cash-electing shares, stock-electing shares and
non-electing shares.
<Table>
<Caption>
60% CASH/40% STOCK-ELECTING SHARES 40% CASH/60% STOCK-ELECTING SHARES
------------------------------------ ------------------------------------
EACH CASH-ELECTING EACH STOCK- EACH CASH-ELECTING EACH STOCK-
AVERAGE CASH STOCK SH. ELECTING SH. SH. ELECTING SH.
CLOSING OFFER OFFER ------------------ --------------- ------------------ ---------------
PRICE PRICE PRICE CASH STOCK CASH STOCK CASH STOCK CASH STOCK
- ------- ------ ----- -------- ------- ------ ------ -------- ------- ------ ------
$10.00 $11.35 1.135x $11.35 0.000x $0.60 1.075x $11.35 0.000x $4.18 0.717x
$11.00 $11.78 1.071x $11.75 0.003x $0.00 1.071x $11.78 0.000x $3.90 0.717x
$12.00 $12.21 1.018x $11.75 0.038x $0.00 1.018x $12.21 0.000x $3.61 0.717x
$13.00 $12.64 0.972x $11.75 0.068x $0.00 0.972x $12.64 0.000x $3.32 0.717x
$14.00 $13.07 0.934x $11.75 0.094x $0.00 0.934x $13.07 0.000x $3.04 0.717x
$15.00 $13.50 0.900x $11.75 0.117x $0.00 0.900x $13.50 0.000x $2.75 0.717x
$16.00 $13.93 0.871x $11.75 0.136x $0.00 0.871x $13.93 0.000x $2.46 0.717x
$17.00 $14.36 0.845x $11.75 0.154x $0.00 0.845x $14.36 0.000x $2.18 0.717x
$18.00 $14.79 0.822x $11.75 0.169x $0.00 0.822x $14.79 0.000x $1.89 0.717x
$19.00 $15.22 0.801x $11.75 0.183x $0.00 0.801x $15.22 0.000x $1.60 0.717x
$20.00 $15.65 0.783x $11.75 0.195x $0.00 0.783x $15.65 0.000x $1.32 0.717x
$21.00 $16.08 0.766x $11.75 0.206x $0.00 0.766x $16.08 0.000x $1.03 0.717x
$22.00 $16.51 0.750x $11.75 0.216x $0.00 0.750x $16.51 0.000x $0.74 0.717x
$23.00 $16.94 0.737x $11.75 0.226x $0.00 0.737x $16.94 0.000x $0.46 0.717x
$24.00 $17.37 0.724x $11.75 0.234x $0.00 0.724x $17.37 0.000x $0.17 0.717x
$25.00 $17.80 0.712x $11.75 0.242x $0.00 0.712x $17.63 0.007x $0.00 0.712x
</Table>
<Table>
<Caption>
60% CASH/20% STOCK/20% NON-ELECTING SHARES 40% CASH/40% STOCK/20% NON-ELECTING SHARES
---------------------------------------------- -----------------------------------------------
EACH CASH- EACH STOCK- EACH NON- EACH CASH- EACH STOCK- EACH NON-
AVERAGE CASH STOCK ELECTING SH. ELECTING SH. ELECTING SH. ELECTING SH. ELECTING SH. ELECTING SH.
CLOSING OFFER OFFER -------------- ------------- ------------- -------------- ------------- --------------
PRICE PRICE PRICE CASH STOCK CASH STOCK CASH STOCK CASH STOCK CASH STOCK CASH STOCK
- ------- ------ ----- ------ ----- ----- ----- ----- ----- ------ ----- ----- ----- ------ -----
$10.00 $11.35 1.135x $11.35 0.000x $0.60 1.075x $0.60 1.075x $11.35 0.000x $0.60 1.075x $12.55 0.000x
$11.00 $11.78 1.071x $11.75 0.003x $0.00 1.071x $0.00 1.071x $11.78 0.000x $0.00 1.071x $11.69 0.008x
$12.00 $12.21 1.018x $11.75 0.038x $0.00 1.018x $0.00 1.018x $12.21 0.000x $0.00 1.018x $10.83 0.115x
$13.00 $12.64 0.972x $11.75 0.068x $0.00 0.972x $0.00 0.972x $12.64 0.000x $0.00 0.972x $ 9.97 0.205x
$14.00 $13.07 0.934x $11.75 0.094x $0.00 0.934x $0.00 0.934x $13.07 0.000x $0.00 0.934x $ 9.11 0.283x
$15.00 $13.50 0.900x $11.75 0.117x $0.00 0.900x $0.00 0.900x $13.50 0.000x $0.00 0.900x $ 8.25 0.350x
$16.00 $13.93 0.871x $11.75 0.136x $0.00 0.871x $0.00 0.871x $13.93 0.000x $0.00 0.871x $ 7.39 0.409x
$17.00 $14.36 0.845x $11.75 0.154x $0.00 0.845x $0.00 0.845x $14.36 0.000x $0.00 0.845x $ 6.53 0.461x
$18.00 $14.79 0.822x $11.75 0.169x $0.00 0.822x $0.00 0.822x $134.79 0.000x $0.00 0.822x $ 5.67 0.507x
$19.00 $15.22 0.801x $11.75 0.183x $0.00 0.801x $0.00 0.801x $15.22 0.000x $0.00 0.801x $ 4.81 0.548x
$20.00 $15.65 0.783x $11.75 0.195x $0.00 0.783x $0.00 0.783x $15.65 0.000x $0.00 0.783x $ 3.95 0.585x
$21.00 $16.08 0.766x $11.75 0.206x $0.00 0.766x $0.00 0.766x $16.08 0.000x $0.00 0.766x $ 3.09 0.619x
$22.00 $16.51 0.750x $11.75 0.216x $0.00 0.750x $0.00 0.750x $16.51 0.000x $0.00 0.750x $ 2.23 0.649x
$23.00 $16.94 0.737x $11.75 0.226x $0.00 0.737x $0.00 0.737x $16.94 0.000x $0.00 0.737x $ 1.37 0.677x
$24.00 $17.37 0.724x $11.75 0.234x $0.00 0.724x $0.00 0.724x $17.37 0.000x $0.00 0.724x $ 0.51 0.703x
$25.00 $17.80 0.712x $11.75 0.242x $0.00 0.712x $0.00 0.712x $17.63 0.007x $0.00 0.712x $ 0.00 0.712x
</Table>
The Schedule TO states that the principal executive offices of PeopleSoft
and the Purchaser are located at 4460 Hacienda Drive, Pleasanton, California,
94588.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
The information under the heading "Background of the Offer" in Item 4 is
hereby amended and restated as follows:
As a regular part of our respective business plans, the Company and
PeopleSoft have from time to time each considered opportunities for expanding
and strengthening our respective technology, products, research and development
capabilities and distribution channels, including strategic acquisitions,
business combinations, investments, licensing and development agreements and
joint ventures.
Although PeopleSoft and J.D. Edwards did not have any prior business
understandings or relationships, during the past several years, PeopleSoft's
senior management and that of J.D. Edwards have made periodic inquiries to each
other regarding whether a strategic transaction between the parties would be
mutually beneficial.
In November 1998, members of PeopleSoft's senior management met with
members of senior management of J.D. Edwards to discuss a potential business
combination between PeopleSoft and J.D. Edwards. During the winter of 2000, and
again in the fall of 2001, additional meetings were held to discuss a potential
strategic transaction between the parties, but no agreements were reached.
D-53
On or about June 5, 2002, Craig Conway, PeopleSoft's President and Chief
Executive Officer, contacted Larry Ellison, Oracle's Chairman and Chief
Executive Officer, to determine whether Oracle would be interested in selling
its enterprise applications business to PeopleSoft. On that date, Oracle and
PeopleSoft entered into a mutual nondisclosure agreement. On the following day,
June 6, 2002, Ram Gupta, PeopleSoft's Executive Vice President, Products and
Technology, Peter Gassner, Rick Bergquist, PeopleSoft's Senior Vice President
and Chief Technology Officer, and Kevin Parker, PeopleSoft's Senior Vice
President and Chief Financial Officer, met in person with Safra Catz, Executive
Vice President of Oracle, and other representatives of Oracle, to discuss the
matter. The parties were unable to agree on the terms of any potential sale of
Oracle's enterprise applications business to PeopleSoft. Shortly thereafter, Mr.
Conway and Mr. Ellison had a brief telephone conversation in which they
concluded that they could not agree on mutually acceptable terms to such a
transaction. There have been no further discussions between Oracle and
PeopleSoft on this subject since that time.
In October and November 2002, senior members of PeopleSoft's management and
that of J.D. Edwards met to further explore a potential transaction between the
parties.
On November 25, 2002, the Board of Directors met and explored options to
enhance stockholder value, including, continuing on its then current track,
consolidation with other mid-market players, changing its business model or
pursuing an upstream merger. Mr. Dutkowsky advised the Board of the meetings
held with PeopleSoft.
On December 18, 2002, a representative of Citigroup, at PeopleSoft's
request, presented an overview of the potential business combination with J.D.
Edwards to members of PeopleSoft's senior management.
On December 18, 2002, the Board of Directors met and again explored options
to enhance stockholder value and the Board authorized further discussions and
due diligence concerning a merger with PeopleSoft. On December 20, 2002, J.D.
Edwards engaged Morgan Stanley & Co. Incorporated as J.D. Edwards' financial
advisor in connection with a potential strategic transaction.
