Exhibit 2(a)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MAPICS, INC.,
FP ACQUISITION SUB, INC.,
AND
FRONTSTEP, INC.
DATED AS OF NOVEMBER 24, 2002
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER.................................1
1.1 Merger.........................................................1
1.2 Time and Place of Closing......................................2
1.3 Effective Time.................................................2
ARTICLE 2 TERMS OF MERGER..................................................2
2.1 Charter........................................................2
2.2 Bylaws.........................................................2
2.3 Directors and Officers.........................................2
ARTICLE 3 MANNER OF CONVERTING SHARES......................................3
3.1 Conversion of Shares...........................................3
3.2 Anti-Dilution Provisions.......................................3
3.3 Dissenting Shareholders........................................4
3.4 Fractional Shares..............................................4
3.5 Conversion of Stock Options....................................4
ARTICLE 4 EXCHANGE OF SHARES...............................................6
4.1 Exchange Procedures............................................6
4.2 Rights of Former Frontstep Shareholders........................7
4.3 Other Transactions.............................................8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF FRONTSTEP......................8
5.1 Organization, Standing, and Power..............................8
5.2 Authority of Frontstep; No Breach By Agreement.................8
5.3 Capital Stock.................................................10
5.4 Frontstep Subsidiaries........................................10
5.5 SEC Filings; Financial Statements. Except as disclosed
in Section 5.5 of the Frontstep Disclosure Memorandum,.......11
5.6 Absence of Undisclosed Liabilities............................12
5.7 Absence of Certain Changes or Events..........................12
5.8 Tax Matters...................................................12
5.9 Assets........................................................14
5.10 Intellectual Property.........................................15
5.11 Environmental Matters.........................................16
5.12 Compliance with Laws..........................................16
5.13 Labor Relations...............................................17
5.14 Employee Benefit Plans........................................18
5.15 Material Contracts............................................20
5.16 Shareholders' Voting Agreements...............................21
5.17 Legal Proceedings.............................................21
5.18 Reports.......................................................21
5.19 Statements True and Correct...................................22
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5.20 Tax and Regulatory Matters....................................22
5.21 State Takeover Laws...........................................23
5.22 Charter Provisions............................................23
5.23 Opinion of Financial Advisor..................................23
5.24 Board Recommendation..........................................23
5.25 Debt..........................................................23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF MAPICS........................24
6.1 Organization, Standing, and Power.............................24
6.2 Authority; No Breach By Agreement.............................24
6.3 Capital Stock.................................................25
6.4 SEC Filings; Financial Statements.............................26
6.5 Absence of Undisclosed Liability..............................26
6.6 Absence of Certain Changes or Events..........................26
6.7 Compliance with Laws..........................................27
6.8 Legal Proceedings.............................................27
6.9 Statements True and Correct...................................28
6.10 State Takeover Laws...........................................28
6.11 Charter Provision.............................................29
6.12 Board Recommendation..........................................29
6.13 Authority of Sub..............................................29
6.14 Tax and Regulatory Matters....................................29
6.15 Rights Agreement and Other Agreements.........................30
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION........................30
7.1 Affirmative Covenants of Frontstep............................30
7.2 Negative Covenants of Frontstep...............................31
7.3 Covenants of MAPICS...........................................33
7.4 Adverse Changes in Condition..................................33
7.5 Reports.......................................................33
7.6 Payment of Certain Taxes......................................34
ARTICLE 8 ADDITIONAL AGREEMENTS...........................................34
8.1 Registration Statement; Proxy Statement; Shareholder
Approval.....................................................34
8.2 Other Offers, Etc.............................................36
8.3 Nasdaq National Market Listing................................37
8.4 Antitrust Notification; Consents of Regulatory Authorities....37
8.5 Filings with State Offices....................................38
8.6 Agreement as to Efforts to Consummate.........................38
8.7 Investigation and Confidentiality.............................38
8.8 Press Releases................................................39
8.9 Tax Treatment.................................................39
8.10 State Takeover Laws...........................................39
8.11 Charter Provisions............................................40
8.12 Agreement of Affiliates.......................................40
8.13 Employee Benefits and Contracts...............................40
8.14 Indemnification...............................................41
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ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE...............42
9.1 Conditions to Obligations of Each Party.......................42
9.2 Conditions to Obligations of MAPICS...........................44
9.3 Conditions to Obligations of Frontstep........................46
ARTICLE 10 TERMINATION....................................................48
10.1 Termination...................................................48
10.2 Effect of Termination.........................................49
10.3 Non-Survival of Representations and Covenants.................49
ARTICLE 11 MISCELLANEOUS..................................................50
11.1 Definitions...................................................50
11.2 Expenses......................................................60
11.3 Brokers and Finders...........................................61
11.4 Entire Agreement..............................................62
11.5 Amendments....................................................62
11.6 Waivers.......................................................62
11.7 Assignment....................................................63
11.8 Notices.......................................................63
11.9 Governing Law.................................................64
11.10 Counterparts..................................................64
11.11 Captions; Articles and Sections...............................64
11.12 Interpretations...............................................64
11.13 Enforcement of Agreement......................................65
11.14 Severability..................................................65
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EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
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Exhibit 1 Voting Agreements............................................1
Exhibit 2 Restructuring Agreement.....................................10
Exhibit 3 Affiliates Agreement........................................40
Exhibit 4 New Foothill Warrant........................................56
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and
entered into as of November 24, 2002, by and among MAPICS, INC. ("MAPICS"), a
Georgia corporation; FP ACQUISITION SUB, INC. ("SUB"), a Georgia corporation;
and FRONTSTEP, INC. ("FRONTSTEP"), an Ohio corporation.
PREAMBLE
The respective Boards of Directors of Frontstep, Sub and MAPICS believe
that the transactions described herein are in the best interests of the Parties
to this Agreement and their respective shareholders. This Agreement provides for
the acquisition of Frontstep by MAPICS pursuant to the merger of Sub with and
into Frontstep. At the effective time of such Merger, the outstanding shares of
the capital stock of Frontstep shall be converted into the right to receive
shares of the common stock of MAPICS (except as provided herein). As a result,
shareholders of Frontstep shall become shareholders of MAPICS and Frontstep
shall continue to conduct its business and operations as a wholly owned
subsidiary of MAPICS. The transactions described in this Agreement are subject
to the approvals of the shareholders of Frontstep, the shareholders of MAPICS,
and the satisfaction of certain other conditions described in this Agreement. It
is the intention of the Parties to this Agreement that the Merger for federal
income tax purposes shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code.
Concurrently with the execution and delivery of this Agreement, as a
condition and inducement to MAPICS's willingness to enter into this Agreement,
certain of the holders of the outstanding shares of Frontstep Common Stock,
Frontstep Preferred Stock and the Frontstep Note Warrants and the Series A
Warrants have executed and delivered to MAPICS an agreement in substantially the
form of Exhibit 1 (the "VOTING AGREEMENTS"), pursuant to which they have agreed,
among other things, subject to the terms of such Voting Agreement, to vote the
shares of Frontstep Common Stock over which such Persons have voting power to
approve and adopt this Agreement.
Certain capitalized terms used in this Agreement are defined in Section
11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
Parties agree as follows:
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER.
Subject to the terms and conditions of this Agreement, at the Effective
Time, Sub shall be merged with and into Frontstep in accordance with the
provisions of Section 1701.78 of the Ohio Revised Code ("ORC") and with the
effect provided in Section 1701.82 of the ORC and Section 14-2-1107 of the
Georgia Business Corporation Code ("GBCC") and with the effect provided in
Section 14-2-1106 of the GBCC (the "MERGER"). Frontstep shall be the Surviving
Corporation
resulting from the Merger and shall become a wholly owned Subsidiary
of MAPICS and shall continue to be governed by the Laws of the State of Ohio.
The Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the respective Boards of Directors of
Frontstep, Sub and MAPICS and by MAPICS, as the sole shareholder of Sub.
1.2 TIME AND PLACE OF CLOSING.
The closing of the transactions contemplated hereby (the "CLOSING")
will take place at 9:00 A.M. on the date that the Effective Time occurs (or the
immediately preceding day if the Effective Time is earlier than 9:00 A.M.), or
at such other time as the Parties, acting through their authorized officers, may
mutually agree. The Closing shall be held at Xxxxxx & Bird, LLP, 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx or at such location as may be mutually agreed
upon by the Parties.
1.3 EFFECTIVE TIME.
The Merger and other transactions contemplated by this Agreement shall
become effective on the date and at the time the Certificate of Merger
reflecting the Merger shall become effective with the Secretary of State of the
State of Ohio and the Certificate of Merger reflecting the Merger shall become
effective with the Secretary of State of the State of Georgia (the "EFFECTIVE
TIME"). Subject to the terms and conditions hereof, unless otherwise mutually
agreed upon in writing by the authorized officers of each Party, the Parties
shall use their reasonable efforts to cause the Effective Time to occur on the
first business day following the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the last required
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger, and (ii) the date on which the shareholders of Frontstep
and shareholders of MAPICS approve this Agreement to the extent such approval is
required by applicable Law.
ARTICLE 2 TERMS OF MERGER
2.1 CHARTER.
The Articles of Incorporation of Sub in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until duly amended or repealed; provided that such Articles of
Incorporation shall be amended to reflect that the name of the Surviving
Corporation shall be "Frontstep, Inc."
2.2 BYLAWS.
The Bylaws of Sub in effect immediately prior to the Effective Time
shall be the Code of Regulations of the Surviving Corporation until duly amended
or repealed.
2.3 DIRECTORS AND OFFICERS.
The directors of Sub in office immediately prior to the Effective Time,
together with such additional persons as may thereafter be elected, shall serve
as the directors of the Surviving
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Corporation from and after the Effective Time in accordance with the Code of
Regulations of the Surviving Corporation. The officers of Sub in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of the Surviving
Corporation from and after the Effective Time in accordance with the Code of
Regulations of the Surviving Corporation.
ARTICLE 3 MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES.
Subject to the provisions of this Article 3, at the Effective Time, by
virtue of the Merger and without any action on the part of MAPICS, Frontstep,
Sub or the shareholders of any of the foregoing, the shares of the constituent
corporations shall be converted as follows:
(a) Each share of Sub Common Stock issued and outstanding immediately
prior to the Effective Time shall cease to be outstanding and shall be converted
into one share of Frontstep Common Stock.
(b) Each share of Frontstep Common Stock (excluding shares held by any
Frontstep Entity or any MAPICS Entity, and excluding shares held by shareholders
who perfect their statutory dissenters' rights as provided in Section 3.3)
issued and outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
that fraction of a share of MAPICS Common Stock equal to (i) 4,200,000 shares
DIVIDED BY (ii) the total number of shares of Frontstep Common Stock (assuming
the conversion of all outstanding shares of the Frontstep Preferred Stock and
the exercise of the Frontstep Note Warrants) outstanding immediately prior to
the Effective Time (the "EXCHANGE RATIO") .
(c) Pursuant to the MAPICS Rights Agreement, each share of MAPICS
Common Stock issued in connection with the Merger upon conversion of Frontstep
Common Stock shall be accompanied by a MAPICS Right.
(d) Each of the shares of Frontstep Common Stock held by any Frontstep
Entity or by any MAPICS Entity shall be canceled and retired at the Effective
Time and no consideration shall be issued in exchange therefor.
3.2 ANTI-DILUTION PROVISIONS.
In the event MAPICS changes the number of shares of MAPICS Common Stock
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend, or similar recapitalization with respect to such stock and the
record date therefor (in the case of a stock dividend) or the effective date
thereof (in the case of a stock split or similar recapitalization for which a
record date is not established) shall be prior to the Effective Time, the
Exchange Ratio shall be proportionately adjusted.
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3.3 DISSENTING SHAREHOLDERS.
Any holder of shares of Frontstep Common Stock who perfects such
holder's dissenters' rights in accordance with and as contemplated by Section
1701.85 of the ORC shall be entitled to receive from MAPICS or the Surviving
Corporation the fair value of such shares in cash as determined pursuant to such
provision of Law; provided, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has complied with the
applicable provisions of the ORC and, if required by such provisions of the ORC,
surrendered to Frontstep the certificate or certificates representing the shares
for which payment is being made. In the event that after the Effective Time a
dissenting shareholder of Frontstep fails to perfect, or effectively withdraws
or loses, such holder's right to appraisal of and payment for such holder's
shares, MAPICS shall issue and deliver the consideration to which such holder of
shares of Frontstep Common Stock is entitled under this Article 3 (without
interest) upon surrender by such holder of the certificate or certificates
representing the shares of Frontstep Common Stock held by such holder. If and to
the extent required by applicable Law, MAPICS shall cause the Surviving
Corporation to establish (or cause to be established) an escrow account with an
amount sufficient to satisfy the maximum aggregate payment that may be required
to be paid to dissenting shareholders. Upon satisfaction of all claims of
dissenting shareholders, the remaining escrowed amount, reduced by payment of
the fees and expenses of the escrow agent, will be returned to the Surviving
Corporation.
3.4 FRACTIONAL SHARES.
Notwithstanding any other provision of this Agreement, each holder of
shares of Frontstep Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of MAPICS Common
Stock (after taking into account all certificates delivered by such holder)
shall receive from MAPICS, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of MAPICS Common Stock multiplied by
the market value of one share of MAPICS Common Stock at the Effective Time. The
market value of one share of MAPICS Common Stock at the Effective Time shall be
the last sale price of such common stock on the Nasdaq National Market (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by MAPICS) on the last trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a shareholder in respect of any fractional shares.
3.5 CONVERSION OF STOCK OPTIONS.
(a) At the Effective Time, each option or other Equity Right to
purchase shares of Frontstep Common Stock pursuant to stock options or stock
appreciation rights ("FRONTSTEP OPTIONS") granted by Frontstep under the
Frontstep Stock Plans, which are outstanding at the Effective Time, whether or
not exercisable, but excluding any Frontstep Options issued pursuant to the
Director Plan, shall be converted into and become rights with respect to MAPICS
Common Stock, and MAPICS shall assume each Frontstep Option, in accordance with
the terms of the Frontstep Stock Plan and stock option agreement by which it is
evidenced, except that from and after the Effective Time, (i) MAPICS and its
Compensation Committee shall be substituted for Frontstep and the Committee of
Frontstep's Board of Directors (including, if applicable, the entire Board of
Directors of Frontstep) administering such Frontstep Stock Plan,
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(ii) each Frontstep Option assumed by MAPICS may be exercised solely for shares
of MAPICS Common Stock (or cash, if so provided under the terms of such
Frontstep Option), (iii) the number of shares of MAPICS Common Stock subject to
such Frontstep Option shall be equal to the number of shares of Frontstep Common
Stock subject to such Frontstep Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, and (iv) the per share exercise price under
each such Frontstep Option shall be adjusted by dividing the per share exercise
price under each such Frontstep Option by the Exchange Ratio and rounding up to
the nearest cent. Notwithstanding the provisions of clause (iii) of the
preceding sentence, MAPICS shall not be obligated to issue any fraction of a
share of MAPICS Common Stock upon exercise of Frontstep Options and any fraction
of a share of MAPICS Common Stock that otherwise would be subject to a converted
Frontstep Option shall represent the right to receive a cash payment upon
exercise of such converted Frontstep Option equal to the product of such
fraction and the difference between the market value of one share of MAPICS
Common Stock at the time of exercise of such converted Frontstep Option and the
per share exercise price of such converted Frontstep Option. The market value of
one share of MAPICS Common Stock at the time of exercise of a converted
Frontstep Option shall be the last sale price of such common stock on the Nasdaq
National Market (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by MAPICS) on the last trading
day preceding the date of exercise. In addition, notwithstanding the provisions
of clauses (iii) and (iv) of the first sentence of this Section 3.5, each
Frontstep Option which is an "incentive stock option" shall be adjusted as
required by Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension or
renewal of the option, within the meaning of Section 424(h) of the Internal
Revenue Code. Each of Frontstep and MAPICS agrees to take all steps reasonably
necessary to effectuate the foregoing provisions of this Section 3.5, including
using its reasonable efforts to obtain from each holder of a Frontstep Option
any Consent or Contract that may reasonably be deemed necessary or advisable in
order to effect the transactions contemplated by this Section 3.5, which Consent
or Contract shall be in form and content reasonably acceptable to Frontstep and
MAPICS. Anything in this Agreement to the contrary notwithstanding, MAPICS shall
have the right, in its sole discretion, not to deliver the consideration
provided in this Section 3.5 to a former holder of a Frontstep Option who has
not delivered such Consent or Contract.
(b) The Board of Directors of Frontstep or a committee of Non-Employee
Directors thereof (as such term is defined for purposes of Rule 16b-3(d) under
the Exchange Act) shall adopt a resolution in advance of the Effective Time
providing that the disposition by the officers and directors of Frontstep of
Frontstep Common Stock, Frontstep Options or other equity securities of
Frontstep pursuant to the Merger or the other transactions contemplated by this
Agreement is intended to be exempt from liability pursuant to Rule 16b-3 under
the Exchange Act. The Board of Directors of MAPICS or a committee of
Non-Employee Directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act) shall adopt a resolution in advance of the
Effective Time providing that the receipt by the Frontstep Insiders (as defined
below) of MAPICS Common Stock or other equity securities of MAPICS pursuant to
the Merger or the other transactions contemplated by this Agreement (to the
extent such equity securities are listed in the Section 16 Information, as
defined below) is intended to be exempt from liability pursuant to Rule 16b-3
under the Exchange Act. For purposes of this Section 3.5(b), the term "FRONTSTEP
INSIDERS" means those officers and directors of Frontstep who will become
subject to the reporting requirements of Section 16(a) of the Exchange Act as
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insiders of MAPICS in conjunction with the Merger, and the term "SECTION 16
INFORMATION" means information provided by Frontstep that is accurate in all
respects regarding Frontstep Insiders and the number of shares of MAPICS Common
Stock or other MAPICS equity securities to be acquired by each such Frontstep
Insider in connection with the Merger and other transactions contemplated by
this Agreement.
(c) At the Effective Time, the Foothill Warrant shall be cancelled and
exchanged for the New Foothill Warrant.
ARTICLE 4 EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES.
