EXHIBIT 8
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is made and entered into as
of November 24, 2002, by and among MAPICS, Inc., a Georgia corporation
("MAPICS"), Frontstep, Inc., an Ohio corporation ("Frontstep"), and the
undersigned (the "Shareholder").
Preamble
The Shareholder desires that MAPICS, FP Acquisition Sub, Inc., a wholly
owned subsidiary of MAPICS ("Sub"), and Frontstep enter into an Agreement and
Plan of Merger dated the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") with respect to the merger of Sub with
and into Frontstep (the "Merger"); and
The Shareholder and Frontstep are executing this Agreement as an
inducement to MAPICS to enter into and execute, and to cause Sub to enter into
and execute, the Merger Agreement.
Capitalized terms used and not defined in this Agreement shall have the
meanings ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by MAPICS
and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
ARTICLE 1 REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDER
The Shareholder represents and warrants to MAPICS:
1.1 Beneficial Owner.
The Shareholder is the record or beneficial owner of the number of shares
(such "Shareholder's Shares") of common stock, no par value, of Frontstep
("Frontstep Common Stock") set forth below such Shareholder's name on the
signature page hereof. Except for the Shareholder's Shares (which definition
shall include any other form of securities convertible into Frontstep Common
Stock) and any other shares of Frontstep Common Stock subject hereto, the
Shareholder is not the record or beneficial owner of any shares of Frontstep
Common Stock. The Shareholder has the legal capacity and authority to enter
into and perform all of the Shareholder's obligations under this Agreement.
This Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, the Shareholder, enforceable in
accordance with its terms.
1.2 No Breach by Agreement.
Neither the execution and delivery of this Agreement nor the consummation
by the Shareholder of the transactions contemplated hereby will result in a
violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any kind to
which the Shareholder is a party or bound or to which the Shareholder's Shares
are subject. If the Shareholder is married and the Shareholder's Shares
constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
the Shareholder's spouse, enforceable against such person in accordance with
its terms. Consummation by the Shareholder of the transactions contemplated
hereby will not (i) violate, or require any consent, approval, or notice under,
any provision of any judgment, order, decree, statute, law, rule or regulation
applicable to the Shareholder or the Shareholder's Shares or (ii) conflict with
or result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation to which such Shareholder is a party or by which such
Shareholder or any such Shareholder's properties or assets may be bound.
1.3 No Lien.
The Shareholder's Shares and the certificates representing such shares are
now, and at all times during the term hereof will be, held by the Shareholder,
or by a nominee or custodian for the benefit of such Shareholder, free and
clear of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
1.4 No Brokers.
No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Shareholder.
1.5 Investment Intent; Accredited Investor.
The Shareholder is not acquiring any MAPICS Common Stock with a view to,
or for offer or sale in connection with, any distribution thereof (within the
meaning of the Securities Act) that would be in violation of the securities
laws of the United States of America or any state thereof. The Shareholder
acknowledges that such Shareholder (i) has such knowledge and experience in
business and financial matters and with respect to investments in securities to
enable the Shareholder to understand and evaluate the risks of an investment in
the MAPICS Common Stock to be acquired by the Shareholder and to form an
investment decision with respect thereto and is able to bear the risk of such
-2-
investment for an indefinite period and to afford a complete loss thereof and
(ii) is an "accredited investor" as defined in Rule 501 of Regulation D under
the Securities Act.
1.6 Acknowledgement.
The Shareholder understands and acknowledges that MAPICS is entering into,
and causing Sub to enter into, the Merger Agreement in reliance upon the
Shareholder's execution and delivery of this Agreement. The Shareholder
acknowledges that the irrevocable proxy set forth in Section 2.3 is granted in
consideration for the execution and delivery of the Merger Agreement by MAPICS
and Sub.
ARTICLE 2 SHAREHOLDER COVENANTS AND AGREEMENT; GRANT
OF PROXY
The Shareholder agrees with, and covenants to, MAPICS as follows:
2.1 Voting Agreements.
(a) At any meeting of shareholders of Frontstep called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with respect to the
Merger and the Merger Agreement is sought (the "Shareholders' Meeting"), the
Shareholder shall vote (or cause to be voted) the Shareholder's Shares in favor
of the Merger, the execution and delivery by Frontstep of the Merger Agreement,
and the approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement, provided that the terms of the Merger
Agreement shall not have been amended to reduce the consideration payable in
the Merger to a lesser amount of MAPICS Common Stock.
(b) At any meeting of shareholders of Frontstep or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, the Shareholder shall vote (or cause to be voted) such
Shareholder's Shares against (i) any Acquisition Proposal (other than the
Merger), any amendment of Frontstep's Articles of Incorporation or Code of
Regulations or other proposal or transaction involving Frontstep or any of its
subsidiaries which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify the Merger, the Merger Agreement
or any of the other transactions contemplated by the Merger Agreement, (iii)
any action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
Frontstep under the Merger Agreement or this Agreement; and (iv) except as
otherwise agreed to in writing in advance by MAPICS, against any of the
following actions or agreements (other than the Merger Agreement or the
transactions contemplated thereby): (A) any action or agreement that is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone or attempt to discourage or adversely affect the Merger and the
transactions contemplated by this Agreement and the Merger Agreement; (B) any
change in the management or Board of Directors of Frontstep, except as
contemplated by the Merger Agreement; (C) any change in the present
capitalization or dividend policy of Frontstep; or (D) any other material
change in Frontstep's corporate structure or business;
-3-
provided, however, notwithstanding anything to the contrary herein contained,
the Shareholder may vote, consent or give approval with respect to such
Shareholder's Shares in favor of (w) any amendment of Frontstep's Articles of
Incorporation or Code of Regulations, (x) any change in the present
capitalization of Frontstep, (y) any change in the management or Board of
Directors of Frontstep, and (z) any transaction (including a series of related
transactions), in each case if the action on which such vote, consent or other
approval is sought relates to (I) the issuance of voting securities of
Frontstep (or debt or equity securities of Frontstep exchangeable for or
convertible into voting securities of Frontstep) which immediately following
the issuance thereof (treating in the case of the issuance of debt or equity
securities of Frontstep exchangeable for or convertible or exerciseable into
voting securities of Frontstep, as if the maximum number of voting securities
issuable upon the exchange, conversion or exercise thereof had been issued at
the time of the issuance of such debt or equity securities) constitutes no more
than forty percent (40%) of the total voting power of Frontstep, or (II) the
sale or other disposition (other than in the ordinary course of business) of
assets of Frontstep that, in the aggregate with all other such sales or
dispositions made or agreed to be made, constitute less than the greater of (x)
twenty-five percent (25%) of the book value of all tangible assets of Frontstep
or (y) twenty-five percent (25%) of the annual revenue generating capacity of
Frontstep. Notwithstanding anything to the contrary contained in this
Agreement, each Shareholder who is also a member of the Board of Directors of
Frontstep shall be free to act in such Shareholder's capacity as a member of
the Board of Directors of Frontstep and to discharge such Shareholder's
fiduciary duty as such. The provisions of this Section 2.1 shall constitute a
voting trust under Section 1701.49 of the Ohio Revised Code.
2.2 Certain Covenants.
(a) Transfer. The Shareholder shall not, except pursuant to this Agreement
(i) transfer (which term shall include, for the purposes of this Agreement, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of the Shareholder's Shares or any interest therein, except pursuant to the
Merger; enter into any contract, option or other agreement or understanding
with respect to any transfer of any or all of the Shareholder's Shares or any
interest therein, (iii) grant any proxy, power of attorney or other
authorization in or with respect to the Shareholder's Shares, except for this
Agreement, or (iv) deposit the Shareholder's Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shareholder's
Shares; provided, that the Shareholder may transfer (as defined above) any of
the Shareholder's Shares to any other person who is on the date hereof, or to
any family member of a person or charitable institution which prior to the
Shareholders Meeting and prior to such transfer becomes, a party to this
Agreement bound by all the obligations of the Shareholder hereunder.
(b) Exchange of Shares; Waiver of Rights of Appraisal. If the requisite
number of the holders of Frontstep Stock approve the Merger and the Merger
Agreement, the Shareholder's Shares shall, pursuant to the terms of the Merger
Agreement, be exchanged for the consideration provided in the Merger Agreement.
The Shareholder hereby waives any rights of appraisal with respect to the
Merger, or rights to dissent from the Merger, that such Shareholder may have.
-4-
(c) Other Offers. The Shareholder shall not, nor shall Shareholder permit
any investment banker, attorney or other adviser or representative of the
Shareholder to, directly or indirectly, (i) solicit, initiate, encourage or
induce the making, submission or announcement of, any Acquisition Proposal or
(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. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by an investment
banker, attorney or other adviser or representative of the Shareholder, whether
or not such person is purporting to act on behalf of the Shareholder or
otherwise, shall be deemed to be in violation of this Section 2.2(c) by the
Shareholder; provided, that it is hereby acknowledged and agreed that neither
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. nor any of its Affiliates is acting as an investment
banker, adviser or representative to the Company. "Acquisition Proposal" does
not include the Merger and the other transactions contemplated by the Merger
Agreement or any transfer expressly permitted by the proviso to Section 2.2(a).
(d) Confidentiality. The Shareholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to herein.
In this connection, pending public disclosure thereof, each Shareholder hereby
agrees not to disclose or discuss such matters with anyone not a party to this
Agreement (other than counsel and advisors, if any) without the prior written
consent of MAPICS, except for filings required pursuant to the Exchange Act and
the rules and regulations thereunder or disclosures such Shareholder's counsel
advises are necessary in order to fulfill such Shareholder's obligations
imposed by laws, in which event such Shareholder shall give notice of such
disclosure to MAPICS as promptly as practicable so as to enable MAPICS to seek
a protective order from a court of competent jurisdiction with respect thereto.
(e) No Inconsistent Agreements. The Shareholder shall not enter into any
agreement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions of this Agreement.