On January 28, 2003, the Board met and representatives of Morgan Stanley
presented an analysis of the current software industry dynamics, the competitive
landscape and strategic alternatives available to J.D. Edwards, including
continuing merger discussions with PeopleSoft.
On February 2, 2003, members of senior management of both parties met in
Denver, Colorado to further discuss the possible business combination, and on
February 3, 2003, Mr. Dutkowsky reviewed with the Board a summary of those
discussions.
From February 4, 2003 to February 24, 2003, PeopleSoft and J.D. Edwards
exchanged preliminary information regarding valuation.
On February 19, 2003, the Board of Directors met with representatives of
Morgan Stanley and reviewed discussions with PeopleSoft regarding proposed stock
exchange ratios, exchange ratio premiums and the estimated savings from the cost
synergies from the merged operations. After discussion of strategic alternatives
available, the Board authorized further discussions with PeopleSoft.
On February 24, 2003, PeopleSoft formally engaged Citigroup as its
financial advisor in connection with a potential strategic combination with J.D.
Edwards.
On February 25, 2003, Mr. Parker reviewed with PeopleSoft's board of
directors the status of discussions and the rationale for the merger. A
representative of the law firm of Gibson, Dunn & Crutcher LLP reviewed with the
board its legal duties in considering a transaction of this nature. After
discussion, the board authorized further discussions and diligence concerning a
merger with J.D. Edwards.
During March 2003 discussions continued, but the parties were unable to
come to agreement and terminated discussions in early April.
On May 2, 2003, Messrs. Conway and Dutkowsky held a conversation regarding
a potential strategic transaction.
D-54
On May 5, 2003, Mr. Dutkowsky discussed his May 2nd conversation with Mr.
Conway with the Board of Directors in a special telephonic meeting, and the
Board authorized management to continue discussions with PeopleSoft regarding a
potential strategic transaction. On May 11, 2003, Messrs. Conway and Dutkowsky
held a telephone conversation and agreed to move forward with merger
negotiations.
During the period commencing on May 12, 2003 through June 1, 2003, the
parties, their financial advisors and their legal counsel conducted intensive
due diligence.
On May 15, 2003, the Board of Directors held a special telephonic meeting
at which the proposed merger was discussed and considered. At the meeting, J.D.
Edwards management and representatives of Morgan Stanley made presentations to
the Board regarding the proposed business combination. Representatives of the
law firm of Wilson Sonsini Goodrich & Rosati, Professional Corporation presented
an extensive review of the terms of the proposed merger. Following the
presentations, and after discussion, the Board directed management and counsel
to pursue further negotiations regarding the proposed merger and the original
merger agreement.
On May 16, 2003, PeopleSoft and J.D. Edwards executed a new mutual
non-disclosure agreement and, as an inducement for PeopleSoft to commit its time
and resources to perform a due diligence review of J.D. Edwards and enter into
discussions regarding the proposed business combination, J.D. Edwards entered
into a 13-day exclusivity arrangement.
On May 16, 2003, PeopleSoft's counsel sent a preliminary draft merger
agreement to J.D. Edwards' counsel. On May 19, 2003, PeopleSoft and J.D. Edwards
executed an addendum to the mutual non-disclosure agreement relating to highly
sensitive competitive information.
On May 19, 2003, PeopleSoft's board of directors held a special meeting at
which the proposed merger was discussed and considered. Director Fanzilli was
not present at the meeting due to a family illness. A representative of Gibson,
Dunn & Crutcher LLP was also present at this meeting and reviewed with the
directors their legal duties in considering the proposed merger. At the meeting,
PeopleSoft's management and representatives of Citigroup Global Markets made
presentations to the board regarding J.D. Edwards, the opportunities for a
combined company and certain proposed terms of a business combination. Following
the presentations, and after discussion, PeopleSoft's board approved proceeding
with diligence and negotiation with representatives of J.D. Edwards.
On May 20, 2003, senior members of PeopleSoft's management and J.D.
Edwards' management, and representatives of Gibson, Dunn & Crutcher LLP, Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Citigroup and Morgan
Stanley met to discuss the proposed original merger agreement at the offices of
Wilson Sonsini Goodrich & Rosati, Professional Corporation, in Palo Alto,
California. Based on those discussions a new draft of the original merger
agreement was prepared and distributed to the parties.
On May 23, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and representatives of Morgan Stanley reviewed various issues with
the Board regarding the proposed business combination. Representatives of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, presented an extensive
review of the terms of the proposed original merger agreement as well as the
directors' legal duties in considering the proposed merger. Management made
extensive presentations about the results of the due diligence review, the
benefits of the business combination and integration issues.
On May 27, 2003, PeopleSoft's board of directors held a regular meeting at
which the proposed merger was discussed and considered. At the meeting,
PeopleSoft's management and representatives of Citigroup made presentations to
the board regarding the proposed business combination. A representative of
Gibson, Dunn & Crutcher LLP was also present at this meeting, and presented a
summary of the original merger agreement and the status of negotiations.
Management made extensive presentations concerning J.D. Edwards and integration
issues at the meeting. Citigroup also reviewed issues relating to fairness with
the board and gave its preliminary opinion that, as of that date, the exchange
ratio in the original merger agreement was fair, from a financial point of view,
to PeopleSoft. Following the
D-55
presentations, and after discussion, PeopleSoft's board directed management and
counsel to pursue further negotiations regarding the original merger agreement
and the proposed merger.
On May 28, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and J.D. Edwards' legal and financial advisors reviewed with the
Board the proposed business combination and the proposed original merger
agreement.
Between May 28, 2003 and May 31, 2003, offers of employment with the
combined company were made by PeopleSoft to senior management of J.D. Edwards
and the terms of employment were negotiated by the parties. PeopleSoft also
discussed with J.D. Edwards the proposed amendment to its change in control plan
and the Board amended the plan on June 1, 2003. These amendments were made in
connection with the original merger agreement and were not changed in connection
with the negotiation of the Merger Agreement. See the section of the Prospectus
entitled "Background of the Offer and the Merger -- Interests of Certain Persons
in the Merger."
PeopleSoft's board of directors held a special meeting by conference
telephone call on May 28, 2003 to obtain an update regarding the status of
negotiations and to discuss open issues on the original merger agreement and
related documents.
On May 31, 2003, PeopleSoft's board of directors held a special telephonic
meeting at which the proposed merger was discussed and considered. At the
meeting, PeopleSoft's management and representatives of Citigroup made
presentations to the board regarding the proposed business combination. A
representative of Gibson, Dunn & Crutcher LLP was also present at this meeting.
Citigroup presented its fairness opinion regarding the proposed transaction to
the board. The board also discussed, with the input of management and legal
counsel, final remaining open issues in the original merger agreement. Following
the presentations, and after discussion, PeopleSoft's board unanimously approved
the original merger agreement and the transactions contemplated by the original
merger agreement in substantially the form presented to the board and authorized
senior members of PeopleSoft's management to finalize and execute the original
merger agreement and the other agreements contemplated thereby on behalf of
PeopleSoft.
On May 31, 2003, counsel for PeopleSoft and J.D. Edwards' counsel
negotiated the original merger agreement.
On June 1, 2003, the Board of Directors held a special meeting at which the
proposed merger was discussed and considered. At the meeting, J.D. Edwards
management and representatives of Morgan Stanley made presentations to the Board
regarding the proposed business combination. Morgan Stanley presented its
financial fairness opinion regarding the consideration to be paid pursuant to
the proposed transaction to the Board. Representatives of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, provided a detailed summary of the
final terms of the original merger agreement. Following the presentations, and
after discussion, the Board unanimously approved the original merger agreement
and the transactions contemplated by the original merger agreement in
substantially the form presented to the Board and determined the original merger
agreement to be in the best interests of the J.D. Edwards stockholders and
authorized senior members of its management to finalize and execute the original
merger agreement and the other agreements contemplated thereby on behalf of J.D.
Edwards.
On June 1, 2003, counsel for PeopleSoft and J.D. Edwards' counsel finalized
the original merger agreement and, thereafter, the original merger agreement,
voting agreements and certain employment agreements were executed by the
relevant parties.
PeopleSoft and J.D. Edwards publicly announced the proposed transaction and
its material terms in the early morning of June 2, 2003.
Four days later, on June 6, 2003, Oracle announced its intention to
commence a tender offer beginning on June 9, 2003 for all issued and outstanding
PeopleSoft Common Stock, which is referred to as the "Oracle Offer," at a price
of $16 per share.
D-56
Oracle also delivered a letter to PeopleSoft announcing its intention to
commence the Oracle Offer and requesting that the board of directors redeem or
render inapplicable all outstanding preferred stock purchase rights. The letter
also stated that Oracle was prepared to meet with PeopleSoft's management to
discuss the Oracle Offer.
On June 6, 2003, PeopleSoft filed a press release regarding the anticipated
Oracle Offer. The release was filed with the SEC as a preliminary communication
filed under cover of Schedule 14D-9.
In response to Oracle's June 6 announcement, PeopleSoft contacted Citigroup
and Goldman, Sachs & Co. to render financial advice to the board of directors in
connection with, among other things, any tender offer commenced by Oracle. In
addition, the board of directors retained Gibson, Dunn & Crutcher LLP to render
legal advice in connection with any such tender offer.