(a) Promptly after the Effective Time, MAPICS shall make available to
MAPICS's transfer agent or another exchange agent selected by MAPICS (the
"EXCHANGE AGENT") for exchange in accordance with this Section 4.1 the shares of
MAPICS Common Stock issuable pursuant to this Agreement and cash in an amount
sufficient to permit payment of cash in lieu of fractional shares pursuant to
Section 3.4. Promptly after the Effective Time, MAPICS and Frontstep shall cause
the Exchange Agent to mail to each holder of record of a certificate or
certificates which represented shares of Frontstep Common Stock immediately
prior to the Effective Time (the "CERTIFICATES") appropriate transmittal
materials and instructions (which shall specify that delivery shall be effected,
and risk of loss and title to such Certificates shall pass, only upon proper
delivery of such Certificates to the Exchange Agent). The Certificate or
Certificates of Frontstep Common Stock so delivered shall be duly endorsed as
the Exchange Agent may require. In the event of a transfer of ownership of
shares of Frontstep Common Stock represented by Certificates that is not
registered in the transfer records of Frontstep, the consideration provided in
Section 3.1 may be issued to a transferee if the Certificates representing such
shares are delivered to the Exchange Agent, accompanied by all documents
required to evidence such transfer and by evidence satisfactory to the Exchange
Agent that any applicable stock transfer taxes have been paid. If any
Certificate shall have been lost, stolen, mislaid or destroyed, upon receipt of
(i) an affidavit of that fact from the holder claiming such Certificate to be
lost, mislaid, stolen or destroyed, (ii) such bond, security or indemnity as
MAPICS and the Exchange Agent may reasonably require and (iii) any other
documents necessary to evidence and effect the bona fide exchange thereof, the
Exchange Agent shall issue to such holder the consideration into which the
shares represented by such lost, stolen, mislaid or destroyed Certificate shall
have been converted. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it may deem
appropriate. MAPICS shall pay all charges and expenses, including those of the
Exchange Agent, in connection with the distribution of the consideration
provided in Section 3.1.
(b) After the Effective Time, each holder of shares of Frontstep Common
Stock (other than shares to be canceled pursuant to Section 3.1(d) or as to
which statutory dissenters' rights have been perfected as provided in Section
3.3) issued and outstanding at the Effective Time shall surrender the
Certificate or Certificates representing such shares (or deliver an affidavit of
lost stock certificate, together with such bond, security or indemnity agreement
as the Exchange Agent may reasonably require) to the Exchange Agent and shall
promptly upon surrender or delivery thereof receive in exchange therefor the
consideration provided in Section 3.1 (without
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interest thereon) pursuant to Section 3.2. To the extent required by Section
3.4, each holder of shares of Frontstep Common Stock issued and outstanding at
the Effective Time also shall receive, upon surrender of the Certificate or
Certificates, cash in lieu of any fractional share of MAPICS Common Stock to
which such holder may be otherwise entitled (without interest). MAPICS shall not
be obligated to deliver the consideration to which any former holder of
Frontstep Common Stock is entitled as a result of the Merger until such holder
surrenders such holder's Certificate or Certificates for exchange as provided in
this Section 4.1.
(c) Each of MAPICS, the Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Frontstep Common
Stock such amounts, if any, as it is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code or any
provision of state, local or foreign Tax Law. To the extent that any amounts are
so withheld by MAPICS, the Surviving Corporation or the Exchange Agent, 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 the shares of Frontstep Common
Stock in respect of which such deduction and withholding was made by MAPICS, the
Surviving Corporation or the Exchange Agent, as the case may be.
(d) Any other provision of this Agreement notwithstanding, none of
MAPICS, the Surviving Corporation or the Exchange Agent shall be liable to a
holder of Frontstep Common Stock for any amounts paid or property delivered in
good faith to a public official pursuant to any applicable abandoned property,
escheat or similar Law. Adoption of this Agreement by the shareholders of
Frontstep shall constitute ratification of the appointment of the Exchange
Agent.
4.2 RIGHTS OF FORMER FRONTSTEP SHAREHOLDERS.
At the Effective Time, the stock transfer books of Frontstep shall be
closed as to holders of Frontstep Common Stock immediately prior to the
Effective Time and no transfer of Frontstep Common Stock by any such holder
shall thereafter be made or recognized. Until surrendered for exchange in
accordance with the provisions of Section 4.1, each Certificate theretofore
representing shares of Frontstep Common Stock (other than shares to be canceled
pursuant to Section 3.1(d) or as to which statutory dissenters' rights have been
perfected as provided in Section 3.3) shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Sections 3.1 and 3.4 in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by Frontstep in respect of such shares of Frontstep Common Stock in accordance
with the terms of this Agreement and which remain unpaid at the Effective Time.
To the extent permitted by Law, former shareholders of record of Frontstep shall
be entitled to vote after the Effective Time at any meeting of MAPICS
shareholders the number of whole shares of MAPICS Common Stock into which their
respective shares of Frontstep Common Stock are converted, regardless of whether
such holders have exchanged their Certificates for certificates representing
MAPICS Common Stock in accordance with the provisions of this Agreement.
Whenever a dividend or other distribution is declared by MAPICS on the MAPICS
Common Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares of
MAPICS Common Stock issuable pursuant to this Agreement, but
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from and after the Effective Time no dividend or other distribution payable to
the holders of record of MAPICS Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any Certificate until such
holder surrenders such Certificate for exchange (or delivers an affidavit of
lost stock certificate, together with such bond, security or indemnity agreement
as the Exchange Agent may reasonably require) as provided in Section 4.1.
However, upon surrender of such Certificate or delivery of such affidavit, both
the MAPICS Common Stock certificate (together with all such undelivered
dividends or other distributions without interest) and any undelivered dividends
and cash payments payable hereunder (without interest) shall be delivered and
paid with respect to each share represented by such Certificate or affidavit.
4.3 OTHER TRANSACTIONS.
At the Effective Time, MAPICS shall (a) pay to Xxxxxxxx Xxx ("XXX"),
against delivery by Fox to the Surviving Corporation for surrender and
cancellation of all Convertible Notes owned, of record or beneficially, by Fox,
the principal amount of and all accrued but unpaid interest on such Convertible
Notes; (b) issue and deliver the New Notes upon satisfaction of the condition
set forth in Section 9.2(m) and as provided therein; and (c) issue and deliver
the New Mitsui Notes upon satisfaction of the condition set forth in Section
9.2(q) and as provided therein; and MAPICS shall issue and deliver the New
Foothill Warrant to Foothill against surrender by Foothill of the Foothill
Warrant for cancellation. At the Effective Time, MAPICS shall pay in full all
obligations under the Frontstep Credit Facility then outstanding.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF FRONTSTEP
Frontstep hereby represents and warrants to MAPICS and Sub as follows:
5.1 ORGANIZATION, STANDING, AND POWER.
Frontstep is a corporation duly organized, validly existing, and in
good standing under the Laws of the State of Ohio, and has the corporate power
and authority to carry on its business as now conducted and to own, lease and
operate its Assets as the same are now owned, leased or operated. Frontstep is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the states of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Frontstep Material Adverse Effect. The minute book and other
organizational documents for Frontstep have been made available to MAPICS for
its review and, except as disclosed in Section 5.1 of the Frontstep Disclosure
Memorandum, are true and complete in all material respects as in effect as of
the date of this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the Board of Directors (including any
committees of the Board of Directors) and shareholders thereof.
5.2 AUTHORITY OF FRONTSTEP; NO BREACH BY AGREEMENT.
(a) Frontstep has the corporate power and authority necessary to
execute, deliver, and, other than with respect to the Merger, perform this
Agreement, and with respect to the Merger,
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upon the approval and adoption of this Agreement and the Merger by Frontstep's
shareholders in accordance with this Agreement and Ohio law, to perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Frontstep, subject to the approval and adoption of this
Agreement by the holders of two-thirds of the outstanding shares of Frontstep
Common Stock as contemplated by Section 8.1, which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by
Frontstep (assuming the conversion of all outstanding shares of Frontstep
Preferred Stock prior to the record date for the Frontstep Shareholder Meeting).
Subject to such requisite shareholder approval, this Agreement represents a
legal, valid, and binding obligation of Frontstep, enforceable against Frontstep
in accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Frontstep,
nor the consummation by Frontstep of the transactions contemplated hereby, nor
compliance by Frontstep with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Frontstep's Articles of
Incorporation or Code of Regulations or the certificate or articles of
incorporation or bylaws (or equivalent documents) of any Frontstep Subsidiary or
any resolution adopted by the board of directors or the shareholders of any
Frontstep Entity, or (ii) except as disclosed in Section 5.2 of the Frontstep
Disclosure Memorandum, constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of any
Frontstep Entity under, any Contract or Permit of any Frontstep Entity where
such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Frontstep Material Adverse
Effect, or (iii) subject to receipt of the requisite Consents referred to in
Section 9.1(b) or (c), constitute or result in a Default under, or require any
Consent pursuant to, any Law or Order applicable to any Frontstep Entity or any
of their respective material Assets (including any MAPICS Entity or any
Frontstep Entity becoming subject to or liable for the payment of any Tax or any
of the Assets owned by any Frontstep Entity being reassessed or revalued by any
Regulatory Authority ).
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and the rules
of Nasdaq, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings, or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Frontstep Material Adverse Effect, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by Frontstep of the
Merger and the other transactions contemplated in this Agreement.
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5.3 CAPITAL STOCK.
(a) The authorized capital stock of Frontstep consists of (i)
20,000,000 shares of Frontstep Common Stock, of which 7,568,218 shares are
issued and outstanding as of the date of this Agreement and not more than
15,944,497 shares will be issued and outstanding at the Effective Time, and (ii)
1,000,000 shares of Frontstep Preferred Stock, of which 566,933 shares are
issued and outstanding as of the date of this Agreement. All of the issued and
outstanding shares of capital stock of Frontstep are duly and validly issued and
outstanding and are fully paid and nonassessable. None of the outstanding shares
of capital stock of Frontstep has been issued in violation of any preemptive
rights of the current or past shareholders of Frontstep.
(b) Except as set forth in Section 5.3(a), or as disclosed in Section
5.3(b) of the Frontstep Disclosure Memorandum, there are no shares of capital
stock or other equity securities of Frontstep outstanding and no outstanding
Equity Rights relating to the capital stock of Frontstep. Except as specifically
contemplated by this Agreement or as disclosed in Section 5.3(b) of the
Frontstep Disclosure Memorandum, no Person has any Contract or any right or
privilege (whether pre-emptive or contractual) capable of becoming a Contract or
Equity Right for the purchase, subscription or issuance of any securities of
Frontstep.
(c) Each holder of Frontstep Preferred Stock and Frontstep have
executed and delivered the Restructuring Agreement, and a true and correct copy
of the Restructuring Agreement, as so executed and delivered, is attached hereto
as Exhibit 2.
5.4 FRONTSTEP SUBSIDIARIES.
Frontstep has disclosed in Section 5.4 of the Frontstep Disclosure
Memorandum each of the Frontstep Subsidiaries that is a corporation (identifying
its jurisdiction of incorporation, each jurisdiction in which it is qualified
and/or licensed to transact business, and the number of shares owned and
percentage ownership interest represented by such share ownership) and each of
the Frontstep Subsidiaries that is a general or limited partnership, limited
liability company, or other non-corporate entity (identifying the Law under
which such entity is organized, each jurisdiction in which it is qualified
and/or licensed to transact business, and the amount and nature of the ownership
interest therein). Except as disclosed in Section 5.4 of the Frontstep
Disclosure Memorandum, Frontstep or one of its wholly owned Subsidiaries owns
all of the issued and outstanding shares of capital stock (or other equity
interests) of each Frontstep Subsidiary. No capital stock (or other equity
interest) of any Frontstep Subsidiary is or may become required to be issued
(other than to another Frontstep Entity) by reason of any Equity Rights, and
there are no Contracts by which any Frontstep Subsidiary is bound to issue
(other than to another Frontstep Entity) additional shares of its capital stock
(or other equity interests) or Equity Rights or by which any Frontstep Entity is
or may be bound to transfer any shares of the capital stock (or other equity
interests) of any Frontstep Subsidiary (other than to another Frontstep Entity).
Except as set forth in Section 5.4 of the Frontstep Disclosure Memorandum, there
are no Contracts relating to the rights of any Frontstep Entity to vote or to
dispose of any shares of the capital stock (or other equity interests) of any
Frontstep Subsidiary. Except as set forth in Section 5.4 of the Frontstep
Disclosure Memorandum, all of the shares of capital stock (or other equity
interests) of each Frontstep Subsidiary held by a Frontstep Entity are fully
paid and nonassessable and are owned by the Frontstep Entity free and clear of
any Lien. Except as
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disclosed in Section 5.4 of the Frontstep Disclosure Memorandum, each Frontstep
Subsidiary is a corporation, limited liability company, limited partnership or
limited liability partnership, and each such Subsidiary is duly organized,
validly existing, and in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each Frontstep Subsidiary is duly qualified or licensed to transact
business as a foreign entity in good standing in the States of the United States
and foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Frontstep
Material Adverse Effect. The minute book and other organizational documents for
each Frontstep Subsidiary have been made available to MAPICS for its review,
and, except as disclosed in Section 5.4 of the Frontstep Disclosure Memorandum,
are true and complete in all material respects as in effect as of the date of
this Agreement and accurately reflect in all material respects all amendments
thereto and all proceedings of the Board of Directors or other governing body
and shareholders or other owners thereof.
5.5 SEC FILINGS; FINANCIAL STATEMENTS. Except as disclosed in Section 5.5 of the
Frontstep Disclosure Memorandum,
(a) Frontstep has timely filed and made available to MAPICS all SEC
Documents required to be filed by Frontstep since June 30, 1999 (the "FRONTSTEP
SEC REPORTS"). The Frontstep SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable Laws, including without limitation, the inclusion of the
certifications required by Rule 15d-14 under the Exchange Act, and (ii) did not,
at the time they were filed (or, if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing or, in the case of
registration statements, at the effective date thereof) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such Frontstep SEC Reports or necessary in order to make the
statements in such Frontstep SEC Reports, in light of the circumstances under
which they were made, not misleading. No Frontstep Subsidiary is required to
file any SEC Documents.
(b) Each of the Frontstep Financial Statements (including, in each
case, any related notes) contained in the Frontstep SEC Reports, including any
Frontstep SEC Reports filed after the date of this Agreement until the Effective
Time, complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by Form
10-Q of the SEC), and fairly presented in all material respects the consolidated
financial position of Frontstep and its Subsidiaries as at the respective dates
and the consolidated results of operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
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5.6 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as disclosed in Section 5.6 of the Frontstep Disclosure
Memorandum, no Frontstep Entity has any Liabilities that are reasonably likely
to have, individually or in the aggregate, a Frontstep Material Adverse Effect,
except Liabilities which are accrued or reserved against in the consolidated
balance sheets of Frontstep as of June 30, 2002 and September 30, 2002, included
in the Frontstep Financial Statements delivered prior to the date of this
Agreement or reflected in the notes thereto. Except as disclosed in Section 5.6
of the Frontstep Disclosure Memorandum, no Frontstep Entity has incurred or paid
any Liability since June 30, 2002, except for such Liabilities incurred or paid
(i) in the ordinary course of business consistent with past business practice
and which are not reasonably likely to have, individually or in the aggregate, a
Frontstep Material Adverse Effect or (ii) in connection with the transactions
contemplated by this Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since June 30, 2002, except as disclosed in the Frontstep Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 5.7 of the Frontstep Disclosure Memorandum, (i) there have been no
events, changes, or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Frontstep Material Adverse Effect, and
(ii) none of the Frontstep Entities has taken any action, or failed to take any
action, prior to the date of this Agreement, which action or failure, if taken
after the date of this Agreement, would represent or result in a material breach
or violation of any of the covenants and agreements of Frontstep provided in
Article 7.
5.8 TAX MATTERS.
Except as disclosed in Section 5.8 of the Frontstep Disclosure
Memorandum:
(a) All Frontstep Entities have timely filed with the appropriate
Taxing authorities all Tax Returns in all jurisdictions in which Tax Returns are
required to be filed, except where the failure to timely file such Tax Returns
would not have a Frontstep Material Adverse Effect, and such Tax Returns, when
filed, were correct and complete in all material respects. None of the Frontstep
Entities is the beneficiary of any extension of time within which to file any
Tax Return. All Taxes of the Frontstep Entities (whether or not shown on any Tax
Return) have been fully and timely paid other than such Taxes not yet due or
payable that are adequately reserved against in the consolidated balance sheets
of Frontstep as of June 30, 2002 and September 30, 2002 included in the
Frontstep Financial Statements delivered prior to the date of this Agreement.
There are no Liens for any Taxes (other than a Lien for current Taxes not yet
due and payable) on any of the Assets of any of the Frontstep Entities. No claim
has ever been made by an authority in a jurisdiction where any Frontstep Entity
does not file a Tax Return that such Frontstep Entity may be subject to Taxes by
that jurisdiction.
(b) None of the Frontstep Entities has received any notice of
assessment or proposed assessment in connection with any Taxes, other than those
Taxes the assessment of which would not have a Frontstep Material Adverse
Effect, and there are no pending, or to the Knowledge of Frontstep threatened,
disputes, claims, audits or examinations regarding any Taxes of any
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Frontstep Entity or the Assets of any Frontstep Entity. To the Knowledge of
Frontstep, no officer or employee responsible for Tax matters of any Frontstep
Entity expects any Taxing Authority to assess any additional Taxes for any
period for which Tax Returns have been filed. None of the Frontstep Entities has
waived any statute of limitations in respect of any Taxes or agreed to a Tax
assessment or deficiency.
(c) Each Frontstep Entity has complied in all material respects with
all applicable Laws, rules and regulations relating to the withholding of Taxes
and the payment thereof to appropriate authorities, including Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee or independent contractor, and Taxes required to be withheld and paid
pursuant to Sections 1441 and 1442 of the Internal Revenue Code or similar
provisions under foreign Law.
(d) The unpaid Taxes of each Frontstep Entity (i) did not, as of the
most recent fiscal month end, exceed the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the most recent balance sheet
(rather than in any notes thereto) for such Frontstep Entity and (ii) do not
exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with past custom and practice of the Frontstep Entities in filing
their Tax Returns.
(e) None of the Frontstep Entities is a party to any Tax allocation or
sharing agreement and none of the Frontstep Entities has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which was Frontstep) or has any Tax Liability of any
Person under Treasury Regulation Section 1.1502-6 or any similar provision of
state, local or foreign Law (other than the other current or former members of
the consolidated group of which Frontstep is parent), or as a transferee or
successor, by contract or otherwise.
(f) During the five-year period ending on the date hereof, none of the
Frontstep Entities was a distributing corporation or a controlled corporation in
a transaction intended to be governed by Section 355 of the Internal Revenue
Code.