2.3 Grant of Irrevocable Proxy; Appointment of Proxy.
(a) The Shareholder hereby irrevocably grants to, and appoints, MAPICS and
▇▇▇▇▇▇▇ ▇▇▇▇, President and Chief Executive Officer of MAPICS, in his capacity
as officer of MAPICS, and any individual who shall hereafter succeed to any
such office of MAPICS, and each of them separately, the Shareholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Shareholder, to vote the Shareholder's Shares, or grant a
consent or approval in respect of such Shares (i) in favor of the Merger, the
execution and delivery of the Merger Agreement and approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have been
amended to reduce the consideration payable in the Merger to a lesser amount of
-5-
MAPICS Common Stock, and against any Acquisition Proposal, other than
transactions permitted by the proviso set forth in Section 2.1(b).
(b) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's shares that may still be in effect are not
irrevocable, and that any such proxies are hereby revoked.
(c) The Shareholder hereby affirms that the irrevocable proxy set forth in
this Section 2.3 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance
of the duties of the Shareholder under this Agreement. The Shareholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. The Shareholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 1701.48 of the Ohio Revised Code.
2.4 Agreement as to Certain Events.
The Shareholder agrees that this Agreement and the obligations hereunder
shall attach to the Shareholder's Shares and shall be binding upon any person
or entity to which legal or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise, including the Shareholder's
successors or assigns. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of
Frontstep affecting the Frontstep Common Stock, or the acquisition of
additional shares of Frontstep Common Stock or other voting securities of
Frontstep by any Shareholder, the number of Shares subject to the terms of this
Agreement shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Frontstep Common
Stock or other voting securities of Frontstep issued to or acquired by the
Shareholder. The Shareholder agrees, subject to the terms and conditions of the
Restructuring Agreement and the following provisions of this Section 2.4, at
the request of MAPICS, to exercise, exchange or convert any of such
Shareholder's options (or other securities convertible into Frontstep Common
Stock) to acquire additional shares of Frontstep Common Stock ("Rights") into
Shares of Frontstep Common Stock, so as to constitute After-Acquired Shares
under this Agreement; provided, however, that MAPICS shall not require the
exercise of any such stock options, at any time when the exercise price of such
stock option is more than the then-current market price of shares of Forest
Common Stock. Notwithstanding the foregoing, the Shareholder shall have no
obligation to exercise the Series A Warrants and the Convertible Notes. In
order to facilitate the exercise at the request of MAPICS of any such Right,
MAPICS shall loan to any requesting Shareholder funds sufficient to allow such
Shareholder to exercise the Right. Such loan shall be non-recourse (except with
respect to pledged securities), shall not be interest bearing, shall be due and
payable upon the earlier of acquisition by MAPICS of the After-Acquired
-6-
Shares, consummation of the Merger or termination of this Agreement and shall
be secured by a pledge of the shares of Frontstep Common Stock acquired upon
exercise of such Right. Each Shareholder hereby agrees to promptly notify
MAPICS in writing of the number of After-Acquired Shares that may be acquired
by such Shareholder, if any, after the date hereof. "After-Acquired Shares"
means any shares of Frontstep Common Stock acquired directly or indirectly, or
otherwise beneficially owned, by any of the Shareholders in any capacity after
the date hereof and prior to the termination hereof, whether upon the exercise
of options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of a purchase, dividend, distribution,
gift, bequest, inheritance or as a successor in interest in any capacity
(including a fiduciary capacity) or otherwise; and the phrases "beneficially
own" or "beneficial ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing (without duplicative counting of the
same securities by the same holder, securities beneficially owned by a person
shall include securities beneficially owned by all other persons with whom such
Person would constitute a "group" within the meaning of Rule 13d-5 of the
Exchange Act).
2.5 Stop Transfer; Legends.
Frontstep agrees with, and covenants to, MAPICS that Frontstep shall not
register the transfer of any certificate representing any of the Shareholder's
Shares, unless such transfer is made to MAPICS or Sub or otherwise in
compliance with this Agreement. The Shareholder agrees that the Shareholder
will tender to Frontstep, within five business days after the date thereof, any
and all certificates representing such Shareholder's Shares and Frontstep will
inscribe upon such certificates the following legend: "The shares of Common
Stock, no par value, of Frontstep, Inc. represented by this certificate are
subject to a Shareholders Agreement dated as of November 24, 2002, and may not
be sold or otherwise transferred, except in accordance therewith. Copies of
such Agreement may be obtained at the principal executive offices of Frontstep,
Inc."
2.6 Standstill.
Shareholder agrees that, for a period of two years from the Effective
Time, unless such shall have been specifically invited in writing by MAPICS,
neither Shareholder nor any of its directors, officers or employees
(collectively, "Representatives"), will in any manner, directly or indirectly,
(a) effect or seek, offer or propose (whether publicly or otherwise) to effect,
or cause or participate in or in any way assist any other person to effect or
seek, offer or propose (whether publicly or otherwise) to effect or participate
in, (i) any acquisition of any securities (or beneficial ownership thereof) or
assets of MAPICS or any of its Subsidiaries; provided that Shareholder may
acquire shares of MAPICS equal to or less than five percent (5%) of the number
of shares issued to Shareholder in the Merger, (ii) any tender or exchange
offer, merger or other business combination involving MAPICS or any of its
Subsidiaries, (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to MAPICS or any of
its Subsidiaries, or (iv) any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the Securities and Exchange Commission) or consents
to vote any voting securities of MAPICS, (b) form, join or in any way
participate in a "group" (as defined under the ▇▇▇▇ ▇▇▇) other than any "group"
that may be deemed to be formed by this Agreement or by the Investor Rights
Agreement, (c) otherwise act,
-7-
alone or in concert with others, to seek to control or influence the
management, board of directors or policies of MAPICS, (d) take any action which
might force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above, or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing.
Shareholder also agrees during such period not to request MAPICS (or its
directors, officers, employees, advisors or agents), directly or indirectly, to
amend or waive any provision of this paragraph (including this sentence).
Shareholder acknowledges that Shareholder is aware (and that its
Representatives who are apprised of this matter have been advised) that the
United States securities laws prohibit Shareholder, its Representatives, and
any person who has received material non-public information about MAPICS from
purchasing or selling securities of MAPICS or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities in
reliance on such information.
Solely for the purposes of this Section 2.6, the term "Shareholder" shall
mean ▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Fallen Angel Equity Fund, L.P., Fallen Angel Capital,
L.L.C., MSDW Venture Partners IV, Inc., MSDW Venture Partners IV, L.L.C.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Partners IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Offshore
Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity Funding, Inc.,
Originators Investment Plan, L.P., or MSDW OIP Investors, Inc., as applicable.
2.7 Lock-up.
Shareholder agrees that for a period beginning upon the Effective Time of
the Merger and ending 180 days thereafter, the Shareholder will not, directly
or indirectly (x) make, agree to or cause any offer, sale (including short
sale), loan, pledge, or other disposition of, or grant any options, rights or
warrants to purchase with respect to, or otherwise transfer or reduce any risk
of ownership of, directly or indirectly, any MAPICS Common Stock or (y) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of MAPICS Common Stock
(regardless of whether any of the transactions described in clause (x) or (y)
is to be settled by the delivery of MAPICS Common Stock, in cash or otherwise),
nor will the undersigned make any demand for or exercise any right with respect
to the registration of MAPICS Common Stock, without the prior written consent
of MAPICS, which shall not be unreasonably withheld, conditioned or delayed;
provided, however, that nothing contained herein shall prohibit (i) the
exercise of stock options or other purchases of MAPICS Common Stock under stock
option plans or other incentive compensation arrangements for employees or
directors previously approved by MAPICS's Board of Directors or (ii) the gift,
pledge or assignment of any such securities without the prior consent of MAPICS
if the donee, pledgee or assignee agrees, in writing delivered to MAPICS within
five days after such gift, pledge or assignment, to be bound by the terms of
this letter. The Shareholder consents to the entry of stop-transfer
instructions with MAPICS's transfer agent against the transfer of, and
authorizes MAPICS to cause the transfer agent to decline to transfer, any of
the above-described
-8-
securities owned beneficially or of record by the undersigned. Notwithstanding
the foregoing, if MAPICS amends or waives the terms of this Section 2.7 for any
Shareholder (other than a Shareholder who immediately following the Merger is
an employee of MAPICS or the Surviving Corporation), without any further action
on the part of MAPICS or any other Person, this Section 2.7 shall be amended
and waived for all other Shareholders.
2.8 Release of Claims
Except for the rights of the Shareholder to reimbursement of expenses in
accordance with the terms of the Merger Agreement and any rights to which
Shareholder or its Representatives are entitled under Section 8.14 of the
Merger Agreement, Shareholder, on behalf of itself, its Representatives, heirs,
executors, administrators, successors, and assigns, effective as of the
Effective Time (i) fully and completely releases and discharges Frontstep, its
affiliates (prior to the Effective Time), and each of their respective
officers, directors and employees (each a "Released Party") from any claim,
liability, damage, cost, action, cause of action, expense or other obligation
that Shareholder has or may have against any Released Party based upon, related
to or in any way arising out of any acts, whether of omission or commission, of
any Released Party relating to the Merger, or other events occurring or
circumstances existing at or prior to the Effective Time of the Merger, and
(ii) agrees never to commence, aid in any way, or prosecute against any
Released Party any action, lawsuit, or other proceeding based upon any claims,
demands, causes of action, obligations, damages, or liabilities covered by this
Section 2.8.
2.9 Conflict with Investor Rights Agreement
The Shareholder, as a party to that certain Amended and Restated Investor
Rights Agreement dated March 7, 2002 (the "Investor Rights Agreement"), hereby
consents that, to the extent Section 2.1, Section 2.2, Section 2.3, Section 2.6
or Section 2.7 of this Agreement conflicts with the Investor Rights Agreement,
this Agreement will control; provided, however, that should the Merger fail to
close for any reason, the Investor Rights Agreement shall control and the
Shareholders shall continue to be bound by its provisions. The Investor Rights
Agreement will terminate on consummation of the Merger and the Closing of the
Merger Agreement.