On June 8, 2003, PeopleSoft's board of directors and its financial and
legal advisors met to discuss Oracle's June 6 announcements and to establish
procedures for thoroughly and diligently evaluating the terms of the Oracle
Offer, once announced. At that meeting, PeopleSoft's board of directors formed a
committee of independent directors which was charged with evaluating the terms
of the Oracle Offer, in consultation with the financial and legal advisors
engaged by PeopleSoft's board of directors to render financial advice and legal
advice in connection with, among other things, any tender offer commenced by
Oracle. PeopleSoft's board of directors retained Goldman, Sachs & Co. and
Citigroup as its financial advisors with respect to such matters and PeopleSoft
subsequently executed a written engagement letter with each financial advisor.
On June 9, 2003, Oracle and its subsidiary commenced their tender offer. The
Oracle Offer, as described, is currently pending.
On June 9, 2003, the Board held a special meeting to discuss the Oracle
Offer, PeopleSoft's response to the tender offer and potential responses by J.D.
Edwards. At the invitation of the Board, representatives of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, and Morgan Stanley attended and
discussed with the Board a range of legal and strategic issues related to the
Oracle Offer, including its potential impact on the merger. Also on June 9,
Oracle delivered a letter to PeopleSoft expressing concern that PeopleSoft had
taken a negative position on the Oracle Offer reaffirming its offer to meet with
PeopleSoft's board of directors and requesting that PeopleSoft redeem its
preferred stock rights plan.
On June 11, 2003, after careful consideration, including consultation with
management and its financial and legal advisors, and upon the unanimous
recommendation of the committee of independent directors, PeopleSoft's board of
directors unanimously concluded that the Oracle Offer would undoubtedly face
lengthy antitrust scrutiny, with a significant likelihood that the necessary
approval would not be granted, that the delays and uncertainties created by the
Oracle Offer, coupled with Oracle's stated intent to discontinue PeopleSoft's
market-leading products, represent a substantial threat to stockholder value,
and that the unsolicited and hostile nature of the Oracle Offer, combined with
Oracle's statements, was designed to disrupt PeopleSoft's strong momentum at
significant cost to PeopleSoft and its employees and customers. For these and
other reasons more fully set forth in PeopleSoft's Schedule 14D-9, the board of
directors of PeopleSoft determined that the Oracle Offer was not in the best
interests of PeopleSoft's stockholders and unanimously recommended that
PeopleSoft's stockholders reject the Oracle Offer and not tender their shares to
Oracle to purchase pursuant to the offer.
At a special meeting held by conference telephone call on June 11, 2003,
PeopleSoft's board of directors reaffirmed its support of the acquisition of
J.D. Edwards, and the Board reaffirmed its support of the merger at a special
telephonic meeting on June 12, 2003. At the direction of PeopleSoft's board of
directors and the Board, from June 13 to June 15, 2003, senior members of
PeopleSoft's management team and representatives of Gibson, Dunn & Crutcher LLP,
Citigroup and Goldman Sachs met with senior members of management of J.D.
Edwards and representatives of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, and Morgan Stanley in Palo Alto, California to discuss and
negotiate amendments to the original merger agreement.
At a special meeting held by conference telephone call on June 15, 2003,
PeopleSoft's board, by the unanimous vote of the directors, approved the Merger
Agreement and the transactions contemplated
D-57
thereby, including the offer and the merger, and determined that the
transactions contemplated by the Merger Agreement, including the offer and the
merger, were advisable to PeopleSoft's stockholders. Citigroup rendered its
opinion that, as of that date and based upon the various considerations set
forth in the opinion, the consideration to be paid by PeopleSoft in the offer
and subsequent merger is fair, from a financial point of view, to PeopleSoft.
On June 15, 2003, the Board of Directors held a special telephonic meeting
at which the proposed Merger Agreement, and transactions contemplated thereby,
were discussed and considered. At the meeting, J.D. Edwards management and
representatives of Morgan Stanley and Wilson Sonsini Goodrich & Rosati,
Professional Corporation, made presentations to the Board regarding the proposed
Merger Agreement, and the transactions contemplated thereby, and the potential
impact on J.D. Edwards, the stockholders of J.D. Edwards and the merger. Morgan
Stanley presented its revised fairness opinion regarding the proposed amended
transaction to the Board. Representatives of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, provided a detailed summary of the final terms of the
Merger Agreement, and the transactions contemplated thereby. Following the
presentations, and after discussion, the Board unanimously approved the Merger
Agreement and the transactions contemplated thereby in substantially the form
presented to the Board and determined the Merger Agreement, the offer and the
merger to be in the best interests of the J.D. Edwards stockholders and
authorized senior members of its management to finalize and execute the Merger
Agreement and the other agreements contemplated thereby on behalf of J.D.
Edwards. The Board also voted unanimously to recommend that the J.D. Edwards
stockholder accept the offer, tender their Shares pursuant to the offer and
approve the merger and the Merger Agreement.
The Merger Agreement is designed to allow the two companies to accelerate
the completion of the transaction and bring forward the benefits of their
combination. PeopleSoft's board of directors believes that the transactions
contemplated by the Merger Agreement provide several benefits to its
stockholders, including, among others:
- the Merger Agreement reaffirms the commitment of PeopleSoft and J.D.
Edwards to combine;
- the Merger Agreement provides an opportunity to complete the transaction
in a more timely fashion;
- the amended terms of the transaction will minimize customer uncertainty
arising from the Oracle Offer and enable PeopleSoft and J.D. Edwards to
speed their integration plans and the substantial benefits of the
combination; and
- the cash portion of the consideration reduces the dilution to
PeopleSoft's stockholders, increases the certainty of the value of the
transaction to J.D. Edwards stockholders and, at the same time, increases
the accretion to PeopleSoft's earnings per share for the benefit of all
stockholders.
PeopleSoft and J.D. Edwards publicly announced the revised transaction, the
anticipated exchange offer and its material terms during the morning of June 16,
2003.
ITEM 8. ADDITIONAL INFORMATION
The information under the heading "Recent Developments" in Item 8 is hereby
amended and restated as follows:
On June 6, 2003, Oracle Corporation announced that it intended to commence
a cash tender offer to purchase all of the outstanding shares of PeopleSoft for
$16 per share, or approximately $5.1 billion.
On June 8, 2003, PeopleSoft's board of directors discussed Oracle's June 6
announcement and formed a committee of non-management directors, comprised of
Frank J. Fanzilli, Jr., Steven D. Goldby, A. George Battle and Cyril J.
Yansouni, to evaluate and assess the terms of Oracle's tender offer, once
announced, in consultation with PeopleSoft's board of directors' financial and
legal advisors, and make a recommendation to its board.
D-58
On June 9, 2003, Oracle Corporation and Pepper Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Oracle, filed a Tender Offer
Statement on Schedule TO with the SEC in connection with the Oracle offer.
On June 9, 2003 a purported class action lawsuit was filed in District
Court, County of Jefferson, Colorado by J.D. Edwards stockholders against J.D.
Edwards' directors and officers alleging breaches of fiduciary duty by such
persons and seeking, among other remedies, to enjoin the transactions
contemplated by the merger. The Company believes that the plaintiff's claims are
wholly without merit and will defend against them vigorously.
On June 11, 2003, PeopleSoft's board of directors, including all of the
members of the transaction committee, met with management and the PeopleSoft
board's financial and legal advisors to further consider and discuss the Oracle
offer. After careful consideration, including consultation with management and
the board's financial and legal advisors, the committee unanimously concluded
that the Oracle offer dramatically undervalued PeopleSoft, would undoubtedly
face lengthy antitrust scrutiny, with a significant likelihood that the
necessary approval would not be granted, that the delays and uncertainties
created by Oracle's tender offer, coupled with Oracle's stated intent to
discontinue our market-leading products, represented a substantial threat to
stockholder value, and that the unsolicited and hostile nature of Oracle's
tender offer, combined with Oracle's statements, was designed to disrupt
PeopleSoft's strong momentum at significant cost to PeopleSoft and its
customers. For these and other reasons more fully described in PeopleSoft's
Solicitation/Recommendation on Schedule 14D-9, the committee determined that the
Oracle offer was not in the best interests of PeopleSoft's stockholders and
unanimously recommended to the full board of directors that the full board, in
turn, recommend that PeopleSoft's stockholders reject the Oracle tender offer
and not tender their shares to Oracle for purchase. The full PeopleSoft board of
directors concurred with the committee and, having determined that the Oracle
tender offer was not in the best interests of PeopleSoft's stockholders,
unanimously recommended that PeopleSoft's stockholders reject the offer.
PeopleSoft publicly announced the PeopleSoft board's recommendation on June 12,
2003.
In response to the Oracle offer, on June 12, 2003, J.D. Edwards filed a
suit in California Superior Court in the County of San Mateo against Oracle
Corporation, Pepper Acquisition Corp. and two of Oracle's executives alleging
violations of California's Business and Professions Code Section 17200 et seq.,
intentional interference with prospective economic advantage and negligent
interference with prospective economic advantage. The suit seeks compensatory
and exemplary damages, as well as preliminary and permanent injunctive relief
enjoining the defendants from proceeding with Oracle's proposed tender offer,
taking or attempting to take any other steps to acquire control of PeopleSoft or
J.D. Edwards, and otherwise interfering with the completion of the proposed
acquisition of J.D. Edwards by PeopleSoft. On June 16, 2003, the Company filed a
motion for expedited discovery and a preliminary injunction hearing. On June 17,
2003, Oracle filed a notice of removal of the action to the United States
District Court, Northern District of California, San Francisco/Oakland Division.