(g) None of the Frontstep Entities has made any payments, is obligated
to make any payments, or is a party to any contract that could obligate it to
make any payments that could be disallowed as a deduction under Section 280G or
162(m) of the Internal Revenue Code. Frontstep has not been a United States real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(1)(A)(ii). None of the Frontstep Entities has been or will be required to
include any adjustment in taxable income for any Tax period (or portion thereof)
pursuant to Section 481 of the Internal Revenue Code or any comparable provision
under state or foreign Tax Laws as a result of transactions or events occurring
prior to the Closing. The net operating losses of the Frontstep Entities are not
subject to any limitation on their use under the provisions of Sections 382 or
269 of the Internal Revenue Code or any other provisions of the Internal Revenue
Code or the Treasury Regulations dealing with the utilization of net operating
losses other than any such limitations as may arise as a result of the
consummation of the transactions contemplated by this Agreement. None of the
Frontstep Entities has filed a consent under Code Section 341(f) concerning
collapsible corporations.
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(h) Each of the Frontstep Entities engaged in business in the United
States is in compliance with, and its records contain all information and
documents (including properly completed IRS Forms W-9) necessary to comply with,
all applicable information reporting and Tax withholding requirements under
federal, state, and local Tax Laws, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the Internal
Revenue Code.
(i) No Frontstep Entity incorporated or organized under the laws of a
state in the United States has or has had in any foreign country a permanent
establishment, as defined in any applicable tax treaty or convention between the
United States and such foreign country.
5.9 ASSETS.
(a) Except as disclosed in Section 5.9 of the Frontstep Disclosure
Memorandum or as disclosed or reserved against in the Frontstep Financial
Statements delivered prior to the date of this Agreement, the Frontstep Entities
have good and marketable title, free and clear of all Liens, to all of their
respective Assets, except for any such Liens or other defects of title which are
not reasonably likely to have a Frontstep Material Adverse Effect. All tangible
properties used in the businesses of the Frontstep Entities are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Frontstep's past practices.
(b) All items of inventory of the Frontstep Entities reflected on the
most recent balance sheet included in the Frontstep Financial Statements
delivered prior to the date of this Agreement and prior to the Effective Time
consisted and will consist, as applicable, of items of a quality and quantity
usable and saleable in the ordinary course of business and conform to generally
accepted standards in the industry in which the Frontstep Entities are a part.
(c) Except as disclosed in Section 5.9 of the Frontstep Disclosure
Memorandum, the accounts receivable of the Frontstep Entities as set forth on
the most recent balance sheet included in the Frontstep Financial Statements
delivered prior to the date of this Agreement or arising since the date thereof
are valid and genuine; have arisen solely out of bona fide sales and deliveries
of goods, performance of services and other business transactions in the
ordinary course of business consistent with past practice; are not subject to
valid defenses, set-offs or counterclaims; and are collectible within 90 days
after billing at the full recorded amount thereof less, in the case of accounts
receivable appearing on the most recent balance sheet included in the Frontstep
Financial Statements delivered prior to the date of this Agreement, the recorded
allowance for collection losses on such balance sheet. The allowance for
collection losses on such balance sheet has been determined in accordance with
GAAP.
(d) All Assets which are material to Frontstep's business on a
consolidated basis, held under leases or subleases by any of the Frontstep
Entities, are held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect.
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(e) The Frontstep Entities currently maintain insurance similar in
amounts, scope, and coverage to that maintained by other peer organizations.
Except as disclosed in Section 5.9 of the Frontstep Disclosure Memorandum, none
of the Frontstep Entities has received notice from any insurance carrier that
(i) any policy of insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. Except as disclosed in Section 5.9 of
the Frontstep Disclosure Memorandum, there are presently no claims for amounts
exceeding in any individual case $25,000 pending under such policies of
insurance and no notices of claims in excess of such amount have been given by
any Frontstep Entity under such policies.
(f) The Assets of the Frontstep Entities include all Assets required to
operate the business of the Frontstep Entities as presently conducted.
5.10 INTELLECTUAL PROPERTY.
Each Frontstep Entity owns or has a license to use all of the
Intellectual Property used by such Frontstep Entity in the course of its
business, including sufficient rights in each copy possessed by each Frontstep
Entity sufficient to permit use thereof in the manner so used by such Frontstep
Entity. Each Frontstep Entity is the owner of or has a license to, with the
right to sublicense, any Intellectual Property sold or licensed to a third party
by such Frontstep Entity in connection with such Frontstep Entity's business
operations, and such Frontstep Entity has the right to convey by sale or license
any Intellectual Property so conveyed. Except as disclosed in Section 5.10 of
the Frontstep Disclosure Memorandum, no Frontstep Entity is in Default under any
of its Intellectual Property licenses, all such Intellectual Property licenses
are in full force and effect and there exists no actual or threatened
termination, cancellation or limitation of, or any amendment, modification or
change to any such Intellectual Property license. No proceedings have been
instituted, or are pending or to the Knowledge of Frontstep threatened, which
challenge the rights of any Frontstep Entity with respect to Intellectual
Property used, sold or licensed by such Frontstep Entity in the course of its
business, nor has any person claimed or alleged any rights to such Intellectual
Property. The conduct of the business of the Frontstep Entities does not
infringe any Intellectual Property of any other person. Except as disclosed in
Section 5.10 of the Frontstep Disclosure Memorandum, no Frontstep Entity is
obligated to pay any recurring royalties to any Person with respect to any such
Intellectual Property. Except as disclosed in Section 5.10 of the Frontstep
Disclosure Memorandum, every officer, director, or employee of any Frontstep
Entity is a party to a Contract which requires such officer, director or
employee to assign any interest in any Intellectual Property to a Frontstep
Entity and to keep confidential any trade secrets, proprietary data, customer
information, or other business information of a Frontstep Entity, and to the
Knowledge of any Frontstep Entity, no such officer, director or employee is
party to any Contract with any Person other than a Frontstep Entity which
requires such officer, director or employee to assign any interest in any
Intellectual Property arising out of or in relation to such officer's,
director's or employee's tenure or employment with such Frontstep Entity to any
Person other than a Frontstep Entity. Except as disclosed in Section 5.10 of the
Frontstep Disclosure Memorandum, no officer, director or employee of any
Frontstep Entity, which officer's, director's or employee's cessation of service
with such Frontstep Entity would have a Frontstep Material Adverse Effect, is
party to any Contract which restricts or prohibits such officer, director or
employee from engaging in activities competitive with any Person, including any
Frontstep Entity.
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5.11 ENVIRONMENTAL MATTERS.
(a) Each Frontstep Entity, its Participation Facilities, and its
Operating Properties are, and have been, in compliance with all Environmental
Laws, except for violations which are not reasonably likely to have,
individually or in the aggregate, a Frontstep Material Adverse Effect.
(b) There is no Litigation pending or, to the Knowledge of Frontstep,
threatened before any court, governmental agency, or authority or other forum in
which any Frontstep Entity or any of its Operating Properties or Participation
Facilities (or Frontstep in respect of such Operating Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with or
Liability under any Environmental Law or (ii) relating to the release,
discharge, spillage, or disposal into the environment of any Hazardous Material,
whether or not occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site currently or formerly owned, leased, or operated
by any Frontstep Entity or any of its Operating Properties or Participation
Facilities, nor to Frontstep's Knowledge is there any reasonable basis for any
Litigation of a type described in this sentence.
(c) During the period of (i) any Frontstep Entity's ownership or
operation of any of their respective current properties, (ii) any Frontstep
Entity's participation in the management of any Participation Facility, or (iii)
any Frontstep Entity's holding of a security interest in any Operating Property,
to the Knowledge of Frontstep, there have been no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, adjacent to, or
affecting (or potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a Frontstep
Material Adverse Effect. Prior to the period of (i) any Frontstep Entity's
ownership or operation of any of their respective current properties, (ii) any
Frontstep Entity's participation in the management of any Participation
Facility, or (iii) any Frontstep Entity's holding of a security interest in any
Operating Property, to the Knowledge of Frontstep, there were no releases,
discharges, spillages, or disposals of Hazardous Material in, on, under, or
affecting any such property, Participation Facility or Operating Property,
except such as are not reasonably likely to have, individually or in the
aggregate, a Frontstep Material Adverse Effect.
5.12 COMPLIANCE WITH LAWS.
Each Frontstep Entity has in effect all Permits necessary for it to
own, lease, or operate its material Assets and to carry on its business as now
conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Frontstep Material Adverse
Effect, and there has occurred no Default under any such Permit, other than
Defaults which could not reasonably be anticipated to have, individually or in
the aggregate, a Frontstep Material Adverse Effect. Except as disclosed in
Section 5.12 of the Frontstep Disclosure Memorandum, none of the Frontstep
Entities:
(a) is in Default under any of the provisions of its Articles of
Incorporation or Bylaws (or other governing instruments);
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(b) is in Default under any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for Defaults which could
not reasonably be anticipated to have, individually or in the aggregate, a
Frontstep Material Adverse Effect; or
(c) since January 1, 1999, has received any notification or
communication in writing from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof (i) asserting
that any Frontstep Entity is not, or may not be, in compliance with any Laws or
Orders, except where such noncompliance is not reasonably likely to have,
individually or in the aggregate, a Frontstep Material Adverse Effect, (ii)
threatening to revoke any Permits other than those Permits the revocation of
which is not reasonably likely to have, individually or in the aggregate, a
Frontstep Material Adverse Effect, or (iii) requiring any Frontstep Entity to
enter into or consent to the issuance of a cease and desist order, injunction,
formal agreement, directive, commitment, or memorandum of understanding, or to
adopt any board resolution or similar undertaking, which restricts materially
the conduct of its business or in any manner relates to its employment
decisions, its employment or safety policies or practices; or
(d) has effectuated (i) a "PLANT CLOSING" (as defined in the Worker
Adjustment and Retraining Notification Act (the "WARN ACT")) affecting any site
of employment or one or more facilities or operating units within any site of
employment or facility of any Frontstep Entity; or (ii) a "MASS LAYOFF" (as
defined in the WARN Act) affecting any site of employment or facility of any
Frontstep Entity; and no Frontstep Entity has been affected by any transaction
or engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar state or local Law. Except as set forth in Section
5.12 of the Frontstep Disclosure Memorandum, none of any Frontstep Entity's
employees has suffered an "EMPLOYMENT LOSS" (as defined in the WARN Act) since
six months prior to the Closing Date.
Section 5.12 of the Frontstep Disclosure Memorandum contains a list of
all independent contractors of each Frontstep Entity (separately listed by
Frontstep Entity), to which any Frontstep Entity paid more than $25,000 in the
last twelve (12) months, and each such Person meets the standards under all Laws
(including Treasury Regulations under the Internal Revenue Code and federal and
state labor and employment Laws) as independent contractors and no such Person
is an employee of any Frontstep Entity under any applicable Law. Copies of all
material reports, correspondence, notices and other documents relating to any
inspection, audit, monitoring or other form of review or enforcement action by a
Regulatory Authority have been made available to MAPICS.
5.13 LABOR RELATIONS.
(a) No Frontstep Entity is the subject of any Litigation asserting that
it or any other Frontstep Entity has committed an unfair labor practice (within
the meaning of the National Labor Relations Act or comparable state Law) or
other violation of state or federal labor Law or seeking to compel it or any
other Frontstep Entity to bargain with any labor organization or other employee
representative as to wages or conditions of employment, nor is any Frontstep
Entity party to any collective bargaining agreement or subject to any bargaining
order, injunction or other Order relating to Frontstep's relationship or
dealings with its employees, any labor organization or any other employee
representative. There is no strike, slowdown, lockout or
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other job action or labor dispute involving any Frontstep Entity pending or, to
the Knowledge of Frontstep, threatened and there has been no such actions or
disputes in the past five years. To the Knowledge of Frontstep, in the past five
years, there has not been any attempt by any Frontstep Entity employees or any
labor organization or other employee representative to organize or certify a
collective bargaining unit or to engage in any other union organization activity
with respect to the workforce of any Frontstep Entity. Except as disclosed in
Section 5.13 of the Frontstep Disclosure Memorandum, the employment of each
employee and the engagement of each independent contractor of each Frontstep
Entity is terminable at will by the relevant Frontstep Entity without any
penalty, liability or severance obligation incurred by any Frontstep Entity, and
except as disclosed in Section 5.13 of the Frontstep Disclosure Memorandum and
for amounts incurred in the ordinary course of business, no Frontstep Entity
will owe any amounts to any of its employees or independent contractors as of
the Closing Date, including any amounts incurred for any wages, bonuses,
vacation pay, sick leave, contract notice periods, change of control payments or
severance obligations.
(b) To the Knowledge of Frontstep, all of the Frontstep employees
employed in the United States are either United States citizens or are legally
entitled to work in the United States under the Immigration Reform and Control
Act of 1986, as amended, other United States immigration Laws and the Laws
related to the employment of non-United States citizens applicable in the state
in which the employees are employed.
5.14 EMPLOYEE BENEFIT PLANS
(a) Frontstep has disclosed in Section 5.14 of the Frontstep Disclosure
Memorandum, and has delivered or made available to MAPICS prior to the execution
of this Agreement, (i) copies of each Employee Benefit Plan currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by any
Frontstep Entity or ERISA Affiliate thereof for the benefit of employees, former
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries or under which employees, retirees, former employees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate (collectively, the "FRONTSTEP BENEFIT PLANS") and
(ii) a list of each Employee Benefit Plan that is not identified in (i) above
(e.g., former Employee Benefit Plans) but for which the Frontstep Entity or
ERISA Affiliate has or reasonably could have any obligation or Liability. Any of
the Frontstep Benefit Plans which is an "EMPLOYEE PENSION BENEFIT PLAN," as that
term is defined in ERISA Section 3(2), is referred to herein as a "FRONTSTEP
ERISA PLAN."
(b) Frontstep has delivered to MAPICS prior to the execution of this
Agreement (i) all trust agreements or other funding arrangements for all
Employee Benefit Plans, (ii) all determination letters, rulings, opinion
letters, information letters or advisory opinions issued by the United States
Internal Revenue Service ("IRS"), the United States Department of Labor ("DOL")
or the Pension Benefit Guaranty Corporation during this calendar year or any of
the preceding three calendar years, (iii) any filing or documentation (whether
or not filed with the IRS) where corrective action was taken in connection with
the IRS EPCRS program set forth in Revenue Procedure 2001-17 (or its predecessor
or successor rulings), (iv) annual reports or returns, audited or unaudited
financial statements, actuarial reports and valuations prepared for any Employee
Benefit Plan for the current plan year and the three preceding plan years, and
(v) the most recent summary plan descriptions and any material modifications
thereto.
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(c) Except as disclosed in Section 5.14 of the Frontstep Disclosure
Memorandum, each Frontstep Benefit Plan is in compliance with the terms of such
Frontstep Benefit Plan, in compliance with the applicable requirements of the
Internal Revenue Code, in material compliance with the applicable requirements
of ERISA, and in compliance with any other applicable Laws. Each Frontstep ERISA
Plan which is intended to be qualified under Section 401(a) of the Internal
Revenue Code has received a favorable determination letter from the IRS that is
still in effect and applies to the Frontstep ERISA Plan as amended and as
administered or, within the time permitted under Internal Revenue Code Section
401(b), has timely applied for a favorable determination letter which when
issued will apply retroactively to the Frontstep ERISA Plan as amended and as
administered. Frontstep is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. Frontstep has not
received any communication (written or unwritten) from any government agency
questioning or challenging the compliance of any Frontstep Benefit Plan with
applicable Laws. No Frontstep Benefit Plan is currently being audited by a
governmental agency for compliance with applicable Laws or has been audited with
a determination by the governmental agency that the Employee Benefit Plan failed
to comply with applicable Laws.
(d) Except as disclosed in Section 5.14 of the Frontstep Disclosure
Memorandum to the Knowledge of Frontstep, there has been no oral or written
representation or communication with respect to any aspect of the Frontstep
Benefit Plans made to employees of Frontstep which is not in accordance with the
written or otherwise preexisting terms and provisions of such plans. Neither
Frontstep nor any administrator or fiduciary of any Frontstep Benefit Plan (or
any agent of any of the foregoing) has engaged in any transaction, or acted or
failed to act in any manner, which could subject Frontstep or MAPICS to any
direct or indirect Liability (by indemnity or otherwise) for breach of any
fiduciary, co-fiduciary or other duty under ERISA. There are no unresolved
claims or disputes under the terms of, or in connection with, the Frontstep
Benefit Plans other than claims for benefits which are payable in the ordinary
course of business and no action, proceeding, prosecution, inquiry, hearing or
investigation has been commenced with respect to any Frontstep Benefit Plan.
(e) Except as disclosed in Section 5.14 of the Frontstep Disclosure
Memorandum all Frontstep Benefit Plan documents and annual reports or returns,
audited or unaudited financial statements, actuarial valuations, summary annual
reports, and summary plan descriptions issued with respect to the Frontstep
Benefit Plans are correct and complete, have been timely filed with the IRS, the
DOL or distributed to participants of the Frontstep Benefit Plans (as required
by Law), and there have been no changes in the information set forth therein.
(f) No "PARTY IN INTEREST" (as defined in ERISA Section 3(14)) or
"DISQUALIFIED PERSON" (as defined in Internal Revenue Code Section 4975(e)(2))
of any Frontstep Benefit Plan has engaged in any nonexempt "PROHIBITED
TRANSACTION" (described in Internal Revenue Code Section 4975(c) or ERISA
Section 406).
(g) Neither Frontstep nor any of its ERISA Affiliates have ever
maintained a "DEFINED BENEFIT PLAN" (as defined in Section 414(j) of the
Internal Revenue Code).
(h) Except as disclosed in Section 5.14 of the Frontstep Disclosure
Memorandum, no Frontstep Entity has any Liability for retiree health and life
benefits under any of the Frontstep
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Benefit Plans and there are no restrictions on the rights of such Frontstep
Entity to amend or terminate any such retiree health or benefit Plan without
incurring any Liability thereunder except to the extent required under Part 6 of
Title I of ERISA or Internal Revenue Code Section 4980B. No Tax under Internal
Revenue Code Sections 4980B or 5000 has been incurred with respect to any
Frontstep Benefit Plan and no circumstance exists which could give rise to such
Taxes.
(i) Except as disclosed in Section 5.14 of the Frontstep Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Frontstep Entity
from any Frontstep Entity under any Frontstep Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Frontstep Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.
(j) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any Frontstep Entity and their respective beneficiaries, other than
entitlements accrued pursuant to funded retirement plans subject to the
provisions of Internal Revenue Code Section 412 or ERISA Section 302, have been
fully reflected on the Frontstep Financial Statements to the extent required by
and in accordance with GAAP.
(k) All individuals who render services to any Frontstep Entity and who
are authorized to participate in a Frontstep Benefit Plan pursuant to the terms
of such Frontstep Benefit Plan are in fact eligible to and authorized to
participate in such Frontstep Benefit Plan. Except as disclosed in Section 5.14
of the Frontstep Disclosure Memorandum, all individuals participating in (or
eligible to participate in) any Frontstep Benefit Plan are common-law employees
of a Frontstep Entity.