2.10 Further Assurances; Public Disclosure.
The Shareholder shall, upon request of MAPICS, execute and deliver any
additional documents and take such further actions as may reasonably be deemed
by MAPICS to be necessary or desirable to carry out the provisions hereof and
to vest the power to vote such Shareholder's Shares as contemplated by Section
2.3 in MAPICS and the other irrevocable proxies described therein at the
expense of MAPICS. The Shareholder hereby agrees that, subject to the
Shareholder's right of prior review and reasonable opportunity to comment,
MAPICS may publish and disclose in the Joint Proxy Statement (including all
documents and schedules filed with the SEC), such
-9-
Shareholder's identity and ownership of Frontstep Common Stock and the nature
of such Shareholder's commitments, arrangements and understandings under this
Agreement.
ARTICLE 3 REGULATORY APPROVALS; TERMINATION
3.1 Regulatory Approvals.
Each of the provisions of this Agreement is subject to compliance with
applicable regulatory conditions and receipt of any required regulatory
approvals.
3.2 Termination.
This Agreement, and all rights and obligations of the parties hereunder,
shall terminate upon the date upon which the Merger Agreement is terminated in
accordance with its terms; provided that if an "Extension Event" shall have
occurred as of or prior to termination of the Merger Agreement, then, for a
period of nine months following such termination, (i) the rights and
obligations of the parties hereto under Sections 2.1(b), 2.2(a)(ii),
2.3(a)(ii), 2.4 and 2.6 hereof shall continue in full force and effect and (ii)
the Shareholder shall not transfer any or all of the Shareholder's Shares in
connection with any Acquisition Proposal. For purposes of the foregoing, an
"Extension Event" means any of the following events: (A) the shareholders
meeting to approve the Merger Agreement shall not have been held or the
approval of the Merger at such meeting by the holders of two-thirds of the
outstanding shares of Frontstep Common Stock shall not have been obtained, (B)
any person (other than MAPICS or any Subsidiary of MAPICS) after the date of
this Agreement shall have made, or re-affirmed, or publicly disclosed an
intention to make or re-affirm, an Acquisition Proposal, or (C) any person
shall have formally protested any application filed with any regulatory
authorities pursuant to Section 8.4(a) of the Merger Agreement by MAPICS or any
of its Affiliates in connection with the Merger.
ARTICLE 4 MISCELLANEOUS
4.1 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 25% 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)
-10-
involving: (i) any acquisition or purchase from Frontstep by any Person or
"Group" (other than MAPICS or any of its Affiliates) of 40% 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 40% 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 60% 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
25% 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; 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.
Notwithstanding the foregoing, for purposes of this Agreement, the
Affiliate of any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Shareholder shall be deemed to be limited
solely to MSDW Venture Partners IV, Inc., MSDW Venture Partners IV,
L.L.C., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Partners IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity
Funding, Inc., Originator Investment Plan, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Off-Shore Investors IV, L.P. and MSDW OIP Investors, Inc.
"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.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
Term Page Term Page
After-Acquired Shares............7 MAPICS...........................1
Agreement........................1 Merger...........................1
Extension Event.................10 Released Party...................9
Frontstep........................1 Representatives..................7
Investor Rights Agreement........9 Rights...........................6
---------------------------------- ----------------------------------
-11-
Term Page Term Page
Shareholder......................1 Shareholders' Meeting............3
Shareholder's....................1 Sub..............................1
(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."
(d) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Merger Agreement.
4.2 Notices.
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice): (i) if to Frontstep or MAPICS, to its respective
address provided in the Merger Agreement; and (ii) if to the Shareholder; to
such Shareholder's address shown below such Shareholder's signature on the last
page hereof.
4.3 Interpretation.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. When a reference is made in this Agreement to a section, such
reference shall be to a section in this Agreement unless otherwise indicated.
The descriptive headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
4.4 Counterparts.
This Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement.
4.5 Entire Agreement.
This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof and is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
4.6 Governing Law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Ohio, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
-12-
4.7 No Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of
law or otherwise, by any of the parties without the prior written consent of
the other parties, except as expressly contemplated by Section 2.2(a) and
provided that MAPICS, without obtaining the consent of any other party hereto,
shall be entitled to assign this Agreement or all or any of its rights or
obligations hereunder (i) to any one or more Affiliates of MAPICS and (ii) to
any lender to MAPICS or Sub as collateral security but no assignment by MAPICS
under this Section 4.7 shall relieve MAPICS of its obligations under this
Agreement. Any assignment in violation of the foregoing shall be void.
4.8 Specific Performance.
The Shareholder agrees that irreparable damage would occur and that MAPICS
would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that MAPICS
shall be entitled to an injunction or injunctions to prevent breaches by the
Shareholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Ohio or in Ohio state court, this being in addition to any other
remedy to which they are entitled at law or in equity. The parties expressly
agree and acknowledge that the State of Ohio 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 District of Ohio. If jurisdiction is not present in federal court, then the
parties hereby agree and consent to the exclusive jurisdiction of the state
courts of Franklin County, Ohio. Each party hereto hereby irrevocably waives,
to the fullest extent permitted by Law, (a) any objection that it may now or
hereafter have to laying venue of any suit, action or proceeding brought in
such court, (b) any claim that any suit, action or proceeding brought in such
court has been brought in an inconvenient forum, and (c) any defense that it
may now or hereafter have based on lack of personal jurisdiction in such forum.
If any term, provision, covenant or restriction herein, or the application
thereof to any circumstance, shall, to any extent, be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions herein and the application
thereof to any other circumstances, shall remain in full force and effect,
shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
4.9 Amendments.
No amendment, modification or waiver in respect of this Agreement shall be
effective against any party unless it shall be in writing and signed by such
party.
-13-
[Signatures on next page]
-14-
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Shareholder Agreement as of the day and year first above written.
MAPICS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------
Vice President
FRONTSTEP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
President
SHAREHOLDERS:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Partners IV, L.P.
By: MSDW Venture Partners IV, L.L.C.
By: MSDW Venture Capital IV, Inc.
By: /s/ ▇▇▇ ▇▇ ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇ ▇▇▇▇▇▇
Title: Managing Director
Number of Shares
Beneficially Owned: 3,462,113
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Investors IV, L.P.
By: MSDW Venture Partners IV, L.L.C.
By: MSDW Venture Capital IV, Inc.
By: /s/ ▇▇▇ ▇▇ ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇ ▇▇▇▇▇▇
Title: Managing Director
Number of Shares
Beneficially Owned: 401,660
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Offshore Investors IV, L.P.
By: MSDW Venture Partners IV, L.L.C.
By: MSDW Venture Capital IV, Inc.
By: /s/ ▇▇▇ ▇▇ ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇ ▇▇▇▇▇▇
Title: Managing Director
Number of Shares
Beneficially Owned: 135,067
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is made and entered into as
of November 24, 2002, by and among MAPICS, Inc., a Georgia corporation
("MAPICS"), Frontstep, Inc., an Ohio corporation ("Frontstep"), and the
undersigned (the "Shareholder").
Preamble
The Shareholder desires that MAPICS, FP Acquisition Sub, Inc., a wholly
owned subsidiary of MAPICS ("Sub"), and Frontstep enter into an Agreement and
Plan of Merger dated the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") with respect to the merger of Sub with
and into Frontstep (the "Merger"); and
The Shareholder and Frontstep are executing this Agreement as an
inducement to MAPICS to enter into and execute, and to cause Sub to enter into
and execute, the Merger Agreement.
Capitalized terms used and not defined in this Agreement shall have the
meanings ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by MAPICS
and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
ARTICLE 1 REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDER
The Shareholder represents and warrants to MAPICS:
1.1 Beneficial Owner.
The Shareholder is the record or beneficial owner of the number of shares
(such "Shareholder's Shares") of common stock, no par value, of Frontstep
("Frontstep Common Stock") set forth below such Shareholder's name on the
signature page hereof. Except for the Shareholder's Shares (which definition
shall include any other form of securities convertible into Frontstep Common
Stock) and any other shares of Frontstep Common Stock subject hereto, the
Shareholder is not the record or beneficial owner of any shares of Frontstep
Common Stock. The Shareholder has the legal capacity and authority to enter
into and perform all of the Shareholder's obligations under this Agreement.
This Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, the Shareholder, enforceable in
accordance with its terms.
1.2 No Breach by Agreement.
Neither the execution and delivery of this Agreement nor the consummation
by the Shareholder of the transactions contemplated hereby will result in a
violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any kind to
which the Shareholder is a party or bound or to which the Shareholder's Shares
are subject. If the Shareholder is married and the Shareholder's Shares
constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
the Shareholder's spouse, enforceable against such person in accordance with
its terms. Consummation by the Shareholder of the transactions contemplated
hereby will not (i) violate, or require any consent, approval, or notice under,
any provision of any judgment, order, decree, statute, law, rule or regulation
applicable to the Shareholder or the Shareholder's Shares or (ii) conflict with
or result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation to which such Shareholder is a party or by which such
Shareholder or any such Shareholder's properties or assets may be bound.
1.3 No Lien.
The Shareholder's Shares and the certificates representing such shares are
now, and at all times during the term hereof will be, held by the Shareholder,
or by a nominee or custodian for the benefit of such Shareholder, free and
clear of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
1.4 No Brokers.
No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Shareholder.
