LWSN » Topics » Certain Relationships and Related Transactions

This excerpt taken from the LWSN DEF 14A filed Aug 28, 2009.

Certain Relationships and Related Transactions

 

Our Corporate Governance Policy and our Code of Conduct each require that the Audit Committee and disinterested directors review and approve all business transactions between Lawson and its related persons, including directors, executive officers, 5% stockholders and their immediate family members or affiliates. The Board has delegated to our Audit Committee the authority to review potential or existing related party transactions. The Audit Committee will only approve or ratify those transactions that are determined to be consistent with the best interests of Lawson and its stockholders, and that comply with applicable policies, our Code of Conduct and legal restrictions. The Audit Committee and disinterested directors approved the following related party transactions:

 

Transactions with Affiliates of Dr. Romesh Wadhwani.

 

During the fourth quarter of fiscal 2009, we repurchased an aggregate of 1.6 million shares of our common stock at an average price of $5.55 per share under the share repurchase program.  These shares were purchased in four private transactions from May 1, 2009 through May 12, 2009 from an affiliate of Dr. Romesh Wadhwani, our co-chairman and a member of our Board of Directors.  We repurchased these shares at a 2% discount from the closing market price of our common stock on the respective dates of purchase.

 

Effective April 27, 2007, one of our subsidiaries, Lawson International AB, entered into a two-year non-exclusive reseller agreement (the “Non-Exclusive India Reseller Agreement”) with Symphony Service Corp. (India) Pvt Ltd (“Symphony Services India”) for the territory of India. Symphony Services India is an affiliate of Dr. Romesh Wadhwani. Under that agreement, Symphony Services India may distribute, sublicense and service our products to customers of Symphony Services India in India, in consideration of payment of the applicable reseller fees to us. This agreement replaced an exclusive reseller agreement for India that was signed in 1998 between Intentia International AB and Intentia South Asia Pvt. Ltd. India (“Intentia India”), and assigned by Intentia India to Symphony Services India in March 2005.  The Non-Exclusive India Reseller Agreement automatically renewed for an additional two-year term starting April 27, 2009 and is based on the standard form of non-exclusive reseller agreement used by us with non-affiliated resellers. The Non-Exclusive India Reseller Agreement was approved by our management, the Audit Committee, and by our Board (with Dr. Wadhwani abstaining), because it was determined that the new agreement (i) eliminated exclusivity and is for a shorter term than the former agreement, (ii) reflects Lawson’s current standard terms for non-affiliated resellers and (iii) does not represent a conflict of interest. We believe that the terms of the Non-Exclusive India Reseller Agreement are no less favorable to Lawson than the terms of other reseller agreements entered into by Lawson with unaffiliated resellers. During fiscal 2009, we paid Symphony Services India $400,000 under the reseller agreement.

 

In May 2005, Intentia entered an agreement with Symphony Service Corp. (“Symphony Services”), an affiliate of Dr. Romesh Wadhwani, pursuant to which Symphony Services agreed to provide Intentia both product development and customer support resources for an initial five year term subject to earlier termination after three years. Intentia believed this agreement will help enable it to achieve significant quality improvements and better customer service without increasing total spending on product development and customer support and was part of a business transformation plan approved by Intentia in July 2004. The agreement was not affected by the consummation of the business combination with Lawson. This agreement will terminate in May 2010. Any future services agreements with Symphony would depend on the need for those services and acceptable agreement terms

 

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for Lawson, and would be subject to prior approval by Lawson’s Audit Committee and disinterested directors. During fiscal 2009, we paid Symphony Services $4.0 million for services under this agreement.

 

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