(l) On or after September 26, 1980, neither the Frontstep nor any of
its ERISA Affiliates has had an "OBLIGATION TO CONTRIBUTE" (as defined in ERISA
Section 4212) to a "MULTIEMPLOYER PLAN" (as defined in ERISA Sections 4001(a)(3)
and 3(37)(A)).
5.15 MATERIAL CONTRACTS.
Except as disclosed in Section 5.15 of the Frontstep Disclosure
Memorandum or otherwise reflected in the Frontstep Financial Statements, none of
the Frontstep Entities, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $50,000, (ii) any Contract relating to the borrowing of money by any
Frontstep Entity or the guarantee by any Frontstep Entity of any such obligation
(other than Contracts evidencing trade payables and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (iii) any
Contract which prohibits or restricts any Frontstep Entity from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among Frontstep
Entities, (v) any Contract
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involving Intellectual Property (other than Contracts entered into in the
ordinary course with customers and "shrink-wrap" software licenses), (vi) any
Contract relating to the provision of data processing, network communication, or
other technical services to or by any Frontstep Entity, (vii) any Contract
relating to the purchase or sale of any goods or services (other than Contracts
entered into in the ordinary course of business and involving payments under any
individual Contract not in excess of $50,000), and (viii) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by Frontstep with the SEC as of the date of this Agreement (together
with all Contracts referred to in Sections 5.10 and 5.14(a), the "FRONTSTEP
CONTRACTS"). With respect to each Frontstep Contract and except as disclosed in
Section 5.15 of the Frontstep Disclosure Memorandum: (A) the Contract is in full
force and effect; (B) no Frontstep Entity is in Default thereunder; (C) no
Frontstep Entity has repudiated or waived any material provision of any such
Contract; and (D) no other party to any such Contract is, to the Knowledge of
Frontstep, in Default in any respect or has repudiated or waived any material
provision thereunder. All of the indebtedness of any Frontstep Entity for money
borrowed is prepayable at any time by such Frontstep Entity without penalty or
premium.
5.16 SHAREHOLDERS' VOTING AGREEMENTS.
Each of the directors, shareholders and executive officers of Frontstep
listed in Section 5.16 of the Frontstep Disclosure Memorandum have executed and
delivered to MAPICS the Voting Agreements.
5.17 LEGAL PROCEEDINGS.
Except as disclosed in Section 5.17 of the Frontstep Disclosure
Memorandum, there is no Litigation instituted or pending, or, to the Knowledge
of Frontstep, threatened (or unasserted but considered probable of assertion and
which if asserted would have at least a reasonable possibility of an unfavorable
outcome) against any Frontstep Entity, or against any director, officer or
employee in their capacities as such, or any Employee Benefit Plan of any
Frontstep Entity, or against any Asset, interest, or right of any of them that
is reasonably likely to have, individually or in the aggregate, a Frontstep
Material Adverse Effect, nor are there any Orders outstanding against any
Frontstep Entity that are reasonably likely to have, individually or in the
aggregate, a Frontstep Material Adverse Effect. Section 5.17 of the Frontstep
Disclosure Memorandum contains a summary of all Litigation as of the date of
this Agreement to which any Frontstep Entity is a party and which names a
Frontstep Entity as a defendant or cross-defendant or for which any Frontstep
Entity has any potential Liability. Section 5.17 of the Frontstep Disclosure
Memorandum contains a summary of all Orders to which any Frontstep Entity is
subject.
5.18 REPORTS.
Except as disclosed in Section 5.18 of the Frontstep Disclosure
Memorandum, since January 1, 1999 or the date of organization if later, each
Frontstep Entity has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except failures to file which are not
reasonably likely to have, individually or in the aggregate, a Frontstep
Material Adverse Effect). As of their respective dates, each of such reports and
documents, including the financial
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statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of its respective date, each such report and
document, together with any amendments required with respect thereto, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
5.19 STATEMENTS TRUE AND CORRECT.
(a) No written statement, certificate, instrument, or other writing
furnished or to be furnished by any Frontstep Entity to MAPICS pursuant to this
Agreement or any other document, agreement, or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) None of the information supplied or to be supplied by any Frontstep
Entity in writing for inclusion in the Registration Statement to be filed by
MAPICS with the SEC will, when the Registration Statement becomes effective, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein not misleading and all of
such information will satisfy all other requirements of the Securities Laws.
(c) None of the information supplied or to be supplied by any Frontstep
Entity in writing for inclusion in the Joint Proxy Statement to be mailed to the
shareholders of Frontstep and shareholders of MAPICS in connection with the
Shareholders' Meetings, and any other documents to be filed by a Frontstep
Entity with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Joint Proxy Statement, when first mailed to
the shareholders of Frontstep and shareholders of MAPICS, be false or misleading
with respect to any 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, or, in the case of the Joint Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Shareholders'
Meetings, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meetings and all of such information will satisfy all other
requirements of the Securities Laws.
(d) All documents that any Frontstep Entity is responsible for filing
with any Regulatory Authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions of
applicable Law.
5.20 TAX AND REGULATORY MATTERS.
No Frontstep Entity or, to the Knowledge of Frontstep, any Affiliate
thereof has taken or agreed to take any action or has any Knowledge of any fact
or circumstance that is reasonably likely to (i) prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) or result in
the imposition of a condition or restriction of the type referred to in the last
sentence of such Section.
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5.21 STATE TAKEOVER LAWS.
Each Frontstep Entity has taken, or pursuant to Section 8.10 will take,
all necessary action to exempt the transactions contemplated by this Agreement
from, or if necessary to challenge the validity or applicability of, any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover Laws, including Section 1704 of the ORC (collectively,
"TAKEOVER LAWS").
5.22 CHARTER PROVISIONS.
Each Frontstep Entity has taken all action so that the entering into of
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Code of Regulations or
other governing instruments of any Frontstep Entity or restrict or impair the
ability of MAPICS or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a shareholder with respect to, shares of any Frontstep Entity that
may be directly or indirectly acquired or controlled by them.
5.23 OPINION OF FINANCIAL ADVISOR.
Frontstep has received the opinion of a Frontstep Financial Advisor,
dated the date of this Agreement, to the effect that, assuming the conversion or
exercise of the Frontstep Preferred Stock and the Frontstep Note Warrant, the
Exchange Ratio is fair, from a financial point of view, to the holders of
outstanding shares of Frontstep Common Stock as of the date of this Agreement, a
signed copy of which has been delivered to MAPICS.
5.24 BOARD RECOMMENDATION.
The Board of Directors of Frontstep, at a meeting duly called and held,
has by unanimous vote of the directors present (who constituted all of the
directors then in office) (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, the Voting Agreements,
and the transactions contemplated thereby, taken together, are fair to and in
the best interests of the Frontstep shareholders and (ii) resolved to recommend
that the holders of the shares of Frontstep Common Stock approve this Agreement.
5.25 DEBT.
As of the date hereof, the aggregate Indebtedness of the Frontstep
Entities is not more than $21,500,000, and contemporaneously with its execution
of this Agreement Frontstep has delivered to MAPICS written confirmation from
each lender of such Indebtedness stating the amount thereof outstanding on the
date hereof.
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ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF MAPICS
MAPICS and Sub hereby represent and warrant to Frontstep as follows:
6.1 ORGANIZATION, STANDING, AND POWER.
MAPICS is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of Georgia, and has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its Assets as the same are now owned, leased or operated. MAPICS is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the states of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a MAPICS Material Adverse Effect. The minute book and other
organizational documents for MAPICS have been made available to Frontstep for
its review and, except as disclosed in Section 6.1 of the MAPICS Disclosure
Memorandum, are true and complete in all material respects as in effect as of
the date of this Agreement and accurately reflect in all material respects all
amendments thereto and all proceedings of the Board of Directors (including any
committees of the Board of Directors) and shareholders thereof.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) MAPICS has the corporate power and authority necessary to execute,
deliver and, other than with respect to the Merger, perform this Agreement, and
with respect to the Merger, upon the approval of this Agreement and the Merger
by MAPICS's shareholders in accordance with this Agreement and Georgia law, to
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein, including the
Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of MAPICS, subject to the approval of the
issuance of the shares of MAPICS Common Stock pursuant to the Merger by a
majority of the votes cast at the MAPICS Shareholders' Meeting (assuming for
such purpose that the votes cast in respect of such proposal represent a
majority of the outstanding MAPICS Common Stock), which is the only shareholder
vote required for approval and adoption of this Agreement and consummation of
the Merger by MAPICS. Subject to such requisite shareholder approval, this
Agreement represents a legal, valid, and binding obligation of MAPICS,
enforceable against MAPICS in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Except as disclosed in Section 6.2(b) of the MAPICS Disclosure
Memorandum, neither the execution and delivery of this Agreement by MAPICS, nor
the consummation by MAPICS of the transactions contemplated hereby, nor
compliance by MAPICS with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of MAPICS's Articles of Incorporation or
Bylaws or any resolution adopted by the Board of Directors or the
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shareholders of MAPICS, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any MAPICS Entity under, any Contract or Permit of any MAPICS Entity,
where such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a MAPICS Material Adverse
Effect, or, (iii) subject to receipt of the requisite Consents referred to in
Section 9.1(b) or (c), constitute or result in a Default under, or require any
Consent pursuant to, any Law or Order applicable to any MAPICS Entity or any of
their respective material Assets (including any MAPICS Entity or any Frontstep
Entity becoming subject to or liable for the payment of any Tax or any of the
Assets owned by any MAPICS Entity or any Frontstep Entity being reassessed or
revalued by any Regulatory Authority).
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and the rules
of Nasdaq, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the IRS or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, and other than Consents,
filings, or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a MAPICS Material Adverse
Effect, no notice to, filing with, or Consent of, any public body or authority
is necessary for the consummation by MAPICS of the Merger and the other
transactions contemplated in this Agreement.
6.3 CAPITAL STOCK.
(a) The authorized capital stock of MAPICS consists of (i) 90,000,000
shares of MAPICS Common Stock, of which 18,389,671 shares are issued and
outstanding as of November 8, 2002, and (ii) 1,000,000 shares of MAPICS
Preferred Stock, of which (A) 225,000 shares have been designated as Series D
Convertible Preferred Stock, of which 125,000 shares are issued and outstanding
as of the date of this Agreement, (B) 100,000 shares have been designated as
Series E Convertible Preferred Stock, of which 49,999 shares are issued and
outstanding as of the date of this Agreement, and (C) 30,000 shares have been
designated as Series F Junior Participating Preferred Stock, of which zero
shares are issued and outstanding as of the date of this Agreement. All of the
issued and outstanding shares of MAPICS Capital Stock are, and all of the shares
of MAPICS Common Stock to be issued in exchange for shares of Frontstep Common
Stock upon consummation of the Merger, when issued in accordance with the terms
of this Agreement, will be, duly and validly issued and outstanding and fully
paid and nonassessable under the GBCC. None of the outstanding shares of MAPICS
Capital Stock has been, and none of the shares of MAPICS Common Stock to be
issued in exchange for shares of Frontstep Common Stock upon consummation of the
Merger will be, issued in violation of any preemptive rights of the current or
past shareholders of MAPICS.
(b) Except as set forth in Section 6.3(a), or as provided in the MAPICS
Rights Agreement, or as disclosed in Section 6.3 of the MAPICS Disclosure
Memorandum, there are no shares of capital stock or other equity securities of
MAPICS outstanding and no outstanding Equity Rights relating to the capital
stock of MAPICS.
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6.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) MAPICS has timely filed and made available to Frontstep all SEC
Documents required to be filed by MAPICS since September 30, 1999 (together with
all such SEC Documents filed, whether or not required to be filed the "MAPICS
SEC REPORTS"). Except as disclosed in Section 6.4(a) of the MAPICS Disclosure
Memorandum, the MAPICS SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws and
other applicable Laws, including without limitation, the inclusion of the
certifications required by Rule 15d-14 under the Exchange Act, and (ii) did not,
at the time they were filed (or, if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing or, in the case of
registration statements, at the effective date thereof) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such MAPICS SEC Reports or necessary in order to make the statements
in such MAPICS SEC Reports, in light of the circumstances under which they were
made, not misleading. No MAPICS Subsidiary is required to file any SEC
documents.
(b) Except as disclosed in Section 6.4(b) of the MAPICS Disclosure
Memorandum, each of the MAPICS Financial Statements (including, in each case,
any related notes) contained in the MAPICS SEC Reports, including any MAPICS SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of MAPICS
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
6.5 ABSENCE OF UNDISCLOSED LIABILITY
No MAPICS Entity has any Liabilities that are reasonably likely to
have, individually or in the aggregate, a MAPICS Material Adverse Effect, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of MAPICS as of June 30, 2002 and September 30, 2002, included in the
MAPICS Financial Statements delivered prior to the date of this Agreement or
reflected in the notes thereto. No MAPICS Entity has incurred or paid any
Liability since June 30, 2002, except for such Liabilities incurred or paid (i)
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
MAPICS Material Adverse Effect or (ii) in connection with the transactions
contemplated by this Agreement.
6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since September 30, 2002, except as disclosed in the MAPICS Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 6.6 of the MAPICS Disclosure Memorandum, (i) there have been no events,
changes or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a MAPICS Material Adverse
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Effect, and (ii) none of the MAPICS Entities has taken any action, or failed to
take any action, prior to the date of this Agreement, which action or failure,
if taken after the date of this Agreement, would represent or result in a
material breach or violation of any of the covenants and agreements of MAPICS
provided in Article 7.
6.7 COMPLIANCE WITH LAWS.
Each MAPICS Entity has in effect all Permits necessary for it to own,
lease or operate its material Assets and to carry on its business as now
conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a MAPICS Material Adverse
Effect, and there has occurred no Default under any such Permit, other than
Defaults which could not reasonably be anticipated to have, individually or in
the aggregate, a MAPICS Material Adverse Effect. Except as disclosed in Section
6.7 of the MAPICS Disclosure Memorandum, none of the MAPICS Entities:
(a) is in Default under its Articles of Incorporation or Bylaws (or
other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable to its
business or employees conducting its business, except for Defaults which could
not reasonably be anticipated to have, individually or in the aggregate, a
MAPICS Material Adverse Effect; or
(c) since January 1, 1999, has received any notification or
communication in writing from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof (i) asserting
that any MAPICS Entity is not, or may not be, in compliance with any Laws or
Orders, where such noncompliance is reasonably likely to have, individually or
in the aggregate, a MAPICS Material Adverse Effect, (ii) threatening to revoke
any Permits, the revocation of which is reasonably likely to have, individually
or in the aggregate, a MAPICS Material Adverse Effect, or (iii) requiring any
MAPICS Entity to enter into or consent to the issuance of a cease and desist
order, injunction, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any manner relates to
its employment decisions, its employment or safety policies or practices.
6.8 LEGAL PROCEEDINGS.
There is no Litigation instituted or pending, or, to the Knowledge of
MAPICS, threatened (or unasserted but considered probable of assertion and which
if asserted would have at least a reasonable possibility of an unfavorable
outcome) against any MAPICS Entity, or against any director, officer, employee
or Employee Benefit Plan of any MAPICS Entity, or against any Asset, interest,
or right of any of them, that is reasonably likely to have, individually or in
the aggregate, a MAPICS Material Adverse Effect, nor are there any Orders
outstanding against any MAPICS Entity, that is reasonably likely to have,
individually or in the aggregate, a MAPICS Material Adverse Effect. Section 6.8
of the MAPICS Disclosure Memorandum contains a summary of all Litigation as of
the date of this Agreement to which any MAPICS Entity is a party and which names
a MAPICS Entity as a defendant or cross-defendant or for which any
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MAPICS Entity has potential Liability. Section 6.8 the MAPICS Disclosure
Memorandum contains a summary of all Orders to which any MAPICS Entity is
subject.
6.9 STATEMENTS TRUE AND CORRECT.
(a) No written statement, certificate, instrument or other writing
furnished or to be furnished by any MAPICS Entity or any Affiliate thereof to
Frontstep pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue statement of
material fact or will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) None of the information supplied or to be supplied by any MAPICS
Entity or any Affiliate thereof in writing for inclusion in the Registration
Statement to be filed by MAPICS with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading and all such information will satisfy all other
requirements of the Securities Laws.
(c) None of the information supplied or to be supplied by any MAPICS
Entity or any Affiliate thereof in writing for inclusion in the Joint Proxy
Statement to be mailed to each Party's shareholders in connection with the
Shareholders' Meetings, and any other documents to be filed by any MAPICS Entity
or any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Joint Proxy Statement,
when first mailed to the shareholders of Frontstep and shareholders of MAPICS,
be false or misleading with respect to any 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, or, in the case of the
Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Shareholders' Meetings, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meetings and all such information will satisfy all
other requirements of the Securities Laws.
(d) All documents that any MAPICS Entity or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
6.10 STATE TAKEOVER LAWS.
Each MAPICS Entity has taken all necessary action to exempt the
transactions contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable "moratorium," "fair price,"
"business combination," "control share," or other anti-takeover Laws, including
Sections 14-2-1110 through 14-2-1113 and Sections 14-2-1131 through 14-2-1133 of
the GBCC (collectively, "GEORGIA TAKEOVER LAWS").
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6.11 CHARTER PROVISION.
Each MAPICS Entity has taken all action so that the entering into of
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws or other
governing instruments of any MAPICS Entity or restrict or impair the ability of
MAPICS or any of its Subsidiaries to vote, or otherwise to exercise the rights
of a shareholder with respect to, shares of any MAPICS Entity that may be
directly or indirectly acquired or controlled by them.
6.12 BOARD RECOMMENDATION.
The Board of Directors of MAPICS, at a meeting duly called and held,
has by unanimous vote of the directors present (who constituted all of the
directors then in office) (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, the Voting Agreements,
and the transactions contemplated thereby, taken together, are fair to and in
the best interests of the MAPICS shareholders and (ii) resolved to recommend
that the holders of the MAPICS Capital Stock approve the issuance of MAPICS
Common Stock pursuant to this Agreement.
6.13 AUTHORITY OF SUB.
Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Georgia as a wholly owned Subsidiary of
MAPICS. Except as disclosed in Section 6.13 of the MAPICS Disclosure Statement,
the authorized capital stock of Sub consists of 1,000 shares of Sub Common
Stock, all of which are validly issued and outstanding, fully paid and
nonassessable and is owned by MAPICS free and clear of any Lien. Sub has the
corporate power and authority necessary to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Sub. This Agreement represents a legal, valid, and
binding obligation of Sub, enforceable against Sub in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
MAPICS, as the sole shareholder of Sub, has voted prior to the Effective Time
the shares of Sub Common Stock in favor of approval of this Agreement, as and to
the extent required by applicable Law.