1.5 Investment Intent; Accredited Investor.
The Shareholder is not acquiring any MAPICS Common Stock with a view to,
or for offer or sale in connection with, any distribution thereof (within the
meaning of the Securities Act) that would be in violation of the securities
laws of the United States of America or any state thereof. The Shareholder
acknowledges that such Shareholder (i) has such knowledge and experience in
business and financial matters and with respect to investments in securities to
enable the Shareholder to understand and evaluate the risks of an investment in
the MAPICS Common Stock to be acquired by the Shareholder and to form an
investment decision with respect thereto and is able to bear the risk of such
-2-
investment for an indefinite period and to afford a complete loss thereof and
(ii) is an "accredited investor" as defined in Rule 501 of Regulation D under
the Securities Act.
1.6 Acknowledgement.
The Shareholder understands and acknowledges that MAPICS is entering into,
and causing Sub to enter into, the Merger Agreement in reliance upon the
Shareholder's execution and delivery of this Agreement. The Shareholder
acknowledges that the irrevocable proxy set forth in Section 2.3 is granted in
consideration for the execution and delivery of the Merger Agreement by MAPICS
and Sub.
ARTICLE 2 SHAREHOLDER COVENANTS AND AGREEMENT; GRANT
OF PROXY
The Shareholder agrees with, and covenants to, MAPICS as follows:
2.1 Voting Agreements.
(a) At any meeting of shareholders of Frontstep called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with respect to the
Merger and the Merger Agreement is sought (the "Shareholders' Meeting"), the
Shareholder shall vote (or cause to be voted) the Shareholder's Shares in favor
of the Merger, the execution and delivery by Frontstep of the Merger Agreement,
and the approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement, provided that the terms of the Merger
Agreement shall not have been amended to reduce the consideration payable in
the Merger to a lesser amount of MAPICS Common Stock.
(b) At any meeting of shareholders of Frontstep or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, the Shareholder shall vote (or cause to be voted) such
Shareholder's Shares against (i) any Acquisition Proposal (other than the
Merger), any amendment of Frontstep's Articles of Incorporation or Code of
Regulations or other proposal or transaction involving Frontstep or any of its
subsidiaries which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify the Merger, the Merger Agreement
or any of the other transactions contemplated by the Merger Agreement, (iii)
any action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
Frontstep under the Merger Agreement or this Agreement; and (iv) except as
otherwise agreed to in writing in advance by MAPICS, against any of the
following actions or agreements (other than the Merger Agreement or the
transactions contemplated thereby): (A) any action or agreement that is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone or attempt to discourage or adversely affect the Merger and the
transactions contemplated by this Agreement and the Merger Agreement; (B) any
change in the management or Board of Directors of Frontstep, except as
contemplated by the Merger Agreement; (C) any change in the present
capitalization or dividend policy of Frontstep; or (D) any other material
change in Frontstep's corporate structure or business;
-3-
provided, however, notwithstanding anything to the contrary herein contained,
the Shareholder may vote, consent or give approval with respect to such
Shareholder's Shares in favor of (w) any amendment of Frontstep's Articles of
Incorporation or Code of Regulations, (x) any change in the present
capitalization of Frontstep, (y) any change in the management or Board of
Directors of Frontstep, and (z) any transaction (including a series of related
transactions), in each case if the action on which such vote, consent or other
approval is sought relates to (I) the issuance of voting securities of
Frontstep (or debt or equity securities of Frontstep exchangeable for or
convertible into voting securities of Frontstep) which immediately following
the issuance thereof (treating in the case of the issuance of debt or equity
securities of Frontstep exchangeable for or convertible or exerciseable into
voting securities of Frontstep, as if the maximum number of voting securities
issuable upon the exchange, conversion or exercise thereof had been issued at
the time of the issuance of such debt or equity securities) constitutes no more
than forty percent (40%) of the total voting power of Frontstep, or (II) the
sale or other disposition (other than in the ordinary course of business) of
assets of Frontstep that, in the aggregate with all other such sales or
dispositions made or agreed to be made, constitute less than the greater of (x)
twenty-five percent (25%) of the book value of all tangible assets of Frontstep
or (y) twenty-five percent (25%) of the annual revenue generating capacity of
Frontstep. Notwithstanding anything to the contrary contained in this
Agreement, each Shareholder who is also a member of the Board of Directors of
Frontstep shall be free to act in such Shareholder's capacity as a member of
the Board of Directors of Frontstep and to discharge such Shareholder's
fiduciary duty as such. The provisions of this Section 2.1 shall constitute a
voting trust under Section 1701.49 of the Ohio Revised Code.
2.2 Certain Covenants.
(a) Transfer. The Shareholder shall not, except pursuant to this Agreement
(i) transfer (which term shall include, for the purposes of this Agreement, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of the Shareholder's Shares or any interest therein, except pursuant to the
Merger; enter into any contract, option or other agreement or understanding
with respect to any transfer of any or all of the Shareholder's Shares or any
interest therein, (iii) grant any proxy, power of attorney or other
authorization in or with respect to the Shareholder's Shares, except for this
Agreement, or (iv) deposit the Shareholder's Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shareholder's
Shares; provided, that the Shareholder may transfer (as defined above) any of
the Shareholder's Shares to any other person who is on the date hereof, or to
any family member of a person or charitable institution which prior to the
Shareholders Meeting and prior to such transfer becomes, a party to this
Agreement bound by all the obligations of the Shareholder hereunder.
(b) Exchange of Shares; Waiver of Rights of Appraisal. If the requisite
number of the holders of Frontstep Stock approve the Merger and the Merger
Agreement, the Shareholder's Shares shall, pursuant to the terms of the Merger
Agreement, be exchanged for the consideration provided in the Merger Agreement.
The Shareholder hereby waives any rights of appraisal with respect to the
Merger, or rights to dissent from the Merger, that such Shareholder may have.
-4-
(c) Other Offers. The Shareholder shall not, nor shall Shareholder permit
any investment banker, attorney or other adviser or representative of the
Shareholder to, directly or indirectly, (i) solicit, initiate, encourage or
induce the making, submission or announcement of, any Acquisition Proposal or
(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. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by an investment
banker, attorney or other adviser or representative of the Shareholder, whether
or not such person is purporting to act on behalf of the Shareholder or
otherwise, shall be deemed to be in violation of this Section 2.2(c) by the
Shareholder; provided, that it is hereby acknowledged and agreed that neither
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. nor any of its Affiliates is acting as an investment
banker, adviser or representative to the Company. "Acquisition Proposal" does
not include the Merger and the other transactions contemplated by the Merger
Agreement or any transfer expressly permitted by the proviso to Section 2.2(a).
(d) Confidentiality. The Shareholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to herein.
In this connection, pending public disclosure thereof, each Shareholder hereby
agrees not to disclose or discuss such matters with anyone not a party to this
Agreement (other than counsel and advisors, if any) without the prior written
consent of MAPICS, except for filings required pursuant to the Exchange Act and
the rules and regulations thereunder or disclosures such Shareholder's counsel
advises are necessary in order to fulfill such Shareholder's obligations
imposed by laws, in which event such Shareholder shall give notice of such
disclosure to MAPICS as promptly as practicable so as to enable MAPICS to seek
a protective order from a court of competent jurisdiction with respect thereto.
(e) No Inconsistent Agreements. The Shareholder shall not enter into any
agreement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions of this Agreement.
2.3 Grant of Irrevocable Proxy; Appointment of Proxy.
(a) The Shareholder hereby irrevocably grants to, and appoints, MAPICS and
▇▇▇▇▇▇▇ ▇▇▇▇, President and Chief Executive Officer of MAPICS, in his capacity
as officer of MAPICS, and any individual who shall hereafter succeed to any
such office of MAPICS, and each of them separately, the Shareholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Shareholder, to vote the Shareholder's Shares, or grant a
consent or approval in respect of such Shares (i) in favor of the Merger, the
execution and delivery of the Merger Agreement and approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have been
amended to reduce the consideration payable in the Merger to a lesser amount of
-5-
MAPICS Common Stock, and against any Acquisition Proposal, other than
transactions permitted by the proviso set forth in Section 2.1(b).
(b) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's shares that may still be in effect are not
irrevocable, and that any such proxies are hereby revoked.
(c) The Shareholder hereby affirms that the irrevocable proxy set forth in
this Section 2.3 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance
of the duties of the Shareholder under this Agreement. The Shareholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. The Shareholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 1701.48 of the Ohio Revised Code.
2.4 Agreement as to Certain Events.
The Shareholder agrees that this Agreement and the obligations hereunder
shall attach to the Shareholder's Shares and shall be binding upon any person
or entity to which legal or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise, including the Shareholder's
successors or assigns. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of
Frontstep affecting the Frontstep Common Stock, or the acquisition of
additional shares of Frontstep Common Stock or other voting securities of
Frontstep by any Shareholder, the number of Shares subject to the terms of this
Agreement shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Frontstep Common
Stock or other voting securities of Frontstep issued to or acquired by the
Shareholder. The Shareholder agrees, subject to the terms and conditions of the
Restructuring Agreement and the following provisions of this Section 2.4, at
the request of MAPICS, to exercise, exchange or convert any of such
Shareholder's options (or other securities convertible into Frontstep Common
Stock) to acquire additional shares of Frontstep Common Stock ("Rights") into
Shares of Frontstep Common Stock, so as to constitute After-Acquired Shares
under this Agreement; provided, however, that MAPICS shall not require the
exercise of any such stock options, at any time when the exercise price of such
stock option is more than the then-current market price of shares of Forest
Common Stock. Notwithstanding the foregoing, the Shareholder shall have no
obligation to exercise the Series A Warrants and the Convertible Notes. In
order to facilitate the exercise at the request of MAPICS of any such Right,
MAPICS shall loan to any requesting Shareholder funds sufficient to allow such
Shareholder to exercise the Right. Such loan shall be non-recourse (except with
respect to pledged securities), shall not be interest bearing, shall be due and
payable upon the earlier of acquisition by MAPICS of the After-Acquired
-6-
Shares, consummation of the Merger or termination of this Agreement and shall
be secured by a pledge of the shares of Frontstep Common Stock acquired upon
exercise of such Right. Each Shareholder hereby agrees to promptly notify
MAPICS in writing of the number of After-Acquired Shares that may be acquired
by such Shareholder, if any, after the date hereof. "After-Acquired Shares"
means any shares of Frontstep Common Stock acquired directly or indirectly, or
otherwise beneficially owned, by any of the Shareholders in any capacity after
the date hereof and prior to the termination hereof, whether upon the exercise
of options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of a purchase, dividend, distribution,
gift, bequest, inheritance or as a successor in interest in any capacity
(including a fiduciary capacity) or otherwise; and the phrases "beneficially
own" or "beneficial ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing (without duplicative counting of the
same securities by the same holder, securities beneficially owned by a person
shall include securities beneficially owned by all other persons with whom such
Person would constitute a "group" within the meaning of Rule 13d-5 of the
Exchange Act).