On June 18, 2003, the Company filed a motion to remand the action back to San
Mateo County Superior Court. The United States District Court granted our motion
to remand on June 20, 2003.
On June 12, 2003, J.D. Edwards filed a suit in District Court for the City
and County of Denver, Colorado against Oracle Corporation and its wholly owned
subsidiary, Pepper Acquisition Corp., alleging claims for tortious interference
with contract and prospective business relations. The suit seeks, among other
things, compensatory damages of $1.7 billion and an unspecified amount of
punitive damages.
On June 13, 2003, PeopleSoft filed a suit in the California Superior Court
for the County of Alameda against Oracle Corporation and Pepper Acquisition
Corp. In that suit, PeopleSoft alleged that in connection with Oracle's proposed
tender offer, the defendants have engaged in: (1) unfair trade practices in
violation of California's Business and Professions Code; (2) acts of unlawful
interference with our contracts with our customers; (3) acts of unlawful
interference with our relationships with prospective customers; and (4) acts of
unlawful disparagement of our products and services. PeopleSoft seeks an
injunction precluding defendants' unfair trade practices and other unlawful
actions, proceeding further with the tender offer, restitution and damages. On
June 17, 2003 Oracle removed the case to federal district
D-59
court. On June 19, 2003, the case was remanded to the California Superior Court
for the County of Alameda.
In addition, ten stockholder lawsuits have been filed against PeopleSoft
and certain of its directors and executive officers alleging breaches of
fiduciary duties by PeopleSoft and such persons and seeking to enjoin
transactions contemplated by the merger. The California stockholder lawsuits
have been stayed. A plaintiff in one of the Delaware stockholder lawsuits has
filed a motion for preliminary injunction.
On June 18, 2003, Oracle Corporation announced that it had amended its
offer to purchase all of the outstanding stock of PeopleSoft by increasing the
purchase price from $16.00 to $19.50 per share. After careful consideration,
including consultation with its management and its board's financial and legal
advisors, the PeopleSoft special committee unanimously concluded that the
previously stated reasons for rejecting the Oracle Offer remained and that the
offer consideration was inadequate. As more fully described in PeopleSoft's
amended Schedule 14D-9, the committee determined that the Oracle Offer was not
in the best interests of the PeopleSoft stockholders and unanimously recommended
to the full PeopleSoft board that it recommend that PeopleSoft stockholders
reject the Oracle Offer and not tender their shares to Oracle for purchase. The
full board of directors concurred with the committee and, having determined that
the revised Oracle Offer was not in the best interests of the stockholders,
unanimously recommended that the PeopleSoft stockholders reject the revised
Oracle Offer. PeopleSoft publicly announced the board's recommendation on June
20, 2003.
In addition, on June 18, 2003, Oracle Corporation filed a lawsuit against
PeopleSoft, the members of its board of directors and J.D. Edwards in the
Delaware Chancery Court. The lawsuit alleges breaches of fiduciary duties
against PeopleSoft and its board of directors and seeks injunctive relief
requiring (i) rescission of the Merger Agreement; (ii) an injunction against the
offer; an order requiring PeopleSoft to redeem its rights plan or amend the plan
to permit the Oracle offer to proceed; (iii) an injunction requiring the
PeopleSoft board to take action to make Section 203 of the Delaware General
Corporation Law inapplicable to the Oracle offer; and (iv) an injunction
prohibiting PeopleSoft from implementing a recently announced customer
protection program. The claims against J.D. Edwards are based on aiding and
abetting PeopleSoft and the director defendants. The Company and PeopleSoft
answered Oracle's complaint on June 26, 2003, denying all substantive claims.
The parties are currently scheduled to confer with the Court on July 25, 2003
about further scheduling a hearing date, if necessary. PeopleSoft is therefore
not prevented from closing the offer or the merger prior to July 25, 2003 if the
respective regulatory and other conditions are met. PeopleSoft and J.D. Edwards
believe that the Oracle suit is without merit and intend to vigorously defend
this lawsuit as well as other pending litigation relating to the Oracle offer
and the offer and the merger.
On June 30, 2003, a purported shareholder class action was filed against
J.D. Edwards and its board of directors in Delaware Chancery Court. The action
asserts claims against the J.D. Edwards board of directors for alleged breaches
of fiduciary duties in connection with the merger agreement and seeks, among
other remedies, to enjoin the transactions contemplated by the merger. J.D.
Edwards believes that the plaintiff's claims are wholly without merit and will
defend against them vigorously.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS.
Item 9 is hereby amended and restated as follows:
The following exhibits are filed herewith:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(1) Prospectus, dated June 19, 2003 (incorporated by reference
to the prospectus included in the registration statement on
Form S-4 of PeopleSoft, Inc. filed on June 19, 2003).
(a)(2) Letter of Transmittal (incorporated by reference to Exhibit
99.7 to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003).
(a)(3) Letter to holders of Common Stock of J.D. Edwards & Company,
dated June 19, 2003.*+
</Table>
D-60
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(4) Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder
(incorporated by reference to Annex A of J.D. Edwards'
Schedule 14D-9, filed June 19, 2003).
(a)(5) Joint Press Release of J.D. Edwards & Company and
PeopleSoft, Inc., dated June 1, 2003 (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on June 2, 2003).
(a)(6) Press release of J.D. Edwards & Company, dated June 9, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 9, 2003).
(a)(7) Press Release of J.D. Edwards & Company, dated June 12, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 12, 2003).
(a)(8) Press Release of J.D. Edwards & Company, dated June 13, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 13, 2003).
(a)(9) Press Release of PeopleSoft, Inc., dated June 13, 2003
(incorporated by reference to J.D. Edwards' filing pursuant
to Rule 425 under the Securities Act on June 13, 2003).
(a)(10) Complaint of Oracle Corporation against PeopleSoft, Inc.,
Craig A. Conway, David A. Duffield, Aneel Bhusri, Steven D.
Goldby, A. George Blatte, Frank J. Fanzilli, Cyril J.
Yansouri and J.D. Edwards & Company filed on June 18, 2003
in the Court of Chancery of the State of Delaware.+
(a)(11) Joint Press Release of J.D. Edwards & Company and
PeopleSoft, Inc., dated June 16, 2003 (incorporated by
reference to J.D. Edwards' Schedule 14D-9, filed June 16,
2003).
(a)(12) Series of Messages to Employees and Transcripts of
Multimedia Presentations made available on J.D. Edwards'
website (incorporated by reference to J.D. Edwards' filing
pursuant to Rule 425 under the Securities Act on June 25,
2003).
(a)(13) Complaint of Milton Pfeiffer, on behalf of himself and all
others similarly situated, against J.D. Edwards & Company,
Michael J. Maples, Trygve E. Myhren, Gerald Harrison, Delwin
D. Hock, Robert M. Dutkowsky, Richard E. Allen, Robert C.
Newman, and Kathleen J. Cunningham filed on June 30, 2003 in
the Court of Chancery of the State of Delaware.
(e)(1) Amended and Restated Agreement and Plan of Merger and
Reorganization among PeopleSoft, Inc., Jersey Acquisition
Corporation and J.D. Edwards & Company, dated as of June 16,
2003 (incorporated by reference to Annex A to the
registration statement on Form S-4 of PeopleSoft, Inc. filed
on June 19, 2003).
(e)(2) Form of Stockholder Voting Agreement, dated as of June 16,
2003, among PeopleSoft, Inc. and certain stockholders of
J.D. Edwards & Company (incorporated by reference to Exhibit
C to Annex A to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003).
(e)(3) Form of Affiliate Agreement, dated as of June 16, 2003,
among PeopleSoft, Inc. and certain affiliates of J.D.
Edwards & Company (incorporated by reference to Exhibit B to
Annex A to the registration statement on Form S-4 of
PeopleSoft, Inc. filed on June 19, 2003).
(e)(4) Opinion of Morgan Stanley to the Board of Directors of J.D.
Edwards & Company, dated June 15, 2003 (incorporated by
reference to Annex B of J.D. Edwards' Schedule 14D-9, filed
June 19, 2003).*
(e)(5) Amended Management Change in Control Plan of J.D. Edwards &
Company.+
(e)(6) Amended Employment Agreement between J.D. Edwards & Company
and Robert Dutkowsky, dated June 1, 2003.+
(e)(7) Amended Employment Agreement between J.D. Edwards & Company
and Richard Allen, dated June 1, 2003.+
(e)(8) Amended Employment Agreement between J.D. Edwards & Company
and Richard Snow, dated June 1, 2003.+
(e)(9) Form of Offer Letter for Certain Key Executive Officers of
J.D. Edwards & Company.+
(e)(10) Form of Offer Letter for Certain Employees of J.D. Edwards &
Company.+
</Table>
D-61
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(e)(11) J.D. Edwards & Company 1992 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10.16 to J.D. Edwards
& Company's registration statement on Form S-1).
(e)(12) J.D. Edwards & Company 1997 Equity Incentive Plan
(incorporated by reference to Exhibit 10.21 to J.D. Edwards
& Company's registration statement on Form S-1).
(e)(13) J.D. Edwards & Company 2003 Equity Incentive Plan
(incorporated by reference to Appendix B to J.D. Edwards &
Company's 2003 Definitive Proxy Statement for its Annual
Meeting of Stockholders).
(e)(14) Form of Indemnification Agreement between J.D. Edwards &
Company and its Officers and Directors (incorporated by
reference to Exhibit 10.13 to J.D. Edwards & Company's
registration statement on Form S-1).