6.14 TAX AND REGULATORY MATTERS.
No MAPICS Entity or any Affiliate thereof has taken or agreed to take
any action or has any Knowledge of any fact or circumstance that is reasonably
likely to (i) prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities
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referred to in Section 9.1(b) or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
6.15 RIGHTS AGREEMENT AND OTHER AGREEMENTS.
(a) Execution of this Agreement and consummation of the Merger and the
other transactions contemplated by this Agreement will not result in the grant
of any rights to any Person under the MAPICS Rights Agreement (other than as
contemplated by Section 3.1) or enable or require the MAPICS Rights to be
exercised, distributed or triggered. No "STOCK ACQUISITION DATE" or "SECTION
11(a)(ii) TRIGGER DATE" (as such terms are defined in the MAPICS Rights
Agreement) has occurred.
(b) Execution of this Agreement and consummation of the Merger and the
other transactions contemplated by this Agreement will not result in a change in
control as defined in any MAPICS stock option plans, change in control
agreements or employment agreements.
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF FRONTSTEP.
(a) From the date of this Agreement until the earlier of the Effective
Time, or the termination of this Agreement, unless the prior written consent of
MAPICS shall have been obtained, and except as otherwise expressly contemplated
herein, Frontstep shall, and shall cause each of its Subsidiaries to, (A)
operate its business only in the usual, regular, and ordinary course, except for
actions required to be taken in connection with the consummation of the
transactions contemplated by this Agreement or actions approved by MAPICS, (B)
preserve intact its business organization and Assets and maintain its rights and
franchises, and (C) take no action which would (1) materially adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentences of Section 9.1(b) or 9.1(c), or (2) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
(b) Frontstep shall cause to be prepared and delivered to MAPICS a
consolidated balance sheet for Frontstep, as of the most recent month ending
more than ten days prior to the Effective Time (the "PRE-CLOSING BALANCE Sheet")
and a certificate, which shall be true and complete, based on such Pre-Closing
Balance Sheet setting forth Frontstep's calculation of its Indebtedness as of
the date of the Pre-Closing Balance Sheet. The Pre-Closing Balance Sheet shall
(w) include the consolidated financial position of Frontstep and the Frontstep
Subsidiaries, (x) fairly present the financial position of Frontstep and the
Frontstep Subsidiaries as at the close of business on such date in accordance
with GAAP applied on a basis consistent with those used in the preparation of
the Frontstep Financial Statements, (y) be prepared in accordance with
accounting policies and practices consistent with those used in the preparation
of the Frontstep Financial Statements.
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7.2 NEGATIVE COVENANTS OF FRONTSTEP.
From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, unless the prior written consent of MAPICS
shall have been obtained, and except as otherwise expressly contemplated herein,
Frontstep covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Articles of Incorporation, Code of Regulations or other
governing instruments of any Frontstep Entity; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Frontstep Entity to another
Frontstep Entity) in excess of an aggregate of $21,500,000 (for the Frontstep
Entities on a consolidated basis) except in the ordinary course of the business
of Frontstep Subsidiaries consistent with past practices, or impose, or suffer
the imposition, on any Asset of any Frontstep Entity of any Lien or permit any
such Lien to exist (other than in connection with Liens in effect as of the date
hereof that are disclosed in the Frontstep Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any Frontstep Entity, or declare or pay any dividend or make
any other distribution in respect of Frontstep's capital stock except as
necessary to permit the conversion of the Preferred Shares and the exercise of
the Frontstep Note Warrants; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date of this Agreement and pursuant to the terms
thereof in existence on the date hereof, or as disclosed in Section 7.2(d) of
the Frontstep Disclosure Memorandum, issue, sell, pledge, encumber, authorize
the issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of Frontstep Common Stock or any other capital stock of any
Frontstep Entity, or any stock appreciation rights, or any option, warrant, or
other Equity Right except as necessary to permit the conversion of the Preferred
Shares, the exercise of the Frontstep Note Warrants and the amendment of the
Foothill Warrant to reduce the Purchase Price (as such term is defined in the
Foothill Warrant) to $2.20 per share, subject to the terms and conditions of the
Foothill Warrant; or
(e) adjust, split, combine or reclassify any capital stock of any
Frontstep Entity or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Frontstep Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber (i) any shares of
capital stock of any Frontstep Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another Frontstep Entity) or (ii) any Asset
other than in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S. Government
agency securities, which in either case have maturities of three years or less,
purchase any securities or
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make any material investment, either by purchase of stock of securities,
contributions to capital, Asset transfers, or purchase of any Assets, in any
Person other than a wholly owned Frontstep Subsidiary, or otherwise acquire
direct or indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business or (ii) the creation of new
wholly owned Subsidiaries organized to conduct or continue activities otherwise
permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Frontstep Entity, except in accordance with past practice
disclosed in Section 7.2(g) of the Frontstep Disclosure Memorandum or as
required by Law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written Contracts in effect on the date of this
Agreement and disclosed in Section 7.2(g) of the Frontstep Disclosure
Memorandum; and enter into or amend any severance agreements with officers of
any Frontstep Entity; grant any material increase in fees or other increases in
compensation or other benefits to directors of any Frontstep Entity except in
accordance with past practice disclosed in Section 7.2(g) of the Frontstep
Disclosure Memorandum or waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of any Equity Rights or restricted stock, or
reprice Equity Rights granted under the Frontstep Stock Plan or authorize cash
payments in exchange for any Equity Rights; or
(h) enter into or amend any employment Contract between any Frontstep
Entity and any Person (unless such amendment is required by Law) that the
Frontstep Entity does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time on
or after the Effective Time; or
(i) adopt any new employee benefit plan of any Frontstep Entity or
terminate or withdraw from, or make any material change in or to, any existing
employee benefit plans of any Frontstep Entity other than any such change that
is required by Law or that, in the opinion of counsel, is necessary or advisable
to maintain the tax qualified status of any such plan, or make any distributions
from such employee benefit plans, except as required by Law, the terms of such
plans or consistent with past practice; or
(j) except as set forth in Section 7.2(j) of the Frontstep Disclosure
Memorandum, make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to conform
to changes in Tax Laws or regulatory accounting requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Frontstep Entity
for material money damages or restrictions upon the operations of any Frontstep
Entity; or
(l) except in the ordinary course of business, enter into, modify,
amend or terminate any material Contract (including any loan Contract with an
unpaid balance exceeding $25,000) or waive, release, compromise or assign any
material rights or claims.
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7.3 COVENANTS OF MAPICS.
From the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement, unless the prior written consent of
Frontstep shall have been obtained, and except as otherwise expressly
contemplated herein, MAPICS covenants and agrees that it shall (a) continue to
conduct its business and the business of its Subsidiaries in a manner designed
in its reasonable judgment, to enhance the long-term value of the MAPICS Common
Stock and the business prospects of the MAPICS Entities and to the extent
consistent therewith use all reasonable efforts to preserve intact the MAPICS
Entities' core businesses and goodwill with their respective employees and the
communities they serve, and (b) take no action which would (i) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Section 9.1(b) or
9.1(c), or (ii) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement; provided, that the foregoing
shall not prevent any MAPICS Entity from acquiring any Assets or other
businesses or from discontinuing or disposing of any of its Assets or business
if such action is, in the reasonable judgment of MAPICS, desirable in the
conduct of the business of MAPICS and its Subsidiaries, provided that such
actions shall not materially delay the Effective Time or materially hinder
consummation of the Merger. MAPICS further covenants and agrees that it will
not, without the prior written consent of Frontstep, which consent shall not be
unreasonably withheld, amend the Articles of Incorporation or Bylaws of MAPICS
or, except as expressly contemplated by this Agreement, the MAPICS Rights
Agreement, in each case, in any manner adverse to the holders of Frontstep
Common Stock as compared to rights of holders of MAPICS Common Stock generally
as of the date of this Agreement.
7.4 ADVERSE CHANGES IN CONDITION.
Each Party agrees to give written notice promptly to the other Party
upon becoming aware of the occurrence or impending occurrence of any event or
circumstance relating to it or any of its Subsidiaries which (i) is reasonably
likely to have, individually or in the aggregate, a Frontstep Material Adverse
Effect or a MAPICS Material Adverse Effect, as applicable, or (ii) would cause
or constitute a material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.5 REPORTS.
Each Party and its Subsidiaries shall file all reports required to be
filed by it with Regulatory Authorities between the date of this Agreement and
the Effective Time and shall deliver to the other Party copies of all such
reports promptly after the same are filed. If financial statements are contained
in any such reports filed with the SEC, such financial statements will fairly
present the consolidated financial position of the entity filing such statements
as of the dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As of their respective
dates, such reports filed with the SEC will comply in all material respects with
the Securities Laws and will not contain any untrue statement of a material fact
or omit to state a
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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. Any financial statements contained in any other reports to
another Regulatory Authority shall be prepared in accordance with Laws
applicable to such reports.
7.6 PAYMENT OF CERTAIN TAXES.
Frontstep shall cause the obligations of Frontstep Pte Ltd. set forth
in Section 5.12 of the Frontstep Disclosure Memorandum to be paid in full on or
prior to December 15, 2002.
ARTICLE 8 ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
(a) As promptly as reasonably practicable after execution of this
Agreement, MAPICS shall use its reasonable best efforts to prepare and file the
Registration Statement with the SEC, and shall use its reasonable best efforts
to cause the Registration Statement to become effective under the Securities Act
and take any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of MAPICS Common
Stock upon consummation of the Merger. Frontstep shall cooperate in the
preparation and filing of the Registration Statement and shall furnish all
information concerning it and the holders of its capital stock as MAPICS may
reasonably request in connection with such action. In connection with the
Shareholders' Meetings, Frontstep and MAPICS shall prepare and file with the SEC
a Joint Proxy Statement and mail such Joint Proxy Statement to their respective
shareholders, and the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Joint
Proxy Statement. MAPICS and Frontstep shall timely and properly make all
necessary filings with respect to the Merger under the Securities Laws,
including filings required under SEC Rules 165, 425 and 14a-12. MAPICS will
advise Frontstep, promptly after MAPICS receives notice thereof, of the time
when the Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order or the suspension of
the qualification of MAPICS Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
(b) Frontstep shall duly call, give notice of, convene and hold a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, on a date reasonably
acceptable to MAPICS, for the purpose of voting upon approval and adoption of
this Agreement ("FRONTSTEP SHAREHOLDER APPROVAL") and such other related matters
as it deems appropriate and shall, through its Board of Directors, except as
otherwise expressly provided in Section 8.1(c) recommend to its shareholders the
approval and adoption of this Agreement and use its reasonable efforts to obtain
the Frontstep Shareholder Approval.
(c) Neither the Board of Directors of Frontstep nor any committee
thereof shall (i) except as expressly permitted by this Section 8.1(c),
withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify,
in a manner adverse to MAPICS, the approval or recommendation
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of such Board of Directors or such committee of the Merger or this Agreement,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, or (iii) cause Frontstep to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
(each, an "ACQUISITION AGREEMENT") related to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that, prior to the adoption of this
Agreement by the holders of Frontstep Common Stock, the Board of Directors of
Frontstep determines in good faith, after it has received a Superior Proposal
and after receipt of advice from outside counsel, that the failure to do so
would result in a reasonable possibility that the Board of Directors of
Frontstep would breach its fiduciary duties to Frontstep shareholders under
applicable Law, the Board of Directors of Frontstep may (subject to this and the
following sentences) inform Frontstep shareholders that it no longer believes
that the Merger is advisable and no longer recommends approval and may (subject
to this and the following sentences) approve or recommend a Superior Proposal
(and in connection therewith withdraw or modify its approval or recommendation
of this Agreement and the Merger (a "SUBSEQUENT DETERMINATION"), but only at a
time that is after the third Business Day following MAPICS's receipt of written
notice advising MAPICS that the Board of Directors of Frontstep has received a
Superior Proposal specifying the material terms and conditions of such Superior
Proposal (and including a copy thereof with all accompanying documentation, if
in writing), identifying the person making such Superior Proposal and stating
that it intends to make a Subsequent Determination. After providing such notice,
Frontstep shall provide to MAPICS the opportunity to make, before the expiration
of the Third Business Day following MAPICS's receipt of such notice, such
adjustments in the terms and conditions of this Agreement as would enable
Frontstep to proceed with its recommendation to its shareholders without a
Subsequent Determination; provided, however, that any such adjustment shall be
at the discretion of the Parties at the time. Notwithstanding any other
provision of this Agreement, Frontstep shall submit this Agreement to its
shareholders at its Shareholders' Meeting even if the Board of Directors of
Frontstep determines at any time after the date hereof that it is no longer
advisable or recommends that Frontstep shareholders reject it.
(d) MAPICS shall duly call, give notice of, convene and hold a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon the issuance of shares of MAPICS Common Stock pursuant to the Merger
and such other related matters as it deems appropriate and shall, through its
Board of Directors, recommend to its shareholders the approval of the issuance
of shares of MAPICS Common Stock pursuant to the Merger ("MAPICS SHAREHOLDER
APPROVAL") and use its reasonable efforts to obtain such MAPICS Shareholder
Approval.
(e) Neither the Board of Directors of MAPICS nor any committee thereof
shall withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in a manner adverse to Frontstep, the approval of such Board of
Directors or such committee of this Agreement or the Merger or the
recommendation of such Board of Directors to MAPICS shareholders that they give
the MAPICS Shareholder Approval; provided, that the Board of Directors of MAPICS
shall be permitted to (i) not recommend to MAPICS shareholders that they give
the MAPICS Shareholder Approval or (ii) withdraw, qualify or modify, or propose
publicly to withdraw, qualify or modify, in a manner adverse to Frontstep, the
recommendation of such Board of Directors to MAPICS shareholders that they give
the MAPICS Shareholder Approval, only if the Board of Directors of MAPICS by a
majority vote determines in its good faith judgment that it is necessary to do
so to comply with its fiduciary duties to MAPICS
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shareholders under applicable Law, after receiving the advice of outside legal
counsel, that the failure to do so would result in a reasonable possibility that
the Board of Directors of MAPICS would breach its fiduciary duties to MAPICS
shareholders under applicable Law; provided, further, that nothing contained in
this Section 8.1 shall permit MAPICS's Board of Directors or any committee
thereof to rescind or amend the resolutions adopting this Agreement as of the
date hereof.
8.2 OTHER OFFERS, ETC.
(a) No Frontstep Entity shall, nor shall it authorize or permit any of
its Affiliates or Representatives to, directly or indirectly (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal, (ii) participate in any discussions or negotiations
regarding, or furnish to any Person or "GROUP" (as such term is defined in
Section 13(d) under the Exchange Act) any nonpublic information with respect to,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) approve, endorse or recommend any Acquisition
Proposal, or (iv) enter into any Acquisition Agreement) relating to an
Acquisition Proposal or contemplating or otherwise relating to any Acquisition
Transaction; provided however, that this Section 8.2(a) shall not prohibit a
Frontstep Entity from furnishing nonpublic information regarding any Frontstep
Entity to, or entering into a confidentiality agreement or discussions or
negotiations with, any Person or Group in response to a bona fide unsolicited
written Acquisition Proposal submitted by such Person or Group (and not
withdrawn) if (A) no Frontstep Entity or Representative or Affiliate thereof
shall have violated any of the restrictions set forth in this Section 8.2, (B)
the Board of Directors of Frontstep determines in its good faith judgment (based
on, among other things, the advice of Frontstep's Financial Advisor or any other
financial advisor of nationally recognized reputation) that such Acquisition
Proposal constitutes a Superior Proposal, (C) (1) at least two business days
prior to furnishing any such nonpublic information to, or entering into
discussions or negotiations with, such Person or Group, Frontstep gives MAPICS
written notice of the identity of such Person or Group and of Frontstep's
intention to furnish nonpublic information to such Person or Group, and (2)
Frontstep receives from such Person or Group an executed confidentiality
agreement containing terms no less favorable to the disclosing party than the
terms of the Confidentiality Agreement and (D) contemporaneously with furnishing
any such nonpublic information to such Person or Group, Frontstep furnishes such
nonpublic information to MAPICS (to the extent such nonpublic information has
not been previously furnished by Frontstep to MAPICS).
(b) In addition to the obligations of Frontstep set forth in Section
8.2(a), as promptly as practicable, and in any event within one business day
after any of the executive officers of Frontstep become aware thereof, Frontstep
shall advise MAPICS of any request received by Frontstep for nonpublic
information which Frontstep reasonably believes could lead to an Acquisition
Proposal or of any Acquisition Proposal, the material terms and conditions of
such request or Acquisition Proposal, and the identity of the Person or Group
making any such request or Acquisition Proposal. Frontstep shall keep MAPICS
informed promptly of material amendments or modifications to any such request or
Acquisition Proposal.
(c) Frontstep and its Subsidiaries shall immediately cease any and all
existing activities, discussions or negotiations with any Persons conducted
heretofore with respect to any
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Acquisition Proposal and will use their respective reasonable best efforts to
enforce any confidentiality or similar agreement relating to any Acquisition
Proposal. Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in this Section 8.2, by any Affiliate or Representative
of any Frontstep Entity shall be deemed to be a breach of this Section 8.2 by
Frontstep.
(d) Nothing contained in this Agreement shall prevent a Party or its
board of directors from complying with Rule 14d-9 and Rule 14e-2 under the
Exchange Act with respect to an Acquisition Proposal, provided that such Rules
will in no way eliminate or modify the effect that any action pursuant to such
Rules would otherwise have under this Agreement.
8.3 NASDAQ NATIONAL MARKET LISTING.
MAPICS shall use its reasonable efforts to list, prior to the Effective
Time, on the Nasdaq National Market the shares of MAPICS Common Stock to be
issued to the holders of Frontstep Common Stock pursuant to the Merger, and
MAPICS shall give all notices and make all filings with Nasdaq required in
connection with the transactions contemplated herein.