2.5 Stop Transfer; Legends.
Frontstep agrees with, and covenants to, MAPICS that Frontstep shall not
register the transfer of any certificate representing any of the Shareholder's
Shares, unless such transfer is made to MAPICS or Sub or otherwise in
compliance with this Agreement. The Shareholder agrees that the Shareholder
will tender to Frontstep, within five business days after the date thereof, any
and all certificates representing such Shareholder's Shares and Frontstep will
inscribe upon such certificates the following legend: "The shares of Common
Stock, no par value, of Frontstep, Inc. represented by this certificate are
subject to a Shareholders Agreement dated as of November 24, 2002, and may not
be sold or otherwise transferred, except in accordance therewith. Copies of
such Agreement may be obtained at the principal executive offices of Frontstep,
Inc."
2.6 Standstill.
Shareholder agrees that, for a period of two years from the Effective
Time, unless such shall have been specifically invited in writing by MAPICS,
neither Shareholder nor any of its directors, officers or employees
(collectively, "Representatives"), will in any manner, directly or indirectly,
(a) effect or seek, offer or propose (whether publicly or otherwise) to effect,
or cause or participate in or in any way assist any other person to effect or
seek, offer or propose (whether publicly or otherwise) to effect or participate
in, (i) any acquisition of any securities (or beneficial ownership thereof) or
assets of MAPICS or any of its Subsidiaries; provided that Shareholder may
acquire shares of MAPICS equal to or less than five percent (5%) of the number
of shares issued to Shareholder in the Merger, (ii) any tender or exchange
offer, merger or other business combination involving MAPICS or any of its
Subsidiaries, (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to MAPICS or any of
its Subsidiaries, or (iv) any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the Securities and Exchange Commission) or consents
to vote any voting securities of MAPICS, (b) form, join or in any way
participate in a "group" (as defined under the ▇▇▇▇ ▇▇▇) other than any "group"
that may be deemed to be formed by this Agreement or by the Investor Rights
Agreement, (c) otherwise act,
-7-
alone or in concert with others, to seek to control or influence the
management, board of directors or policies of MAPICS, (d) take any action which
might force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above, or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing.
Shareholder also agrees during such period not to request MAPICS (or its
directors, officers, employees, advisors or agents), directly or indirectly, to
amend or waive any provision of this paragraph (including this sentence).
Shareholder acknowledges that Shareholder is aware (and that its
Representatives who are apprised of this matter have been advised) that the
United States securities laws prohibit Shareholder, its Representatives, and
any person who has received material non-public information about MAPICS from
purchasing or selling securities of MAPICS or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities in
reliance on such information.
Solely for the purposes of this Section 2.6, the term "Shareholder" shall
mean ▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Fallen Angel Equity Fund, L.P., Fallen Angel Capital,
L.L.C., MSDW Venture Partners IV, Inc., MSDW Venture Partners IV, L.L.C.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Partners IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Offshore
Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity Funding, Inc.,
Originators Investment Plan, L.P., or MSDW OIP Investors, Inc., as applicable.
2.7 Lock-up.
Shareholder agrees that for a period beginning upon the Effective Time of
the Merger and ending 180 days thereafter, the Shareholder will not, directly
or indirectly (x) make, agree to or cause any offer, sale (including short
sale), loan, pledge, or other disposition of, or grant any options, rights or
warrants to purchase with respect to, or otherwise transfer or reduce any risk
of ownership of, directly or indirectly, any MAPICS Common Stock or (y) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of MAPICS Common Stock
(regardless of whether any of the transactions described in clause (x) or (y)
is to be settled by the delivery of MAPICS Common Stock, in cash or otherwise),
nor will the undersigned make any demand for or exercise any right with respect
to the registration of MAPICS Common Stock, without the prior written consent
of MAPICS, which shall not be unreasonably withheld, conditioned or delayed;
provided, however, that nothing contained herein shall prohibit (i) the
exercise of stock options or other purchases of MAPICS Common Stock under stock
option plans or other incentive compensation arrangements for employees or
directors previously approved by MAPICS's Board of Directors or (ii) the gift,
pledge or assignment of any such securities without the prior consent of MAPICS
if the donee, pledgee or assignee agrees, in writing delivered to MAPICS within
five days after such gift, pledge or assignment, to be bound by the terms of
this letter. The Shareholder consents to the entry of stop-transfer
instructions with MAPICS's transfer agent against the transfer of, and
authorizes MAPICS to cause the transfer agent to decline to transfer, any of
the above-described
-8-
securities owned beneficially or of record by the undersigned. Notwithstanding
the foregoing, if MAPICS amends or waives the terms of this Section 2.7 for any
Shareholder (other than a Shareholder who immediately following the Merger is
an employee of MAPICS or the Surviving Corporation), without any further action
on the part of MAPICS or any other Person, this Section 2.7 shall be amended
and waived for all other Shareholders.
2.8 Release of Claims
Except for the rights of the Shareholder to reimbursement of expenses in
accordance with the terms of the Merger Agreement and any rights to which
Shareholder or its Representatives are entitled under Section 8.14 of the
Merger Agreement, Shareholder, on behalf of itself, its Representatives, heirs,
executors, administrators, successors, and assigns, effective as of the
Effective Time (i) fully and completely releases and discharges Frontstep, its
affiliates (prior to the Effective Time), and each of their respective
officers, directors and employees (each a "Released Party") from any claim,
liability, damage, cost, action, cause of action, expense or other obligation
that Shareholder has or may have against any Released Party based upon, related
to or in any way arising out of any acts, whether of omission or commission, of
any Released Party relating to the Merger, or other events occurring or
circumstances existing at or prior to the Effective Time of the Merger, and
(ii) agrees never to commence, aid in any way, or prosecute against any
Released Party any action, lawsuit, or other proceeding based upon any claims,
demands, causes of action, obligations, damages, or liabilities covered by this
Section 2.8.
2.9 Conflict with Investor Rights Agreement
The Shareholder, as a party to that certain Amended and Restated Investor
Rights Agreement dated March 7, 2002 (the "Investor Rights Agreement"), hereby
consents that, to the extent Section 2.1, Section 2.2, Section 2.3, Section 2.6
or Section 2.7 of this Agreement conflicts with the Investor Rights Agreement,
this Agreement will control; provided, however, that should the Merger fail to
close for any reason, the Investor Rights Agreement shall control and the
Shareholders shall continue to be bound by its provisions. The Investor Rights
Agreement will terminate on consummation of the Merger and the Closing of the
Merger Agreement.
2.10 Further Assurances; Public Disclosure.
The Shareholder shall, upon request of MAPICS, execute and deliver any
additional documents and take such further actions as may reasonably be deemed
by MAPICS to be necessary or desirable to carry out the provisions hereof and
to vest the power to vote such Shareholder's Shares as contemplated by Section
2.3 in MAPICS and the other irrevocable proxies described therein at the
expense of MAPICS. The Shareholder hereby agrees that, subject to the
Shareholder's right of prior review and reasonable opportunity to comment,
MAPICS may publish and disclose in the Joint Proxy Statement (including all
documents and schedules filed with the SEC), such
-9-
Shareholder's identity and ownership of Frontstep Common Stock and the nature
of such Shareholder's commitments, arrangements and understandings under this
Agreement.
ARTICLE 3 REGULATORY APPROVALS; TERMINATION
3.1 Regulatory Approvals.
Each of the provisions of this Agreement is subject to compliance with
applicable regulatory conditions and receipt of any required regulatory
approvals.
3.2 Termination.
This Agreement, and all rights and obligations of the parties hereunder,
shall terminate upon the date upon which the Merger Agreement is terminated in
accordance with its terms; provided that if an "Extension Event" shall have
occurred as of or prior to termination of the Merger Agreement, then, for a
period of nine months following such termination, (i) the rights and
obligations of the parties hereto under Sections 2.1(b), 2.2(a)(ii),
2.3(a)(ii), 2.4 and 2.6 hereof shall continue in full force and effect and (ii)
the Shareholder shall not transfer any or all of the Shareholder's Shares in
connection with any Acquisition Proposal. For purposes of the foregoing, an
"Extension Event" means any of the following events: (A) the shareholders
meeting to approve the Merger Agreement shall not have been held or the
approval of the Merger at such meeting by the holders of two-thirds of the
outstanding shares of Frontstep Common Stock shall not have been obtained, (B)
any person (other than MAPICS or any Subsidiary of MAPICS) after the date of
this Agreement shall have made, or re-affirmed, or publicly disclosed an
intention to make or re-affirm, an Acquisition Proposal, or (C) any person
shall have formally protested any application filed with any regulatory
authorities pursuant to Section 8.4(a) of the Merger Agreement by MAPICS or any
of its Affiliates in connection with the Merger.
ARTICLE 4 MISCELLANEOUS
4.1 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 25% 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)
-10-
involving: (i) any acquisition or purchase from Frontstep by any Person or
"Group" (other than MAPICS or any of its Affiliates) of 40% 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 40% 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 60% 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
25% 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; 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.