(e)(15) Form of Management Change in Control Plan, participated in
by J.D. Edwards & Company's executive officers (incorporated
by reference to Exhibit 10.17 for J.D. Edwards & Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 2000).
(e)(16) Employment Agreement, dated January 2, 2002, between by J.D.
Edwards & Company and Robert M. Dutkowsky (incorporated by
reference to Exhibit 10.15 for J.D. Edwards & Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 2001).
(e)(17) Employment Agreement, dated August 1, 2000, between by J.D.
Edwards & Company and Richard Allen (incorporated by
reference to Exhibit 10.16 for J.D. Edwards & Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 2000).
(e)(18) Employment Agreement, dated May 3, 2002, between by J.D.
Edwards & Company and Richard Snow (incorporated by
reference to Exhibit 10.19 for J.D. Edwards & Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 2002).
</Table>
- ---------------
* Included in copies mailed to stockholders of J.D. Edwards.
+ Previously filed.
D-62
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Name: Richard G. Snow, Jr.
Title: Vice President, General
Counsel and Secretary
Date: July 2, 2003
D-63
ANNEX D -- PART IV
TO THE INFORMATION STATEMENT
D-64
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
J.D. EDWARDS & COMPANY
(Name of Subject Company)
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
281667105
(CUSIP Number of Class of Securities)
Robert M. Dutkowsky
President and Chief Executive Officer
J.D. Edwards & Company
One Technology Way
Denver, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
COPIES TO:
---------------------
Herbert P. Fockler
Steve L. Camahort
Jose F. Macias
Jon C. Avina
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-65
PURPOSE OF AMENDMENT
The purpose of this amendment is to amend and supplement Items 3 and 4 in
the Solicitation/ Recommendation Statement on Schedule 14D-9 previously filed by
J.D. Edwards & Company ("J.D. Edwards" or the "Company") on June 19, 2003 and
subsequently amended June 26, 2003 and July 23, 2003 (the "Statement").
Capitalized terms used but not otherwise defined herein have the meanings
ascribed to such terms in the Statement.
ITEM 3. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
The first paragraph in Item 3 is hereby amended and restated as follows:
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates with certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Rule 14f-1 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which is attached as Annex A hereto (the "Information Statement") and are
incorporated herein by reference. Except as described or referred to herein and
in Annex A, to the knowledge of the Company, as of the date hereof, there are no
material agreements, arrangements or understandings, or any actual or potential
conflicts of interest, between the Company or its affiliates and (1) the
Company, its executive officers, directors or affiliates or (2) PeopleSoft or
the Purchaser, their respective officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
The information under the heading "J.D. Edwards' Reasons for the Offer and
the Merger" in Item 4 is hereby amended and restated as follows:
The Board of Directors believes that the offer and the merger are
advisable, fair to and in the best interest of, J.D. Edwards and the J.D.
Edwards stockholders. At a special meeting of the Board of Directors held on
June 1, 2003, at which the original merger agreement and the transactions
relating thereto were considered and voted upon, the J.D. Edwards directors
unanimously approved the original merger agreement and the merger. On June 15,
2003, at a special meeting, the J.D. Edwards' directors unanimously approved the
offer, the Merger Agreement and the merger. The directors unanimously recommend
that the holders of Shares accept the offer, tender their Shares and approve the
Merger Agreement and the merger.
In the course of reaching its decision to approve the offer and the Merger
Agreement, the Board of Directors consulted with J.D. Edwards' management, as
well as its outside legal counsel and its financial advisors, and identified
several potential benefits for J.D. Edwards' stockholders, employees and
customers. These potential benefits include, among other things:
- the Board's judgment that the two companies have significant
complementary strengths and complementary products:
- PeopleSoft is a leader in providing enterprise applications and services
to large enterprises, and J.D. Edwards is a leader in providing
enterprise applications and services to mid-market businesses;
- PeopleSoft has strong human resource products, and J.D. Edwards has
strong manufacturing and distribution products;
- PeopleSoft is a leading provider to the service industries, such as
financial services, telecommunications, healthcare, government and
education, and J.D. Edwards is a leading provider in manufacturing and
distribution industries, including wholesale distribution, industrial,
consumer and life sciences; asset-intensive industries; and project and
service industries, including construction and real estate;
- the combined company's potential to grow by leveraging a strong global
presence;
D-66
- the resulting business has greater global scale and expertise, along with
the opportunity for increased revenue growth and increased margins and
profits;
- the Board's judgment that the two companies have similar cultures;
- that based on the prices of J.D. Edwards and PeopleSoft Common Stock at
the time the Merger Agreement was approved by the Board, the premium of
the transaction value offered over the price of J.D. Edwards Common Stock
then prevailing in the market; and
- the ability to elect to receive stock consideration provides an
opportunity for J.D. Edwards stockholders to participate in the future
growth in value of the combined company following the merger as
stockholders of PeopleSoft.
In addition to the anticipated benefits outlined above, in the course of
its deliberations, the Board of Directors considered a number of other factors
relevant to the offer and the merger, including:
- historical information concerning J.D. Edwards and PeopleSoft and their
respective businesses, financial performance, condition, operations,
technology, management and position in their respective industries, and
information and evaluations regarding the two companies' strengths,
weaknesses and prospects, both before and after giving effect to the
offer and the merger;
- the potential effect on stockholder value of J.D. Edwards continuing as
an independent entity compared to the potential effect of a combination
with PeopleSoft in light of the other possible strategic alternatives the
Board examined;
- the presentations of J.D. Edwards' financial advisor, Morgan Stanley &
Co. Incorporated, in connection with its opinion (which opinion is
attached to this Statement as Annex B) to the effect that, as of June 15,
2003, and subject to the assumptions, qualifications and limitations set
forth in its written opinion, the per share merger consideration to be
paid pursuant to the Merger Agreement was fair, from a financial point of
view, to holders of J.D. Edwards Common Stock;
- current financial market conditions and historical market prices,
volatility and trading information for J.D. Edwards Common Stock and
PeopleSoft Common Stock, and various factors that might affect the market
value of PeopleSoft Common Stock in the future;
- the premium represented by the offer consideration and the premiums paid
in other recent transactions that could be viewed as comparable, as well
as the negotiations between J.D. Edwards and PeopleSoft relating to the
offer consideration;
- the alternatives available to J.D. Edwards; and
- the terms of the offer, the Merger Agreement and related agreements, by
themselves and in comparison to the terms of other transactions, and the
intensive negotiations between PeopleSoft and J.D. Edwards including
their negotiations relating to the details of the Merger Agreement,
including but not limited to, the conditions to the parties' obligations
to complete the offer and the merger, the details of the "no shop"
restrictions on J.D. Edwards and the scope of J.D. Edwards "fiduciary
out" from these restrictions, the parties' termination rights, the
termination fee that J.D. Edwards may be required to pay PeopleSoft in
certain circumstances and the voting agreements.
The foregoing discussion of factors considered by the Board of Directors is
not meant to be exhaustive but includes the material factors considered by the
board in approving the Merger Agreement and the transactions contemplated by the
Merger Agreement and in recommending that stockholders accept the offer, tender
their Shares and approve the Merger Agreement and the merger. The Board of
Directors did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. Rather, the Board made their respective determination based on
the totality of the information presented to them, and the judgments of
individual members of the Board may have been influenced to a greater or lesser
degree by different factors.
D-67
The potential negative factors the Board of Directors considered include:
- the fact that a portion of the consideration is based on a fixed exchange
ratio means that the aggregate value of the transaction will fluctuate
subject to the changes in PeopleSoft's trading price in the public
market;
- the fact that pursuant to the Merger Agreement, J.D. Edwards is required
to obtain PeopleSoft's consent before it can take a variety of actions
between the signing and the closing of the merger;
- the risk that potential benefits and synergies sought in the merger may
not be fully realized, if at all;
- the risk that the operations of J.D. Edwards would be disrupted from
employee uncertainty following announcement of the offer and the merger;
- the risk of potential delay or reduction in customer orders;
- the risk that despite the efforts of the combined company, key technical
and management personnel of J.D. Edwards might not choose to remain
employed by the combined company;
- the possibility that the trading price or value of PeopleSoft's Common
Stock may decrease in the future;
- the adverse effect on J.D. Edwards' business, operating results and
financial condition and the effect on J.D. Edwards' ability to attract
and retain key management, marketing and technical personnel, in the
event the offer and the merger were not consummated following public
announcement that the Merger Agreement had been entered into; and
- various other risks associated with the businesses of J.D. Edwards,
PeopleSoft and the combined company and the merger, including those
described under the section entitled "Risk Factors" in the Prospectus.
The Board of Directors concluded, however, that many of these risks could
be managed or mitigated by J.D. Edwards or by the combined company or were
unlikely to have a material impact on the offer, the merger or the combined
company, and that, overall, the risks, uncertainties, restrictions and
potentially negative factors associated with the offer and the merger were
outweighed by the potential benefits of the offer and the merger.
In approving the Merger Agreement, the Board of Directors was aware of the
interests of J.D. Edwards' management in the merger, as described in the section
of the Prospectus entitled "The Merger -- Interests of Certain Persons in the
Merger."
D-68
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Name: Richard G. Snow, Jr.