8.4 ANTITRUST NOTIFICATION; CONSENTS OF REGULATORY AUTHORITIES.
(a) To the extent required by the HSR Act, each of the Parties will,
within a reasonable period of time, file with the United States Federal Trade
Commission ("FTC") and the United States Department of Justice ("DOJ") the
notification and report form required for the transactions contemplated hereby,
will promptly file any supplemental or additional information which may
reasonably be requested in connection therewith pursuant to the HSR Act, and
will comply in all material respects with the requirements of the HSR Act. Each
Party shall use its reasonable efforts to resolve objections, if any, which may
be asserted with respect to the Merger under the HSR Act, the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the Federal Trade Commission Act, as
amended, and any other federal, state or foreign Law or, regulation or decree
designed to prohibit, restrict or regulate actions for the purpose or effect of
monopolization or restraint of trade (collectively "ANTITRUST LAWS"). In the
event any Litigation is threatened or instituted challenging the Merger as
violative of Antitrust Laws, each Party shall use its reasonable efforts to
avoid the filing of, or resist or resolve such Litigation. Each Party shall use
its reasonable efforts to take such action as may be required by: (i) the DOJ
and/or the FTC in order to resolve such objections as either of them may have to
the Merger under the Antitrust Laws, or (ii) any federal or state court of the
United States, or similar court of competent jurisdiction in any foreign
jurisdiction, in any suit brought by any Regulatory Authority or any other
Person challenging the Merger as violative of the Antitrust Laws, in order to
avoid the entry of any Order (whether temporary, preliminary or permanent) which
has the effect of preventing the consummation of the Merger and to have vacated,
lifted, reversed or overturned any such Order. Reasonable efforts shall not
include the willingness of MAPICS to accept an Order agreeing to the
divestiture, or the holding separate, of any Assets of any MAPICS Entity or any
Frontstep Entity which MAPICS reasonably determines to be material to MAPICS or
to the benefits of the transaction for which it has bargained for hereunder.
MAPICS shall be entitled to direct any proceedings or negotiations with any
Regulatory Authority relating to any of the foregoing, provided that it shall
afford Frontstep a reasonable opportunity to participate therein.
Notwithstanding anything to the contrary in this Section, no MAPICS Entity
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shall be required to divest any of its businesses, product lines or Assets, or
to take or agree to take any other action or agree to any limitation, that is
reasonably likely to have a Material Adverse Effect on MAPICS or on MAPICS
combined with Frontstep after the Effective Time.
(b) The Parties hereto shall cooperate with each other and use their
reasonable efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings (which shall include the
filings pursuant to subsection (a) above), and to obtain as promptly as
practicable all Consents of all Regulatory Authorities and other Persons which
are necessary or advisable to consummate the transactions contemplated by this
Agreement (including the Merger). The Parties agree that they will consult with
each other with respect to the obtaining of all Consents of all Regulatory
Authorities and other Persons necessary or advisable to consummate the
transactions contemplated by this Agreement and each Party will keep the other
apprised of the status of matters relating to contemplation of the transactions
contemplated herein. Each Party also shall promptly advise the other upon
receiving any communication from any Regulatory Authority whose Consent is
required for consummation of the transactions contemplated by this Agreement
which causes such Party to believe that there is a reasonable likelihood that
any requisite Consent will not be obtained or that the receipt of any such
Consent will be materially delayed.
8.5 FILINGS WITH STATE OFFICES.
Upon the terms and subject to the conditions of this Agreement,
Frontstep and Sub, as applicable, shall execute and file the Certificate of
Merger with the Secretary of State of the State of Ohio and the Certificate of
Merger with the Secretary of State of the State of Georgia in connection with
the Closing.
8.6 AGREEMENT AS TO EFFORTS TO CONSUMMATE.
Subject to the terms and conditions of this Agreement, each Party
agrees to use, and to cause its Subsidiaries to use, its reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper, or advisable under applicable Laws to consummate and
make effective, as soon as reasonably practicable after the date of this
Agreement, the transactions contemplated by this Agreement, including, without
limitation, using its reasonable efforts to lift or rescind any Order adversely
affecting its ability to consummate the transactions contemplated herein and to
cause to be satisfied the conditions referred to in Article 9, and using its
reasonable efforts to cause the conditions set forth in clauses (k) through (q)
of Section 9.2 to be satisfied at or prior to closing. Frontstep shall retain a
proxy solicitation firm reasonably acceptable to MAPICS for the purpose of
soliciting proxies in connection with obtaining the Frontstep Shareholder
Approval.
8.7 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to
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the transactions contemplated hereby and shall not interfere unnecessarily with
normal operations. No investigation by a Party shall affect the ability of such
Party to rely on the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreements, which are hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Frontstep shall use its reasonable efforts to exercise, and shall
not waive any of, its rights under confidentiality agreements entered into with
Persons which were considering an Acquisition Proposal with respect to Frontstep
to preserve the confidentiality of the information relating to the Frontstep
Entities provided to such Persons and their Affiliates and Representatives.
(d) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Frontstep Material Adverse
Effect or a MAPICS Material Adverse Effect, as applicable.
8.8 PRESS RELEASES.
Prior to the Effective Time, Frontstep and MAPICS shall consult with
each other as to the form and substance of any press release or other public
disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 8.8 shall be deemed
to prohibit any Party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such Party's disclosure obligations
imposed by Law.
8.9 TAX TREATMENT.
Each of the Parties undertakes and agrees to use its reasonable best
efforts to cause the Merger, and to take no action which would cause the Merger
not, to qualify as a "REORGANIZATION" within the meaning of Section 368(a) of
the Internal Revenue Code for federal income tax purposes.
8.10 STATE TAKEOVER LAWS.
Each Frontstep Entity shall take all necessary steps to exempt the
transactions contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable Takeover Law.
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8.11 CHARTER PROVISIONS.
Each Frontstep Entity shall take all necessary action to ensure that
the entering into of this Agreement and the consummation of the Merger and the
other transactions contemplated hereby do not and will not result in the grant
of any rights to any Person under the Articles of Incorporation, Code of
Regulations or other governing instruments of any Frontstep Entity or restrict
or impair the ability of MAPICS or any of its Subsidiaries to vote, or otherwise
to exercise the rights of a shareholder with respect to, shares of any Frontstep
Entity that may be directly or indirectly acquired or controlled by them.
8.12 AGREEMENT OF AFFILIATES.
Frontstep has disclosed in Section 8.12 of the Frontstep Disclosure
Memorandum all Persons whom it reasonably believes is an "affiliate" of
Frontstep for purposes of Rule 145 under the Securities Act. Frontstep shall use
its reasonable efforts to cause each such Person to deliver to MAPICS not later
than 10 days after the date of this Agreement, a written agreement, in
substantially the form of Exhibit 3, providing that such Person will not sell,
pledge, transfer, or otherwise dispose of the shares of Frontstep Common Stock
held by such Person except as contemplated by such agreement or by this
Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of MAPICS Common Stock to be received by such Person upon consummation of
the Merger except in compliance with applicable provisions of the Securities Act
and the rules and regulations thereunder. MAPICS shall be entitled to place
restrictive legends upon certificates for shares of MAPICS Common Stock issued
to affiliates of Frontstep pursuant to this Agreement to enforce the provisions
of this Section 8.12. MAPICS shall not be required to maintain the effectiveness
of the Registration Statement under the Securities Act for the purposes of
resale of MAPICS Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS.
(a) Following the Effective Time, MAPICS shall provide generally to
officers and employees of the Frontstep Entities employee benefits under
employee benefit and welfare plans (other than stock option or other plans
involving the potential issuance of MAPICS Common Stock), on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the MAPICS Entities to their similarly situated officers
and employees; provided, that, for a period of twelve (12) months after the
Effective Time, MAPICS shall provide generally to officers and employees of
Frontstep Entities severance benefits in accordance with the policies of either
(i) Frontstep as disclosed in Section 8.13 of the Frontstep Disclosure
Memorandum, or (ii) MAPICS. For purposes of participation, vesting and (except
in the case of MAPICS retirement plans) benefit accrual under MAPICS's employee
benefit plans, the service of the employees of the Frontstep Entities prior to
the Effective Time shall be treated as service with a MAPICS Entity
participating in such employee benefit plans. MAPICS also shall cause the
Surviving Corporation and its Subsidiaries to honor in accordance with their
terms only those employment, severance, consulting and other compensation
Contracts disclosed in Section 8.13 of the Frontstep Disclosure Memorandum to
MAPICS between any Frontstep Entity and any current or former director, officer,
or employee thereof, and all provisions for vested benefits or other vested
amounts earned or accrued through the Effective Time under the Frontstep Benefit
Plans.
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(b) As soon as practicable following the date of this Agreement,
Frontstep's Board of Directors or, if appropriate, any committee thereof
administering the Frontstep Employee Stock Purchase Plan (the "ESPP") shall
adopt such resolutions or take such actions as are required to terminate such
ESPP prior to the Effective Time.
8.14 INDEMNIFICATION.
(a) For a period of six years after the Effective Time, MAPICS shall
cause the Surviving Corporation to indemnify, defend and hold harmless the
present and former directors, officers, employees and agents of the Frontstep
Entities (each, an "INDEMNIFIED PARTY") against all Liabilities arising out of
actions or omissions arising out of the Indemnified Party's service or services
as directors, officers, employees or agents of Frontstep or, at Frontstep's
request, of another corporation, partnership, joint venture, trust or other
enterprise occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the fullest extent permitted by
Frontstep's Articles of Incorporation and Code of Regulations as in effect on
the date hereof, including provisions relating to advances of expenses incurred
in the defense of any Litigation and whether or not any MAPICS Entity is insured
against any such matter. Without limiting the foregoing, in any case in which
approval by the Surviving Corporation is required to effectuate any
indemnification, the Surviving Corporation shall direct, at the election of the
Indemnified Party, that the determination of any such approval shall be made by
independent counsel mutually agreed upon between MAPICS and the Indemnified
Party.
(b) MAPICS shall cause the Surviving Corporation to use its reasonable
efforts (and Frontstep shall cooperate prior to the Effective Time in these
efforts) to maintain in effect for a period of six years after the Effective
Time Frontstep's existing directors' and officers' liability insurance policy at
no cost to any former director, officer or employee of any Frontstep Entity
(provided that the Surviving Corporation may substitute therefor (i) policies of
at least the same coverage and amounts containing terms and conditions which are
substantially no less advantageous and do not result in any gaps or lapses in
coverage or (ii) with the consent of Frontstep given prior to the Effective
Time, any other policy) with respect to claims arising from facts or events
which occurred prior to the Effective Time and covering persons who are
currently covered by such insurance; provided, that the Surviving Corporation
shall not be obligated to make aggregate annual premium payments for such
six-year period in respect of such policy (or coverage replacing such policy)
which exceed, for the portion related to Frontstep's directors and officers,
$750,000 (the "MAXIMUM AMOUNT"). If the amount of the premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount, the
Surviving Corporation shall use its reasonable efforts to maintain the most
advantageous policies of directors' and officers' liability insurance obtainable
for a premium equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.14, upon learning of any such Liability or
Litigation, shall promptly notify the Surviving Corporation thereof. In the
event of any such Litigation (whether arising before or after the Effective
Time), (i) the Surviving Corporation shall have the right to assume the defense
thereof and the Surviving Corporation shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if the Surviving Corporation elects not
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to assume such defense or counsel for the Indemnified Parties advises that there
are substantive issues which raise conflicts of interest between the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, that the Surviving
Corporation shall be obligated pursuant to this paragraph (c) to pay for only
one firm of counsel for all Indemnified Parties in any jurisdiction; (ii) the
Indemnified Parties will cooperate in the defense of any such Litigation; and
(iii) the Surviving Corporation shall not be liable for any settlement effected
without its prior written consent; and provided further that the Surviving
Corporation shall not have any obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law.
(d) If the Surviving Corporation or any successors or assigns shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving Person of such consolidation or merger or shall transfer all or
substantially all of its assets to any Person, then and in each case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall assume the obligations set forth in this Section 8.14.
(e) The provisions of this Section 8.14 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party and their
respective heirs and representatives.
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY.
The respective obligations of each Party to perform this Agreement and
consummate the Merger and the other transactions contemplated hereby are subject
to the satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6:
(a) SHAREHOLDER APPROVAL. The shareholders of Frontstep shall have
adopted and approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by Law,
by the provisions of any governing instruments, or by the rules of Nasdaq. The
shareholders of MAPICS shall have approved the issuance of shares of MAPICS
Common Stock pursuant to the Merger, as and to the extent required by Law, by
the provisions of any governing instruments, or by the rules of Nasdaq.
(b) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for consummation
of the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
(including requirements relating to the raising of additional capital or the
disposition of Assets) which in the reasonable judgment of the Board of
Directors of MAPICS would so materially adversely impact the economic or
business assumptions of the transactions
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contemplated by this Agreement that, had such condition or requirement been
known, MAPICS would not, in its reasonable judgment, have entered into this
Agreement.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred to
in Section 9.1(b)) or for the preventing of any Default under any Contract or
Permit of such Party. Frontstep shall have obtained the Consents listed in
Section 9.1(c) of the Frontstep Disclosure Memorandum. No Consent so obtained
which is necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner which in the reasonable judgment of the
Board of Directors of MAPICS would so materially adversely impact the economic
or business assumptions of the transactions contemplated by this Agreement that,
had such condition or requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement.
(d) LEGAL PROCEEDINGS. No court or governmental or Regulatory Authority
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law or Order (whether temporary, preliminary or permanent) or taken
any other action which prohibits, restricts or makes illegal consummation of the
transactions contemplated by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the Securities Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals under
state securities Laws or the Securities Act or Exchange Act relating to the
issuance or trading of the shares of MAPICS Common Stock issuable pursuant to
the Merger shall have been received.
(f) NASDAQ NATIONAL MARKET LISTING. The shares of MAPICS Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
Nasdaq National Market.
(g) TAX MATTERS. Frontstep shall have received a written opinion of
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP, in form and substance reasonably
satisfactory to Frontstep, and MAPICS shall have received a written opinion of
Xxxxxx & Bird LLP, in form and substance reasonably satisfactory to MAPICS (the
"TAX OPINIONS"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) the exchange in the Merger by the stockholders of Frontstep Common
Stock for MAPICS Common Stock will not give rise to gain or loss to the
stockholders of Frontstep with respect to such exchange (except to the extent of
any cash received), and (iii) none of Frontstep, Sub or MAPICS will recognize
gain or loss solely as a consequence of the Merger. The issuance of such Tax
Opinions shall be conditioned upon the receipt by each of Xxxxxx & Bird LLP and
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP of representation letters and/or officers'
certificates from each of MAPICS and Frontstep reasonably satisfactory in form
and substance to each of Xxxxxx & Bird LLP and Vorys, Xxxxx, Xxxxxxx and Xxxxx
LLP, and each such letter or certificate shall be dated on or before the date of
such Tax Opinion and shall not have been withdrawn or modified in any material
respect as of the Effective Time.
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9.2 CONDITIONS TO OBLIGATIONS OF MAPICS.
The obligations of MAPICS to perform this Agreement and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by MAPICS pursuant to
Section 11.6(a):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of Frontstep set
forth in this Agreement shall be assessed as of the date of this Agreement and
as of the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties set forth in
Section 5.3 shall be true and correct (except for inaccuracies which are de
minimis in amount). The representations and warranties set forth in Sections
5.5, 5.10, 5.15, 5.20, 5.21, and 5.22 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Frontstep set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3, 5.5, 5.10, 5.15, 5.20,
5.21, and 5.22) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Frontstep Material Adverse Effect; provided that,
for purposes of this sentence only, those representations and warranties which
are qualified by references to "material" or "Material Adverse Effect" or to the
"Knowledge" of any Person shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Frontstep to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to or at
the Effective Time shall have been duly performed and complied with in all
material respects.
(c) CERTIFICATES. Frontstep shall have delivered to MAPICS (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.1 as relates to Frontstep and in Sections
9.2(a) and 9.2(b) have been satisfied, (ii) the certificate required by Section
7.1(b), (iii) a certification, dated as of the Closing Date and signed on its
behalf by its chief executive officer and chief financial officer, certifying
the aggregate amount of the TRANSACTION FEES, (iv) a certification, dated as of
the Closing Date and signed on its behalf by its chief executive officer and
chief financial officer, to the effect that the certifications required by Rule
15d-14 under the Exchange Act could be given with respect to all periods not
included in a Frontstep SEC Report as of the Closing Date and ending on or prior
to the Closing Date; and (v) certified copies of resolutions duly adopted by
Frontstep's Board of Directors and shareholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as MAPICS and its counsel shall request.
(d) AFFILIATES AGREEMENTS. MAPICS shall have received from each
Affiliate of Frontstep listed in Section 8.12 of the Frontstep Disclosure
Memorandum the affiliates letter referred to in Section 8.12.
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(e) MATERIAL ADVERSE CHANGE. From the date of this Agreement, there
shall have been no event, change or occurrence which individually or together
with any other event, change or occurrence, has, or is reasonably likely to
have, a Frontstep Material Adverse Effect.
(f) FIRPTA CERTIFICATE. Frontstep shall have delivered to MAPICS a
certification from Frontstep, dated no more than thirty (30) days prior to the
Closing Date and signed by a responsible corporate officer of Frontstep, that
Frontstep is not, and has not been at any time during the five years preceding
the date of such certification, a United States real property holding
corporation, as defined in Internal Revenue Code Section 897(c)(2).
(g) EXERCISE OR CANCELLATION OF CERTAIN STOCK OPTIONS. All options to
purchase Frontstep's Common Stock issued pursuant to the Director Plan shall
have been exercised or cancelled and MAPICS shall have received evidence of such
exercises and cancellations satisfactory to MAPICS in its sole discretion.
(h) The aggregate Indebtedness of all Frontstep Entities immediately
prior to the Closing shall not be greater than $21,500,000, and MAPICS shall
have received the certificate, dated the Closing Date, of the Chief Financial
Officer of Frontstep to that effect.
(i) SHAREHOLDER DISSENT. Holders of no more than five percent (5%) of
the outstanding shares of Frontstep Common Stock shall have perfected their
dissenters' rights pursuant to Section 3.3 hereof and Section 1701.74 of the
ORC.
(j) TRANSACTION FEES. The Transaction Fees shall not be greater than
$1,500,000.
(k) [Intentionally Omitted].
(l) Fox shall have (i) executed and delivered to Frontstep and MAPICS
an agreement, in form and content reasonably satisfactory to MAPICS, terminating
as of the Effective Time any arrangement existing between Fox and any Frontstep
Entity (including, without limitation, any arrangement under which Fox is an
employee, consultant, agent or independent contractor) pursuant to which Fox is
paid any consideration or is otherwise entitled to receive any benefit, (ii)
tendered to each Frontstep Entity for or with respect to which Fox serves as an
officer or director his written resignation as such officer or director, which
resignation shall by its terms be effective as of the Effective Time, (iii)
released in writing each Frontstep Entity from the payment of any compensation
or other benefit to Fox for or with respect to any period prior to the Effective
Time except for compensation, including reasonable director's fees and
reasonable and actual travel and living expenses, for services provided prior to
the Effective Time, incurred and payable in the ordinary course of business
consistent with past practices; and (iv) surrendered to Frontstep for
cancellation all Convertible Notes owned, of record or beneficially, by Fox
against payment by MAPICS at the Closing of all principal and accrued interest
under such Convertible Notes.