Notwithstanding the foregoing, for purposes of this Agreement, the
Affiliate of any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Shareholder shall be deemed to be limited
solely to MSDW Venture Partners IV, Inc., MSDW Venture Partners IV,
L.L.C., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Partners IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity
Funding, Inc., Originator Investment Plan, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Off-Shore Investors IV, L.P. and MSDW OIP Investors, Inc.
"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.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
Term Page Term Page
After-Acquired Shares............7 MAPICS...........................1
Agreement........................1 Merger...........................1
Extension Event.................10 Released Party...................9
Frontstep........................1 Representatives..................7
Investor Rights Agreement........9 Rights...........................6
---------------------------------- ----------------------------------
-11-
Term Page Term Page
Shareholder......................1 Shareholders' Meeting............3
Shareholder's....................1 Sub..............................1
(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."
(d) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Merger Agreement.
4.2 Notices.
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice): (i) if to Frontstep or MAPICS, to its respective
address provided in the Merger Agreement; and (ii) if to the Shareholder; to
such Shareholder's address shown below such Shareholder's signature on the last
page hereof.
4.3 Interpretation.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. When a reference is made in this Agreement to a section, such
reference shall be to a section in this Agreement unless otherwise indicated.
The descriptive headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
4.4 Counterparts.
This Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement.
4.5 Entire Agreement.
This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof and is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
4.6 Governing Law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Ohio, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
-12-
4.7 No Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of
law or otherwise, by any of the parties without the prior written consent of
the other parties, except as expressly contemplated by Section 2.2(a) and
provided that MAPICS, without obtaining the consent of any other party hereto,
shall be entitled to assign this Agreement or all or any of its rights or
obligations hereunder (i) to any one or more Affiliates of MAPICS and (ii) to
any lender to MAPICS or Sub as collateral security but no assignment by MAPICS
under this Section 4.7 shall relieve MAPICS of its obligations under this
Agreement. Any assignment in violation of the foregoing shall be void.
4.8 Specific Performance.
The Shareholder agrees that irreparable damage would occur and that MAPICS
would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that MAPICS
shall be entitled to an injunction or injunctions to prevent breaches by the
Shareholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Ohio or in Ohio state court, this being in addition to any other
remedy to which they are entitled at law or in equity. The parties expressly
agree and acknowledge that the State of Ohio 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 District of Ohio. If jurisdiction is not present in federal court, then the
parties hereby agree and consent to the exclusive jurisdiction of the state
courts of Franklin County, Ohio. Each party hereto hereby irrevocably waives,
to the fullest extent permitted by Law, (a) any objection that it may now or
hereafter have to laying venue of any suit, action or proceeding brought in
such court, (b) any claim that any suit, action or proceeding brought in such
court has been brought in an inconvenient forum, and (c) any defense that it
may now or hereafter have based on lack of personal jurisdiction in such forum.
If any term, provision, covenant or restriction herein, or the application
thereof to any circumstance, shall, to any extent, be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions herein and the application
thereof to any other circumstances, shall remain in full force and effect,
shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
4.9 Amendments.
No amendment, modification or waiver in respect of this Agreement shall be
effective against any party unless it shall be in writing and signed by such
party.
-13-
[Signatures on next page]
-14-
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Shareholder Agreement as of the day and year first above written.
MAPICS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------
Vice President
FRONTSTEP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
President
SHAREHOLDER:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity Funding, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Number of Shares
Beneficially Owned: 757,749
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is made and entered into as
of November 24, 2002, by and among MAPICS, Inc., a Georgia corporation
("MAPICS"), Frontstep, Inc., an Ohio corporation ("Frontstep"), and the
undersigned (the "Shareholder").
Preamble
The Shareholder desires that MAPICS, FP Acquisition Sub, Inc., a wholly
owned subsidiary of MAPICS ("Sub"), and Frontstep enter into an Agreement and
Plan of Merger dated the date hereof (as the same may be amended or
supplemented, the "Merger Agreement") with respect to the merger of Sub with
and into Frontstep (the "Merger"); and
The Shareholder and Frontstep are executing this Agreement as an
inducement to MAPICS to enter into and execute, and to cause Sub to enter into
and execute, the Merger Agreement.
Capitalized terms used and not defined in this Agreement shall have the
meanings ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by MAPICS
and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
ARTICLE 1 REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDER
The Shareholder represents and warrants to MAPICS:
1.1 Beneficial Owner.
The Shareholder is the record or beneficial owner of the number of shares
(such "Shareholder's Shares") of common stock, no par value, of Frontstep
("Frontstep Common Stock") set forth below such Shareholder's name on the
signature page hereof. Except for the Shareholder's Shares (which definition
shall include any other form of securities convertible into Frontstep Common
Stock) and any other shares of Frontstep Common Stock subject hereto, the
Shareholder is not the record or beneficial owner of any shares of Frontstep
Common Stock. The Shareholder has the legal capacity and authority to enter
into and perform all of the Shareholder's obligations under this Agreement.
This Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, the Shareholder, enforceable in
accordance with its terms.
1.2 No Breach by Agreement.
Neither the execution and delivery of this Agreement nor the consummation
by the Shareholder of the transactions contemplated hereby will result in a
violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any kind to
which the Shareholder is a party or bound or to which the Shareholder's Shares
are subject. If the Shareholder is married and the Shareholder's Shares
constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
the Shareholder's spouse, enforceable against such person in accordance with
its terms. Consummation by the Shareholder of the transactions contemplated
hereby will not (i) violate, or require any consent, approval, or notice under,
any provision of any judgment, order, decree, statute, law, rule or regulation
applicable to the Shareholder or the Shareholder's Shares or (ii) conflict with
or result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation to which such Shareholder is a party or by which such
Shareholder or any such Shareholder's properties or assets may be bound.
1.3 No Lien.
The Shareholder's Shares and the certificates representing such shares are
now, and at all times during the term hereof will be, held by the Shareholder,
or by a nominee or custodian for the benefit of such Shareholder, free and
clear of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
1.4 No Brokers.
No broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Shareholder.
1.5 Investment Intent; Accredited Investor.
The Shareholder is not acquiring any MAPICS Common Stock with a view to,
or for offer or sale in connection with, any distribution thereof (within the
meaning of the Securities Act) that would be in violation of the securities
laws of the United States of America or any state thereof. The Shareholder
acknowledges that such Shareholder (i) has such knowledge and experience in
business and financial matters and with respect to investments in securities to
enable the Shareholder to understand and evaluate the risks of an investment in
the MAPICS Common Stock to be acquired by the Shareholder and to form an
investment decision with respect thereto and is able to bear the risk of such
-2-
investment for an indefinite period and to afford a complete loss thereof and
(ii) is an "accredited investor" as defined in Rule 501 of Regulation D under
the Securities Act.
1.6 Acknowledgement.
The Shareholder understands and acknowledges that MAPICS is entering into,
and causing Sub to enter into, the Merger Agreement in reliance upon the
Shareholder's execution and delivery of this Agreement. The Shareholder
acknowledges that the irrevocable proxy set forth in Section 2.3 is granted in
consideration for the execution and delivery of the Merger Agreement by MAPICS
and Sub.
ARTICLE 2 SHAREHOLDER COVENANTS AND AGREEMENT; GRANT
OF PROXY
The Shareholder agrees with, and covenants to, MAPICS as follows:
2.1 Voting Agreements.
(a) At any meeting of shareholders of Frontstep called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with respect to the
Merger and the Merger Agreement is sought (the "Shareholders' Meeting"), the
Shareholder shall vote (or cause to be voted) the Shareholder's Shares in favor
of the Merger, the execution and delivery by Frontstep of the Merger Agreement,
and the approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement, provided that the terms of the Merger
Agreement shall not have been amended to reduce the consideration payable in
the Merger to a lesser amount of MAPICS Common Stock.
(b) At any meeting of shareholders of Frontstep or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, the Shareholder shall vote (or cause to be voted) such
Shareholder's Shares against (i) any Acquisition Proposal (other than the
Merger), any amendment of Frontstep's Articles of Incorporation or Code of
Regulations or other proposal or transaction involving Frontstep or any of its
subsidiaries which amendment or other proposal or transaction would in any
manner impede, frustrate, prevent or nullify the Merger, the Merger Agreement
or any of the other transactions contemplated by the Merger Agreement, (iii)
any action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
Frontstep under the Merger Agreement or this Agreement; and (iv) except as
otherwise agreed to in writing in advance by MAPICS, against any of the
following actions or agreements (other than the Merger Agreement or the
transactions contemplated thereby): (A) any action or agreement that is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone or attempt to discourage or adversely affect the Merger and the
transactions contemplated by this Agreement and the Merger Agreement; (B) any
change in the management or Board of Directors of Frontstep, except as
contemplated by the Merger Agreement; (C) any change in the present
capitalization or dividend policy of Frontstep; or (D) any other material
change in Frontstep's corporate structure or business;
-3-
provided, however, notwithstanding anything to the contrary herein contained,
the Shareholder may vote, consent or give approval with respect to such
Shareholder's Shares in favor of (w) any amendment of Frontstep's Articles of
Incorporation or Code of Regulations, (x) any change in the present
capitalization of Frontstep, (y) any change in the management or Board of
Directors of Frontstep, and (z) any transaction (including a series of related
transactions), in each case if the action on which such vote, consent or other
approval is sought relates to (I) the issuance of voting securities of
Frontstep (or debt or equity securities of Frontstep exchangeable for or
convertible into voting securities of Frontstep) which immediately following
the issuance thereof (treating in the case of the issuance of debt or equity
securities of Frontstep exchangeable for or convertible or exerciseable into
voting securities of Frontstep, as if the maximum number of voting securities
issuable upon the exchange, conversion or exercise thereof had been issued at
the time of the issuance of such debt or equity securities) constitutes no more
than forty percent (40%) of the total voting power of Frontstep, or (II) the
sale or other disposition (other than in the ordinary course of business) of
assets of Frontstep that, in the aggregate with all other such sales or
dispositions made or agreed to be made, constitute less than the greater of (x)
twenty-five percent (25%) of the book value of all tangible assets of Frontstep
or (y) twenty-five percent (25%) of the annual revenue generating capacity of
Frontstep. Notwithstanding anything to the contrary contained in this
Agreement, each Shareholder who is also a member of the Board of Directors of
Frontstep shall be free to act in such Shareholder's capacity as a member of
the Board of Directors of Frontstep and to discharge such Shareholder's
fiduciary duty as such. The provisions of this Section 2.1 shall constitute a
voting trust under Section 1701.49 of the Ohio Revised Code.