Title: Vice President, General
Counsel and Secretary
Date: July 7, 2003
D-69
ANNEX D -- PART V
TO THE INFORMATION STATEMENT
D-70
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 4
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
J.D. EDWARDS & COMPANY
(Name of Subject Company)
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
---------------------
281667105
(CUSIP Number of Class of Securities)
---------------------
Robert M. Dutkowsky
President and Chief Executive Officer
J.D. Edwards & Company
One Technology Way
Denver, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
COPIES TO:
---------------------
Herbert P. Fockler
Steve L. Camahort
Jose F. Macias
Jon C. Avina
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-71
PURPOSE OF AMENDMENT
The purpose of this amendment is to amend and supplement Item 9 in the
Solicitation/ Recommendation Statement on Schedule 14D-9 previously filed by
J.D. Edwards & Company ("J.D. Edwards") on June 19, 2003 and subsequently
amended June 26, 2003, July 3, 2003 and July 8, 2003 (the "Statement").
Capitalized terms used but not otherwise defined herein have the meanings
ascribed to such terms in the Statement.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
The following exhibits are filed herewith:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(14) Articles from a newsletter to employees of J.D. Edwards
posted on J.D. Edwards' internal website (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on July 8, 2003).
(a)(15) Article entitled "J.D. Edwards: We're not up for grabs"
posted on J.D. Edwards' internal website (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on July 8, 2003).
</Table>
D-72
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Name: Richard G. Snow, Jr.
Title: Vice President, General
Counsel and Secretary
Date: July 9, 2003
D-73
ANNEX D -- PART VI
TO THE INFORMATION STATEMENT
D-74
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 5
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
J.D. EDWARDS & COMPANY
(Name of Subject Company)
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
---------------------
281667105
(CUSIP Number of Class of Securities)
---------------------
Robert M. Dutkowsky
President and Chief Executive Officer
J.D. Edwards & Company
One Technology Way
Denver, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
COPIES TO:
---------------------
Herbert P. Fockler
Steve L. Camahort
Jose F. Macias
Jon C. Avina
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-75
PURPOSE OF AMENDMENT
The purpose of this amendment is to amend and supplement Item 9 in the
Solicitation/Recommendation Statement on Schedule 14D-9 previously filed by J.D.
Edwards & Company ("J.D. Edwards") on June 19, 2003 and subsequently amended
June 26, 2003, July 3, 2003, July 8, 2003 and July 9, 2003 (the "Statement").
Capitalized terms used but not otherwise defined herein have the meanings
ascribed to such terms in the Statement.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
The following exhibits are filed herewith:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(16) Articles from a newsletter to employees of J.D. Edwards
posted on J.D. Edwards' internal website (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on July 11, 2003).
</Table>
D-76
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Name: Richard G. Snow, Jr.
Title: Vice President, General
Counsel and Secretary
Date: July 11, 2003
D-77
ANNEX D -- PART VII
TO THE INFORMATION STATEMENT
D-78
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 6 TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
J.D. EDWARDS & COMPANY
(Name of Subject Company)
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
---------------------
281667105
(CUSIP Number of Class of Securities)
---------------------
Robert M. Dutkowsky
President and Chief Executive Officer
J.D. Edwards & Company
One Technology Way
Denver, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
COPIES TO:
---------------------
Herbert P. Fockler
Steve L. Camahort
Jose F. Macias
Jon C. Avina
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-79
PURPOSE OF AMENDMENT
The purpose of this amendment is to amend and supplement Items 4, 8 and 9
in the Solicitation/ Recommendation Statement on Schedule 14D-9 previously filed
by J.D. Edwards & Company ("J.D. Edwards") on June 19, 2003 and subsequently
amended June 26, 2003, July 3, 2003, July 8, 2003, July 9, 2003 and July 11,
2003 (the "Statement"). Capitalized terms used but not otherwise defined herein
have the meanings ascribed to such terms in the Statement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
The information under the heading "J.D. Edwards' Reasons for the Offer and
the Merger" in Item 4 is hereby amended and restated as follows:
The Board of Directors believes that the offer and the merger are
advisable, fair to and in the best interest of, J.D. Edwards and the J.D.
Edwards stockholders. At a special meeting of the Board of Directors held on
June 1, 2003, at which the original merger agreement and the transactions
relating thereto were considered and voted upon, the J.D. Edwards directors
unanimously approved the original merger agreement and the merger. On June 15,
2003, at a special meeting, the J.D. Edwards' directors unanimously approved the
offer, the Merger Agreement and the merger. The directors unanimously recommend
that the holders of Shares accept the offer, tender their Shares and approve the
Merger Agreement and the merger.
In the course of reaching its decision to approve the offer and the Merger
Agreement, the Board of Directors consulted with J.D. Edwards' management, as
well as its outside legal counsel and its financial advisors, and identified
several potential benefits for J.D. Edwards' stockholders, employees and
customers as reasons for that approval. These reasons include, among other
things:
- the Board's judgment that the combined company will be stronger than
either company standing alone, because of their significant complementary
strengths and complementary products:
- PeopleSoft is a leader in providing enterprise applications and services
to large enterprises, and J.D. Edwards is a leader is providing
enterprise applications and services to mid-market businesses;
- PeopleSoft has strong human resource products, and J.D. Edwards has
strong manufacturing and distribution products;
- PeopleSoft is a leading provider to the service industries, such as
financial services, telecommunications, healthcare, government and
education, and J.D. Edwards is a leading provider in manufacturing and
distribution industries, including wholesale distribution, industrial,
consumer and life sciences; asset-intensive industries; and project and
service industries, including construction and real estate;
- the combined company should have the potential to grow by leveraging a
stronger global presence than either company alone;
- the resulting business should benefit from greater global scale and
expertise, along with an opportunity for increased revenue growth and
increased margins and profits;
- the Board's judgment that the two companies have similar cultures, which
should assist integration into one combined business;
- that, based on the prices of J.D. Edwards and PeopleSoft Common Stock at
the time the Merger Agreement was approved by the Board, the value
offered in the transaction represented a premium over the price of J.D.
Edwards Common Stock then prevailing in the market; and
- the ability of J.D. Edwards stockholders to elect to receive stock
consideration provides them an opportunity to participate in the future
growth in value of the combined company following the merger as
stockholders of PeopleSoft.
D-80
In addition to the anticipated benefits outlined above, in the course of
its deliberations, the Board of Directors considered a number of other factors
relevant to the offer and the merger, including:
- historical information concerning J.D. Edwards and PeopleSoft and their
respective businesses, financial performance, condition, operations,
technology, management and position in their respective industries, and
information and evaluations regarding the two companies' strengths,
weaknesses and prospects, both before and after giving effect to the
offer and the merger;
- the potential effect on stockholder value of J.D. Edwards continuing as
an independent entity compared to the potential effect of a combination
with PeopleSoft in light of the other possible strategic alternatives the
Board examined;
- the presentations of J.D. Edwards' financial advisor, Morgan Stanley &
Co. Incorporated, in connection with its opinion (which opinion is
attached to this Statement as Annex B) to the effect that, as of June 15,
2003, and subject to the assumptions, qualifications and limitations set
forth in its written opinion, the per share merger consideration to be
paid pursuant to the Merger Agreement was fair, from a financial point of
view, to holders of J.D. Edwards Common Stock;
- current financial market conditions and historical market prices,
volatility and trading information for J.D. Edwards Common Stock and
PeopleSoft Common Stock, and various factors that might affect the market
value of PeopleSoft Common Stock in the future;
- the premium represented by the offer consideration and the premiums paid
in other recent transactions that could be viewed as comparable, as well
as the negotiations between J.D. Edwards and PeopleSoft relating to the
offer consideration;
- the alternatives available to J.D. Edwards; and
- the terms of the offer, the Merger Agreement and related agreements, by
themselves and in comparison to the terms of other transactions, and the
intensive negotiations between PeopleSoft and J.D. Edwards including
their negotiations relating to the details of the Merger Agreement,
including but not limited to, the conditions to the parties' obligations
to complete the offer and the merger, the details of the "no shop"
restrictions on J.D. Edwards and the scope of J.D. Edwards "fiduciary
out" from these restrictions, the parties' termination rights, the
termination fee that J.D. Edwards may be required to pay PeopleSoft in
certain circumstances and the voting agreements.
The foregoing discussion of factors considered by the Board of Directors is
not meant to be exhaustive but includes the material factors considered by the
board in approving the Merger Agreement and the transactions contemplated by the
Merger Agreement and in recommending that stockholders accept the offer, tender
their Shares and approve the Merger Agreement and the merger. The Board of
Directors did not find it practicable to, and did not, quantify or other wise
assign relative weights to the specific factors considered in reaching its
determination. Rather, the Board made their respective determination based on
the totality of the information presented to them, and the judgments of
individual members of the Board may have been influenced to a greater or lesser
degree by different factors.
The potential negative factors the Board of Directors considered include:
- the fact that a portion of the consideration is based on a fixed exchange
ratio means that the aggregate value of the transaction will fluctuate
subject to the changes in PeopleSoft's trading price in the public
market;
- the fact that pursuant to the Merger Agreement, J.D. Edwards is required
to obtain PeopleSoft's consent before it can take a variety of actions
between the signing and the closing of the merger;
- the risk that potential benefits and synergies sought in the merger may
not be fully realized, if at all;
D-81
- the risk that the operations of J.D. Edwards would be disrupted from
employee uncertainty following announcement of the offer and the merger;
- the risk of potential delay or reduction in customer orders;
- the risk that despite the efforts of the combined company, key technical
and management personnel of J.D. Edwards might not choose to remain
employed by the combined company;
- the possibility that the trading price or value of PeopleSoft's Common
Stock may decrease in the future;
- the adverse effect on J.D. Edwards' business, operating results and
financial condition and the effect on J.D. Edwards' ability to attract
and retain key management, marketing and technical personnel, in the
event the offer and the merger were not consummated following public
announcement that the Merger Agreement had been entered into; and
- various other risks associated with the businesses of J.D. Edwards,
PeopleSoft and the combined company and the merger, including those
described under the section entitled "Risk Factors" in the Prospectus.