(m) All holders as of the Closing of Convertible Notes other than Fox
shall have exchanged such Notes for the unsecured subordinated promissory notes
of MAPICS in the principal amount of the principal plus all accrued but unpaid
interest to and including the Closing Date of the Convertible Notes so
surrendered (each a "NEW NOTE" and collectively the "NEW NOTES"), with each such
New Note being due and payable as to both principal and interest on
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February 28, 2004, and with each such New Note bearing interest at the rate of
ten percent (10%) per annum from and after the Closing Date to and including
August 31, 2003 and at the rate of twelve percent (12%) per annum from and after
August 31, 2003 until paid, without any penalty for prepayment of such New Notes
by MAPICS, and with the New Notes being unsecured and subordinated to the senior
Indebtedness of MAPICS described in Section 9.2(k) on terms and conditions
acceptable to the lenders of such Indebtedness (which terms and conditions shall
be no more favorable to the holders of the New Notes than the terms and
conditions of subordination contained in the Convertible Notes).
(n) All shares of Frontstep Preferred Stock shall have been converted
not later than immediately prior to the record date for the Frontstep
Shareholders' Meeting into not more than 5,792,397 shares of Frontstep Common
Stock in accordance with the terms of the Restructuring Agreement.
(o) Each Series A Warrant shall have been surrendered to Frontstep for
cancellation not later than immediately prior to the Effective Time and shall
have been cancelled.
(p) Frontstep shall have obtained, and shall have delivered to MAPICS,
all documentation necessary to require holders of minority interests in any
Frontstep Subsidiary to transfer and convey such interests to Frontstep or its
designee upon the request of Frontstep or the Surviving Corporation.
(q) The holders of the Mitsui Notes shall have exchanged all of the
Mitsui Notes for the unsecured subordinated promissory notes of MAPICS (each a
"NEW MITSUI NOTE" and collectively the "NEW MITSUI NOTES"), each of which New
Mitsui Note shall be in the principal amount of the principal of and all accrued
but unpaid interest to and including the Closing Date on the Mitsui Note for
which it was exchanged, shall be payable on or before the later of (A) June 30,
2003 or (B) sixty (60) days after the Closing Date, and shall be unsecured and
subordinated to the senior Indebtedness of MAPICS on terms and conditions
acceptable to the lenders of such Indebtedness (which terms and conditions shall
be no more favorable to the holders of the New Mitsui Notes than the terms and
conditions of the Mitsui Notes), the terms and conditions of such New Mitsui
Notes being reasonably acceptable to the holders of the Mitsui Notes.
(r) The Frontstep Note Warrants shall not have been amended or modified
in any respect after the date hereof, and shall have been fully exercised in
accordance with their terms not later than immediately prior to the record date
for the Frontstep Shareholders' Meeting.
9.3 CONDITIONS TO OBLIGATIONS OF FRONTSTEP.
The obligations of Frontstep to perform this Agreement and consummate
the Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Frontstep pursuant to
Section 11.6(b):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of MAPICS set forth
in this Agreement shall be assessed as of the date of this Agreement and as of
the Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
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representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of MAPICS set
forth in Section 6.3 shall be true and correct (except for inaccuracies which
are de minimis in amount). The representations and warranties of MAPICS set
forth in Sections 6.4, 6.10, 6.14 and 6.15 shall be true and correct in all
material respects. There shall not exist inaccuracies in the representations and
warranties of MAPICS set forth in this Agreement (including the representations
and warranties set forth in Section 6.3, 6.4, 6.10, 6.14 and 6.15) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have, a
MAPICS Material Adverse Effect; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" or to the "Knowledge" of any Person
shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of MAPICS to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to or at the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) CERTIFICATES. MAPICS shall have delivered to Frontstep (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.1 as relates to MAPICS and in Sections 9.3(a)
and 9.3(b) have been satisfied, and (ii) certified copies of resolutions duly
adopted by MAPICS's Board of Directors and shareholders and Sub's Board of
Directors and sole shareholder evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Frontstep and its counsel shall request.
(d) FAIRNESS OPINION. Frontstep shall have received from a Frontstep
Financial Advisor a letter, dated not later than the date on which the Board of
Directors of Frontstep approves this Agreement to the effect that, assuming the
conversion or exercise of the Frontstep Preferred Stock and the Frontstep Note
Warrant, in the opinion of such firm, the Exchange Ratio is fair, from a
financial point of view, to the holders of outstanding shares of Frontstep
Common Stock as of the date of this Agreement.
(e) EXCHANGE AGENT CERTIFICATION. The Exchange Agent shall have
delivered to Frontstep a certificate, dated as of the Effective Time, to the
effect that the Exchange Agent has received from MAPICS appropriate instructions
and authorization for the Exchange Agent to issue a sufficient number of shares
of MAPICS Common Stock in exchange for outstanding shares of Frontstep Common
Stock and that MAPICS has deposited with the Exchange Agent sufficient funds to
pay a reasonable estimate of the cash payments necessary to make all fractional
share payments as required by Section 3.4.
(f) From the date of this Agreement, there shall have been no event,
change or occurrence which individually or together with any other event, change
or occurrence, has, or is reasonably likely to have, a MAPICS Material Adverse
Effect.
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(g) All shares of Frontstep Preferred Stock shall have been converted
not later than immediately prior to the record date for the Frontstep
Shareholders' Meeting into not more than 5,792,397 shares of Frontstep Common
Stock.
ARTICLE 10 TERMINATION
10.1 TERMINATION.
Notwithstanding any other provision of this Agreement, and
notwithstanding the approval of this Agreement by the shareholders of Frontstep
and shareholders of MAPICS or both, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time:
(a) By mutual written agreement of MAPICS and Frontstep; or
(b) By either Party (provided that the terminating Party is not then in
material breach of any representation, warranty, covenant, or other agreement
contained in this Agreement) in the event of a breach by the other Party of any
representation or warranty contained in this Agreement which cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching Party of such breach and which breach is reasonably likely, in the
opinion of the non-breaching Party, to permit such Party to refuse to consummate
the transactions contemplated by this Agreement pursuant to the standard set
forth in Section 9.2 or 9.3 as applicable; or
(c) By either Party (provided that the terminating Party is not then in
material breach of any representation, warranty, covenant, or other agreement
contained in this Agreement) in the event of a material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot be
or has not been cured within 30 days after the giving of written notice to the
breaching Party of such breach, and such breach has not been waived in writing
by the non-breaching party; or
(d) By either Party (provided that the terminating Party is not then in
material breach of any representation, warranty, covenant, or other agreement
contained in this Agreement) in the event (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other transactions
contemplated hereby shall have been denied by final nonappealable action of such
authority or if any action taken by such authority is not appealed within the
time limit for appeal, (ii) any Law or Order permanently restraining, enjoining
or otherwise prohibiting the consummation of the Merger shall have become final
and nonappealable, or (iii) the shareholders of Frontstep or shareholders of
MAPICS fail to vote their approval of the matters relating to this Agreement and
the transactions contemplated hereby at the Shareholders' Meetings where such
matters were presented to such shareholders for approval and voted upon; or
(e) By either Party in the event that the Merger shall not have been
consummated by April 30, 2003 (the "OUTSIDE DATE"), if the failure to consummate
the transactions contemplated hereby on or before such date is not caused by any
breach of this Agreement by the Party electing to terminate pursuant to this
Section 10.1(e); or
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(f) By MAPICS in the event that (i) the Board of Directors of
Frontstep, shall have failed to reaffirm its approval upon MAPICS's request for
such reaffirmation of the Merger and the transactions contemplated by this
Agreement (to the exclusion of any other Acquisition Proposal), or shall have
resolved not to reaffirm the Merger, or (ii) the Board of Directors of Frontstep
shall have failed to include in the Joint Proxy Statement its recommendation,
without modification or qualification, that Frontstep shareholders give the
Frontstep Shareholder Approval or shall have withdrawn, qualified or modified,
or proposed publicly to withdraw, qualify or modify, in a manner adverse to
MAPICS, the recommendation of such Board of Directors to Frontstep shareholders
that they give the Frontstep Shareholder Approval, or (iii) the Board of
Directors of Frontstep shall have affirmed, recommended or authorized entering
into any Acquisition Transaction other than the Merger or, within ten business
days after commencement of any tender or exchange offer for any shares of
Frontstep Common Stock, the Board of Directors of Frontstep shall have failed to
recommend against acceptance of such tender or exchange offer by its
shareholders or takes no position with respect to the acceptance of such tender
or exchange offer by its shareholders, or (iv) the Board of Directors of
Frontstep negotiates or authorizes the conduct of negotiations with a third
party (it being understood and agreed that "negotiate" shall not be deemed to
include the provision of information to, or the request and receipt of
information from, any Person that submits an Acquisition Proposal or discussions
regarding such information for the sole purpose of ascertaining the terms of
such Acquisition Proposal) regarding an Acquisition Proposal other than the
Merger, or (v) any Person (other than a MAPICS Entity) shall have acquired
beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 25% of the outstanding shares of Frontstep Common Stock after
the date hereof; or
(g) By either Party (provided that the terminating Party is not then in
material breach of any representation, warranty, covenant, or other agreement
contained in this Agreement) in the event that any of the conditions precedent
to the obligations of such Party to consummate the Merger cannot be satisfied or
fulfilled by the date specified in Section 10.1(e).
10.2 EFFECT OF TERMINATION.
In the event of the termination and abandonment of this Agreement
pursuant to Section 10.1, this Agreement shall become void and have no effect,
except that (i) the provisions of this Section 10.2, Section 8.7(b), and Article
11, shall survive any such termination and abandonment, and (ii) no such
termination shall relieve the breaching Party from Liability resulting from any
breach by that Party of this Agreement.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS.
Except for this Section 10.3, Section 8.9, Section 8.13, Section 8.14
and Article 1, Article 2, Article 3 and Article 11, the respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time.
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ARTICLE 11 MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"ACQUISITION PROPOSAL" means any proposal (whether
communicated to Frontstep or publicly announced to Frontstep's
shareholders) by any Person (other than MAPICS or any of its
Affiliates) for an Acquisition Transaction involving Frontstep or any
of its present or future consolidated Subsidiaries, or any combination
of such Subsidiaries, the assets of which constitute twenty percent
(20%) or more of the consolidated assets of Frontstep as reflected on
Frontstep's consolidated statement of condition prepared in accordance
with GAAP.
"ACQUISITION TRANSACTION" means any transaction or series of
related transactions (other than the transactions contemplated by this
Agreement, including the conversion of the Frontstep Preferred Stock
into Frontstep Common Stock and the exercise of the Frontstep Note
Warrants) involving: (i) any acquisition or purchase from Frontstep by
any Person or "Group" (other than MAPICS or any of its Affiliates) of
20% or more in interest of the total outstanding voting securities of
Frontstep or any of its Subsidiaries, or any tender offer or exchange
offer that if consummated would result in any Person or "Group" (other
than MAPICS or any of its Affiliates) beneficially owning 20% or more
in interest of the total outstanding voting securities of Frontstep or
any of its Subsidiaries, or any merger, consolidation, business
combination or similar transaction involving Frontstep pursuant to
which the shareholders of Frontstep immediately preceding such
transaction hold less than 80% of the equity interests in the surviving
or resulting entity (which includes the parent corporation of any
constituent corporation to any such transaction) of such transaction;
(ii) any sale or lease (other than in the ordinary course of business),
or exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of 20% or more of the assets of
Frontstep; or (iii) any liquidation or dissolution of Frontstep.
"AFFILIATE" of a Person means: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person;
or (iii) any other Person for which a Person described in clause (ii)
acts in any such capacity.
"ASSETS" of a Person means all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of
such Person and wherever located.
"BANKRUPTCY CODE" means the Bankruptcy Code, Xxxxx 00, Xxxxxx
Xxxxxx Code.
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"BUSINESS DAY" means any day other than a Saturday or Sunday
or any day on which national banks are authorized or regulated by law
to close. Any reference to "days" (unless Business Days are specified)
shall mean calendar days.
"CLOSING DATE" means the date on which the Closing occurs.
"CONFIDENTIALITY AGREEMENT" means that certain Mutual
Non-Disclosure Agreement, dated March 1, 2002, between Frontstep and
MAPICS.
"CONSENT" means any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" means any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
license, obligation, plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital
stock, Assets or business.
"CONVERTIBLE NOTES" means the 10% Subordinated Notes due May
10, 2004 in an aggregate principal amount of $5,000,000 issued by
Frontstep.
"DEFAULT" means (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or
Permit, (ii) any occurrence of any event that with the passage of time
or the giving of notice or both would constitute a breach or violation
of, default under, contravention of, or conflict with, any Contract,
Law, Order, or Permit, or (iii) any occurrence of any event that with
or without the passage of time or the giving of notice would give rise
to a right of any Person to exercise any remedy or obtain any relief
under, terminate or revoke, suspend, cancel, or modify or change the
current terms of, or renegotiate, or to accelerate the maturity or
performance of, or to increase or impose any Liability under, any
Contract, Law, Order, or Permit.
"DIRECTOR PLAN" means the Amended and Restated Frontstep, Inc.
Stock Option Plan for Outside Directors.
"EMPLOYEE BENEFIT PLAN" means each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, share purchase, severance pay, vacation, bonus, retention,
change in control or other incentive plan, medical, vision, dental or
other health plan, any life insurance plan, flexible spending account,
cafeteria plan, vacation, holiday, disability or any other employee
benefit plan or fringe benefit plan, including any "employee benefit
plan," as that term is defined in Section 3(3) of ERISA and any other
plan, fund, policy, program, practice, custom understanding or
arrangement providing compensation or other benefits, whether or not
such Employee Benefit Plan is or is intended to be (i) covered or
qualified under the Code, ERISA or any other applicable Law, (ii)
written or oral, (iii) funded or unfunded, (iv) actual or contingent or
(v) arrived at through collective bargaining or otherwise.
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"ENVIRONMENTAL LAWS" means all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata)
including the Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et
seq. ("RCRA"), and other Laws relating to emissions, discharges,
releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"EQUITY RIGHTS" means all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Equity Rights.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means any entity which together with a
Frontstep Entity would be treated as a single employer under Code
Section 414.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXHIBITS" 1 through 4, inclusive, means the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument
or document without being attached hereto.
"FOOTHILL" means Foothill Capital Corporation.
"FOOTHILL WARRANT" means the Amended and Restated Common Share
Purchase Warrant, dated November 15, 2001, issued by Frontstep to
Foothill and providing for the to purchase 550,000 shares of Frontstep
Common Stock, as amended.
"FRONTSTEP COMMON STOCK" means the no par value common stock
of Frontstep.
"FRONTSTEP CREDIT FACILITY" means that certain Loan and
Security Agreement, dated as of July 17, 2001, by and between Foothill
Capital Corporation and Frontstep, as amended.
"FRONTSTEP DISCLOSURE MEMORANDUM" means the written
information entitled "Frontstep, Inc. Disclosure Memorandum" delivered
prior to the date of this Agreement to MAPICS describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced
with respect thereto.
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"FRONTSTEP ENTITIES" means, collectively, Frontstep and all
Frontstep Subsidiaries.
"FRONTSTEP FINANCIAL ADVISOR" means Updata, Inc. or Xxxxxxx
Xxxxx & Co., Inc.
"FRONTSTEP FINANCIAL STATEMENTS" means (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Frontstep as of June 30 and September 30, 2002, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the three months
ended September 30, 2002, and for each of the three fiscal years ended
June 30, 2002, 2001 and 2000, and as filed by Frontstep in SEC
Documents, and (ii) the consolidated balance sheets of Frontstep
(including related notes and schedules, if any) and related statements
of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to September 30, 2002.
"FRONTSTEP MATERIAL ADVERSE EFFECT" means an event, change or
occurrence which, individually or together with any other event, change
or occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of Frontstep and its
Subsidiaries, taken as a whole, or (ii) the ability of Frontstep to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement,
including without limitation, any appointment of, or the taking of
possession by a receiver, custodian, trustee, or liquidator of any
Frontstep Entity or of all or a substantial part of its property,
general assignment by a Frontstep Entity for the benefit of its
creditors, commencement by a Frontstep Entity of a voluntary proceeding
under the Federal Bankruptcy Code or under any other law relating to
relief from creditors generally, or failure by a Frontstep Entity to
contest in a timely or appropriate manner, or acquiescence in writing
to, any petition filed against it in an involuntary proceeding under
the Bankruptcy Code or under any other law relating to relief from
creditors generally, or any application for the appointment of a
receiver, custodian, trustee, or liquidator of itself or of all or a
substantial part of its property, or its liquidation, reorganization,
dissolution, or winding-up; provided that "Material Adverse Effect"
shall not be deemed to include the impact of (A) changes in Laws of
general applicability or interpretations thereof by courts or
governmental authorities, (B) changes in generally accepted accounting
principles, or (C) actions and omissions of Frontstep (or any of its
Subsidiaries) taken with the prior informed written Consent of MAPICS
in contemplation of the transactions contemplated hereby.
"FRONTSTEP NOTE WARRANTS" means Warrants for the Purchase of
600,000 Shares of Common Stock of Frontstep dated March 7, 2002 issued
by Frontstep in connection with the issuance and sale of the Frontstep
Convertible Notes.
"FRONTSTEP PREFERRED STOCK" means the no par value Series A
Convertible Participating Preferred Stock of Frontstep.
"FRONTSTEP STOCK PLANS" means the Director Plan, the Frontstep
Amended and Restated Non-Qualified Stock Option Plan for Key Employees,
the Frontstep Second
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Amended and Restated 1999 Non-Qualified Stock Option Plan for Key
Employees and the Symix Non-Qualified Stock Option Plan for Key
Executives.
"FRONTSTEP SUBSIDIARIES" means the Subsidiaries of Frontstep,
which shall include the Frontstep Subsidiaries described in Section 5.4
and any corporation, limited liability company, limited partnership,
limited liability partnership or other organization acquired as a
Subsidiary of Frontstep in the future and held as a Subsidiary by
Frontstep at the Effective Time.
"GAAP" means generally accepted accounting principles in the
United States, consistently applied during the periods involved.
"GBCC" means the Georgia Business Corporation Code.
"HAZARDOUS MATERIAL" means (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil, asbestos-containing materials and any
polychlorinated biphenyls.
"HSR ACT" means Section 7A of the Xxxxxxx Act, as added by
Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"INDEBTEDNESS" of a Person as of any particular date means (a)
all indebtedness or other obligations of such Person for borrowed
money, including without limitation, accrued interest, all amendment
and other fees related thereto and all prepayment penalties thereunder
or for the deferred purchase price of property or services, including
without limitation, all such obligations pursuant to the Convertible
Notes, the Mitsui Notes and the Frontstep Credit Facility; and (b) all
obligations under leases that are or should be, in accordance with
GAAP, recorded as capital leases in respect of which such Person is
liable as lessee.