2.2 Certain Covenants.
(a) Transfer. The Shareholder shall not, except pursuant to this Agreement
(i) transfer (which term shall include, for the purposes of this Agreement, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of the Shareholder's Shares or any interest therein, except pursuant to the
Merger; enter into any contract, option or other agreement or understanding
with respect to any transfer of any or all of the Shareholder's Shares or any
interest therein, (iii) grant any proxy, power of attorney or other
authorization in or with respect to the Shareholder's Shares, except for this
Agreement, or (iv) deposit the Shareholder's Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shareholder's
Shares; provided, that the Shareholder may transfer (as defined above) any of
the Shareholder's Shares to any other person who is on the date hereof, or to
any family member of a person or charitable institution which prior to the
Shareholders Meeting and prior to such transfer becomes, a party to this
Agreement bound by all the obligations of the Shareholder hereunder.
(b) Exchange of Shares; Waiver of Rights of Appraisal. If the requisite
number of the holders of Frontstep Stock approve the Merger and the Merger
Agreement, the Shareholder's Shares shall, pursuant to the terms of the Merger
Agreement, be exchanged for the consideration provided in the Merger Agreement.
The Shareholder hereby waives any rights of appraisal with respect to the
Merger, or rights to dissent from the Merger, that such Shareholder may have.
-4-
(c) Other Offers. The Shareholder shall not, nor shall Shareholder permit
any investment banker, attorney or other adviser or representative of the
Shareholder to, directly or indirectly, (i) solicit, initiate, encourage or
induce the making, submission or announcement of, any Acquisition Proposal or
(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. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by an investment
banker, attorney or other adviser or representative of the Shareholder, whether
or not such person is purporting to act on behalf of the Shareholder or
otherwise, shall be deemed to be in violation of this Section 2.2(c) by the
Shareholder; provided, that it is hereby acknowledged and agreed that neither
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. nor any of its Affiliates is acting as an investment
banker, adviser or representative to the Company. "Acquisition Proposal" does
not include the Merger and the other transactions contemplated by the Merger
Agreement or any transfer expressly permitted by the proviso to Section 2.2(a).
(d) Confidentiality. The Shareholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to herein.
In this connection, pending public disclosure thereof, each Shareholder hereby
agrees not to disclose or discuss such matters with anyone not a party to this
Agreement (other than counsel and advisors, if any) without the prior written
consent of MAPICS, except for filings required pursuant to the Exchange Act and
the rules and regulations thereunder or disclosures such Shareholder's counsel
advises are necessary in order to fulfill such Shareholder's obligations
imposed by laws, in which event such Shareholder shall give notice of such
disclosure to MAPICS as promptly as practicable so as to enable MAPICS to seek
a protective order from a court of competent jurisdiction with respect thereto.
(e) No Inconsistent Agreements. The Shareholder shall not enter into any
agreement or understanding with any Person the effect of which would be
inconsistent or violative of the provisions of this Agreement.
2.3 Grant of Irrevocable Proxy; Appointment of Proxy.
(a) The Shareholder hereby irrevocably grants to, and appoints, MAPICS and
▇▇▇▇▇▇▇ ▇▇▇▇, President and Chief Executive Officer of MAPICS, in his capacity
as officer of MAPICS, and any individual who shall hereafter succeed to any
such office of MAPICS, and each of them separately, the Shareholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Shareholder, to vote the Shareholder's Shares, or grant a
consent or approval in respect of such Shares (i) in favor of the Merger, the
execution and delivery of the Merger Agreement and approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have been
amended to reduce the consideration payable in the Merger to a lesser amount of
-5-
MAPICS Common Stock, and against any Acquisition Proposal, other than
transactions permitted by the proviso set forth in Section 2.1(b).
(b) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's shares that may still be in effect are not
irrevocable, and that any such proxies are hereby revoked.
(c) The Shareholder hereby affirms that the irrevocable proxy set forth in
this Section 2.3 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance
of the duties of the Shareholder under this Agreement. The Shareholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. The Shareholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 1701.48 of the Ohio Revised Code.
2.4 Agreement as to Certain Events.
The Shareholder agrees that this Agreement and the obligations hereunder
shall attach to the Shareholder's Shares and shall be binding upon any person
or entity to which legal or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise, including the Shareholder's
successors or assigns. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of
Frontstep affecting the Frontstep Common Stock, or the acquisition of
additional shares of Frontstep Common Stock or other voting securities of
Frontstep by any Shareholder, the number of Shares subject to the terms of this
Agreement shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Frontstep Common
Stock or other voting securities of Frontstep issued to or acquired by the
Shareholder. The Shareholder agrees, subject to the terms and conditions of the
Restructuring Agreement and the following provisions of this Section 2.4, at
the request of MAPICS, to exercise, exchange or convert any of such
Shareholder's options (or other securities convertible into Frontstep Common
Stock) to acquire additional shares of Frontstep Common Stock ("Rights") into
Shares of Frontstep Common Stock, so as to constitute After-Acquired Shares
under this Agreement; provided, however, that MAPICS shall not require the
exercise of any such stock options, at any time when the exercise price of such
stock option is more than the then-current market price of shares of Forest
Common Stock. Notwithstanding the foregoing, the Shareholder shall have no
obligation to exercise the Series A Warrants and the Convertible Notes. In
order to facilitate the exercise at the request of MAPICS of any such Right,
MAPICS shall loan to any requesting Shareholder funds sufficient to allow such
Shareholder to exercise the Right. Such loan shall be non-recourse (except with
respect to pledged securities), shall not be interest bearing, shall be due and
payable upon the earlier of acquisition by MAPICS of the After-Acquired
-6-
Shares, consummation of the Merger or termination of this Agreement and shall
be secured by a pledge of the shares of Frontstep Common Stock acquired upon
exercise of such Right. Each Shareholder hereby agrees to promptly notify
MAPICS in writing of the number of After-Acquired Shares that may be acquired
by such Shareholder, if any, after the date hereof. "After-Acquired Shares"
means any shares of Frontstep Common Stock acquired directly or indirectly, or
otherwise beneficially owned, by any of the Shareholders in any capacity after
the date hereof and prior to the termination hereof, whether upon the exercise
of options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of a purchase, dividend, distribution,
gift, bequest, inheritance or as a successor in interest in any capacity
(including a fiduciary capacity) or otherwise; and the phrases "beneficially
own" or "beneficial ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing (without duplicative counting of the
same securities by the same holder, securities beneficially owned by a person
shall include securities beneficially owned by all other persons with whom such
Person would constitute a "group" within the meaning of Rule 13d-5 of the
Exchange Act).
2.5 Stop Transfer; Legends.
Frontstep agrees with, and covenants to, MAPICS that Frontstep shall not
register the transfer of any certificate representing any of the Shareholder's
Shares, unless such transfer is made to MAPICS or Sub or otherwise in
compliance with this Agreement. The Shareholder agrees that the Shareholder
will tender to Frontstep, within five business days after the date thereof, any
and all certificates representing such Shareholder's Shares and Frontstep will
inscribe upon such certificates the following legend: "The shares of Common
Stock, no par value, of Frontstep, Inc. represented by this certificate are
subject to a Shareholders Agreement dated as of November 24, 2002, and may not
be sold or otherwise transferred, except in accordance therewith. Copies of
such Agreement may be obtained at the principal executive offices of Frontstep,
Inc."
2.6 Standstill.
Shareholder agrees that, for a period of two years from the Effective
Time, unless such shall have been specifically invited in writing by MAPICS,
neither Shareholder nor any of its directors, officers or employees
(collectively, "Representatives"), will in any manner, directly or indirectly,
(a) effect or seek, offer or propose (whether publicly or otherwise) to effect,
or cause or participate in or in any way assist any other person to effect or
seek, offer or propose (whether publicly or otherwise) to effect or participate
in, (i) any acquisition of any securities (or beneficial ownership thereof) or
assets of MAPICS or any of its Subsidiaries; provided that Shareholder may
acquire shares of MAPICS equal to or less than five percent (5%) of the number
of shares issued to Shareholder in the Merger, (ii) any tender or exchange
offer, merger or other business combination involving MAPICS or any of its
Subsidiaries, (iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to MAPICS or any of
its Subsidiaries, or (iv) any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the Securities and Exchange Commission) or consents
to vote any voting securities of MAPICS, (b) form, join or in any way
participate in a "group" (as defined under the ▇▇▇▇ ▇▇▇) other than any "group"
that may be deemed to be formed by this Agreement or by the Investor Rights
Agreement, (c) otherwise act,
-7-
alone or in concert with others, to seek to control or influence the
management, board of directors or policies of MAPICS, (d) take any action which
might force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above, or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing.
Shareholder also agrees during such period not to request MAPICS (or its
directors, officers, employees, advisors or agents), directly or indirectly, to
amend or waive any provision of this paragraph (including this sentence).
Shareholder acknowledges that Shareholder is aware (and that its
Representatives who are apprised of this matter have been advised) that the
United States securities laws prohibit Shareholder, its Representatives, and
any person who has received material non-public information about MAPICS from
purchasing or selling securities of MAPICS or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities in
reliance on such information.