The Board of Directors concluded, however, that many of these risks could
be managed or mitigated by J.D. Edwards or by the combined company or were
unlikely to have a material impact on the offer, the merger or the combined
company, and that, overall, the risks, uncertainties, restrictions and
potentially negative factors associated with the offer and the merger were
outweighed by the potential benefits of the offer and the merger.
Since the announcement of the Oracle offer, the Board of Directors has at
various times considered the effect of the offer on the likelihood of completing
the transaction with PeopleSoft and also its effects on PeopleSoft, J.D. Edwards
and the combined company. The Board and management have also discussed at
various times the actions of PeopleSoft in response to the Oracle offer,
including its program to provide assurances to its customers in response to
Oracle's public statements about its intentions regarding the future of
PeopleSoft's products should Oracle be successful in acquiring PeopleSoft. See
Item 8 for a discussion of this customer program.
At the time of the Board's decision to approve the Merger Agreement on June
15, 2003, J.D. Edwards was aware that PeopleSoft was considering the customer
program. The scope and terms of the program, however, had not been finalized at
that time, and, the Board did not consider the program when it arrived at its
decision to recommend the offer and merger to the J.D. Edwards' stockholders.
Since that time, PeopleSoft's implementation of the customer protection
program has not caused the Board to reconsider its recommendation to the
stockholders. At a meeting of the Board of Directors on July 2, 2003, the Board
did discuss, among other things, PeopleSoft's publicly announced preliminary
results of operations for its quarter ended June 30, 2003. As part of this
discussion, the Board noted the effect of the customer program on PeopleSoft's
quarterly results. While at that time the Board recognized that the program
would create a contingent liability that could affect the financial condition of
an acquiror of PeopleSoft, whether in a negotiated or unsolicited transaction,
the Board also recognized that:
- the program did not adversely affect PeopleSoft's own financial
condition, had no impact on PeopleSoft's own financial statements and
appeared to have helped PeopleSoft achieve better than expected results
of operations for the second quarter, especially in light of the adverse
effect that the Oracle offer may have had on PeopleSoft's sales efforts;
- the program was an effective tool for protecting the value of
PeopleSoft's business, an important consideration for the stockholders of
J.D. Edwards who would be investors in PeopleSoft following the closing
of the offer and merger; and
- any adverse effect that the program might have on the potential value of
PeopleSoft in a future acquisition was outweighed by the risk that the
Oracle offer could deny the J.D. Edwards' stockholders from realizing the
benefits of a combination with PeopleSoft, especially given the fact
D-82
that Oracle had made numerous public announcements that it was not
interested in acquiring J.D. Edwards under the terms that it had
negotiated with PeopleSoft, if at all.
In approving the Merger Agreement, the Board of Directors was aware of the
interests of J.D. Edwards' management in the merger, as described in the section
of the Prospectus entitled "The Merger -- Interests of Certain Persons in the
Merger."
ITEM 8. ADDITIONAL INFORMATION
The information under the heading "Recent Developments" in Item 8 is hereby
amended and restated as follows:
On June 6, 2003, Oracle Corporation announced that it intended to commence
a cash tender offer to purchase all of the outstanding shares of PeopleSoft for
$16 per share, or approximately $5.1 billion.
On June 8, 2003, PeopleSoft's board of directors discussed Oracle's June 6
announcement and formed a committee of independent directors, comprised of Frank
J. Fanzilli, Jr., Steven D. Goldby, A. George Battle and Cyril J. Yansouni, to
evaluate and assess the terms of Oracle's tender offer, once announced, in
consultation with PeopleSoft's board of directors' financial and legal advisors,
and make a recommendation to its board.
On June 9, 2003, Oracle Corporation and Pepper Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Oracle, filed a Tender Offer
Statement on Schedule TO with the SEC in connection with the Oracle offer.
On June 9, 2003 a purported class action lawsuit was filed in District
Court, County of Jefferson, Colorado by J.D. Edwards stockholders against J.D.
Edwards' directors and officers alleging breaches of fiduciary duty by such
persons and seeking, among other remedies, to enjoin the transactions
contemplated by the merger. The Company believes that the plaintiff's claims are
wholly without merit and will defend against them vigorously.
On June 11, 2003, PeopleSoft's board of directors, including all of the
members of the transaction committee, met with management and the PeopleSoft
board's financial and legal advisors to further consider and discuss the Oracle
offer. After careful consideration, including consultation with management and
the board's financial and legal advisors, the committee unanimously concluded
that the Oracle offer dramatically undervalued PeopleSoft, would undoubtedly
face lengthy antitrust scrutiny, with a significant likelihood that the
necessary approval would not be granted, that the delays and uncertainties
created by Oracle's tender offer, coupled with Oracle's stated intent to
discontinue our market-leading products, represented a substantial threat to
stockholder value, and that the unsolicited and hostile nature of Oracle's
tender offer, combined with Oracle's statements, was designed to disrupt
PeopleSoft's strong momentum at significant cost to PeopleSoft and its
customers. For these and other reasons more fully described in PeopleSoft's
Solicitation/Recommendation on Schedule 14D-9, the committee determined that the
Oracle offer was not in the best interests of PeopleSoft's stockholders and
unanimously recommended to the full board of directors that the full board, in
turn, recommend that PeopleSoft's stockholders reject the Oracle tender offer
and not tender their shares to Oracle for purchase. The full PeopleSoft board of
directors concurred with the committee and, having determined that the Oracle
tender offer was not in the best interests of PeopleSoft's stockholders,
unanimously recommended that PeopleSoft's stockholders reject the offer.
PeopleSoft publicly announced the PeopleSoft board's recommendation on June 12,
2003.
In response to the Oracle offer, on June 12, 2003, J.D. Edwards filed a
suit in California Superior Court in the County of San Mateo against Oracle
Corporation, Pepper Acquisition Corp. and two of Oracle's executives alleging
violations of California's Business and Professions Code Section 17200 et seq.,
intentional interference with prospective economic advantage and negligent
interference with prospective economic advantage. The suit seeks compensatory
and exemplary damages, as well as preliminary and permanent injunctive relief
enjoining the defendants from proceeding with Oracle's proposed tender offer,
taking or attempting to take any other steps to acquire control of PeopleSoft or
J.D. Edwards, and otherwise interfering with the completion of the proposed
acquisition of J.D. Edwards by PeopleSoft. On
D-83
June 16, 2003, the Company filed a motion for expedited discovery and a
preliminary injunction hearing. On June 17, 2003, Oracle filed a notice of
removal of the action to the United States District Court, Northern District of
California, San Francisco/Oakland Division. On June 18, 2003, the Company filed
a motion to remand the action back to San Mateo County Superior Court. The
United States District Court granted our motion to remand on June 20, 2003.
On June 12, 2003, J.D. Edwards filed a suit in District Court for the City
and County of Denver, Colorado against Oracle Corporation and its wholly owned
subsidiary, Pepper Acquisition Corp., alleging claims for tortious interference
with contract and prospective business relations. The suit seeks, among other
things, compensatory damages of $1.7 billion and an unspecified amount of
punitive damages.
On June 13, 2003, PeopleSoft filed a suit in the California Superior Court
for the County of Alameda against Oracle Corporation and Pepper Acquisition
Corp. In that suit, PeopleSoft alleged that in connection with Oracle's proposed
tender offer, the defendants have engaged in: (1) unfair trade practices in
violation of California's Business and Professions Code; (2) acts of unlawful
interference with our contracts with our customers; (3) acts of unlawful
interference with our relationships with prospective customers; and (4) acts of
unlawful disparagement of our products and services. PeopleSoft seeks an
injunction precluding defendants' unfair trade practices and other unlawful
actions, proceeding further with the tender offer, restitution and damages. On
June 17, 2003 Oracle removed the case to federal district court. On June 19,
2003, the case was remanded to the California Superior Court for the County of
Alameda.
In addition, thirteen stockholder lawsuits have been filed against
PeopleSoft and certain of its directors and executive officers alleging breaches
of fiduciary duties by PeopleSoft and such persons and seeking to enjoin
transactions contemplated by the merger. The California stockholder lawsuits
have been stayed. A plaintiff in one of the Delaware stockholder lawsuits has
filed a motion for preliminary injunction.
On June 18, 2003, Oracle Corporation announced that it had amended its
offer to purchase all of the outstanding stock of PeopleSoft by increasing the
purchase price from $16.00 to $19.50 per share. After careful consideration,
including consultation with its management and its board's financial and legal
advisors, the transaction committee unanimously concluded that the previously
stated reasons for rejecting the Oracle Offer remained and that the offer
consideration undervalued PeopleSoft. As more fully described in PeopleSoft's
amended Schedule 14D-9, the committee determined that the Oracle Offer was not
in the best interests of the PeopleSoft stockholders and unanimously recommended
to the full PeopleSoft board that it recommend that PeopleSoft stockholders
reject the Oracle Offer and not tender their shares to Oracle for purchase. The
full board of directors concurred with the committee and, having determined that
the revised Oracle Offer was not in the best interests of the stockholders,
unanimously recommended that the PeopleSoft stockholders reject the revised
Oracle Offer. PeopleSoft publicly announced the board's recommendation on June
20, 2003.