"INTELLECTUAL PROPERTY" means copyrights, patents, trademarks,
service marks, service names, trade names, domain names, together with
all goodwill associated therewith, registrations and applications
therefor, technology rights and licenses, computer software (including
the source code and object code forms thereof or documentation relating
thereto), trade secrets, franchises, know-how, inventions, and other
intellectual property rights.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"JOINT PROXY STATEMENT" means the proxy statement used by
Frontstep and MAPICS to solicit the approval of their respective
shareholders of the transactions contemplated by this Agreement, which
shall include the prospectus of MAPICS relating to the issuance of the
MAPICS Common Stock to holders of Frontstep Common Stock.
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"KNOWLEDGE" as used with respect to a Person (including
references to such Person being aware of a particular matter) means the
personal knowledge after due inquiry of the chairman, president, chief
financial officer, chief accounting officer, chief operating officer,
general counsel, or any senior, executive or other vice president of
such Person and the knowledge of any such Persons obtained or which
would have been obtained from a reasonable investigation.
"LAW" means any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any Regulatory
Authority.
"LIABILITY" means any direct or indirect, primary or
secondary, liability (including any liability for Taxes), indebtedness,
obligation, penalty, cost or expense (including costs of investigation,
collection and defense), claim, deficiency, guaranty or endorsement of
or by any Person (other than endorsements of notes, bills, checks, and
drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, and (ii) Liens which do
not materially impair the use of or title to the Assets subject to such
Lien.
"LITIGATION" means any action, arbitration, cause of action,
lawsuit, claim, complaint, criminal prosecution, governmental or other
examination or investigation, audit (other than regular audits of
financial statements by outside auditors), compliance review,
inspection, hearing, administrative or other proceeding relating to or
affecting a Party, its business, its records, its policies, its
practices, its compliance with Law, its actions, its Assets (including
Contracts related to it), or the transactions contemplated by this
Agreement.
"LOSSES" means any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, damages (including
special and consequential damages), liabilities, costs, and expenses,
including interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
"MAPICS CAPITAL STOCK" means, collectively, the MAPICS Common
Stock, the MAPICS Preferred Stock and any other class or series of
capital stock of MAPICS.
"MAPICS COMMON STOCK" means the $0.01 par value common stock
of MAPICS.
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"MAPICS DISCLOSURE MEMORANDUM" means the written information
entitled "MAPICS Inc. Disclosure Memorandum" delivered prior to the
date of this Agreement to Frontstep describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect
to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced with respect thereto.
"MAPICS ENTITIES" means, collectively, MAPICS and all MAPICS
Subsidiaries.
"MAPICS MATERIAL ADVERSE EFFECT" means an event, change or
occurrence which, individually or together with any other event, change
or occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of MAPICS and its
Subsidiaries, taken as a whole, or (ii) the ability of MAPICS to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement,
provided that "MAPICS Material Adverse Effect" shall not be deemed to
include the impact of (A) changes in Laws of general applicability or
interpretations thereof by courts or governmental authorities, (B)
changes in generally accepted accounting principles, (C) actions and
omissions of MAPICS (or any of its Subsidiaries) taken with the prior
informed written Consent of Frontstep in contemplation of the
transactions contemplated hereby, (D) failure of MAPICS to meet the
revenue or earnings predictions of equity analysts (as reflected in the
First Call consensus estimate), or any other published revenue or
earnings predictions or expectations, for any period ending on or after
the date of this Agreement, or (E) changes in the market price or
trading volume of MAPICS Common Stock.
"MAPICS PREFERRED STOCK" means the $1.00 par value preferred
stock of MAPICS.
"MAPICS RIGHTS" means the Equity Rights issued pursuant to the
MAPICS Rights Agreement.
"MAPICS RIGHTS AGREEMENT" means that certain Amended and
Restated Rights Agreement, dated as of March 30, 1998, among MAPICS,
Inc. a Georgia corporation, MAPICS, Inc., a Massachusetts corporation
and BankBoston, N.A., as Rights Agent.
"MATERIAL" or "MATERIAL" for purposes of this Agreement shall
be determined in light of the facts and circumstances of the matter in
question; provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"MITSUI" means Mitsui & Co., Ltd., Mitsui & Co. Asia
Investment Ltd. and MVC Corporation.
"MITSUI NOTES" means the Convertible Subordinated Note
Agreements, dated May 13, 2002, as amended on September 1, 2002 and the
Convertible Subordinated Note Agreement dated July 22, 2002 in an
aggregate principal amount of $2,032,018 issued by Frontstep in favor
of Mitsui.
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"XXX XXXXXXXX XXXXXXX" means the Warrant in the form of
Exhibit 4.
"NASDAQ" means Nasdaq Stock Market, Inc.
"NASDAQ NATIONAL MARKET" means the National Market System of
the Nasdaq Stock Market, Inc.
"OPERATING PROPERTY" means any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in
which such Party or Subsidiary holds a security interest or other
interest (including an interest in a fiduciary capacity), and, where
required by the context, includes the owner or operator of such
property, but only with respect to such property.
"ORDER" means any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"PARTICIPATION FACILITY" means any facility or property in
which the Party in question or any of its Subsidiaries participates in
the management and, where required by the context, said term means the
owner or operator of such facility or property, but only with respect
to such facility or property.
"PARTY" means any of Frontstep, Sub or MAPICS, and "PARTIES"
means Frontstep, Sub and MAPICS.
"PERMIT" means any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets, or business.
"PERSON" means a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, limited liability partnership, trust, business
association, group acting in concert, or any person acting in a
representative capacity.
"REGISTRATION STATEMENT" means the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
MAPICS under the Securities Act with respect to the shares of MAPICS
Common Stock to be issued to the shareholders of Frontstep in
connection with the transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" means, collectively, the SEC, the
Nasdaq National Market, the FTC the DOJ, and all other federal, state,
county, local or other governmental or regulatory agencies, authorities
(including taxing and self-regulatory authorities), instrumentalities,
commissions, boards or bodies having jurisdiction over the Parties and
their respective Subsidiaries.
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"REPRESENTATIVE" means any investment banker, financial
advisor, attorney, accountant, consultant, or other representative or
agent engaged by a Person.
"RESTRUCTURING AGREEMENT" means the agreement between
Frontstep and each holder of Frontstep Preferred Stock, dated November
24, 2002, a true and correct copy of which is attached hereto as
Exhibit 2.
"SEC" means the United States Securities and Exchange
Commission.
"SEC DOCUMENTS" means all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES LAWS" means the Securities Act, the Exchange Act,
the Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"SERIES A WARRANTS" means the Warrants for the purchase of
453,546 Common Shares dated May 10, 2000 issued to the holders of the
Series A Preferred Stock of Frontstep.
"SHAREHOLDERS' MEETINGS" means the respective meetings of the
shareholders of Frontstep and shareholders of MAPICS to be held
pursuant to Section 8.1, including any adjournment or adjournments
thereof.
"SUB COMMON STOCK" means common stock, $0.01 par value per
share, of Sub.
"SUBSIDIARIES" means all those corporations, associations, or
other business entities of which the entity in question either (i) owns
or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly or
indirectly by its parent (provided, there shall not be included any
such entity the equity securities of which are owned or controlled in a
fiduciary capacity), (ii) in the case of partnerships, serves as a
general partner, (iii) in the case of a limited liability company,
serves as a managing member, or (iv) otherwise has the ability to elect
a majority of the directors, trustees or managing members thereof.
"SUPERIOR PROPOSAL" means any Acquisition Proposal (on its
most recently amended or modified terms, if amended or modified) (i)
involving the acquisition of the entire equity interest in, or all or
substantially all of the assets and liabilities of, the Frontstep
Entities and (ii) with respect to which the Board of Directors of
Frontstep (A) determines in good faith that such Acquisition Proposal,
if accepted, is reasonably likely to be consummated on a timely basis,
taking into account all legal, financial, regulatory and other aspects
of the Acquisition Proposal and the Person or Group making the
Acquisition Proposal, and (B) determines in its good faith judgment
(based on,
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among other things, the advice of a financial advisor of nationally
recognized reputation) to be more favorable to Frontstep's shareholders
than the Merger taking into account all relevant factors (including
whether, in the good faith judgment of the Board of Directors of
Frontstep, after obtaining the advice of a financial advisor of
nationally recognized reputation, the Person or Group making such
Acquisition Proposal is reasonably able to finance the transaction, and
any proposed changes to this Agreement that may be proposed by MAPICS
in response to such Acquisition Proposal).
"SURVIVING CORPORATION" means Frontstep as the surviving
corporation resulting from the Merger.
"TAX" or "TAXES" means any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, recording license, payroll, franchise, severance,
documentary, stamp, occupation, windfall profits, environmental,
federal highway use, commercial rent, customs duties, capital stock,
paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
county, local or foreign government or subdivision or agency thereof,
including any interest, penalties, and additions imposed thereon or
with respect thereto.
"TAX RETURN" means any report, return, information return,
declaration, claim for refund, or other information required to be
supplied to a Regulatory Authority in connection with Taxes, including
any return of an affiliated or combined or unitary group that includes
a Party or its Subsidiaries.
"TRANSACTION FEES" means professional fees (including
attorneys' fees and accounting fees, other than fees payable to
attorneys for Foothill and audit fees attributable to the normal
year-end audit) and investment banking and other fees (other than fees
related to the solicitation of proxies in connection with the approval
of the Merger, the filing of the Registration Statement and the
printing of the Joint Proxy Statement) paid with respect to, or payable
upon consummation of, the transactions contemplated hereby; provided,
however, if prior to the Closing any claim, demand, action or cause of
action shall be asserted against Frontstep or any of its officers or
directors based upon or arising out of this Agreement or the
transactions contemplated hereby or any Acquisition Proposal shall be
undertaken by a third party, the reasonable fees and expenses paid or
incurred by Frontstep in connection with the defense of any such claim,
demand, action or cause of action or defensive actions taken with
respect to any such Acquisition Proposal shall not be deemed
Transaction Fees hereunder.
(b) The terms set forth below shall have the meanings ascribed thereto
in the referenced sections:
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TERM PAGE
Acquisition Agreement..............................35
Agreement...........................................1
Antitrust Laws.....................................37
Certificates........................................6
Closing.............................................2
DOJ................................................37
DOL................................................18
Effective Time......................................2
ESPP...............................................41
Exchange Agent......................................6
Exchange Ratio......................................3
Fox.................................................8
Frontstep...........................................1
Frontstep Benefit Plans............................18
Frontstep Contracts................................21
Frontstep ERISA Plan...............................18
Frontstep Insiders..................................6
Frontstep Options...................................4
Frontstep SEC Reports..............................11
Frontstep Shareholder Approval.....................34
Frontstep, Inc......................................2
FTC................................................37
GBCC................................................1
Georgia Takeover Laws..............................28
Indemnified Party..................................41
IRS................................................18
MAPICS..............................................1
MAPICS SEC Reports.................................26
MAPICS Shareholder Approval........................35
Maximum Amount.....................................41
Merger..............................................2
New Mitsui Note(s).................................46
New Note(s)........................................45
ORC.................................................1
Outside Date.......................................48
Pre-Closing Balance Sheet..........................30
Section 16 Information..............................6
Sub.................................................1
Subsequent Determination...........................35
Takeover Laws......................................23
Tax Opinions.......................................43
Termination Fee....................................61
Transaction Fees...................................44
Voting Agreements...................................1
Warn Act...........................................17
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants, and
counsel, except that each of the Parties shall bear and pay one-half of the
filing fees payable in connection with the Registration Statement and the Joint
Proxy Statement and printing costs incurred in connection with the printing of
the Registration Statement and the Joint Proxy Statement. Notwithstanding the
foregoing, if the Closing occurs, MAPICS shall pay or assume all of the expenses
of Frontstep that are solely and directly related to the Merger in accordance
with the guidelines established in IRS Revenue Ruling 73-54, 1973-1 Cumulative
Bulletin 187, including without limitation, filing, registration and application
fees, printing fees and fees and expenses of Frontstep's financial or other
consultants, investment bankers, accountants, and counsel. MAPICS shall not be
obligated to pay or assume the fees or expenses of Xxxxx Xxxx and Xxxxxxxx in
connection with the Merger.
(b) Notwithstanding the foregoing, if:
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(i) Either (A) Frontstep or MAPICS terminates this Agreement
pursuant to Section 10.1(e) and (x) there has been publicly announced
and not withdrawn another Acquisition Proposal or (y) Frontstep has
failed to perform and comply in all material respects with any of its
obligations, agreements or covenants required by this Agreement, or (B)
MAPICS terminates this Agreement pursuant to Section 10.1(c), and
within twelve months of such termination Frontstep shall either (I)
consummate an Acquisition Transaction or (II) enter into an Acquisition
Agreement with respect to an Acquisition Transaction, whether or not
such Acquisition Transaction is subsequently consummated (but changing,
in the case of (I) and (II), the references to the 20% and 80% amounts
in the definition of Acquisition Transaction to 50%); or
(ii) MAPICS shall terminate this Agreement pursuant to Section
10.1(d)(iii) as a result of the failure to obtain the approval of
Frontstep's shareholders contemplated thereby; or
(iii) MAPICS shall terminate this Agreement pursuant to
Section 10.1(f);
then Frontstep shall pay to MAPICS an amount equal to One Million Five Hundred
Thousand Dollars ($1,500,000) plus the amount of MAPICS's reasonable
out-of-pocket costs and expenses associated with the transactions contemplated
hereby (collectively, the "TERMINATION FEE"). Frontstep hereby waives any right
to set-off or counterclaim against such amount. If the Termination Fee shall be
payable pursuant to subsection (b)(i) of this Section 11.2, the Termination Fee
shall be paid in same-day funds at or prior to the earlier of the date of
consummation of such Acquisition Transaction or the date of execution of an
Acquisition Agreement with respect to such Acquisition Transaction. If the
Termination Fee shall be payable pursuant to subsections (b)(ii) and (b)(iii) of
this Section 11.2, the Termination Fee shall be paid in same-day funds not later
than two business days from the date of termination of this Agreement.
(c) The Parties acknowledge that the agreements contained in paragraph
(b) of this Section 11.2 are an integral part of the transactions contemplated
by this Agreement, and that without these agreements, they would not enter into
this Agreement; accordingly, if Frontstep fails to pay promptly any fee payable
by it pursuant to this Section 11.2, then Frontstep shall pay to MAPICS, its
costs and expenses (including attorneys' fees) in connection with collecting
such fee, together with interest on the amount of the fee at the Prime Rate plus
two percent (2%) from the date such payment was due under this Agreement until
the date of payment.
(d) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by Frontstep of
the terms of this Agreement or otherwise limit the rights of MAPICS.
11.3 BROKERS AND FINDERS.
Except for Updata, Inc. and Xxxxxxx Xxxxx & Co., Inc. as to Frontstep
and except for SunTrust Capital Markets, Inc. as to MAPICS, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or incurred any
Liability for any financial advisory fees, investment bankers' fees,
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brokerage fees, commissions, or finders' fees in connection with this Agreement
or the transactions contemplated hereby. In the event of a claim by any broker
or finder based upon such broker's representing or being retained by or
allegedly representing or being retained by Frontstep or by MAPICS, each of
Frontstep and MAPICS, as the case may be, agrees to indemnify and hold the other
Party harmless of and from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT.
Except as otherwise expressly provided herein, this Agreement
(including the documents and instruments referred to herein) constitutes the
entire agreement between the Parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral (except, as to Section 8.7(b), for the
Confidentiality Agreement). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, other than as provided in Section 8.13 and Section 8.14.
11.5 AMENDMENTS.
To the extent permitted by Law, this Agreement may be amended by a
subsequent writing signed by each of the Parties upon the approval of each of
the Parties, whether before or after shareholder approval of this Agreement has
been obtained; provided, that after any such approval by the holders of
Frontstep Common Stock, there shall be made no amendment that reduces or
modifies in any material respect the consideration to be received by holders of
Frontstep Common Stock without the further approval of such shareholders; and
further provided, that after any such approval by the holders of MAPICS Common
Stock, the provisions of this Agreement relating to the manner or basis in which
shares of Frontstep Common Stock will be exchanged for shares of MAPICS Common
Stock shall not be amended after the Shareholders' Meetings in a manner adverse
to the holders of MAPICS Common Stock without any requisite approval of the
holders of the issued and outstanding shares of MAPICS Common Stock entitled to
vote thereon.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, MAPICS, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Frontstep, to waive or extend the time for the compliance or fulfillment by
Frontstep of any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of MAPICS under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of MAPICS.
(b) Prior to or at the Effective Time, Frontstep, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by MAPICS or Sub, to waive or extend the time
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for the compliance or fulfillment by MAPICS or Sub of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Frontstep under this Agreement, except any
condition which, if not satisfied, would result in the violation of any Law. No
such waiver shall be effective unless in writing signed by a duly authorized
officer of Frontstep.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT.
Except as expressly contemplated hereby, neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any Party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
11.8 NOTICES.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
Frontstep: Frontstep, Inc.
0000 Xxxxxxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxxx
Copy to Counsel: Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
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MAPICS: MAPICS, Inc.
0000 Xxxxxxxx Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxxxx
Copy to Counsel: Xxxxxx & Bird LLP
One Atlanta Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
11.9 GOVERNING LAW.
Regardless of any conflict of law or choice of law principles that
might otherwise apply, the Parties agree that this Agreement shall be governed
by and construed in all respects in accordance with the laws of the State of
Georgia. The Parties all expressly agree and acknowledge that the State of
Georgia has a reasonable relationship to the Parties and/or this Agreement. As
to any dispute, claim, or litigation arising out of or relating in any way to
this Agreement or the transaction at issue in this Agreement, the Parties hereto
hereby agree and consent to be subject to the exclusive jurisdiction of the
United States District Court for the Northern District of Georgia. If
jurisdiction is not present in federal court, then the Parties hereby agree and
consent to the exclusive jurisdiction of the state courts of Xxxxxx County,
Georgia.
11.10 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
11.11 CAPTIONS; ARTICLES AND SECTIONS.
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement. Unless otherwise indicated, all
references to particular Articles or Sections shall mean and refer to the
referenced Articles and Sections of this Agreement.
11.12 INTERPRETATIONS.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against any Party, whether under any rule of construction
or otherwise. No Party to this Agreement shall be considered the draftsman. The
Parties acknowledge and agree that this Agreement has been reviewed, negotiated,
and accepted by all Parties and their attorneys and
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shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all Parties
hereto.
11.13 ENFORCEMENT OF AGREEMENT.
The Parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not performed in
accordance with its specific terms or was 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 hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
11.14 SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
MAPICS, INC.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
President
FP ACQUISITION SUB, INC.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
President
FRONTSTEP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
President
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