Solely for the purposes of this Section 2.6, the term "Shareholder" shall
mean ▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Fallen Angel Equity Fund, L.P., Fallen Angel Capital,
L.L.C., MSDW Venture Partners IV, Inc., MSDW Venture Partners IV, L.L.C.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Partners IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Offshore
Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity Funding, Inc.,
Originators Investment Plan, L.P., or MSDW OIP Investors, Inc., as applicable.
2.7 Lock-up.
Shareholder agrees that for a period beginning upon the Effective Time of
the Merger and ending 180 days thereafter, the Shareholder will not, directly
or indirectly (x) make, agree to or cause any offer, sale (including short
sale), loan, pledge, or other disposition of, or grant any options, rights or
warrants to purchase with respect to, or otherwise transfer or reduce any risk
of ownership of, directly or indirectly, any MAPICS Common Stock or (y) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of MAPICS Common Stock
(regardless of whether any of the transactions described in clause (x) or (y)
is to be settled by the delivery of MAPICS Common Stock, in cash or otherwise),
nor will the undersigned make any demand for or exercise any right with respect
to the registration of MAPICS Common Stock, without the prior written consent
of MAPICS, which shall not be unreasonably withheld, conditioned or delayed;
provided, however, that nothing contained herein shall prohibit (i) the
exercise of stock options or other purchases of MAPICS Common Stock under stock
option plans or other incentive compensation arrangements for employees or
directors previously approved by MAPICS's Board of Directors or (ii) the gift,
pledge or assignment of any such securities without the prior consent of MAPICS
if the donee, pledgee or assignee agrees, in writing delivered to MAPICS within
five days after such gift, pledge or assignment, to be bound by the terms of
this letter. The Shareholder consents to the entry of stop-transfer
instructions with MAPICS's transfer agent against the transfer of, and
authorizes MAPICS to cause the transfer agent to decline to transfer, any of
the above-described
-8-
securities owned beneficially or of record by the undersigned. Notwithstanding
the foregoing, if MAPICS amends or waives the terms of this Section 2.7 for any
Shareholder (other than a Shareholder who immediately following the Merger is
an employee of MAPICS or the Surviving Corporation), without any further action
on the part of MAPICS or any other Person, this Section 2.7 shall be amended
and waived for all other Shareholders.
2.8 Release of Claims
Except for the rights of the Shareholder to reimbursement of expenses in
accordance with the terms of the Merger Agreement and any rights to which
Shareholder or its Representatives are entitled under Section 8.14 of the
Merger Agreement, Shareholder, on behalf of itself, its Representatives, heirs,
executors, administrators, successors, and assigns, effective as of the
Effective Time (i) fully and completely releases and discharges Frontstep, its
affiliates (prior to the Effective Time), and each of their respective
officers, directors and employees (each a "Released Party") from any claim,
liability, damage, cost, action, cause of action, expense or other obligation
that Shareholder has or may have against any Released Party based upon, related
to or in any way arising out of any acts, whether of omission or commission, of
any Released Party relating to the Merger, or other events occurring or
circumstances existing at or prior to the Effective Time of the Merger, and
(ii) agrees never to commence, aid in any way, or prosecute against any
Released Party any action, lawsuit, or other proceeding based upon any claims,
demands, causes of action, obligations, damages, or liabilities covered by this
Section 2.8.
2.9 Conflict with Investor Rights Agreement
The Shareholder, as a party to that certain Amended and Restated Investor
Rights Agreement dated March 7, 2002 (the "Investor Rights Agreement"), hereby
consents that, to the extent Section 2.1, Section 2.2, Section 2.3, Section 2.6
or Section 2.7 of this Agreement conflicts with the Investor Rights Agreement,
this Agreement will control; provided, however, that should the Merger fail to
close for any reason, the Investor Rights Agreement shall control and the
Shareholders shall continue to be bound by its provisions. The Investor Rights
Agreement will terminate on consummation of the Merger and the Closing of the
Merger Agreement.
2.10 Further Assurances; Public Disclosure.
The Shareholder shall, upon request of MAPICS, execute and deliver any
additional documents and take such further actions as may reasonably be deemed
by MAPICS to be necessary or desirable to carry out the provisions hereof and
to vest the power to vote such Shareholder's Shares as contemplated by Section
2.3 in MAPICS and the other irrevocable proxies described therein at the
expense of MAPICS. The Shareholder hereby agrees that, subject to the
Shareholder's right of prior review and reasonable opportunity to comment,
MAPICS may publish and disclose in the Joint Proxy Statement (including all
documents and schedules filed with the SEC), such
-9-
Shareholder's identity and ownership of Frontstep Common Stock and the nature
of such Shareholder's commitments, arrangements and understandings under this
Agreement.
ARTICLE 3 REGULATORY APPROVALS; TERMINATION
3.1 Regulatory Approvals.
Each of the provisions of this Agreement is subject to compliance with
applicable regulatory conditions and receipt of any required regulatory
approvals.
3.2 Termination.
This Agreement, and all rights and obligations of the parties hereunder,
shall terminate upon the date upon which the Merger Agreement is terminated in
accordance with its terms; provided that if an "Extension Event" shall have
occurred as of or prior to termination of the Merger Agreement, then, for a
period of nine months following such termination, (i) the rights and
obligations of the parties hereto under Sections 2.1(b), 2.2(a)(ii),
2.3(a)(ii), 2.4 and 2.6 hereof shall continue in full force and effect and (ii)
the Shareholder shall not transfer any or all of the Shareholder's Shares in
connection with any Acquisition Proposal. For purposes of the foregoing, an
"Extension Event" means any of the following events: (A) the shareholders
meeting to approve the Merger Agreement shall not have been held or the
approval of the Merger at such meeting by the holders of two-thirds of the
outstanding shares of Frontstep Common Stock shall not have been obtained, (B)
any person (other than MAPICS or any Subsidiary of MAPICS) after the date of
this Agreement shall have made, or re-affirmed, or publicly disclosed an
intention to make or re-affirm, an Acquisition Proposal, or (C) any person
shall have formally protested any application filed with any regulatory
authorities pursuant to Section 8.4(a) of the Merger Agreement by MAPICS or any
of its Affiliates in connection with the Merger.
ARTICLE 4 MISCELLANEOUS
4.1 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 25% 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)
-10-
involving: (i) any acquisition or purchase from Frontstep by any Person or
"Group" (other than MAPICS or any of its Affiliates) of 40% 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 40% 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 60% 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
25% 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; 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.
Notwithstanding the foregoing, for purposes of this Agreement, the
Affiliate of any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Shareholder shall be deemed to be limited
solely to MSDW Venture Partners IV, Inc., MSDW Venture Partners IV,
L.L.C., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Partners IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity
Funding, Inc., Originator Investment Plan, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Venture Off-Shore Investors IV, L.P. and MSDW OIP Investors, Inc.
"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.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
Term Page Term Page
After-Acquired Shares............7 MAPICS...........................1
Agreement........................1 Merger...........................1
Extension Event.................10 Released Party...................9
Frontstep........................1 Representatives..................7
Investor Rights Agreement........9 Rights...........................6
---------------------------------- ----------------------------------
-11-
Term Page Term Page
Shareholder......................1 Shareholders' Meeting............3
Shareholder's....................1 Sub..............................1
(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."
(d) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Merger Agreement.
4.2 Notices.
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice): (i) if to Frontstep or MAPICS, to its respective
address provided in the Merger Agreement; and (ii) if to the Shareholder; to
such Shareholder's address shown below such Shareholder's signature on the last
page hereof.
4.3 Interpretation.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. When a reference is made in this Agreement to a section, such
reference shall be to a section in this Agreement unless otherwise indicated.
The descriptive headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
4.4 Counterparts.
This Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement.
4.5 Entire Agreement.
This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof and is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
4.6 Governing Law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Ohio, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
-12-
4.7 No Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of
law or otherwise, by any of the parties without the prior written consent of
the other parties, except as expressly contemplated by Section 2.2(a) and
provided that MAPICS, without obtaining the consent of any other party hereto,
shall be entitled to assign this Agreement or all or any of its rights or
obligations hereunder (i) to any one or more Affiliates of MAPICS and (ii) to
any lender to MAPICS or Sub as collateral security but no assignment by MAPICS
under this Section 4.7 shall relieve MAPICS of its obligations under this
Agreement. Any assignment in violation of the foregoing shall be void.
4.8 Specific Performance.
The Shareholder agrees that irreparable damage would occur and that MAPICS
would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that MAPICS
shall be entitled to an injunction or injunctions to prevent breaches by the
Shareholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Ohio or in Ohio state court, this being in addition to any other
remedy to which they are entitled at law or in equity. The parties expressly
agree and acknowledge that the State of Ohio 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 District of Ohio. If jurisdiction is not present in federal court, then the
parties hereby agree and consent to the exclusive jurisdiction of the state
courts of Franklin County, Ohio. Each party hereto hereby irrevocably waives,
to the fullest extent permitted by Law, (a) any objection that it may now or
hereafter have to laying venue of any suit, action or proceeding brought in
such court, (b) any claim that any suit, action or proceeding brought in such
court has been brought in an inconvenient forum, and (c) any defense that it
may now or hereafter have based on lack of personal jurisdiction in such forum.
If any term, provision, covenant or restriction herein, or the application
thereof to any circumstance, shall, to any extent, be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions herein and the application
thereof to any other circumstances, shall remain in full force and effect,
shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
4.9 Amendments.
No amendment, modification or waiver in respect of this Agreement shall be
effective against any party unless it shall be in writing and signed by such
party.
-13-
[Signatures on next page]
-14-
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Shareholder Agreement as of the day and year first above written.
MAPICS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------
Vice President
FRONTSTEP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
President
SHAREHOLDER:
Originators Investment Plan, L.P.
By: MSDW OIP Investors, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Number of Shares
Beneficially Owned: 39,890