In addition, on June 18, 2003, Oracle Corporation filed a lawsuit against
PeopleSoft, the members of its board of directors and J.D. Edwards in the
Delaware Chancery Court. The lawsuit alleges breaches of fiduciary duties
against PeopleSoft and its board of directors and seeks injunctive relief
requiring (i) rescission of the Merger Agreement; (ii) an injunction against the
offer; an order requiring PeopleSoft to redeem its rights plan or amend the plan
to permit the Oracle offer to proceed; (iii) an injunction requiring the
PeopleSoft board to take action to make Section 203 of the Delaware General
Corporation Law inapplicable to the Oracle offer; and (iv) an injunction
prohibiting PeopleSoft from implementing a recently announced customer
protection program described below, claimed to be an illegal anti-takeover
device. The claims against J.D. Edwards are based on aiding and abetting
PeopleSoft and the director defendants. The Company and PeopleSoft answered
Oracle's complaint on June 26, 2003, denying all substantive claims. The parties
are currently scheduled to confer with the Court on July 25, 2003 about further
scheduling a hearing date, if necessary. PeopleSoft is therefore not currently
prevented from closing the offer or the merger prior to July 25, 2003 if the
respective regulatory and other conditions are met.
D-84
PeopleSoft and J.D. Edwards believe that the Oracle suit is without merit and
intend to vigorously defend this lawsuit as well as other pending litigation
relating to the Oracle offer and the offer and the merger.
On June 30, 2003, a purported shareholder class action was filed against
J.D. Edwards and the Board of Directors in Delaware Chancery Court. The action
asserts claims against the Board of Directors for alleged breaches of fiduciary
duties in connection with the Merger Agreement and seeks, among other remedies,
to enjoin the transactions contemplated by the merger. J.D. Edwards believes
that the plaintiff's claims are wholly without merit and will defend against
them vigorously.
Furthermore, in connection with the Oracle offer, Oracle has made explicit,
well-publicized statements of its intentions with respect to PeopleSoft's
products if its acquisition efforts succeed. PeopleSoft has indicated that the
Oracle statements have caused PeopleSoft's existing and potential customers to
express concern over the long-term availability and support of PeopleSoft
products.
According to PeopleSoft's public filings with the Securities and Exchange
Commission, to minimize a potential loss of business during the Oracle offer,
PeopleSoft implemented a program incorporating a contingent change in control
provision to its standard perpetual licensing arrangement which provides
customers purchasing application licenses with financial protection in the event
that an acquiror discontinues the sale, development or support of PeopleSoft
applications within a specified period after an acquisition. That financial
protection is in the form of a payment generally equal to two to five times the
total arrangement fees. The multiple increases as the arrangement fees increase
and generally will be paid provided the following events occur:
- Within one year of the contract effective date, PeopleSoft is acquired or
merged, and PeopleSoft is not the acquiror; and
- Within two years of the contract effective date, the acquiring company:
(i) announces its intention to discontinue, or discontinues, support
services before the end of the normal support term as defined by
PeopleSoft standard policies, or (ii) announces its intention to stop
licensing PeopleSoft products to new customers, or (iii) announces its
intention not to provide updates or new releases for supportable
products, which would, if PeopleSoft were not acquired or merged with the
acquired company, have been considered updates or new releases under
PeopleSoft standard business policies; and
- The customer requests the payment in writing by December 31, 2005 and has
timely paid for support services in accordance with the terms of the
customer's agreement with PeopleSoft.
PeopleSoft customers retain rights to the licensed products whether or not
the customer protection program payments are implicated. No customer is entitled
to a refund of arrangement fees paid under the customer's contract with
PeopleSoft, but the customer would be entitled to a payment under the customer
protection program if all of the conditions stated above are met.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
The following exhibits are filed herewith:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(17) Press release, dated as of July 14, 2003, entitled
"Department of Justice Grant of Early Termination Clears Way
for PeopleSoft Acquisition of J.D. Edwards" (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on July 14, 2003).
</Table>
D-85
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Name: Richard G. Snow, Jr.
Title: Vice President, General
Counsel and Secretary
Date: July 14, 2003
D-86
ANNEX D -- PART VIII
TO THE INFORMATION STATEMENT
D-87
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 7
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
---------------------
J.D. EDWARDS & COMPANY
(Name of Subject Company)
---------------------
J.D. EDWARDS & COMPANY
(Name of Person(s) Filing Statement)
---------------------
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
281667105
(CUSIP Number of Class of Securities)
---------------------
Robert M. Dutkowsky
President and Chief Executive Officer
J.D. Edwards & Company
One Technology Way
Denver, CO 80237-3000
(303) 334-4000
(Name, address and telephone number of person
authorized to receive notices and communications on
behalf of the person(s) filing statement)
---------------------
COPIES TO:
Herbert P. Fockler
Steve L. Camahort
Jose F. Macias
Jon C. Avina
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
(650) 493-9300
---------------------
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-88
PURPOSE OF AMENDMENT
The purpose of this amendment is to amend and supplement Item 9 in the
Solicitation/Recommendation Statement on Schedule 14D-9 previously filed by J.D.
Edwards & Company ("J.D. Edwards") on June 19, 2003 and subsequently amended
June 26, 2003, July 3, 2003, July 8, 2003, July 9, 2003, July 11, 2003, and July
14, 2003 (the "Statement"). Capitalized terms used but not otherwise defined
herein have the meanings ascribed to such terms in the Statement.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(18) Series of slides presented by Les Wyatt, Senior Vice
President and Chief Marketing Officer (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on July 16, 2003).
(a)(19) Transcript of webcast by Robert Dutkowsky, Chairman,
President and Chief Executive Officer (incorporated by
reference to J.D. Edwards' filing pursuant to Rule 425 under
the Securities Act on July 16, 2003)
</Table>
D-89
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
J.D. EDWARDS & COMPANY
By: /s/ RICHARD G. SNOW, JR.
------------------------------------
Name: Richard G. Snow, Jr.
Title: Vice President, General
Counsel and Secretary
Date: July 16, 2003
D-90
ANNEX E
TO THE INFORMATION STATEMENT
J.D. EDWARDS & COMPANY
(A DELAWARE CORPORATION)
The undersigned, being the holder of a majority of the outstanding common
stock, par value $0.001 per share, of J.D. Edwards & Company, a Delaware
corporation (the "Corporation"), takes the following action by written consent
in lieu of a meeting of the stockholders of the Corporation pursuant to Section
228 of the General Corporation Law of the State of Delaware (the "DGCL") and
Section 2.11 of the Bylaws of the Corporation:
APPROVAL AND AUTHORIZATION OF MERGER AGREEMENT
WHEREAS, the Corporation entered into that certain Amended and Restated
Agreement and Plan of Merger and Reorganization, dated as of June 16, 2003 (the
"Merger Agreement"), by and among the Corporation, PeopleSoft, Inc., a Delaware
corporation ("PeopleSoft"), and Jersey Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of PeopleSoft ("Acquisition");
WHEREAS, the Merger Agreement provides that Acquisition will merge with and
into the Corporation (the "Merger"), with the Corporation as the surviving
corporation and becoming a wholly-owned subsidiary of PeopleSoft following the
Merger;
WHEREAS, Section 251 of the DGCL requires a majority of the outstanding
shares of common stock of the Corporation to adopt and approve the Merger
Agreement;
WHEREAS, the undersigned is the holder of a majority of the outstanding
common stock of the Corporation; and
WHEREAS, the undersigned deems it in the best interests of the Corporation
to enter into the Merger Agreement and the transactions contemplated thereby,
with the Merger to be completed when such completion is in accordance with
applicable law.
NOW, THEREFORE, BE IT RESOLVED, that the Merger, the Merger Agreement and
the transactions contemplated thereby, be, and they hereby are, approved and
authorized and the Corporation shall be bound by the terms thereof.
GENERAL
RESOLVED FURTHER, that all acts and deeds heretofore done by any director
or officer of the Corporation intended to carry out the intent and accomplish
the purpose of the foregoing resolutions are hereby ratified, authorized and
approved;
RESOLVED FURTHER, that the taking of any action or the execution of any
instrument by an officer of the Corporation in connection with the foregoing
resolutions shall be conclusive evidence of the approval thereof and his
determination that the same was necessary to serve the best interests of the
Corporation; and
RESOLVED FURTHER, that, in addition to the specific authorization in the
foregoing resolutions, any officer of the Corporation, and each of them, is
hereby authorized to take from time to time any and all such action and to
execute and deliver from time to time any and all further papers, instruments,
requests, receipts, applications, reports, certificates and other documents as
may be deemed necessary or
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advisable in the opinion of any such officer to effectuate, consummate and
comply with the purpose and extent of the foregoing resolutions.
IN WITNESS WHEREOF, the undersigned has executed this Written Consent on
the date indicated.
STOCKHOLDER OF J.D. EDWARDS & COMPANY:
<Table>
JERSEY ACQUISITION CORPORATION
By: /s/ ANNE S. JORDAN Date: July 23, 2003
-------------------------------------------------
Name: Anne S. Jordan
Title: Vice President and Secretary
</Table>
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